BALTIMORE – Last Thursday, the Brits said auf Wiedersehen and au revoir to the European Union.

On Friday, the Dow sold off 611 points – a roughly 3.5% slump.

What’s going on?

Dying Order

In Europe and the U.S., the masses are getting restless.

Mr. Guy Wroble of Denver, Colorado, explained why in a short letter to the Financial Times:

The old liberal world order is dying because the cost-benefit ratio for the average person in the Western world is now negative.

The welfare state depends on three things: population growth, productivity growth, and credit growth. All three are either slowing… or are already negative. As a result, economies can no longer keep up with the costs imposed by the Deep State and its cronies.

The “Deep State” is shorthand for the many people, in and out of government – the “foxes,” as Italian economist Vilfredo Pareto called them – who control policy decisions and use them to tilt the playing field in their direction….

Taxes, regulations, and wars are not for the benefit of the electorate, but simply to pay off one special interest group or another.

People vs. Politicians

The “foxes” are expensive.

For instance, the median house nationwide sells for $180,000. In Washington, D.C., it’s more than $500,000. On Wall Street, the average bonus last year was $172,000 – six times the total median compensation of workers nationwide.

More important, the foxes set up a financial system that was fraudulent, pernicious, and bound to blow up.

Using credit instead of commodity-backed money, they distorted the entire economy, curtailed real capital investment, pinched off productivity, stopped income growth for 90% of the people, and slowed economic growth for everybody.

Now, the economy isn’t growing enough to make good on the politicians’ promises. After you factor in inflation, the average working man in the U.S. earns no more today than he did 40 years ago.

Almost all income growth in the last 10 years has gone to the rich. So, the only way the average voter could possibly benefit from the welfare state would be if he were able to tap into the income of the very rich.

And that isn’t going to happen, for one very obvious reason. That top 1%? Those are the foxes that control the system!

Vive la Revolution!

The appeal of the welfare state ceases when people get less welfare than they pay for.

The more wealth and power the elite sucks out of a stagnant system, the more the typical citizen feels trapped and robbed.

The Brexit vote was an attempt to escape.

And in the U.S., many see a vote for Donald Trump as another way to get parasites off the backs of the common people.

Mr. Trump has pledged as much. The presidential election this November, he says, will determine whether the U.S. will be “ruled by the people or the politicians.”

“I will end the special interest monopoly in Washington,” he promises.

The situation is not completely unlike France in the 1780s.

So many foxes had burrowed into the privileged, elite classes that it became impossible to get them out.

They lived on “rents” – such as the right to collect taxes, or tolls, or a percentage of harvests. They were 18th century cronies, not productive members of the economy. And generally, they were even exempt from paying taxes. This left the typical French royal subject with a chip on his shoulder.

Several efforts were made at reform. Assemblies were called. “Parlements” were convened. Elections were held. But the rich foxes wouldn’t give an inch. It took a bloody revolution to change things.

Similarly, today, the foxes have a sweet deal. Their money system gives them an almost bottomless source of credit. (Thanks to negative interest rates on bonds, many governments around the world now get paid to borrow money.) And they use this credit to fund their programs… their bonuses… their stock buyback schemes…

Naturally, they are desperate to keep it going. Bloomberg:

Central banks across the world offered the financial system fresh funds and intervened in currency markets, in an effort to reassure investors sent into panic by Britain’s vote to leave the European Union. After a majority of Britons voted to end their 43-year membership of the EU in a referendum, the Bank of England, the European Central Bank and the Bank of Japan issued statements stressing the availability of liquidity to keep the banking system running.

But there’s a problem…

The Deep State can control Congress. It can control the state bureaucracy… Wall Street… and Big Business. It can even – usually – control the voters.

But it can’t control the credit cycle.

More to come…

Regards,

Bill

Investing Insight

By Mark Morgan Ford, Founder, Wealth Builders Club

My decision to buy gold seven years ago has made me and my family much wealthier. But that’s not why I did it.

I bought gold coins to protect my family and our wealth.

I’ve been a businessman and an investor for almost 40 years.

During that time, I’ve made most of the basic money mistakes you can make. I’ve also seen friends and family members lose their wealth dozens of times.

