2020: What we’ve learned so far

[Bill Bonner’s Diary]( 2020: What We’ve Learned So Far By Bill Bonner Friday, August 28, 2020 – Week 24 of the Quarantine [Bill Bonner] SAN MARTIN, ARGENTINA – Unbelievably, August is almost over. Summer has all but adjourned. The leaves are turning and the gavel is coming down. And what have we learned? What is the verdict? - It doesn’t matter whether you lock down or not. - A face mask probably doesn’t help. - Americans are easily panicked. - They readily tyrannize each other. - The Federal Reserve can inflate stock prices (at least some of them, sometimes). - Nobody is worried about deficits, debts, or reckless money-printing. - Neither political party can add or subtract. - The economy is not going to bounce back. Recommended Link [Top CEO: “If the Internet was the appetizer, [this tech] is the main course.”]( [image]( Source: ITU Pictures It’s the most disruptive technology of the decade… Top tech CEOs expect it to [create more wealth than the Internet](. Robin Li, CEO of Baidu (one of the 10 largest internet companies in the world) says: “If the internet was the appetizer, then [this technology] is the main course.” Amazon’s Jeff Bezos says “We are now solving problems with [this tech] that were in the realm of science fiction… It is a golden age.” But here’s the most exciting part for you… Investors in this space already had the chance to see an incredible 737% gain in just 5 weeks. For a short time, you can get in with as little as $257. [Click here to see how]( -- Futile Lockdown Thanks to the diligent, detailed, and deep analysis of [David Stockman]( we now see that COVID-19 acts just like the seasonal flu. It works its way through a population, infects many, and kills the weakest. We know, too, that face masks provide little protection. They stop droplets – say, from a sneeze – from spreading. But the COVID-19 molecule is much too small to be snagged by woven cloth. Another thing we know is that the lockdowns were a mistake. For three very good reasons: First… They don’t make any difference. Stockman highlights three approaches: No lockdown (Sweden); a light lockdown (Arizona); and a heavy lockdown (Illinois). Guess which one has had the lowest death rate so far? Right… Sweden. But the numbers are so close; as we suspected, the virus doesn’t care whether you lock down or not. The results are about the same. Needless Deaths The second reason is that by shutting down the whole society, the people who actually needed protection didn’t get it. The best policy solution is probably simply to try to keep old people and the virus away from each other. That is especially important in nursing homes, where people are already on the edge of the grave. Instead, governments locked down those who were not at risk, and largely ignored the vulnerable. Deaths were needlessly high among those most at risk. [The FINAL Wave of 5G Millionaires Starts Any Day Now.]( Collateral Damage The third reason will take more time to calculate and confirm. But the collateral damage – deaths from other causes, including poverty… depression… stunted lives – will eventually be tallied. Among young people, for example, suicides are 22 times as common as COVID and pneumonia deaths. We already know some of the major costs – the $2.2 trillion “Everything Bailout”… the Federal Reserve’s $3 trillion money-printing spree. But that is just the beginning. Even with a record current deficit of $2.8 trillion, Democrats and Republicans are “negotiating” (both sides bidding with other peoples’ money) even more boondoggles. Not Bouncing Back These amounts will rise over the next few years. Because the economy is not bouncing back. Restaurants are half-empty. Airports are operating at only a quarter of their pre-lockdown levels. Hotels, theaters, bars – the whole travel and leisure complex is depressed. And after a bit of recovery from April to July, small business employment is now drifting downwards – signaling not just a weak recovery… but no recovery at all. GDP growth rates have been trending down for decades. Under Donald Trump, they reached their lowest level since World War II. Staggering under $77 trillion of debt… …fearful of more riots, race- or mask-shaming, and lockups… …with mortgages and rents unpaid… …10% unemployment… …empty seats, empty desks, empty parking spaces… …trillions in fake money… …unemployment benefits that were often more than people’s income from working… …helicopter money… …a public that has been indoctrinated to believe the coronavirus is like the Black Death… …and two presidential candidates, neither of whom has any idea what is going on… …it is possible that the economy will never recover… that the downdraft from the worst policies and stupidest mistakes in history cannot be overcome… and that we are on our way to an unavoidable reckoning. Recommended Link [1-Minute Poll: Is America Spiraling Out of Control?]