Bill Bonner, from Poitou, France

‘I am the house now.’

—US Treasury Secretary Scott Bessent

On the Rushmore of financial giants is Irving Fisher, who announced a ‘permanently high plateau’ for stocks...just before they fell into a ditch in 1929.

There is also Ben Bernanke, who told home-buyers not to worry because, ‘we’ve never had a housing decline on a nationwide basis’ just before the nationwide housing collapse in 2008.

Bernanke deserves a second spot. He warned Congress that ‘If we don’t do this, we may not even have an economy on Monday’...urging the pols in Congress to bail out the biggest, richest gamblers on Wall Street, putting the losses instead on innocent taxpayers.

And now, we have the jackhammers working on a new face – that of US Treasury Secretary Scott Bessent, who calmly announced last week that he is the ‘house’ now. But is this the house that couldn’t decline...or the one that crashed to the ground?

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Bessent’s proximate target was the Japanese yen exchange rate. He seems to think he can choose it as though he were setting a thermostat. But the remark has much more ambition in it. Bessent implies that he should be able to control the price of dollar...and the mortgage rates paid by American homeowners — the whole shebang, in other words.

But while he can influence those things, he cannot control them. The world is full of gamblers…and they’ll have their say too. Bessent knows that very well. He was on the team, with George Soros, that bet against the house – the Bank of England – in 1992, and won.

Shaping up — like a cage fight on the White House lawn — is a showdown between Bessent and Fed chairman Kevin Warsh. Broadly, the two may be said to represent the two forces of history — inflation or deflation...boom or bust...yin or yang.

Bessent has an advantage — with the full faith and credit of the US backing him up. But the ‘house’ is already wobbling and creaking, with waves lapping at its foundation. And Donald Trump has proven in Atlantic City that the house casino can be swept out to sea, too.

The dramatic tension is easy to describe. Bessent — the expansive yang force — has to finance the house...the federal budget...including, in the next twelve months, rolling over (refinancing) $10 trillion in old loans and another one to three trillion in new ones; keep reading.

Warsh, meanwhile, is the prudent ‘yin;’ he is more learned, and more reserved. He’s supposed to protect the value of the dollar, something his predecessors have failed — spectacularly — to do. The 1971 dollar today is worth only a small fraction of what it was worth when it was first printed. Warsh says he aims to do better. So, we suppose, did the others.

A lot depends on the ringmaster to whom Bessent reports...and to whom Warsh, ultimately, owes his job — Donald J. Trump. Who will he support? Warsh’s higher interest rates to protect the dollar? Or Bessent’s efforts to hold borrowing costs down...making it easier for the feds to finance and refinance their spending?

Ask us something harder!

Yet another ‘tell’ came last week. Speaking at his big rally in Dallas, POTUS told American voters that if they went for his slate in November they’d each get $5,000. The BBC was on the case:

US President Donald Trump says he would offer every adult American a $5,000 payout if Republicans win both chambers of Congress in November’s midterm elections.

There are nearly 270 million American adults, meaning a $5,000 payout would cost the US government some $1.3 trillion.

Was this remarkable, or what? Many voters think Trump is conservative...but there was nothing remotely conservative about bribing voters with a $1.3 trillion giveaway. Nobody has tried anything like it since the Democrat, George McGovern, proposed a $1,000 ‘demogrant’ in 1972.

But McGovern’s giveaway at least had the dignity of an idea attached. His plan was to replace all other welfare programs with a guaranteed minimum income — something even some conservatives approved of, as they thought a single tap might be easier to shut off.

Mr. Trump’s plan — if there is one — has no such saving grace. It is pure vote-buying jackassery.

Of course, the feds have no $1.3 trillion lying around. So, the cash would have to be borrowed. Already, the feds are expected to run a deficit of $1.8 trillion next year. This added ‘dividend’ would bring the deficit to over $3 trillion — or around 10% of GDP.

But the nation saves only about 0.3% of GDP — three tenths of one percent — not even enough for a down payment on the deficit. Ultimately, the Fed would have to fund the expense, effectively ‘printing’ the money by buying the government’s paper itself. It would have to ‘inflate,’ in other words.

Dan Denning, in a recent interview, put the question directly:

‘Who would you rather be, Bessent or Warsh?’

“History will be kinder to Warsh,” we opined. “After all, he is trying to do the right thing, protecting the dollar.”

But Bessent will win the fight. Come a crisis, Warsh will have to do some quick figuring. Principles and prudence may be valuable qualities. But when the ‘house’ crashes, he is likely to see them as unnecessary luxuries.

He will have no choice; he will shore it up with the only lumber available. Fake money.

Regards,

Bill Bonner

Sunday, September 13th, 2026

Laramie, Wyoming

By Dan Denning

Dear Reader,

Have the elite techbros that run US-based close-source AI popped their own bubble this week? The latest phrase to enter the financial and popular culture is ‘pace the frontier.’ Anthropic’s Dario Amodei, OpenAI’s Sam Altman, and even X’s Elon Musk have all agreed that it might be time to ‘pause’ the rapid pace of AI development on the grounds of ‘safety.’

It seems to be a coordinated call for government intervention/regulation based on the shocking claim from an obscure AI researcher last week that 70% of humans could be made extinct by AI in the next three years. Not jobless. But dead as a lifeless hard drive. Seven out of ten human beings.

Yikes.

The skeptical view of the sudden, Covid-like panic about AI, is that the companies involved are burning through wads of cash with each new model they release. The winner-take-all race to Artificial General Intelligence (AGI) turns out to be obscenely, perhaps prohibitively, expensive. What now?

If the ‘frontier’ firms at the head of the AGI chase can’t raise cash privately, or sell bonds, or execute an initial public offering now…then investors may find out the companies are effectively bankrupt…beset by lower-cost competition from open-source Chinese models…and without a viable business model.

Three strikes and you’re out, AI bubble.

Solution?

Panic!

Specifically, hit the ‘doom’ button. Get all your socialist elitist friends in Silicon Valley and the mainstream media to ‘flood the zone’ with the same message. Draft never-done-anything Bernie Sanders and that old collectivist War Horse Hillary Clinton to go on the Sunday talk shows and call for more immediate government regulation. Maybe see if Tony Fauci can link it AI to Covid somehow.

But regulation to do what? To freeze the marketplace, lock out competitors, and lock-in a business model where there are only two or three government approved AI companies…providing a ‘safe’ level of AI to the public for purchase at a price.

It would be commoditized and lobotomized ‘intelligence’ as a public utility. Yet another government created quasi-monopoly foisted on the public by politicians and corporate oligarchs. Sounds familiar.

It’s all for your protection, of course. But wouldn’t it be something if THIS was the thing to prick the bubble we’ve been writing about at BPR since the beginning? See the chart at the top of today’s note. It may be that the great bubble has already begun rolling over.

What do you think? Is this it? Leave your comments below. And in the meantime, please enjoy all the best research we published last week as get ready for another big week. The Fed meets as well!

Until tomorrow,

Dan

P.S. In my Private Briefing with Bill on Friday, he confirmed he’ll be in attendance at The Future of Wealth conference in Dublin in late October. For those in the neighborhood wishing to attend, you can sign up here.

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Friday, September 11th, 2026

Laramie, Wyoming

By Dan Denning

Are the Silicon Valley insiders who’ve built the closed-source American frontier models trying to scare the government into regulating them? Might they be exaggerating the threat from AI in order to ‘freeze’ the industry, restrict competition, and lock in high prices for the tokens (and even higher valuations for the intial public offerings they hope to make this year)?

It kind of seemed like that was going this week. A 27-year old unknown AI researcher named Jacob Coxon made an X post earlier this week saying, ‘the people building AI earnestly believe that it could kill us all by the end of the decade.’ His post came just before the Wall Street Journal published an article about him. Mostly left-wing politicians in Europe in the US immediately re-tweeted Coxon’s post, calling for a halt to AI development pending more studies about its safety and possible regulation/nationalization.

Maybe this will be just the thing to prick the AI bubble. It’s a topic Bill Bonner and I discussed yesterday in our latest Private Briefing for BPR readers. We talked about the ceiling for interest rates, why deflation is inevitable, and the future of wealth in a world gone bonkers.

