Elites’ false signals will bring the economy to a halt

[Bill Bonner’s Diary]( Elites’ False Signals Will Bring the Economy to a Halt By Bill Bonner Thursday, October 21, 2021 [Bill Bonner] BALTIMORE, MARYLAND – God? Or man? Who should take the rap? God will defend Himself – tomorrow. Today, we continue with [our case against man](. It’s classic, isn’t it? A group is successful. It expands its wealth and power. The wealth softens it… the power corrupts it. And then, its elites begin running the whole system just to keep the jig up, so as to preserve their wealth and power. The elites control the “[traffic signals]( Their role is not to tell others where to go, but simply to make it easy for them to get there. Remember what it takes to create a prosperous, fair economy? Honest money (that no one can fiddle)… honest judges (protecting freedom and property rights)… and honest prices (set by buyers and sellers, not by the government). That is, the signals have to be neutral and true. Like traffic lights on the highway, they should not favor any special group… or any special cause… but rather, help everyone get home, safely. Recommended Link [New Law Could Impact 330 Million Americans]( [ad_img]( Self-proclaimed socialist Bernie Sanders called it… “The most consequential piece of legislation since the 1930s.” Unfortunately, according to the Wall Street Journal, most people are unprepared for what’s coming. By the time you see this message, this bill may already have become law. This means you don’t have much time to prepare. [Click here to get the details and see one simple move you can make now to protect yourself.]( -- Simple Maths Instead, America’s elites have falsified the signals to benefit themselves. [As we reported yesterday]( the top 10% of the population now owns almost all U.S. businesses – 89% of the stock market. So when stock prices rise… almost $9 out of every extra $10 goes into their pockets. Let’s do some simplified math… If you buy a U.S. Treasury bond with a 10% yield, it’s roughly the same as buying a whole company with a price-to-earnings (P/E) ratio of 10. Either way, you’d expect to earn back your investment in 10 years. But if the feds push the bond yield down to 1%… it will take you 10 times as long to earn back your money, 100 years. Who wants to wait 100 years? And who knows what the dollar will be worth a century from now? That’s why the smart money borrows at low interest rates… and rushes over to more promising assets – stocks, cryptos, and even NFTs. That’s why the P/E ratio on the S&P 500 is about twice its long term average. And that’s how the elite got so much richer than everyone else. [Featured: Biden did What? Unbelievable!]( False Signals So, how do you force up stock prices? You falsify the signals. The simplest way is to push down bond yields… which is what the Federal Reserve has been doing, vigorously, for the last 12 years. Everybody knows that rigging the bond market is an idiotic thing to do. Price fixing is always a disaster, whether it is done by Emperor Diocletian in the third century, in his Edict on Maximum Prices… or by Richard Nixon in his “wage and price controls” of 1971. Typically, you need an “emergency” to cover your tracks. In 2008, the big emergency was the collapse of the mortgage finance bubble. 10-year T-bonds were trading with a yield around 4%. The Fed knocked that to the floor; the 10-year yield hasn’t topped 4% since then – even as inflation went to 5% this year. Even with the emergency over, the stock market roaring back, and the “greatest economy ever,” according to Donald Trump… the Fed has continued to hold the yield down (it’s currently 1.65%). Recommended Link [The Great Bitcoin Meltdown Is Near]( [ad_img]( “If you suspect Bitcoin is going to crash, I just want you to know, you’re right.” – Jeff Brown Prepare now, and get rich later… [Here is the truth about Bitcoin that no one else will tell you.]( -- Assets Gone Wild But now, the deciders are acting out of greed and self-interest, not the public interest. Absurdly low bond yields – like traffic lights on the fritz – sent asset prices into nutty territory. The Dow is up 450% since its 2009 low. And as we showed you [yesterday]( House Speaker Nancy Pelosi gained $74 million. Senate Majority Leader Mitch O’Connell gained $31 million. Overall, the stock market added some $40 trillion in value from its 2009 low to today (based on the Wilshire 5000, which tracks all American stocks actively traded in the U.S.)… while the economy barely limped along. And since 9 out of 10 of these new dollars went to the elite top 10%, it gained a total of about $36 trillion from this stock market manipulation alone. Meanwhile, [cryptos went wild]( [NFTs went crazy]( [meme stocks went bananas]( …and serious speculators went broke, waiting for a correction. [Featured: Christmas is cancelled?]