BALTIMORE – We spent the long holiday weekend with hammer and nails.
We were replacing a fence and called upon an Amish family from Charles County for help.
Straw Hats and Suspenders
The Amish don’t drive and don’t recognize national holidays, so they were delivered to the farm on the 4th by a neighbor.
The father brought with him three of his boys – the eldest with a beard of his own, smoking a cigarillo.
The Amish at work. Photo Credit: Elizabeth Bonner |
We are accustomed to thinking of the Amish as people time forgot… living in a state of purity, unpolluted by modern society. But as they say on Facebook, their actual status is: “It’s Complicated.”
The Amish don’t drive. They don’t drink. They don’t have zippers on their pants (they don’t wear jeans). They wear straw hats and suspenders.
But they are not so different from the rest of us.
“What the f*** are you doing?” said one of the boys to his brother.
“Shut your f****** mouth,” shot back the younger boy.
They set to work without hesitation and worked steadily, drilling holes with a patched-up augur… planting the posts… and driving nails with an air gun.
They weren’t cheap. But they finished in one day what would have taken us a week on our own.
Turning Inward
Meanwhile, back in the markets, U.S. stocks fell a little yesterday.
After the excitement of Brexit, investors don’t seem to know what to do.
Some believe the vote in Britain signals a “breaking up” pattern… a move toward Trumpism and away from globalization and financialization.
If so, it may mean “walls” – turning inward and away from the go-go era of ever rising credit and central bank backstops for the capital markets.
Others believe Brexit will have the opposite effect. The “Hillary Effect,” they say, causes policy makers to close ranks… and do “whatever it takes” to protect themselves.
What it takes, they believe, is more phony money.
In Friday’s paper, Mark Carney, head of the Bank of England, said he was ready to act if Britain should suffer “economic post-traumatic stress.”
We will translate that for the benefit of readers who don’t speak Centralbankese. Carney said: If stock prices drop, we’ll rush in with enough cash to turn it around.
And yesterday, the Financial Times cautioned policy makers to forget the long view. The important thing is to prevent a recession now!
“This is not the time for [the Treasury secretary] to set long-term tax policy,” says an editorial.
No… this is a time to watch the news. (Or the “incoming data,” as Fed chief Janet Yellen calls it.)
Tipping the Playing Field
Donald Trump was in Maryland over the weekend.
Actually, he was in Berlin, Maryland, far out on the Eastern Shore. Berlin is in Worcester County, which has the highest unemployment in the state… and the highest level of support for Mr. Trump.
In Maryland, the unemployment rate is below 5%. In Worcester County, it is 7%.
Why?
We are connecting the dots. One of our dots is that center of light, liquidity, and hysteria – Washington, D.C.
Berlin, Maryland, another dot, is about as far away as you can go from Washington and still be in Maryland.
Washington has an average home price of about $500,000 and the highest median household income in the nation (about $90,000).
How did Washington get so rich?
The simple explanation: Instead of leveling the playing field, the insiders tipped it in their direction. Now, money drains away from all over the country into the deep pockets of the nation’s capital.
Wait a minute… How does that work?
Every state in the union has two senators and at least one Congressman. How does D.C., with no senators and only one delegate in the House without voting rights, get the best deal?
Ah-ha! Another dot: the Deep State.
Foxes in the Chicken House
The government is not controlled by the Congress. Nor is the nation’s money.
Instead, both are controlled by a group of unelected insiders (aka, the Deep State).
They pull the strings. They write the legislation (which members of Congress admit they are too busy to read). They make sure that whatever meat is served to the rest of the nation, the choicest cuts are left in the District of Columbia and the surrounding counties of Maryland and Virginia.
We’ve mentioned this often. But we’ll do so again, for the benefit of new readers and Alzheimer’s victims.
The great Italian economist Vilfredo Pareto explained how government works. No matter what you call the system – a monarchy, a theocracy, or a democracy – real power always ends up in the hands of a small group.
“The foxes,” Pareto called them. They make the system work… and they make it work primarily for themselves.
The foxes produce nothing of value. Instead, they are lobbyists, bureaucrats, contractors, regulators, lawyers, insiders, administrators, educators, policy wonks, cronies, and hangers on of all sorts.
They are the Deep State.
They are the foxes living in the D.C. chicken house.
The “JFK Effect”
“The Donald” went to Berlin, Maryland, and Monessen, Pennsylvania… and not to a wealthy D.C. suburb such as Chevy Chase… because he has positioned himself as the anti-establishment candidate.
But if elected, we don’t know whether he would take on the Deep State. John F. Kennedy was the last U.S. president to challenge it. And you know how that worked out…
Ms. Clinton, meanwhile, is the Deep State’s champion. She seems to approve of every agency, every policy, every crony, and every war the Deep State has undertaken.
Ms. Clinton is the insider. Mr. Trump, the outsider. Each position has its advantages.
