Is it too late to 'blow the whistle?' - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 25 June 2013
Is it too late to 'blow the whistle?' A  A  A

Paris, France

"When the government fears the people, there is liberty. When the people fear the government, there is tyranny."
Thomas Jefferson.

"I'm not a traitor, nor a hero. I'm an American."
Edward Snowden

------------------------------------- It's Not Just About Picking The Right Stocks... -------------------------------------

Take a look at the pyramid alongside...

This simple structure holds the secret to investing success!

That's right! You could read a dozen books on how to pick the right stocks, and yet never really create solid wealth from your portfolio.

And most of the times, the reason has something to do with this pyramid.

So, what's this all about? Find out all about this simple yet powerful investment rule here...


Poor Edward Snowden. There aren't many real heroes. Most of the people who pass for heroes are just puffed up jackasses...and stuffed-shirt imposters. Roosevelt. Lincoln. Bernanke.

Snowden is the real thing. He gave up his cozy, comfortable life so that others may see the evil that lurks in the shadows...and do something about it. But he sacrificed himself in vain; he didn't realize that the fix was in. It's too late to 'blow the whistle.' Besides, the people he is trying to help aren't worth it. They hear the whistle and run for cover. Whistle blowers will be hunted down...not protected.

The feds will make an example of Snowden. So the people will fear the government even more. The poor man has thrown his body on the grenade for nothing.

We will come back to that in a moment. First, let us check in on another explosion....the comfy little fantasy of Ben Bernanke is blowing up.

The Dow went down another 139 points on Monday. Gold fell $14. But wait. It gets worse.

    "The lost decade for bonds has begun," Howard Ward, the chief investment officer at Rye, New York-based Gamco Investors Inc., which oversees $36.7 billion, said in a June 19 telephone interview. "Stocks are likely going to be the asset class of choice over the course of the next 10 years. Now that the tide has turned and the economy is doing better, investors in bonds are going to have a hard time making any money."
A very brief and summary history of the bond market:

Bond prices went up from the end of the Civil War to the end of the century.

They went down for the next two decades...

And up for the following three decades....

After WWII bonds fell again, until the early '80s, when they headed up.

And here's the important part of this history:

The bond market made another historic turn last month.

Of course, we won't know for sure for many years. But it looks to us as though the long-awaited top has come...and now gone.

If this is true, it is the most important bit of financial 'news' you will read for the next 10, 20, maybe 30 years.

Falling bond prices (rising yields) change everything. They make it harder to finance new cars...or new houses. And they are especially tough on debtors. Alas, there are more debtors, with more debt, now than at any time in history. Debt levels rose spectacularly during the '80 - '2013 period. The typical household had debt equal to about 60% of disposable income up until 1980. Then, the ratio rose to about 130%. Now, it's near 115%.

The ratio of total debt in the US compared to GDP is now 350% -- more than twice what it was in 1980.

Higher rates will force down debt levels - one way or another. Assuming they go back to pre-1980 levels, that will mean about $30 trillion worth of debt that needs to be worked off, written off, downsized, de-leveraged, defaulted...

...or inflated away!

More on that as the story develops.

Back to Snowden.

When you make a mistake, usually there is a negative feedback loop, which lets you know you're headed in the wrong direction. You borrow too much money, for example, and your creditors begin trailing you with court orders or baseball bats.

But in a major public policy disaster, the feedback loop is twisted. The feds spend too much money, for example...and give the bill to the next generation. The poor youngsters can't vote. Many are not even born yet.

A police state is a disaster. It has its own ways of bending the feedback loop. From the Government Accountability Project:

    If every action has an opposite and equal reaction, the whistleblower is that reaction within the surveillance state. Dragnet electronic surveillance is a high-tech revival of tactics used to attack the civil rights movement and political enemies of the Nixon administration. Whistleblowers famously alerted the public to past government overreach, while helping to defend both national security and civil liberties.

    In contrast, secrecy, retaliation and intimidation undermine our Constitutional rights and weaken our democratic processes more swiftly, more surely, and more corrosively than the acts of terror from which they purport to protect us.
Every public policy disaster produces zombies. And armed zombies protect themselves...with arms, naturally. Stalin purged his rivals and adversaries. Millions were starved to death...or sent work camps in Siberia. Hitler had leaders of the White Rose... a Christian group that opposed the Nazi regime...beheaded, with an axe. The Japanese army officers assassinated Japan's central banker, after he called for a cutback in military spending. And the Argentines 'disappeared' thousands of whistleblowers and other troublemakers, dropping their bodies in the river.

And now, poor Snowden is on the run. And who knows, maybe he'll get lucky. Maybe he'll get away. Or maybe another hero, in Washington, will come forward...and find the courage to protect him.

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Get The Daily Reckoning directly
in your mail box.
Just enter your e-mail address » 

Read our Privacy Policy and Terms Of Use.

Equitymaster requests your view! Post a comment on "Is it too late to 'blow the whistle?'". Click here!


Recent Articles:
Will They Haul Off Trump's Statue, Too?
August 16, 2017
All across the country, the old gods become devils. New, gluten-free gods take their places...
Farm Loan Waivers: Why Bad Economics Makes for Good Politics
August 14, 2017
It is because the negative effects of the waivers aren't clearly visible.
The Most Important Innovation in Finance Since Gold Coins
August 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
The Most Profitable Investment in the History of the World
August 8, 2017
'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'