PORTLAW, IRELAND – Vignettes from Ireland:

** We walked into the tourist office in Youghal (pronounced “Yall”) in County Cork. Two young men were there. Curly hair. Cute. Something odd about them. Too carefully groomed and well dressed for the town.

“How do we get to Sir Walter Raleigh’s house?” we asked.

“I don’t know. I’ll look it up for you.”

Something was amiss. The accents were wrong. And how could they not know where the famous house was located? It is the only tourist attraction in the small, depressed town.

When asked, they gave us the full story.

“We’re Italian. We’re here on an exchange program to learn English. We don’t know anything about this area.”

** We walked through Portlaw in nearby County Waterford yesterday. The town was almost deserted. But one man came towards us. Disheveled. Unkempt.

“Good morning,” we said.

“Agghh… I don’t talk to nobody,” he snarled.

** The only café in town had café women behind the counter yesterday morning, but no customers. We sat down and were soon enjoying the “small Irish breakfast” – coffee, soda bread, sausage, ham, tomato, egg, and black pudding. We listened while we ate.

First girl: “I’m not going to pay any attention to her.”

Second girl: “She doesn’t know what she’s talking about.”

Third girl: “She’s just not from here… How could she know? She knows nothing about the area.”

Fourth girl: “Yeah… she’s from Kilmeaden.”

Kilmeaden is about five miles away.

BS Big Picture

Meanwhile… back to the world of money.

As you no doubt remember, average numbers – and government statistics – have created a phony picture of the real condition of the country.

According to the Fed, the White House, and the press, we are at the beginning of a period of strong, synchronized growth around the world.

The bigger the picture, the more likely it is to be fraudulent. You can stand at a podium and say whatever BS about macro trends and theories you want. But don’t try it at home.

People do not live in “the world.” They do not work in “the world economy.” They live in Columbus, Ohio, or Poughkeepsie, New York. And they take the jobs that are available to them there.

Even if it were true that the macro picture is bright (which we very much doubt), the micro picture surely is not.

Tale of Two Countries

Some areas of the country have done very well – boosted by the “financialization” of the economy and the pumping up of asset prices that has been going on for the last 30 years.

The number of multimillionaires, for example, has surged. CNBC:

The number of American households worth $25 million or more has grown 73% since 2008, compared with growth of 54% for millionaire households. There are now 145,000 U.S. households worth $25 million or more, up from 142,000 in 2014.

The average man, however, has not gained a penny. The latest figures show that a man over the age of 25 earns an average of 2.5 cents per hour less than he did in 1999 (in constant 1982 dollars).

Since real (inflation-adjusted) income growth has been negative, and only a few people are getting so much wealthier, there must be a lot of people who are getting much poorer.

This was our reasoning when our head of research, Joe Withrow, decided to have a look, county by county. He concluded that 73% of U.S. counties are depressed.

And now comes further evidence, using an entirely different approach. Science news website Live Science reports:

Last year was not a good one for Americans’ happiness – a record number of states saw declines in their residents’ well-being, according to a new poll.

The poll, from Gallup-Sharecare, found that residents’ well-being declined in 21 states in 2017, compared with the levels in 2016. That’s the largest number of states to see a drop in well-being over a single year since Gallup-Sharecare began the poll 10 years ago.

For comparison, during the Great Recession in 2009, 15 states saw declines in their residents’ well-being, compared with the year before, Gallup said in a statement.

Often have we wondered how such a technologically advanced, capitalist nation in the 21st century could make so little economic progress.

It seems almost impossible. And yet, the evidence is there. What went wrong?

We don’t know for sure. But it appears that a combination of fake money, fake interest rates, excessive borrowing, and too much government has brought the capitalist machine almost to a standstill.

Knaves and Fools

Another way to look at it:

Progress and prosperity depend on win-win deals. And win-win deals depend on a few things – reliable money, safety, liberty, and property rights.

Take away any one of those things and the machine goes on the fritz.

Beginning in the 1960s and 1970s, a handful of academics – backed by a small group of political, Wall Street, and crony insiders (aka the Deep State) – got control over the economy, the government, and the Fed.

That group found that it could get ahead by imposing win-lose deals on the nation, paid for largely with the funny money made available by the Fed.

Since then, this group of insiders has managed to bamboozle more than 300 million people and stifle what should be the most dynamic economy in history.

We have portrayed former fed chief Janet Yellen and her predecessors as stupid, bumbling, and incompetent. But a Dear Reader sets us straight:

The behavior that you ascribe to Bernanke, Yellen, Powell, and other Fed governors is that of bumbling nincompoops… I have an alternate hypothesis: The Fed governors have an agenda consisting of three objectives.

Objective No. 1 is to protect and enhance the wealth of their masters: the big banks that own the Fed. Objective No. 2 is to convince the American public that they have their best interests at heart, and that they are doing their utmost to maintain full employment while containing inflation within a very challenging environment. Objective No. 3 is to conceal Objective No. 1 from the public.

Yes… he’s right. They’re more knaves than fools.

Remarkably, but still predictably, Ms. Yellen is now being widely congratulated for her role in this travesty. And her replacement as Fed chief, Jerome Powell, has pledged to continue in her footsteps.

“While the challenges we face are always evolving,” he recently assured investors, “the Fed’s approach will remain the same.”

