Back to the Future
Price controls, runaway inflation and empty shelves
Joel Bowman, checking in today from Carmen de Areco, Argentina...
“It’s like going back in time,” observed the driver. “These sleepy little towns, it’s as though they’re frozen in some bygone era, like the whole scene should be in black and white or something.”
We had just pulled into our little campo retreat. The town (a pueblito, really), lies a couple of hours west of Buenos Aires and is surrounded by cattle and soy farms.
Like August in Europe, nobody works here in January. It’s too hot in the capital, so those who can retreat to the cooler countryside. As we type this message to you, the entire town is asleep, indulging in their customary postprandial siesta.
Travelers who visit Argentina soon discover they’ve taken a curious kind of trip... one that takes them “back to America’s future.”
Price controls (“precios cuidados”)... rampant inflation (officially 50%)... capital controls and empty shelves...
Here, that’s called “Monday to Friday.” (Weekends are for asados, church, football and anything else that can distract from the weekday drag.)
In North America, where official inflation is one-seventh what it is here and where price controls have only just appeared on the media’s radar, such phenomena is spoken about in anxious tones.
People worry what will happen to their life savings, to their investments, to their retirement plans. Will we have enough to get by? Will we see gas lines around the block again? What about “meatflation,” disappearing toilet roll and food shortages?
USA Today:
Shortages at grocery stores across the country have grown more acute in recent weeks as omicron continues to spread and winter storms have piled on to the supply chain struggles and labor shortages.
The shortages being reported nationwide are widespread, impacting produce and meat as well as packaged goods such as cereal.
While items are harder to find, many also cost more with rising inflation.
How to position yourself for “inflation volatility” was top of the agenda for the Bonner Private Research January report, delivered this past Wednesday by Tom Dyson and Dan Denning. The lads pulled no punches regarding the severity of this situation:
“Navigating the end of the greatest speculative bubble of all time and as crashing stock, bond and property markets around the world collide with Washington’s giant currency distribution scheme is going to be, in a word, chaotic…”
Paid readers can expect weekly updates from Tom (every Wednesday) and Dan (each Friday) with their very best ideas and research for how to steer clear of disaster over the coming months and years. If you’re not already signed up, you can join us here for about $2/week...
Meanwhile, a Dear Reader writes in to inquire...
“I thought that there was supposed to be stuff from Tom and the hobofamily coming to my inbox? Maybe I misunderstood about that. I haven’t gotten anything from them yet. I have enjoyed the postcards over the years and following Tom and his family on their travels…”
Tom Dyson responds from Chiswick, London...
Thank you for writing in! We’re still a hobofamily… and later this year, we’re thinking of going to live in Mexico for a while, and maybe volunteering… or backpacking around. We’ll definitely start sending our Postcards again if we do.
But right now, I’m laser focused on designing an investment strategy for Bonner Private Research. So I spend all day reading, researching, and scouring corporate documents. I’ve never felt so motivated to find new investment ideas as I do now. Also, I’ve never felt more challenged by the environment. (I began my professional career in finance in March 2000.)
My current hypothesis is that we’re entering a bear market, a period of rolling recessions… and a new era of high, but capricious inflation, which I’ve been calling “inflation volatility.” If I’m right about this, the stock market is going to be a treacherous place for our savings over the next few years, and I’m going to need to be on my A-game to navigate it successfully. We all will. (I’ll be happy to simply keep what we’ve got, after inflation. But given the potential for losses across all investment markets right now, even that won’t be easy, I don’t expect.)
