This is a war the feds will lose



Bill Bonner's Diary

This Is a War the Feds Will Lose

By Bill Bonner, Chairman, Bonner & Partners

Bill Bonner

SAN MARTIN, ARGENTINA – The "war" against the C virus raged over the weekend.

Donald Trump invoked war powers to force major industries to manufacture ventilators and called the bug "the silent enemy." Casualties increased. There are now more than 2,400 dead in the U.S. Worldwide, the total is over 30,000.

The Washington Post reports that civilians are fleeing before the invading forces:

The Great Migration of 2020: On the move to escape the coronavirus 

From beaches and resort towns to mountain cabins to rural family homesteads, places far from densely packed cities are drawing people eager to escape from infection hotspots.

But virus fugitives often are running into fierce opposition on their routes, including Florida's effort to block New Yorkers from joining their relatives in the Sunshine State, a police checkpoint keeping outsiders from entering the Florida Keys, and several coastal islands closing bridges to try to keep the coronavirus at bay.

The New York Times reports that same thing is underway in Europe… separating haves from have-nots:

In France and across Europe, affluent city dwellers have been decamping epicenters of the crisis to their second homes, where proximity to the sea or the mountains lessens the discomfort of confinement and a decent internet link permits remote work. But they also bring fears that they will spread the virus to regions with few hospitals to handle a surge in the sick, putting at greater risk local residents who tend to be older and have limited incomes. War profiteers are going the other way.

Meanwhile, another group races to Washington to join The Swamp critters, trying to get some of that $2 trillion worth of federal boondoggle spending.

The New York Times:

The Race for Virus Money Is On. Lobbyists Are Standing By.

But who's the real enemy? Is it a molecule with a Facebook page? Is it the damage done by the virus… or by the feds' heavy-handed financial reaction? Or is it something else… something deeper…

… a desperate, last-ditch war to protect a fraudulent financial system, the ersatz "wealth" of the elite… and their decrepit empire?

Perhaps it is all those things…

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Biggest Bubble in History

Over the last three decades, a bogus "stimulus" program impaired the economy's immune system and created the biggest bubble in asset price history.

Then, the "deus ex virus" came along and attacked it, like a birthday balloon suddenly struck by a machete.

The feds point the finger at God. It was God's bug, they say.

CNBC:

[Former Federal Reserve Chair] Bernanke says this is much closer to a natural disaster than the Great Depression

And yet, while you rarely get what you expect or what you want from markets, you always get what you deserve.

And after decades of meddling by the feds… and after trillions of dollars of fake money, record debt and distorted interest rates… the U.S. economy surely was ready for a trip to the woodshed.

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And, while perhaps no one foresaw the approach of the COVID-19 molecule, you'd have to have been blind not to see the financial disaster coming.

Bubbles… zombies… unicorns… negative rates… trillion-dollar deficits… public officials doing strange and nonsensical things – all the portents of impending doom were on display.

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Coronavirus Loot

But what next?

Nature has her own program. The COVID-19 will come and go. The number of cases of the virus will probably peak out within a few weeks. We will bury our dead and go on with life…

But the jackasses will always be with us.

The feds will learn that not only can they get away with $2 trillion deficits… but also that the voters, the campaign donors, the cronies, the Deep State insiders – every Tom, Dick, and Harry will demand it.

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Bailed-out businesses will not learn to save capital for a rainy day. Instead, they will pass out the loot to managers and shareholders, becoming even weaker.

Households, too, will find the free money appealing; they will come to expect it.

In New Jersey, just to take one example, the additional emergency federal contribution to unemployment compensation will bring the hourly rate to a minimum of $32 an hour.

Many people will make more money collecting unemployment than actually working.

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"Red Alert" Issued by Little-known Financial Agency

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Most Americans have never heard of a small federal agency called the OFR.

It was quietly created in the wake of the 2008 financial crisis as a sort of "early detection system" for financial disasters.

Since then, it has mostly been ignored by the media and 
politicians alike.

But all that is about to change. Because this system just flashed a "red alert"…

And one top-level analyst, with a history of exposing political and financial secrets… believes he knows the real reason why… 

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Fake-Money Firepower

We've seen this before… short-term solutions turn into bigger, long-term problems.

