GUALFIN, ARGENTINA – Remember, yesterday and today, we let the shades speak.
We make no predictions. Nor do we connect any dots.
Instead, we merely stand back and marvel at the gall… the conceit… the shameful, egotistical, self-dealing of it. We’re talking about the vanity of the living.
Phantoms of the Future
And rather than pass judgement ourselves, we call upon the dead… and the unborn… to do the talking. Yesterday, we heard from the ghosts of the past. Today, the phantoms of the future tell their tale:
“Thanks. I’ll get right down to it. Thanks a lot… you jerks.
“You’re supposed to leave your children and grandchildren a richer, safer world. You are doing neither.
“You ran up $22 trillion in debt by 2019. Who did you think was going to pay that? Not you. Donald Trump was already 72. And the average baby boomer was in his 60s, getting ready for retirement. He expected to draw medical and pension benefits for 20 years. Where did you think that money would come from?
“The feds were already running deficits of $1 trillion per year. At that rate, it was just a matter of time before they went broke. But rather than put on the brakes, you just kept at it… so the debt hit $40 trillion by 2030.” [Our speaker has the advantage of being able to see what happens in the future.]
“What’d you think? That you needed that money so much more than we did? That we should pay for your stupid wars… your stupid programs… and your stupid medical and retirement benefits. Didn’t it occur to you that we might have our own stupid programs?
“And didn’t you ever stop to think that we might have some ideas of our own? You think your hopes and your desires are of such paramount importance that you can’t imagine that any future generation could have an agenda of its own?
“You spend $800 billion a year claiming to defend yourself. Against whom? You build all those ships… planes… and have troops stationed all over the world… What do you think you’re doing… preparing to re-fight WWII? Well, I got news: No WWII replay is coming.”
“And then there are your other dumb programs… fighting drugs… rounding up immigrants… subsidizing poverty… encouraging ‘equality’… keeping the planet from overheating… paying people with handicaps… offering medical services to old people…
“…I could go down the list of all the things you spent money on. About one out of every three dollars was borrowed. Now, what does that mean? It means you wanted it, but you were unwilling to pay for it.
“So, you took the money from us – in future generations, who weren’t even born then… and had no say in it – to pay for a third of your numbskull spending.
“Did you think that we would be such morons that we wouldn’t be able to come up with any boondoggles of our own? That you had to spend our money for us… because we wouldn’t be smart enough to spend it for ourselves?
“And just look at what you spent the money on. The War on Poverty had no effect on poverty. The war on drugs just increased the population of prison inmates… and made the streets much more violent. The war on terrorism radicalized Muslims so they wanted to kill us. And your cockamamie finances opened the door to a series of calamities.
“You want to know what happened? It was obvious. But you never even bothered to look. You must have thought some miracle would take care of it. But someone had to pay that $40 trillion of debt. And guess who did. We did.
“We neither borrowed it, nor lent it, but we suffered one financial disaster after another, as the feds kept trying to avoid it.”
Crash of 2019
“First, the Crash of 2019 caused the feds to panic. They tried the same tricks they used in 2000 and 2008. But they didn’t work (partly because they never ‘normalized’ interest rates.) So, they turned from monetary stimulus (the Fed) to fiscal stimulus (the federal government).
“The Trump government passed another tax cut and a big infrastructure bill (more stimulus). Now the deficit was at $2 trillion. Still, everything seemed to be going okay for a while. But by then, the whole economy was running on fake money.
“More than half of federal spending, for example, was funded by the Fed. And after a while, we noticed prices beginning to edge up as the money worked its way into the economy.
“At first, it seemed like a good thing. Finally, the economists said, we were overcoming the deflation. The stock market went up. It was the best performer in the world in 2023, for example.
“But it was all phony. All distortions. The feds were printing money and pumping it into the economy. We all felt richer, at first. The economy seemed to be picking up. But then, as prices continued up, we realized that it was no different from Zimbabwe… or Venezuela… or Argentina.
“That’s when it got really rough. People were getting poorer and losing faith in the system.
“This was at the end of Trump’s second term. The two parties had radicalized, with the Trump supporters on one side and the socialists of AOC on the other. They would each hold political rallies and one side would attack the other. It was getting bad. Almost like a civil war.
“You can’t hold an honest election in those circumstances. So Trump called another state of emergency. And he put into place that Chinese system of social credit. Everybody got a score. And if you were seen at a demonstration or you said something against the government, you lost points. Then, they’d cancel your credit card or take away your job.
“It sounds harsh. But it’s probably a good thing he did it. Because things were getting out of control. Inflation was running about 40% per year. But what do you expect? You set that up… your generation.”
“The retirees – your generation – weren’t going to agree to a reduction in benefits. And the military wasn’t about to surrender its honey pot. The result was political and economic dysfunction. Nobody could cut spending, because the other side wouldn’t go along.
“And who were the main victims? You’re hearing from them now. The young. Even the unborn. Depression, inflation, martial law, street fighting, repression… Young people couldn’t get jobs… and couldn’t cover their own living expenses.
“We had to live with Mom and Dad… and yes, we voted for AOC because at least she promised to forgive our student loans and give us an income. And then Donald Trump cancelled our votes because it was a national emergency.
“It was crazy. But it was your fault. Jerks… We spit on your graves…”
BUDGET INSIGHT: PREPARE FOR A PAINFUL RECKONING
By Dan Denning, Coauthor, The Bonner-Denning Letter
There’s nothing rational about what’s going on.