As the Establishment Candidate, Ms. Clinton raises $7 for every $1 raised by Donald Trump. On the other hand, 9 out of 10 voters would probably be receptive to an anti-establishment message, if Mr. Trump could deliver it properly.
The outcome?
To be determined…
Regards,
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Bill
Further Reading: When it comes to politics and the economy, many Americans suffer from what psychologists call “willful blindness.” That’s why Bill has taken the extraordinary step of exposing America’s greatest weakness. To get full details, read on here.
Commodities Insight
Dr. Steve Sjuggerud, Editor, True Wealth Systems
Earlier this year, the Federal Reserve told us a rate hike could come in June.
That got gold investors worried…
"Gold slides on Fed rate hike expectations," read a headline on CNBC.com.
Higher rates are bad for gold… At least that’s what most folks believe.
The Fed decided not to hike rates again in June, but for gold investors the question remains:
Should you worry about higher interest rates?
In short, no…
The last time the Federal Reserve pushed rates higher for a sustained period was from 2004 to 2006. Rates went from 1% all the way to 5.25%.
If gold were truly affected by the Fed raising interest rates, then you would think that the dramatic move we saw from 2004 to 2006 would have a devastating effect on the gold price… right?
You’d be wrong. Gold was unaffected. Its price just kept going up while the Fed was raising interest rates. Take a look:
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Specifically, exactly one year after the Fed’s first interest-rate hike in 2004, gold prices were up more than 10%.
The story was the same the previous time the Fed started hiking rates… in 1999. One year after the Fed started hiking interest rates, the price of gold was up more than 10%.
Just because gold went up 10%-plus in a year the last two times the Fed raised interest rates doesn’t mean that it has to happen again…
We can’t say that gold will go up 10% or more. But we can say you shouldn’t worry so much about the Fed right now.
The last time the Fed consistently raised interest rates, gold was in a bull market. And higher rates didn’t hurt gold.
Today, I believe we’re in a new bull market in gold – one that would also be unaffected by interest-rate hikes by the Federal Reserve, just like we saw from 2004 to 2006.
Look, the media might try to spook you about gold and the Fed in the coming weeks…
Pay no attention to it… You know the truth. Gold doesn’t care about the Fed, especially when gold is in a bull market.
P.S. Most investors don’t know this… but there’s a "Magic Number" that appears before every big move higher in gold and gold stocks.
I recently released a free video presentation explaining the Magic Number, how it works, and how you can use it to make a fortune in the gold market. Watch it here now.
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Mailbag
A mixed Mailbag today…
To kick things off, readers weigh in on yesterday’s Diary – “Planet Debt.”
It seems to me that the financial elites are more like financial terrorists. When the population at large generates enough wealth worth taking, they sell their holdings at the peak, causing values to tip down. And when they have bottomed out, they are in strong position to buy everyone else’s losses at basement prices.
Wealth transfer? When they face the real Judge in the afterlife I’m virtually positive it will be deemed STEALING, and they will go to their rightful place.
— Robin B.
We are doomed. The banks are going to take the money from our saving accounts, and probably checking accounts [via negative interest rates]. We cannot hoard money as the powers to be are trying eliminate cash.
The panic button is starting to get depressed a little at a time.
— James G.
The argument can be made that the same people who own the member banks of the Federal Reserve also own the government. That is, I believe, your definition of the Deep State, with which I agree.
I like your comments. I like your writing. I just needed to point out that the Federal Reserve is privately owned and operated for a profit by powerful men, behind the scenes. They are the deep pockets that control the Deep State… and they will end up owning all the assets and the debt.
— Allen B.
Meanwhile, Bill is taking flak for his comment, also in yesterday’s Diary, that Donald Trump went bankrupt – twice – by the time Bill Clinton took office.
To my knowledge, Donald Trump has never gone broke, much less to say he has gone broke twice. To my knowledge, on two occasions, corporations owned or substantially owned by Trump have filed for bankruptcy and been reorganized under Chapter 11.
If “gone broke” means having zero cash and zero equity… then even these corporations, in which the Trump ownership ended up greater than zero, did not go broke.
— Fritz B.
And readers continue to weigh in on whether Bill should buy 75,000 acres of land adjacent to his ranch in Argentina…
I have enjoyed your stories as I came from a ranch-farm. I am sure you are seeing that this is a love thing, not a moneymaker. If you could sell the current one and buy the better one, it most likely would still be a loser. If you can afford it, go for it. But I have personally seen more than one good businessman bite the dust over ranches.
— Don G.
You are too smart to continue pumping money in a faraway hole. Just kill you cows, buy yourself a few 40 foot containers full of space food, transport it to your hacienda in the mountains, and be done with worrying…
It will be cheaper than paying $40 per acre for a 75,000-acre property.
— Alain V.
In Case You Missed It…
Currency expert Jim Rickards has been giving interview after interview about his Brexit analysis.
But there’s one strategy he hasn’t shared on TV… and he says it’s his most profitable way to capitalize on Brexit. Read his research here.
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