Public Disservice

The prosecution calls Ms. Elizabeth Warren to the witness stand...

(Source: Getty Images)

Bill Bonner, reckoning today from Youghal, Ireland...

“I hope this breaks soon.”

Matt, our gardener, was talking about the weather. A heat wave has covered the green island. The sun shines brightly by day, the moon by night.

Yesterday, in town, there were young boys jumping off the dock into the water…splashing…laughing…having a good time.

And all over the country, people are taking advantage of the summery weather.  Bleached-white legs poke down from shorts…alabaster arms are naked to the sun. It may not feel like summer to those of us used to the hazy, hot and humid days of Maryland, but it is summer to them…and they are determined not to waste a minute of it.

Later in the day, we drove over to Ardmore, a tiny beachfront town not far from where we live, to have dinner. It was still light when we came out of the restaurant, with the sun still above horizon at 9:30. A cold wind blew in off the Atlantic. We buttoned up our coats, wrapped scarves around our necks, and held onto our hats as we made our way over to the beach.

“Look…”  To our astonishment, there, frolicking in the waves, was a group of children. Out at sea, there were white caps on the waves. Closer to shore, the waves crashed over the happy bathers, their little bodies turned purple by the cold water.  

“How can they stand it,” we asked each other. The temperature was 59 degrees.

Budget Murder

But if people can convince themselves that winter is summer, they have little trouble with the fantasies and non-sequiturs of public life. A budget deal, for example, was a foregone conclusion. But the one now working its way through Congress is more like an unconditional surrender than a negotiated truce. Even by Washington standards it is an incredible phony. US government debt was headed towards $55 trillion by 2033. That was before the debt deal. Where is it headed now? To $55 trillion!

We will leave an investigation of this week’s bi-partisan budget murder to others. Today, we have Ms. Elizabeth Warren on the witness stand.    

Ms. Warren’s own wealth – estimated by Forbes at $12 million in 2019 – puts her in the top 1%. (She put the baseline for her proposed wealth tax at $50 million, leaving herself room for growth.) She lives and works among the nation’s rich, powerful, and famous. Her main residence is in the super-chic academic Olympus of Cambridge, MA. And while not cavorting with the intellectual high life, she also has a condo in Washington, DC, among the political low-lifes.   

You may wonder, how a paragon of public virtue like the senator from Massachusetts could have amassed a small fortune while on the payroll of universities and/or Congress. The answer is that she leverages the fame given to her by the voters. Book deals, speaking fees, consulting – it adds up.

You may wonder, too, how is it that people like Ms. Warren are presumed to be unbesmirched by normal human sins – said to be rampant among capitalists – such as hubris, greed, envy and sloth? Is she some sort of AI-powered human impersonator? Or does she want to make money, gain status and exercise power pretty much like everyone else?

Our question marks are getting a real workout today! But isn’t it likely that all politicians, public ‘servants’ and do-gooders actually have more or less the same instincts and ambitions as everybody else?  

The Fed’s Spin

The honest capitalist gets what he is after by satisfying the wants and desires of others. He is no saint. Given an opportunity, he will cheat. Which is why he is so ready to send campaign contributions to Ms. Warren and her fellow politicians; they give him a way to cheat legally. Even patriotically.

Instead of providing better goods and services, for example, he will ask his representatives in Washington to sanction his foreign competitors, for the good of the country, of course. Or, if he is in the newspaper business, he may put the feds’ spin on his reports, or turn over ‘whistleblowers’ to the FBI, in exchange for ‘access’ to government honchos. And always and everywhere, he knows that the US federal government is the biggest customer, with the deepest pockets and bluntest pencil, in the entire world. He’ll readily conspire against the public interest to get a piece of that business!

Ms. Warren, is she so different? If you prick her, does she not bleed? If you tickle her, does she not laugh? And doesn’t she lust after wealth, power and status just like the rest of us?

But she is not an ‘honest capitalist.’ She doesn’t get what she wants by satisfying the wants and needs of others. She lifts no bales. She toils not…neither does she spin. She is no capitalist; she’s a politician.  

We studied the difference between a capitalist and a politician for our new book, ‘Uncivilizing America.” One must satisfy a customer. The other bamboozles him.  The former seeks win-win deals. That latter’s deals are always win-lose.  

Public Disservice

Ms. Warren provides neither goods nor services. Hers is a whole different gig. The rich man can turn down a new car…a vacation…or a penthouse apartment. But he won’t be able to say no to Ms. Warren’s proposed wealth tax.

And before we give our question marks a rest, let us pose some final interrogatories:

How is it possible, with so much brain power in Cambridge and so much good will in Washington…so many Elizabeth Warren’s, the best and brightest! …devoting their lives to ‘public service’….

…that America falls behind by almost every public measure? How come American men’s lives are getting shorter, not longer? How come its stalwart citizens – America’s Hard Working Families  (AHWF) – make so little progress?  Indeed, by our measure, they have been falling behind for the last half century. And how come our public institutions now seem incompetent at best, hopelessly corrupt at worst? Didn’t the FBI and the CIA, our ramparts against evil, both at home and abroad, collude with the Democratic party to elect Hillary…and then Biden? If you can’t trust them, who can you trust?

What has gone wrong? And why can’t the Great and Good fix it?

More coming…

Regards,

Bill Bonner

Joel’s Note: As for that ballooning national debt… the official debt clock now reads an eye-watering $31.8 TRILLION dollars. For those keeping score at home, that’s almost $100k per citizen… or nearly a quarter of a million dollars per taxpayer.

That’s up considerably from a generation ago. In 1980, for example, the total national debt in the US was less than one trillion dollars. (We used to count in billions once upon a time, remember?) Back then, the year John Lennon was assassinated, the national debt was a measly $4,000 per citizen (or about $11,300 per taxpayer). It was also only a third of GDP.

Today’s debt to GDP ratio, for comparison, stacks up to 120%… more than the value of every coffee poured, lawn mowed, hair cut, novel printed, contract drafted, wire fused, pipe welded, app downloaded, movie made, hotel booked, brick laid, tree felled, etc. in the land.

How will Uncle Sam make good on this generous and (until now) ongoing loan?

He won’t.

Here’s Bonner Private Research’s investment director, Tom Dyson, with the bad news. From yesterday’s note to BPR members…

[T]he U.S. government is not going to honor its obligations. It has borrowed too much, spent too much and has made too many expensive commitments which it now can’t keep. It’s going to default. Not everywhere. Not all at once. But a long, soft, slow default.

I believe this story – the U.S. government’s slow default – will be the dominant investment narrative of the next 20 years… the one story that drives all other price trends in the financial markets. It’s supremely important, I think. 

The near death experience for the financial system was 2008. Having survived that...the authorities will always choose inflation. The alternative is death. This means the crisis will not feel like an action thriller. It will be a slow motion multi year affair. All steps will be taken to make sure the decline is long, slow, and managed...a controlled and gradual demolition of the currency. Brick by brick.

This is the macro backdrop against which savers and investors must manage their capital… and it’s why Tom and Dan are cautioning BPR members to remain in ‘Maximum Safety Mode.’ Right now, the BPR Official Stock Watchlist has 11 open positions showing an average gain of just over 12%. The official BPR Trade of the Decade, meanwhile, is up 78%… and counting.

If capital preservation is something you’re concerned about, you can follow along with the BPR investment strategy by becoming a member right here…