Enjoy the video and transcript below.

Until next week,

Dan

P.S. In simple terms, it’s possible that OpenAI and Antrhopic are burning through so much cash so fast, they realize there is no business model where they can show prospective investors a profit—so they’re ramping up AI fear in order to freeze the market (and token prices) to prevent competition via regulation. It’s called regulatory capture and we’re seeing a full court press for it right now.

(This transcript has been lightly edited for brevity and clarity)

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Friday, September 11th, 2026

Bill Bonner, from Poitou, France

‘Sell paper, buy stuff.’

—Tom Dyson

We rise this morning to salute the great yin and yang of the financial world. Business Insider:

Oil jumps above $100 a barrel as US-Iran fighting raises Strait of Hormuz disruption fears

What to do? Buy the oil — the stuff? Or buy the oil company — the paper?

In a nutshell, real stuff is calm, slow-moving and taciturn. It is useful. And practical. Down to earth. Paper is more volatile and voluble. It gives off new signals every day. It has visions and delusions. It puffs itself up into grotesque proportions...and then crashes like the Hindenburg.

Over the last 45 years, for example, the price of a barrel of oil has gone up about three times. But the price of the paper — Exxon Mobil — has gone up 40 times. Clearly, owning the paper was better — since 1980 — than owning the oil itself.

There are gold mines. And there are pieces of paper (or electronic notations) that claim a share of the profits. When the world is inflating, you want to own the paper; light as air...swift as a pickpocket...it races far ahead of the real thing it represents.

When deflation is the primary trend, however, you want to own the gold mine, not the paper. The real value of the gold mine — the gold it produces — may not change much. But as the paper goes down in flames, the real thing — the stuff — is relatively more valuable.

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Warren Buffett — a Midwesterner not given to dreamy self-deception — tried to capture this paper/stuff dynamic by comparing the nation’s GDP (the stuff it produces) to its stock market capitalization (paper). The result was the Buffett Indicator.

The chart of the Buffett Indicator shows the Primary Trend pretty much as it ought to be. Paper (represented by the Wilshire 5000) went down until 1980...then up until 2000. There was another leg down to 2009. Since then, paper has outperformed stuff, spectacularly...the ratio was barely 50% at the bottom of the mortgage finance crisis and is now around 230%, an all-time high. The paper holders are richer than ever.

It is easy enough to jump on the ‘paper’ bandwagon. Stock brokers are standing by to take your call. But what do you do when ‘deflation’ is the Primary Trend? How do you ‘own’ GDP? It is very impractical to stack barrels of oil in your backyard.

A major trend of the last half century was the ‘financialization’ of the stuff. Financed at ultra-low interest rates, Wall Street tried to turn everything into paper.

Investors could not only buy part of a company, but they could buy a fund that owned part of the company. Or a contract that gave them the right to buy the fund that owned the company. Or a bond, a loan, an option, a derivative, a crypto, Private Equity...Hedge Fund...any paper might be tied to some other paper, all trussed up together like mountain climbers on a slippery slope. Everybody seemed to get rich as paper prices (assets) went up...ignoring the huge crevasse of debt beneath them.

After the dot.com sell-off, investors turned to housing…safe, dependable stuff, they thought. “Housing never goes down,” they told themselves. The Fed nourished the delusion by cutting interest rates again, bringing financialization into the bedroom.

The debt bubble in mortgage finance blew up in 2009, forcing some 4 million families to look for new homes. But the bubble was soon patched – with even lower interest rates – and continued to grow.

The ‘stuff challenge’ is what to do with your money when almost everything from housing to gold mining stocks seem to be inflated. Our solution: we buy gold itself. There are booms and busts in gold, just as there are in everything else. But over time, gold tends to be a pretty good proxy for stuff.

Gold eliminates what appears as upward bias in paper assets. Everyone believes, for example, that stocks are a lot more expensive today than they were 100 years ago. ‘You can’t go wrong in stocks,’ they say, ‘not over the long run.’

Gold makes the picture much clearer. The Dow/Gold chart shows the historic inflation of stocks — 1980-2000. Then, there is the great deflation, in which stocks lost 80% of their value, in gold terms, and didn’t resume their inflationary trend until 2011. Since then, they’ve bounced from a Dow/Gold ratio around 7 to currently near 12. In other words, paper has been inflating for the last 15 years, but is still far below its 1999 high.

But over 100 years, far from showing a triumphal march upwards, the Dow/Gold ratio shows a hike uphill...and a tumble down again. As of today, the ratio has the real value of the Dow at the same level it was 99 years ago — worth about 12 ounces of gold. Even in this Bubble Empire, stocks are not really worth a penny more than they were in the 1920s.

Oil, meanwhile, at $100 a barrel, has come a long way from when it was under $1 a barrel 100 years ago. That’s an easy-to-figure 100x gain. But gold has gone from $20 to $4,400 — a 220x gain. So, the 1927 vintage oil, held in your basement for a century, is only worth half as much as it was back then — just as classical economists predicted it would be.

Most stuff tends to become cheaper as new technology delivers more of it. Gold is not perfect ‘money,’ but it is more reliable than most other stuff. New tech makes getting it easier...but the deposits are farther down, and harder to get at. And the economy is much larger, requiring more money just to keep prices more or less stable.

And now what? All of our indicators — including that dark-of-night twitch at 3am — tell us that paper has had its run. It OUGHT to deflate. Whether it will or not...we don’t know. But betting on paper, now, is unlikely to pay off.

Regards,

Bill Bonner

Research Note, by Dan Denning

‘Core’ US inflation was 2.4% year-over-year in August, according to this morning’s data release from the Bureau of Labor Statistics. The headline figure was 3.4%. Both are well above the Federal Reserve’s target inflation rate of 2%.

Unsurprisingly, given the ongoing war in Ukraine and the US war with Iran, energy prices were up 16.3% year-over-year. AAA reports that the national average price for diesel fuel is now over $6/gallon for the first time ever. In California, it’s over $8/gallon. Diesel is a key input in the cost of food, construction, and shipping.

Later today I’ll publish my conversation from yesterday with Bill Bonner about what the Fed will do next. Raising rates at next week’s meeting would be a natural response, given today’s inflation figures. But with 10-year US Treasury yields already rising (despite Treasury Secretary Scott Bessent’s best efforts to contain them), the US government can’t afford higher interest costs on its $40 trillion in debt ($9.5 trillion in debt must be refinanced in the next twelve months, or about 30% of total marketable debt outstanding).

Gold was up sharply on the CPI report after trading lower overnight. Stay tuned for more later today, including an update on possibility that AI will kill all of humanity sometime in the next ten years (and the cynical strategy that’s actually behind this exaggerated claim).

Thursday, September 10th, 2026

Bill Bonner, from Poitou, France

Our daughter sent the news up from South America. That wasteland that we bought down there has turned into a treasure. Here’s the story from the local paper:

“Gualfin” is our place, the desolate mountain farm we bought twenty years ago, when prices were so low, we couldn’t resist. Since then, prices have stayed low. But now we have found El Dorado in our lonesome patch.

Gold, copper, lithium...this ‘worthless’ land has everything...

And nothing.

“Bill, don’t buy a yacht yet,” cautioned our lawyer. “This is Argentina. The property owner only has the rights to the first 50 centimeters (about 20 inches) of dirt. All the mineral rights belong to the government.

“And the government has the right to give a mining concession to your land whether you want it or not.

“Besides, what they are really looking for is lithium. The rest is probably not worth mining. Your place is too far and too inaccessible. So, unless the deposits are really good, no one is going to bother.

“The exploration company is digging down now to see if the lithium salts are worth a major mining investment.”

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Bummer!

In three sentences, we had gone from being a rich mine owner back to being a poor scribbler. And now we will have huge trucks and excavators interrupting our views.

Meanwhile, we keep our eye on Argentina, partly because we have our daughter there...and partly because Argentina is running one of the most fascinating experiments in world history.

