| By Bill Bonner, Chairman, Bonner & Partners One may say that, apart from wars and revolutions, there is nothing in our modern civilizations which compares in importance to [inflation]. The upheavals caused by inflations are so profound that people prefer to hush them up and conceal them. – Elias Canetti, Crowds and Power PORTLAW, IRELAND – Instead of revisiting the peak, yesterday, the Dow took a few steps back down the mountain. What happens next is anybody's guess. But the picture we've been sketching out is a doozy. It shows that no matter what the Dow does… no matter what the headlines or the pollsters tell us… the deeper cycle is on a downward slope. It has been since 1999. | Recommended Link | TONIGHT: Teeka's Biggest Announcement Ever It's been 30 years in the making… And finally, during this once-in-a-lifetime interview, Teeka Tiwari will reveal how he made most of his fortune. It's THE secret he's used to see a small $1,000 investment reach as much as $1.6 million… More than once. Now, for the first time ever, he's going to reveal how YOU can get in on these "sweetheart deals" too. | | | -- | Rendezvous With Destiny And it will probably continue until it finally reaches its rendezvous with destiny. That's when fear reigns supreme… and hope, optimism, and faith in the future have been crushed down to historic lows. We'll know when that moment comes by watching our Greed/Fear gauge, which measures the relationship between stock prices and gold. People invest in stocks when they think everything is hunky dory (greed). They go for gold when they worry that things aren't so hunky or so dory (fear). When the Greed/Fear gauge goes below five (when you can buy all the Dow stocks for less than five ounces of gold)… the point of maximum anxiety – Peak Fear – will be at hand. Then, you'll be able to buy almost any stock you want for only about a quarter (we're talking in real money terms… measured in gold) of what you would pay now. Houses, too, should be only about half what they cost today. And bonds? Don't be surprised to find that most of them will be worthless by then. That's what inflation does to bonds. It wreaks havoc. Crackpot Idea But you're probably protesting… "There is no inflation." Or maybe you think "Inflation is no threat." Or "A little inflation is a good thing." If so, you are wrong. Inflation has already done trillions of dollars' worth of damage to the U.S. economy. And if the picture we're seeing is correct… that is just the beginning. So… let's look at how it works. "Inflation" refers to an increase in the supply of money. People use it colloquially to refer to consumer price increases. But increasing the supply of money doesn't necessarily increase consumer prices. It depends on where the money goes and how it gets there. Following each of the two bubble blow-ups this century, the feds decided to "stimulate" the economy with fake money. The whole idea was crackpot from the get-go. Fake money (money that no one earned or saved) can never produce real growth. Feds' Choice In 2008, the feds had a choice. If they wanted to stimulate the economy, they could use monetary policy (lowering interest rates… and using quantitative easing (QE) to buy bonds). [By buying bonds, the Fed forces down yields and interest rates across the economy. This, in theory, would lead to more spending and investment.] Or they could use fiscal policy. Instead of buying bonds, for example, they might have taken their $3.6 trillion QE program and used it to send taxpayers a rebate check. Each taxpayer could have gotten a check for about $27,000 – tax free, of course. Or instead of frittering away money on wars, crony pay-offs, and zombie giveaways over the last 10 years, the feds could have divided up $11 trillion of deficits, too. This would have given each taxpayer about $85,000 more. Talk about stimulus! The money would have been almost immediately spent on consumer items. The economy would have boomed. Inflate or Die Of course, this boom, too, would have been fake. And it would have ended as soon as the fake money stopped flowing. That is the insight embedded in Richard Russell's dictum: Inflate or die. Once you have a fake-money boom going, you can only keep it going by giving it more fake money. Otherwise, it dies. When you pump money into the economy via the monetary channel, you raise prices for stocks, bonds, and property. When you pump it via the fiscal channel, consumer prices rise. Typically, they rise slowly at first. Then, they rise fast. And then, you either "pull a Volcker," in which you get ahead of inflation by radically tightening credit (former Fed chair Paul Volcker put the federal funds rate up to 20% in 1980)… …or, you let inflation run. In 2008, with inflation as high as 5.6% and the federal funds rate running close to 4%, the feds took the monetary road. They inflated. But they inflated Wall Street's financial economy, not Main Street's consumer economy. Fed Turnaround But the "inflate or die" rule still applies. The only way the feds can keep the Wall Street boom alive is to inflate more. That is the real meaning of the Fed's turnaround. Fed chair Jerome Powell has paused his rate hike program, and is now looking at more cuts. The Fed has to inflate the financial sector with more cheap credit, or the boom will die. Volcker made his choice. He decided to kill the fake boom himself. Then, with inflation on the run, a real boom could begin. And now, Powell has made his choice, too. He will not "pull a Volcker." He will go with more inflation. First, the Fed will try to inflate the financial markets further. When that fails, it will inflate the consumer economy, too – funding higher and higher deficits with more and more fake money. Yes, we're on our way… to Venezuela… Argentina… and Hell. Whee! Tomorrow, we'll look at how we get there. Regards, Bill POSTCARDS FROM THE FRINGE: AN IMPORTANT NEW LOW By Tom Dyson We're now living in a two-bedroom cottage on a tropical fruit orchard in the Kerala backcountry. It's brand new. The WiFi is fast, the water is hot, and it is cool inside. And the best part: Three times a day, our hosts lay out an incredible spread of local cuisine (all veg, all cooked from scratch). Yesterday, before lunch, I went into the orchard and picked a handful of little red chili peppers off a bush to eat with our curry. We've never eaten so well. And it's so nice to see the kids, normally fussy eaters, eating so much healthy food. We're paying $35 a night to stay here. Plus another $15 a day for the food. We'll stay here for 10 nights. As parents, one thing we really care about is that our kids are humans who other humans like being around. Which is why we find it so ironic when the first question most people ask us – when they find out we homeschool – is "How do you socialize them?" "Not all classrooms have four walls," we say. Nothing makes me more proud than watching the kids hanging out in the common area of some youth hostel, swapping travel stories with the other backpackers. Or watching them play soccer with local kids in the exotic countries we visit. Here's Penny (6)… Tom's daughter Penny touching an elephant Meanwhile, I've been keeping a close eye on the markets. The chart below caught my eye. 
