Big Money

Bill Bonner, writing today from Baltimore, Maryland

Forbes:

Biden forgives $4.28 billion in student debt for 54,900 borrowers

The relief is a result of fixes the U.S. Department of Education made to the once-troubled Public Service Loan Forgiveness program.

Where did Joe Biden get the power to spend Americans’ money without asking Congress?

Who knows?

But while the president was doing unconstitutional acts… the markets were making unconscionable moves. Fortune:

Fartcoin hits $1 billion market cap as memecoin market explodes

And then, as expected… rather than force the feds to actually reduce spending, Republicans got together and agreed to spend even more. Tampa Free Press:

House Republican leaders have announced an internal agreement on a stopgap spending bill, also known as a continuing resolution (CR), to fund the government through March 2025, averting a looming shutdown set for Friday night. The proposed CR includes $110 billion in disaster relief for victims of Hurricanes Milton and Helene, along with a one-year extension of the farm bill, according to multiple reports.

What a lovely Christmas pageant it is! A grand parade of fools and knaves. A circus of freaks and clowns.

Yes, here at Bonner Private Research we are enjoying the show. But we’re closing up shop for the holidays. Our readers have more important things to think about than politics, economics, or investments.

But our goal is to prevent you from taking the Big Loss… and to that end, we bring some last-minute thoughts.

We believe we are watching a struggle between money and power… between Musk and Trump…between the Primary Political Trend of at least the last 50 years and (possibly) a new direction. Money wants a freer economy… with the usual grift and corruption. Power wants what it always wants — more power.

The outcome is in doubt… but many investors are anticipating a huge ‘melt-up.’ They think they face a once-in-a-lifetime opportunity, a new era created by the new MAGA-istas.

We hope it works out.

But just in case … here’s our contrary view…

Share Bonner Private Research

Almost all commentators, on the left and the right, have it wrong. They think we are looking at a struggle between conservatives Trump/Musk/etc on one side and the establishment, wokish, war-mongering liberals on the other.

If that were true, we could take our places in the bleachers, rooting for a victory for the conservative cause, hoping for lower deficits, lower inflation, lower interest rates — and a less expensive, less powerful government.

Then, we might even expect a business revival. Manufacturing would return to the US… and thousands of rapists and murderers would leave.

But that is not what is on offer.

The Republican elite, now including Donald Trump, have a very different agenda from Elon Musk. They spent a lot of time and a lot of money getting power. They’re not going to want to give it up. Instead, they’re going to use it in the same way elites always use government — to take money and power away from ‘The People’ and give it to themselves.

That has been the Primary Political Trend for at least 50 years. It will change at some point, but typically, not until some catastrophe comes along and the elites run out of other peoples’ money.

And that suggests that at some point in the not-too-remote future, Messrs. Musk and Trump are headed for a showdown. Mr. Trump is now the most powerful man in the world. He wouldn’t want to see his face taken down from Rushmore… even before it gets there, or share power with a rich guy from South Africa.

Besides… he has his weight to throw around. Bloomberg:

President-elect Donald Trump warned the European Union that its exports will get hit with US tariffs if its member states don’t buy more American oil and gas. 

“I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!,” he said on Truth Social.

Big Man politics require a Big Stick… which costs Big Money. It seems very unlikely that Trump would give up the pleasure of power for reasons he neither understands nor appreciates.

Look for bigger deficits, not smaller ones. And lower asset prices, not higher ones. And if we’re wrong…

Well, it won’t be the first time.

Happy holidays.

Regards,

Bill Bonner

Bill Bonner, writing today from Baltimore, Maryland

Forbes:

Biden forgives $4.28 billion in student debt for 54,900 borrowers

The relief is a result of fixes the U.S. Department of Education made to the once-troubled Public Service Loan Forgiveness program.

Where did Joe Biden get the power to spend Americans’ money without asking Congress?

Who knows?

