The Marian Feast and the Nixonian Fraud

Timeless money, political prestidigitation and a world without limits...

(Source: Getty Images)

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

Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

~ W.B. Yeats, The Second Coming (1919)

Our trip across the Irish sea was uneventful. Then, we settled into Dublin for a few days, attending a granddaughter’s baptism. The priest, a charming man from Dublin, had something on his mind.

Before we get to that, we pass along a headline, AP:

Trump and 18 allies indicted in Georgia

Donald Trump and 18 allies have been indicted in Georgia over efforts to overturn his 2020 election loss in the state. The criminal case announced Monday is the fourth brought against the ex-president. (Aug. 15)

We offer no opinion on the merits of the case, if there are any. Surely, Donald Trump has done a lot of dodgy things in his long career as a leveraged real estate speculator, entertainer and politician.  

What interests us is what this tells us about America’s drift towards Banana Republic…or Late, Degenerate Empire…status. The blood-dimmed tide is loosed; everything is political now…including the law.

A World Without Limits

Let us return to more pleasant matters.

“We’re grateful for any baptism,” said the priest, after the ceremony.

“So many people today think they don’t need religion. It’s the most remarkable thing. They think they’re completely responsible for their own lives…that they can make their own rules…and decide for themselves how they will live and what rules they will live by.

“But they were born into a world they didn’t create…by a process they had nothing to do with…and then, they fall in love, and not because love was something they invented or even wanted to do…and then – a miracle – they have babies of their own.

“They think the sun rises and sets…because of something they did. As if they were masters of time itself. Their lives are all time. And yet, as Jesus said…can any one of them add a single second to their day?  

“Baptism marks your entry into the real world. It’s a world you didn’t create…with laws you didn’t write…and what you could call feedback loops, which are really moral lessons. You do something bad and something bad happens to you. You may not want something bad to happen to you. But the laws of the real world…are always enforced. There are no escapees. No scofflaws. People get what they deserve…if not in this world, certainly in the next.

“Maybe it’s a generational thing. I don’t know. But more and more people seem to think they can pretend that this real world of limits and duties doesn’t exist. They think they can live on Amazon, where they can shop for anything they want, when they want, 24 hours a day. They think they can do anything, any time, any way they want. I guess that is what’s behind all these people who want to choose whether they will be men or women. But is that a choice we really have?”

Political Prestidigitation

While the priest was speaking, our mind was wandering in directions he probably didn’t expect. We were thinking about other choices we probably don’t really have. We cannot, for example, choose to get rich by printing money. It’s been tried many times. Doesn’t work.

And where in the history of the world is an empire that lived by the sword and didn’t pay the price?  

The price is high. How can a country that spends $1.5 trillion per year on foreign policy ever hope to balance its budget? And without a balanced budget how can it hope to avoid inflation and bankruptcy?   

“The odd and unlikely thing is that so many people think the world of faith is the unreal world. They think Christianity…or Judaism or the Muslim faith…are made up. They think that recognizing the lessons learned over thousands of years…and the truths that have withstood the tests of time… are somehow imaginary or untrue…they call them ‘superstitions’. But the world of faith is far more real than the artificial, self-centered world in which they live.”

Today is the “Marian Feast,” it is the day Catholics celebrate the “Assumption” of Mary (mother of Jesus) into Heaven. 

It is also the day the Nixon Administration engaged in a little magic of its own…creating a new dollar, cut off from the real world. With no fixed connection to gold (or anything else)…the new dollar distorted everything…and misled those who managed it.

Timeless Money

We blame many of today’s conceits and bamboozles on this switcheroo from August 15, 1971. Along with the War Between the States…the Spanish American war…WWI…the creation of the Federal Reserve, the Roosevelt Administration and other important milestones…it was a cruel baptism…a full immersion; like a baby drowned in a bathtub.  

Cutting the dollar loose from gold, the feds also cut it loose from time. Time is money; money is time. The elites thought they could create more money; they must have also thought they could buy time.  

This delirium was heightened when they dragged interest rates below zero. Interest rates connect the present with the past and with the future. They measure the “time value” of money. Setting rates below zero meant they had not only added to time…but made it irrelevant. It was as if they had destroyed the most important thing in our lives…they had disappeared the hours. You could hold a T-bond forever and have nothing to show for it. Time had no further value.

What black magic was this? Or was it just tomfoolery? And what price do you pay for this kind of claptrap? How about $94 trillion in debt…inflation….bankruptcy…chaos…confusion…corruption…? Decline and fall?

Stay tuned...

Regards,

Bill Bonner

Joel‘s Note: It was the Austrian School economist, Ludwig von Mises, who first warned about the boom and bust cycle guaranteed by fractional reserve banking and, in particular, central banks diddling with the price of money. Wrote Mises, in his comprehensive treatise on economics, Human Action, back in 1940:

“The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression.”

Of course, people don’t want to hear about the downside, the “$94 trillion in debt…inflation….bankruptcy…chaos…confusion…corruption…” that Bill cites. The “decline and fall?”

Instead, they yearn for a magic elixir, a cure for reality, some form of political prestidigitation, wherein an elected (or even unelected) official pulls a rabbit of perennial prosperity out of a hat. Continued Mises:

“People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers' stone to make it last."

Last week, we spoke with BPR Investment Director, Tom Dyson, about how he’s philosophically positioned to avoid the “Big Loss”… the one nobody seems to want to even acknowledge or contemplate, much less confront with eyes wide open. Here’s part of Tom’s response… (the full Private Briefing was about an hour.)

“I was just thinking about 2020 and 2021 and just looking back over some of the things that we were talking about and that were in the news back then. It's easy to forget how crazy the markets got back then with blank check companies, for example. To think that people were propositioning investors with this pitch. ‘We don't know what we're going to invest in, but we're going to invest in something cool. Why don't you give us our money now and we'll take care of it?’

[…]

“Loans with negative interest rates and images of rocks selling for hundreds of thousands or whatever. So it was crazy. It was a true bubble. And then you overlay on to that, they've just jacked up interest rates the fastest that any of us have ever seen in our lifetimes. I'm not going to say the fastest ever, but who knows? I don't know what's going to happen. I'm not saying that there's going to be a market crash or that bad things are going to happen. I'm not saying that. I don't know that. I don't have a crystal ball. What I'm saying is I don't want to participate in this right now. I just don't want to. I want to be on the sidelines and I'm happy to watch. It's fun to watch, I love it, but I don't want to be on the field.

“By the way, we're getting paid to watch. For the first time in many years there's actually a real interest rate on risk-free securities. So why not? Why not watch? To me, that's just a sensible position. And I'm a gambler. I'm into asymmetric risks. We weigh up all the probabilities of all the potential outcomes and then you try and figure out what's the best thing to do. I just can't get away from this that the best place right now is on the sidelines watching.”

Right now, the “sidelines” means having a large part of the portfolio in cash and gold. That said, of the 11 open positions that Tom has under coverage, not a single one is in the red. In fact, the average gain (as of his last update) was 38.21%. And that’s playing defense. The Trade of the Decade alone is up over 125%. Not too shabby.

Members can listen to the entire Private Briefing (or read the full transcript) here. If you’re not already a member, but would like to join the project, simply find a plan that suits you and get on board today…