| By Bill Bonner Wednesday, December 16, 2020 WEST RIVER, MARYLAND – “It feels like 1999,” says a friend. “Then, it was the dot-coms trading at ridiculous prices. Now, it’s everything.” At the office yesterday, lunch was delivered by DoorDash. Friends who come to Baltimore frequently use Airbnb to find a place to stay. Unlike many of the dot-coms of 1999, these hip, new companies are operating in the real world and generating real revenues. But they’re not making any money. They lose money. That is, they destroy wealth, they don’t create it. That’s what happens when it costs more to provide a service or a product than you get from selling it. Not only do you lose money, but capital is wasted… and lost forever. Das Kapital is our subject today… and tomorrow, too. And our hypothesis is that just as bad money drives out good money (Gresham’s Law), bad capital destroys good capital (Bonner’s Law). Capital is what creates wealth. It is yesterday’s achievements. It is savings. It is factories, banks, markets, patents, machines, highways, knowledge, skills, pipelines, and depots. Capital is what makes one country rich and another poor. And real capital is what the geniuses at the Federal Reserve are now destroying. So, let’s look more closely… | Recommended Link | | An Urgent Briefing from Tom Dyson On November 3rd, America changed directions. But most investors are unaware that the country has already passed a point of no return. A Great Divide separates the insiders from the outsiders. Investment expert Tom Dyson has criss-crossed the country in a camper with his family, exploring these two Americas. What he's found may surprise you. Some will be shocked and saddened. But others will see that NOW is the time to take steps to preserve your money, instead of losing it in the midst of what could be the worst crisis of our lifetime. To hear Tom's report from the road, and find out what you can do to profit… | | | -- | Gamblers Win The trouble with Airbnb, DoorDash, and hundreds of others is not just that they’re losing money… but that their business models will probably never make any money. They can increase sales. But if they try to widen their margins, competitors take away their market share. This is also the problem with Elon Musk’s Tesla. It made headlines by being a big, bold mover… first and foremost in the electric car market. But it’s not like Amazon. People who want a new toaster oven can turn to Amazon to find the best deal at the best price. But they can’t turn to Tesla to find the best electric car. What is the "1170" Investment Account? For most consumers, buying an auto… or even buying lunch… is worth spending a little time in order to find what you want at the lowest price. And now that the major automakers are making electric cars, too, Tesla is just one of many different choices. And it has many competitive disadvantages (lack of distributors… fewer service networks… etc.) That doesn’t stop investors from believing that they can make a buck by buying TSLA or any of the other fast-moving stocks of today. In the last few days, both Airbnb and DoorDash have sold shares to raise money (to cover their losses). And both new share offerings soared soon after making early investors billions of dollars in profits. The gamblers made money. But did the world gain capital? Or did it lose it? Is the world better off when investors provide capital to capital-destroying enterprises? Sharp Drop And here, we turn to Bloomberg. For while the sleek, rich hustlers are making money by trading stocks in companies that lose capital, the average person, who never had much of it in the first place, is running out of the little he had… Americans’ cash cushions have been declining for months, most acutely among low-income households, underscoring the already-precarious financial situation of the millions of people who may soon lose their jobless benefits. The median household checking account balance surged by 65% after the arrival of stimulus checks in April, formally known as Economic Impact Payments, but balances have steadily declined since May, according to a report published Wednesday by the JPMorgan Chase Institute. […] JPMorgan Chase Institute, part of the biggest U.S. bank, estimates 9.4 million people are on track to lose their unemployment benefits at the end of the month without congressional action. The vast majority of those people are receiving Pandemic Unemployment Assistance, a program that offers jobless benefits to those not traditionally eligible like gig workers. When the jobless benefits expire, what happens? Their spending will “drop sharply,” say the experts. Fake-Money Package So what to do about that? Don’t worry, Dear Reader, the feds are on the case. Here’s NBC News: Lawmakers are trying to hammer out an agreement by Friday, when Congress hits the deadline to pass legislation to keep the government