PARIS – Yes, it is heartwarming, isn’t it? Almost inspiring.
We mean… seeing our leaders finally get together… embracing warmly… and agreeing on something.
No more trouble. No more strife. Oh, Lord, they’ve seen the light!
They are all on board now – Trump, AOC, Bernie Sanders, Powell, The New York Times… and hundreds, thousands of others, the great, the good, and the grandiose numbskulls.
Swaying together… singing… hugging… drinking cocktails… and giving each other high fives…
…as they ride along on the DebtBall Express.
Like all government programs, what works in financial policy is what doesn’t work in real life. The feds have put in about $15 trillion worth of stimulus (quantitative easing, budget deficits… not to mention artificially low interest rates) over the last 10 years.
This did not produce a stronger economy; instead, it produced a weaker one… with much more debt.
Still, Stimulus Theory has the backing of the public… the elite… and thousands of economists.
Over the last hundred years, PhD economists have multiplied faster than STDs. Today, we have at least 100 times as many as we had in 1919.
These know-it-alls advise our corporations and our politicians, often run our banks, and provide lame excuses for politicians’ failures. Surely, with so much learned brainpower, we are the smartest generation that ever lived.
But against this fancy new conceit, today, we offer some plain old common sense: Ricardo’s Equivalence Theorem.
By the time Donald Trump got to the White House, the recovery was already limping, hobbling, and ageing fast.
What to do? Stimulus!
He gave it a jolt of joy juice with his tax cut at the end of 2017. That produced a little jumpiness in the hands, and legs, but by the end of 2018, the effect had already worn off; stocks were falling and the economy seemed to be sinking again.
But the whole fandango could have been avoided simply by reading David Ricardo’s Essay on the Funding System from 1820.
The 19th-century economist noted that a town could finance its spending by taxing its citizens… or it could borrow from them. Either way, taxpayers would have to foot the bill (what other source of revenue did the town have?).
But the townspeople – at least back then – weren’t idiots. They knew that the borrowing would eventually show up in higher taxes. So, they bought the town’s bonds themselves.
Then, they earned interest at exactly the same rate as the town paid it, and so, they stocked up the money with which to pay their taxes with no additional loss.
Borrowing? Taxing? Ricardo showed that it didn’t matter. The cost of town government was the same either way. Borrowing produced no stimulating effect.
But with so many PhDs to help them think, today’s townsfolk can barely think at all. Somehow, they believe that they will never have to pay the government’s borrowings. They think borrowed money “comes from the Fed.” Or that the economy will “grow its way out of debt.”
Or, drawing on the popular new fantasy called Modern Monetary Theory (MMT), they think that the feds can simply print the money needed to pay it off.
MMT fans, notably Bernie Sanders’ advisor with a PhD in economics, Stephanie Kelton, even argue that deficits are not too large… but too small. “Every dollar the government spends translates into a dollar of income for someone…” she points out.
So, with this mischievous wisdom egging them on, instead of saving their tax reductions (which would have completely nullified the “stimulus” effect), people spent them.
Alas, they did not invest in things that might actually increase output and wealth. Instead, the cheap money was consumed… used up… like a bottle of cheap booze.
Imports from China boomed to new record highs. Stock buybacks hit new records, too. And the result? From March to September, investors gained about $4 trillion in stock market wealth. The public was left with a hangover of unpayable debt.
And now, instead of renouncing the foolishness of it, today’s geniuses – PhDs prominently included – wait for the next drink.
Six months ago, speculators were wondering about the Fed’s next rate hike. Now, they’re betting on the next rate cut.
Economist Richard Duncan:
…we will see that the US economy has reached a tipping point.
It is going to take more than “patience” from the Fed to keep the US out of recession. It’s going to require rate cuts.
Americans have been trained to believe that their votes decide important government policies. It is just a matter of choosing the right candidate…
But in the coming debacle, both parties… and all major candidates… PhDs… Nobel Prize winners… leading newspapers… pundits and politicians… will be on the same stimulus team – and all lined up against you.
Because the “stimulus” program is simply a wealth transfer scheme pretending to be an economic policy.
And they – the elites, the political class, the Deep State, Washington, Wall Street, and The Swamp – benefit from it.
That’s all from us this week…
TECHNOLOGY INSIGHT: CAN THIS TECH REALLY CURE CANCER?
By Jeff Brown, Editor, Exponential Tech Investor
It was standing-room only at a genetic editing forum I attended off Kendall Square in Cambridge, MA, last month.
Hundreds of people, including scientists… doctors… lawyers… ethicists… investors… and students, gathered to participate in several genetic editing panels led by luminaries from the most powerful companies in the industry.
