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[Bill Bonner’s Diary]( Blah… Blah… Quack… Quack By Bill Bonner Friday, June 25, 2021 To fight this recession, the Fed needs more than a snapback. It needs soaring household spending to offset moribund business investment. And to do that, [Federal Reserve chief] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. – New York Times columnist, Paul Krugman, 2002 [Bill Bonner] YOUGHAL, IRELAND – Many silly and regrettable things are said every week. It would be exhausting to try to pick out the worst of them. Still… some – like bad visits to the dentist – are naturally memorable. We’ll begin with a comment from U.S. Treasury Secretary Janet Yellen this week. Business Insider reports: Treasury Secretary Janet Yellen urged Congress on Wednesday to extend a July 31 deadline to pay down a portion of the federal government’s $28 trillion in debt to investors and foreign governments. Without the extension, she warned of an “absolutely catastrophic” default that would imperil the nation’s economic recovery from the pandemic. “I think defaulting on the national debt should be regarded as unthinkable,” she told the Senate Appropriations Committee, calling it “utterly unprecedented in American history for the US government to default on its legal obligations.” Unprecedented? Hardly. The U.S. effectively reneged on its obligations in 1971. That’s when the Nixon Administration cut the U.S. dollar’s link to gold. Thereafter, creditors would have to take whatever the U.S. chose to give them. Secretary of the Treasury at the time, [John Connally]( put it to them straight: “The dollar is our currency, but it’s your problem.” Since then, tracked by the gold price, foreign U.S. dollar-holders have lost 98% of their money. Recommended Link [Who’s Been Running America Since January 20th? Hint: NOT Obama, Joe Biden, or Kamala]( [ad_img]( Starting January 20th, radical changes swallowed America. New proposals were written on how the country should be run… what should be done with houses and assets, savings in the banks, and retirement accounts. Biden and Kamala Harris have honored the plans of these faceless men and women writing these new rules. But you can fight and win. Here’s how… [See Uncensored Story Here.]( Fess Up Would it be unthinkable to finally fess up? Not at all. We’re thinking about it right now. And what we think is that it wouldn’t be catastrophic at all. Suppose, instead of printing up more fake dollars so as to pretend to honor its commitments, the U.S. simply admitted that it can’t pay? Bondholders would finally see what the [full faith and credit of the U.S. government]( really worth. They could surely find better uses for their money anyway – lending it to the U.S. government guarantees that it will be frittered away. And suddenly, the whole world would have to face the music. The current monetary system is a fraud. It [robs the ordinary citizen in order to reward the rich](. It slows real growth. It confuses and misleads investors, businesses, and households. It creates bubbles and blow-ups. It finances [zombie companies]( and pays for Washington’s boondoggles. Putting it behind us would be a big improvement. [Featured: Caught on Camera: Tesla Car Shocks Everyone]( Intellectually or Morally Deficient But despite the towering blockheadedness of Ms. Yellen’s comment, it only comes in second in this week’s log of bogus, numbskull, or insipid remarks. New York Times columnist Paul Krugman gets the top spot. On Monday, he argued that the inflation “panic” was over. Here’s what he wrote in The New York Times: Seriously, both recent data and recent statements from the Federal Reserve have, well, deflated the case for a sustained outbreak of inflation. For that case has always depended on asserting that the Fed is either intellectually or morally deficient (or both). That is, to panic over inflation, you had to believe either that the Fed’s model of how inflation works is all wrong or that the Fed would lack the political courage to cool off the economy if it were to become dangerously overheated. […] To buy into this story, you have to claim […] that the Fed, which is fully capable of reining in a runaway boom, will stand idly by while inflation gets out of hand. Yes, you would have to think the Fed cannot, or will not, control inflation… which is just what we do think. You might also think that the Fed is intellectually deficient. But in today’s world, you might take that for granted. Recommended Link [New Cash Law Will Be Disaster for Savers]( [image]( New law has expert warning seniors and retirees to beware. There’s a darker truth behind this political event… [Read the shocking details]( -- Influential and Important But first, let us put Mr. Krugman’s pensée in perspective. Because of his