The rich man’s wealth is his strong city, and as a high wall in his own conceit.

– Proverbs 18:11

POITOU, FRANCE – We are following up on Friday’s discussion by connecting a few final dots. Then, we promise we will never mention “trade” again.

Reader Challenge

Talk about a “ball joint,” a “female end” or a “coupling” in Congress, and they are likely to get the wrong idea.

Half the members of Congress are professional, lifelong politicians. Most of the others are lawyers by trade. Then there is an assortment of dentists, psychiatrists, and car dealers. But not a single plumber.

And yet, some people think that Congress and the administration are, at least, in part responsible for our toilets. That is the assumption built into our Dear Reader Bradley J.’s challenge. He wrote:

The purpose of a nation is to defend the common interests of its citizens. Certainly the ability to earn a living at a standard of living higher than that of the Chinese worker with his family’s bathroom at the end of his block, shared with 50 other families, is part of what our nation exists to achieve.

There is no mention of improving standards of living or increasing wealth in either the Declaration of Independence or the Constitution.

And we know that, in the U.S., the private sector is responsible for toilets.

But the question presumes that the feds who run “our nation” can make you richer – by either offensive or defensive actions – than you would be on your own.

Is that true? How?

Can they somehow create or protect higher wage rates? And if they can, how come they don’t do it everywhere?

If you live in Nigeria, where the hourly wage is about $3, can the feds raise wages by setting the minimum wage at $10? Or by blocking the importation of foreign goods? Or by closing the border to immigrants? Is there something else they can do?

It seems pretty obvious that the answer is no. Nigerians make $3 an hour, grosso modo, because that’s what their labor is worth. They lack the training, capital, equipment, infrastructure, evolved financial and commercial institutions, knowhow, and markets that would make their labor more productive.

Locally, the Nigerian authorities could build a wall around the whole country and prevent anyone from getting in. Then, they could set a minimum wage of 100,000 kobos. Or a million kobos. But it would still only be worth $3 an hour.

World improvers, do-gooders, and meddlers are always coming up with development programs to help poor countries.

But without the guidance of honest prices (set in open markets), and the profit motive, these schemes almost always fail. Even the successes are usually fraudulent, consuming more real resources than they actually produce in output.

As far as we know, there is nothing the feds can do to help them except provide basic services – respect for property rights, safety, enforcement of contracts, and honest money. Otherwise, they should butt out and let the private sector’s win-win deals get to work.

Futile Conceit

But what about the U.S.?

As our Dear Reader suggests, maybe the feds can protect high-wage industries from competition by keeping out low-wage imports. And maybe they can protect high-wage earners from low-wage competitors by closing the borders to immigrants.

Why can’t they build a wall… and keep out low-priced goods and low-priced labor… so that we can live on an island of prosperity in a sea of chaos, competition, and change?

Oh, Dear Reader, you are not the first to dream!

So let’s say we put up a high wall. Is it effective? Or just a futile “conceit,” as the Bible suggests… like pulling the covers over your head when your house is on fire?

Do people in America earn more than people in Nigeria because their politicians are better? Or because they are more productive?

Our guess is that they earn more because they have more machines. More skills. More capital. More sophisticated finance markets. Better supply and delivery systems.

Our guess, too, is that part of the reason U.S. companies… and U.S. workers… did so well was that they faced more competition, not less.

The U.S. was – and maybe still is – the largest free market area in the world. The shoemaker in Maine had to compete with the leather workers in California… and the steel mills of Pennsylvania had to fight it out with those of Alabama.

Competition kept everyone on their toes… and then allowed industries to concentrate and specialize in areas where they were most efficient. Oranges are grown in California and Florida, not in Virginia. Cars are made in Detroit, not in Nevada. The info tech business developed in Silicon Valley, not in West Virginia.

The competition… the ability to specialize… immigrants… and the relative lack of meddling by the feds… created the most productive workers in the world. And the highest wages.

Building Walls

But U.S. wages – compared to those in the rest of the world – probably peaked out in the ‘70s. Then, the European Union created another big, almost-free trade zone. German and Japanese carmakers beat out their U.S. competitors – even in America. And China opened up to the world economy.

