News Commentary

Bill Bonner: Here’s Proof That Wealthy Elites Control Washington

"We had no proof. Just an observation. But it looks to us as though government always begins and ends as a tool for those who control it. It is not the product of a 'social contract.' It is not an expression of the 'general will.' It is not the 'price we pay for civilization.' It is not 'captured by wealthy special interests.' On the contrary, it is as blunt and stupid as a crowbar. It is used by the elite to pry wealth, status and power away from everyone else. Few victims of the public school system believed us, but now cometh a study from Princeton and Northwestern universities proving we were right." Continue reading →

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Bill Bonner: What You NEED to Know about Wealth Inequality

"After the 1970s, real capital played a smaller and smaller role. It was replaced by credit and its sinister twin: debt. The r in Piketty’s now famous annotation r > g is supposed to represent the return on capital investment. But where did the wad come from? Savings rates went down. Real earnings went down. Growth rates went down. So how could there be more capital available and how could it produce higher rates of return (compared to economic growth)? The whole thing is a headache for a thoughtful man. Capital investments with no real capital behind them. Profits that outstrip the economic growth from which they must come. What to make of it?" Continue reading →

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Bill Bonner: Don’t Be Fooled By the Wealth Inequality Debate

"QE is supposed to be the weapon in the Fed’s fight against unemployment. The Fed is still buying $45 billion of bonds via QE every month… in addition to holding short-term interest rates to the floor. Where does that $45 billion go? The insurance companies and pension funds that sell bonds to the Fed use this newly created money to buy the real assets of America – houses, companies, commercial property, resources, farmland… everything. And that drives up the prices of everything for everyone else. The Fed says QE is meant to help create jobs… and 'stimulate' the economy. It does nothing of the sort. Instead, it lines the pockets of those at the top of the heap." Continue reading →

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Retirement Myth Reveals the Possibility of Great Socioeconomic Change

"So now we know: Even a million dollars isn't enough to retire on. Sounds reasonable, given all the obstacles to retirement in the West and especially in the US. But there is a problem with this article that is much bigger than the retirement issues it explores. The problem is – and we can see from the article's feedback – that the readership is a good deal more sophisticated than the article itself. As we've often pointed out, when people cease to believe in the narrative provided to them by their own elites, then inevitably society begins to change in fundamental ways. As we can see, this article glosses over the REASONS for increasing retirement problems." Continue reading →

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“Everything we are told about deflation is a lie”

"Messrs Yellen, Draghi et al should be careful what they wish for. Inflation targeting is hardly a precise science. Achieving an entirely arbitrary 2% inflation level is bad enough for savers on fixed incomes when deposit rates are close enough to zero as to make no difference, but markets have a tendency to overshoot. Most government bond markets are clearly overbought – but in a QE world given fresh impetus by the looming arrival of the ECB, overbought markets can become even more overbought. When we don’t claim to understand the underlying dynamics (political) or the final destination (though we have our own fears), it’s much better simply not to play." Continue reading →

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Bill Bonner: Debunking the Fed’s Credit Propaganda

"We have no choice but to go ahead. But to where? And how? Hold on. One question at a time, please. To where? Japan! How? By using the same policy tools the Japanese used. It worked there, didn’t it? The Fed is fully committed to staying the course. If credit deflation returns to the US, it will have to be over Janet Yellen’s dead body. Which is not a bad idea. But Yellen is not likely to let it happen… not if she can prevent it. But there’s the rub. If credit is going to keep expanding, someone has to borrow more – a lot more." Continue reading →

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Yellen Surprise Suggests Investors Should Go On Defense

"Comments this week from Janet Yellen, who just took over as Fed chair, caught many in the market off guard when she suggested the central bank may be in a position to raise its key interest rate as soon as six months after ending its massive bond-buying stimulus. That could put the first rate hike on the table by the spring of 2015 compared with previous expectations for no sooner than the second half of the year. Indeed, rate futures markets now assign a 52 percent probability to the Fed's April 2015 meeting for the first rate hike versus just a 33 percent chance a month ago. Stocks such as utilities could be an option to steer clear of some of the hotter stocks and sectors of 2013 that are now richly valued." Continue reading →

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Bill Bonner: The Massive Problem Threatening the Global Recovery

"Debt is an obligation laid upon the future by the past. The larger it gets, the harder it is for the future to happen. There is a correlation between extreme levels of public debt and low economic growth. High levels of debt-to-GDP have been historically associated with low levels of economic growth. That is what has been happening in Japan for the last 23 years… and in Europe and the US for the last seven. These economies are still fighting deleveraging, resisting debt deflation and pretending that they can continue to add debt forever… and that somehow this will get them out of their debt traps. But they are doomed. Without growth they can’t pay the debt. With so much debt, they can’t grow." Continue reading →

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Bill Bonner: Why the Crowd Is About to Get Destroyed in US Stocks

"In the US, as in Japan, QE does not help stimulate a real recovery. But it does help simulate one. House prices are up (thanks, in part, to ultra-low mortgage rates). The middle class has more 'wealth' (albeit the paper kind) due to gains in their stock market portfolios. The rich are feeling fat and sassy, too. The Fed can continue modest tapering. But this is likely to produce a selloff in the stock market. Then the Fed will stop tapering. But it will be too late to reverse the damage to equities. They will go down for many years… bringing us even closer to the Japanese model. Our guess now is that this situation will persist for a few years." Continue reading →

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Economist Mag Defends Fed With an Ode to the Dead

"Today, powerful people situated strategically around the Fed are protecting that institution and its members. But times are not what they were. There is the Internet to contend with and a mood of informed populism in the US that does not bode well for a continued Fed coverup. Thus, the Fed faces an institutional conundrum. The public pressure on the Fed in the long run will surely not let up. In fact, it may subside a little as the Fed tends to this latest stock market bubble, what we have called a 'Wall Street Party.' But when the party is ending and insiders (and hopefully you, dear reader) have drunk their fill of the bubbly and retired, there will be Hell to pay." Continue reading →

Continue ReadingEconomist Mag Defends Fed With an Ode to the Dead