Too bad.





By Chris Lowe, Editor at Large, Bonner & Partners

It’s been a straight shot higher for bond yields in 2018.

Today’s chart tracks the yield on the 10-year Treasury note – an important benchmark for borrowing costs throughout the economy.

The 10-year T-note yield is up 48 basis points so far this year.


That’s a 20% move higher in just over a month and a half.

(A basis point is one one-hundredth of a percentage point.)

Chris Lowe


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In the mailbag, the government’s deficit spending is weighing on readers…

One stands amazed at readers who take umbrage at your insightful comments on the financial situation in this world. As a Zimbabwean resident abroad, I know firsthand the perils of money printing and the ultimate consequences of this disastrous policy. There are a multitude of retired Zimbabwean civil servants who, after a lifetime of service to the state and commerce, now depend entirely on charity food parcels to exist, their previously comfortable state pensions having disappeared with the Zimbabwean dollar.

This consequence of money printing is going to be difficult to evade in the Western world since, as demonstrated by Paul Volcker, the surefire remedy to hyperinflation is to increase interest rates. But with the current state of indebtedness of state, business, and private balance sheets, this remedy will be unsustainable at 4 or 5 percent, let alone at an inflation-defeating 15%. I’ve been an avid follower of yours, dating from Daily Reckoning days.

– Ewan L.

What, besides calling the fire department, is one to do during the next crisis? Buy gold? Buy bitcoin?

– William B.

It’s amazing to me that you can continue to spew the same old BS as the Democrats and the mainstream media, even Fox News, that the Republicans control both houses of Congress. Are the majority of your readers so stupid that they don’t understand that 51 to 49 will get nothing past the Democrats unless it’s something they want? Therefore, all we get is half-assed measures, and Band-Aids on 44-mag wounds. Please don’t keep supporting the media with this BS; I hope you’re smarter than that. But I’m wondering.

– Homer B.

You say the Fed has only 142 basis points to play with in the next downturn. Wrong. They can always follow the lead of Japan and Europe and go negative, making bond buyers pay for the “safety” of government promises.

– Chuck B.

While I certainly agree with your views that government deficits are severely problematic, and that we as a country have grotesquely misallocated savings (such as the major expansion in tuition loans), I believe your focus on a low savings rate overstates the problem. As I recall from my prior reading of economic statistics, the savings rate does not consider the change in the value of existing investments. (Please correct me if I am wrong.) While this may make some sense, as a measure of how much of current earnings are “saved,” it is not a very good proxy for either the capital creation of the economy or the financial status of households.

As a case in point, I am a retiree with only a very modest current income. However, I have not been a prodigal with my lifetime of savings, and have consistently watched my net worth increase over the last nine years as I have spent less than my earnings and capital gains. In fact, I have substantially paid down my mortgage debt and my modest margin account. While I may be fortunate among the baby boomers, I am certainly not alone.

While valuations may be inflated based on normal monetary conditions, they are less so given secular – if not lifetime – lows of interest rates. My point is that a focus on the official economists’ low savings rate is a very inadequate measure. It often goes up when financial markets enter a bear market and goes down when personal wealth increases. Similarly, the later reference to deposits in depositary financial institutions is also misplaced, as even moderately sophisticated savers rarely leave any significant amounts on deposit in depositary institutions.

Will we really be better off when the inevitable bear market comes and people sell their securities and investments and move their savings into banks? I think not.

– Anthony B.

The behavior that you ascribe to Bernanke, Yellen, Powell, and other Fed governors is that of bumbling nincompoops. Ben Bernanke obtained his PhD from the MIT Sloan School of Management. Although we missed each other by some years, I can nevertheless state with a high degree of certainty, based on my interactions there, that Mr. Bernanke is among the smartest of the smart. I simply cannot reconcile his education and experience with the image of a bumbling nincompoop.

I have an alternate hypothesis: The Fed governors have an agenda consisting of three objectives. Objective No. 1 is to protect and enhance the wealth of their masters: the big banks that own the Fed. Objective No. 2 is to convince the American public that they have their best interests at heart, and that they are doing their utmost to maintain full employment while containing inflation within a very challenging environment. Objective No. 3 is to conceal Objective No. 1 from the public.

– Steve S.

Meanwhile, a question on a project from Bill Bonner Letter coauthor Dan Denning.

I recently heard Dan Denning on the Stansberry Investor Hour podcast. He mentioned a project he’s working on which I’m interested in – research on overlooked and undervalued towns, communities, and land in the Rocky Mountain West. Will that project be published in The Bill Bonner Letter? I’m interested in subscribing, but wanted to clarify how to access this project. Please let me know. Thanks!

– Matthew B.

Editor’s Note: For nearly a year, Dan Denning has undertaken an ambitious project. As the reader alluded to, he’s been traversing the American West looking for overlooked and undervalued towns that could act as “boltholes” during any future crises.

Dan will be finishing up this project soon. And he’ll be sharing his findings with all subscribers to The Bill Bonner Letter. You can learn how to join Bill and Dan as a subscriber right here.


President Trump just completed his first year in office. And there’s already talk about whether the president will run for another term.

But according to our colleagues at Casey Research, Trump will fail in 2020 unless he can accomplish this one task.