This chart shows the amount of money invested in bonds with negative yields, worldwide. Overlaid with gold, it shows the important relationship between gold and interest rates. (The further the interest rates banks and governments are offering fall, the more attractive gold becomes.) This chart tells me that a) if/when inflation returns, there's going to be a megalanche of money coming from the bond market. Rising inflation is bad for the value of bonds. It also cuts down your real returns from the yield. When this happens, money will flood into gold. I intend to capitalize on this. And b) this isn't going to happen for a while. (I have a reliable early indicator. I'll keep you posted.) When I met with Bill Bonner and Dan Denning in London a month ago, the Dow-to-Gold ratio was at 20.25. Yesterday, it broke below 19 and is now at 18.91. The wheels are turning… If you want to participate in this trade (betting on a fall in the Dow-to-Gold ratio), you need to act now. Once the ratio falls below 18.5, the train will have left the station. I won't be recommending this trade anymore (unless it rises back above 18.5). After meeting with Bill and Dan, I set up a model million-dollar portfolio to observe this trading idea in the real world. This portfolio is now worth $1,124,465. Later today, I'm sharing the details of this portfolio with readers of The Bonner-Denning Letter. And I'm showing them two ways to express it in the market, one of which uses leverage to amplify returns. If you're already a Bonner-Denning Letter subscriber, then simply watch for your issue later today. If you're not, you can join up right here. – Tom Dyson P.S. Please send me your feedback! No matter how critical you are, I'll publish it… (without revealing your identity). Write to me here. FEATURED READS The U.S. Hasn't Seen Debt Like This Since World War II
As Bill has said, the feds "growing their way out" of debt is not an option. They have no money. And a new report from the Congressional Budget Office tells a somber tale. If current spending levels remain unchanged, national debt will soon be the size of the entire U.S. economy… Goldbugs Have Been Waiting a Long Time for This Moment…
The Fed is feeling the heat from the White House. Donald Trump has been urging it to cut rates. And Fed chair Jerome Powell's recent dovish comments seem to indicate that the Fed will do just that… soon. While all this "EZ money" has taken a toll on the U.S. dollar, it's left gold ready to hit a new record high… Why Legal Cannabis Will Be Bigger Than Cryptos
World-renowned cryptocurrency expert Teeka Tiwari has helped his readers book huge gains in cryptos. But he has his sights set on a new industry that will be even more explosive: legal cannabis stocks. They offer plenty of opportunities for savvy investors. But there's a right way… and a wrong way… to play the market. MAILBAG Today, a dear reader weighs in on the crisis brewing in Iran… after your editor called war "the ultimate win-lose enterprise"… When George Washington warned about foreign entanglements, the United States was weak. We stayed weak after World War I, and look what that cost us in World War II. What are your solutions for dealing with Iran, North Korea, China, Russia, Venezuela, Syria, and Cuba – all communist and/or despot-led countries bent on our destruction? As bad as war is, nothing is worse than losing one. Just ask the Germans, Italians, Japanese, and Nationalist Chinese. – John S. And one dear reader wants to know how Tom and his family are surviving on so little while traveling… Have to call BS on your story, Tom. Can you please explain how ANYONE can travel ANYWHERE in the world for a few hundred dollars a week with a wife and three kids? You can't find a hotel, or even a hostel, for that amount. Let alone feed five people on that amount. Are you sleeping in the streets? And begging for lunch and dinner? I love suffering through the daily Diary… but if this is true, please share with everyone how to travel around the world with a party of five for a "few" hundred dollars a week… My family is in. Even with a strong U.S. dollar conversion rate or cashing in bullion for local currency – there is no possible way. Tom's Reply: Here in India, we can find accommodation for less than $10 a day everywhere we go. We've upgraded a bit recently because the kids weren't enjoying India as much as I had hoped and I wanted to change their minds about it. And it's the off-season. That helps. We've purposely chosen countries with weak exchange rates. And where possible, a recent history of terrorist attacks or war. And we try to avoid peak season. Egypt was cheap. Turkey was even cheaper than India. I use air mile hacking for our intercontinental flights and discount airlines for local flights. And of course, we ride a lot of local buses and trains. We never eat in fancy restaurants. Only street food and cafes. So our food expense is barely a line item. Finally, at first, we spent money on tourist activities like boat rides, zip lining, camel rides, water parks, that sort of thing. It's probably the worst value proposition in our budget. But we skip a lot of that stuff now because we are tired of it. If you're serious about attempting amazing budget travel, Mexico, Turkey, Argentina, Palestine, Pakistan, India, or anywhere in North Africa are all safe places (ignore the media) where a family can live very comfortably on a few hundred dollars a week. IN CASE YOU MISSED IT… Palm Beach Research Group guru, Teeka Tiwari, is about to reveal his most powerful wealth-building secret. It's one he's used to see a small, $1,000 investment turn into as much as $1.6 million… and no, it's not cryptos. Tonight at 8 p.m. ET, Teeka will reveal this "sweetheart deal" during the special broadcast of The Pocket Change Millionaire Summit. It's in a market that Main Street has essentially been locked out of… until now. Read on here to reserve your seat and learn more about how to make life-changing gains. 
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