( Gridlock But the phony traffic signal didn’t just make rich people richer. It also snarled traffic in all directions, caused gridlock in key sectors… and major pile-ups in others. The U.S. government owed $10 trillion in September 2008. Now, only 13 years later, the debt is $28 trillion. U.S. corporate debt, too, has surged way beyond its traditional levels… to $11 trillion. That’s nearly double what it was in 2008. Businesses borrowed, not for new investments that would produce more goods and services, but to buy back their own stocks. And to pay their managers big bonuses. And even to speculate – like [MicroStrategy]( – on bitcoin. And as businesses shifted from the hard work of producing valuable goods and services to making money by gambling with cheap debt, real output declined. After 2008, manufacturing went into a slump and never recovered. Even in nominal terms, manufacturing output is lower today than it was 13 years ago. Recommended Link [Welcome to an empire of debt]( [image]( Our credit system is currently sitting at $68 trillion. It’s the largest debt ceiling in the history of the world – in fact, it’s more than twice the value of every single home in America put together. It’s the most crucial part of our economy. And despite stagnant wages and rising costs, America still appears to be getting richer and richer (at least on paper). And there’s the problem… This massive credit system is about to collapse. But this system has a dark secret about where they’re going to get money to pay off this massive debt. This will affect EVERY American citizen! [Click here before it’s too late.]( -- No Return And now… it’s “inflate or die.” The feds inflate by buying bonds. Buying bonds keeps interest rates low. With $85 trillion in total debt, every 1% increase in real interest rates costs the nation $850 billion in extra debt service. A 5% increase (back to more normal rates) would cost $4.2 trillion. If the feds stop printing money and allow Treasury yields and interest rates to return to normal, in a matter of seconds, the whole flimflam blows up. And yet, “inflating” is eventually fatal, too. And as the debt grows larger, it takes more and more debt to have any effect. When total debt was around $25 trillion, as it was in 2000, another $1 trillion of money-printing could give the economy a big boost. Now, at $85 trillion of total debt, $1 trillion more is hardly noticed. That’s why the Biden Administration proposed $3.5 trillion in additional spending. It needs big numbers – and big deficits – to keep the party going. Congress balked. But come the next “emergency,” hold onto your hat. Regards, [signature] Bill --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=Elites’ false signals will bring the economy to a halt). --------------------------------------------------------------- FEATURED READS [This Company Is Hiking Prices to Cope with Supply Chain Costs]( the company that owns Ben & Jerry’s and Dove, said recently that its prices will rise by 4.1% in the third quarter to "offset rising commodity and other input costs." Other companies like Nestle, Procter & Gamble, and Tide detergent also said they will raise prices to combat higher costs… [Trump Announces Launch of His Own Social Media Platform]( months after former president Donald Trump was expelled from Twitter, he announced the launch of his own media company with its own social media platform. Trump’s goal is to create a rival to the Big Tech companies that have shut him out in the past… MAILBAG Dear readers respond to yesterday’s Diary, “[Bezzle, Bezzle, Boil and Bubble]( on the slowing of American progress and industry… This country is slowly being destroyed by the so-called “Elites,” and our own leaders (who are leftist idiots). The only way to cure this is to destroy everything and start over. – Chuck L. When will we ever get it? Or do we just refuse to? Capitalism is an experiment that has failed over and over again and we keep trying to make it work. The Roman empire collapsed, Britain collapsed, Germany collapsed, Russia collapsed. And now, we are beating a dead horse as America (as well as the rest of the Western credit economies) falters. The indigenous peoples of the world traded with each other and lived in balance with nature’s abundance. There were no competitive and destructive governments in perverse need of control. They lived in cooperation. We should turn the world back over to them, get out of the way, and let them, once again, wisely manage this once-abundant paradise. The indigenous people understood cooperation, while we see only competition. We have pushed nature to the limit and nature is now forcing us to change. – Fletcher E. One reader has a specific example of an industry that has been taken over by elites… The monopoly on the movement of containers out in Los Angeles is another glimpse into the powerful shipping industry. Another one is the Jones Act, which restricts which vessels can deliver the goods, and consequently, raises prices for people who can least afford it. Puerto Rico comes to mind. The Jones Act is archaic, yet the country is hostage to it, and we, of the longshoremen. Logistics taken to the extreme… for the benefit of a few. – Michael C. What kind of “cure” is there to defend America against the elite? At what point will we know that America is too far gone? Write us at [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=Elites’ false signals will bring the economy to a halt). IN CASE YOU MISSED IT… [The 3-Stock Retirement Blueprint]( When most folks think about making money through the markets, they think “buy and hold.” They think “diversification.” And they think about investing in things like index funds. But one man has a different approach… It’s called the “3-Stock Retirement Blueprint.” It’s a way to play 3 stocks – yes, just 3 – and potentially make more money than you would by trading all the rest of them… Or by using an old-fashioned approach. Sound impossible? [Get all the details here]( – including the names and tickers of the three stocks. [Click here now.]( [image]( --------------------------------------------------------------- Get Instant Access Click to read these free reports and automatically sign up for daily research. 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