A physician cannot heal the sick if he is ignorant of the causes of certain conditions of the body, nor can a statesman help his fellow citizens if he cannot follow how, why or by what process each event had developed.
PARIS – Whenever you see the “we should do this” or “we should do that” in the public media, it is always followed by something that is idiotic or immoral.
Yesterday was no exception.
“It’s high time we abolish billionaires” says a serious front-page story in The New York Times. The “rich” are becoming the new villains… the “them” that will rally mobs… and voters… to action:
“… it is an illustration of the political precariousness of billionaires that the idea has since become something like mainline thought on the progressive left…”
And so begins another era; the beginning always comes at the end.
And now, the end of the week, we’re ready for it… the next phase of our economic history.
In the present case, we are arriving at the end of a long period of claptrap and chicanery.
For more than 30 years, stock and bond markets have leapt at the sound of the Fed’s EZ money trumpet. And now, the money hounds are exhausted and deaf.
And – with barely 250 basis points available to it – the Fed is almost out of breath anyway.
But, unless history comes to a complete stop, this end must also mark a beginning. And that, despite what may have seemed like pointless and aggravating detours, has been our destination this week.
What Comes Next
Dear Readers were annoyed that we suggested there is no easy “us vs. them” analysis. They may choose to believe that Mr. Trump is the anti-Christ… or that Ms. Ocasio-Cortez is a she-devil.
These explanations are simple enough to understand and remember; they make voting easy, and help us enjoy a delicious indignation as well as smug superiority. But neither will help us understand what comes next.
Because the coming crisis will explode the delusions of both “us” and “them”… both Republicans and Democrats… rich and poor.
It is, for example, a gross fantasy to think you can get rich by spending money you don’t have on fatuous stuff you don’t really need.
It’s also a fantasy to think that you can create money “out of nowhere” and that you can use it to “stimulate” an economy so it produces more real wealth.
And who could believe that the 12 academics at the Federal Open Market Committee could do a better job of choosing interest rates – in a $20 trillion economy – than free markets? If they can, why not let them set the price of oil and diapers, too?
Yet, in all the discussion of why billionaires are so bad… and how the rich got so unconscionably rich… why the Democrats are such jackasses and why the Republicans are so swinish… nobody in either party dares to mention the major cause nor to suggest the obvious remedy: Unplug the machine that made them that way.
Instead, they propose more fantasies, including unfunded tax cuts, higher taxes on the rich, and unlimited deficits. The first and third merely push the burden into the future.
The second will raise pitifully little money… and maybe even suppress the overall tax take. And none attacks the real problem.
But the hallucination that will come into focus soonest and most clearly – and mark both the end of the long boom and the beginning of the long bust – is the idea that somehow business, credit, and stock market cycles have disappeared.
Inevitably, the cycles will turn (we think they already have) and the whole compound fantasy of wealth gains without the pain of saving, learning, working, and self-discipline will blow up.
That much, we think, is almost certain. Then, the partisan questions arise. Who’s to blame? The billionaires? The Fed? And who will save the situation? The Democrats? The Republicans? DJT? AOC? And that’s where the “us” vs. “them” analysis becomes more dangerous.
Getting to the end of the 30-plus-year boom required a bipartisan collusion. Both groups had to agree. And both did. Both signed off on the fake money system… both agreed to huge deficits… and both fed the debt monster that now haunts the whole economy.
And now, beginning a new era… is a new cycle… and a new bamboozle. The two parties – us and them – will fight furiously over the details of when, how, and what is done to whom.
But both will agree – the show must go on; the money must continue to flow. The “system” must be protected – at all costs.
Honest wealth (and indirectly power and status) comes from Main Street – people providing goods and services to each other in voluntary, win-win deals. (We include some honest “public sector” activities such as schools, firefighters, and police. If the feds didn’t provide these services, they would still exist. They would simply be cheaper and more efficient.)
“Public spending” – either direct or indirect (through regulation) – must come from Main Street. That is, it must come from “us.” And it must go to someone else. Whom? “Them.”
Who are these nasty jackals? Are the Iranians draining your retirement savings? Are the Chinese undermining the dollar? Are Russians stealing your job?