( According to a recent Wall Street Journal poll, 80% of U.S. voters believe “America is Spiraling Out of Control.” [image]( We want to know what YOU think… Do YOU think America is spiraling out of control? Click on your answer below: [YES]( [NO]( Casting your vote will take you to a new video that reveals WHY everything’s so upside-down in America. -- Early and Often The feds will continue to try to replace real, wealth-producing schlepping and bussing in the Main Street economy with fake, sweat-free dollars doled out by both the Federal Reserve and the federal government. More loans, more $1,200 giveaways… more bailouts for businesses… and more “liquidity” provided by the Fed. In the coming two months, for example, neither party will want to stand in the way of a gift to the voters. Later, the feds – Republicans or Democrats – will respond to events, rushing in with more cash and credit at every hint of Armageddon. A new virus? A stock market selloff? A dragging recovery? Sagging inflation? They only have one tool – fake money. Now we know that they will use it early and often. The injury caused by the Fed will take even longer to tally. So far, it seems benign. The indexes are all at or near all-time highs, just five months after a massive selloff. That, alone, is remarkable enough. But it is even more remarkable when we realize that this has happened during a severe recession. [This Revolutionary Tech IS the #1 Investment of the Century.]( No Bull Another remarkable thing we’ve learned is that the indexes can go up and the media can report on the fabulous bull market… even while, for most investors, the bull market doesn’t exist. While the leading stocks soar, the average stock in the S&P 500 is still down for the year… and there are 126 stocks in the S&P 500 that have lost more than 25% of their value. And that’s only part of the story. Here’s fund manager Jon Boyar: Look at the smaller names, which have fared the worst. I like to track the Russell 2000, because I think you find the most value in the micro-, small-, and mid-caps. As of July 9th, Russell 2000 was down about 14%, but the “typical” stock in that index has done far worse. Again, simply computing the average of all the companies in the index masks real pain within it, with outliers like Novavax Inc. (NVAX) – which has gained around 2000% for the year – skewing the results. Calculating the median return for each company, however, produces a negative 20% return. Even worse, about a third of the stocks in that index have seen their prices drop by a third or more over that span. Recommended Link [Silicon Valley Genius Makes Next Big Tech Prediction]( [image]( Angel investor Jeff Brown has put his money into 130 tech startups… And he’s profited on 93% of them. In three of the last four years, he picked the No. 1 tech stock on the S&P 500… before it went up. Now he’s found a new opportunity. A company that makes the tiny device critical to every single new 5G phone. Apple is expected to release their phone on or around September 22. When they do, shares in this tiny device maker could soar. [Find out all the details before it’s too late]( -- More Bull But the Fed is ready to do even more mischief. Here’s Fed Chairman Jerome Powell, yesterday, with more mumbly-fumbly: The persistent undershoot of inflation from our 2 percent longer-run objective is a cause for concern. Many find it counterintuitive that the Fed would want to push up inflation. After all, low and stable inflation is essential for a well-functioning economy. And we are certainly mindful that higher prices for essential items, such as food, gasoline, and shelter, add to the burdens faced by many families, especially those struggling with lost jobs and incomes. However, inflation that is persistently too low can pose serious risks to the economy. Inflation that runs below its desired level can lead to an unwelcome fall in longer-term inflation expectations, which, in turn, can pull actual inflation even lower, resulting in an adverse cycle of ever-lower inflation and inflation expectations. […] We want to do what we can to prevent such a dynamic from happening here. The point? We don’t know why the economy is doing so poorly. And we don’t care. So, we’ll just keep the printing presses running hot! Regards, [signature] Bill P.S. This morning, we opened our mailbag to find a reply from Blake R., the dear reader who called us a “[Drugstore