RANCHO SANTANA, NICARAGUA — The seas have gotten rough. The boat is pitching… rolling. It’s hard to tell which direction we’re going.
Today, we grab the guard rail to get our bearings.
Bad Rehearsal
We’re on our way south… to Panama… and then to Salta, Argentina.
Salta is not on the pampas. It’s on the high ground. There’s no ocean at our front door. Just desert. Miles and miles of desert.
Argentina is a great place for us to explore the future. That is, all the bad ideas… bad policies… and bad politics that are now developing in the U.S. have been rehearsed for many years — 8 decades, to be more precise — south of the Rio de la Plata.
Runaway spending programs? Check!
Huge government deficits? Check!
Uncontrolled money-printing? Check! Price fixing? Uh huh. Tariffs and subsidies to protect crony industries? Yep. Phony statistics, fake news, demagoguery, pandering? If they haven’t tried it in Argentina, it’s not worth trying.
Crackpots, scalawags, grifters and opportunists running the government?
Hey… Argentina has them, too. Lots of them.
And inflation? You bet.
The current inflation rate is said to be 55%. How can you do business with your money losing value at that rate? How can you protect your family’s wealth?
And what should you do now if you think the U.S. is headed down that same long, lost highway?
That’s what we aim to find out. We’ll be giving you on-the-scene reports.
Today, though, we are still looking at the storm-toss’d seas of the U.S…
Buy the Dip?
The Dow jumped 700 points on the open Tuesday. By precisely 11:30 a.m… it was back in the red. A minute later, the S&P 500 went red, too.
Then it began a climb… very, very slowly. It was only in the last few minutes that the Dow sprinted up to close over 1,000 points to the good. CNBC:
Stocks rose sharply in wild trading on Tuesday as investors weighed the prospects of fiscal stimulus to curb slower economic growth stemming from the coronavirus outbreak.
And Wednesday? As we write from the Managua airport, the Dow is expected to open 500 points lower! It went on plummet more than 1,600 points in the afternoon.
What to make of it? Are we in a bear market yet? Buy the dip?
Meanwhile, the dreaded coronavirus continues its progress. ABC News reports from New York:
Gov. Cuomo orders containment zone in New Rochelle, calls in National Guard
The World Health Organization declared COVID-19 a global pandemic.
The New York Auto Show was put off.
Sanders and Biden both canceled rallies; neither wanted to lose supporters to the virus.
Google told its employees to go home. Boston cancelled its St. Patrick’s Day parade.
But amid all the lurid news, it’s easy to lose track of what is really going on…
Final Insult
In our view, the U.S. empire began its downward slide in 1999. The glory days were over.
Old… decrepit… and fearful… after decades of corruption, conniving, bad policies, and bad money… America slid by nearly every comparative measure.
The final insult came last year when — despite breakthroughs in medical science and record spending on health care — life expectancies actually fell.
At the start of the new millennium, the U.S. elite turned to the two worst possible policies to try to keep money moving in its direction: war overseas and inflation at home.
So far, the inflation has been of the pleasant variety; it boosted prices for stocks and bonds… and enriched the elite who own them.
But it also enfeebled the economy and compromised its immune system.
Debt grew — corporate, household and government. Asset prices rose to the highest levels ever. And government finances deteriorated, with trillion-dollar deficits “as far as the eye can see.”
Ol’ Humpty Dumpty had never been on such a high wall, in other words. It was only a matter of time until something knocked him off.
A virus? An oil price war? A worldwide recession? We didn’t know what would give him the shove, but something would.
And now… maybe something has…
Certain Conclusion
As we write, poor Humpty is squirming and struggling, trying desperately to hold on.
And there are the feds. They are out with their ladders and poles — stimulus! — trying to keep him up there.
In the short term, we don’t know which way it will go. But over the longer term, the conclusion is almost certain.
Tax cuts, rate cuts, quantitative easing (QE), Repo Madness, equity purchases, Modern Monetary Theory (MMT)… the president even says he has some beautiful new trick up his sleeve…
Helicopter money and every stupid scheme the hinds can come up with — they’ll try them all.
But all the king’s horses and all the king’s men will only make things worse.
Stay tuned.
Regards,
Bill
• This article was originally published by Bonner & Partners. You can learn more about Bill and Bill Bonner’s Diary right here.