And here we find the “us” and the “them” that really matters. All of life is a struggle for wealth, power, and status. There are only two ways to get it: You earn it… or you take it. And the only fight worth having is a fight to protect yourself from those who try to take it from you.
Main Street earns it. Washington and Wall Street (aided and abetted by the fake money system) take it.
And guess what? The takers are Red. And they are Blue.
Tune in on Monday. You’ll find out why your editor has gone wobbly on the “us” thing… and why the U.S. economy is doomed to a long, painful correction… and how both “us”es – Democrats and Republicans, DJT and AOC – will make the situation worse.
P.S. And one last thing. We do our best to connect the dots. But there are so many dots. And we only have so much time in a day. So, we’ve recruited a little help. Dan Denning, our coauthor on The Bill Bonner Letter, will write to you Sunday morning. There are several trends that Dan is following that will be important for dear readers in the years ahead. We’ll let Dan fill you in on the rest on Sunday.
TECHNOLOGY INSIGHT: WHY 2.7 BILLION SMARTPHONES WILL BECOME OBSOLETE
By Jeff Brown, Editor, The Near Future Report
The smartphone in your pocket will soon be obsolete.
And it’s not just you. There will be an estimated 2.7 billion smartphone users by the end of this year. Every one of those phones will have to be replaced.
Smartphone models over the last three years have been largely the same.
Each new smartphone generation was only moderately better than the previous generation.
There was a bit more memory, a faster processor, better quality resolution in the camera, but nothing revolutionary.
Customers weren’t rushing out to upgrade their smartphones. And it shows…
Back in 2007, customers upgraded their smartphone every 19 months. Today, that number is 32 months.
Customers have been waiting for something too compelling to pass up. That something is 5G.
Regular readers of the Diary will know I’ve written on 5G extensively.
5G wireless technology is the most significant development in wireless technology since the first generation in the 1980s. Typical 5G speeds will be, on average, 100 times faster than what we experience from 4G today.
5G wireless technology is not evolutionary, it is revolutionary.
But, if you want to use these wireless networks, you’re going to need a new smartphone. The 4G smartphones in use today, the phone you and I use every day, simply won’t work over 5G networks.
That’s why I say every smartphone on the planet, all 2.7 billion of them, will have to be replaced. This will be the largest consumer electronics replacement cycle in history.
And this isn’t some far-off event.
The first 5G networks have already rolled out in 30 markets in the United States, and 5G will be in more than 100 markets around the U.S. by the end of the year.
We will also see the first 5G-enabled phones hit the market during the second half of 2019 – likely between June and September.
The 5G future isn’t coming. It’s here.
– Jeff Brown
P.S. You’ve likely heard of 5G. You might have read articles about it or seen it on the news. But here’s what very few people know: How to invest alongside this trend. I’ve been preparing my readers with a “best of breed” portfolio of 5G technology companies. When 5G-enabled phones hit the market in the next few months, things will start to get very “real.” I expect these stocks will take off. You’ll want to be positioned early. Get the full story here.
The Powell Put
First, it was the Greenspan put… then the Bernanke put… and the Yellen put. For decades, Fed chairs have been transmitting the same message: They have the market’s back. They will never let markets fall too far. With Jerome Powell now taking the top job, and easing rate hikes in the face of market anxieties, it looks like we’ll get a Powell put, too.
The Age of Millennial Politics
Millennials, people in their twenties and thirties, are going to Washington. And they have very different priorities… The most famous young lawmaker, Alexandria Ocasio-Cortez, may serve as a good example of what you can expect in the age of millennial politics.
Why China Is Buying Gold Miners
China is on a spending spree. The country is snapping up gold miners as quickly as it can find them. Why? And what does it mean for you? Dave Forest, Casey Research’s resident commodities expert, has the story.
In the mailbag, Bill’s Diary “Who’s America’s True Enemy?” has readers talking…
Bill, I enjoy following your opinions on the state of our country and politics with a few history lessons. I expect I will continue to do so until one of us dies or somebody unplugs the internet. As for Mr. Trump, I heard someone refer to him as he arrived in office as “chemotherapy” for our political system.