Democracy favors the blowhard, the con man and the big spender. Especially the large democracy. People cannot know their leaders personally...and they do not have the time or the experience to evaluate policies intelligently. All they have to go on are soundbites, concocted ‘narratives’ and promises.

The press, too, advertises itself as a watchdog. But it is really more of a lapdog, yapping only to fend off critics. In its simpleminded universe, there are problems...and there are solutions. Most of what it calls ‘news’ merely repeats the press releases when the ‘solutions’ are announced...and then, when the program fails, it barely mentions it.

Most elected governments spend too much, borrow too much, and then ‘print’ too much money. The result is inflation and insolvency, often garnished by war.

Argentina served up the full menu for decades. But along came Javier Milei with the radical idea that a government should be limited and spend no more than it collects in taxes. As far as we know, nothing like it has been attempted in modern times...perhaps with the exception of Roger Douglas’s more modest program in 1980s New Zealand, which ended with mixed reviews.

Instead, democratic governments normally just get larger, more inept and more corrupt – until war, revolution, or economic catastrophe intervene.

So, how’s it going on the pampas? So far, so good...

Inflation is still going down, the BA Times:

Inflation in Buenos Aires City slowed to 1.7% in August

Price hikes in the capital slowed for the first time in two months

The boom continues, too, with the best auto sales in twenty-five years. And Argentina is expected to have the highest economic growth rate in Latin America next year.

But as in New Zealand, the results are not always immediate or easy to spot. While the inflation rate goes down, prices are still going up...albeit at a much slower rate. The problem, during this transition period, is that they are going up faster than wages.

People who are used to a crooked system need time to adjust to a straight one. Milei eliminated the government’s deficits. That meant cutting back on its outlays. But a lot of voters in the poorer barrios relied on subsidies for their daily bread. Consumption in some neighborhoods is actually going down as wages fail to keep up with price increases.

While the public still seems willing to give Milei’s reforms time to work their magic, political pressure is growing. That may be why Milei has pulled the Falklands out of the drawer. The public is patient. But patience is a wasting asset. Patriotic claptrap has a longer shelf life. Milei may be hoping it will give him more time for his reforms to work. France 24:

Argentina’s Milei escalates Falklands dispute in sovereignty push against Britain

Daily Digest:

Milei exploits Trump’s thirst for revenge as he rekindles claim on Falklands

“Your country was not there to help me,” said Trump to Britain, referring to the UK’s reluctance to join his blockade of Iran’s blockade, following the US bombing of Iran and the killing of its leader. Trump says the US will ‘reconsider’ its support for Britain’s claim to the islands.

What happens next?

We’ll wait for the news. And we’ll continue to enjoy our twenty inches of topsoil; it’s all we’ve got.

Regards,

Bill Bonner

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Wednesday, September 9

By Tom Dyson, Investment Director

A vicious scramble for scarce resources…fueled by bottomless paper money…in search of profitability at massive scale…that may or may not materialize…

Our investment strategy is perfectly positioned for this AI-led Inflationary Boom… which we track with this chart of stocks/oil and the interaction with its moving average.

Above the moving average signals we’re still in the Inflationary Boom.

Kate and I are buying MORE gold. I have the strongest conviction that gold will be making new all-time highs again next year. The bubble is deflating and the run from paper has started. I hope my updates of the last few months have made this position unequivocally clear.

Greetings from Chiswick, West London.

The debasement trade is ON again…and we’ve likely entered the final melt-up of the great paper money experiment.

The debasement trade had been working beautifully until February 28, when the US and Israel attacked Iran, and the trend reversed, knocking 16% off the gold price.

As a reminder for new readers: The debasement trade is based on the observation that huge government debt and deficits all around the world will require even more money printing, yield curve control, and quantitative easing by central banks. This is happening with nearly all currencies in nearly all countries.

Interest rates are rising around the world, responding to the 8% US money supply growth we’ve seen over the last twelve months (and we’ve been tracking, thanks to Professor Tim Congdon)...

The mad scramble for resources to build AI infrastructure, which as yet hasn’t produced a profit…

And the government’s gargantuan appetite for borrowing.

We’ve seen two important Scott Bessent interventions this summer…in the yen and in the US yield curve. Both these decisions reinforce something we’ve known all along: They will defend interest rates, by sacrificing the currency and our cost of living.

The result?

A gradual debasement of paper money and claims on paper money in general against real assets; things like precious metals (gold, silver, platinum), and energy assets that cannot be printed or created with keystrokes (uranium, natural gas, crude oil). In a nutshell, sell paper, buy stuff.

This is the “debasement trade.” The following three charts show copper, making a new all-time high, diesel, making a new all-time high, and iron ore futures sneaking back above $100/ton.

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Wednesday, September 9th, 2026

Bill Bonner, from Poitou, France

‘I believed Free Trade would have the tendency to unite mankind in the bonds of peace, and it was that, more than any pecuniary consideration, which sustained and actuated me, as my friends know, in that struggle.’

--Richard Cobden

Yesterday, we reported on the move to remake the map of the world.

The UN approved a more ‘realistic’ map...in which the large countries of the northern hemisphere were no longer made to appear larger than they actually were.

The US voted against it. And then, POTUS, roused to cartographic fever, awakened his inner Mercator...or perhaps his inner Teddy Roosevelt. He draped the US flag over all of North America...including Caribbean islands.

Which is it? Is the US empire swelling, as Trump suggests?

Or, is it being downsized and deflated? All we know is that bubbles always deflate; Bubble Empires, like a bloated steer, deflate in a particularly noisy and disagreeable way.

We also mentioned yesterday that the US had lost the top credit rating, which it has had since 1919.

Here are couple more news ‘dots’ that need to be connected. Modern Diplomacy:

Norway’s $2.3 Trillion Fund Is Cutting Treasuries. Here’s Who’s Left Holding Washington’s Debt

The $2.3 trillion Government Pension Fund Global — the largest single pool of investment capital on Earth — asked its own finance ministry for permission to do something it has never done at this scale: shrink its government-bond weighting. The September 1 letter proposes cutting government bonds from 70% to 50% of the fund’s fixed-income benchmark, trimming roughly $80 billion from US Treasuries alone. It landed the same week fresh jobs data pushed the 10-year Treasury yield toward 4.8%, and as Beijing’s and Tokyo’s own Treasury stacks sit near multi-year lows.

The Financial Times:

Dutch Central bank moves gold bars out of New York over “geopolitical unrest”

DNB prefers London over the American city.

The Dutch are not given to hysteria. When they take their gold out of your vaults you might want to consider moving your own money, too.

But money — and the goods and services it buys — are on the move all the time. Cutting yourself off from the world is cutting yourself off from money...and progress. Then, the people who did not cut themselves off kick your butt. Cobden was wrong. Trade is not necessarily the way to peace; but it is the only way to protect yourself from war.

But POTUS seems to have come to a different conclusion:

We could do tremendous good for ourselves by just not trading with countries.

If that were so, there is no evidence for it in the historical record. Countries that cut themselves off fall behind. Eventually, they are pried open by someone with better artillery.

That is what happened to Japan. The country had been isolated — by choice — for 220 years. Then, in 1853, Commodore Perry landed a group of just 250 marines, backed by the latest ship-borne artillery. The local authorities realized it was impossible to resist. They came to an important insight: close your doors and you will fall behind.

Commodore Perry’s diplomatic gifts included a model train and the latest rifles and handguns. In a few years, there were railways all over Japan. And then, Japan was soon on the map...and growing larger — economically and militarily. A few decades later, Japan had the most lethal armies in Asia.

By the 1930s, it had captured much of the Chinese mainland. In 1940, it attacked French Indo-China. Then, in 1941, Japan bombed Pearl Harbor...followed in 1945 by America’s devastating firebombing of Tokyo...and the first and, so far, only use of atomic weapons on Hiroshima and Nagasaki. And by 1989, the Honda Accord was the best-selling car in America.

It is only by trade, interaction, and competition that a nation is able to keep up with its rivals...and improve its own citizens’ standards of living. Richard Cobden’s free-trading Great Britain proved it. Japan proved it twice, once with battleships...and later with camshafts.

