Pet Cemetery

America is the biggest single consumer market in the world. But if exporters want to access US customers, they’ll have to stick with the dollar... or face a 100% tariff.

Wednesday, September 11th, 2024 

Bill Bonner, writing today from Normandy, France

‘They’re eating our pets.’ 

— Donald Trump last night, talking about immigrants 

It’s an election year... when brightly-colored campaign promises fall to the ground like autumn leaves... and rot. 

We didn’t get much out of the Harris-Trump debate. One candidate seemed like a big, old, angry, tired dummy. The other... younger... more conniving... appeared as a smooth, but empty, pantsuit. Based on that performance alone, our betting money would be long Kamala... and short US assets, including the dollar. 

Faced with debt up the kazoo, and deficits from here to eternity, US policy makers only have two choices.

Tighten up — with spending cuts. Or loosen up — with interest rate cuts. The first pill is hard to swallow. It causes immediate discomfort. The second is a happy pill — at least, for a while. It makes the bubble economy even more bubblicious. Neither candidate has any intention of taking the hard pill.  

Yesterday, we looked at Donald Trump’s proposal to stick foreigners with a big part of the losses from US inflation. America is the biggest single consumer market in the world. But if exporters want to access US customers, they’ll have to stick with the dollar... or face a 100% tariff. 

The idea is simple: Force foreigners to keep using the dollar as it wastes away.  

But wait... here comes another dumbass proposal... this one endorsed by both parties. The Wall Street Journal: 

Republicans and Democrats seem to agree on very little these days. But officials from both parties are intrigued by the idea of the U.S. deploying a new economic tool: a sovereign-wealth fund. 

White House officials say they have been working for several months on the design of such a fund. The fund would provide capital to advance strategic interests such as early-stage technology and energy security as competition with China heats up.  

The disclosure comes after former President Donald Trump in an appearance last week called for a sovereign-wealth fund to “invest in great national endeavors for the benefit of all of the American people,” such as infrastructure and medical research. 

We wish we had been in the room at the Economic Club of New York when Donald Trump suggested it. We would have liked to see the mouths water and the eyes bulge. Trump: 

“We’ll be able to invest in state-of-the-art manufacturing hubs, advanced defense capabilities, cutting-edge medical research and help save billions of dollars in preventing disease in the first place. And it is many of the people in this room who will be helping to advise and recommend investments for this fund.” 

Washington and Wall Street both live on OPM — other people’s money. Both have gotten rich thanks to post-1971 credit money and the Fed’s manipulation of interest rates. And now The Donald dangles billions — trillions! — more in fees, commissions, and inside deals before the Wall Street crowd. 

But help us out here, dear reader. What was the last ‘great national endeavor’ that paid off? 

AMTRAK? The war on poverty? The War on Drugs? The invasion of Iraq? The War on Terror? The F-35? The zero interest rate policy? $2 trillion budget deficits? If these ‘investments’ were so profitable, how come, now, we have a $35 trillion debt fund... and not a $35 trillion ‘wealth fund?’ 

Pity the TV interviewers don’t ask more questions. Who would run such a program? The same elites who run the rest of the government, of course. How could they invest the public’s money better than private investors with their own skin in the game? Why would they do a better job of this than they do of handling the border crisis, downtown San Francisco or the federal budget itself?  

And, since so much wealth has already been squandered on previous ‘investments,’ where would the new wealth fund cash come from? 

A modest prediction: If the feds keep ‘investing’ more and more of our money, pretty soon we’ll be eating our own pets. 

Regards, 

Bill Bonner 

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Research Note, By Dan Denning

Core inflation is rising at an annual rate of 3.2%, according to data released this morning by the Bureau of Labor Statistics (BLS). Core inflation excludes food and energy prices. Take away month over month decreases in fuel oil and piped natural gas (both down 1.9%, according to the BLS) and the headline inflation rate was ‘just’ 2.5% in August. Meanwhile, commodities (as measured by the Reuters/Jeffries CRB Index) are at their lowest level relative to stocks (as measured by the S&P 500) since late 2021.