Money-Printing, Increased Spending Devastate Financial Gains

Money-Printing, Increased Spending Devastate Financial Gains by Bill Bonner for Bonner and Partners

Last week, stocks finished at an all-time high. But guess what? In terms of real money – gold-linked, pre-1971 dollars – stocks have been losing ground since the start of the millennium.

We are looking at one of the most remarkable episodes in financial history. Investors think they are making money… when they’re actually getting poorer.

Donald J. Trump tells the international Deep Staters at Davos that the U.S. economy is “spectacular,” but most of its counties have never recovered from the crisis of ’08-’09.

What a jolly time to be alive… to be conscious… with a few dollars saved up and a sense of humor. And coming up… a financial Demolition Derby on a global scale…

Financial Train Wreck

Yes, we’ve seen plenty of little sh*thole countries go broke. They spend too much. They steal too much. And then, what do they do to cover the corruption and waste? They print money.

But we’ve never seen a country with the world’s reserve currency and a $20 trillion economy do it. So this will be fun to watch.

And on this TV you can’t touch that dial. You can’t turn it off.

Doesn’t matter how smart our Federal Reserve governors are. Doesn’t matter what stable genius is in the White House. Doesn’t matter what any of us think or do.

You don’t even need a “bad guy” or a monetary monster. Milton Friedman is practically a saint in some circles; but it was he who invented the new money in 1971… and he will be largely to blame for the destruction ahead.

Yes, Dear Reader, even good people do bad things… and even smart people make such jackass mistakes as to cause the gods to chuckle, and the dead to laugh out loud.

They’ve seen this before. They know how it turns out.

So let’s look more closely at why it is inevitable, even as they do everything “right”…

Do the Right Thing

The Fed clearly made the right choice when it chose to pump up the repo market with hundreds of billions in new money. Otherwise, the world economy, the stock market… the whole shebang would have gone to Hell.

It will surely do the right thing next week and the week after, too. The feds have $6 trillion of short-term loans to “roll” in the next six months. That’s the cost of overspending – wars, boondoggles, giveaways, waste – by the U.S. government.

Oh… and it’s not going away. No candidate – Democrat or Republican – is proposing to cut U.S. spending. And no president could survive in office if the Deep State connivers completely turned against him.

That’s why they will all do the “right” thing.

And who could blame Obama and then-Fed chief Bernanke for pushing the panic button in ’08? They did the right thing, adding $10 trillion in deficits and $3.6 trillion in Fed quantitative easing (QE).

Bernanke had the “courage to act” and saved the nation from a dreadful recession; he said so himself.

And didn’t Mr. Trump do the right thing when he cut taxes… and increased spending… too? Isn’t that why the Dow is at 29,000… unemployment is below 5%… and he can brag at Davos? He thinks so.

Mr. Obama had allowed for a modest decline in military spending as the wars in the Mideast wound down. Then, not only did the “conservative” Trump increase military spending, he boosted domestic entitlements, too.

Domestic, social spending rose 3.2% annually under Obama. Under Trump, it is going up at a 5.4% annual rate. Overall, spending is increasing more than twice as fast as it did during the Obama years.

And who doesn’t like it? Who doesn’t want more money? Widows? Veterans? Cronies? Lobbyists? The Swamp? Everybody is in favor. At least, at the beginning.

Hyperinflation Legend

Our old friend Doug Casey had the once-in-a-lifetime opportunity to meet a real central bank legend. It was Gideon Gono, who – as the governor of Zimbabwe’s central bank – had printed trillion-Zimbabwe dollar notes by the gazillion… and destroyed the country’s economy.

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Bonner and Partners

Bill Bonner founded Agora Inc. in 1978. Since then, it has grown into one of the largest independent newsletter publishing companies in the world. Bill also co-wrote two New York Times bestselling books, Financial Reckoning Day and Empire of Debt, In his latest book, Hormegeddon, Bill describes what happens when you get too much of a good thing in the sphere of public policy, economics and business. This new newsletter is unlike anything else published in America today. Now in this industry, Bill Bonner has agreed to share his secrets and insights every month. It’s like having a super-wealthy uncle share his best ideas, insights and wisdom about business, relationships, investments, trends, developments, ideas and more.