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"Different Kind of Dumb, Part III"
Federal policies - ultra low interest rates - exaggerated the tops.
Now, as if guided by an “invisible hand,” they will exaggerate the bottoms.
by Bill Bonner
Dublin, Ireland - "One of the problems with being the world’s hegemon is that you become like a TikTok idol; you can’t stop looking at the screen and admiring yourself. Your beliefs, you think, are the beliefs every successful society should have. Your institutions are those everyone should mimic. Your rules and regulations should apply to everyone. And if anyone else wants to be successful, they’ll have to do what you did.
But let’s back up. Here’s what we know so far: Bonds topped out in July 2020. Stocks topped out December 2021. These twin peaks marked the beginning of a new Primary Trend. If we are right, we will not see a repeat of these highs, probably not in our lifetimes, and probably not before major new lows are registered. The Primary Trend now is headed down for asset prices, and up for interest rates.
Exaggeration Nation: Federal policies —- ultra low interest rates - exaggerated the tops. Now, as if guided by an “invisible hand,” they will exaggerate the bottoms. That is, the feds will spend too much money, get involved in too many wars, limit trade, reward their cronies... punish their opponents... and enact regulations and policies that will curtail output, thus raising real consumer prices and increasing poverty.
We have no authority for this, the tail end part of our outlook. It is a guess. But it’s what a late, degenerate empire tends to do. And so far, the feds are doing it - what they ought to do, if their real goal were to take the US down a peg and make things worse for most people.
This backasswards view seems to be the best way to understand the recently passed $95 billion “foreign aid” act, which can only be justified in the most abstract terms - security, nobility and so forth, which, we suspect, is nothing more than claptrap to disguise what is primarily a boondoggle for the firepower industry.
But today, let’s look deeper... into the megapolitical mush. We, almost all of us reading this commentary, live in The West. Our views are those of westerners. Our news and opinions come from the western press.
If we listened to Tucker Carlson’s interview with Vladimir Putin, we quickly realized that he had an entirely different perspective. Did he live on another planet? Was he just dumb? Maybe... but it was a different kind of dumb. In the Ukraine-Russia war, for example, we westerners are told that the Russians are the ‘bad guys.’ Almost all of us believe it. But Putin doesn’t believe it. What’s wrong with him? In Gaza, we are expected to believe that the Israelis are the good guys, even if they have ‘gone too far.’ Only a fringe of intellectuals, students, and leftists think otherwise. What’s wrong with them?
Foreign Entanglements: And what about the generations who came before us and now sleep in the earth? They were clear about it…we would be better off avoiding ‘foreign entanglements’; now we’ve got them all over the place. And for 180 years they did their best to control deficits. Even as late as the Reagan administration total accumulated US debt was less than $1 trillion. Were they dumb too, for trying to live within their means?
We also know that our thoughts - shaped as they are by our contacts and circumstances, our influencers and bigmouths - are the correct ones. After all, our models for government, markets, courts, fast food, movies, news media, and ‘defense’ dominate the world. They are successful. They must be ‘right.’ We are the chosen people. We invaded North and South America, Australia, too…and practically exterminated the indigenous peoples. It wasn’t the other way around.
Our western world must be freer, fairer, richer and smarter than any rival. And if anyone wants to be our partner... an ally...or a friend, he’ll do things our way. And it almost goes without saying that a “dictator” in charge of a quirky, marginal economy such as Russia’s, would do things differently... and make a mess out of it. So, too, how could a communist central planner, such as Chairman Xi, possibly ‘run’ a successful economy... especially one with 1.4 billion people in it? And yet, the Chinese and Russian economies are both growing 3-4 times faster than the US. What’s going on? Didn’t we sanction them enough?
And what’s this? Oilprice.com: "China Is Winning The Race for Affordable EVs." "In China alone, EV sales are set to jump to about 10 million this year, accounting for about 45% of all car sales in the country."
Asia Times: "What haunts policymakers is the realization that the US no longer has... [a WWII-style]... industrial edge. Today China is the world’s manufacturing powerhouse. The US isn’t as far behind China as Japan was behind the US in the 1940s, but it’s no longer the arsenal of democracy.
Today the US has the world’s second largest manufacturing economy and its $2.5 trillion in annual manufacturing output exceeds the entire economies of all but seven countries. But it’s a distant second and its capacity to build enough of the most important tools of war is open to question. Old-fashioned metal bending is among America’s hollowed-out sectors. Measured by output dollar value, the three largest US manufacturing industries are chemicals; computer and electronic products; and food, beverage and tobacco products.
Meanwhile, China is said to be acquiring weapons five to six times faster than the US. In a conflict over Taiwan, would its vast manufacturing infrastructure enable it to outproduce the US the way the US outproduced Japan and Germany in World War II? Bending metal is what you have to do if you’re going to make tanks, planes or bombs. But maybe we can buy them from the Chinese? Tomorrow... tune in for more on a different kind of dumb."
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