And now, predictably, Americans want walls. They want to render unto Caesar the power to control what comes in and what goes out, and on what terms.

But will walls protect them?

There are more consumers in an economy than there are people working in export-focused manufacturing companies. So, like all other win-lose deals, tariffs help a few and hurt many.

Outside of the national borders, a person may pay $10 for a widget. Inside, he may have to pay $20 in order to preserve the wages of the domestic widget makers.

The people on the widget assembly line may applaud the nation’s Caesar. But the rest of the population – if they understood what was going on – would curse him; they are on the losing end of a wealth redistribution scheme.

And overall, they are poorer. Money has been taken out of the win-win economy (via import taxes) and shifted to the win-lose system. Costs go up. Earnings do not.

Rough Seas

Also, protected from foreign competition and distorted by artificial price signals, domestic industries become less efficient, and managers shift their focus from the plant in Cincinnati to the headquarters in Washington.

Instead of trying to satisfy their customers, they are angling, canoodling, and plotting with the feds.

Capital investment, too, tends to slacken off. Why invest precious earnings to produce a better product when consumers are forced to buy what you’ve already got? Profits become a function of politics, not of productivity.

By contrast, the foreigners out on the rough seas of free-for-all capitalism become better navigators. They develop more capital, more skills, better systems of transport, more commercial connections, and more elaborate sales and distribution networks.

They become more efficient and productive. And since it is private sector productivity – not public sector activism – that establishes real wage levels, the foreigners grow richer as the domestic economy becomes poorer.

Future Happens

Alas, Dear Reader, high walls can’t protect you. Life is win-win, creative, destructive, and competitive 24/7. And the future happens, whether you’re ready for it or not.

The feds can neither create wealth nor protect it. It is productivity that makes a worker’s time valuable. And it is productivity, and only productivity, that keeps it valuable. Everything else – including high walls and trade war bamboozles – is claptrap.

That is the theory of it. As for the practice, we have two examples.

First, in 1914, the fastest-growing economy of Europe was Russia. It was about the same size as the U.S., and had about the same prospects. Had it continued growing at the same speed, it would be an economy more or less as big as the U.S. today.

Instead, it took a goofy, win-lose path. Politicians decided where to invest… how much people should earn… and even how many toilets they should have.

Price signals were distorted… and ignored. Trade with the outside world came to an almost complete stop.

A high wall protected the Russians for nearly three generations. Almost no immigrants. Almost no foreign products.

Protecting its domestic autoworkers, for example, left Russians with only one choice of automobile – the Lada. Alas, the car was a joke in the auto industry.

A man goes into a garage. “Can I get a pair of windshield wipers for my Lada?” he asks.

“Sure, Buddy. Seems like a fair trade.”

Today, the entire Russian economy is no greater than that of the New York metropolitan area. Practically the entire 20th century was wasted.

And here’s another example of where high walls were meant to keep out competition: North Korea. Nothing much goes in. Nothing much comes out.

At the end of the Korean War, both North and South Korea were poverty-ridden hellholes. But they took different routes. And got very different results.

The North built walls and focused on win-lose deals, emphasizing “juche” (domestic industries) and “songun” (military first).

The South looked to win-win deals and opened itself to worldwide competition… facing every disadvantage possible – unskilled labor, poverty-ridden consumers, capital-short industries… you name it.

An imperfect test, because there were other things going on. But about as good as you get in political economics.

Same people. Same language. Same peninsula. Starting from the same point, more or less. But with two very different approaches. And what was the outcome?

You already know the answer, don’t you?

Starting from almost nothing, GDP per capita in South Korea is about $25,000 today. In the U.S., it is about $60,000.

And in North Korea? Nobody knows. But estimates put it somewhere between $1,000 and $2,000 per year.

Children in the North tend to be undernourished, resulting in smaller adults and a life expectancy that is 10 years shorter than their neighbors to the south.

High walls… or open walls? Let Caesar control everything… or Caesar backs off?

Your choice.





By Jeff Brown, Editor, Exponential Tech Investor

Regular Diary readers know that I follow developments in the cryptocurrency market very closely.

I actually just returned from several blockchain and cryptocurrency conferences in New York City.

