Coming soon: a counterfeit economy

[Bill Bonner’s Diary]( Coming Soon: A Counterfeit Economy By Bill Bonner Friday, September 4, 2020 – Week 25 of the Quarantine [Bill Bonner] SAN MARTIN, ARGENTINA – Do you see what is happening, Dear Reader? We’re entering a new phase. Up until now, the Federal Reserve was backstopping Wall Street. This created a huge shift in wealth from average people – with few financial assets – to the “rich,” who own most of them. But it was fake wealth. That is, the U.S. stock market could easily be cut in half. In a flash, about $17.5 trillion of “wealth” would disappear. A few short sellers – who bet on lower prices – would make money. But most of the $17.5 trillion would simply vanish. Poof! It would be gone. Because it was never real… never an honest reflection of what America’s companies are really worth. Recommended Link [Teeka: This is 63 times better than an IPO]( [image]( IPOs are minting “a new billionaire every week,” says Bloomberg. But here’s what the media is NOT reporting. This year, retail investors got – on average – 36% on IPO day. Not bad for one day. But on the EXACT same day… Insiders got 22,946%! It’s outrageous! Now, of course, gains like these are not to be expected. But this secret market is no longer for the “One Percent.” And on Wednesday, September 9, at 8 p.m. ET, Teeka Tiwari is pulling back the curtain… He’ll reveal how you can access the biggest gains of this once-in-a-generation IPO boom. [Click here for Teeka’s top IPO pick of 2020]( -- “Rout” on Wall Street Yesterday, there was a modest selloff on Wall Street. Here’s Bloomberg with the news: Stocks Post Biggest Rout Since June as Tech Sinks: Markets Wrap U.S. equities tumbled by the most in almost three months as the rotation away from high-flying tech stocks gained steam, with investors questioning the sustainability of lofty valuations. The S&P 500 Index retreated from a record high and fell more than 3.5%, its biggest drop since early June, amid declines in Apple, Microsoft, Amazon and Facebook. The Nasdaq 100 sank 5%, its largest decline since March. European stocks erased gains and finished more than 1% lower. Why the “rout?” Between the first of March and the first of June, the Federal Reserve added $3 trillion to Wall Street’s play money. Bouncing off this trampoline of fake money, stock prices rebounded… and went higher than ever. This was despite falling GDP growth… and falling Earnings/Share growth, too. In other words, there was no reason for it – except the flush of the Fed’s new money. But then, beginning in June, the Fed eased off. Its balance sheet – which measures the amount of cash it feeds to Wall Street – went down. And if the selloff on the U.S. stock market continues, the Fed will react as it has for the last 30 years – it will increase the ration, putting more fake money into the trough… fattening the market averages again. (There’s a whole ’nuther story about the stock market, too. The averages are heavily weighted towards the leading stocks – which are those that make the headlines and attract the interest of the “Robinhood” traders. The top four stocks, for example – Apple, Amazon, Google, and Microsoft – are now worth more than the GDPs of every country in the world, except the U.S. and China. Apple is worth more than the entire Russell 2000. Most stocks, however, are still down for the year.) [A Revolutionary New Force Set to Create 818,236 New Millionaires Over the Next Three Years…]( Counterfeit Recovery But now… a new phase begins. The feds are going to be forced to do for Main Street what they’ve been doing for Wall Street all along. That is, they can’t permit a substantial recession – especially not one that they caused themselves. They’ll have to fix it. And what do they have to work with? Just the same thing they used to trick up Wall Street – the printing press. And it will produce the same result: a counterfeit “recovery.” But we’re getting ahead of ourselves… Along with sliding stocks, yesterday, came more evidence that the Main Street “recovery” is not happening. No V. No U. [It’s more like an L](. “The nation’s trade deficit widened by nearly 19% in July,” Barron’s reported. And “On Wednesday, the Federal Reserve’s Beige Book showed that many layoffs related to the pandemic are becoming permanent.” Why no quick recovery? The quick answer is that the next round of giveaways got held up in a fight between Democrats and Republicans. And as more evidence of an L-shaped, non-recovery comes in, they’ll quickly get together on another round of “stimulus.” This free money will give the appearance of a “recovery.” But a real recovery will not happen. Things are not going back to “normal.” Not any time soon. Because an economy is made up of millions of delicate connections, habits, preferences… and price-sensitive decisions. You stop on the way to work, for example, and buy a cup of coffee and a donut. Then, your boss tells you to work remotely. You stop buying the donut… The donut shop closes… It stops buying sugar and flour… And on… and on… all the way to the cane fields of Brazil. Recommended Link [Is Washington on the verge of a massive announcement?]