Anyway, the point is, writing postcards about our family life and our travels would be a distraction right now. And besides, we’re only going to be hiding out in West London at my late-mother’s house for the next few months, homeschooling and doing research…
We’ve been in London for two weeks now, and we haven’t set foot outdoors yet. We caught covid on the journey over here so we cut ourselves off from society while we recovered. We’ve rid ourselves of the virus now, so we’re going to go out this weekend. We’ll walk around central London. Maybe have lunch in an old pub. I’m looking forward to getting some fresh air… and seeing the River Thames again. And we all need haircuts…
Homeschool is going really well. The kids spend all day learning (as I do) and they enjoy that. They’re learning about all sorts of different things. Yesterday I noticed Dusty studying calculus in the morning… and the hypothetical challenges of colonizing Venus in the afternoon. Miles studied electric eels and hurricanes and took a class in psychology. Penny was learning to count money…
Most of their instruction comes from high quality, engaging videos that Kate curates the night before. We also pay for an online curriculum that runs classes in math, english, science, history, language etc by grade level. And they love reading books. (Now we’re rid of covid, one of the first things we’ll do here in London is visit the local library.)
I wonder, why wouldn’t the public school system adopt a similar system? It seems like such a waste that each day, millions of teachers around the world teach the exact same material? Why not use technology to beam the best lessons given by the most engaging teachers, into hundreds of classrooms at the same time? This would free up teachers on the ground to answer questions, help any students that are struggling, provide additional materials etc.
Basically, the concept of teachers giving classes to only 30 students seems obsolete to me. The best teachers should be giving classes to 10,000 students… and the rest should become classroom counselors, which is basically what Kate and I are for our kids. Maybe this is already happening? I have no idea how schools operate these days….
We often discuss finance and investing with the kids. This morning, Dusty said to me: “If the pandemic caused the stock market to rise to new highs, then what happens when the pandemic ends? Won’t it go back down?”
I laughed. “Yep,” I said. “Probably…”
Have a good weekend,
Tom
P.S. Here’s Dusty doing his schoolwork this morning…
And now for Bill Bonner’s missives from the week past...
Why we decided to ‘go private’ after forty years of public spectacle
A little context for long sufferers and newcomers alike...
We began writing in 1998. Sometimes, these daily missives were hard to write. They must have been even harder to read! Because, we’re like travelers who never know exactly where they’re going. Instead, we look, we wonder… What’s happening? Why? Where does it lead?
Between a BlackRock and a Hard Place
How Larry Fink saves the world, one virtue signal at a time...
It is fairly easy to broadcast a concern for ‘people’ or the planet. It is hard to make a profit. Which course of action is most helpful to customers? To other people? Or even to the planet?
A Meditation on Cool
What's left when you strip away the profits?
In the modest decline so far, the world’s stock owners are down about $9 trillion. All they need is another $40 trillion in losses and the correction will be complete.
Cool Fads and Killer Cads
How the Feds abandoned honest profits for brute force politics
Human life is always a struggle. Between good and evil… comedy and tragedy … civilization and barbarism. To and fro… back and forth… between honest, consensual commerce and brute force politics… between those who make it… and those who take it away from them.
Young Dr. Frankensteins
Fallen angels, malignant devils and modern monetary Turkeys...
What really makes the world a better place? A ‘New Deal?’ A Republican? A Democrat? A master race? Stimulus spending? An Inquisition? Fair Trade? The Rights of Man? Vax mandates? Slavery? Prohibition? Low interest rates? A cheap currency? Diversity? Price controls? Defending Ukraine from the Russians? Or Russia from the Ukrainians?
Meanwhile, back here in the countryside, the smell of asado is wafting across the fields. The sounds of the local cumbia music can be heard off in the distance. One by one, the stores and cafes reopen. Children return to the parks. The town awakens after its siesta. And life goes on.
Wherever you are, enjoy your weekend...
Cheers,
Joel Bowman
I’ve wondered for years why we do not use our best, most interesting teachers to electronically present top quality lessons. I attended Ohio State back in the sixties and they had the technology then . Best guess as to why we still don’t have such a system lies with the power of the teacher’s unions. Such a waste, particularly now when our children’s educational futures are being shredded in the name of coved.
In reply to Tom's question as to why don't schools do what he and and his wife do for their children. The purpose of modern education is to teach children what to think, not how, and the powers that be couldn't countenance the former as it would make the majority of the population unmanageable as opposed to the small minority that exist in he Western World now after 70 years of dumbing down.