Bill Bonner

The trouble with history is that it is unforgiving. Like double entry bookkeeping, for every credit, there’s a debit. Attached to every rise is a fall. You can’t get one without the other.

The quality of America’s public and elected officials seems to have declined sharply over the last 50 years. Glancing back at the Watergate scandal we wonder if the Epstein Saga will go the same way.

The days of consensual democracy are clearly over. We are in some kind of Banana Republic/Strongman phase. This was highlighted yesterday in a news item that showed the strongman signing another EO.

Of the entire GDP gain for last year — $174 billion — fully three quarters of it were from capital investment in the AI/high tech industry. Take it away…and most of the ‘growth’ vanishes.

Stock prices are ‘mean reverting,’ which is to say that they always go back to a ‘normal’ range. And when they are extremely overvalued as they are today, they have a lot of ground to cover (losses!).

That is the essential insight of the classics – that there may be progress in man’s material world, but not in his intellectual world. Ideas come and go… and then come again.

The US has become a banana republic without the bananas. The practical importance: shouldn’t its capital assets — its stocks and bonds, primarily — be marked down to banana republic levels?

As an indicator of real wealth, happiness, or progress, GDP is worthless. All you have to do to raise GDP is to invite in more immigrants. As each one buses and schleps, total output goes up.

The murders got the world’s attention. Hardly noticed was the economy…because, after the communist takeover, it disappeared. You could not say ‘the economy declined.’ There was no economy.

One major consequence of diddling rates to the downside is that debt builds up…which will eventually cause a debt crisis and make it impossible to pay for the free stuff politicians promised.