With at least another two years to go, I expect there will be more hair loss and throwing up. It is unlikely we will be cured, but my hope is we can get in remission for a few years and get an honest color back in our cheeks. I’m tired of Red and Blue. Maybe the only hope is pot becoming legal in our nation, we get over the nausea, get our appetite back, and begin to see the beauty of all the colors we are :).
– Chris R.
The radical Democrats are our true enemy today and have been for a while… under Obama, especially, and Clinton.
– Diary reader
The left wants to eliminate the Constitution and create a fascist totalitarian regime. They are the enemy, a domestic enemy that I took an oath to protect against. They think Cuba, Venezuela, and Zimbabwe are nice places. I will defend my country against that push…
– Richard F.
More open-minded, brave, wonderful, right-on observing and writing, Bill! Thank you! Imagine if humans applied science, logic, facts, and reason to everything. What a fair, admirable, and safe world it would be. Unfortunately, humans mainly care about themselves and their family members, jobs, homes, cars, and TVs. The re-engineering of human DNA, genetics, and biochemistry is crucial to our species’ improvement and survival.
– Kevin A.
Bill, your buddies Pelosi and Schumer greatly accept your thoughts on the State of the Union. You could see how much they were enjoying it. I thought the speech was good from the Republican viewpoint. You couldn’t pay a Democrat anything to say that the SOTU speech was any good. I always read your column and thought you were a wise man. But now, I’m not so sure…
– Michael C.
NDNR (neither Democrat nor Republican) surely must have a chance in 2020? Over here, we would call it FEA (f ’em all!), but that would not play in the Bible Belt. Seriously, the greatest sense right now is talked by Tulsi Gabbard, who actually served in the military (unlike all the warmongers on Capitol Hill), yet the Democratic machine has already cast her in the final scene of Butch Cassidy and the Sundance Kid (pointing overwhelming firepower straight at her).
– Rhys J.
Hi Bill. This is my first ever response to your newsletter. I like your colorblindness. I think you’re right that the “enemy” is not us or them. I am curious where you are going with this. I like your writing… good facts, good language, great stories.
I would suggest that the “enemy” is the point of view where we see all of us as separate. The true unity is found at deeper levels where we see we are all connected. From classical physics to quantum mechanics to quantum field theory to the unified field, science has discovered deeper and deeper layers of reality, only to confirm the “unity” that had been observed there thousands of years ago by several ancient traditions.
So, the problem is that most of us only see reality from the surface, separate level and wallow in its problems. Whereas, if more of us could verify and act from the deeper, real level of unity, then the connectedness would be paramount and the problems would be easily resolved without all the divisiveness. Don’t know how you explain that to your readers, but it takes the solution and the problem to another level. I suspect that’s where you are going. Good luck.
– Michael N.
Dear Sir. We appreciate these missives, which I share with an expatriate American neighbor from time to time. I am neither Republican nor Democrat; rather, Canadian.
Attributed famously to Winston Churchill, is that it is better to live a life of successes checkered with failures, than not to have tried at all. I feel that is where we are today, and you point us with courage through the checkered present.
– Ernst B.
As a Christian, conservative, and veteran, I agree that America is already a parliamentary-controlled socialist nation (like Britain/Germany), unlike what the USA was before the progressive Teddy Roosevelt (and subsequent presidents) took the reins in 1901. To be more accurate and less-vague, Mr. Trump should have stated that the USA “would never-ever” become a “totalitarian socialist state” as Venezuela is/was under Maduro and Chávez, and the previous USSR.
– Randy C.
I trust and hope you are not in the least bit inclined to change anything about your views or perspective as expressed in your thoughtful and thought-provoking, erudite and amusing at times, discouraging at others, postings.
I marvel at how much antipathy and anger your writing provokes in some. After all, they are free to subscribe and read or delete and unsubscribe. It is naïve of them to believe they might change your mind or that their views are any more valid. You provide an invaluable alternative to so much of what is circulated. I find it refreshingly interesting and generally worth the few minutes of reading time.
– Paul H.
Mr. Bonner, To quote a Tina Turner song lyric: “You’re simply the best!” I don’t understand how anyone could be upset at what you’re writing, but then again, I don’t understand most of what’s happening in the world.
– William D.