RANCHO SANTANA, NICARAGUA – If you run over a pedestrian in Washington, D.C., it might be wise to keep going.
Because the person under your bumper could be a swamp rat.
In fact, it could be Jerome Powell, whom President Trump just chose to replace Janet Yellen at the Fed.
Born in the Swamp
If any further proof was needed that the president has been White House-broken by the Deep State, here we have it.
Mr. Powell was born in the swamp. No kidding… he hatched in Washington, D.C.
He’s never really left. He even got his law degree from Georgetown Law Center, about five blocks from the Capitol Building.
He must have been there – in the ’70s – when we were there. But we have no recollection of him.
We spent three long years at Georgetown. It did not appeal to us. Because it was little more than a training mill for federal functionaries – the people who make the swamp what it is.
We recall a course on the philosophy of the law. In it, we argued that law and regulation were incompatible.
You can’t have a free society… with laws that apply to everyone… and have a bunch of unelected lobbyists, lawyers, and insiders telling people what they can and can’t do.
“If we were to agree with your paper,” said our professor gravely, “half this town would have to disappear.”
“Yes,” we replied. “That’s what we had in mind.”
Back and Forth
Washington is rigged by the Deep State insiders.
The students and the professors at Georgetown Law Center all wanted in on the scam.
We decided not to practice law; Powell decided otherwise. He went into the kind of “administrative law” (which, we argued, was oxymoronic) that Georgetown specializes in… and then began a long career, slithering around the swamp, in and out of government and finance.
He worked for the regulators… then he worked for the industry he was meant to be regulating.
And then, back to the regulators.
All of this back and forth seems to have been good for Mr. Powell. He is reported to have a personal fortune of more than $100 million.
The important thing, from our point of view, is that he can be relied upon to do exactly as expected.
Like Ms. Yellen, he will be in favor of shrinking the Fed’s balance sheet… and raising interesting rates… until the money supply tightens and all hell breaks loose.
Then, he will move heaven and earth to protect the Deep State from bankruptcy… with an aggressive program of QE Encore.
Then, most likely, we will have the financial chaos and “crack-up boom” we wrote about last week.
Failure of Tech
Yesterday, we left a question hanging: How come Amazon can make shopping cheaper and more efficient, but consumers don’t seem to get much advantage from it?
They don’t keep the savings. They don’t seem to spend them either. They just disappear.
Household discretionary spending has steadily eroded over the last 30 years.
Each year, households have less money to spend. First, they turned to the Everyday Low Prices at Walmart. More recently, Amazon has come to their aid.
Neither puts more money in their pockets.
But what’s going wrong?
Last week, we saw that thousands of people waited in line, some of them overnight, to buy a new model “smartphone” from Apple.
What was wrong with the old one? Or, more broadly, what was wrong with the old rotary-dial landline?
We’ve been exploring new technology and the companies that bring it to market.
Amazon, for example, brought internet-based retailing to the world and made its founder and CEO, Jeff Bezos, its richest person.
We’ve noticed that this Internet Invasion did not seem to lift GDP, employment, productivity, or wage growth. Instead, all have fallen, as our dependence on this new tech has risen.
We’ve noticed, too, that Amazon was made possible by the almost infinite funding of the Fake-Money system.
And we wondered if it doesn’t represent a new thing for capitalism – industries that make life better, but that do not make profits or add to GDP.
Warning: this discussion will be a battle. It challenges ideas and assumptions we take for granted. So, we will attack from the flank. A head-on charge is too obvious and too easily rebuffed.
Just to let you know where we are going: We will show that progress is not inevitable… GDP is not everything… that the economy could go into a depression, but we could still be better off… and, if that happens, many of today’s “assets” will disappear, along with the reputations of people such as Mr. Powell.
Editor’s Note: Today, Bill shares more pictures of Nicaragua’s beaches.
The sun sets on the coast of Rancho Santana
MARKET INSIGHT: A HISTORIC BULL MARKET
By Chris Lowe, Editor at Large, Bonner & Partners
Welcome to the second-longest bull market in history.
Today’s chart looks at the longest 20% or more rallies without a pullback on the S&P 500… a widely accepted definition of a bull market.
March 9, 2009 was the post-crash low. Since then – after 3,161 days – the S&P 500 hasn’t had a pullback of 20% or more.
The only bull market that has lasted longer ran between 1987 and 2000.
It lasted 4,494 days.
– Chris Lowe
The Most Hated Bull Market?
As Chris Lowe showed above, we’re currently in the second-longest bull market in history. But rather than feeling euphoria, some Wall Street veterans are mistrustful of the current rally. Here’s why.
What the Economic Recovery Is Missing: Wage Growth
Official unemployment figures remain low as economic data continues to improve. But hourly earnings haven’t kept up. In fact, wages are actually starting to sink.
Chris Mayer: All 100-Baggers Share These Three Traits
A “100-bagger” is a stock that returns $100 for every $1 invested. One of Bill’s top analysts, Chris Mayer, spent years researching these big winners. Here’s what he uncovered.
In the mailbag, readers consider if the world’s two favorite stocks are doomed…
Jeff Bezos may not be as ignorant as you think. Amazon has an affiliate program that pays out lots of money. If Bezos terminates the affiliate program, that money would immediately show up on the bottom line. Wouldn’t be surprised if he did it after he has wiped out all the remaining competition.
– Jim R.
What I don’t understand is how you have entrusted, if I’m not mistaken, over $5 million of your family trust money to the recommendations of Chris Mayer. Have you not read Chris’ book 100 Baggers? If you haven’t, perhaps you should read at least pages 53–60, where Chris discusses Amazon.
– Joe A.
You condemn Amazon, which is helping many clients to purchase cheaper merchandise compared to what they had to pay at a mall or retail outlet. At the same time, you write favorably about this pie-in-the-sky idea of bitcoin, which isn’t a currency.
There are no banks or Federal Reserves to check or monitor these cryptocurrencies. They are as real as Trump’s phony media. If you like to make good money better, without buying cryptos, then start buying put options on the large malls and large retailers; you would come ahead this way!
– Al R.
Can’t think of anything tougher than being an auto startup, but it’s hard to equate Tesla and DeLorean completely, Bill. Tesla seems to be in the league of Amazon and Apple. It’s a highly valued disruptor in the tech age, but with little profit (Amazon), yet high upside, where DeLorean was its founder’s dream gone nightmarish. With Tesla at least, their products have to make money independent of government largesse.
Jeff Bezos harnessed and scaled up the computer age like no other, defying the laws of profit and loss. Go figure. Who knew?
– Michael C.