| By Bill Bonner Thursday, December 10, 2020 WEST RIVER, MARYLAND – Yesterday, the bipartisan boondoggle – the proposed $908 billion bailout led by Mitt Romney – got stuck in the Swamp. Nancy Pelosi said it was too little. Mitch McConnell said it was too much. So, the pols put their heads together and came up with a short-term fix. Here’s The Washington Post: House approves one-week spending bill as stimulus talks drag on The House of Representatives on Wednesday approved a one-week extension in funding for the federal government, a move aimed at giving lawmakers more time to hammer out agreements on spending bills and emergency economic relief. But wait… The government is broke… already headed to a $2 trillion deficit for fiscal year 2021. Its pockets are empty. Its bank account is overdrawn. It has already looked under the seat cushions; there is nothing there. How, then, could it possibly help people in need? | Recommended Link | Why this man just took out $5,345 in one-dollar bills It might be the silliest he's ever felt in his life… This man just walked out of the bank with $5,345 – all in one-dollar bills. You should've seen the teller's face. But there's a very good reason. This pile of cash represents the biggest mistake investors are making right now. | | | -- | Play Dead That’s just one question… “And why should it?” is another. Why does anyone think giving out fake money to offset a real downturn is a good idea? Or even giving out real money, for that matter? If the economy needs a reset… a recession to reprice assets and clean out bad investments and bad businesses… why stop it? Why should the unemployment rate be below 5% and not above 10%? Why should the Dow be near 30,000… rather than closer to 15,000? Why not just let the chips fall where they may, in other words? Where’s the science behind that? In 1919-1920, the Spanish Flu killed 675,000 Americans. Far worse than the coronavirus; that would be the equivalent to about 1.8 million deaths today. Then, the economy went into a depression. Did the government leap to its feet? Nope, it played dead. No big deficits. No quantitative easing (QE). No bailouts. No checks to nobody. What is the "1170" Investment Account? Unemployment rose to 8.7% in 1921, according to economist Christina Romer. But the Harding administration did, by today’s standards, almost nothing. Or worse than nothing. Instead of stimulating the economy, arguably, it suppressed it… by cutting spending and running a surplus. Oh, what heartless swine! | Recommended Link | | THE BIGGEST FINANCIAL MISTAKE OF YOUR LIFE? Jeff Brown says if you don’t add THIS one biotech stock to your portfolio… It could be the single biggest financial blunder of your life. The stakes are high. Make your move right now. | | | -- | Creative Destruction But how did the economists of 1921 know what the unemployment rate should be? How do today’s economists know better? After all, capitalism works by relentlessly destroying some jobs… thus making workers available for new skills, new enterprises, and new industries. If the unemployment rate were zero, progress would stop. But progress is exactly what happened after 1921 – with little help (or hindrance) from the feds. Christina Romer says that by 1923, the unemployment rate was back below 5%. According to today’s economic scientists, when an economy goes limp, the authorities must have “the courage to act” (in Ben Bernanke’s hagiographic words). They need to supply the starch that the markets lack. Otherwise… well… Otherwise what? We don’t know, either. Viral: 1.3 Million Folks have Already Seen This Message. Terrible Mistake Economics is no real science. It is mostly quackery mixed with flimflam. But its practitioners nevertheless have Ph.Ds. And in the 20th century, they tried to upgrade their discipline from a subset of moral philosophy – don’t spend more than you earn! – to a pseudo-science, with numbers… formulae… sigmas… alphas… and deltas, too. We saw yesterday that the foundational science of today’s money system – monetarism – was a terrible mistake. It failed to appreciate the importance of the traditional gold standard. It thought it could do better with the Federal Reserve standard. But while the U.S. dollar of 1913 (when the Fed was created) was just as good as the dollar of 1791 (when the dollar was created), the dollar of 2020 is worth, relatively, only about 3 cents! Why? Because in a crisis, the temptation to “print” more money is always irresistible. The Fed’s balance sheet – a measure of how much printing is going on – was only 6% of U.S. GDP in 2008. By the end of 2021, it will likely be near 50%. Where’s the science behind that? The Fed says we should have a 2% inflation target. Not 1%. Not 10%. What does science say about that? It says that interest rates need to be around zero… or less. Where did that come from? The feds believe they have to fight a downturn with more cash and credit – even giving out $1,200 checks to millions of Americans, the vast majority of whom were still working and collecting salaries. Huh? What science tells them to do that? | Recommended