The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.

– Jean-Baptiste Colbert, French finance minister (1665-1683)

POITOU, FRANCE – Yesterday, another losing battle began.

This time, fresh from defeat on O’care repeal and the Alabama primary, Senate Republicans and Donald J. Trump locked arms for a march on the tax code.

Here’s the Los Angeles Times:

According to the plan, which Republican officials outlined Wednesday, many businesses would see a huge reduction in their tax bills and many middle-class Americans would see tax relief. The plan would reduce the number of individual tax brackets to three from seven and nearly double the standard deduction.

“This is a once-in-a-generation opportunity” to offer “historic tax relief to the American people,” President Trump said as he pitched the plan during a speech in Indianapolis on Wednesday.

“I’ve been waiting for this for a long time.” […]

“My plan is for the working people and my plan is for jobs,” he said before leaving Washington for Indiana. “I think there’s very little benefit for people of wealth.”

Sliding Season

Here at the Diary headquarters, we are enjoying a delightful autumn.

Yesterday, the sun shone all day. We took our lunch outside, with potatoes and salad fresh from the garden… followed by applesauce, fruit of the orchard. (The sausage came from the village market.)

It is a shame to darken such sunny days with the latest news. But we are in the sliding season… enjoying the last warm days, like the last sips of a good wine in the trenches of Dien Bien Phu or the last hours of a picnic on the slopes of Pompeii.

As much as we might like to stay right where we are, the world still turns. Days grow shorter; the morning dew makes the grass slick… and we slide into winter.

Sliding too is the hope for a genuine recovery… an economic renaissance… or even a quick, cultural tire repair in America.

Like all dreams, it was always about the future. Tomorrow, we would be richer. Tomorrow, we would be thinner. Tomorrow, we would be a better country in a world we helped make better.


Our inventors would come up with something – such as Facebook or Viagra. Our businessmen would innovate – like they did with Toys “R” Us… Hewlett-Packard… and Sears. And our politicians would “Make America Great Again.

Surely, a law could be passed that would solve our problems… and make it happen – finally, Eden in America.

How about a tax cut?

Yes, a tax cut!

We’ve never met a tax cut we didn’t like. Then again, we have a fondness for all carnival barkers and mountebanks. They are loveable imposters.

Billionaire in a Bordello

Tax cuts let people hold on to more of the money they’ve earned.

Then they spend it… they invest it… their gardens bloom… and their buildings soar. Tax cuts should always be a good thing. More win-win; less win-lose.

But wait… There’s a catch.

Unless the feds cut spending along with taxes, the money has gotta come from somewhere. Ultimately, all wealth comes from win-win deals on Main Street. And all taxes move it from people who earned it to people who did not.

From a macro perspective, then, how… when… and who makes the payment is just a matter of detail.

An alert dear reader quickly figures it out:

Under the Bonner Doctrine (BD) corollary, the Deep State – like a billionaire in a bordello – gets what it wants… and when, where, and how it wants it. Hence, the BD dictates lower taxes for those with higher connections. Another predicted result is even higher deficits, as that’s the path of least resistance.

Since the fickle feds failed to bring medical spending or empire costs under control, any tax cut now is just another flimflam; no matter how the details emerge, voters will give up more of their wealth to their elite masters.

And the nation will slide a little closer to bankruptcy…

Art of Plucking

The billionaire in the bordello may or may not get what he wants. But he is spending his own money.

At the least, he’ll get what he’s got coming.

Not so the Deep State insiders. They spend other people’s money. And they get it – as Jean-Baptiste Colbert described the taxation – by grabbing the most feathers with the least squawk.

Early estimates suggest that the tax proposal will result in about $2.5 trillion in lost revenue.

And even that depends on closing loopholes as well as opening them. But when the cameras are turned to some other White House shenanigans… and the headlines focus on some new clown crisis… Deep State lobbyists – who control the details – will squawk and get out their pencils.

They’ll make sure their favorite loopholes are untouched. And, doodling in the marginalia, they’ll open up some new ones.

The real tax cost will be closer to $4 or $5 trillion.

In other words, even if it were passed – which is unlikely – it will be no reform at all.

Just more win-lose deals at the public’s expense.

Sooner or later, though, comes the autumn season and everything changes – the billionaire… the bull market… the empire… and the bordello.

The tomorrows run out. Frost finds its pumpkin… and the dream slides into nightmare.





Market Insight: Oil Rallies


Chris Lowe

Crude oil is showing signs of life…

On Tuesday, we reported on how the commodities market overall is struggling to make new highs.

Not so for crude oil.

Today’s chart tracks the price of a barrel of Brent crude oil – the international benchmark.

As you can see, it made a new high for 2017, hitting $59.40 on September 25.

Chris Lowe

Featured Reads

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Preparing for the Next American Civil War
America is headed for another civil war, and you better be prepared. That’s the message from colleague and analyst Nick Giambruno. Nick sits down with Editor at Large Chris Lowe to explain what’s causing the conflict and what it means for your finances.


In today’s mailbag, Bill’s recent Diary, “Trump Can’t Stop America From Going Broke”, has gotten some readers thinking…

What few realize is that governments are actually the worst enemies of their citizens. They may perform a useful function in defense, and in coordinating and regulating commerce and social intercourse, but what they do that benefits one faction, is likely to be at some cost to another faction – and they always respond to factional pressures. Factions, of course, have little or no regard for individuals.

Politicians are the instruments of government. They respond primarily to factions, which largely finance their campaigns for office, often via wealthy members of such factions. The best politicians try to have some regard for what their actions do to individuals, but when push comes to shove, the desires of factions rule what they do, the individual be damned. Politicians always tend to put Number One first, just like the rest of us. That eventually must result in corruption and oppression by government.

– Chuck B.

WHO CONTROLS THE FED? As far as I can see, there is no control to the money printing. For all we know, they print as needed. Who’s to know? The whole system is built on BS. It is so much worse than we can imagine. I enjoy your writing.

– Udo P.

Wow, I have to hand it to you. You’re a master wordsmith. But I have a problem taking seriously data that is selected to fit the narrative. You mix inflation-adjusted with unadulterated ones. Sales measured in dollars don’t reflect the growth in volume, productivity, and innovation that lowers unit costs. The 1950s cannot reasonably compare to today as much has changed, not the least being women in the workforce. Companies buying back their own shares isn’t necessarily hurting investors. Even poverty has a dramatically different meaning today.

In playing the numbers game to be meaningful, all these factors have to be considered in comparisons. The lower purchasing power of the dollar affects all values, including the value of labor. So, to say the dollar has lost 90% in purchasing power is patently false.

– Erich K.

Love your Diary. Here’s a quote I thought you might like from Danielle DiMartino Booth’s recent book Fed Up, about her several years of working as an analyst at the Fed:

“… a sign outside the Jan Mayen Arctic Circle weather station, a desolate volcanic island about six hundred miles west of Norway’s North Cape… translated to English reads: ‘Theory is when you understand everything, but nothing works. Practice is when everything works, but nobody understands why. At this station, theory and practice are united, so nothing works, and nobody understands why.’”

– N. F.

Forget the rest of it. I’m just glad to hear that the lost cat turned up. It’s great you took them in!

– Nick F.

In Case You Missed It…

Our colleague Jeff Clark isn’t your typical trader…

He rarely wears a suit, almost never leaves his Northern California home before noon, and typically does most of his trading in a bathrobe.

But as he explained to us, he’s able to do this because he’s developed a strategy to make more money in a day than most people make in a month. Get the full story here.