YOUGHAL, IRELAND – What a spectacular summer!

People may be frying eggs on the sidewalks of Algiers and fighting forest fires in Sweden, but here in Ireland, the heatwave is a delight.

Farmers are grousing, of course, but we are enjoying daytime temperatures in the mid-70s and beautiful, clear skies.

Farmers are grumbling in the U.S., too. The weather is always a favorite subject. And this year, they have something more to kvetch about – the trade war.

Casualties are beginning to pile up. This from Bloomberg:

Harley-Davidson Inc. on Tuesday cut its profit margin forecast, citing tariffs. The iconic motorcycle maker was caught in the crossfire of the trade war last month when it announced plans to shift some U.S. production overseas, prompting attacks from Trump.

Dutch electronics firm Royal Philips NV Chief Executive Frans van Houten says an escalation of tariffs may mean it has to pass on costs to customers, and Whirlpool Corp. said rising raw material costs hurt results in some of its markets in the second quarter.

Farm Bailout

Out on the Great Plains, the bodies lie especially thick. The damage estimate so far: $11 billion.

But U.S. farmers are not locking arms like Londoners during the Blitz, or going on short rations like Soviets during the Siege of Leningrad. If anyone is going to make wartime sacrifices… it’s not going to be them.

They’ve got two senators per state… and a Republican Party that needs their money and their votes.

As expected, America’s president proposed yesterday to bail out the farm sector with $12 billion in welfare payments.

Naturally, the president feels some responsibility in the matter, since it was he who put the hayseeds under water.

He also looks ahead to the midterm election season, when the fellows with the big tractors make a big impression on the politicians.

The Donald has replaced win-win with win-lose. But the $12 billion won’t come out of Donald Trump’s pocket.

Nor will it come from the U.S. Treasury. The feds don’t have any money; they’re already projected to run a trillion dollars in the hole for fiscal year 2019.

So where will the money come from?

Will taxes be raised on consumers, also hurt by the trade war? Will the steel producers… or steel workers… or steel buyers – similarly damaged – pony up the money? Which group will get the rewards? Which will be punished?

Even Republicans are beginning to notice that the trade war threatens profits, jobs, and incomes. It also hurts our system of government, they say. Per Politico:

Pro-free trade Republicans were already furious with Trump’s escalation of tariffs against U.S. allies and China – a multi-front trade war they say is hurting U.S. farmers and manufacturers. But the administration’s response Tuesday – sending $12 billion to farmers hurt by retaliatory tariffs to ease the pain – is the precise anathema of conservative, free-trade orthodoxy, they said.

“This is becoming more and more like a Soviet-type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits,” said Senator Ron Johnson (R-Wis.). “I’m very exasperated. This is serious.”

“Taxpayers are going to be asked to initial checks to farmers in lieu of having a trade policy that actually opens and expands more markets. There isn’t anything about this that anybody should like,” said Senator John Thune of South Dakota, the No. 3 GOP leader. He suggested the new spending might need to be offset by cuts in other funding areas.

Senator Ben Sasse (R-Neb.) said Trump is giving farmers “golden crutches.” And GOP Senators Jeff Flake of Arizona, Bob Corker of Tennessee, and Pat Toomey of Pennsylvania said their legislation to tie the president’s hands on tariffs should pick up new steam now that the Trump administration is distorting the market.

“This is what we feared all along, that these markets would be replaced by handouts,” Flake said. “You lose some of these markets, you lose them for good or a long time.”

Win-Lose Economy

And here we see how an economy works when win-lose replaces win-win.

Farmers, steelworkers, secretaries, and car salesmen turn their faces away from the lathes… away from their customers… and away from balance sheets and fields.

Instead, they turn toward that cornucopia of endless bounty – Washington.

But Washington has no money. Unlike Dubuque or Las Cruces, Washington is in the win-lose business. Every penny of bailout, subsidy, boondoggle, and giveaway must come from someone, somewhere else.

You will recall that we ended our Diary on Monday with a provocative comment… that the coming poverty will be neither gentle nor genteel.

It will not be like a frayed jacket from Savile Row… or worn Stieff silver. It will not be like an eccentric uncle translating ancient Aramaic fragments while the family fortune runs down.

Nor will it be like an idyllic life in the countryside, tilling your family farm in the summer and sitting in front of an open fire in winter.

Instead, it will be mean, brutal, and rude… as the feds squeeze the economy hard… and groups fight among themselves for the juice.