The U.S. government ran a $234 billion deficit in the month of February – the largest monthly deficit in U.S. history. Just three federal spending items – Social Security at $87 billion, Medicare at $52 billion, and net interest on the debt at $25 billion – totaled $164 billion in spending for February.
That consumed all but $3 billion of TOTAL receipts for the month of $167 billion. You can see this, all laid out, in the next image.
February could have been the month where the U.S. moved into the early stages of its long-awaited fiscal crisis. It could be happening right now… that tipping point where it becomes impossible for us to escape a painful reckoning.
Think about it! If just three spending items are consuming all of your revenues, where will you get the money left for other entitlements? For defense? For a wall?
And do you really believe, with the baby boomers retiring in droves, that entitlement spending is going to go DOWN? Forget about it.
I’m not implying that retirees aren’t entitled to money they’ve paid into the system. But I am saying that money isn’t there. Or, once that money is spent, there’s nothing left for anything else in the budget.
Why not raise taxes? That’s what Alexandria Ocasio-Cortez (AOC), Elizabeth Warren, and Bernie Sanders all want to do.
But it’s not going to be enough to plug the coming fiscal gap. And it’s certainly not going to be enough to pay for anything like a Green New Deal or a “freedom dividend” of $1,000 per month (a clever name for non-means tested Universal Basic Income from Andrew Yang, a candidate for the Democratic Presidential nomination).
What about a shift toward MMT (Modern Monetary Theory) – the idea that economic cycles should be managed by government spending and taxing, rather than by the Fed’s monetary policies? MMT proponents will say that government can, and perhaps should, create and spend money on social programs like a Green New Deal.
It’s not likely to be a real policy alternative until 2022, when congressional candidates and presidential candidates may run on some concrete proposal to begin spending money into existence and bypassing the Fed (and borrowing).
That’s not impossible. After all, the Fed’s policies are directly responsible for wealth inequality in America. (There are other causes, but quantitative easing (QE) is the most visible cause of why the rich have gotten incredibly rich and the middle class has fallen further behind.)
QE benefited asset owners. But it did nothing for the American middle class, which is now mad as hell and willing to listen to anyone who has ideas on how to fix the mess.
You think AOC is just for socialists? Don’t be surprised how many of your friends and neighbors are for her policies, either in the name of fairness or with the promise of getting a piece of the stolen goods.
– Dan Denning
P.S. If you don’t know, our mission with The Bonner-Denning Letter is to protect your wealth from “the big loss.” We look for the big trends coming our way and put you on the right side of history. And right now, we’re seeing a disturbing development taking place.
Call it socialism. Call it financial martial law. Call it the death of win-win capitalism. It’s all the same. And it’s coming faster than you think. Full story here.
Did the Bull Market End 14 Months Ago?
The definition of a “bull market” in stocks is a fluid one. By most accounts, we are currently in one of the longest-running bulls in history. But, if you parse the data, the picture could look very different. Perhaps the bull ended over a year ago…
Now Instagram Has a “Fake News” Problem, Too
As Bill has said, Facebook is a “noxious fruit of the fake economy.” Critics say the Silicon Valley giant has a “fake news problem.” Now, Facebook’s other platforms are also under fire…
Modern Monetary Tyranny
Our editor recently said MMT was a “substitution for common sense.” And as Dan Denning says above, he believes it’s worse than that. It’s nothing short of a death sentence for the middle class. And it’s on its way… fast.
Today, plenty of responses to Bill’s “Conversations With a Ghost”…
Thank you, Uncle Scrooge, for inviting the ghost from the past. What he said is so true. I remember when Henry Kissinger was a nobody who wrote an alarming white paper on reducing the population by 80%. Then, he became a spokesperson for the Deep State. Maybe this is where the Deep State is taking us? Back to the days of nobility and serfdom. Frankly, I don’t see it any other way. Where is William Wallace when you need him?
– Stephen B.
Hello, Bill. You are almost the only talking (writing) head I can consistently read without a rising sense of nausea. In fact, I enjoy every damn thing you write. Common sense and insight is not yet against the law in these United States, but that is certainly the direction in which we are moving.
– Paul G.
I’m a Canadian so I must be even better than you. Well, actually seems about the same, except the war stuff – we only helped out there. I’m of the Kris Kristofferson era – only a few years younger. He wrote great songs… many anti-war, anti-politician, anti-(bad)cop songs. Some just flat out serious. Some really humorous making fun of them and us. Send him this wonderful Diary entry. See if he wants to make a song of it. He’d kill it. Great job!
– Michael M.
Most think the defining feature of Americans is not love of freedom, rather love of money. The two are most certainly not the same…
– Rhys J.
And one dear reader has a solution for all of this government debt…
The answer is simple to the financial problems of the USA: 1. Put a flat tax of 18% on all income earned, dividends, and capital gains, with no deductions of any kind; 2. Cut the U.S. Department of Defense budget by 70%, which would bring it into line with China and Russia. Why are we so inefficient that we need 11 nuclear aircraft carriers, when China and Russia have only one, for example? The tax code would be simple and we could pay down some of our debt. This was proposed by Jerry Brown years ago, when he ran for president, and is not a new idea. But it will never happen unless we have a total collapse.
– Paul L.
IN CASE YOU MISSED IT…
Here’s something the mainstream media won’t tell you…
A new technological breakthrough is expected to unlock $12.3 trillion in new wealth, giving it the potential to be the single-best investment opportunity of 2019.
And Jeff Brown, Bill’s go-to tech expert, has discovered the one small company that is perfectly positioned to profit from this mountain of money… but you’ll want to act quickly. Read on here.