Had they followed the plan I’ll lay out for you today, they could have avoided – or offset – these losses.

Here are a few ways you can lose your wealth…

Regulators can confiscate your stocks and bonds – and even your cash.

Banks can seize your real estate if you can’t meet your mortgage payments.

Brokerages can collapse, wiping out your retirement accounts.

Any wise-guy lawyer can sue you, win a judgment, and then put a lien on your property. He can also take your salary.

But you won’t have to worry about any of these when you own gold.

Gold is the ultimate safe haven for your wealth.

It’s the best way to protect yourself against all the major forces of wealth destruction because: Gold is tangible. It’s portable. And, in most cases, it’s private.

Tangibility matters. Your stocks and bonds exist on an electronic spreadsheet. This spreadsheet belongs to some financial institution. What if it disappeared? It’s not likely, but it’s still a possibility. When it comes to protecting what I have, my risk tolerance is zero.

Portability matters, too. Real estate is a tangible asset, but it is not portable. If you wanted to get out of the country, you couldn’t take your property with you. And you can’t protect it from confiscation, either. I know hardworking people who have lost their homes to fraud.

Privacy is also important. The other problem with real estate (and many other forms of tangible wealth) is it’s public. Clerks record and preserve every real estate transaction you make. With Google, your neighbors can study your real estate and what you paid for it.

None of these problems exist with the gold coins I typically recommend.

You can buy, hold, or sell them… without anyone knowing what you are doing. Since they are small, you can transport them discreetly.

You can carry $20,000 worth of gold in a pair of jeans – and $1 million worth in a carry-on bag. Plus, you can ship gold coins on a plane or a boat or by parcel post.

Editor’s Note: Gold is just one way to help preserve lasting wealth. All this week, Mark is hosting an online training event. He’s explaining the ideas behind his favorite wealth-building methods and showing you how to create a sizable net worth in just seven years or less… all without touching stocks, bonds, or options.

To sign up for 100% free access to Mark’s training event, go here now.

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Mailbag

Friday’s Diary, connecting the dots between Brexit and the rise of Donald Trump, has gotten a lot of readers hot under the collar…

You made a statement today: “That’s what makes it so much fun. Trump must be the biggest numskull ever to win the Republican Party nomination… perhaps after George Bush.” This coming from a man who tries to raise cattle in Argentina. I will believe Trump (defend the Second Amendment, close the boarders [sic], rebuild the military, appoint conservative judges to the Supreme Court, defend the police, make this country secure by vetting immigrants, eliminating the death tax, cutting crop tax, etc., etc.) Who is the bigger numskull? — Tom B.

I always thought of Bill Bonner as being a levelheaded, fair person. He is absolutely right about that world-class lying thief Hillary Clinton. But he must think he is smarter, and has more common sense than Trump, who has connected with the American people. If so, then he should do every one a favor and run for the president of the USA. — Don T.

Sometimes, society cultivates the leaders who come to the forefront by their own behavior and beliefs. This is what it appears to be with Hillary and Trump. Hillary representing the detached from reality, self-entitled, spoiled… and Trump representing the frustrated, grounded, “working hard, not smart” crowd. — Paul M.

Bill, if you and Trump asked me to go have a few beers, I would pick Trump first… and you second. But I would squeeze you in. It all boils down to who is worse for the future of my grandsons – not Trump. — George M.

Go Trump! Bill, move to Europe, stick to good financial and investment advice. Stay out of the political bias or personally influencing your readers. Again thank you. — Chip B.

As a new Lifetime partner [of Bill’s monthly publication, The Bill Bonner Letter], I’m writing to commend Bill’s outstanding and withering analysis of Hillary and “The Donald” in this year’s absurd presidential elections. This is exactly the sort of analysis more Americans need to start reading. Though, alas, they most probably will not. Keep up the sharp insights and keen eye. — Marc G.

I’ve met the enemy and he is us. On the upcoming presidential election – in both candidates we have villages missing their idiot. — Corry O.

In Case You Missed It…

Our colleagues at Agora Financial took to the streets of Baltimore to demonstrate how easy their newest investment strategy is.

In this entertaining video, they show two people with absolutely no investing experience how to make $127 in the market in less than three minutes.