"The Future Can Wait"
by Bill Bonner
"When political campaigns are funded by corporations,
unions, and non-profit goo, the future is ruled out."
– George Gilder
RANCHO SANTANA, NICARAGUA – "Today, prodded by George Gilder… we connect some big dots. But first, the news... The U.S. stock market – as represented by the Wilshire 5000 Index, which tracks the market value of all American stocks actively traded in the United States – is now “off the charts.” As a percentage of GDP, stocks have reached almost 200% – an all-time record. And it’s not just the big names. The Russell 2000 Index – which tracks the smallest 2,000 stocks in the Russell 3000 Index – has gained more than 50% since November. And it’s done so despite the fact that four out of 10 of its companies are losing money.
And there is poor Gabe Plotkin of Melvin Capital Management. He made nearly $850 million in 2020. But then, he got caught in the GameStop hullabaloo and lost $460 million. Easy come, easy go, right?
Shocking Headline: Hey ho…WT… Well, this is one for the record books. A real, certified, no-doubt-about-it BUBBLE. And as we know, because we weren’t born yesterday, all bubbles burst. They don’t expand infinitely… or forever. They puff themselves up… and then something comes along to prick them. And BOOM! It’s over.
MacroMavens’ Stephanie Pomboy was interviewed on Fox News yesterday. She says the usual ratio between GDP and stock market capitalization is about 80%. That is, stocks should be worth only 80% of GDP, not 195%, which is where they currently stand. To get back to where they belong, the stock market will have to cut in half. This, she believes, could be coming soon… as the inflationary trends we’ve been talking about here in the Diary for the last few days come to a head. “It would take relatively modest increases in the monthly consumer price index (CPI) to get us up to or north of 4% year-on-year by May. That headline will be shocking to a lot in the markets,” she warns.
This could be the pin that this donkey tail is waiting for. It could cause a panic of selling… followed, of course, by a panic of money-printing. We’ll see…
Government’s Real Role: In the meantime, we’ll return to our theme for today by pointing out that a crash in the stock market is actually not a bad thing. Things that get out of whack have to get back into whack somehow. It really doesn’t matter whether stock prices are low or high… only that they are true. And as Scarlett O’Hara once observed, that’s what tomorrow is for. Like it or not, it always comes… at about the same time every day.
But the future – with all its innovations, evolutions, and surprises – must be allowed to happen. Which is where the government comes into play – it’s real role, that is. Whether controlled by Republicans or Democrats, it acts on behalf of the super-elite – those with the most to lose – to stop the future from happening. Like an aging dictator who puts his rivals in jail, the only future the elite will tolerate is one that leaves them rich and powerful… Anything else must be delayed… distorted… and derailed.
Which is why the printing presses are running so hot. Remember, it’s “Inflate or Die.” Either they continue to fund the feds’ schemes – including the bubble on Wall Street – with printing-press money… or they admit the truth. “Hey, look,” President Biden might begin, interrupting the latest episode of "I Hate Suzie" with an urgent announcement. “We made some mistakes. We spent too much. We borrowed too much. We printed too much. Well… we’re just going to have to bite…”
At about that point, the TV screen would likely go blank. Maybe after some popping noise… or a sprinkle of red drops on the screen. Because there is no way the powers-that-be would stand for it. Surrender to the future? Que sera sera? Not a chance.
Scary Future: “The future is scary,” they tell the voters. “There are terrorists out there! Viruses! Higher mortgage rates! The planet is hotting up! The Mexicans are invading! The Russians are stealing our elections! The Chinese are stealing our wealth! A stock market crash! A depression! A coup d’état! The future? You’re not going to like it. But don’t worry. We’ll make war on it. We’ll give you a better version of tomorrow.”
It is true, of course, that there will be things about the future we won’t like. What if they bring the Confederate statues back? What if Jeff Bezos gets even richer? Or drugs are legalized? Or Joe Biden starts smoking! What if stocks crash and interest rates rise? Oh please… won’t somebody do something to stop it!
Oh… and by the way, we all will have to die. That’s in the future, too… guaranteed. And thank God! What a world it would be if time froze. We can’t imagine it, because it is unimaginable. Change… death… the rise and fall of empires… the coming and going of fame and fortune… the building up and the tearing down… clearing away yesterday to make space for tomorrow. (In this Amor Fati – love of fate – sense, COVID-19 – which seems to target the old and the weak – could be seen as a helpmate to the future… not a menace to it.)
Yes, Dear Reader, fortunes will be lost as well as made. Old money will give way to new money, just as the old, land-based wealth of the Agrarian Era gave way to the new fortunes of the Industrial Age… which then lost ground to Wall Street and the Silicon Valley billionaires. Detroit, the richest U.S. city in 1955, is now a dump. And the richest man in the world in 1955 is now dead.
Guard the Bubble: Excesses have to be squeezed out. The old must be laid in their graves. Mistakes must be corrected. Money moves on… from the old to the young… from weak hands to strong ones. Vanity… laziness… pride… and wickedness are punished. The Devil claims his sinners. Heaven finds her own.
But standing tall against this future is the Biden Administration… heavily armed… backed by crony money… and by the entire Elite Establishment… The New York Times, The Washington Post, The Swamp, the military/industrial/prison/entitlement complex…lined up together… a phalanx of the great and the good… unstoppable… immovable…
All there… to protect our sacred democracy… to guard the bubble… to keep the printing presses humming… and to keep the future from making any changes they don’t like. But can they actually produce a better tomorrow? Stay tuned…"
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