Emergency measures during a crisis – like the ultra-low interest rates of 2009 – soon become permanent.

The problem in 2008 was mortgage debt. The feds responded with more debt – particularly corporate and government debt. This made the economy more fragile than ever, leading to today's crisis.

This time, they follow the same protocol, only in triplicate or quadruplicate. The amount of new money (and debt) going into the system is staggering.

 More fake money can create more fake wealth. But it can't create real wealth.

We saw that over the last 10 years. The feds' fake money drove up stock prices 300%. But real economic growth was the lowest for any recovery on record.

Today, the losses in the Main Street economy are real. The feds can't make them up. All they can do is create more fake wealth.

That's why we watch the Dow-to-Gold ratio. It will tell the tale… not precisely, and not immediately… but eventually. Stock prices may rise, but real values won't.

Look, the feds are in an Inflate-or-Die trap. They're fighting it with the only thing they have: more and more inflation.

They'll add more and more fake-money firepower… until the whole shebang blows to kingdom come.

This is a war they're going to lose.

Regards,

signature

Bill

Like what you're reading? Send your thoughts to feedback@bonnerandpartners.com.

Chart

MAILBAG

In today's mailbag, Dear Readers offer mixed opinions on coronavirus and the state of America…

Bill, once again, you are making comparisons between countries that are flawed. When you speak of Sweden, Denmark, and Norway and insinuate that the U.S. should follow Sweden's lead in dealing with the coronavirus, you are encouraging your American readers to advocate the same approach.

The three Scandinavian countries have intelligent populations who, in general, have a regard for the common good. Their people are generally more active and fit, less obese, and healthier. They also are vastly smaller countries without the barriers that exist between state and federal authority and they have amazing health systems. The USA, not so much. Good luck to the U.S.

– Geoffrey O.

Love hearing about life on the ranch in Argentina. Must be like living on many farms in the 1950s in America, picking corn with a horse pulling the wagon and horses pulling the hay up to the second story of the barn. Those were the good, old days. It is too bad that people like you (and many, many more) are not teaching our kids today.

They are so coddled and learn only from left-influenced teachers and professors that they don't ever get the real picture. That is one reason why we are in the mess we are in today. The kids are not being taught. They're being brainwashed. As you said, we've never been here before so who knows what the outcome will be? But we do know it will not pleasant for many Americans.

– Frank G.

I saw a chart recently which showed that the U.S. is not far from the top in number of coronavirus cases, and still in the acceleration phase, along with Spain. Since then, we have reached the top in number of cases. This is in spite of all the controls the politicians are piling on us.

Maybe President Trump is correct, and we should just go back to work, and let the epidemic follow its path of choice. After all, the nation got through the Spanish Flu after WWI pretty quickly with (only?) a quarter of a million deaths. If the nation outlasts this epidemic with about 3/4 of a million deaths (nearly three times the population) despite the political interference, we will be doing okay by comparison.

– Charles B.

Is an educational deficiency contributing to America's woes, as Frank believes? Should Americans go back to life-as-usual despite the coronavirus pandemic, as Charles suggests? Write us at feedback@bonnerandpartners.com.

IN CASE YOU MISSED IT…

Don't Believe This Coronavirus Myth

Everyone thinks they need a surgical mask.

It's a waste of your money.

It's far more important for you and your family to have this item instead.

Three other dangerous coronavirus myths can be found in this video.

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These COVID-19 Numbers Might Surprise You...



The Bleeding Edge
  • In the age of COVID-19, "contactless payments" could mean the end of cash
  • This technology could help power an American manufacturing renaissance
  • Next year, Apple's biggest product reveal won't be a new iPhone…

Dear Reader,

The insights about COVID-19 and its spread published in the last three days have been incredible. The increase in data and transparency is allowing us to better understand this virus.

The University of Oxford just published some excellent research outlining how quickly the team from Oxford's Evolutionary Ecology and Infectious Disease group believes COVID-19 has spread.

I think the results will surprise you…

The assumptions used were all reasonable and backed by data already collected about COVID-19 and its basic reproductive rate (how fast it spreads). The team also assumed that COVID-19 first reached the U.K. by mid-January, which is a conservative assumption.

