BALTIMORE – For weeks, the top news headlines have been about politics.

And politics has been all about the Republican Party candidate for president of the United States, Donald Trump.

The Establishment, the media, and most right-thinking people look around and sniff the air.

Something stinks. And the smell, they say, is coming from that skunk, Trump.

Meanwhile, Hillary, all greased up with expensive perfume, glides by – all her double dealing… her millions in Wall Street speaking fees… her crony friends and supporters.

She and her husband have a net worth of $50 million – after a career spent devoted almost entirely to “public service.”

Who asks where the money came from?

Instead, the headlines are all about poor Donald.

Scams and Flimflams

For better or for worse, the 2016 presidential campaign was all about him.

Not about his policies. Not about calm analysis of what was wrong and how it could be fixed.

It was always about him. And now, the nation’s attention is still focused on him and his peccadillos… rather than Ms. Clinton and her scams, corruptions, and Deep State flimflams.

“Remember, it’s a rigged system.  It’s a rigged election,” said the candidate over the weekend.

Is the election really rigged?  Probably not in the way Mr. Trump intends listeners to believe. But the “system” is so rigged that the election results hardly matter.

A real conservative would shift the debate away from fanny pinching and other ungentlemanly comportment to how it is rigged.  Americans want to know.  How come the economy no longer grows as it used to?  How come most Americans are poorer today than they were in 1999?  How come we no longer win our wars?

He would explain to listeners that much of the rigging took place while Hillary and Bill Clinton were collecting more than $150 million in speaking fees, telling us how to improve the world!

Then, he would help listeners put two and two together – explaining how the fake dollar corrupted the nation’s economy… and its politics, too.

And he would offer real solutions.

As it is, nobody seems to care. Not the stock market. Not the bond market. Not commentators. Not Hillary. Not Donald. Nobody.

Dark Movement

As long-suffering Diary readers will know, the global economy now depends on three things:

  1. Rising U.S. asset prices – The world’s wealthy have parked much of their money in American lots.
  2. Low consumer price inflation – If inflation rates spike unexpectedly, the bond market will implode… Trillions of dollars of imagined wealth will be lost.
  3. China’s economy – China is the No. 1 buyer of commodities and the No. 1 shipper of finished goods… When it goes down, so do a lot of other things.

Let’s look at them in order…

U.S. markets will remain stable until they become unstable. That pretty much sums it up. When the next crisis will come is anyone’s guess; we’re surprised it hasn’t already come.

But there is a dark movement afoot for the world’s central banks to buy stocks in addition to the bonds they’re already buying under QE… and in almost unlimited quantities. (See our comments on former Treasury Secretary Larry Summers’ wacky proposal here.)

That may help keep stock prices high and maintain the illusion of stability.

As for higher levels of consumer price inflation, they are surely coming, too.

But not necessarily anytime soon. With the economy slowing, the velocity of money – the rate at which money is used to buy and sell stuff – tends to slow down, too.

The fewer transactions there are, the less upward pressure there is on prices.

Plus, wages are more or less stagnant or falling in the developed world. And there is still a huge supply of labor available in the developing world for less than $20 a day.

If we’re waiting for labor costs to push up consumer prices, we could have a long wait.

The China Factor

Which brings us to China…

An alarming report in Friday’s Financial Times warned us that “China exports fall sharply as concerns over demand grow.”

Chinese exports are falling – in dollar terms – at a rate of 10% a year.

China buys raw materials. It sells finished products. It is the greatest “export-led” success story of all time.

But if China can’t sell its products, it can’t afford to buy resources… resource prices plunge… and consumer prices follow… aggravating weak demand with lower prices… falling money velocity… gloom, doom… recession, depression… and worldwide deflation…

Then, as the world’s attention is fixed on the sordid business of the U.S. election, with its contest between reality-TV Big Shot Donald Trump vs. Deep State Shill Hillary Clinton, the world economy wobbles…

Stay tuned…

Regards,

Signature

Bill

Market Insight


BY CHRIS LOWE, EDITOR AT LARGE


Did Treasury yields just bottom?

Today’s chart tracks the yield on the 10-year Treasury note, a widely watched marker for borrowing costs throughout the economy.

 

As you can see, the 10-year yield hit a low of 1.4% in July.

Since then, it’s up 32% to 1.8%.


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The government all but restricts advertising of this secret loophole, so most Americans have never even heard of this before. Click here for the full story…


Mailbag

Following Thursday’s Diary about the death of conservative America, we got a bunch of subscription-cancellation requests from outraged readers. But not everyone took offense…

Why would anyone cancel your newsletter? Besides having to keep a dictionary at hand while reading, I enjoy getting stimulated to think different then I normally do. You see things as they are and I can’t find a good reason to disagree with anything you write. Keep plugging; they will come back when they see the light.

– David S.

Love your messages about the election and both candidates. You’re wrong about one thing though. Trump doesn’t make me laugh. He makes me sick and has for 20 years.

– George E.

This election has descended into unplumbed depths. I watched both presidential debates. Although the words “presidential” and “debate” have both been grossly misused in describing these fiascos. They were poorly moderated slanging matches and were an insult to the viewers’ intelligence.

There has been no (coherent) discussion of policy – right or wrong – because of the mudslinging. Trump can’t string two words together to form a sentence (let alone two or more sentences that make sense). And Clinton just trots out the same old hackneyed tripe she has been pushing for months. The U.S. is the laughing stock of the world because of this campaign. It’s a sad day for American democracy.

– Paul B.

I am totally dumbfounded at the support for Donald Trump. It has been said those who cannot remember history are condemned to repeat it… and that those who do not learn history are doomed to repeat it.

Didn’t these Trump supporters study history? Did they never hear of Mussolini or Hitler? Can they not see that Trump is the same as the Fascist and the Nazi? Don’t they see the similarities?

They wanted to make their countries great again. They attacked a different religious group. They wanted to destroy all who opposed them. They wanted to have total power.

I’m just dumbfounded and encourage Trump’s supporters to pay attention to what he has said… and take some time to read some history and learn from it.

– Leo G.