Caesar: The Ides of March are come.
Soothsayer: Ay, Caesar, but not gone.
— Julius Caesar, Shakespeare
GRANADA, NICARAGUA – Today, we stop the horses and circle the wagons.
For 19 years, we have been rolling along… exploring… discovering…
We began with the assumption that we didn’t “know” anything… so we kept our eyes open.
Now we know even less.
But we’ve covered a lot of ground. So, let’s take a brief pause to get our bearings… and to sit in front of the campfire and tell our tales.
New readers of the Diary are invited to pull up a log. You need to know what we’ve seen so far. It will help make sense of what you read tomorrow and in the future.
And, yes, this is going to take a little longer than a normal Diary…
We’ve been exploring a wilderness unknown to most humans – a money world that is very different from the way it is s’posed to be. In the press lately are reports of “fake news.” Well, guess what? The money system is fake, too.
If you are an investor… or preparing to retire… or just someone who is interested in how the world works, listen up.
Because it doesn’t work the way they tell you in the civics books… Economics 101… or in the mainstream press. It is much more complex, corrupt, and dangerous.
But let’s start with the government, which controls – directly or indirectly – about half the U.S. economy. It was not intended to be so big, so powerful, and so intrusive. But then, it hardly resembles the blueprint described in the Constitution.
Elections matter a whole lot less than you think.
As the great Italian economist Vilfredo Pareto explained, no matter what you call your government, over time, it will be taken over by the cunning insiders and hustlers he called “foxes.”
There are always some smart people able to manipulate, control, and subvert the government and use its police power (governments claim a monopoly on the use of violence) to get what they want.
What do these foxes want?
Money. Power. Status. The usual.
There is nothing underhanded about it. Nothing sinister or surprising. And you don’t need to believe in conspiracies to understand it.
The subversion takes place right out in the open. But because it is so different from what we are looking for, we don’t even see it.
But it’s really very simple: You spend your time earning money. The foxes spend their time figuring out how to get it from you – by taxation, legislation, regulation, or an ingenious phony-money system.
The concept of the “Deep State” was first applied to countries such as Turkey and Egypt.
These are places where military-police-security insiders put screws to your thumbs, forcing you to do as you were told. Elections changed ruling parties and their leaders. But the real power was elsewhere.
Author Mike Lofgren popularized the use of the term in the U.S. But he had a much broader view of the Deep State. Lofgren:
The Deep State… is the story of our time. It’s the thin red line that runs through the war on terrorism, and a militarized foreign policy. Also the financialization and deindustrialization of the economy, and a social structure that has given us the most unequal income distribution in almost a century.
Lofgren worked as a Congressional staffer with “top secret” clearance for decades. He noticed that business went on as usual regardless of which party won the White House.
Gradually, he came to see that the public spectacle we see on TV and call “politics” is only a small part of the governing system.
The important decisions are made by the “foxes” – bureaucrats, lobbyists, campaign contributors, and crony businesses.
It was no accident, for example, that not a single member of Congress even bothered to read the Obamacare legislation – a sweeping program that affected almost everyone and altered one-seventh of the nation’s GDP.
They knew there was nothing they could do about it.
The Deep State is big… diffuse… and adaptable. Lofgren calls it a “hybrid association” of key elements of government and parts of top-level finance and industry.
It is respectable – even prestigious – including university professors and think tank analysts as well as lobbyists and contractors. It doesn’t care which passport you hold, which party you vote for, or what you think.
It includes liberals and conservatives. Republicans as well as Democrats. Platonists and Aristotelians.
Internally, these different interests compete for money and power.
The “conservatives,” for example, want to direct more of your money to the military-security industries. The “liberals” want to favor cronies in the social-welfare industries.
Even within sectors, there is competition. The Navy may want more ships. The Air Force may want more planes. The Army may want more tanks.
Most of the news you hear focuses on these battles within the Deep State to see who will get the most of your money.
Elections shift the favors from one crony industry to another. The faces change. Budgets are adjusted, marginally. But the major goal of the insiders remains: to keep the power and money headed in their direction.
The headlines can rant about a victory for the Right or a defeat for the Left. But behind the scenes, the real winner is always the same: the Deep State itself.
That’s why, though President Obama and President George W. Bush were very different personalities with very different ideas, they kept the major programs going in the same direction for the last 16 years: war abroad and entitlements at home.
If the expression “war and entitlements” has a familiar ring to it, it is no accident. “Bread and circuses” was a similar expression 2,000 years ago.
Not much has changed. Rome was an empire then. The U.S. is an empire now.