Cowboy]( earlier this week: Looking back and assessing my comments about ranching, I see that I sounded a bit harsh and judgmental. I read your response and it bothered me that my message did convey a sense of pre-judgment; which was wrong. For that, I apologize. The point I hoped to convey was that money does not buy experience nor, for that matter, does it buy much knowledge in today’s educational system. As an analogy, my buying an Armani suit and some expensive Italian shoes does not make me a good Wall Street stock trader, analyst, or successful hedge fund manager. Like a rancher or cowboy, a lack of knowledge coupled with a lack of experience can have a tragic outcome; as in the case of a bloated dead cow. Likewise, bad information and advice, conveyed to a “non-professional” investor with limited experience, can also have a similar tragic outcome. The goal for all of us, I believe, is to gain sound knowledge and apply it correctly with life’s hard lessons (aka “experience”) in order to become wise. I watched a savvy cowboy bloat three young registered Angus heifers in three hours in late fall on a circle of early-morning, wet alfalfa because he thought it was late enough in the year and cold enough that the nitrogen content would not be a problem. Lesson learned. My wife is always reminding me to be kind and compassionate, regardless of what we are dealing with in life, and I need to be better about doing just that. I don’t agree with much of the negativity and “doom and gloom” that I read in your newsletter, but I do find myself reading it and trying to gain knowledge and a better perspective. You have far more knowledge about history and world governments than I do and I am learning much from that. Good luck applying the hard lessons learned by ranching in Argentina. Thanks, Blake. And you’re right. We’re all learning. And we’re all humbled by what we don’t know. And God knows, we make fools of ourselves regularly. As many readers pointed out, that “[JCB backhoe]( which we’ve owned for at least 10 years, is actually a CAT. We just never noticed. Another dear reader remarked coolly: “Guess you got that at the drugstore, too!” Anyway, thanks for reading… and for writing. --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=2020: What We’ve Learned So Far). --------------------------------------------------------------- MAILBAG In today’s mailbag, dear readers chime in on Bill’s essays about the Argentine Paradox (catch up [here]( and [here]( I’m Argentine. Now, in my eighties, I’m devoted to dealing with my investments abroad Argentina. I’m surprised for the quality of the information Bill has written. I do believe Bill had very good sources of Argentina’s story. Besides, he talks of Rueff. So I’m convinced he is, like me, close to the Austrian School of Economics. I’m waiting for the second article on Argentina… – Luis P. The Argentine Paradox is misunderstood. The reason for Argentina’s descent from a relatively rich nation was that most of the wealth was concentrated at the very top. There was no significant middle class. When you have that situation, the result is populism, which translates into, “Give them what they want in order to keep the peace and stay in power.” A bit of an echo that we see in the USA today. – Mort S. Meanwhile, another dear reader says self-righteousness and arrogance are crippling America… As Jimmy Carter once said: In the last several decades, Americans have always been involved in some foreign wars and told people how they should live. Case in point, we have a lot to learn from China how to deal with COVID-19. But have we learned anything yet? Dressing it as a Chinese virus does not solve our problem. Now, because we are seeing the Chinese are ahead of us in many fields such as 5G, AI, and aerospace technology, suddenly we are awaken. We want to copy that and start government planning to help the industry in key technology areas so that we won’t fall behind. Even worse, we are playing rascals, trying to destroy Huawei and force TikTok to sell. Where is the spirit of free trade and free enterprises that we always cherished? Does the end always justify the means? What is our leadership and moral high ground? We are going downhill from here. – Chris C. Is America lagging because of an unwillingness to learn from the rest of the world, as Chris suggests? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… [Until Midnight: Claim 1 free bonus year of The Delta Report]( Until midnight tonight, we’re offering you 1 free bonus year of the Delta Report to get you ready for an “aftershock” of the 2020 market crash. 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