The research models determined that COVID-19 has already infected somewhere between 36% and 68% of the U.K. population.

That's not a typo.

It is highly likely that a third to more than half the population has had or has COVID-19… And most are asymptomatic. They don't even know they have it.

This data is consistent with research just out of Iceland. Iceland is unique because it has tested nearly 3.4% of its entire population for COVID-19. On a percentage basis, this is more than any other country in the world.

It found that half of those who tested positive for COVID-19 are asymptomatic, and the other half display "very moderate cold-like symptoms." Only 30 have been hospitalized out of the country's 1,086 confirmed infections, and there are no deaths as of the time of writing.

Additionally, Italy's National Health Institute released data that confirmed more than 99% of all COVID-19 fatalities were people already suffering from underlying medical conditions. Only 0.8% of the fatalities were healthy adults.

To put that in context, only 86 healthy adults have died from COVID-19 there.

Given the research out of Oxford and the basic reproductive rate of COVID-19, it is not difficult to determine the exponential growth in the spread of COVID-19.

On March 1, I spoke with an infectious disease expert at Johns Hopkins who stated that the actual number of cases was likely 100–200 times larger than what was being reported.

But we don't see those cases for the same reason as the research out of Iceland… The cases are asymptomatic or too mild to justify testing for it.

And here is why this latest research over the last few days is fantastic news for us all.

Johns Hopkins University reports that there are more than 741,000 confirmed cases. The reality is that there are almost certainly more than 74,100,000 cases.

That may seem scary, but it means that the actual mortality rate would be 0.047% or less. Compare that to the mortality rate from influenza in the 2017–2018 season (0.14%).

Every day, the data is giving us a lot to be optimistic about. The world is quickly building immunity to COVID-19.

Veritas in numeris.

Truth in numbers.

As always, I'll keep monitoring the situation. But now our insights…

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Get ready for the digital dollar and the end of cash…

As I'm sure readers know by now, the U.S. Senate approved a $2.2 trillion coronavirus stimulus package last week.

What many may not know is that the original bill contained language regarding a central bank digital currency (CBDC). It talked about creating a digital dollar as a means of moving away from cash and toward "contactless" payments.

The funding to explore a CBDC was dropped from the final stimulus bill. But it has already been reintroduced in a new bill. And I can tell you, there's a lot of talk about this in Washington right now.

As longtime readers know, I'm a member of the Chamber of Digital Commerce. The Chamber is a group that advocates for the blockchain industry and educates policymakers on the benefits of the technology.

I discussed this on Friday with several colleagues at the Chamber. It appears the digital dollar has become a priority in some corners of D.C.

And next week, we'll be having a call with the chairman and chief executive of the Commodity Futures Trading Commission on the same topic.

Apple is expected to release its long-awaited 5G iPhone on or around September 22.

So that raises the question – how should the digital dollar be structured?

The legislation does not refer to blockchain technology. But experts in the industry believe that Congress should look at a blockchain-based stablecoin.

After all, USD stablecoins already exist, and they work. Why re-create the wheel?

Of course, private companies back the existing stablecoins. I don't expect the U.S. government would ever cede control of the official currency to another entity.

It made this clear when Facebook went public with its Libra digital currency project. Many central governments around the world fiercely opposed it.

But the government could build the digital dollar based on existing stablecoin code. That would be the fastest, most secure route to take. This could accelerate the deployment of a digital dollar.

However it plays out, though, one thing is clear: COVID-19 was the catalyst Congress needed to get serious about a CBDC.

In my 2020 prediction series, I said that 2020 would be the year we would see the rise of state-backed digital currencies. That prediction is looking more promising by the day.

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It involves President Trump, billions of dollars, several large banks, and Warren Buffett. As well as a MAJOR upgrade to our credit and debit cards.

Teeka, who correctly picked the last two "investments of the decade," is declaring this his top pick for the 2020s.

See Teeka's top pick
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A new AI chip makes computer vision even smarter…

Computer vision (CV) technology will get a major boost from a new artificial intelligence (AI) chip that a team at the Institute of Photonics at the Vienna University of Technology just developed.

