Ghost Wealth

Wealth is not discovered. It is created. So, there must be a connection between the makers and the made...between producers and their products...and between the income and the capital accounts.

Source: Getty Images

Friday, July 25^th, 2025

Bill Bonner, from Poitou, France

Today, we wonder about money itself. We come to no conclusion...for now, we just wallow in it, like a pig rolling in mud.

In the Capital city, the money pours in...and the swamp waters rise. Politico:

The first six months of President Donald Trump’s term have produced a cash cow of historic magnitude for the lobbying industry, with record-breaking demand for help navigating the administration’s constant stream of policy pronouncements — or trying to avoid becoming a pay-for in the GOP’s megabill.

The result is a new set of power brokers in Trump’s swamp. Firms with strong ties to the White House have skyrocketed to the top of the pecking order of lobbying outfits in town, according to a POLITICO analysis of the latest quarterly lobbying disclosures filed this week.

No firm has benefitted more than Ballard Partners, which is led by Trump fundraiser Brian Ballard. The firm previously employed White House chief of staff Susie Wiles and Attorney General Pam Bondi. Ballard brought in $20.6 million in lobbying revenues during the second quarter of the year from clients including Palantir, American Express, TikTok, Ripple Labs and UnitedHealth. Its haul is more than four times what the firm brought in during the second quarter of 2024.

Public Citizen elaborates:

According to Bondi’s financial disclosure report filed in January, she received over $1 million in income from January 2023 to January 2025 as a lobbyist, partner, and chair of the Corporate Regulatory Compliance practice at Ballard.

The real genius of ‘Big Man’ leaders is being able to convince the masses that they are working for them, while the money still flows to the insiders.

Another way to look at it: as the empire of laws declines, the degenerate rule of men takes over. They make money by offering to fix the problems their own policies cause.

But let’s keep our eyes on the money. It gushes into financial assets too.

Stocks are at or near all-time highs. The S&P 500 is over 6,300. The Nasdaq is over 21,000. The Dow is over 45,000. And the total value of all US publicly traded stocks is over $50 trillion.

‘Anti-stocks’ — gold and crypto — are also getting more money. Gold is over $3,400. And it was just last week that USA Today reported a new breakthrough for bitcoin:

Bitcoin leapt past $120,000 for the first time on Monday, marking another milestone for the world's largest cryptocurrency as investors bet on long-sought policy wins for the industry this week, which has been dubbed "crypto week" by U.S. Republicans.

Bitcoin BTC scaled a record high of $123,153.22 before pulling back. The increase brings the year-to-date gains for digital currency to 30%.

Everything seems to be getting more grease…except the real economy.

So far this year, GDP went down in the first quarter. The second quarter shows some growth...leaving the first half of the year with about 1% net increase in output.

That puts the gain from bitcoin at about 30 times as much. Bitcoin has no material existence...no connection to any durable or tangible asset...no team of economists to manage and guide it...and no backing from anyone. It has nevertheless gained a full third in value this year against the dollar, while the dollar lost about 10% against other currencies and 20% against gold.

And here is where this ghost currency gets interesting. The total market cap of bitcoin is around $2.3 trillion. All the cryptos put together are worth over $4 trillion.

Is this a $4 trillion increase to the world’s money supply? If so, where did it come from? What wealth does it represent? Or is it...like the new money itself...a kind of ghost wealth, ready to disappear in the light of day?

The ‘wealth’ implied by stock prices has gone way up too...about ten times as much as GDP. Corporate earnings don’t explain it. Instead, price/earnings leverage has increased to the second highest level on record.

Even as late as 1980, stocks were selling for only 6- or 7-times annual earnings. But that was the end of an era. Since then, stocks have gone up...and up...and up...never again selling for as little as 10 times earnings.

And today, on the S&P, a dollar’s worth of corporate earnings is enough to justify $30 worth of stock price — a number greatly inflated by the fake dollar that appeared in 1971 and has been with us ever since. This suggests that as much as two-thirds of the stock market’s value – about $33 trillion -- is also ‘ghost wealth.’

No hunter-gatherer tribe ever happened upon a Tesla pick-up truck. Not a single one of the Maya aristocracy...even in the hot jungle of Mesoamerica... turned on the air-conditioning...or opened a can of cold Coca Cola while watching the Super Bowl on his big screen TV.

Nope, wealth is not discovered. It is created. So, there must be a connection between the makers and the made...between producers and their products...and between the income and the capital accounts.

A stock gets its value from its company output (real or imagined). We’ve seen that stock prices have risen far more than corporate profits. But where does bitcoin get its value; it produces no profits at all?

No one working for bitcoin makes sales, let alone profits. No employees produce anything — no income...no output...no product...no nothing. Owners get no W-2 forms. No dividends. No tchotchkes.

So where’s the ‘wealth’ implied by a $2.3 trillion capitalization?

Tune in next week...we’ll look more closely at this ‘ghost wealth’…where does it come from; where does it go? And when does it go bye-bye?

Regards,

Bill Bonner