( [image]( This top financial expert just returned from a private meeting with members of the Senate Financial Services Committee… And he’s got his hands on a major announcement. He says, “In 3 decades, I’ve NEVER seen anything like this. Every retiree and investor in America should be alert.” [Click here to watch the full briefing]( -- Plot Change The feds thought they could turn off, and then turn back on, the economy – like putting a movie on “pause.” They thought they could just pick up where they left off. But it doesn’t work that way. Sales, wages, and profits are lost forever… And then, when they push the “play” button, they find that the plot has changed. Attitudes, as well as the illusions and connections that made the “greatest economy ever,” are no longer the same. [Looking for the next tech cash cow? This is it.]( People don’t want to eat donuts. They don’t want to go to the office… to restaurants… on cruises… or on vacations to Europe. Unlike the pre-crisis period, now, they don’t want to spend money. Savings rates soared from only about 7% in February to over 30% in April. Now, they’ve fallen back down, but are still running about 3 times what they were last year. Part of this is probably because there are fewer opportunities to spend money – especially among the wealthy. Much of their spending was on entertainment, vacations, restaurants, and other diversions and status symbols. Now, they don’t want to – or aren’t allowed to – do those things. For many, saving – not spending – is the new status symbol. It is “socially responsible,” they tell themselves. It prevents them, and others, from getting sick. It helps “the environment.” And it makes them look less like greedy SOBs, while the rest of “the people” suffer. Besides, along with the money the feds showered upon them from helicopters, it leaves them with more cash… and a feeling of well-being and safety. Recommended Link [Why 25,833 people (and counting) have paid for this]( [image]( Every day, an average of over 100 people across the country are paying to join this new research service by retired millionaire Jeff Clark. In fact, in just the past 6 months alone, 25,833 people (and counting) have signed up… Proving to be one of the most popular services in the industry. Why are so many people joining? Because he developed a retirement income method that nobody else is talking about… And so far, it’s working out very well. Those who’ve followed his recommendations have had the chance to double their money (or more) again and again… in a matter of months, weeks, or even days. [Just click here for all the details]( -- New Chapter Alas, the money the wealthy don’t spend is the money the non-wealthy don’t earn… so they don’t spend it, either. And it’s also the money that doesn’t show up in GDP statistics. During the Trump years, the U.S. saw the slowest real GDP growth since World War II – less than 2% per annum, on average. That leaves a very small margin for error. Depress the Main Street economy by just 2%… and you are in recession. That’s the error the feds have made. And now, they try to correct it… to go back to “normal”… to “make America great again” – with fake money. But we’re watching a new movie now. And we don’t think it has a happy ending. Stay tuned! Regards, [signature] Bill --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=Coming Soon: A Counterfeit Economy). --------------------------------------------------------------- FEATURED READS [This Is What Economists Think of the August Jobs Report]( have mixed reactions to the latest U.S. jobs report. The good: Unemployment is below the 10% threshold. The not so good: The pace of jobs growth is starting to slow. [Click here]( to read more insights… [Bet on Higher Gold Prices]( all big proponents of gold here at the Diary. Bill and his colleagues over at The Bonner-Denning Letter, Tom Dyson and Dan Denning, say the yellow metal can only go up in value from here. And commodities consulting firm CPM Group agrees. Go long on gold… MAILBAG Dear readers come to Bill’s defense today after others lambasted his remarks on[President Trump and the Republican Party]( Trump is not the answer. His lies and deceit are frightening. I believe in a strong small business environment. I know for a fact – working in unemployment on the government side – that most are making more on unemployment than they were working. The unemployed not having to look for a job – or not being penalized for not taking a job – has employers shouting, “We need workers!” The issue is compensation. When the billionaires have more wealth than over 50% of all America, there is a problem. Until owners pay a fair compensation, it’s going to get worse, not better. A strong middle class makes America strong. It is no longer strong, and you are right: like Rome, we are going to fall. – Cheryl Z. Bill, this