The chip combines light-sensing electronics with AI software on a single semiconductor that acts as the sensor. I'll explain with a little background…

Computer vision is what allows machines to "see." Self-driving cars, autonomous robots, and autonomous drones all use the technology.

With CV, the sensors are the "eyes." They take in video and images and digitize them.

Up to this point, those images had to be sent back to the cloud for processing. Then the AI crunches the data and sends back its analysis.

The challenge with this model is that it is energy intensive. And there's a delay between input and output.

The delay occurs because everything is sent back to the cloud… even data that are not useful for the AI. And that's where this new tech comes in…

This new chip allows the AI to process data from the sensors right on the spot. If it encounters something unique, it will send that data back to the cloud for analysis. And data that are not useful will simply be discarded.

In other words, the AI will operate at the edge of the network and have "discretion" about what it sends to the cloud to be analyzed.

This will empower computer vision to process data much faster than it could before. And it will reduce the amount of energy required because unnecessary data is filtered out.

So we'll see this tech deployed in self-driving cars, factory automation systems, quality control systems, robots, drones, and any other area that employs computer vision. It will lead to optimized, energy-efficient systems.

Silicon Valley's top angel investor, Jeff Brown, thinks one company behind this piece could be the #1 tech stock of 2020.

Bigger picture, we're starting to see a trend in the industry. We saw this same dynamic with Tesla's new patent that we talked about last Thursday.

And here's an interesting implication for this advanced technology…

Longtime readers know I've been predicting an "American manufacturing renaissance."

In the near future, manufacturing facilities will return onshore in developed countries. And advanced robotics that use this form of computer vision will operate them.

And if COVID-19 has taught us anything, it's that unforeseen events overseas can quickly disrupt supply chains. I suspect many multinational corporations will begin weighing the benefits of moving some of their facilities back onshore.

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More hints that Apple is gearing up for a big augmented reality launch…

Rumors are floating around that several Taiwan-based inspection labs recently received some smart glass testing orders from Apple. If true, that would mean Apple is much further along on developing a consumer eyewear product.

What's more, Apple just filed a patent for automatic lens adjustment glasses.

The patent details a system of actuators and motors in a pair of augmented reality (AR) glasses that shifts the lenses around to optimize the viewing for each user.

In other words, the lenses adjust on the fly so the wearer can best see the visuals of the AR glasses.

This kind of patent tells me that Apple is refining its augmented reality technology.

Remember, Apple already detailed a new user interface for AR glasses in a patent filed earlier this year. We talked about that back in February.

To me, it's clear that Apple is now putting the finishing touches on its AR glasses. This tells us it is gearing up for a big commercial launch.

There is a chance it might happen at the end of 2020, but I suspect that Apple will wait until next year so it can take advantage of component miniaturization and further develop its platform.

After all, it makes sense for Apple to focus on its 5G-enabled iPhone this year with its big launch this fall.

And as a bonus, Apple can build 5G technology into its AR glasses. The glasses could connect directly to 5G wireless networks, just as some Apple watches can connect directly to wireless networks.

Simply put, there's no company better positioned to bring these two technologies together. I'm not kidding when I say that I believe Apple could be a $2 trillion company by 2022, thanks to 5G and AR.

And by the way, if investors are looking for exposure to Apple's new suite of products, there's a better way than buying Apple stock…

I've been preparing my readers for this new consumer electronics boom by recommending key Apple suppliers. One of them is my No. 1 large-cap 5G stock of 2020. Get all the information here.

Regards,

Jeff Brown
Editor, The Bleeding Edge


Like what you're reading? Send your thoughts to feedback@bonnerandpartners.com.


In Case You Missed It…

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5G stocks have historically seen extraordinary gains.

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Now Apple is entering the market.

The tech giant is expected to release its first 5G-enabled iPhone on or around Sept. 22.

And every one of them has a critical device inside.

One company that makes this device could see its stock soar.

In fact, one expert believes it could be the No. 1 tech stock of 2020.

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Bonner and Partners

Bonner & Partners
55 NE 5th Avenue, Delray Beach, FL 33483
www.bonnerandpartners.com

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