“Was ever there a fairer métier than ours?” Bill Bonner asked early in our days of writing the Daily Reckoning from an office overlooking the pedestrian street Rue de La Verrerie in Paris.
By then, we had already worked across from one another for several years and would continue doing so for the better part of two decades.
Bill’s answer was contained in the question. It’s also right there in the preface to the 2009 second edition of our New York Times best-seller, Financial Reckoning Day.
The essay is titled “Confessions of a Newsletter Man.”
More to the point today, the answer to the question “Was there ever a fairer métier than ours?” opens the reader up to a whole new world of ideas and the odd characters who have espoused them over time.
The carpenter risked cutting off a finger, the used-car salesman gradually lost the ability to hear an engine knock, and the foot soldier might be sent somewhere the liquor was scarce and the shooting distressingly accurate.
The financial newsletter man suffered no such indignities. He read the newspapers, watched the authorities make fools of themselves and earned a modest living by pointing it out.
When he was wrong, he acquired humility. When he was right, he made enemies, and either way, there was usually lunch.
Bill called our principal occupational hazard “a rupture of the midriff,” brought on by laughing at the daily humbug. Most people read the news for information, he observed, and were therefore vulnerable to taking it seriously.
The newsletter publisher occupied a more useful distance. He stood close enough to the media to see how the machinery worked, but far enough away to avoid being mistaken for a reputable part of it.
That was the métier I entered. Bill likes the French term for “career” because the French use it when they want to imply the passion you have for the lifestyle, rather than just the gig you do for pocket change.
“Often wrong but never in doubt,” could be our motto. At times tedious, the work requires a taste for history, an acquaintance with philosophy, some math, a tolerance for eccentricity and an instinctive suspicion of anything described as permanent.
The ideas matter, naturally. The ideas matter most. But ideas arrive attached to people, and the people rarely, if ever, behave like the smooth, interchangeable strategists you see on highly produced and edited financial television.
People come with theories, feuds, appetites, old suits, strange warnings and stories that have survived several market cycles. Their rough edges are part of the evidence.
Before you get the idea we’re just reminiscing today… that’s not it. Instead, we’re going to tell you what you’ve signed up for as a member of the Grey Swan fraternity. And, perhaps, more importantly, where the idea for this venture even came from.
An Ascot at Le Paradis
One afternoon in Paris, Bill and I met Christopher Ruddy at Le Paradis, on the corner of Rue de la Verrerie and Rue Saint-Martin. It’s a quaint little bistro around the corner from the plaque which establishes the site of the old Banque de France, object a mob’s ire, pitchforks and torches after the John Law “Mississippi Scheme” collapsed and investors were left penniless.
The café occupied the sort of Parisian corner that lends importance to any conversation held there. Its narrow terrace faced both streets, offering a procession of pedestrians, scooters, delivery vans and Parisian dogs carrying themselves with more confidence than most American executives. And women. The women of Paris are always tres chic, even when stopping by the market for a fresh poulet roti and baguette for dinner. In one dedicated effort, Bill wrote an essay about spending an entire afternoon describing the women of Paris as they passed by le Paradis… but we digress. It was a different time. And Bill knows his audience.
For some odd reason of his own, the man arrived at this particular meeting wearing an ascot. At the time, he would have been the only person I knew who could wear an ascot without looking as though he had lost a wager.
The media venture under discussion had already gathered some support among Bill’s friends and associates.
Mr. Bonner had grown up playing basketball with James Dale Davidson, who had been invited to become the founding director of a new media venture called Newsmax.
Jim’s longtime collaborator, Lord William Rees-Mogg, had edited The Times of London, served as vice chairman of the BBC and worked with him on newsletters and books, including The Sovereign Individual, a forecast about markets, sovereignty and the political consequences of technological change. Through that relationship, Rees-Mogg was asked to serve as Newsmax’s chairman during its formative years.
So there we were at le Paradis, meeting Chris Ruddy, the founder of Newsmax. A would-be American media tycoon, a financial publisher in an ascot and a lowly scrivener sitting inside a web of relationships that ran through Fleet Street, financial newsletter publishing, British public life and the early internet.
Waiters threaded between the tables carrying plates and small glasses of wine. Traffic moved past the terrace while we talked about publishing, politics and the appetite readers have for news delivered with conviction.
Ideas rarely travel in straight lines. Books about sovereignty and technology drift into political media, where their arguments find a wider and less predictable audience. Institutional labels change, but the questions follow the people.
Who controls the information? Who controls the money? How does technology alter the balance between the individual and the state?
The waiter brought steak frites. Parisian women and their petite dogs continued past the terrace, and the discussion moved on before anyone could put it into a proper box.
That scene that afternoon belongs in the pantheon of Grey Swan origin stories because the fraternity did not begin as a formal organization. It began as a network of conversations in which one person introduced another, an idea crossed several national borders, and gained a foothold as technology changed the publishing and communications landscape.
An odd lot, enjoying an afternoon glass, chasing ideas and discussing business whose consequences wouldn’t accrue until many years later.