one was tough to read. Not because it was wrong or inaccurate, but because it was the truth. I have never been a huge Trump fan. However, I always felt he would be better than the last and hoped he would be different. When you put numbers to the spending though (which was always my main concern with the last), along with everything else going on, it’s obvious that he’s surprisingly worse. Is he better than the possible next? Who knows. But what’s evident is that we’re screwed come November, with respect to many different issues. No matter who wins. Huge fan of your no bull***t opinions. Keep it up. God bless. – Trevor F. I believe that Donald Trump is a very dangerous man. He doesn’t seem to know too much about foreign affairs or economics. Sure, he is a businessman, but how he conducts his business is not necessarily the right approach for the United States as a whole. As far as the economy goes, Trump will spend extravagant amounts of taxpayer dollars if it means enhancing his election possibilities. He also thumbs his nose at normal political protocols, the Constitution, and the pandemic. All in all, he is a dangerous man in a hugely important position. – Mark P. Forget about the naysayers of either stripe. They know not of what they speak. They are clearly as imbecilic as all the buffoons running this ship aground with grand help from both parties. Your analyses are spot on, Bill. Stay the course. Time will be the ultimate judge of this foolhardy behavior. There can be no question that we are on the cusp of a reckoning day. – Michael B. Bill, I don’t agree with everything you say, by any means, but I think that your actions are rather to be praised and admired than condemned. Argentina, for all of its own faults (which are many), is probably a better place to live for most than the United States. So why shouldn’t you live there, if you want to and you can? There is nothing unpatriotic about criticizing any country or any parties or persons that you perceive (rightly, as I happen to think, in the present case, but anyway…) to be doing stupid and evil things. Many Americans cleave to the slogan, “My country, right or wrong.” They don’t know (or perhaps don’t care) that it comes from a speech by Carl Schurz, a German revolutionary who emigrated to the United States (as a political refugee), served as a Union general in the Civil War, was a founding member of the short-lived Liberal Republican Party, and was an important advocate of civil service reform. He later represented Missouri in the U.S. Senate, was U.S. Minister to Spain, and served as the 13th U.S. Secretary of the Interior. In a speech he gave on the Senate floor, critical of certain government actions, he ended (as I recall) with the words, “My country, right or wrong; if right, to be kept right; and if wrong, to be set right.” People forget that last part. – Mikael K. Take heart – the array of vehement responses will cause some to think a few more minutes outside their normal comfort zone about issues raised on either side of the election story. For that reason alone, you should feel you have accomplished quite a bit! If you look for the bad in mankind hoping to find it, you surely will. A true selfless act always inspires another. – Bill S. I’m amazed that some of your readers find your words so offensive and so send you emails that criticize your position in a most offensive fashion. What the Republicans once stood for, they have lost under Mr. Trump, probably forever. The differences between Republicans and Democrats are so slight as being meaningless. Whichever party wins the election this year will – in all probability – have to contend to an imploding economy. There is simply NO WAY that the United States can continue on this path. Our leaders of both parties, in my opinion, have set upon a track that over the long haul is simply NOT sustainable. Meanwhile, keep your commentary coming. I always find it interesting and thought-provoking. – Erich H. Is it unpatriotic to criticize one’s country, as some dear readers believe? Is Donald Trump really dangerous, as Bill asserts? Write us atfeedback@rogueeconomics.com. IN CASE YOU MISSED IT… [Buffett Dumps $800M Of Apple, Buys This Instead!]( Through Berkshire Hathaway… Warren Buffett recently dumped $800 million of Apple stock… And [bought this instead]( He’s now moved $3.8 BILLION in a tiny niche of the tech sector billionaires are flocking to… [See full story here…]( [image]( --------------------------------------------------------------- Get Instant Access Click to read these free reports and automatically sign up for daily research. [image]( [The Ultimate Guide to Taking Back Your Privacy]( [image]( [The Gold Investor’s Guide]( [image]( [The Trader’s Guide to Technical Analysis]( [Rogue Economincs]( Rogue Economics 55 NE 5th Avenue, Delray Beach, FL 33483 [www.rogueeconomics.com]( [Share]( [FACEBOOK]( [Tweet]( [TWITTER]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. 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