funded. Leaders from both parties hope to attach the Covid-19 aid package to the government funding bill. "We're not leaving, I assure you. We're not leaving until we finish this package," McConnell, R-Ky., promised. The “package,” of course, is full of money. And Dear Readers will accuse us of beating a dead horse when we point out that the feds have no money to put in the package. But this nag is not dead… Far from it. Viral: 1.3 Million Folks have Already Seen This Message. Instead, it is prancing around in front of us… full of life. Who doesn’t believe that giving money is not only a good idea… but necessary? What economist doesn’t tell you that when the economy goes limp, you put some starch in it by increasing “demand?” And what politician won’t tell you that he is providing “relief to hard-working American families” by printing up walking-around money and handing it out all over town? But what if they’re hard at work… say, for DoorDash… or the Small Business Administration? Or what if they are not working at all? Like a dirty old man heading for a playground, the feds are preparing to hand out more candy. But will it make the kids better off? Or will it just rot their teeth? We will see tomorrow… Regards, Bill
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FEATURED READS Put Your Money in Gold This Decade
Casey Research founder Doug Casey agrees with Bill, Dan Denning, and Tom Dyson: It’s a good time to invest in gold. If you invest in anything over the next 10 years, says Doug, make it the yellow metal. Why? Read on for his take… Warren Buffett’s No. 1 Investment Could Help You Save For Retirement
Stocks aren’t always the best way to save for retirement. In fact, many people who use them to build their nest egg end up losing money in the long run. So what’s the solution? A private investment – well known to be a favorite of Warren Buffett’s – that you can access through your brokerage account… MAILBAG A dear reader comes to Bill’s defense when it comes to his science argument… Loved your piece on science as the new religion. As a medical practitioner with 50 years of experience, I can tell you that much of the medical research published today is complete junk. The list of ones I am aware of and the ones I have personally experienced is quite extensive. Before I had even graduated, I had developed a very heavy skepticism for any one with the title of “Professor.” With some notable exceptions, they were not good at what they did and held salaried positions because they would not survive in the competitive world of private health care. Keep up the skepticism and you, too, are then a real scientist. – Douglas G. Meanwhile, another dear reader gives their take on Bill’s essay “The Guillotine Is Waiting”… I call it the “pitchfork stage.” Maybe because when I was a child and a teenager, we were poor enough that it was necessary that I learn how to use a pitchfork. Back then, it was for forking the hay and pitching it into the beef cattle’s feeding troughs. But I can think of much more effective uses today, for those 1950’s pitchforks of yesterday. Someone recently asked me if I thought we were still a free country. My reply: “We cannot be politically free if we are not also economically free. We cannot be economically free if we are not also monetarily free. We lost our monetary freedom in August of 1971, when the U.S. dollar was severed from its gold-backing and convertibility. Fiat paper money leads to despotism. Gold and silver are for our freedom.” – David M. And finally, another dear reader appreciates Bill’s look back at the Old-Maryland dialect… To Bill Bonner, really enjoyed reading about your latest visit with your cousin. I’m a logger from northern Vermont, with over 50 years in the woods. Those southern boys talk like us only with different accents. I’m semi-retired now; gave up working in the winter when it’s 20 below. I’m spending some time down here in Florida, where worrying about this COVID-19 seems like a joke compared to working in the woods. Everybody I know who works very long at logging ends up in the hospital with an injury at least once. The death rate for hand loggers like me is also at least 10 times higher than COVID. The point is, that doesn’t stop me or my friends from doing what we enjoy for work. Most of us work as safely as we can. But you can’t beat fate, so lighten up people and enjoy your life. – Mikael B. Is political freedom dependent on economic freedom? Can freedom be found in precious metals, as David believes? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… 1 Stock You Could Make Money on Today He's never worked a day on Wall Street… Yet, this man is showing regular folks how to make as much as $18,666… $19,508… and even $21,730 in a single month… With up to 92.3% accuracy… By trading just ONE STOCK… SHOW ME HOW. 
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