By Joe Withrow, Head of Research, Bonner & Partners

Yesterday, we observed that bitcoin was showing signs of new life. Today, we take a step back to visualize the size of the entire cryptocurrency market relative to gold, fiat money, debt, and derivatives.

And by comparison, the entire cryptocurrency market is just a drop in the bucket…


As you can see, the market value of the total cryptocurrency market is only $300 billion. That makes cryptos 25 times smaller than the gold market… 300 times smaller than the global money supply… 716 times smaller than the world’s outstanding debt… and 1,812 times smaller than the global derivatives market (which consists of options, futures, warrants, swaps, and forward contracts).

If cryptocurrencies can attract capital from other asset classes – perhaps through an ETF supported by custodian services as we mentioned yesterday – it would appear that the crypto market has a lot of room to grow.

– Joe Withrow

P.S. The cryptocurrency market remains a fraction of other established financial markets. But there’s reason to believe it could soon skyrocket. That’s because institutional banks and multibillion-dollar funds are beginning to pour money into cryptos.

The “big money” is being very discreet. And you won’t read about it on the front page of Bloomberg. But cryptocurrency expert Teeka Tiwari believes this rush of institutional money could send bitcoin to $65,000. Teeka has put together a brief video presentation with all the details. Go right here.


Cash Is a Miracle… So Why Are Businesses Refusing It?
More and more restaurants and business are refusing to accept cash, opting instead for credit card payments only. The policy makes transactions more convenient… but it comes with an unseen cost.

Departing Facebook Security Officer: Pick a Side
In March, Facebook was at the heart of a massive data breach scandal. Data from millions of users had been leaked to the political consulting firm Cambridge Analytica. Shortly after the news broke, Facebook’s top online security officer departed. But not before circulating a brutally honest memo…

Trump’s Other War With China
Coverage of the U.S.-China trade war still fills newspapers. But behind the scenes, a different struggle between the two countries is playing out. It’s a war that could determine which nation is “top dog” for decades to come… and America may be up against the ropes.


In the mailbag, Bill’s recent Diary, “Was the White House Wrong About Everything?” gets readers thinking…

The White House Office of Management and Budget has been routinely wrong on everything it has ever “analyzed” in the entire history of that department. Only a staff of idiots like the White House Office of Management and Budget would ignore the historical positive effect of President Reagan’s tax cut, which increased revenues by 300% and brought a surplus to the budget with the resulting economic boom the cuts created. And so will President Trump’s tax cuts with the economic windfall they have stimulated.

Thanks for identifying yourself as a paid member of the “Hate Trump” faction, which also includes the efforts of the “White House Office of Management and Budget.” You will join the OMB in continuing to probably get just about everything wrong.

– John G.

It seems like you did not factor in all of the $8 trillion that just came back from overseas. You did not factor in the billions that the White House just pulled in from the United Nations last month. Let me see, what else did you leave out? How about the $20 trillion Obama left us with? And by the way, where did all of that go? We have yet to see where every bit went.

– Dale B.

In Bill Bonner’s July 16 Diary installment, he indicated that communist China (a major human rights violator) could be seriously hurt by President Trump’s trade war. But he wrote that China’s injury would also hurt the U.S. and cause many Americans to suffer. Today (July 23), he repeated this belief. But who gave the heavily bureaucratic, win-lose, swampster Chinese communists so many advantages over the past three decades?

– Frank W.

One is either for or against Trump; there is no middle ground. He may paint himself like a saint; he is anything but. He may be trying to right the government ship, but he is against a monster wave from the entrenched money that is always feeding from the government.

I doubt if anyone could right the ship. When the average American does not “know,” will not even look at the debt facts and then “know,” or just goes along believing gifted BS, it will take the ship taking on more water to the point of sinking for them to finally figure it out and “know.”

Take the example of Trump being upset about interest rates going up. Mistakes 1 through 3 are being used by the Fed – higher interest rates being needed to take us back out of recession when it comes. Of course, without the entrenched money losing any, while we go down with the ship. Why clear out bad debt when we can bundle it and sell it to those who do not “know”?

– Bernard B.


In the 1930s, a group of professors submitted a proposal to the president. It outlined a radical change to America’s money, putting it firmly in the hands of the government.

The called it “The Chicago Plan”…

Dan Denning, Bill’s coauthor on The Bill Bonner Letter, believes The Chicago Plan could be making a comeback. Here’s what it would mean for your money…