MIAMI – How do we know if new programs will make the economy better… or worse?

Here’s a simple formula:

W = rv (w-w – w-l)

That is, wealth is equal to the real value of win-win exchanges minus the loss from win-lose exchanges.

Yes, dear reader, it’s as simple as that. Like a whittler working on a piece of wood, we’ve shaved so much off, there is nothing left of it… except the essential heartwood.

And now we can use it to see how Trump’s changes will affect the economy.

We’re down here in the southern tip of Florida showing a group of eager colleagues from Brazil how we do business.

“I’ve been reading your Diary,” said one. “But I’ve noticed you seem to make a lot of your readers mad.

“Is that really a good idea? Aren’t you driving away potential customers?”

“Uh… who knows?” we replied, taking the high road. “The Diary is free. But readers pay in something more important than money: time. We try to make it worth their time by looking at what might go wrong.”

Unlimited Funding

What could go wrong?

Our bubbly stew of observations over the last few weeks has cooled and congealed into an extended hypothesis:

  1. The fake-money system was set up by the feds in 1971… Even free-market economist Milton Friedman was in favor of it.
  2. It turned out to be the best thing that ever happened to Friedman’s nemesis: Big Government. It provided almost unlimited funding to the insiders. They used it to build a “Deep State” – an unholy alliance of money and power, a “shadow government” that runs the country no matter who you vote for.
  3. These insiders used the fake-money system to transfer trillions of dollars from the mostly middle-class Main Street economy to themselves and their cronies.
  4. And now they control the government and its money.
  5. Donald J. Trump says he aims to “drain the swamp.” Perhaps he is sincere. If so, he has a hard row to hoe.
  6. Bear markets in stocks or bonds are both overdue. And after the longest expansion since the ’30s, a recession must be headed our way, too.
  7. Even if these things don’t happen, the swamp critters could still prevail.

The new president did take a step in the right direction when he pulled out of the Trans-Pacific Partnership (TPP) trade deal.

He took another step when he suspended further implementation of Obamacare. According to a report in The Wall Street Journal, he has frozen any measure that would “burden individuals, families, and insurers.”

Draining the swamp is shorthand for eliminating those burdens. It is the only way to Make America Great Again, at least economically.

Today, we hear that he is planning to cut funding to the UN. Another good move.

If the power and wealth of average Americans is to increase, the power and wealth of the swamp critters must decrease.

Wealth Formula

You’ll recall: There are only two ways to get what you want.

Your first option is to make a win-win deal with others, where you give something in exchange for something you want.

You have a cow. Your neighbor has a chicken. You give milk. Your neighbor gives you eggs.

“Capitalism” is just an elaboration of that exchange. And all government policies – QE, Dodd-Frank, trade tariffs, tax rates… everything – can be measured by it.

Do they make these win-win exchanges easier… or harder?

The other way to get what you want is to take it without giving anything in return. You shoot your neighbor’s cow and roast it for dinner. The neighbor complains; you shoot him, too.

That is a win-lose deal. You win. He loses.

Perverse Incentives

Win-lose deals do not create wealth; they merely transfer it.

The math is easy…

A win is a plus. A lose is a minus. A plus added to a minus equals zero (1 + -1 = 0). The world’s wealth doesn’t increase. It can’t. Because the gain came at someone else’s expense.

Of course, there are transaction costs and perverse incentives involved.

The neighbor, fearing you may kill his cow, doesn’t bother to raise it. Or he may erect a high wall to keep you away from his livestock. Or he may kill his cow, just to avoid having it stolen from him. Or kill you.

All of these things destroy wealth because people get less of what they really want.

To be continued… including some pretty nasty win-lose deals…





Tech Insight

BY Jeff Brown, Editor, Exponential Tech Investor

Editor’s Note: Cybercrime is big business. And with more people investing in cybersecurity, it’s quickly becoming one of the biggest technology trends for the next decade… One that our tech expert, Jeff Brown, will be watching very closely.

When I think of a market that is constantly changing, constantly evolving, and constantly under attack, I think about cybersecurity.

It is precisely because the problem of cybersecurity is so complex and dynamic and without any single solution that many fortunes have been made and will continue to be made in this market.

And that makes it a perfect sector to target in Exponential Tech Investor.

In 2014, there were approximately 42.8 million detected cyberattacks. That’s a 48% increase over 2013.

And those are just the known attacks. With all those attacks, the annual cost of cybercrime in 2014 was estimated at between $375 billion and $575 billion.

Total costs of cybercrime in 2015 were as high as $3 trillion. And that means cybercrime is big business.

But because the industry moves so fast, most large cybersecurity firms struggle to keep up. As a result, the cybersecurity industry is a very healthy industry for small-cap technology companies that can be more nimble. That’s attracting lots of venture capital money.

Since 2012, venture capital groups invested $13.2 billion into cybersecurity startups across 1,629 deals. At about $4 billion a year, 2015 and 2016 were record years for VC-backed investments into the space.

As government and private sector budgets for security technology continue to increase, cybersecurity will be one of the biggest technology trends for the next decade. It is already growing at an extremely fast rate.

In 2015, spending on cybersecurity was forecast at $76.9 billion. By 2019, it’s expected to more than double to $155 billion.

