RANCHO SANTANA, NICARAGUA – Yesterday, coming back from Granada with a driver, we learned a little about how the Nicaraguan economy works.

[Editor’s Note: You can see pictures from Bill’s travels around Nicaragua after the annual Bonner & Partners Family Office meeting, right here.]

We were passing shacks of all varieties and various levels of ingenuity.

Some had bare concrete walls and tin roofs. Some were built entirely of rusty tin, apparently scavenged from a tear-down site. Some wooden buildings leaned. Many you could see right through.

The countryside may not be rich in money, but it was well-furnished with trash.

Plastic bags hooked onto fences and tree limbs. Rusted-out trucks sat in front yards. Paper of all sorts littered the roadsides…

We’ll come back to that in a mo’…

You Wanna Really Make America Great Again?

First, finally some good news from the Trump team! They’re proposing to cut funding for 80 different agencies and programs.

The Institute of Museum and Library Services, for example. The Corporation for National and Community Service… the Appalachian Regional Commission… the National Endowment for the Humanities… and dozens of others.

They’re all supposed to get the axe.

Well… hooray! It’s about time. Get rid of them all. And since you’ve got the axe out… there’s plenty more dead wood that could be chopped.

The SEC. Who needs it? Let investors take care of themselves; they’ve got the money to do it.

And why 17 different spook agencies? One would be more than enough.

The Department of Agriculture has been around since 1862 and has not grown a single cucumber. Most of its $140 billion budget is spent on the SNAP program that gives food to poor people.

SNAP’s EBT card can (according to press reports) be used to buy underwear, shoes, fast food, lobster, strip clubs, and soon… marijuana; shut it down.

The Department of Commerce? Who needs it?

The Department of Education has 4,500 employees who have never taught a single student. It should be history, too!

And Homeland Security? Don’t we already have the Pentagon, the FBI, the CIA, the DIA, and the NSA? Not to mention state and local police.

We’ve been through those airport scanners so often, our teeth are ready to fall out. And as far as we know, not a single airline disaster has been averted.

But wait… The savings from defunding these programs are earmarked for the Department of Defense… and Homeland Security.

Where’s the gain? Where’s the benefit? What difference does it make whether the money is wasted by the EPA or the Pentagon? Net result = zero.

In other words, Trump is just shifting resources from one Deep State sector to another… exchanging one group of cronies for another group… And it is not at all clear this is a good trade.

At least the parasites at the National Endowment for the Humanities don’t get us into unwinnable wars.

Besides, the generals should be punished, not rewarded. They haven’t won a war since WWII despite spending, in today’s money, about $30 trillion.

And they haven’t fought a war worth fighting, either. Nor is there any war going on anywhere on the planet today that is worth a single American life or a single American dollar.

Nor is there any nation anywhere in the world that is preparing to invade the U.S., steal our property, rape our women, and carry our children off into slavery.

You wanna really make America great again? You really wanna “save” the country? Pass Donald Trump’s budget cuts.

But don’t stop there. Cut the defense budget by $400 billion, too. And bring the troops home.

And one more very important thing…

The Magic Money System

It would be such fun to be president… until you were impeached, of course!

This is Washington we’re talking about… aka the Swamp. As for Donald’s plan to rob the Peters in the EPA to give to the Pauls in the Pentagon, the insiders are indifferent.

The increases are approved. The decreases never show up. Peter and Paul go about their business as before.

But no way is the Deep State going to stand still as its major boondoggles are defunded. And fortunately for the swamp critters, the funding system is magical .

No need to trouble the taxpayers… not when there’s credit available for almost nothing.

So now we turn to Janet Yellen, the creature from the Jekyll Island lowlands. She gave a press conference on Wednesday. We would quote the Fed chief, but it might be viewed as mockery.

Instead, we will summarize:

Uh… It looks like the economy is doing okay… so we’re going to keep doing what we’ve been doing… I mean letting it return to normal as we keep our eyes on the data.

Some of it looks good. Some not so good. So, we’ll keep doing what we’re doing… or maybe more of it. Unless things don’t go so well, you know, like… then we’ll do less. Or more, whichever way you want to look at it.

There are those who expect Ms. Yellen to lead the economy back to “normalcy.” And there are those who expect Donald Trump to lead the nation back to greatness. We had a friend who believed aliens would land on the White House lawn and show us the way to greatness.

And what do we know? Maybe they will.


Gardens, Pigs, and Satellite Dishes

Nicaragua is a poor country, the second poorest in Latin America. According to a group called Opportunity International nearly a third of the population lives on as little as $2 a day.

In rural areas, such as the ones we were driving through, as much as 50% of the population lives in “extreme poverty.”

We’re not sure what that means. People seem well-fed. They have gardens. Pigs run across the road. Even the humblest house has a satellite dish on the roof.

Looking in through the open doors, you see people lounging in hammocks or sitting on plastic chairs, talking. We saw no sign of desperation.

Much of the road was simple dirt. Dust followed us for miles before affixing itself to our rear bumper. But then we came to a nicer section, paved with distinctive concrete blocks.

The interlocking pavers were unusual and looked more expensive than ordinary highway surfaces. We wondered why they used them.

