RANCHO SANTANA, NICARAGUA – “I wanted to build a little vacation cottage.”

We were getting a tour of concrete and rebar. A colleague is building a house on the ocean. It seems to have gotten away from him.

“Well…” he continued. “How many times am I going to build a vacation house in Nicaragua?

“So, I thought I might as well do it right.”

Spectacular Views

“Mizewells” are expensive. Especially when you’re building on the Pacific Coast. Every view is spectacular. And every room has one.

In our friend’s case, he has perched his castle on a cliff. On the right is a stone shelf, where the waves slap against the rocks, sending geysers of spray 20 feet in the air.

Farther out, there is a long stretch of sand beach reaching to hills in the distance. On the left, it is rougher and wilder, with giant rocks, in the water… and cliffs all along the coast.

How to make use of these views, the architect asks himself.

His new house has five bedrooms – each with a view up or down the beach – and a living room that is bigger than most single-family homes.

“Hey,” we noted in amazement, “even your car has a million-dollar view.”

Dream Home

Back in Baltimore, where our colleague spends 90% of his time, he is frugal and careful. Down here, he is letting himself go.

Why?

“It’s our dream home. When I tried to cut the costs by eliminating some of the space, I showed it to my wife. She was very nice about it.

“‘That’ll be okay,’ she said. But it was only okay. It wasn’t a dream home. Now, it’s a dream home.”

Our friend has probably boosted the local GDP by a couple of percentage points.

At the site, there were at least 50 workers… hammering, sawing, mixing, hauling, toting and trucking. Each one was probably grateful to have a job… and get cash at the end of the week.

If he were not building his palace on the coast, there might not be other jobs available. The locals would return to fishing and gardening… or whatever they did before the building boom began.

Instead, they take the money and share it with family members… grocery stores… liquor stores… churches… and so on.

If he is industrious, the day laborer might learn masonry or carpentry, save some of his money… and use it to buy a truck and start a construction business of his own.

Thus does a real economy evolve. Progress!?

No Bump in GDP

Many years ago, we spotted an item in The New York Times. To the Gray Lady, it was a curiosity; to us, it was gold.

A man from Chicago, in his 50s, was diagnosed with incurable cancer. He went home to a small Greek island to die. Dying was cheaper there… and he could live in his parent’s home until the final event.

With time on his hands, he took up gardening. He grew vegetables. And grapes. And made wine.

The seasons came and went. But he remained. He didn’t die. Instead, he lived another 30 years, working in his garden, drinking his wine, joining the neighbors in eating, drinking, singing, and dancing.

Although this story had a happy ending for the Times’ readers, the economists were left in tears.

No funeral, no flowers, no casket, no grave… no life insurance payment… no medical treatments… no drugs… no doctor visits… no diagnoses… no tests… no estate planning… no inheritance battles… no lawyers… no home sale… no commissions… no new kitchen… and so on.

In short, no bump up in GDP.

Well, dear reader, don’t you think it was selfish of the man to deprive the economy of extra GDP?

We do. And we can promise you, when our time comes, we intend to go through with it as planned… The economy is already weak enough.

More to come…

Regards,

Signature

Bill

MARKET INSIGHT: BITCOIN SOARS PAST GOLD

By Chris Lowe, Editor at Large, Bonner & Partners

Bitcoin has left gold for dead in 2017.

Bitcoin and gold are similar in that they are widely used as money. And neither is issued by governments or central banks.

As early as March this year, one bitcoin cost less than an ounce of gold.

But as you can see from the chart, the world’s first cryptocurrency quickly outperformed the yellow metal.

Chart

As you can see, gold has risen 12% in U.S. dollar terms year to date.

Bitcoin is up 647%.

Chris Lowe

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Wage growth in the U.S. has stalled, even as official unemployment figures remain low. But a closer look reveals something surprising. Not all income levels are being impacted equally.

Doug Casey: Bitcoin Will Disappear in Five Years
Regular readers know Doug Casey as a legendary speculator and a New York Times bestselling author. In this guest essay, Doug reveals why the world’s most popular cryptocurrency could disappear in the next five years.

MAILBAG

In the mailbag, one reader makes a prediction for economic growth…

I really don’t understand why no one seems to understand why the economy is stagnating. This was hinted at back in 1972 in the book The Limits to Growth. The book described a complex model showing the interactions among such things as population growth, industrial output, pollution, etc. and showed the results of running the model under various initial assumptions.

The standard run or “business-as-usual” model showed industrial output peaking around the second or third decades of the 21st century, followed by a decline from that point onward. The decline was attributed, in part at least, to a depletion of the world’s natural resources.

To anyone who bothers looking, this is playing out as a forecast: Arable land is eroding very quickly; scientists are saying that at current rates of erosion, we have about 60 years of farming left; world freshwater supplies are being depleted in California and India as underground water reservoirs are falling and glaciers which replenish rivers are vanishing; global supplies of the cheap oil which fueled the economic growth of the past two centuries peaked around 2005 and are now in terminal decline; the saltwater fishery has been forecast to disappear by mid-century.

I don’t know why most people find it so difficult to understand that energy consumption equals production of goods and services, which equals economic growth. I’m sorry folks, the party’s over and flogging the dead horse of economic growth only makes matters worse and hastens the decline. As the economist Kenneth Boulding famously said in the 1970s, “Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist.”

– Allan M.

IN CASE YOU MISSED IT…

In early February last year, colleague Jeff Brown went in front of a small audience of multimillion-dollar family offices to present his best recommendation. The company he named that day, chip-maker Nvidia, went on to be the best-performing stock of 2016. It climbed over 330% in one year.

Now, Jeff is making another bold prediction that he believes will be even more profitable. See it for yourself right here.

Video