Bill Bonner’s Diary of a Rogue Economist

Pssst… The Military-Industrial Complex Is Alive and Well

Bill Bonner, Chairman, Bonner & Partners, April 22, 2014

We made an observation last week: The US empire and its credit bubble will probably come to an end at the same time. Each depends on the other. If the US were not so big and powerful, it could not impose its money as the world’s reserve currency. Without its position as the issuer of the world’s reserve currency (dollars instead of gold), the US wouldn’t be able to flood the world with its cash. Without the rest of the world’s need for dollars, the credit bubble couldn’t continue growing.

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Send Our Troops to Ukraine?

Bill Bonner, Chairman, Bonner & Partners, April 21, 2014

Coming off successes in Iraq and Afghanistan, it makes sense that the US should send troops to Ukraine, no? When we first read this in the Washington Post, we thought it might be a late April Fools’ Day joke. Then we discovered the writer was sincere about it; apparently, James Jeffrey is a fool all year round: “The best way to send Putin a tough message and possibly deflect a Russian campaign against more vulnerable NATO states is to back up our commitment to the sanctity of NATO territory with ground troops, the only military deployment that can make such commitments unequivocal…”

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What to Do When the “Empire of Debt” Crumbles

Bill Bonner, Chairman, Bonner & Partners, April 19, 2014

“Dere’s dem dat’s smart… an’dere’s dem dat’s good,” said Uncle Remus. Many young people today can’t even identify Uncle Remus. Some of their elders might want to arrest you for quoting him in the original dialect. But the man was a genius. When we were young, we were a lot smarter. But as the years go by, many of the things we thought were smart don’t seem so smart anymore. And now we realize that, no matter how smart we think we are, we are never quite smart enough.

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“Don’t Go in There… The Bull Is Dangerous.”

Bill Bonner, Chairman, Bonner & Partners, April 18, 2014

We are being toughened up. Physically. Financially. Sentimentally. We already had to cinch our belt up a notch to keep our pants from falling off. We’ve also been forced to cinch up our finances… to avoid losing too much money. Some men buy boats. Some take up golf. Some buy ranches in South America. Almost all learn something from the exercise. Many survive. And a few emerge stronger and wealthier. We aim to be part of the first two groups. We’ve given up all hope of being included in the third.

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What Do Janet Yellen and Yuri Geller Have in Common?

Bill Bonner, Chairman, Bonner & Partners, April 17, 2014

It looks as though the US stock market is in the process of topping out. But if you’d bet heavily on a bear market, each time you saw one coming, you’d be broke by now. We will wait to see what happens… Meanwhile, we are still puzzling over the miracle produced by the Fed. Yuri Geller could bend spoons. The Fed bends the entire economy. Hardly a single price is unaffected. Hardly a single business plan or investment strategy goes forward without an eye on the central bank.

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The Great Keynesian Fraud

Bill Bonner, Chairman, Bonner & Partners, April 16, 2014

Economics has been called the “dismal science.” But even that is merely fraud and flattery. Economics is dismal, but it isn’t science. At best it is merely voyeurism – peeping in people’s windows as they go about their business and trying to figure out what they are doing. At worst, it is pompous theorizing about how to get the schmucks to do better. We doubt that you are especially interested in economics, dear reader. We know we are not. But we can’t resist a good comedy… or a good opportunity to point and giggle.

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[Warning] How NOT to Run Your Business

Bill Bonner, Chairman, Bonner & Partners, April 15, 2014

Herewith the sad finances of our Argentine ranch, Gualfin, literally at the end of the road, high up in the Andes. In business, as in other things, we are being roughened up… and toughened up. When we adjourned on Monday we promised a grim accounting. So, we visited our accountant – a cheerful young man in the nearest city, Salta – and bothered ourselves with the figures. “You have to understand, Señor Bonner, that you can’t expect to be competitive at anything,” Gerardo concluded. “You’re so far from everywhere. Everything costs you more. And, of course, you don’t have much water.”

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US Stocks Are 50% Overvalued… It’s Time to Get Out

Bill Bonner, Chairman, Bonner & Partners, April 14, 2014

The Dow fell 143 points on Friday. Gold was just about flat. Why the fall in stock prices? Many reasons were proposed, but no one knows for sure. There may not be a reason at all. Stocks don’t need a reason to fall. From time to time, they just do. Not to put too fine a point on it, but asset prices go up… and then they go down. Always have. Always will. Generally, it’s a credit expansion that drives them up. A credit contraction takes them back down.

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The Surest Way to Build Lasting Wealth I Know

Bill Bonner, Chairman, Bonner & Partners, April 12, 2014

It has been five years since the S&P 500 hit a low of 666 in March 2009. Since then, the S&P 500 is up over 150%. But nothing lasts forever – especially in a stock market rigged by the twin Fed polices of QE and ZIRP (zero-interest rate policy). So, how do you protect yourself from downside market risk while profiting from opportunities available in the market? The answer is a special class of stocks I call “legacy stocks.” When you invest in legacy stocks you are buying into companies with true staying power. I’m talking about companies that have been thriving for decades.

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The Fed’s Childishly Naïve Theory of Credit

Bill Bonner, Chairman, Bonner & Partners, April 11, 2014

Today, we return to familiar territory. We have seen it before: The slowdown in the economy. The overpricing of assets (particularly stocks). The huge increase in debt. The Fed’s QE and ZIRP. But for all its familiarity, it remains strange… and mysterious. Let’s backtrack… The foundation for today’s peculiar economy was laid in the 1960s and 1970s. In 1968, President Johnson asked Congress to end the requirement that US dollars be backed by gold. Then in 1971, President Nixon issued Executive Order 11615, which “closed the gold window.”

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