“Avoid foreign entanglements” was advice given to the new nation by its “father,” George Washington. But a century later, the advice was forgotten.
And today, there is scarcely a foreign power anywhere in the world – no matter how insignificant – with which the U.S. doesn’t want to tangle…
…and no messy war, clumsy trade deal, squirrelly treaty, or wasteful foreign aid program that it doesn’t want to get entangled in.
There are patterns in history as there are in an individual life. People are born. They grow up. They make mistakes. And then they die.
So, too, does a nation grow. And if it is able – if it develops sufficient firepower – it becomes an empire, not just a nation among equals, but primus inter pares.
It becomes “America First.”
America first took the road to empire around the same time that its GDP became the world’s largest – in the 1890s.
President Teddy Roosevelt and newspaper mogul William Randolph Hearst ginned up the Spanish-American War.
Roosevelt, vainglorious and bullheaded, pioneered the art of killing barely armed foreigners for Great National Purpose.
His Rough Riders invaded Cuba and then the Philippines. As many as a quarter of a million Filipinos died to make English the country’s official language.
Obviously, the Philippines posed no threat to the safety of the United States of America. But when an empire’s blood is up, there is no stopping it.
Empires follow paths of their own – dictated neither by voters nor by elected leaders.
People don’t necessarily want to have an empire. They don’t necessarily believe you when you tell them they have one, either.
Most Americans – even today – believe they live in a republic governed by the Constitution.
But they come to think what they must think when they must think it.
Empires require imperial thinking. People think that they should go to “war” with crime, drugs, and poverty at home.
And overseas, they invade Vietnam… Grenada… Afghanistan… Iraq… you name it.
The wars are rarely “won” in a conventional sense. It is almost impossible to win them because the war aims are often unclear or simply unattainable.
In the War on Drugs, for example, the more the feds try to stop drug taking, the more the profit margins for illegal distributors fatten, attracting more dealers and more drugs.
And in the War on Terror, it is unlikely that victory is even conceivable. Terror is a tactic, not an enemy. It is not going to disappear.
But as senseless as these wars appear, there is a hidden motive. Wars are profitable – for the Deep State and its war industries.
The wars provide a justification for shifting wealth from the real economy to the war economy. And from people who engage in win-win transactions – trading goods and services with each other to make each other’s lives better – to the win-lose economy of guns, prisons, and artificial legs.
Empires love wars. But America’s foreign wars – like so much else in our current monetary-government system – are fake. There is no real danger from the enemy.
None of America’s enemies from the past half-century were capable of invading the U.S., stealing our money, ravaging our women, or defeating our armies.
These fake wars were simply a way of transferring money – from the people who earn it to the foxes in the war-fighting sector, including the Pentagon.
General Smedley Butler, who served in the Philippines as well as in World War I, was at his death the most highly decorated marine in history. He summed up his role:
I served in all commissioned ranks from a Second Lieutenant to a Major General. And during that time, I spent most of my time being a high class muscle-man for Big Business, for Wall Street, and for the Bankers.
“And for the politicians and the Deep State,” he might have added.
Like financial bubbles and love affairs, empires are unstable.
Typically, an empire expands until it is either defeated or bankrupted – often both. As more and more of the economy is put on a war footing, less and less is available to produce real wealth.
Growth slows. Debts increase. Eventually, the debts implode… and the empire is out of business.
Alternatively, or often in parallel, as the empire reaches farther and farther from its homeland, it creates more and more enemies.
Eventually, it is “overstretched” and is ready for a comeuppance – usually delivered as a mortal blow by the empire next in line.
But America’s empire has a peculiar flaw… like a doomsday bug, embedded in its DNA.
Tune in tomorrow for the rest of this campfire tale…
BY NICK GIAMBRUNO, EDITOR, CRISIS INVESTING
Editor’s Note: Today, our colleague Nick Giambruno reveals one of his favorite trades of 2017 and explains why the price of this one commodity will skyrocket more than 1,000%.
In the past few decades, there have been three uranium bull markets – during the 1950s, the 1970s, and the early 2000s.
The most recent bull market originated with a preceding 20-year bear market, where the uranium price decreased over 70%. It bottomed at $8 per pound in 2001.
For many companies, the cost of producing uranium was higher than the spot price.
Miners were producing uranium for around $18 per pound, but they could only sell it for about $9 per pound. So there was little incentive to increase or maintain production.
Miners simply stopped producing. Production capacity plummeted. This sowed the seeds for another uranium bull market.