Energy and excitement cascaded throughout the room…
Jeff attends an invitation-only meeting on cutting-edge genetic editing technology
The talks centered around the state of CRISPR – where it is… and where it is going.
Remember, CRISPR technology is like software programming for DNA. Basically, CRISPR allows scientists to “cut out” a genetic mutation in our DNA and replace it with a version of our DNA that is “healthy”… mutation free.
But how far along is it? Can it REALLY cure cancer? Can it REALLY cure blindness? Can it REALLY eradicate all human disease caused by genetic mutations? If so, how far do we take it?
That’s why the room was packed with CEOs and scientists from the top companies in the space.
I attended the event because genetic editing technology represents the biggest breakthrough in medical technology since antibiotics. And I walked away more confident than ever…
The companies represented were very cautious and conservative, as most scientists are… But one of them let it slip when pressed: “The technology works… It just works.”
Scientists and company executives discuss the potential of CRISPR genome editing technology
And the world will find out that CRISPR works, in humans, in 2019…
The top three CRISPR companies will administer their therapies in the first non-China human clinical trials this year. One clinical trial is expected to target sickle cell disease. Another is designed to treat a specific type of blindness.
The CEOs present confirmed for us that these will be one-time treatments. And they expect to release results after just four to six months.
That means these trials will be binary. Either they work… or they don’t.
And if they work, as I am sure they will, we will see an avalanche of investment dollars flow into the best genetic editing stocks before 2019 is out.
– Jeff Brown
P.S. Before you go, one last thing…
I’ve uncovered what I believe will be the biggest investing opportunity of 2019. A technology mega trend is about to hit the mainstream. And three key companies at the heart of it are set to soar, potentially as high as 1,000%.
But fair warning, this opportunity won’t be for everyone. If you can’t handle volatility or big price spikes overnight, then maybe sit this one out. But if you’re prepared to take on some risk to potentially make a small fortune, then go right here.
A Disaster Waiting to Happen in the Bond Market
While the Fed remains dovish, many have turned back to bonds. But long-term market watchers are ringing the warning bell on the bond market. That’s because, behind the rally in global debt markets, lurks a disaster… one that could expose traders to a $2 trillion wipeout…
Your DNA Is the New Data
Popular at-home genetic testing companies provide you with a personalized health report… in exchange for your DNA. This highlights the threat to privacy from genetic databases. And while learning about your ancestry may sound innocent enough, your DNA now lives on one of those databases. A database that authorities like the FBI have access to…
The Fed’s Next Desperate Move
As Bill put it recently, America’s Federal Reserve has now abandoned any pretense of sensible monetary policy. Come the next recession, the usual “toolkit” won’t suffice. The Fed will get desperate. And Dan Denning, Bill’s coauthor on The Bonner-Denning Letter, shows just how desperate…
Today, a couple fiery responses to yesterday’s Diary, “Trump and AOC Actually Agree on Something…”
The simple reason none of this claptrap will work is that it’s all disguised taxation. Spending money you don’t have favors the recipient of the money at someone else’s expense. That person has been taxed just as surely as the money (his production) has been taken from him or her in direct taxation. The more of this that’s done the poorer producers become, which is the fruit of the last 10 years, even though the cause, as much as anything, is money spent even further back. It’s taking the market that long to catch up. But catch up it will, and the more of it that goes on without dealing with the mistakes of the past the faster we move toward the failure.
Interestingly, it’s like so many things in life. If you don’t deal with, finish the things of the past, they keep coming up. Government spends money with the idea the debt can be floated and depreciated away over time indefinitely by market discounting, but somebody pays and he who pays for government largess has been taxed, no matter how cleverly it’s been done.
– Mike R.
As a faithful reader of Bill’s Diary… wonderfully written but dark explanations that the end is near, thanks to a federal government unable to live within its means, whose necessary borrowing, therefore, has created a debt that can never be repaid. I now want him to focus his artful use of the English language to verbally explain how to avoid the horrendous collapse he’s long been predicting.
– Jim R.
And one dear reader offers a clever observation on Brexit…
For the first time in history, the UK will probably see the end of May before the end of April.
– Woody P.
IN CASE YOU MISSED IT…
Have you heard Jeff Brown’s recent prediction? It’s his most important one to date… and you have until tomorrow to hear it.
When Bill’s go-to tech expert makes a prediction like this, it pays to listen. He picked the No. 1 stock in the S&P 500 in 2016 and 2018… And the latter has handed his readers over 160%, so far…
But this presentation gets taken down tomorrow at midnight. So, now’s the time to act if you want to potentially pocket a small fortune. Read on here for all the details.