Friday, December 17, 2021

"Fare Thee Well"

"Fare Thee Well"
By Bill Bonner

YOUGHAL, IRELAND – "This is the final Diary you will receive from us via Rogue Economics/Legacy Research. Yes, we’re moving on. But we’ll still be “connecting the dots” as best we can. And any dear readers who still have the stomach for it are invited to join us. But perhaps we owe you an explanation?

Thank You: Let’s begin with a “thank you.” Many dear readers have been suffering through our Reckonings and Diaries now for more than 20 years. Sometimes, they are hard to write; but they must be even harder to read! Because we never know exactly what we are writing about. Instead, we are just looking… and wondering. What’s happening? Why? Where does it lead? Sometimes, the questions take us down blind alleys and waste our time. Often, they simply lead to more questions. Only occasionally do they lead to useful insights.

Still, fish gotta swim. Birds gotta fly. And writers gotta keep writing. Many thanks to you, Dear Reader, for sticking with us… especially to those dear readers who have taken the time to write and tell us why they thought we were a fascist… a communist… or simply a moron. Heck, they may be right. And we hope you’ll come along for the next part of this adventure. Our dear readers are like our old friends; we would be sad to lose you.

Benefit of Experience: And now, in the home stretch of our career, we hope to make the relationship worthwhile for you. Fortunately, writing about money is one of the few métiers where age is actually a benefit. After all, you have to be over 70 to have lived through, as an adult, the inflation of the 1970s. You have to be at least in your sixties to recall how Paul Volcker stopped it. As you get older, you may become more vulnerable to the coronavirus, but you become more resistant to claptrap. You remember the WIN buttons… the lime-colored leisure suits… and the Vietnam War.

You’ve heard too many something-for-nothing claims, seen too many new gadgets that didn’t work, and voted for too many politicians who didn’t do what they said they would do. We bring this up because we think we are approaching a period of Peak Delusion. A good dose of geezer cynicism may be the only way to survive it. The “new” dollar – without gold backing – was introduced more than 50 years ago. When it came out, the old-timers preached doom. Now, we’re going to see that they were right. No pure paper money has ever survived a full credit cycle. Our guess is that this dollar will be gone, too, when interest rates reach their next top.

Public Interest: Looking back over our half-century of work, we see different stages. First, we thought we could change the world. Young people often think they have the answers; so did we. And we were worried, in the early 1970s, as now, about the growth of government. The central competition in public life is not really between Democrats and Republicans, or liberals and conservatives. It is between those who go about their business… helping each other… providing goods and services to each other… building wealth and families…and those who want to stop them.

It is the difference we described in much more detail in our book, “Win-Win or Lose,” between those who make and those who take… between those who get what they want by honest, consensual exchange and those who use armies, sanctions, laws, and regulations. It is the difference between violence and persuasion. We were naïve and foolish. We saw the tilt toward coercive government as some kind of “mistake,” that people just failed to realize that “win-win” was a better way to go.

Private Interest: But after seven years in Washington, heading up a group called the National Taxpayers Union, we finally had to face facts: A lot of people prefer power to prosperity… and that includes almost all the denizens on both sides of the Potomac. We left “public interest” and decided to focus on private interest.

We were supremely lucky. It was just the beginning of the financialization phase of the U.S. economy. In 1971, the feds had switched to a paper money system, unconnected to and unrestrained by gold. It was off to the races. Everyone wanted to know what horse to bet on. We were, however, woefully unprepared for our new role. We didn’t understand much about economics or investing.

So we teamed up with people who did. Gary North, Mark Hulbert, Adrian Day, Doug Casey, Jim Davidson, John Dessauer, Porter Stansberry, Steve Sjuggerud, Alex Green, and many others. Sometimes, they were right. Sometimes, they were wrong. But we were always learning. And we are grateful to them all.

Starved for Wisdom: Then, in the late 1990s, along came the internet. People said it would make “information” available – for free – to everyone. That would put us newsletter publishers out of business, they said. But we knew that “information” was worthless… less than worthless… without context, trust, training, preparation, circumstance, and all the other things that give it value.

“Imagine Napoleon on the retreat from Moscow,” we invited readers. “His soldiers are freezing to death. Starving. Getting slaughtered by partisans. And then… as if by some miracle… someone hands him the plans for building a nuclear bomb! What value would that have had? Zero.” Our point was that the precise “information” you need, when you need it, is extremely valuable. Otherwise, it’s just excess baggage.

We went on to speculate that with the buildout of the internet, “the world may soon be stuffed with information… and starved for wisdom.” In the following years, investors gorged on ideas, recommendations, and revelations… about new tech breakthroughs, trading techniques, cryptos, pot stocks, penny stocks, and much, much more. Many of these turned out to be astonishingly profitable. But your editor, who began writing a daily “blog” in 1998, was a wet blanket. He doubted that these innovations would produce lasting wealth – after all, what did they produce at all? As to the new tech, he urged caution.

Trade of the Decade: In retrospect, his counsel lost money for many dear readers… and made money for many others. He eschewed investments in dotcoms… even in the most successful of them all – Amazon. He wondered aloud if the whole “information revolution” was anything more than a time waster. And he ridiculed many of the most sacred tenets of tech believers… including the doctrine that technology always means progress and that progress will free humans from work, thrift, and sin.

On the other hand, his very simple “Trade of the Decade” – sell stocks, buy gold – turned out to be the best trade of two decades. At the end of the 1990s, gold was trading at $282 an ounce. The Dow was just over 11,000. Since then, gold has gone up about 6 times. The Dow is only up three times. Investors who made our trade have coasted calmly through the three major crises of the 21st century… and are still way ahead.

Search for Wisdom: But now, we see a bigger challenge ahead. Wisdom seems to have disappeared. Where it still appears in residual clumps, like survivors after a worldwide plague, it is furtive… fearful… and almost ashamed of itself. Nature knows that real progress… and real wealth... require real work, real investment, real reflection, and real self-discipline over what is generally a really long time.

So that is our goal. We’ve joined up with Dan Denning and Tom Dyson to plug our ears with wax and tie ourselves to the mast. Yes, we search for the rarest and most precious thing in the financial world – wisdom. And we fully recognize that we may not find it. We leave it to you to judge. We’ll be back at the keyboard on Monday morning. We hope you’ll still be with us."

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