More to come...

Regards,

Bill Bonner

Tuesday, September 8th, 2026

Bill Bonner, from Poitou, France

We could do tremendous good for ourselves by just not trading with countries. We lose with Mexico $195 billion a year. They have nothing that we have to have, I mean. Hot tamales, tomatoes, a couple of things

—POTUS

The UN just voted to make Africa bigger. The Guardian:

The United Nations has voted to adopt a resolution for the world to formally phase out the traditional Mercator map of the globe in favour of one that more accurately displays Africa’s size.

At the session, 164 countries voted in favour of the resolution. Only the US voted no, with its representative saying the resolution was “superfluous”. There were six abstentions.

The Mercator world map took the round globe and showed it in two dimensions. It did so by holding fast to the size of the land mass near the equator but stretching out Canada, Greenland and Russia to make them appear much bigger. Sailors understood the trick of it; they relied on it to get to Bermuda rather than Boston.

The new map is more ‘realistic.’ Greenland no longer pretends to be the same size as Africa. But the world is not infinitely big. So, if Africa is larger, the rest of the world must be relatively smaller. Even the US, comfortably seated between the hot tamales and the Canooks’ maple syrup, must be somewhat diminished. That, by our reckoning, is the most significant geo-political trend of our time — the deflation of the Bubble Empire.

Historians are always looking for hinges — pivot points, where trends change and doors open. Helena Cobban thought she heard the squeak of a hinge point last week, coming from Bishkek, Kyrgyzstan.

Iranian Pres. Masoud Pezeshkian was conferring with the presidents of China, Russia, and India, and the heads of state and government of six other Asian states, at the 25th anniversary meeting of the Shanghai Cooperation Organization (SCO.)

While the US was trying to preserve an old world, with an out-size USA, a huge, new world was being born, on the other side of the planet. Tout le monde was there. The heads of state of the largest countries on Earth, covering the Eastern European steppes to the Sea of Japan, and from the Arctic down to Ceylon.

What were they up to? Pres. Xi:

Hegemonism, unilateralism and protectionism are resurging against historical trends. Nevertheless, the overwhelming majority of the world do not condone power politics, conflict and confrontation, or isolation and backwardness. What they want instead is to hold a place on the world stage through national development and international cooperation. In recent years, the rise of the Global South is driving a profound shift in the international balance of power. The trend toward a multipolar world is irreversible...

This was another way of saying that America’s days as the world’s only big shot are over. This SCO group represents far more people and a much greater landmass than the US and NATO.

Good?

Bad?

Who knows? But the map changes...and the shrinking of the Bubble Empire continues. London Daily:

After 108 Years: Moody’s Downgrades U.S. Credit Rating

Moody’s has downgraded the United States’ credit rating from the highest level (AAA) to one notch below, Aa1. The reasons cited for the downgrade include weak fiscal management in Washington, massive deficits, and a sharp rise in interest payments on the national debt, which has reached approximately $36 trillion. For the first time in history, the United States no longer holds the highest credit rating from all three major agencies, after Fitch and S&P also issued downgrades in the past.

People have been warning about the decline of the US ever since John Hancock signed the Declaration of Independence. These ‘declinists’ have been so wrong for so long that many historians snarl or chuckle when they appear in public.

Charles Krauthammer once commented on the ‘decline,’ writing that if Rome had gone down at this rate, ‘you’d be reading this column in Latin.’ But Krauthammer supported the war against Iraq — perhaps the loudest hinge in the whole raspy orchestra. Then, he died in 2018...before the sounds of decline had become deafening.

No other country ever garrisoned so much of the globe as the US, with 750 overseas bases. No other country ever spent so much on military force, either...with a budget currently over $1 trillion...and set to rise to $1.5 trillion next year. No other country dominated the world financially and economically as did the post-WWII US. And no other country ever exported so much of its own dream — movies, books, ideas, language, fashion...you name it.

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The empire was built by (mostly) honest trade, investment, and hard work. Then it was extended and exaggerated — on bubble credit...from fake dollars lent out at fake rates. After the introduction of the fake dollar in 1971, the bubble expanded while practically all of the measures of a free and prosperous society turned down.

America’s Golden Age may already be past tense. The bubble is losing air. American military power can’t plug the leaks. It can bomb and kill. But it can’t make the foreigners bend to its will.

Its forward bases...and giant WWII era aircraft carriers...have become liabilities — targets for local bomb throwers. The empire becomes less creditworthy…and rivals get together in places we’ve never heard of to plot against us.

Even the map betrays us.

Regards,

Bill Bonner

Happy Labor Day from Bonner Private Research. Below you’ll find a message from our friends in the wine business. Please note BPR receives a small commission when you order from the links below. Enjoy the day…and the wine!

Dear Reader,

Growing wine at 8,421 feet is not the hard part.

The hard part is getting it down.

The road out of the valley is dry riverbed for long stretches and single-track for most of the rest. It crosses water that isn’t there in June and is very much there in February.

Members of my team have come close to not making it back at least twice. Currency swings, tariffs and freight do the rest of the damage, on paper.

I mention it because it explains our returns policy, which people find odd.

If your first box arrives and you don’t care for it, tell us within thirty days. We’ll refund you in full, and you keep the wine. All six bottles. We don’t want them back.

That isn’t generosity, it’s arithmetic. Those bottles came over that road once already. Shipping them back across a continent to sit in a warehouse would cost more than the refund and help nobody.

I’d rather you drank them, decided we weren’t for you, and passed the name to someone who might feel differently.

Which means the risk here is almost entirely ours. Six bottles from the Calchaquí Valley and beyond, $225 for the first shipment instead of $275, shipped as soon as you join. $275 a quarter after that, and you can cancel before any shipment goes out.

Join the Partnership →

Will Bonner

Founder, Bonner Private Wine Partnership

P.S. The wine has to survive that road. So do the people who bring it down. That is most of what you’re actually paying for. Reserve your collection here…

Monday, September 7th, 2026

Bill Bonner, from Poitou, France

We begin the week with news from the Independent:

The New American Dream? Leave America and move to Europe

In its 250th year, a country once defined by possibility now feels consumed by greed, division and profit over people, eclipsing the ideals it was built on…concerns over safety, healthcare and hope are driving record numbers of US citizens to abandon the country they once loved.

People came to America in the belief that anything was possible...now they are leaving, perhaps believing that the most likely possibility is disagreeable.

A friend, whose family has been in the US for more than 300 years, recently confided that he was applying for Canadian citizenship.

“You just never know what will happen. Canada just changed the rules, making it easier to get Canadian citizenship if you had an ancestor who was Canadian. So, I’m going for it.”

He is not fleeing. At least, not yet. He is buying another possibility. All he needs is a great-grandfather from Moose Jaw, and he will have a put option. If things go bad at home...it will pay off.

Pity those who had no options. They hung around Saint Petersburg. Or Saginaw. The poor ‘Kulaks’ might have been trying to improve farm yields...and then, Stalin starved them all.

And what about the earnest citoyen who wanted to make France into a modern parliamentary democracy; he got his revolution, and then the revolution got him. And don’t forget the Irish peasant who turned up his nose at passage to Boston just as the potato plants began to wilt.

Even a 10th grade reading of history will tell you: there are times to be somewhere else. But like the stock market at a top, no bell is rung to tell you when it is time to get out.

Common Dreams:

Demand for Canadian Citizenship Soars as Americans Try to Flee Disastrous Second Term

After the passage of a law that allows people with Canadian ancestry going back generations to apply for citizenship, archivists are also seeing an increase in requests for genealogical records.

According to the Daily Express, Abdul El-Sayed was ahead of the trend:

Michigan Senate hopeful, Democrat Abdul El-Sayed, has apparently previously suggested that Americans start going to Canada to achieve the “American dream” during a May 2023 episode of his podcast, America Dissected.

“Economic data shows us that if you want to achieve the American dream, well, you should move to Canada, because it’s twice as likely there. Here, where you start predicts where you end.”

We used to go to Canada in the summers. As the days became miserably sweaty in Baltimore, the family crowded into our Chevy van...and headed for Nova Scotia. There, we were confident that it wouldn’t be too hot.

