If You Start to Cough, Don’t Bother Calling a Central Banker

‘Two guys enter a bank wearing face masks.


‘Then one guy yells: “Don’t worry, this is just a hold-up.”’

Currency joke making the rounds on the internet

We’ve heard of a purple rage…and purple rain…and purple prose.

But never before had we seen purple chickens.

The locals paint the chicks to protect them from hawks.

Money Morning

Purple chicks

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We went to visit a farm over the weekend. More about that in a minute…

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Ready to act

The stock market managed a bounce yesterday. Whether it was more than that, we will wait to find out.

As expected, major central banks have already said they are ‘ready to act as appropriate’. And this morning, an emergency meeting of G7 finance ministers is crafting a coordinated response.

Remember, if you start to cough, don’t bother contacting your regional central banker. He has no antibodies that work against a virus.

As far as we know, no blind person has ever been made to see…nor has any lame person been made to walk…after visiting the Federal Reserve headquarters in the Eccles Building in Washington, DC.

Nor can central banks replace lost sales, wages, or profits. All they have is fake money. And all they can do is add it to the financial system, in one way or another.

Yesterday, speculators were betting that the Fed would double down on its errors of the last 10 years — cutting rates and buying assets. It delivered on the former earlier today with an emergency rate cut.

But except for the illusion of the ‘wealth effect’, those measures have done nothing in the past for the real economy, which has simply limped along through the weakest recovery ever recorded.

But they did hand Wall Street some huge (temporary, on-paper) profits. And maybe they will again.

Our bet, nevertheless, is that however much the feds may drive up stock prices, the real value of stocks will go down.

Stocks represent companies. And companies — now bigly overpriced — are likely to be less valuable as the C virus, consumer panic and inflation do their damage.

A corollary to this guess is that however much new, fake money is introduced to fight the plague, the value of the dollar will fall at least as much.

So, even if stock prices go up in nominal (fake dollar) terms…they will go down in real terms, as they did in the 1970s. Gold will tell the tale.

And your best bet is to find a nice place to wait it out.

Smoothest feet in Christendom

We’re still in Nicaragua. On our own, we feel like a bank robber on the lam. Or maybe a disgraced professor of literature from an all-girls school. (What was all the fuss about? She was over 18!)

A stock market crash? A pandemic? A presidential election?

What better place to enjoy them!

We must have the smoothest feet in Christendom. Each day, they are sanded for an hour as we walk along the beach and then bathed in saltwater. And there, riding seaward on the waves, are the women surfers, singing each to each.

After a quick swim, our housekeeper makes us a big breakfast. The minimum wage here is about $20 per day. So, a half-time maid costs about as much as three café lattes in Baltimore.

And what’s to worry about here? Nicaragua doesn’t need a C virus. Or a stock crash. Or an election. It is already depressed.

The other resorts up and down the coast have almost all closed their doors. We stay open, still paying hundreds of workers, mostly because they would have nowhere to go and nothing else to do.

In the bar…in the restaurant…at the beach…they stand ready to help in any way they can, grateful for their jobs.

As for the farm…we bought it a couple of months ago.

Why? We’d begun raising pigs, cows, chickens, and sheep. We needed a better place to put them. And by law, our woodshop (a key part of the resort) is required to plant 10,000 trees a year (an environmental protection rule). We’ll plant them at the farm!

Besides, the Fed is out to destroy the dollar with inflation. It may take time, but they’ll eventually get the job done. Most likely, it will destroy the economy and the stock market, too.

10 years from now, we expect to find the dollar worth less than half of what it’s worth today. Stocks too. And bonds? Probably.

But farmland in Nicaragua? Trees? Well, who knows?


Bill Bonner,
For The Rum Rebellion

PS: Discover why forecasting guru Harry Dent is convinced we’re in the ‘the greatest bubble in history’ that could wipe out 40%-plus value from the stock market. Click Here for Your Free Report.

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries.

A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities.

Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally.

With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance.

Bill has been a weekly contributor to The Rum Rebellion.

The Rum Rebellion