That’s a tremendous opportunity for profitable investing, and we’re already tracking the leaders in this space.

– Jeff Brown

Editor’s Note: Jeff has unveiled that we’re on the cusp of a special situation 50 years in the making. Technology is advancing so rapidly that the way we live could soon be completely different… with driverless cars and robot workers. And this change could be one of the greatest wealth-creation events in history. You can find all the details about this event – including how to set yourself up to profit – right here.


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The controversy over Bill’s recent comments about President Trump’s proposed policies continues in today’s Mailbag.

You’ll recall that Bill featured the following piece of reader feedback in Wednesday’s Diary:

Now, four days after his inauguration, you declare the president’s “policies” DOA. Your opinions are not based in fact. You have nothing but your own inflamed ego to back up your crazy predictions. I cannot stomach such ignorance anymore. Post this on your daily, Bill, and see how many of your subscribers agree with me. If you have any left, that is.

And it provoked a flood of responses from your fellow Diary readers. We ran Part I yesterday. Today… Part II.

Your job, as I see it (and in the context of charging us subscription fees for every revelation you and your minions divine), is to point out global and domestic concerns, trends, and opportunities.

But for the last eight weeks, it would seem your job has been to find ways to discredit the new president of the United States. I can turn on any number of network or cable channels to get this sort of Kool-Aid.

Please remove me from your email list and cancel my subscription. I am growing weary of deleting your daily anti-Trump emails. (I need only to visit MSNBC, CNN, CBS, NBS, Huffington Post, etc., etc. for all that garbage.) Please go away.

– Scott T.

I agree with the guy who blasted you! Your writing is so negative, and you offer no intelligence that is actionable. Your views are so jaundiced and pessimistic. I have discontinued my subscription to your BS.

– Ron M.

I am sorry to say it, but I have to agree with your “one reader.” Lighten up, man, before you strain something. All we are saying is give Trump a chance!

– Phil K.

Enough of the Trump bashing. The man is working hard. Give him a chance. I used to look forward to your letters every day. Now I cringe when I see them in my inbox and sometimes don’t even open them.

– Sherry D.

Really, I have never seen the mass hysteria on any person or topic like what has been generated around Donald Trump. Give it a rest. Continue your “observations,” but spare us from your negative doom and gloom.

I get it about the Deep State. I get it about the entrenched elite. It’s just too easy to dismiss someone who has defied all critics and trends. Give him a chance. If he fails, I will be barking as loud as you.

– Bob J.

First of all, I love reading your daily missives. It is great to get an intelligent analysis, and the prose is terrific.

For those who think that saying anything even remotely negative is anti-American, I say speaking your mind – especially if it is done intelligently – is the most pro-American thing you can do. Keep up the good work.

– Barbara L.

I have been reading you for a while now. I don’t always agree. However, you make me think.

The same people that criticized Obama for all his executive orders are now thrilled with Trump’s this past weekend. Once you agree with one policy from one president, how can you complain about another doing the same thing?

Anyway, please keep writing whatever you feel led to write, and some of us will keep on reading and thinking.

– Ray S.

You have an amazing wit and a style of writing that is truly thought provoking and entertaining to read. You have a positive way of saying something negative. You have a diehard fan of your writing style and your point of view. Thanks!

– Stefanie S.

Stay the course. Be critical of presidential action as long as they’re questionable or poorly thought out. Go, Bill!

– Tom H.

I love your comments. Keep them coming. “The Donald,” and it looks like his supporters, have thin skin and cannot see the humor in your comments.

– James S.

I think you are spot on. I do not agree with the reader’s comments that you are off base. I do not wish Mr. Trump any ill will. But as you summarized, the odds are against him. Not his fault, just fact.

– David S.

You’re right on target with Trump. He’s expanding the “swamp” and inviting more government intrusion into our lives. I was hoping he’d hit the links and let the market do its thing – quite the contrary.

Between the “wall” and the “massive investigation into voter fraud,” we’ll have doubled the debt by 2018. But this was all obvious to those of us who have followed this idiot since the 1970s. He’s simply not fit for the position, temperamentally or intellectually.

– Stacey M.

Donald Trump is a work in progress, at least as far as POTUS goes. He has bluster, which hits people both ways. We kind of get a glimpse inside the man… unlike so many politicians who say as little as possible that would reveal what’s going on inside.

Yea, sometimes it’s kind of scary and sometimes incredulous. But often, it’s uplifting – he’s not afraid to speak his mind. Mind you, like your “one reader,” he does not take criticism well.

– Eldan R.

I am a relatively new reader of your daily publishing and am enjoying your views, particularly considering they are different than my own. Maybe this old boy might learn from being challenged, just as others should as well.

– James S.

Seems like the pro-Trump crowd that Bill has gotten so riled has fallen under the same spell that “Obomber’s” acolytes did: They believe all sorts of good things will happen because their political hero said they will.

This, in my humble opinion, is the problem that far too many Americans have created for themselves – they have created a religion of politics and are under the misguided belief that politicians are the answer to their ailments, despite decades of evidence to the contrary. To all these people, I say this is not Bill Bonner’s fault.

– Al D.

In Case You Missed It…

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