YOUGHAL, IRELAND – First, we note that the 10-year T-note yield is holding above 3%. It is on its way to 4%, we think, and will herald the final destruction of the great, fake boom of 2009–2018.


Death by Capitalism

“You say capitalism never killed anyone… But who do you think makes all the guns and bombs?”

The question came to us in the night, like a faint realization that we had forgotten to turn off the stove.

But first, a look at the conversation so far.

On Monday, we took a backward glance at capitalism. The world has moved on so far for so long, we have to turn our head around and squint to see it. Almost everyone now agrees that capitalism cannot be trusted.

People cannot be left alone to figure out how they will get along with one another. They can’t, for example, choose when, how, and where they will work together… or how much they will be paid for it.

Now, every sizeable business must have an HR department – a group of people who look after its human resources… as if people could be reduced to carloads of coal or buckets or sacks of cement.

The HR people make sure that the rules are followed. If an employee works more than 40 hours per week, he must be paid overtime, for example. And don’t forget the bathrooms; they must be accessible to cripples… and they must be transgender-friendly.

It’s the law!

Whips and Harnesses

For more than 100 years in the U.S., politicians, cronies, and do-gooders have been working to improve capitalism. Are the capitalists unwilling to make mortgage loans in one neighborhood at the same rates as in others?

We’ll pass a law forcing them!

Are capitalists reluctant to fund the Deep State’s deficits?

We’ll fund them ourselves with made-up money from the Fed!

Do they allow smoking in their bars? We’ll put a stop to that!

Every apparent shortcoming… every slip-up… every grievance against the great workhorse of capitalism has been met with whips and harnesses.

Now, the animal is so trussed up by regulation… and so weighted down by all the cronies on its back and zombies and freeloaders in the wagon behind it, it can barely pull ahead.

Despite all the technological breakthroughs that have come along in our lifetime, real GDP growth has slowed to barely half the rate of the 1960s.

And the typical working man, who used to be the backbone of the whole economy, has actually lost income and status over the last four decades.

Household incomes continued to rise, but only because more women have joined the workforce. What that did to family cohesion, satisfaction, and quality of life, generally, we don’t know. But it was not necessarily a plus.

Still, whenever there is a problem – real or imagined – Deep State apologists fault the free market.

And so it was that professor Robert Kuttner of Brandeis University came forward to lay the blame for Donald Trump’s election on capitalism. We took a look at Kuttner’s idea on Monday… we come back today to elaborate.

You Get What You Pay For

Politics produced the great calamities of the 20th century – World War I, World War II, the Soviet Union, Mao; capitalism brought forth automobiles, air-conditioning, TV, and wall-to-wall carpeting.

The political disasters cost millions of lives and trillions of dollars. The business breakthroughs added wealth… and, presumably, satisfaction.

But Kuttner says that capitalism is cruel!

He claims that it causes such pain that voters turn to “strongmen” rulers with simplistic plans to remedy capitalism’s failures, such as the aforementioned Mr. Trump. “Build a wall,” says the president.

The improvers – whether they’re Trumpistas or liberal democrats – claim to be breeding a kinder, gentler strain of capitalism, by mating it with Obamacare and trade barriers.

But what they are really doing is interfering with the win-win deals that get people what they really want. You only know what they want when they are free to tell you… and they are only free to tell you when the feds don’t have a gun to their heads.

The more interference – as we saw magnificently illustrated in the Russians’ 70-year experiment with a command economy – the less people get what they really want. Instead, what they get is violence, claptrap, and misery.

Returning to our initial question, the crowning charm of capitalism is its indifference.

It doesn’t care whether people in bad neighborhoods get mortgages at low rates or not. It doesn’t give a hoot whether or not someone is smoking… or even what is done with the guns and bombs it produces.

It is deaf to both the whimpers of suffering humans… and to their murmurs of happiness. It merely responds to their desires. More precisely, it responds to money.

“You get what you pay for,” said Milton Friedman. And the key to getting what you want is to pay for it yourself. If you turn over your money to the feds… you’ll get what they want – crony deals, paperwork, calamitous wars, assassinations, expensive boondoggles, and assault rifles.

That is what has happened over the last 40 years – more and more of the nation’s GDP has been directly spent, controlled, or heavily diddled by the feds.

And since 1971, the feds have been allowed to create their own money – out of thin air – to give them even more purchasing power.

Capitalism doesn’t care what happens to the bombs it makes; it only cares who pays for them. The feds, flush with money, buy a lot of them. Capitalists buy none.





By Joe Withrow, Head of Research, Bonner & Partners

Today, a quick snapshot of the year so far for two major asset classes: stocks and gold.

As you can see, both stocks and gold have had a volatile year so far, but both have ended up mostly sideways.


Today, both gold and stocks are up only 1% year-to-date.

– Joe Withrow

Featured Reads

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Can Blockchain Solve Facebook’s Data Problem?
Tech giant Facebook recently announced that it is founding a new team to focus on blockchain – the technology underpinning cryptocurrencies like bitcoin. Facebook didn’t specify why it founded the team, but here’s one possibility…

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In the mailbag, is Trump ensuring the survival of the country or destroying everything sane in America?

I really enjoyed your Diary “Trump Didn’t Destroy the Working Class.” One of your best, and I’ve been reading your thoughts for years. I don’t always agree, but I always enjoy your insight. Thanks.

– Charles T.

Trump is single-handedly destroying anything sane in this country.

– Kim C.

I feel that subduing the turtle Kim Jong-Un was the critical accomplishment of Trump. The volatility of this regime was one button away. Trump assessed the turtle’s ego and acted. One missile fired at the U.S. would be catastrophic. Enough said on this.

The next issue: the Supreme Court Justices. Ruth Bader Ginsberg can’t last through two Trump terms. Another Trump justice will ensure the survival of this country. The day-to-day BS that the mainstream media throws at us is no more than evaporating rain-melt.

– Kevin K.

Finally, Bill extends birthday wishes to a Dear Reader…

Dear Bill, I am a subscriber to one of your publications. By coincidence, I am visiting my 89-year-old mother in Devon, England. This morning, I brought her a cup of tea to her bedroom. As I entered, she was in a state of shock. She explained that she had just read one of your articles in which you explained that a doomsday prophecy was going to happen on the 14th of May (her birthday). You went on to explain that we are entering a catastrophic economic phase.

My ashen-faced mother asked me if I knew of Bill Bonner. Of course, I gave you a glowing recommendation. Then we went on to discuss how she should prepare for Armageddon. She was very impressed with your rationale. I wonder if you would mind sending her (a potential new subscriber) happy birthday wishes. Many thanks, Bill.

– David M.

Note From Bill: Very sorry to trouble your mother with visions of catastrophe. But she’s lucky. At 89 years old, she is unlikely to suffer the worst of it. Please wish her a happy birthday… and thank her for reading our Diary.


We couldn’t believe what we were hearing…

Jeff Brown, Bill’s top technology expert, said that bitcoin could hit $50,000 in the next few years.

But here’s the thing, you don’t have to buy bitcoin to profit from the crypto explosion. Instead, do this.