“Oh… This is a part of the road that the president is responsible for,” answered our driver.

“His family owns the company that makes them. I don’t think we’re supposed to know. But everyone does. And if the local government wants to pave a road, it has to use his pavers.”

“Oh… It’s a crony deal…”

“Yes… there are a lot of cronies in Nicaragua.”

There are lots of cronies everywhere…

Stay tuned… Monday, more on cronies as our campfire tales resume…




Further Reading: Next up in Investing Insight… Greg Wilson, our friend and analyst with Palm Beach Research Group, reveals how a new front in the War on Cash has just opened up. Read on below.

Investing Insight


Last month, the Venezuelan government revoked the bank account of Surbitcoin, the country’s largest bitcoin exchange.

The company was forced to suspend operations. And bitcoin owners who used the service had nowhere to store their currency.

That same month, the Chinese government issued a string of new policies to crack down on bitcoin exchanges in that country.

Similarly, Chinese bitcoin owners were left without services to buy, sell, or store their cryptocurrencies.

In both cases, repressive governments were trying to prevent money from fleeing their countries.

China and Venezuela have strict capital controls. These policies restrict the free flow of cash in and out of their countries.

It’s no wonder their people turned to bitcoin to circumvent these heavy-handed policies. And it’s no surprise their governments targeted bitcoin. It’s one of the best defenses against the War on Cash…

The best way to think of bitcoin is as a private online currency. The supply of new bitcoins is governed by a computer algorithm, meaning central banks can’t create them on a whim.

All transactions are done “peer to peer” – so there’s no middleman.

In fact, the rules that govern the bitcoin network won’t ever allow more than 21 million bitcoins to be created. So, unlike the dollar, the euro, or the yen, bitcoin is inflation-proof. Its value can’t be “printed away.”

Eventually, governments will have no choice but to accept bitcoin as an alternative currency. As we’ve said before, it’s here to stay.

There’s a service Chinese and Venezuelan bitcoin owners turned to when their exchanges were closed. It’s called LocalBitcoins, a peer-to-peer bitcoin trading website.

Soon after China announced its new bitcoin exchange policies in February, trading volume on LocalBitcoins nearly quadrupled. And in Venezuela, it also exploded after the crackdown there (see chart below).

You can use the website to buy bitcoins online or in person. And you can pay for it with gift cards, MoneyGram, PayPal, or by depositing cash at a bank.

LocalBitcoins is really easy to use. In fact, it took me less than an hour to make my first trade…

Now, that may sound risky… but LocalBitcoins has an escrow feature to protect buyers and sellers.

I suggest you spend some time researching the website before using it. The site includes a search function that separates offers by amount, currency, location, and offer type.

Based on my experience, LocalBitcoins is easy to use and the price is fair.

If you want a backup plan just in case your country or state falls victim to the “War on Bitcoin”… check out LocalBitcoins.

Greg Wilson

P.S. My friend Teeka Tiwari, editor of The Palm Beach Letter, recently released a new presentation that shows how you can get in on the coming cryptocurrency revolution and secure your wealth for the long term. Get the details here.

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Today in the mailbag… lots of kudos from your fellow Diary readers for yesterday’s essay: “Fed Hikes, Markets Yawn.”

Bill – today’s screed was “Right ON.” Keep up the good work.

– Carl T.

Don’t know about the rest but I enjoyed yesterday’s fireside expose. I could probably read that one at one of my own fireside parties and not have everyone running for the exits. Which is the usual when I get off on rants of this type.

– Mike R.

Bill, I greatly appreciate your “measured responses” when appraising the outlook for the Trump presidency.

I particularly appreciate your commentary on the need for win-win transactions in all aspect of life. What a great principle to keep in mind in formulating all of life’s schemes, programs, contracts and transactions. Without it, neither the general “weal” nor the personal “wealth” is enhanced except in the short term. Keep the good common sense flowing!

– Richard F.

Bill, no disrespect to your readers, but you are right on about most things. Trump is a hero in one respect, and one alone… he speaks his mind. He was billionaire enough to speak his mind and get elected anyway. That’s the end of that. Anyone who thinks that you can shrink government by making it first larger is a clear idiot.

– Joe J.

And finally, two responses to Diary reader Arthur’s comment in yesterday’s mailbag: “When Abe Lincoln went to war to force the southern states to remain in the union, the country became an ‘empire,’ the federal mafia was born, and the 10th amendment became meaningless.”

I have to agree with Arthur about the unconstitutionality of the Civil War. States, having willingly joined the Union, should have also been allowed to willingly withdraw from it. That has nothing to do with the “legality” of slavery.

Was Abe Lincoln actually the first Deep State President?

– Chuck B.

I don’t usually respond to someone else’s mailbag comment but it amazes me that someone could interpret what Abe Lincoln did as creating an “Empire” and a mafia style government.

Now, if you take today’s situation, the people have put all their marbles in Trump’s bag just as they did in Obama’s bag and we can see where that has gotten us.

The people can’t be in charge if we keep putting someone in the Oval Office with the expectations that he or she should make all the decisions. They call it a “Kingdom” or “Dictatorship,” not a “Democratic Republic.”

– James B.