I wanted to share a quick insight from one of the conferences I just attended and show you what it means for the future of digital assets.

I recently attended the inaugural Security Token Summit, put on in New York by the Security Token Academy. Only 120 people were permitted to attend. Most of them were leaders in either traditional finance or the burgeoning blockchain industry.

Here’s a picture from one of the presentations. The man presenting is David Weild, the former vice chairman of Nasdaq.


David Weild presents at the Security Token Summit

The primary takeaway from the conference was this: Within 24 months, the traditional equity and bond markets will be “tokenized” – or placed on blockchain networks – and will trade globally 24/7, just like cryptocurrencies do today.

That sounds like an unbelievable statement… But this view was shared by former Nasdaq executives, as well as prominent hedge fund managers.

And it won’t stop there. Everything of value – real estate, commodities, art, etc. – will be digitized, tokenized, and traded like cryptocurrencies in security token marketplaces.

What that means is that one day, you could own .00001 Empire State Building coins… or .00001 Louvre Museum tokens. That may sound unbelievable, but that’s the direction the industry is headed.

We aren’t talking decades here, either… we are talking years.

And it won’t just stop at finance.

As I’ve said before, blockchain technology can be applied to almost every industry. Finance, supply chain logistics, insurance, and even property title management can be improved with the application of a well-designed blockchain solution.

The table below gives you a quick idea of which industries are susceptible to disruption from blockchain technology.


Blockchain technology will reshape our world the way the internet did in the late ’90s. I believe the impact will be even more profound

Yet the average person has no idea it’s coming, because there is such a disconnect between what the mainstream press puts out and what is actually discussed at these exclusive conferences.

But make no mistake, digital assets are the future. And the best digital assets, like bitcoin and ether, are going to explode by a factor of 100 over the coming years as this trend plays out.

So get ready, the blockchain revolution isn’t just approaching…

It’s here.


Jeff Brown
Editor, Exponential Tech Investor

P.S. The mainstream media will tell you that the cryptocurrency revolution is over, that it was a “bubble” that popped earlier this year. But as I showed, that’s far from the truth.

Now is the time to position yourself with quality investments in the blockchain and digital assets space. I recently uncovered a unique opportunity that I believe will reward early investors with 100 times their money. I put together an urgent video presentation with all the details. Go right here.


Why Amazon Isn’t Sweating the Supreme Court Decision
Last week, the Supreme Court ruled that a state could collect sales tax from online retailers with no physical presence in that state. Some are calling for a shakeup of e-commerce. But Amazon, the e-commerce giant, isn’t sweating the decision. Here’s why.

Treasury Takes Aim at China
Relations between the U.S. and China are tense. Now, the Treasury Department is taking things one step further, by investigating Chinese investments in key U.S. industries.

They Called It “The Chicago Plan”
In 1933, the government considered a plan to take complete control of the money in your bank account. This “Chicago Plan” was never enacted. But Dan Denning, Bill’s coauthor on The Bill Bonner Letter, believes it is experiencing a resurgence…


In the mailbag, one reader poses a question on trade…

Will somebody please explain how the president can set tariffs? I thought I read somewhere that only Congress can do that. Is it because these tariffs are part of our national defense? Wow! I never knew that. Huh?

– Julius G.

Meanwhile, Bill’s Diary, “They Were Ordered to Shoot,” draws strong praise… and criticism…

I never comment on blog posts. Never. I’m seldom motivated to spend the time or take the action. So you may count this as a rare exception. Your post on June 21, “They were ordered to shoot,” was the best summary of our current national political situation I’ve ever read. More than thoughtful and insightful, it was painfully relevant and accurate.

An excellent piece. If it were possible to send a copy to every politician in the country, and only one percent got the message, it would be a start. Thanks for the outstanding work!

– Roger R.

I have never replied to anyone’s blog, and I have enjoyed and agreed with most of your views. However, your sly comparison to Nazis is way below your usual commentary. I believe the parents are at fault for putting their children in danger. Nuns taught me to remember that God put your head above your heart, so let your brain rule your heart! Compassion is needed, but discouraging bad behavior is essential. Too many want to pass laws that make them feel good, even if they are ineffective or usually lead to even worse outcomes… but it made them feel good. You are a thinking person, and I admire and enjoy your commentary, but this article really surprised me.

