BALTIMORE – “I couldn’t believe it,” said a friend with grandchildren in a private school in the Washington area. “Their school provided grief counseling!”

“Grief counseling?”

“Yes. Apparently, students were so upset by Donald Trump’s victory that the school thought it should provide psychologists to help them get over it.”

The New York Times, too, seemed to need therapy.

Its weekend edition is full of blaming, scapegoating, and flagellation. Hillary blames FBI Director Comey for her defeat. One columnist says white Americans have become racists.

Another says women are deplorable, too. They didn’t support Ms. Clinton as they should have. “Behind these angry white men are angry white women,” it points out.

Five days have passed since the election results were announced. Many people are still hysterical. They should calm down and take a closer look.

The System Works

Already, the dots are coming together. What we see is this: The system works!

That is, the system whose main purpose is to protect the system continues to do so.

“The Donald” may be getting ready to mount his throne. But the Deep State – America’s “shadow government” – stays in Heaven.

First, Mr. Trump used his victory announcement to signal that easy credit – upon which the system depends for funding – will get even easier.

To the easy monetary policy, he will add easy fiscal policy. As much as an additional $1 trillion will be spent on “infrastructure.” On credit, of course.

As one of Mr. Trump’s economic advisers, Anthony Scaramucci, wrote in the Financial Times this weekend:

While easy-money monetary policies have exacerbated the income divide, central bankers handcuffed by political dysfunction have had little choice but to provide extraordinary accommodation… [B]usiness people like Mr. Trump understand you can grow yourself out of excessive debt.

What we think he meant to say was that you can “inflate” your way out of excessive debt by spending more than you can afford – if you can get Congress to go along.
This new spending was just what President Obama asked Congress for and couldn’t get. It was what big-spending economists such as Larry Summers, Paul Krugman, and Joseph Stiglitz had urged.

It’s what the Financial Times has called for from the get-go. And now the same Republicans who stopped President Obama’s infrastructure spending proposals are expected to come forward and approve Mr. Trump’s program.

Steel! Ships! Concrete! Woohoo!

All Hell Will Break Loose

Politically, this is a great move.  It is what Mr. Trump will have to do anyway (there’s no monetary stimulus left). And it will come as honey to working-class men, big business, Wall Street, and the Establishment. Even better, it could take years before their teeth begin to rot. 

The Rooseveltian-Reaganesque agenda will come with tax cuts, too.

We have never met a tax cut we didn’t like, especially when they are aimed in our direction. So we are pleased to see Team Trump pledging to lower taxes on the rich… and possibly get rid of the estate tax.

You go, Donald!

In the long run, an easier fiscal policy will be catastrophic. The world economy now depends on ultra-low bond yields. And that depends on ultra-low inflation rates. You can get ultra-low inflation with easy monetary policies but not with easy fiscal policies. 

The Treasury market is already anticipating rising inflation. Bond prices are falling; yields are rising… exactly what you’d expect if investors were no longer worried about deflation. [See more below in today’s “Market Insight.”]

When consumer price inflation starts to spike in earnest… bonds will fall hard… and all Hell will break loose.

What will the feds do?

What could they do? The responsible thing would be to raise interest rates to head off the inflation. But that would bring on the correction that they’ve worked so hard to avoid. Instead, they will do what all irresponsible governments do. 

More spending… more stimulus… more inflation. Buenos Aires, here we come! Or maybe even Harare.

Inflation could become hyperinflation.

But that is still in the future… perhaps long in the future…

Hacks and Has-Beens

The third big dot we can connect is the rapid recovery of the stock market following its election-eve jitters.

When it became clear that Mr. Trump would be the 45th president of the United States, the first reaction was panic. Then the market sat down. Took a drink. And quickly realized that he posed no threat to the cronies or their inflated asset prices.

Au contraire – his program may give them a boost.

From an 800-point plunge in Dow futures following the Florida state returns… the index rebounded and then began a rally into a new all-time high.

In short, Wall Street is confident that “The Donald” poses no real threat.

As though to underline the point, Goldman Sachs CEO Lloyd Blankfein appeared in the news. Trump could be a good thing, he hinted to employees.

By the end of the week, we also had a look at Trump’s transition team.

Where were the outsiders? Where were the bomb-throwing revolutionaries?

Instead, the people entering the transition headquarters near the White House were the same hacks and has-beens who have been hanging around Washington for the last 40 years.

They were insiders, not outsiders.

Some were even veterans of the Reagan Revolution 36 years ago. Alas, they were the wrong veterans – the ones who stopped President Reagan from doing what he intended to do.

Tomorrow… why we will have no Reagan-style boom. 




Further Reading: Don’t forget to keep an eye on your inbox this evening. We will be sending you a special edition of the Diary with more details about Porter Stansberry’s Big Trade.


Market Insight


Treasury yields have gone ballistic…

Since news of the Trump win broke on Tuesday, the yield on the 10-year Treasury note – a bellwether for borrowing costs throughout the economy – rose 21%.

That’s the biggest move in nearly two and a half years.

If Bill is right about Trump’s agenda, it’s not the last big move higher for Treasury yields.

Featured Reads

Get Ready for the Greatest Financial Mania the World Has Ever Seen
It’s something you don’t see very often. And it can lead to the most incredible gains of your investing life.

Even Paul Krugman Says a Trump Boom Is Likely
Economist and liberal Establishment darling Paul Krugman reckons a Trump boom is in the cards as taxes are slashed and government spending rises. But that boom may not last for long…

Are We Going Back to the 1930s?
Populism. Protectionism. Nationalism. Isolationism. Promises to restore glory and honor. The erosion of the political middle ground. These were all hallmarks of the politics of the 1930s… and today.


We’ve gotten a relatively muted response so far on Bill’s recent Diary series on the implications of a Trump presidency (catch up here and here).

What’s your view? Is Bill right about Trump saving the Deep State? Is he just more of the same? Or is he the breath of fresh air he claims to be?

Let Bill know what you think. Email him at [email protected].
Now, back to today’s feedback…

Like all sane people, you assume everyone else is sane. To you, strange ideas are only variations of normal opinions and occasional entertaining eccentricities.

But all people are not sane. They do not vote their real self-interests. And they cannot separate lies from what is real.

– Edmund S.

Maybe if we’re lucky, you will be as wrong about the next 4 years as you were about the election.

– Eldon A.

If you don’t vote, what right do you have to comment on the people’s choice? It seems to me you give up that right when you didn’t participate in the process.

– Gene B.

In Case You Missed It…

Bill’s longtime friend and colleague Doug Casey recently spoke with Porter Stansberry to discuss what Porter is calling his Big Trade. It’s his plan for profiting from “the great unwinding of the corporate bond markets” that will begin next year. You can watch it here.