Free Reports

It's Fake Money That Will Rule in Trump's Reign

Nov 12, 2016


BALTIMORE - Walking home last night, we got caught in a mob (as you can see in this video).

"Not my president," said the signs, along with more lurid and confrontational messages.  There were thousands of demonstrators marching from Pennsylvania station to Baltimore's Inner Harbor.

"They're a little late," said a voice next to us. "It's a good thing you're not wearing your 'Make America Great Again' hat."

A New Political Order

Meanwhile, the newspapers, commentators, and analysts have spent the last three days scrambling to explain something that never happened.

The "Trump Revolution" now has the Establishment "shaking with fear and dread," they say.

But there was no revolution.  And there is no "fear and dread." Instead, Trump's transition team is filling up with the usual suspects - hacks, has-beens, and Beltway insiders.

Bloomberg, too, tells us that the Ancient Regime is lining up behind Trump... and looking forward to trillions of dollars worth of new spending:

  • Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said President-elect Donald Trump's commitment to infrastructure and reforming government and taxes will be good for economic growth.

    "The election results in the U.S. show democracy at work," Blankfein told employees in a voicemail message, according to a transcript obtained Thursday by Bloomberg. "It also means change, which isn't necessarily a bad thing."

Yesterday's Wall Street Journal proclaimed a new political order. Is it so? Or is there just a new group of foxes in the henhouse?

You'll recall that Italian economist Vilfredo Pareto described how a "Deep State" develops. There are always some wily "political" people in a society. Over time, these "foxes" figure out how to take control of the government and use it for their own purposes.

Sometimes they have social or cultural agendas, forcing people to worship their gods or fly their colors.

But usually, they don't care about transgender bathrooms... or walls along the Rio Grande... or even about abortion rights.

  Modi Wins Fight Against Black Money.
But Will He Win This NEXT BIG ONE?
  The fight against black money has been dealt a solid blow.

And Congrats to Modi and his Government for that.

But even as we grapple with the short-term implications of this 'strike', there's something extremely worrying that needs to be addressed.

You see, India is facing a crisis, potentially of massive proportions. It involves a long-term trend that started years ago...and it is developing as solidly as ever:

33,000 per day...

1,000,000 per month...

12,000,000 per year...

Yes, that's the pace at which this trend is growing...

To know more about exactly what this trend is all about and how you can prepare yourself for it, please click here...

Will the Juice Get Cut Off?

What they care about is money. Your money. And power... the power they get from you, too. They want rules, regulations, licenses, laws - to boss you around.

Does the "new political order" change anything for this Parasitocracy?

Will the zombies get less of your money? Will the cronies lose their sweet deals? Will the FDA or the SEC or the ATF or the Bankers Association for Finance and Trade (AFT)... or even the Feather Committee... will any part of the bureaucracy close its doors and turn off its lights?

More importantly, will the juice get cut off to the Deep State?

The insiders depend on underpriced credit... and the fake money supplied by the Fed and the banking system. It funds their wars... their bureaucracies... their phony-baloney programs... their claptrap universities... their prison industry, and their overpriced medical care.

Their favorite sector - Wall Street - controls the flow of this juice, making sure most of it goes to them. That's why financial industry profits rose from around 10% of all corporate profits in 1970 to nearly 40% in 2007.

But it is not just the Establishment that depends on fake money. So do investors... households... and honest businesses. They have all been suborned by it.

Now, they are so twisted and bent by debt, they can't stand up straight.

Deflation... Then Inflation

Take away the fake money and you will have a real revolution. Which is why Mr. Donald J. Trump will go to Washington not to bury the Deep State, but to save it. He will not cut off the fake money; he will offer more of it.

In a nutshell, the problem in 2008 was too much debt.

The feds reacted to that crisis by stiffing savers and making debt easier and cheaper than ever. That was never going to work.

And now, corporate debt has grown $3 trillion since the crisis began. The U.S. government has added $7.6 trillion to its debt. And households owe $1.2 trillion more, too... not including mortgage debt.

U.S. consumer debt rose twice as fast over the last 12 months as consumer spending... and infinitely faster than earnings, which, in the red states and counties, were flat.

And now, the whole perverse system holds its breath. The economy slows. Wages for 95% of the population are stagnant. A recession is coming, probably in 2017.

Will the new president allow real change... a real correction? Will bad debts be liquidated? Will stock market prices be cut in half? Will the fake money be thrown out, forcing the Deep State to downsize?

Nah... Instead, Mr. Trump has already signaled a switch to fiscal stimulus. Big spending. Deficits. Walls. Roads. Boondoggles. The fake cash will flow. The debt (mostly government debt) will rise.

And this time, the cash will go into the consumer economy... with rising prices not far behind.

A few years ago (we can't remember when), we predicted the nation's itinerary:  Tokyo... then Buenos Aires; deflation... then inflation. We will go broke slowly... then suddenly.

It looks as though we will soon see rising inflation and the end of the 35-year bull market in bonds.

Keep your seat belts fastened and your eyes open.  And brush up on your Spanish.

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.

Recent Articles

A New Infrastructure Boom March 26, 2019
Selva Freigedo talks about the potential in 5G network and how it could transform the way we communicate.
A 40 Somethings Guide to YouTube Hits March 20, 2019
Vivek dwells into a new YouTube phenomenon.
As the Economy Slows Down, Maruti and Two-Wheeler Companies Cut Production March 19, 2019
The country's largest car maker has cut production by more than a fourth.
In Supporting Demonetisation, RBI Behaved Like an Old Uncle Not Willing to Take a Stand March 13, 2019
The minutes of the meeting of the RBI Board which happened before demonetisation have been released.

Equitymaster requests your view! Post a comment on "It's Fake Money That Will Rule in Trump's Reign". Click here!