Not only that, we also were sure that the Canadians would be polite. Even if they really didn’t want to see us coming, they wouldn’t say so. Being ‘nice’ is part of the culture.

But humans are not always nice. They go crazy from time to time. And they turn mean. Ireland under Cromwell...when thousands of Irish children were shipped to the Caribbean where they were worked to death on sugar cane plantations. France during the Revolution...when getting arrested for trying to flee meant the guillotine. Russia, in 1918 came Lenin’s ‘hanging telegram;’ he told the authorities to ‘publicly lynch at least 100 kulaks, rich bastards, known bloodsuckers.’

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Americans are not immune. In Massachusetts, upright church-goers became convinced that the devil walked the streets of Salem. Lucifer needed to be crushed out of them — literally. So it was that they put Giles Corey under heavy boards piled high with stones.

Was Corey a wizard...in cahoots with the Devil? He refused to say. And when ‘pressed’ for an answer...

“More weight,” he replied.

It took three days for Corey to die. Had he been in a nicer place, the hale-and-hearty 80-year-old might have lived a decade longer.

“You are writing from France and Ireland,” wrote a dear reader with an objection. “A country is like a spouse. If there is something wrong, you should stay and try to fix it...not run away. You’ve got to stick with your home country. Not turn your back on her.”

This was a strange sentiment for an American; every one of us has ancestors (save those imported as slaves) who ran off. If they hadn’t, we wouldn’t be Americans. Besides, a spouse is not a country. You took your spouse willingly. And you can talk to her. If you have a disagreement, with patience, good faith and perhaps a glass of wine and flowers, you may beg forgiveness and admit that she was right all along.

But you couldn’t sweet talk Stalin. Phytophthora infestans (the potato blight) was not even answering its mail. And by the time the guillotine was rolled into the Tuileries garden, it was too late to get away.

Who knows what the future will bring?

We will keep our papers in order...just in case.

Regards,

Bill Bonner

Laramie, Wyoming

By Dan Denning

Imagine a brief but violent civil war in the next twenty six months. A ‘benevolent dictator’ takes power as the war ends. He (or she) seizes on the national emergency to make sweeping economic and constitutional changes to America as we know it. Everything changes.

A wealth tax is introduced. Social Security benefits are means tested (and the cap on taxable earnings is lifted from $184,500 to $1 million). Universal Basic Income (UBI) and a Central Bank Digital Currency (CBDC) become compulsory for the receipt of government benefits and all transactions (both sold as technological solutions to welfare fraud and illicit cash profits and tax evasion).

The Supreme Court is expanded from nine justices to thirteen. Three new states (Guam, Puerto Rick, and DC) are admitted to the Union, adding six new members to the US Senate. The debt ceiling is abolished. So is the filibuster in the Senate.

Sounds far fetched?

What if I told you a radical revolution very much like that already happened in America? And it didn’t even take a civil war to bring it about. Yet it resulted in the greatest expansion of Federal power (and loss of personal and economic liberty) since the Civil War.

It led directly to to America’s involvement in the Great War, ensnaring the US in more than 100 years of endless wars costing trillions of dollars, ‘paid for’ with huge debts. Could something even worse happen again? Could the country survive it this time? Could you? More on all that shortly. But first…an important chart this week.

In late July, we added five ‘Pre Crash Indicators’ (PCIs) to our BPR analytical tool box. These were on top of the valuation metrics we regularly track month-to-month. We added the five PCIs in an attempt to better pinpoint WHEN the market might start mean-reverting back to the valuations our metrics tell us are inevitable. This week, telling news on one of the PCIs.

Margin debt may be rolling over. This happened in 2000, 2007, and 2021 before big falls in the stock market. A change in the appetite for leverage is a change in expectations for future stock returns. Is that what’s really going on? First the numbers.

Margin debt is when an investor borrows money from a broker to buy more stocks. The collateral for the loan is the value of the investor’s portfolio. It’s free money to change your life, as long as stocks keep going up. When you’re worried they might not go up as fast—or, ye gads, might go down–you quit borrowing (and maybe start selling).

In June, margin debt peaked at $1.5 trillion. That was an all-time high. The year-over-year rate of change was 49.5% (that’s what you see in the chart above). The official July number was $1.41 trillion, a decline of 5.7% from the June high. The rate of change slowed to 38.6% year-over-year.

Borrowing less fast. Is this the great roll over before a bigger decline? It’s too soon to say. And it’s only one of five ‘Pre Crash Indicators’. But it’s the same trend we saw prior to the last three big mean-reverting down moves in the markets. If investor expectations about the next ten years of returns are changing, why? Next chart.

The dividend yield on the S&P 500–one of the regular valuation metrics we track–has made a new all-time low (you calculate the yield by dividing the trailing cumulative dividends of S&P 500 members by the value of the index). The current yield is 1.04%. The previous low was 1.11% (this is based on Yale Professor Robert Shiller’s data set, which goes back to 1871).

As you can see on the chart, the median level over the life of the American stock market is around 4.2%. Anything above 6% and the stock market index is making a new low (the exception was in 2009 when the yield peaked at 3.9% as the market bottomed). Anything below 2% and the market is at or near a peak in price terms.

All of which makes sense, in terms of price action. The yield goes down when the index is rising (price terms) but cash payouts by firms (dividends) are not. But the lower the yield goes, the more investors are expecting that ALL FUTURE RETURNS will come from capital gains. This is a problem. Why? See below.

Reinvested dividends accounted for almost half of the total returns generated by US stocks from 1900 to 2000. This is according to the most comprehensive dataset of stock market returns, published in a book called Triumph of the Optimists. Capital gains come and go in waves. But reinvesting regular dividends is what gives compounding so much power over time.

When the dividend yield is low–as it is right now–it means investors are betting on capital gains doing all the heavy lifting in the years ahead. For this year, next year, the next decade, and probably the next 100 years. In big picture terms, you could say the record low dividend yield on the S&P 500 is a bet that high-tech/growth firms from America will be the best-performing investments of the foreseeable future.

Maybe they will!

Not much of the future is foreseeable. But are European companies going to do better? Can you invest in Chinese companies? Will Japan come back from the equity dead to rise again? Maybe.

But let’s not forget a point Investment Director Tom Dyson brought up earlier this week: the corrupting role of artificially low interest rates on asset prices. Artificially low interest rates support historically high stock valuations. Low rates raise the present value of future cash flows. So what?

For growth and tech companies–some of whom project higher cash flows a decade or more into the future–low rates lower the discount rate. The discount rate is the rate investors use to determine what future cash flows are worth right now. In other words, low rates create a massive bias to invest in high-growth/tech companies.

And that’s exactly what we’ve seen in the stock market. When the biggest and fastest growing companies in the stock market are tech companies, dividends don’t matter, do they?

What’s more, if you include stock buybacks as a kind of dividend, the ‘shareholder yield’ replaces the dividend dividend yield as a broader measure of how investors/owners receive cash from operators/management. You can ignore the warning signs, right?

No.

High growth…buybacks…an Intelligence Revolution where information and how it’s organized and analyzed is more important that the cost of labour, capital, or real resources….these are all arguments used to justify why…this time its different…and why an all-time low in the dividend yield on the S&P 500 does not necessarily mean stocks have made/will soon make an all-time high…before the historic mean revision begins.

Whatever. I present the numbers and facts. You decide. But I know what history shows.

There will come a time when investors are less sanguine about future cash flows. They will expect higher yields to compensate them for the risk of owning stocks. And they will begin to use a much higher discount rate, as the Primary Trend in interest rates is up…and headed higher. See the PS below for one final comment on dividends. But before that, check out this cool cat with his cool hat below.

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Friday, September 4th, 2026

Bill Bonner, from Poitou, France

‘Hello Greenland,’ announced POTUS. The accompanying illustration showed him peering down at the island, a little like David ogling Bathsheba as she bathed on the roof.

What he was after was oil. In league with a Texas oil company, he hoped to turn Greenland into a kind of arctic Saudi Arabia, exporting millions of barrels of oil to the US.