– Larry B.

I think you’ve asked the most difficult question on Earth. Where does obedience stop and responsibility begin? To me, the answer is “everywhere.” One can never violate a properly formulated conscience. But what is a properly formulated conscience? It sure as hell isn’t just “my opinion.” It is the result of an effort, proportionate to the seriousness of the matter at hand, to determine what is the right and what is the wrong thing to do. That involves hard work, study, consultation with knowledgeable people, a lot of thought, and yes, prayer and discernment (in the true spiritual sense).

After that, one must make a decision and live by that decision, regardless (as St. Paul says in another place) of whether it is convenient or inconvenient. If a person does anything else, that person condemns him/herself. Not easy or fun, but real. We are responsible, and we are accountable.

– Dave F.

This is neither intelligent nor reasonable. To compare separating children from their parents in compliance with law (for a few hours or days) because the parents acted illegally is not even in the same universe as shooting people. It doesn’t take a mental giant to figure that out, but you have to be excessively critical and grasping at straws to find any reason to voice criticism which may be rooted in the preconceived notion that the Trump administration is wrong, no matter what it does, as the liberals are doing incessantly these days.

It’s nauseating, divisive, and destructive to our society and nation. Now you are part of the problem, and making it worse. Find something more positive to write about, or don’t write.

– David B.

I can appreciate your work very much. But educating the American people is not going to work, even in a mild approach. This is a no-win, sadly. There’s a lack of interest and education. Half the country is not playing with a full deck. And it is getting worse. I like your work; I understand what you are trying to do. Good luck.

– Bruni H.

Who in the hell do you think you are, throwing out your opinion on something you know so little about – the Southern border of the United States! Please withhold your political ramblings in the future. First of all, that is not why we subscribed to your newsletter. Secondarily, your opinion is of no value to anyone but yourself, and we have no desire to listen to it.

– Clayson L.

Bravo, Bill. Just last Sunday, at a church I was attending for Fathers’ Day, the preacher read from Paul and spoke of how we should be submissive to those in power over us. A grumbling under my breath got me a poke in the ribs from my better half. I should forward this to him.

– Anonymous

You, like the rest of us, cannot know the future. You are a talented critic. You think you have all the answers. What would you do as president? Could you straighten everything out? Too much of a mess!

– Lewis S.

I enjoy and appreciate your wisdom and insight on multiple issues. Your products are making me money, and I am thankful for our joint situations in the USA. Although I agree with most of your opinion pieces, you may be biased due to your current location and a bit of “group think.” When I attempt to step back from the 24-hour “news cycle” and look at the factual day-to-day lives around me, I see improving situations.

Unemployment is at record lows (especially minority unemployment), housing starts are up, the stock market is volatile but at record levels, international relations (depending on your location and viewpoint) appear to be improving for the U.S. – perhaps we will see a formal end to a 70-year Korean War, and should count our blessings we do not have Socialist or Hillary at the helm.

– Wes W.

Like it or not, the freest people in America right now are the hoods in our various ghettos. The price of that freedom can be, and often is, death – at the hands of police or other hoods. The rest of us have given up most of our once-rampant freedom to faceless bureaucrats or ivory tower politicians. It is all “for your own good,” of course. Laws and regulations are always said to be so. Sometimes they are, but when we can hardly move without violating something “for your own good,” there is not really a lot of freedom left.

Our good Uncle Sam and his satraps tell us, increasingly, what we are allowed to do – and what we are forbidden from doing. The real power lies with those bureaucrats and those ivory tower politicians – who seem to gain more power with each re-election. The only real power we still have as citizens is the power to kick out the incumbents. Sometimes, as in 2016, we don’t do enough of that – or maybe we do too much.

– Chuck B.

Thanks so much for your article! You’re a genius – I Love it.

– David C.


Late last year, we had a phone call with Jeff Brown, Bill’s top technology expert.

“This will be the biggest technology story of the next ten years,” Jeff told us.

Jeff has already identified investment opportunities that have delivered gains as high as 211%, 222%, and even 345% in under eighteen months. But he says the gains from this next idea will blow all of those out of the water. Details here.