influence, he is regarded by some as the “most important” columnist in America. And The Economist described this Nobel Laureate as “the most celebrated economist of his generation.” As we discussed [yesterday]( his influence is considerable… and lamentable. As we saw in the quote at the top of today’s Diary entry, Krugman urged the Fed to create the housing bubble of 2005-2007. And his economic quackery is part of the reason that America’s elite has lost its intellectual authority. Then, when the housing bubble blew up, he came forward with more bad advice. Here he is in October 2008: It’s politically fashionable to rant against government spending and demand fiscal responsibility. But right now, increased government spending is just what the doctor ordered, and concerns about the U.S. budget deficit should be put on hold. Again, the feds followed his advice. From 2008 to 2020, federal debt increased from $10 trillion to $28 trillion… and the Fed’s balance sheet went up almost 800% (while the economy grew just 50%). [Featured: 10-Second Trading Demo Stuns Everyday Americans]( Theoretical Solution And now that Mr. Krugman has influenced the U.S. into a total debt burden over $80 trillion… and influenced the economy to rely on fake, below-zero (inflation-adjusted) interest rates… and influenced Americans to expect bailouts and stimmy checks… …is the Fed really able to stop its money-printing? In theory, the Fed could “[pull a Volcker]( and stop inflation cold. But then, the economy, the stock market, and the feds themselves would slide into Hell. Stocks would crash. Unemployment would soar. And Mr. Krugman would howl to high Heaven… calling for more money. And the Fed, so ready to go along with every cockamamie spend-a-palooza so far this century, would suddenly find itself endowed with the courage to resist the whole of America’s Elite Establishment? Not likely. Recommended Link [“This Will Be the Hottest Ticker of 2021”]( [image]( Anyone who doesn’t buy this ticker will most likely regret it. Experts are projecting gains as high as 458% by the end of this year… Even Forbes has confirmed that when all is said and done, “a new class of millionaires may emerge.” Unfortunately, a recent study shows that only 3% of retirees have invested in this opportunity. That means a lot of people will miss out. Don’t be one of them. [Click here and get the ticker now… no strings attached.]( -- Krugman’s Solution Instead, the inflation numbers – under duress from the Bureau of Labor Statistics – will tell a confusing tale. The feds will continue spending. The Fed will continue printing. And inevitably… though not predictably – neither by us nor by Mr. Krugman – a new crisis will arise. Perhaps the Fed “taps the brakes” and causes a crash on Wall Street… Or maybe a spike in consumer prices causes a panic. Either way, it will be “no time to worry about the budget.” Or about deficits. Or about inflation itself. No… The Fed will not stand idly by as the inflation fire gets out of hand. It will listen to the Great Influencer… Paul Krugman… and come running with a bucket of gasoline! Regards, [signature] Bill --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=Blah… Blah… Quack… Quack). --------------------------------------------------------------- FEATURED READS [Here’s What’s in the Latest Bipartisan Infrastructure Deal]( the breakdown of an earlier round of negotiations, President Biden has agreed a deal with a bipartisan group of senators to spend $1.2 trillion over eight years on infrastructure. Here’s what’s included... [Bank of America Expects Inflation to Remain Elevated]( the feds are busy trying to convince everyone that the current inflation is “transitory,” Bank of America says it’s here to stay… at up to 4%... for at least the next two to four years... MAILBAG Today, inflation is on this dear reader’s mind… Runaway inflation is as much psychology-driven behavior as it is material reality, like so many other things. Once the buyers and sellers of the world all don their inflation headsets, the herd behavior becomes a self-fulfilling prophecy. Buyers purchase more than they need, in anticipation of future price increases, adding to supply/demand disparities and fueling the anticipated increases. Once this psychology becomes widespread and entrenched, it’s off to the inflation races. Inflation is almost always triggered by shortages, which can have many causes, including pandemics. Monetary stimulus pours fuel on the fire, which is almost impossible to extinguish without drastic monetary measures in reverse. We have a perfect storm of inflation brewing. – Brien A. And following Bill’s Tuesday Diary, where he opined on [the latest crypto fad]( and his Wednesday Diary, where he outlined his [grave doubts about bitcoin]( readers have their say… I have