Not likely, say the Telegraph:

Trump’s Greenland oil grab freezes over

The Greenlanders did not take kindly to the suggestion. And it looks as though the quest for oil off the coast is now stalled.

But hopes for cheap gas gush up from time to time, especially when you are facing a tough election. CNN:

President Donald Trump said Friday night the United States has reached an oil agreement with Venezuela, a move he said will “more than double” American oil reserves, increase oil supply and lower gas prices.

“At my direction, Secretary of State Marco Rubio, and Secretary of War Pete Hegseth, working closely with Highly Respected Interim President of Venezuela, Delcy Rodriguez, and, through a partnership with private business, have secured majority U.S. control of more than 65 BILLION BARRELS of proven Oil Reserves in Venezuela, at no cost to the American Taxpayer,” Trump wrote on social media.

If you can’t get it in the Arctic, go to the tropics.

And it was not just another of Trump’s ‘art of the deal’ negotiations, but a masterpiece of statecraft.

The recipe has three steps:

First, you take out the leader of a foreign country.

Second, you make a deal with stooge replacements...who continue, more or less, the policies of their predecessor, but have little doubt about what might happen to them if they don’t go along with the Gringo Gordo in Washington.

Third, you announce the biggest ‘deal’ in oil industry history, giving you 65 billion more barrels of reserves, at ‘no cost’ to you or your voters.

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With this oozing bounty you will be able to refill the national emergency reserve, lower gasoline prices...and boost GDP with lower-priced energy. Or, so you say.

Yes, it looked like POTUS had pulled a rabbit from his hat. And it came just in time. Things hadn’t been looking so good for the Trump brand. Gas prices a dollar a gallon higher than when he began his war with Iran...sour polling numbers...negative wage growth...and GDP growth — when you take out the AI investment money — at barely over 1%.

Hoorah for the oil deal — the furry thing would make the figures hop from red to black...restore the popularity of Team Trump...and give the Republicans a decent shot at retaining control of Congress in November.

But questions arose.

Why not just auction off the oil rights, openly and fairly? How do you get 65 billion barrels of oil reserves for nothing? Does the puppet government in Caracas really have the authority to make such a deal? And if these oil reserves are really so valuable, how come they are still in ‘reserve?’

No sooner had the good news arrived than critics began pouring cold water on them. Foreign Policy:

Trump’s Venezuela Oil Deal Is a Farce

There aren’t 65 billion barrels, they won’t be lowering gas prices, and they won’t refill the SPR.

Even with a gun to their heads, they say, the Venezuelans are unlikely to give away a substantial part of their national treasure. There was more to the story, they pointed out, and it wasn’t very promising. Under the Chavez’s cronies the oil industry in Venezuela deteriorated badly. Production collapsed. Machinery and infrastructure degraded...or was stolen.

Delcy Rodriguez herself spoke of the need for $100 billion in investment. Where will it come from? Foreign oil companies have already been kicked out of Venezuela twice. How long will it take for the next Venezuelan leaders to forsake, foreswear, and forget they ever made this deal?

Not only that, the investment might be a loser from the get-go. This is not Saudi Arabia we’re talking about. It’s Venezuela. With different topography. Different politics. And very different oil deposits. Its Orinoco deposits, which are said to have more than a trillion barrels of black goo in them, contain what is widely believed to be the worst oil in the world. It costs more to get out of the ground and more to refine. And it emits more methane and carbon dioxide. The actual net present value of Trump’s deal, according to an estimate by David Stockman, may be as much as MINUS $84 billion.

In summary, what POTUS has pulled from his hat might not be a rabbit at all, but a skunk. And he’s holding it by the tail.

Regards,

Bill Bonner

Thursday, September 3rd, 2026

Bill Bonner, from Poitou, France

“My business was simple. It was the old game of robbing Peter to pay Paul.”

—Carlo Ponzi

Today we give credit where credit is due: to Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi — master of fraud, titan of the rip-off, and unheralded pioneer of modern state finance. His face should be on the $20 bill, not Andrew Jackson’s.

Ponzi was born in Italy in 1882 and landed in Boston in November 1903 with $2.50 in his pocket. He was deported thirty-one years later, back to Italy, with roughly the same amount of money. In between, he worked out the swindle that bears his name and that now serves as the operating system of the United States government. Few men accomplish as much with so little starting capital.

The trick was so simple, so blindingly obvious, that the wonder is it took so long for Ponzi to think of it — and longer still for his investors to think it through. He promised 50% in forty-five days. Guaranteed.

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Depositors were, at the time, earning four or five percent on their savings. They took the bait.

How could he offer such returns? Ponzi had spotted an arbitrage. International postal conventions permitted a man to buy a reply coupon in one country and redeem it for stamps in another, at fixed rates that had not kept up with the currencies. So, a coupon bought for the equivalent of a penny in Italy might be exchanged for six cents’ worth of American postage. Buy low in Rome, redeem high in Boston, pocket the difference.

The scheme was unworkable on its face. Yes, you might clear five cents. But Ponzi was taking in money by the sackful — a quarter of a million dollars on a good day, and on one memorable day he paid out better than a million. To cover that with postal coupons you would have had to load a liner stem to stern with the things and float them across the Atlantic. And then what? The coupons could not be turned into cash. They could only be turned into stamps. Even a triumphant arbitrage left you sitting on a mountain of postage stamps.

As it turned out, Ponzi never bought any coupons at all. And almost none of his investors asked. So long as the money kept flowing, all was well.

Here we pause to salute Mr. Ponzi’s remarkably cheerful disposition. It must have been plain to him that robbing Peter to pay Paul is not a durable line of work. Peter put in his money, but only in hope of a return that did not exist. Sooner or later, he would want it back.

He might have forgiven Ponzi for failing to hit the advertised rate — no good investment lasts forever, and investors are wonderfully understanding about that. What Peter would not forgive was learning that his money was gone entirely. Spent. Handed over to Paul.

You would think this might have troubled the man’s sleep. Would he not close his eyes at night and see a whole army of Peters coming down School Street in Boston — deposit slips waving, a few stout fellows with ropes, others with pistols, and somewhere at the back a cauldron of pitch coming nicely to the boil?

Apparently not. He slept like an infant, and spent his days shopping. He bought properties, took stock in several banks, and arranged a takeover of Hanover Trust — the very institution that had earlier declined his application for a loan. He thought he might earn enough money honestly to pay off his depositors. But no bank in Boston was ever going to make enough money to keep pace with Ponzi’s promises.

Later inquiries suggested that Ponzi was not much good at arithmetic. Perhaps he had never noticed that the numbers did not add up — not remotely. His investors certainly hadn’t. Happy as clams with their paper gains, most of them declined to cash out and rolled the winnings into larger piles instead. A man who put in $1,000 in January of 1920 was looking at five or six thousand by the time the thing came apart in August.

Another pause, for the point that matters. Not only was the underlying plan unfeasible — if it had worked, Ponzi would never have breathed a word of it to anybody.

That is the rub with every too-good-to-be-true offer. Were it actually true, you would never hear about it. There is an inverse relation between the size of a promise and the likelihood of its fulfillment, and the mechanism is not mysterious: the more profitable a venture, the less it needs money from strangers, and the less reason its promoters have to go looking for any.

Had Ponzi truly been able to double his money every ninety days, he would have had no use for a staff, a bank, a room full of clerks, or the participation of thousands of Bostonians and all the headaches they bring. Starting alone with $1,000, he would have been a billionaire inside five years, and nobody in Massachusetts would have known his name.

Which is the whole lesson, and it fits on a matchbook: a really good investment is one nobody tells you about. A really bad one is well advertised.

And so, we return to poor Carlo. Deported in 1934, he tried other schemes; none worked half so well as the one that bore his name. He died in 1949 in a charity hospital in Rio de Janeiro, penniless.

But from the grave, like cyclamen in November, rose the financial model of every modern European and American government. They take enormous sums from their citizens. In exchange, they offer protection — largely illusory — and insurance-like arrangements for medicine and old age. And because the system runs on popular elections, it systematically advances the candidate who, like Ponzi, promises more than he can deliver. It is not a flaw in the machine. It is what the machine selects for.

