By Bill Bonner Wednesday, August 5, 2020 – Week 21 of the Quarantine SAN MARTIN, ARGENTINA – Can you solve this philosopher’s conundrum… or answer this child’s riddle? What is something and nothing at the same time? If you’ve been paying attention this week, Dear Reader, you already know the answer: It’s the feds’ transfer payments. Trouble Aboard A “transfer” must have a “to” and a “from.” But these miraculous money manipulations leave the transferor unaware… as if he had not lost a single penny. And yet, the transferee is indisputably richer. He can take his $1,200 check… or his $600 a week unemployment bonus… or his forgivable business loan… and go out and spend, spend, spend. He can get real stuff – a haircut, a Harley, a hunk of Halibut. How could that be? This week, we’ve been guessing that the huge spike in “transfer” payments was not just the product of an unexpected virus. The transfers were already loaded on the train… rolling down the tracks… and running off the rails. In 1970, Americans earned almost 90% of what they spent. By 2019, approximately one dollar in every three came to them as a “transfer” payment from the government. But we haven’t quite figured out what these “transfers” are. Like a ghost train trundling into an empty station, we’re sure there’s trouble aboard. But what? And where are all these transfers – trillions of them – coming from? Recommended Link | TONIGHT: Q&A With Jeff Brown Tech millionaire Jeff Brown is chasing history. In one day, a biotech small cap could start to soar up to 1,000%. Tonight at 8 pm ET, during the 1-Day Profits Summit, Jeff will give you all the details… And answer your top biotech questions during a BONUS Q&A session. (No personalized advice.) |
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Big, Round Numbers The federal budget called for $3.2 trillion in “transfers” even before the calendar year began. That was in addition to the approximately $1.5 trillion of other spending – military spending, funding government agencies and departments – also transferring money from the person who earned it to someone else who didn’t. Then came the CARES Act – $2.2 trillion – boosting the federal deficit for the first nine months alone to $2.7 trillion. And, of course, the Federal Reserve pitched in with $3 trillion… which it lent out at silly rates to Wall Street. In big, round numbers (which are the only kind worth mentioning… since precision, accuracy, or even honesty in federal finances are an illusion), that’s already about $10 trillion. The FINAL Wave of 5G Millionaires Starts Any Day Now. Deal Imminent And the latest news out of Washington is that Republican and Democratic “negotiators” are making progress. They say they’ll make a deal by the end of the week. And what exactly are they “negotiating” about? How much more money to transfer! And to whom! From Bloomberg: The negotiators are trying to reconcile differences between the $3.5 trillion Democratic plan passed by the House in May and the $1 trillion package that Senate Republicans introduced last week. The Senate is scheduled to leave for an August break on Friday and the House is already out. But lawmakers could be brought back to vote on 24 hours notice. In the meantime, the $2.2 trillion in stimulus passed in March is drying up. All together, the U.S. government will probably “transfer” about $12 trillion in this calendar year – if things go well. But if the market sinks again (very likely; imagine a close election)… the Fed will almost certainly toss a few trillion more into the boiler. Hey, a trillion here… a trillion there… and pretty soon, you’re broke! Recommended Link | PIRRO vs. TEEKA: 90-Minute Bloodbath! (See it to believe it) Two of America’s most outspoken personalities: Emmy award-winning TV host (and author) Judge Jeanine Pirro and… Legendary crypto trader Teeka Tiwari… Have just gone toe-to-toe in a fully unhinged, unrehearsed, unsupervised brawl, the likes of which you’ve never seen. Watch now and pay close attention… Because if you can pick the winning side of this battle, you could wind up $500,000 richer. |