Link | | PICK ONE BELOW According to Jeff Clark… A former $200 million money manager… One stock on this list could have handed you a total of $273,441 on just a handful of trades… But he says most folks will gloss right over it… | | | -- | Ultimate Test Note that when we talk about “science,” we’re not talking about engineering. Applied, practical engineering absorbs the lessons of the past… and, while innovating and experimenting, it always returns to what works. Roman bridge-builders, for example, put up bridges that are still in use 2,000 years later – like the Pons Fabricius in Rome. To show his confidence, the architect stood beneath its arches as the scaffold was removed. This served two very useful purposes: It focused the architect’s attention on what would be, for him, a matter of life and death… and it removed incompetents from the professional pool… as well as the gene pool. If we only had a Pons Fabricius for the financial engineers! What a delight it would be to see them all crowded under an enormous arch. Ms. Yellen, who just three years ago, promised no more financial crises in “our lifetimes” – surely, she would be there. And Mr. Bernanke. And there, too, we would find the complete quack, Steven Mnuchin… along with Paul Krugman… Joseph Stiglitz… Jeffrey Sachs… and many others. What a wonderful opportunity! Quick… Take down the scaffold! Regards, Bill
Like what you’re reading? Send your thoughts to feedback@rogueeconomics.com.
FEATURED READ COVID-19 Worsened the U.S. Child Care Crisis. It’s Disproportionately Hindering Working Women
Since February, COVID-19 lockdowns have closed not only businesses and places of leisure, but child care centers, too. Lack of child care options has forced 2.2 million women to leave the workforce to care for their families. This trend is expected to continue… to the detriment of the U.S. economy… MAILBAG In today’s mailbag, a dear reader believes the only way to protect wealth is to invest in hard assets… Thanks for writing the Diary. I enjoy the stories about the ranch and the various homes you own the most. About money, there is not much to know. It depreciates like old vegetables. Here is all you need to know: In October 1959, my late father bought a bit of farmland in Northeast England, where he paid £70 an acre for good clay loam land. Today my brother farms this land, and it is appraised at £9,000 an acre. What happened? The money depreciated, and will continue to depreciate ad infinitum. All you can do is buy or own hard assets. – Charles S. Meanwhile, others share their thoughts on the topic of science… Science has given man great benefits through history, but a great deal of pain as well. As far as global warming, while I agree that man may have contributed greatly, I also have a belief that much more may be at work. The Earth, if formed by a “big bang,” was – and still is – a planet with a molten iron core. At some time in the past, a great freeze started, with ice shelves forming at the poles. With the warming now and the ice pack melting, animals and vegetation from the distant past are being exposed. Therefore, the Earth had to be this warm long before human influence. In school, we were taught that the Earth has gone through freeze/thaw cycles many times in the past. Are we there again? – Jim S. Science provides us with knowledge and facts, with the intention to better us as a society. Most of us are ignorant of the knowledge and facts it discovers about a particular topic. We need to try to absorb it and apply common sense to it. Common sense, as Webster suggests, implies a reliable ability to judge and decide with soundness, prudence, and intelligence. I’m sure there are many studies about when and how we get it, or don’t. Unfortunately, many rely on the media to teach them common sense. The people who lack common sense become exploitable by leaders seeking power. With little common sense, they don’t have within themselves the ability to judge and decide with soundness, prudence, and intelligence. This is why a leader such as Trump degrades science. It becomes a means to persuade people who can’t comprehend, or make judgement of, its meaning by themselves to use his interpretation. – Michael M. How are you protecting your wealth? Do you agree with Jim, that humans are not the sole cause of climate change? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… Legendary Hedge Fund Manager: “This is the only ticker you need in 2021” There’s only one ticker you need for 2021. It’s not TSLA… (Tesla) Not AMZN… (Amazon) Not FB… (Facebook) Not GOOG… (Alphabet Inc.) This is coming straight from a legendary hedge fund manager who’s made $274 million for his former fund… And went 20 years without having a losing year. He was even featured in the book Market Wizards as one of the best traders of all time. The good news is he’s revealing the ticker symbol tomorrow at 10 am ET… no strings attached. Click here to sign up for this free presentation. 
Get Instant Access Click to read these free reports and automatically sign up for daily research. | 
No comments:
Post a Comment