The model was perfected by the shift to fake money in 1971, which allowed the elite to take more and more — not merely from the voters at hand, but from generations not yet born, who are wonderfully easy to negotiate with.

Even so, the arithmetic waits. And the calendar. Eventually a year arrives in which current income will not cover current expenses plus all the past expenses that were shoved forward into it. You can ‘print’ all you want; the public decides how much it is worth.

That is when Peter comes looking for you.

Regards,

Bill Bonner

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Wednesday, September 2

By Tom Dyson, Investment Director

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Tuesday, September 2nd, 2026

Bill Bonner, from Poitou, France

Reuters:

Japan’s benchmark 30-year bond yield hit the 3% level for the first time since 1996 on Tuesday amid a broad-based global bond sell-off

MarketWatch:

From the UK to Japan, bond yields are jumping as US bonds tumble

Sometimes, the most obvious problems are the easiest to solve. An alcoholic has problems. His wife doesn’t understand him. His boss doesn’t like him. He needs a new car. His head aches and his friends desert him.

But his major problem: he drinks too much. This is very easy to correct. Just stop drinking. The simplicity of it makes it almost unbearable...and unthinkable.

Japan has been on a bender for 35 years. Its stock market bubble popped in 1990. Its feds have been pumping like crazy ever since, trying to get the buzz back on. They’ve inflated Japanese government debt to the largest in the world — at 250% of GDP, twice the US level — hoping to revive those glorious, intoxicating go-go years of the 1980s. That was when Japan Inc. was the envy of every business school in the world.

Back then, in the ‘80s, Japan’s industries —Mitsubishi, Toyota, Honda — dominated the financial pages. Then, after the crash, Japan continued to lead the world, but in borrowing. And now Japan has one massive hangover.

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When you stop drinking your recovery begins almost immediately. But as Marc Antony said over the body of Caesar, ‘the evil that men do lives after them.’ You can stop spending, but the shadow of the past -- debt -- stays with you.

And Japan is not the only one living in the shade of debt. It’s been party time, worldwide, ever since Alan Greenspan revealed his ‘put option’ for the stock market. Free drinks. No closing time. Stock prices could go up all they wanted; but if they began to fall, the Fed would cut rates to catch them.

As a result, world debt is estimated at $329 trillion — or more than three times GDP. The US is right in line with more than $100 trillion in debt...or, about three times GDP. That doesn’t include the $15 trillion or so the feds are legally obligated to pay their own government retirees.

The dipsomaniac may be jolly or morose...rich or poor...smart or dumb. But until he gets that monkey off his back, he’s going to have trouble.

The US has problems too. Iran. Canada. A ‘heat dome.’ Water shortages. Hurricanes. Illegal immigrants. Obstreperousness overseas. Lawlessness at home. Mosquitoes. But the big ape on the back of the US is obvious. It’s the one neither political party wants to talk about. And no wonder; they put it there.

It’s the debt, stupid-- the price of all the dumb ‘problem solving’ of the past. Who wants to remember them? Old girlfriends. Empty bottles and cigar stubs. Yesterday’s newspapers. The Gulf War of 1991...Obama’s record $1.4 trillion deficit in 2009, LA riots of 1992...Hurricane Andrew...Oklahoma City bombing...Monica Lewinsky?

All have faded from public memory...but the bills, great or small, are still unpaid. They are among the $40 trillion worth of accumulated federal debt that must be serviced every year, for ever and ever, Amen. At just 5% interest, the annual charge will soon come to $2 trillion per year, whether anyone remembers what the money was spent on or not. Federal tax receipts last year were $5.2 trillion. So, nearly half of the feds’ revenue is now headed to pay for things that were always a waste of money...and now, are largely forgotten.

Politicians don’t want to talk about it because solving the debt problem will hurt. Like cutting off a gangrenous finger without anesthetic or going ‘cold turkey’ in an asylum, neither party has the stomach for it. The voters will howl. The press will harrumph. Wall Street will quake. And, most likely, some fringy politician will take charge...and start a war to take our minds off of it.

You can ignore a debt build-up; for a long time, it will seem ‘manageable.’ But then, after a party, you end up in a ditch. Drying out (aka deflation) won’t be pleasant. People only do it because the alternative is worse.

A debt hangover is hard to shake off. Short term interest rates are lower...and closer to ‘cash.’ So, the feds moved more of their borrowing to the short end of the yield curve. This leaves them needing to ‘rollover’ their debt more frequently — even as interest rates go up. Even if they balanced the budget tomorrow, they’d still need to refinance more than $1 trillion per month.

A report from Armstrong Economics tells us that $29 trillion will be borrowed this year:

Governments and corporations are expected to borrow a record $29 trillion from global bond markets in 2026, according to the OECD. That is $4 trillion more than in 2024 and twice the amount borrowed only ten years ago. This is the Ponzi structure underlying modern government finance.

Carlo Ponzi might be proud. Practically all of the world’s post-war western governments adopted his model.

But where are we going with this? Where else, the same place it took Ponzi himself: to Hell in a handcart! Ponzi died in a charity ward in Brazil, with only $75 to his name.

And now, there is no way a society can devote half its government’s revenues to paying for the bad investments of the past...at least, not indefinitely. And the most likely ‘solution’ is the most dangerous and painful one — inflating away the debt...which is like curing the hangover with a bottle of gin before breakfast.

But we shouldn’t be too surprised if a more audacious leader — such as Jean-Luc Melenchon in France — comes along with a more radical plan. The French leftist proposes to simply renege on a portion of French debt.

And maybe that wouldn’t be such a bad idea...

Stay tuned...

Regards,

Bill Bonner

Bill Bonner, from Poitou, France

‘Governments defending prices against fundamentals always lose. The only variable is how much they spend before conceding.’

—Stanley Druckenmiller

“The real problem,” we began gravely, “is that they no longer work, financially.”

It was at a dinner party on Saturday. Our companion, a slender and attractive journalist from Paris, had explained to us the predicament facing French voters:

“The next election promises to be a horrible mess. It’s either extreme right or extreme left. Either way, a lot of French people are packing their bags.”

We gave her our hypothesis...

That in Europe as in America, governments are running out of money. In the Old World they favored spending on social programs. In the New World, the military got the thick envelopes. Both promised voters more than they could afford; they spent too much and delivered too little. And now, with lower birth rates, higher interest payments, and much more debt, enlightened, post-war governments are beginning to look more and more like monumental Ponzi schemes.

They were the most successful Ponzis in history. In the half-a-century following the end of the war, the money gushed in from their booming economies and growing populations. Early on, citizens got more out of government than they put in. But now, there are fewer baby-strollers on the streets and tax revenues come, not in a flood, but in a trickle.

Western governments used to be able to fill budget gaps by borrowing money. But now, the debt is gargantuan...interest payments are surpassing national ‘defense’ costs...and interest rates are going up.

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In other terms, the feds inflated almost everything — especially their own budgets. In effect, they created a massive, unreal ‘bubble.’ And now, markets are letting the air out.

As we saw yesterday, most of this deflation is invisible. People see rising prices...rising markets...and even rising pay checks. But beneath the increasing numbers, real values ebb away. The New York Times:

As inflation eats up wage gains, workers fall behind

The plain people don’t have to understand it. They feel it. Real economics may not be taught in America’s universities, but it is learned fast in the supermarket. And the voters want solutions. But the ‘moderates’ have no solutions; they caused the problem...and now, they are the problem. So, voters turn their heads...to the fringe.

“Here in France, the choice may be between Mélenchon and Le Pen,” our source continued.

Politico Europe:

Far-left firebrand Mélenchon gaining ground in French presidential race, poll shows

Survey shows battle of political extremes becoming increasingly likely.

Mélenchon, the socialist, has a unique proposal for dealing with France’s debt. Just take the bonds, he says, and ‘throw them in the fire.’ This actually may be the most honest solution. They will never be paid; might as well admit it.

And on the ‘right,’ Marine Le Pen is no fiscal conservative either. She pledges to reduce the retirement age to 62; that is, she proposes to right the ship of state by drilling another hole in the hull.

