GUALFIN, ARGENTINA – As the quality of government declines – from Jefferson and Adams… to Dubya and The Donald – the observer needs a broader sense of humor.

Where he used to titter over a bon mot… or smile wryly at a double entendre, now he can only give a hoarse laugh, like a half-wit watching The Three Stooges.

For now, there’s not even a single entendre. It’s just mud wrestling and pie throwing.

Big Jamboree

Conservatives held their big jamboree last weekend. We sent our own eyes and ears.

“There was hardly a conservative in sight,” he reported. “There were no Ron Pauls here. No Eisenhowers. No Howard Buffetts. Certainly no Thomas Jeffersons.”

The essence of traditional conservatism is humility, doubt, and cynicism about what government can achieve.

Activists, on the other hand, think they can use the feds’ muscle like a ball-peen hammer, to knock the country into whatever shape they want.

But conservatives doubt that civil society is so malleable. In nearly every proposal, they see ugly dents, not a smooth and elegant new shape.

“Balance the budget… and mind your own business,” said the old-timers.

But there was no mention of either at the CPAC (Conservative Political Action Conference) shindig.

The importance of this observation from our financial standpoint is that the country needs conservatives. It used to count on them to keep the books in balance.

Conservatives were wet blankets, reliably voting “no” to expensive schemes and deficit spending.

“There was some talk about smaller government,” said our informant.

“But nobody wanted to touch the reality of it – challenging The Swamp by cutting back government spending. And while people seemed to be in favor of bringing the troops home, nobody really wanted to confront the military arm of the Deep State. I heard no proposals that the Deep State wouldn’t like.”

Disappearance of the Conservative

What we set out to discover on Friday was how much today is not like the yesterday, 77 years ago when Warren Buffett went “all in” on U.S. stocks.

Surely, that is one of the big differences – the disappearance of conservatives.

America was still a republic in 1942, ruled by a still functional legislature, more or less subject to the Constitution, and guided by the basic principles of a free, decent society.

There were drugs, but no war on drugs. There was poverty, but no war on poverty. There were terrorists, but no war on terrorists.

America’s economy was still mostly honest… with interest rates and prices set by free markets.

The dollar was still real money – backed by gold.

America’s military was small; it mostly minded its own business and only responded when provoked.

You could buy all the Dow stocks for less than 4 ounces of gold.

There was a Great Depression, too. During a 10-year period, following the crash of 1929, the economy added just 20% to the GDP.

And while the government was going deeply into debt to finance WWII, it ran surpluses after the war was over, and began paying off its debts – with interest at market rates.

Today, it is a different story.

Ten Thousand Commandments

And as Warren Buffett noted, the feds have 40,000 times as much debt. They have accumulated $22 trillion worth of it – $14 trillion more in the last 10 years – and are adding to it at the rate of $100 billion per month.

And neither Republicans nor Democrats… neither conservatives nor liberals… plan to reduce borrowing, let alone pay back debt.

The rest of the society is deep in hock too – with a total of about $48 trillion more debt.

Stocks are five times as expensive as they were in 1942 – you’ll need 20 ounces of gold to buy the Dow.

The government is still the same on paper. But now, Congress has become little more than a blab-fest. America is now an empire, with the important decisions made by the insiders – for the insiders – of the Deep State.

The insiders rule largely through regulations. Those too have exploded. In 1960, the Code of Federal Regulations – the document that contains all federal rules and regulations – already contained 22,000 pages. Obamacare alone added 10,000 more – eight times more than the Bible – bringing the total to more than 178,000.

In 2018, the 20th anniversary edition of Ten Thousand Commandments, from the Competitive Enterprise Institute, appeared.

It documented 81,883 new regulations during the two decades that had passed since the first edition.

On average, a new regulation – often with criminal or civil penalties attached – appeared at the rate of one every 2 hours and 9 minutes.

By then, the total annual burden on the economy was estimated at $1.9 trillion, an amount that has surely jumped over the $2 trillion mark by today.

The military no longer even pretends merely to defend the U.S. Instead, it seeks “full spectrum dominance,” which can be translated as “keep sending us the money; we’ll find a use for it.”

The most important price in capitalism (the interest rate) is now largely determined – as it was in the old Soviet Union – by technocrats at the Federal Reserve.

And the rich are far richer than the working class, and the insiders aim to keep it that way.

In short, it is a very different world.

Blazing Economy

But the same rules, at least the important ones, still apply. Markets go boom… and then go bust. Borrow too much, and you still go broke. Governments grow old, corrupt, and incompetent.

But wait. Word came out last week that the economy is growing “faster than expected.”