Through the Mists of Time and the Back Alleys off Fleet Street
One afternoon in Paris, Bill and I met Christopher Ruddy at Le Paradis, on the corner of Rue de la Verrerie and Rue Saint-Martin. It’s a quaint little bistro around the corner from the plaque which establishes the site of the old Banque de France, object a mob’s ire, pitchforks and torches after the John Law “Mississippi Scheme” collapsed and investors were left penniless.
The tradition predated us. The Fleet Street Letter began publishing in London in 1937, when Britain still carried the habits of empire, and Europe had already begun assembling the machinery for a second disastrous war in two decades.
Founder Patrick Maitland, the 17th Earl of Lauderdale, set the tone right from the start. Writing in 1938, he warned readers plainly:
“War is coming to Europe, but not until September at the earliest.”
On September 1, 1939, Hitler invaded Poland.
That tradition of anticipating major turning points has continued ever since.
Independent financial letters grew from a recurring problem. Governments promised more than they could pay for, markets preferred a good story to an awkward balance sheet, and official explanations tended to improve as the underlying situation deteriorated.
Fleet Street supplied the news. The independent letter raised suspicions and strengthened the skeptic’s resolve.
There was, of course, no internet to turn to at the time. The writers used newspapers, company accounts, shipping reports, foreign cables and conversations conducted over lunch. There were no scrolling tickers and no television strategist appearing at 9:30 in the morning to explain why the event he had failed to predict at 9:29 had been inevitable.
The trade attracted rogues who had seen money behave badly in the presence of governments and dared write about it. The rogues are the men who originally intrigued Bill. We only learned the trade as a witness and by assignment.
Years later, after the rise and fall of the Bretton Woods exchange rate system, monetary freedom became a public campaign in the hands of James Blanchard, who understood that gold needed a stage, an audience and enough theatrical energy to become more than a relic. The New Orleans Investment Conference, founded, is still known colloquially as “Blanchard” as in the question: “Are you going to Blanchard this year?”
Inflation became a domestic survival problem under Howard Ruff. Readers of the Ruff Times were asked to imagine what happened when the supermarket, pension system and currency all failed to cooperate at once.
Austrian economics could become theology, debt, computer systems and the possible end of civilization before breakfast in the hands of Gary North. His Y2K warnings eventually proved extravagant, but extravagance was part of the character, and he knew how to follow an argument farther than polite society wished to go.
Demographics became a market cycle in Harry Dent’s hands. While investors stared at quarterly earnings, he counted births, households, aging consumers and the years in which families tended to spend the most.
Bill liked these people because they had a point of view. They might be wrong, sometimes spectacularly, but one could identify the assumptions and examine the wreckage afterward.
Harry Shultz wrote his newsletter in a shorthand he’d created that only his readers could understand because he thought English was too clunky and wanted to pack more ideas into every (expensive) page he printed and mailed. Pat Gerard named his investment and lifestyle The Blue Duck, simply because people would see it in their mailbox and read it out of curiosity.
Respectable analysts look down their noses at our business. Perhaps rightly so. But we knew then what we know now, the suits would arrive after the event, armed with the consensus and protected by the fact that everyone else had been wrong, too. It takes a bold writer to make unpopular forecasts… and live by the consequences.
Independent inquiry survived the transfer of monetary power from sterling to the dollar, the Bretton Woods agreement and Nixon’s suspension of dollar convertibility into gold.
The instruments changed, but the questions remained useful. Who benefited from the arrangement, who carried the risk and who would eventually pay?
Kurt and the Cost of Being Serious
Enter Dr. Kurt Richebacher.
Dr. Kurt Richebächer entered our work before the first edition of Financial Reckoning Day appeared. He had served as chief economist and a director of Dresdner Bank and belonged to an older European tradition in which an economist was expected to understand balance sheets, factories and the consequences of bad credit.
Kurt walked with a limp and a silver-tipped cane; the result of an injury he’d sustained as a soldier in World War II.
His banking career had passed through a darker Europe than the one visible from conference hotels. Jürgen Ponto, chairman of Dresdner Bank and one of the senior figures above Kurt in the institution, was murdered at his home in West Germany in 1977 by members of the Red Army Faction.
Banking was not merely a collection of ratios, and Europe’s postwar arrangements had not been assembled in a seminar room.
Kurt carried some of that history with him. He was an imposing man with a broad German accent and a severe manner. He used his silver-tipped cane as an instrument of punctuation whenever the argument required emphasis.
We hosted one seminar at Bill’s place, Château d’Ouzilly in France. The room had terra-cotta floors, old walls and the kind of atmosphere that encourages Americans to begin speaking more seriously than usual.
Kurt stood before the group explaining the distortions created by cheap credit. Someone offered a mild objection, probably involving productivity, liquidity or one of the other words used to make borrowing sound productive.
Kurt brought the silver tip of his cane down hard against the terra-cotta floor. The crack thundered, silencing the room.
He repeated the point in his deep accent, slower this time, as though the objection had not been wrong so much as insufficiently educated. No one interrupted the second explanation.
That was Kurt. The economics arrived with physical force.
Later, in Cannes, we met at a beachside resort across from his apartment. The Mediterranean glittered beyond the terrace, and beautiful women crossed the beach with no visible concern for American monetary policy.
