I must say I find television very educational. The minute somebody turns it on, I go into the library and read a good book.
– Groucho Marx, “King Leer” (1950)
A little more than 10 years ago, I wrote a book called The Great Deformation: The Corruption of Capitalism in America. I had a very unusual experience with its release.
The Great Deformation came out right after the Global Financial Crisis. My goal was to put the whole thing in context via a revisionist history of everything that had happened since 1914, when the Federal Reserve was created, through the Great Depression and the good period of America under Eisenhower, when we balanced the budget and had an honest central bank, and then how we went to hell in a handbasket afterwards.
The point was to help people understand what happened in the fall of 2008.
The Great Deformation ended up being a 730-page tome. I was quite proud of it because I worked on it for two years. But my editor, one week before the thing was to be released, said, “Now, I want to get your expectations right: Nobody is gonna buy this book. It’s too long. It’s 730 pages.”
So, I didn’t expect much. The book came out, and the very next day, Paul Krugman, the great authority on all economic matters in America, wrote a blog post denouncing it as “the ravings of a cranky old man.” I said, “Oh, my God, it’s gonna go from bad to worse.” But that’s not what happened.
By the end of the day, the thing had shot up to No. 4 on the Amazon best-seller list. They rank them by the hour, and there were only three titles ahead of my book, two diet books and a novel from The Walking Dead.
It ended up No. 3 that week on the New York Times best-seller list. I’ve never bragged about it because to this day – four years later – they still haven’t told me whether that was the fiction or the non-fiction list. I think a lot of people would like to believe it was the fiction…
So, with that perspective, I understand the blurring of “non-fiction” and “fiction” when it comes to the economy and the Donald. I’ll start by laying out my bias, because when you talk about Donald Trump, you’re going to be biased.
I voted for him. I voted for him because I believed he was the Great Disruptor. In fact, I’ve written a new book all about this new era in America…
My fondest wish that he would wreck Leviathan have actually – slowly – started to come true if you look at where we’ve been and where we’re going. We needed a leader to call attention to the non-viability of the Warfare State-Welfare State system, the duopoly that supports it, and the massive deficits it creates.
The whole thing must be called into question. Trump had the ability to do that. But he had no program whatsoever to fix it, and I don’t expect that it’s going to be “fixed” on his watch. There’s no program to “Make America Great Again.”
If anybody has made the mistake of embracing it, now is an excellent time to sell the “Trump Bubble.”
He’s taken a bad deficit and exploded it. And he started a trade war with China, thinking that somehow protectionism and massive tariffs will boost growth and help Main Street.
Finally – crucially – he’s taken a Federal Reserve that’s printed way too much money, held interest rates way too low for way too long, and bully-tweeted it into backing off from the baby steps it had taken toward “normalization” of monetary policy.
He is indeed a “low interest man.” But this isn’t all about Donald Trump. He’s merely a symptom of a larger problem that affects our economy, our financial system, our government, and our society. The problem is way beyond his ability – even his desire – to solve it.
What’s brought us to the point of crisis is monetary central planning. Global central banks are utterly out of control. Policymakers and too many investors take money-printing for granted. They either don’t know or don’t care that it’s simply unsustainable.
Things that can’t go on forever won’t. And this “everything bubble” will end with the biggest bust anybody ever saw.
How to Brace Your Portfolio
Desperate times call for… “common sense” measures.
And these are desperate times… Markets are corrupted by monetary central planning. They’re confused. And the road back is going to be treacherous.
We’re looking at a major re-pricing for all financial assets. And thousand-point intraday or day-to-day swings are part of that equation. Those can be frightening… for “buy and hold” investors.
I have a different approach, one that combines strategy and tactics into a plan flexible enough for you to survive and thrive amid the coming chaos. It’s called “The Stockman Model.”
All we’re after is a little stability, perhaps a chance to pocket a windfall when opportunity presents…
To common sense,