First to Go: The Money, by Bill Bonner

Every bubble the last few decades seems to have popped and then given rise to an even bigger bubble. The bubble currently popping will be the bubble to end all bubbles, and nothing larger will follow. From Bill Bonner at

(Source: Getty Images)

Bill Bonner, reckoning today from Baltimore, Maryland…

Yesterday, we took a look into the murky past, to see what lurked therein. Today, we turn our minds to the future, which may prove murkier still.

As we saw in China, during the 1930s and ‘40s, the government printed money to pay its bills. It ran up debt it couldn’t pay. And then, the hyperinflation of the 1950s opened the door to Mao’s communists. After that, it was one disaster after another.

Americans think they can continue to borrow and spend forever. Investors are trained to believe that stocks always bounce back. They think that if they just hold on, soon they will be making money again.

And if they owe money, they think they’ll soon be able to refinance at even lower rates.

But all that has changed. Now that we have inflation, it’s a whole new ballgame.  The Fed can still print money, but now it will cause consumer prices to rise even faster. Your stocks may go up, as they did from 1966 to 1982, but inflation will wipe out your gains. And when you go to refinance your house, you will be hit by a double-whammy. Falling house prices may have erased your ‘equity’…while rising mortgage interest increases your monthly payments.

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