Kurt was concerned enough for everyone. He sat upright with papers stacked beside him while glasses clinked around us and hotel guests drifted toward the water.
The setting made malinvestment sound almost impolite.
At some point, I asked him why he was always so gloomy. Why did he insist on looking at the dark side?
“What good would it do to write about everything that’s going well?” he asked.
Kurt did not regard his work as a contest to produce the most exciting forecast or the fastest route to wealth. His business was identifying risk and helping investors avoid it.
He was not there to tell people how rich they might become. Plenty of others had already volunteered for that assignment.
No. Kurt’s self-appointed – his métier – was pointing out where the credit had gone wrong, where the balance sheet had become fragile, and where optimism had begun to disguise danger.
During the late 1990s, American economists were waxing poetic about the New Economy. Faster computers, fiber optics and rising productivity were said to have altered the business cycle itself.
Kurt looked at the balance sheets. Server capacity was not revenue, processing speed was not profit, and a mile of fiber-optic cable had value only when someone paid to use it.
His essay “The Austrian Case Against American Monetarism” appeared in The Daily Reckoning on June 7, 2000, three months after the Nasdaq reached its peak.
The Austrian critique began with interest rates as signals about time, risk, savings and available capital. When a central bank falsified those signals, projects appeared profitable that could not survive ordinary conditions.
The boom produced activity, investment and optimism while hiding errors that would emerge when the credit stopped expanding.
Kurt asked what had been saved, what had been invested and what had merely been financed. Those questions followed us through the technology collapse, the housing boom, the mortgage crisis and the long experiment with zero interest rates.
Kurt died in August 2007, after the first Bear Stearns mortgage funds had failed but before Lehman Brothers collapsed. He did not live to see negative-yielding bonds or the monetary response to the pandemic. He never read the headlines in the American financial press extolling his prescient forecasts.
The Internet Discovers Tulips
Enthusiasm for the internet had reached a stage previously associated with religious revival when The Daily Reckoning began in 1999.
Companies added “.com” to their names and discovered that punctuation alone possessed market value. Businesses without profits were described as visionary, while businesses without revenue were described as pre-revenue.
Businesses without a recognizable product could be valued most highly because an operating record did not interfere with the projection.
The internet, the productivity gains, and the fiber-optic networks were real. The prices, financing and debt were ridiculous.
That combination confused people because they assumed a transformative technology justified every price attached to it.
Railway investors had made the same error in the nineteenth century. Radio investors made it in the 1920s, and automobile investors made it as manufacturers multiplied faster than customers.
The technology changed, while the fellow buying at the top remained largely the same.
Undersea fiber became the great infrastructure story at Global Crossing, which later filed for bankruptcy. A software company became an accounting cautionary tale when MicroStrategy lost more than half its market value in a day.
Years later, its founder, Michael Saylor, reappeared as one of bitcoin’s most committed corporate advocates. Markets rarely discard a memorable character when they can give him another act.
The daily letter gave us a place to examine each fresh absurdity before the market replaced it with a larger one. It also widened the circle of people who understood one part of the machinery better than the generalists pretending to understand all of it.
Official briefings rarely revealed as much as the road entering a country. The condition of the pavement, the behavior of the guards and the exchange rate offered beside a filling station often told Jim Rogers more than the ministry’s statistics.
Financial abstractions eventually required pavement, fuel, pipes and buildings. James Howard Kunstler kept us abreast with a scathing critique of what he saw as the greatest misuse of capital in human history – suburban sprawl.
Reserve currencies could become weapons without firing a shot. James G. Rickards followed money into law, sanctions and national security.
Markets also produced failure, reinvention and the occasional nervous breakdown before lunch. James Altucher brought all three, usually with enough energy to outrun the subject under discussion.
Technology could alter sovereignty as easily as commerce. James Dale Davidson had been examining that possibility long before digital currencies and borderless networks entered ordinary conversation.
For some reason, the trade attracted an unusual number of men named James or Jim. There was no editorial policy requiring it, although the evidence suggests one may have been operating informally.
The value was not in collecting personalities. It was in the accumulation in angles of attack.
Kurt’s questions followed us out of Cannes and into all the relationships we formed over the next 20 years.
What had been saved? What had been invested? What had merely been financed? What are the government stats covering up? What is merely fictitious prosperity – a hallmark of what he called “late stage capitalism.”
No doubt, Kurt is pounding his silver-tipped cane against a terra-cotta floor somewhere today, railing against the excesses of AI financing and data center buildout.
~Addison
P.S. This week on Grey Swan Live!, we returned to one of our favorite themes: Argentina’s economic turnaround. While DOGE met the Washington establishment and the establishment won, Mieli’s Argentina has truly taken a chainsaw to the administrative state.
We got the latest from our man on the ground, Joel Bowman, author of Notes From the End of the World.
That’s why this Thursday at 2 p.m. ET, Joel Bowman will join Grey Swan Live! from Buenos Aires to break down Javier Milei’s dramatic reforms, the battle over free markets versus socialism and what investors should understand about the future of global capital flows.
