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The Age of Inflation Is About to Begin

Feb 9, 2018


PARIS - Today's screens are full of green numbers (things going up).

Investors may breathe a sigh of relief.

"Whew! Glad that's over..." they are likely to say.

But it's way too early to relax... and way too late to worry about it.

Tonight, the Legends of Finance Summit will have its World Premiere.

The story behind that name is simple - because renowned contrarian Bill Bonner will join legendary speculator Doug Casey for their first-ever online summit.

They will reveal the entire story behind Bill Bonner's audacious "Trade of the Century."

That's why this premiere event is the biggest - and most anticipated - in the history of our research firm. And it's unprecedented in yet another way - because Chris Mayer and Nick Giambruno will also discuss 6 urgent ways to profit from Bill's "Trade of the Century" concept.

The best part? Attendance is free.

New Fed Hack

Greenspan, Bernanke, and Yellen at the Fed have seen to that.

And now, the incoming Fed chairman, Jerome Powell - a Fed hack, like Yellen - will get his chance.

We predict that he will do more harm than all of them put together.

Not intentionally, of course. He will be trapped by circumstances... a victim of history, like poor Gideon Gono, Zimbabwe's central bank chief between 2003 and 2013.

Faced with bills to pay and a desperate economy, what choice did he have?

All he could do was add zeros to the nation's currency... until we ended up with a 10 trillion Zimbabwean dollar note in our wallet. (Worthless, of course.)

Easy Money Fraud

But that is still in the future.

In the present, finally, The New York Times has noticed. The world-as-we-have-known-it is coming to an end.

"World braces as an era of easy money draws to an end," is the front-page headline this morning.

The world-as-we-have-known-it was created by the aforementioned trio - Greenspan, Bernanke, and Yellen.

Over the last 30 years, they aided and abetted the adding of trillions in new chips - fake money, borrowed at fake rates - to the nation's gambling stock.

And now, according to the popular narrative, they are taking it back. (The foolishness of letting traders know what's coming deserves special comment. Stay tuned.)

But the defining feature of the Easy Money Era was fraud. The money was counterfeit. Interest rates were phony. As a result, asset prices were falsified.

And almost everything said by central bankers was either an outright lie, grossly misleading, or hopelessly stupid.

Age of Inflation

At least here at the Diary, we take comfort - amidst the Sturm und Drang of mad volatility, and the political bombshells bursting in mid-air - in the fact that there are some things we can still depend on.

Fraud, of course.

There is no chance - none - that the Fed will follow through on its "normalization" of interest rates.

Instead, when the stock market crashes... and the economy goes into recession... the Fed will quickly turn back to the tried-and-true panacea: the old miracle elixir, that snake oil known as EZ money.

But... there's a catch.

In the coming crisis, monetary policy alone will not be enough; the Fed doesn't have enough room to cut interest rates.

As we predicted when Mr. Trump was elected, the critical fraud is shifting from monetary policy to fiscal policy (government deficit spending).

Yes, the Age of Inflation is coming. Fiscal stimulus. Big spending by both parties.

Indeed, the feds are already laying the groundwork. Here's the Associated Press story from yesterday:

  • The Senate's top leaders announced Wednesday they have sealed agreement on a two-year budget pact that would shower the Pentagon and domestic programs with almost $300 billion above existing limits, giving wins to both GOP defense hawks and Democrats seeking billions for infrastructure projects and combating opioid abuse.

    The agreement is likely to be added to a stopgap spending bill that passed the House on Tuesday, aimed at averting a government shutdown Thursday at midnight. Democratic leader Chuck Schumer of New York called the Senate agreement "a genuine breakthrough."

It is a breakthrough, of sorts.

In the past, Republicans fought (often haplessly and half-heartedly) for lower spending and smaller deficits.

Now, they are right there... in line with the Dems and the Deep State... in favor of tossing more of the nation's wealth to their favored crony industries and zombie supporters.

Deep State Victory

In yesterday's Diary, we pointed out how partisan politics - like football and war - is a win-lose business.

If you pay attention at all, it captures your critical judgment... and your emotions. You soon begin to care who wins.

And while you are rooting for one team or the other, the real news passes unnoticed.

This is the real story... the headline you won't read anywhere but here: Deep State Victory Bus Has Republicans and Democrats Both on Board.

And here's another headline you won't find in the mainstream media: Bipartisan Budget Deal Dooms U.S. Economy to Debt Explosion.

Stay tuned for more headlines... tomorrow.

BILL BONNER Founder, Agora Inc

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

Disclaimer: 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.

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