diversified investments in several things, including gold and silver. I also have a limited stake in both bitcoin and Ethereum. To say that these cryptos have absolutely no worth is like saying that stocks are also worthless. As with stocks – which happen to be grossly overvalued at the moment – or anything else, for that matter, including real estate, everything can be over or undervalued, due to many possible variables. And if bitcoin has no value, then why do so many businesses now accept it as a form of payment, with more accepting it every day? Even governments around the world are starting to accept it, which should tell you it’s becoming viable as a currency on many levels. The fiat dollar is being deliberately destroyed via overprinting. So exactly what do you suggest as an alternative? – Arthur S. Interesting perspective on bitcoin. But then, if that’s all true, the dollar is even worse. It is also backed by nothing. And further, it is deeply in debt. The dollar isn’t a store of value as much as a store of growing debt. I think the millennials like that cryptos have no debt attached. They are a pure value, although how to peg that value is dubious. Thanks, Bill. Keep it up! – Jason M. I HODL (it stands for Hold On for Dear Life) bitcoin and about fifty other cryptos. I have sent several comments to you arguing over the usefulness of cryptos and their future potential. But I also read your Diary daily and it gives me much thought. Today’s musing that bitcoin may be all foam and no beer is something that I have considered frequently. I agree with you regarding precious metals. That is why I have been selling stocks and buying gold and silver. But I am also still buying cryptos because of FOMO (Fear of Missing Out). [...] You express my doubts and frustrations with precision. I don’t know if cryptos will live up to their potential, but I want to own some in case they do. I know that the stock market is going to implode, so I’m dumping stocks while they’re still worth something. I trust gold and silver, so I’ll continue buying them. Keep on writing, Bill. You make a hell of a lot of sense. – Dale A. Bill, thank you for being as brilliant as you are and for defending your often contrarian points of view with bracing sagacity. I also appreciate your moments of humility and self-effacement, during which you admit that you might well be dead wrong. The hilarious writing style, which has wrong-footed me more than once, also contributes to making you a keeper on my daily reading list. A couple of things about the beer metaphor: The foam is there to protect the beer from degradation. So it does actually have a useful function. Even once gone, its absence is still palpable in the beer. Weird, right? I do understand your confusion and disbelief regarding cryptos, especially when you apply staid investment theory, practice, and experience to them and find them wanting. I’ve been there. It seems to me that in order to better understand the “value” of crypto, you lack only a good debate with the most savvy and convincing person in all things crypto: Teeka Tiwari. You may have heard of him. I, for one, would be keen to see who would win the debate, so that perhaps I can find out whether or not I am dead wrong in “HODLing.” A debate between you and Teeka would be as enlightening as it would be entertaining to listen to. Who knows whom would be convinced of what… – Alex V. Do you believe inflation is driven by psychology, as Brien outlines above? And where do you stand in the bitcoin debate? Write us at [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=Blah… Blah… Quack… Quack). IN CASE YOU MISSED IT… [The #1 way to play semiconductors]( It’s all over the news – there’s an extreme shortage of semiconductors. As you probably expect, this situation is GREAT for chip stocks. A basket of semiconductor stocks has almost doubled the S&P’s record performance over the last year. But did you know there’s a MUCH better way than stocks to play these companies? Take a look… Advanced Micro Devices, a strong semiconductor stock, went up 523% over 10 years. Not bad! But a little-known trade on Advanced Micro could’ve paid an extraordinary 7,991% in 6 months. Of course, no one can promise you’ll see 7,991% gains… but that’s one HUGE example of this intriguing way to play semiconductor stocks. So what is this “better way” to play semiconductor stocks? Hint: It has NOTHING to do with options… and [you can do it right from your existing brokerage account](. [Here’s a new video that explains everything. See the full story on this type of play!]( [image]( --------------------------------------------------------------- Get Instant Access Click to read these free reports and automatically sign up for daily research. 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