Submitted by William Bonner, Chairman – Bonner & Partners
The Strange Case of the Disappearing Debt
Every day, we think we see more clearly where this is going. And every day, we are staggered by it.
Our mind boggles. Our knees buckle. We hold our breath and reach for a caipirinha: For the first time ever, central banks are printing more money than governments can use.
That’s right. After central bank buying, net government debt sales will be NEGATIVE.
Yes, governments will still run deficits. Yes, they still will borrow trillions of dollars. But after central banks finish buying their debt this year, there will be less government debt on the open market at the end of the year than there was at the beginning.
Government debt will vanish … as miraculously as the central bank funds that appeared to buy it.
Is this a wonderful system or what?
Chic, Confident and Young
Last night, we had dinner at a sidewalk café. The scene resembled Delray Beach, Florida, without the old people. A corner bar spilled its patrons out onto the street. Men and women, in groups of two … three … four … walked down the streets, well dressed, but casual. Occasionally, an automobile revved its engine as it rolled by the restaurant.
As in South Florida, young men and women are very aware of their bodies. Men work out at gyms and wear shirts that reveal their bulging biceps. Women wear tight, formfitting pants to show off their toned legs and sculpted derrieres. Chic. Confident. Young. That is the Itaim Bibi neighborhood of São Paolo.
“Don’t mistake Itaim Bibi for Brazil,” cautioned a colleague. “This area may be like Los Angeles or London. Most of Brazil is much poorer.”
The average income nationwide is about $10,000. That puts it at about one-third to one-quarter of the average US income. (We are suspicious of facts with crisp numbers in them. Once you’ve adjusted for purchasing power, employment levels, inflation, taxes and social charges – the numbers melt.) Continue reading