The pseudo-conservatives at CPAC took heart as Donald Trump said he had a “blazing” economy.

Then, what did it matter if they were less free, they asked each other, as long as unemployment was low?

What did it matter if U.S. debt was headed to $40 trillion by 2028, if GDP was still growing?

What difference did it make if the Fed fiddled interest rates, as long as the Dow stayed over 23,000?

Tune in tomorrow. You will see that the economic news is fraudulent… and fleeting…

…that the economy is no better than it was under Barack Obama. And that “blazing” growth? It’s actually less than the growth rate through the Great Depression!





By Joe Withrow, Head of Research, Bonner & Partners

The spread between bullish and bearish investors has gotten dangerously high…

That’s the story of today’s chart, which tracks the difference between bullish and bearish investors, according to the American Association of Individual Investors (AAII) investor Sentiment Survey.

The AAII is a research organization with 150,000 members in the U.S. Since 1987, the AAII has been asking its members the same question every week: Is your six-month outlook for U.S. stocks bullish, bearish, or neutral?

Last week, 41.6% of AAII members were bullish and only 20% were bearish. That means the “spread,” or the gulf between the two groups, now sits at 21%.


The AAII survey is considered a contrarian indicator because individual investors tend to get bullish after stocks have already gone up… And they tend to get bearish after stocks have already gone down.

For instance, the last time the discrepancy was this high in favor of the bulls was October 4, 2018. That was exactly two weeks after the market hit its all-time high… And the S&P 500 went on to fall 19% over the next 81 days from there.

And we have seen that same pattern play out consistently. Individual investors tend to be the most bullish just before stocks fall… and vice versa.

With only 20% of investors expecting lower prices, this is more proof that the current snapback rally in stocks has done its job. Most investors are bullish on stocks again. And that’s a sign that the market is overbought.

As Bill has said in the past, a bear market always wants to take down as many investors as possible. Don’t be one of them…

Joe Withrow


MMT for Dummies
Recently, Bill referred to Modern Monetary Theory (MMT) as a “substitution for common sense.” But what is this new monetary theory that has America’s economic community abuzz? Here’s a primer.

Yes… The Government Probably Has Your DNA
Take-at-home DNA testing kits are all the rage. Consumers willingly send their DNA to a company, which then analyzes your genetic material and tells you the details of your ancestry. Sounds good so far, and it turns out you’re 5% Lithuanian! But these companies aren’t the only ones getting your genetic information…

How to Profit from the Gold Bull
A bull market for gold is close at hand. That’s according to Casey Research’s E.B. Tucker. E.B. says gold is about to take off. But if you’re looking to profit, don’t buy physical gold. Do this instead.


In the mailbag: Is Bill forgetting Bernie Sanders?… Tariffs are still trade barriers… and “a horse fell over on me, too.”

Bill, I think what you might not be accounting for is some of the anger voiced by Bernie Sanders over the way capitalism has operated this century. Specifically, the practice of buying businesses, paying exorbitant special dividends to the new owners through debt loaded on the company’s balance sheet, cutting worker pay and benefits, and then casting the business loose without any real concern for its ultimate welfare. If that’s capitalism, America would be better off socialist, and the new robber barons will have nobody to blame but themselves.

– Gary M.

Regarding a Dear Reader’s “take” on trade barriers: Ahem, tariffs ARE trade barriers! Moreover, they are a covert tax on every consumer who buys tariffed goods. History is replete with demonstrations of the non-productiveness (destructiveness) of tariffs.

Yet, Trump imposed them – based upon his half-baked “delusion” that “this time” they will work. All he actually did, however, is show how utterly incompetent he is.

– Bill S.

The horse fell over on me, too. I’m not much of an equestrian, but performed OK that time. While looking over a potential investment, we were going up a steep hill in Costa Rica. The saddle (put on by others) slid off the horse’s back, the horse fell over backwards, I did a back somersault behind the horse, and came up with the reins still clenched in my fist. Nobody was hurt… not even the horse, which landed flat on its back. Cheers!

– Stuart A.

Meanwhile, a question for Bill…

Who are the group of 12 hacks that Bill references that set interest rates? Thanks.

– Anonymous

Editor’s Note: The “12 hacks” that Bill refers to are the members of the Federal Open Market Committee (FOMC). The FOMC is a committee within the Fed that sets the federal funds rate. Read more from Bill here.


Is this what kills the iPhone?

Everybody knows Apple and its revolutionary iPhone.

But what few people know is that the iPhone is under serious threat for the first time ever. That’s according to Jeff Brown, Bill’s go-to technology expert.

To learn about the tech that’s threatening the iPhone, and see how you can stake a claim before that happens, go here.