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Metaphysical Problem Twelve trillion dollars? Who’s got that kind of money? Who can the feds transfer it from…? We can easily see who it goes to – people who’ve lost their jobs… businesses that have figured out how to play the feds’ Payroll Protection Plan (including billionaires… Chinese owners… and one guy who used the money to buy a Ferrari)… speculators on Wall Street… cronies… and some ordinary citizens, too. But the entire U.S. labor force was only expected to earn less than $10 trillion in 2020 – and that dropped to an $8.6 trillion annual rate after the virus struck. Now, with halting openings… reluctant consumers… and a difficult election coming… who knows what they’ll finally bring home? Whatever it will turn out to be, it will almost certainly be much less than the “transfers” made by the feds. So, even if we confiscated 100% of the money earned in America this year… it still wouldn’t be enough to cover the government’s “transfers.” Which is where the metaphysical problem arises. You can’t transfer what you don’t have. This Revolutionary Tech IS the #1 Investment of the Century. Something and Nothing We all know where the money comes from – the printing press. And we all know that printing-press money is intrinsically worthless. There is no real wealth behind it. Which is why the feds can create as much of it as they want. And yet… though it be worthless, it can still be used to claim real stuff. It really does transfer wealth. So, it is worthless and not worthless… something and nothing… here and gone – at the same time. It’s a “bezzle” worthy of Ponzi. Or better. The recipients are happy to get it. While those who have been robbed think they still have it. Recommended Link | Claim Your Stake in the #1 Investment of the Century Starting With Just $10 Former hedge fund manager, Teeka Tiwari, believes this new technology will be the No. 1 Investment of the Century. CNBC reports it will be: “The biggest thing since the internet itself.” And the World Economic Forum predicts it will grow 279,000% over the next few years. It’s NOT 5G, artificial intelligence, the Internet of Things, or cryptocurrency. If you want to know exactly what it is – and how you can claim a stake in it with as little as $10… |
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Old Metaphor What’s really going on? Since there is not enough current income to cover spending, the feds must be transferring wealth from the balance sheet, converting America’s capital – her real, accumulated wealth – into spending money. Which brings us back to an old metaphor: Money is best seen as a claim check. You go to a nice restaurant. You check your coat. You get a ticket proving that you are the owner of the coat. Fake, printing-press money is like additional claim tickets… with no additional coats. So by handing out the additional claim tickets, the feds have actually transferred your coat to someone else. Only, you don’t know it yet. Just wait until winter. Regards, Bill Like what you’re reading? Send your thoughts to feedback@rogueeconomics.com. FEATURED READS Is It Congress’ Job to Get the Economy Running Again? Chicago Federal Reserve president Charles Evans says the economy’s continued recovery from the effects of the coronavirus pandemic is now up to Congress. Not creating or extending fiscal policy to get unemployment and financial support back up and running will be “very costly for the economy”… Big Changes Are Coming to Our Monetary System Legacy Research editor Chris Lowe sits down with Casey Research analyst Nick Giambruno to talk about our monetary system… and what changes you can expect in the future… MAILBAG Dear readers respond to Tuesday’s Diary, “Not Robbing Peter to Pay Paul”… This is a prelude or introduction of a universal basic income. A UBI, of which I am in favor. But only if the public employee departments that handle all the expenditures of government are made obsolete. – Brian C. Really like your reasoning. Having read Von Mises 15 minutes at a time during breaks at work, I have been recognizing this trend for years. It is good to know I am not taking crazy pills. Owning assets is one thing. Being able to hold on to them is another, if the government has become the lapdog of the Federal Reserve. – Christopher F. This isn't some transfer without costs. For every dollar the government steals from Peter to give to Paul, much is lost in the transfer. I would estimate, for every dollar the government takes in, after government employees are paid, general inefficiency, and lots of fraud, that maybe 50 cents of useful spending comes out. The government is the largest wealth destruction machine ever invented. As it grows larger, as a percentage of the economy, we will all become poor. – Jon J. Are you in favor of a universal basic income, like Brian is? Is the government the “largest wealth destruction machine” we’ve ever seen? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… TONIGHT: Jeff Brown Reveals Name of #1 Private Biotech for 2020 The man who picked the #1 stock in the S&P 500 three out of the past four years… Is stepping forward to name his #1 private biotech of 2020 for free. It all happens tonight at 8 pm ET, during “The 1-Day Profits Summit.” CLICK HERE TO RSVP NOW. Get Instant Access Click to read these free reports and automatically sign up for daily research. |