The market didn’t just settle into equilibrium. The supply destruction and increasing demand were so great that, eventually, uranium overshot the price needed to balance the market.
After bottoming at $8 per pound in 2001, it skyrocketed to $130 in 2007.
A nuclear catastrophe ushered in a new bear market, just as it had with previous uranium runs. In 2011, a tsunami caused a nuclear meltdown at the Fukushima power plant in Japan. It was the worst nuclear disaster since Chernobyl.
Afterward, Japan took all 54 of its nuclear reactors offline and switched to importing liquefied natural gas (LNG).
A major source of demand in the global uranium market was gone. And a global supply glut followed.
The uranium price crashed from around $85 to under $30. Then it continued sliding to around $18 per pound.
Now, once again, the spot price of uranium is less than the cost of production. This is great news for us. The current uranium supply/demand imbalance has a lot in common with the last market cycle. It’s setting the stage for the next uranium boom.
Plus, there’s the Trump factor.
President Trump is strongly pro-energy, and pro-nuclear in particular. He has said, “I’m in favor of nuclear energy, very strongly in favor of nuclear energy.”
Nuclear energy fits right in with Trump’s “America First” platform. It’s also critical for securing the country’s energy independence.
A few months ago, I recommended a “best of breed” uranium company in Crisis Investing. Subscribers are already sitting on a double-digit gain as of this writing.
Of course, I can’t tell you the name of this company. That would be unfair to subscribers. But I can tell you why I’m so bullish on it.
It has the upside of a junior exploration company – think 10-bagger or better. But it’s very low-risk. This is the kind of trade we look for in crisis markets, with the risk/reward skewed in our favor.
In the last uranium bull market, this company’s share price rocketed 3,600%. That’s a 10-bagger almost four times over. I expect it to do at least as well in the coming uranium boom.
Doug Casey and I recently put together a video showing you how to maximize your profits from uranium’s coming bull market. Click here to watch it now. But please hurry. This video will only be online until midnight.
— Nick Giambruno
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Today in the mailbag, lots of comments from your fellow readers in response to yesterday’s Diary – “The Swamp Isn’t Draining… It’s Filling Up.”
First, the good…
Bill, I so appreciate your musings on the state of the state of affairs of our "great" nation! Your insights into government rascals, your wit and wisdom are simply off the charts, priceless at times.
That Roman philosopher you quoted got it right – it is simply best to just laugh, and I thank you for giving me many priceless laughs over the last few years since I discovered you.
May you and your wife be blessed with many more years of life as you entertain us so wonderfully – at least until the financial tsunami wave hits? Thanks for being there.
– John W.
"The Swamp Isn’t draining . . . It’s Filling Up," reminds me of the old saying, "The more things change, the more they stay the same." How could people have been so gullible, so blind, and so foolish as to believe that by electing the ultimate elitist – Donald J. Trump – to the presidency, he would save them from the elitists?
The dominoes are all lined up for the fall of the American Empire. Trump is going to flick the first one over to begin the unstoppable cascade that will bring America to ruin. You spoke truly: America is getting what it deserves.
– Dale A.
And now, the bad…
I give up. Why do most people have to jump all over our pres. after only about 55 days in office? Why not give him some time to do his job.
Bill: When you use the CBO as an authority on budget estimates, like health care, again you show your lack of credibility. The CBO was off hundreds of billions of dollars regarding their estimates on Obamacare. And Trump never said all news is fake news, as a matter of fact no one has, just you. Your writings are very confusing and unworthy of your readers time when you spew out misstatements.
– Michael P.
Mr. Bonner. Your commentary proves to me that a perennial critic and fault finder can get rich by convincing the under informed that he is an expert in the market and everything else. Expert opinions should always be taken with a (grain of salt). My opinion.
– William S.
WOW!!! Bill certainly is a wordsmith for sure. He is forever critical of President Trump and has NOT to my recall EVER said one complimentary or positive comment toward our new President who is trying his best to right 8 years of pathetic country destroying wrongs that Obama created on purpose. His writings, as entertaining as they may be to some, are just that "Entertaiment"!!! Many of his thoughts are NOT based on facts but are just Bill’s own "FAKE NEWS" created by him and represented as FACTS. He certainly is the MOST unpatriotic intelligent person in the country. A closet LEFTY that just doesn’t have the guts to admit it to his readers. I’ve said it before, if Bill is SO smart and has all of the answers, he should get off of his dead ass and try and help us all save our country. If it was easy, anybody could do it, that why we need Donald J. Trump!!!
– Bill M.