Gold News

Nobody Knows Anything

Except that you can't get something for nothing...

WHEN IT comes to the markets nobody knows anything, writes Bill Bonner in his Daily Reckoning.

We don't even believe in investing...not the way most people think of it.

What we do know is that you can't expect to get something for nothing...not in the world of finance and investment. So you can't expect to earn a lot from your investments...unless you are lucky, or smart, or the feds rig the system in your favor. Which, of course, is what they've done for the last 40 years!

No kidding. In the early '70s, the feds created a new kind of money. Dollars...with nothing behind them other than the feds themselves. If they wanted, they could destroy the Dollar. Or keep it solid. It was entirely up to them.

In the event, they destroyed it slowly. In the early '70s, we recall buying gasoline for 25 cents a gallon. Now, it was over $3 when we left the US a week ago. It's lost more than 90% of its value!

But this destruction had consequences that were different for the "rich" than they were for the working classes. Financial assets rose with the inflation of the money supply. The price of labor did not. Stocks went up 13 times. Consumer prices (excluding gasoline) went up about half as much.

No wonder the rich got richer!

And now the same dumbbell economists who encouraged the feds to mess up the monetary system are whining about 'inequality.'

Here's Brian Fung kvetching in The Atlantic. He says income equality is not just an economic problem; it's a matter of life or death. No kidding:

Growing income inequality in the United States has Americans talking about justice and economic fairness, but a new study suggests the burgeoning wealth gap is threatening more than just our pocketbooks. It might be raising our risk for an early death.

In one of the few studies to track the health effects of income inequality over time, one Ohio State University (OSU) researcher has discovered that an increase in inequality leads mortality rates to begin rising after five years. Inequality-linked mortality peaks about two years later, before tapering off five years after that. All told, even a modest increase in American societal inequality more than doubles an average individual's cumulative risk of death over the next 12 years.

Drawing data from the US National Health Interview Survey for the years 1986 to 2004, the study found that for every 0.01 increase in the Gini coefficient — a standard measure of a country's economic disparity where 0 represents perfect societal equality and 1 represents maximum inequality — an average person's cumulative risk of death increased by 112 percent in the next dozen years. Hui Zheng, the OSU sociologist who ran the study, replicated the results using three different measures of inequality across a sample of more than 700,000 Americans aged 30 and older. He then ran the same test on 18- to 25-year-olds, with similar results.

Does inequality itself cause you to die young? If some guy in your town gets filthy rich, will your life expectancy go down? What if some guy gets extremely poor...like Mike Tyson, said to be the poorest man in the world, because he has such a huge debt to the IRS? Will that take years off the lives of the rich?

We don't know exactly what insight Mr. Fung is discovering. But we are pretty sure that he doesn't either. Income inequality in itself is not going to shorten anyone's life...unless he gets depressed about it and blows his brains out.

Even then, we'll never really know why he did it.

Nobody knows anything. Especially economists.

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New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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