But while the president was doing unconstitutional acts… the markets were making unconscionable moves. Fortune:

Fartcoin hits $1 billion market cap as memecoin market explodes

And then, as expected… rather than force the feds to actually reduce spending, Republicans got together and agreed to spend even more. Tampa Free Press:

House Republican leaders have announced an internal agreement on a stopgap spending bill, also known as a continuing resolution (CR), to fund the government through March 2025, averting a looming shutdown set for Friday night. The proposed CR includes $110 billion in disaster relief for victims of Hurricanes Milton and Helene, along with a one-year extension of the farm bill, according to multiple reports.

What a lovely Christmas pageant it is! A grand parade of fools and knaves. A circus of freaks and clowns.

But our goal is to prevent you from taking the Big Loss… and to that end, we bring some last-minute thoughts.

The outcome is in doubt… but many investors are anticipating a huge ‘melt-up.’ They think they face a once-in-a-lifetime opportunity, a new era created by the new MAGA-istas.

We hope it works out.

But just in case … here’s our contrary view…

Share Bonner Private Research

Then, we might even expect a business revival. Manufacturing would return to the US… and thousands of rapists and murderers would leave.

But that is not what is on offer.

Besides… he has his weight to throw around. Bloomberg:

President-elect Donald Trump warned the European Union that its exports will get hit with US tariffs if its member states don’t buy more American oil and gas. 

“I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!,” he said on Truth Social.

Big Man politics require a Big Stick… which costs Big Money. It seems very unlikely that Trump would give up the pleasure of power for reasons he neither understands nor appreciates.

Look for bigger deficits, not smaller ones. And lower asset prices, not higher ones. And if we’re wrong…

Well, it won’t be the first time.

Happy holidays.

Regards,

Bill Bonner

By then the receipts on my desk had arranged themselves into a sort of chorus. I heard, faintly, another refrain—one from Kentucky. In the first days of the shutdown, Senator Rand Paul stood alone among Republicans and voted against his party’s stopgap, telling interviewers that the numbers “don’t add up” and that he would not sign on to another year that piles $2 trillion onto the debt.

That, I realized, is what the tariff story shares with the broader budget theater: the habit of calling a tax something else, of shifting burdens into the fog and then celebrating the silhouette as victory. Even the vote tally made the point: he was the only Republican “no,” a lonely arithmetic lesson in a crowded room.

Senator Rand Paul, (R. KY), who was the sole Republican to vote against a continuing resolution, seems to care about the actual finances of the government. “I would never vote for a bill that added $2 trillion in national debt,” Paul said in various interviews over the weekend.

The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.

Oy.

We liked what Liz Wolfe at Reason wrote on Friday, so we’ll repeat it here: “One of the dirty little secrets of every shutdown is that everything remains mostly fine. Private markets could easily replace many federal functions.”

It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.

The Liberal Democratic Party victory has sent Japanese stocks soaring, as party President Sanae Takaichi – now set to become Japan’s first female Prime Minister – is a proponent of stimulus spending, and a China hawk. The electoral win is a vote to keep the yen carry trade alive… and well.

The “yen carry trade” is a currency trading strategy. By borrowing Japanese yen at low interest rates and investing in higher-yielding assets, investors have profited from the interest rate differential. Yen carry trades have played a huge role in global liquidity for decades.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.

Affordability is much more of an issue. Food, rent, healthcare, and childcare are all rising faster than wages. Households aren’t jobless; they’re stretched. Job “quits” are at crisis-level lows.

In addition to the top 10% of earners, consumer spending is still strong. Not necessarily because of prosperity, but because households are taking extra shifts, hustling gigs, working late into the night, and using credit cards. The trends hold up demand but hollow out savings.

It’s the quiet form of financial repression. In an era of fiscal dominance, savers see easy returns clipped, workers stretch hours just to stay even, and wealth slips upward into assets while daily life grows harder to afford.

The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.

Oy.

It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.