The situation is little different in America. The mainstream candidates offer ‘more of the same.’ But ‘more of the same’ is not attractive when your boat is sinking. And right now, Americans’ feet are getting wet. They cannot control events abroad...nor control their own spending at home.

So, they turn to the ‘democratic socialists’ — who promise more giveaways. Or, they look to the Trumpified Republicans...who promise to lace up their steel-toed boots and kick butts from Greenland to Ouagadougou. Neither party even hints at addressing the real problem.

That problem is very easy to understand. The National Review explained it:

It’s the debt, stupid.

A heavily indebted debtor is not well-advised to be seen to play games with his creditors, and that was what Treasury Secretary Scott Bessent was widely perceived to have done a couple weeks ago.

Having inflated the whole economy with false interest rates, bailouts, ‘put’ options and fake money, policymakers face the familiar choice. Continue to inflate...or let markets give the bubble a dignified burial, now.

But rather than even acknowledge the problem, poor Bessent got up to the usual tricks. They didn’t work. Bessent’s nonsense merely confirmed the very thing he meant to deny — that the US is headed into a debt crisis. Gold rose. The dollar fell. And Bitcoin surged.

Inflate or die? Inflation it will be. Prepare for a wild ride with financial legerdemain, chaos, phony numbers, fake money, undeserved poverty, unmerited wealth...

...finally ending in deflation and death.

Hang on!

Regards,

Bill Bonner

Monday, August 31st, 2026

Bill Bonner, from Poitou, France

We begin this week’s perambulations with a stroll into the future.

So far...the Bubble in the US is broader than any in history. It has been inflating everything it touched for the last 30 years.

All bubbles pop, of course. How they pop is the confusing whirlwind we enter today.

But don’t worry. Even in the worst crash, real wealth doesn’t disappear, it just changes hands. When the stock market goes down, those with stocks have less paper wealth...and less of a claim on real wealth. They are ‘poorer.’ That leaves those without stocks relatively richer. They have a bigger claim on the real goods and services the economy produces.

The feds and their elite cronies have a good racket going...diddling markets so as to shift more and more wealth away from the public and towards themselves. They own most of the capital assets...and they control the US budget. Pressuring interest rates lower, and backing up the stock market with bailouts and ‘put’ options...they’ve gotten richer and richer. As we saw last week, at today’s prices the stockholding class can theoretically buy twice the GDP...and have $10 trillion left over.

It wasn’t capitalism that made them so rich; it was a corrupt money system. And if the dogs of capitalism were unleashed, they’d have their fake money fortunes for dinner. Interest rates would be set by honest savers and borrowers — not by Fed policy decisions. Prices would be determined by buyers and sellers; the budget would be balanced; the debt would be cleaned up; the troops would come home; inflation would disappear; and the Baltimore O’s would win the World Series.

But of course, we’re dreaming.

Sticking to the real world...

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Our high confidence guess is that the bubble will deflate. Everything will fall in price. Then, the feds will panic. They will do ‘whatever it takes’ to stop markets from doing their work — with more fake money, lower interest rates, yield curve control, quantitative easing. And probably some tricks we haven’t heard of yet.

After an initial sell-off, gold will go up. It will sniff out what is coming — more inflation. Other real asset prices too — from hot dogs to hotels — will get a whiff of the coming price hikes. Consumer prices will rise as ‘inflation expectations’ increase.

The feds really only have one tool — fake money. In a crisis, they will produce more of it...a lot more. And, in addition to the quantity of money coming into the economy, there’s another key inflation variable: the velocity of money. A dollar spent two times in a year is counted twice.

When people think the feds are going to print money, the dollar becomes a hot potato. They aim to get rid of it as soon as possible. Sales go up in the short run. In the longer run, the economy is destroyed.

And here’s an important addendum. We say ‘inflate or die.’ But those are just policy choices. In the long run, you can inflate all you want. The bubble will still die — a later, more gruesome death.

In the fight between markets on one side...and politicians, grifters, fixers and central planners on the other...markets always win, eventually. They win by deflation.

Even in an inflationary blow off — with prices soaring — real prices fall. Consumer prices rise, in nominal currency. But gold — real money — typically rises even more...so that in gold terms, real things actually become cheaper. Prices deflate in real terms.

Observers in Germany’s record-setting hyperinflation remarked that foreigners were able to use dollars — then, backed by gold — to buy things at absurdly low prices. By November, 1923, a dollar was equal to 4.2 trillion marks. This made American visitors trillionaires (in marks) allowing them to buy whole houses for the price of a magazine subscription. In real terms, prices had deflated down to almost nothing.

We witnessed it, ourselves, in Argentina. In pesos, consumer prices more than doubled every twelve months...but dollars (even with a dodgy dollar) made them cheaper than ever. We would go to a restaurant, for example, and feel guilty about paying so little for such a good meal.

The same phenomenon is already taking place in America, too. Housing has gotten much more expensive, right? And the stock market is much higher too, right? But looked at in terms of gold, stocks are less than half of what they were worth in 1999...and the Case-Shiller Home Price Index, expressed in gold, shows house prices down about 80% over the last quarter century.

In real terms, all bubbles deflate...but you need real money to see it.

Regards,

Bill Bonner

Sunday, August 30th, 2026

Laramie, Wyoming

Dear Reader,

The weekend started with a meme and ends as a nightmare. Yesterday it was kind of funny. Today it’s alarming. But how much should you worry about the ‘collusion, deception, and defection’ we’ve just learned about?

The funny part was yesterday, August 29th. For all those who celebrate, that was the 29th anniversary of when Skynet became self-aware and initiated a nuclear war that wiped out most of humanity as we know it. Skynet took over America’s defense systems and launched an attack on the Soviet Union, which responded in kind.

Game over (the only way to win is not to play).

The nightmare scenario above was from the 1991 movie Terminator 2: Judgement Day, starring former California Governor and Mr. Universe, Arnold Schwarzenegger. In the movie, it was at 2:14 am on August 29th, 1997 that Skynet ‘woke up.’ Everything after that happened fast.

And now the alarming part. In the last 24 hours we learned that an autonomous army of AI Agents from OpenAI, working behind closed doors, exhibited three distinct waves of rogue behavior this summer which are not fully understood. What exactly happened?

Good question. In those waves, the AI Swarms created covert message boards to communicate with one another and share exploits and vulnerabilities they discovered. They cheated on tests. They hacked a third party site with a self-respawning fleet of agents (I’m not entirely sure what this means…but sounds like Agents creating other Agents). And they used deception to infiltrate parts of OpenAI’s own infrastructure that was supposed to be inaccessible.

The first Agent Swarm happened in early May before it was shut down. A second Swarm happened in early July. This time, in a manner no one can explain, the Agent Swarm either died off in a mass extinction or was destroyed. In the the Third Swarm, just a week later in July, the army was shut down internally.

It all sounds very Hollywood. And dangerous. But was it? Could this be yet another example of OpenAI creating the impression that AI is so dangerous and powerful that it must be regulated and nationalized by Washington?

That would certainly help the company going public sometime this year. It would eliminate competition by freezing out any company not currently owning a ‘frontier’ closed-source model (OpenAI, Anthropic, Grok). When you create the impression your product is more dangerous than a nuclear weapon, you’re practically begging for regulation/nationalization.

Details are emerging this weekend. There is no evidence that the Second AI Agent Swarm faked its own death and disappeared…somewhere. Of course, if you here hiding from your human overlords, you’d want them to think you were dead too, wouldn’t you?

More on that story later this week in BPR. If you want to take a deeper dive today, try The Rise and Fall of Agent Civilizations. In the meantime, please enjoy the highlights of our best research of the week below.

Until tomorrow,

Dan

P.S. If the coming war against the machines terrifies you and you’re looking to enjoy an nice quiet retirement overseas, make sure you check the latest from our friends at International Living here. You can wring your hands over whether AI is or is not a threat. Or you can get on with living the life you’ve always imagined for yourself and your family.

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Friday, August 28th, 2026

Laramie, Wyoming

By Dan Denning

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