The 5 Sees the Light, Modest Proposals, Greece’s Bailout, A China Forecast and More!

by Addison Wiggin & Ian Mathias

  • Critics expose The 5… the real purpose of our film I.O.U.S.A.
  • Thus, we turn over a new leaf… a few modest proposals, below
  • Greece gets its bailout… Dan Amoss on why this will be the first of several
  • Bill Bonner with a small problem: Only half of Americans pay taxes

  Confession: We’ve seen the light… this weekend’s airing of I.O.U.S.A.: Solutions on CNN sparked a “come to Jesus” moment of epic proportions for us.

  This catharsis began a few hours after we last spoke. As you know, CNN aired the updated version our documentary I.O.U.S.A. over the weekend. Soon after the announcement, the real truth emerged — from Huffington Post articles to the far depths of the blogosphere:

  • “CNN is giving four hours of free airtime to the leading propagandist fanning the flames of deficit hysteria”
  • Pete Peterson and “his acolytes will have free reign to spread their usual lies about Social Security, Medicare and government in general”
  • I.O.U.S.A. is “basically a snuff film about the national debt, meant to scare Americans into unpalatable solutions like cutting Social Security or Medicare benefits”
  • “They are, quite obviously, attempting to use the crisis to dismantle the social safety net and avoid doing the real work of reforming the financial system. Shock Doctrine 101.”

Alas, the jig is up.

  I.O.U.S.A. — hell, Agora Financial in general — is actually a pawn in a right-wing conspiracy to inflict fiscal terrorism on the masses. Bill Bonner is not our founder, but rather a mouthpiece… we are actually owned by a consortium of behind-the-scenes conservative operators who make Karl Rove and Dick Cheney look like nice, honest men.

All this time, we have endeavored — by advocating fiscal responsibility and highlighting the dangers of overconsumption — to subversively destroy the very entitlement programs we have contributed toward our whole lives… and snuff out those who rely on them.


After 17 years of living this lie… it feels so good to admit it. Today… we set out, modestly, to right the wrong.

  Deficits are a melancholy object to those who walk through this great town or travel in the country, when they see the streets, the roads, the cabin doors, covered in “Foreclosure” signs, followed by bailed-out bankers and incumbent Senators, begging every lowly taxpayer for alms.

Thus, we present a modest proposal: The American worker and investor has done so poorly over the last 10 years not because of easy money and rabid government spending… but because there actually wasn’t enough of either.

We propose the following… then the country will be great again, like in 1999:

  • Reduce interest rates to -2%. Money will no longer be free — the Fed will actually pay banks to borrow money. That way, they’ll lend to you for free, and you can turn around and use that free money to do the sorts of things any American would do with some extra cash… like pay down debts, start a small business or open a Roth IRA
  • Quadruple government stimulus. Paul Krugman is definitely wrong… it’ll take a lot more than just doubling down to fix this mess. We reckon $5 trillion will “get this economy back on track.” With that much money, we could build a high-speed rail from Baltimore to Juneau, get every 50-plus man two Viagras a day and have all American homes government owned… ensuring there will never be a subprime crisis again
  • Expand Medicare and Social Security exponentially. Mandatory retirement at 45. Complimentary liposuction at 50. Remember, when the funds run out of money in 2011, we can borrow from the Fed at a profit… interest rates are at -2%. 

And if by some unlikely fortune, the Fed prints too much money… once we are all millionaire yacht owners… our dollars will have other purposes, too. The USD is, after all, made of cotton and linen. With enough crisp bills, the enterprising tailor could fashion himself a fine pair of pants. More leftovers, as this wealthy housewife illustrates with her beloved deutsche marks, could be used to keep the family warm in wintertime.

  “Unless we as a nation demonstrate a strong commitment to fiscal responsibility,” Ben Bernanke (of all people) said late last week, “in the longer run, we will have neither financial stability nor healthy economic growth."

Turning over a new leaf himself, Bernanke warned the Center for the Study of the Presidency and Congress of some “difficult choices” coming soon. Boy, this guy is OUT THERE…

“To avoid large and ultimately unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense or some combination of the above."

No, no, no… This is not the Ben Bernanke we know and trust. What happened to the guy who wanted to dump money from helicopters into the waiting arms of consumers below? One of those “deficit alarmists” must have gotten to him.

Bring back the old Ben, please.

   “This doesn’t seem like a difficult choice to us,” the criminally subversive “snuff film” star Bill Bonner responds to Bernanke. “We’d gladly accept fewer ‘services’ from the feds if they’d lay off on the taxes. But that’s because we’re in the half of the U.S. households that actually pays taxes.

“No kidding; the report was in yesterday’s news: Almost one half of U.S. households pay no federal income tax.

“So welcome to the beginning of the end. If half the citizens get bread and circuses without paying for them, you can bet that the whole shebang is headed for destruction. The math doesn’t work. Half the people have no interest in curbing taxes or spending. Obviously, those people would prefer to raise taxes — on us — rather than give up their free pills and retirement benefits. Even among the half that does pay taxes, most pay very little — less than they get back in ‘services.’”

We have personally seen Bill accept a free lunch… er, dinner. Just last month at the annual Agora Financial Inaugural Dinner, he dined at our table — with his wife Elizabeth, no less — for free, gratis, no charge.

Geesh… hypocrite.

  Greece and the EU actually have the right idea: The Greeks were offered a $61 billion bailout package over the weekend. European governments will cover two-thirds of the bill, while the IMF will get the rest (and the tip, we presume). Greece will receive this loan with a 5% interest rate, roughly 200 basis points below the current yields on 3-year Greek bonds.

Bravo, we now say.

Not only will other nations — who had no part in Greece’s irresponsibility — have to bail Greece out, but they’ll have to do it at below the market rate. Now that’s how a government should reward the governed.

The sum — $61 billion — does seem a little light, though… $70 billion would be better… then every foreign tourist could get a free baklava upon arrival.

  “Greece is just one branch stemming from the root of today’s economic challenges,” writes one of our as-yet-unreformed co-conspirators, Dan Amoss. As you’ll see, Dan has yet to “come clean” like your noble 5 Min. editors.

“We are beginning to navigate the endgame after decades of Keynesian policies — policies that delude most voters into thinking, ‘You can have something for nothing, at someone else’s expense.’

“If left to its own devices, the free market would have already deflated money and credit rapidly. Instead, policymakers employed Keynesian prescriptions to prop up the past inflation of money and credit. In an attempt to maintain the status quo, these policies expropriate the capital that could have been used to rebuild a sane, honest, sustainable economy.

“Amazingly, the stock and bond markets remain complacent when — over the next few years — the bond markets will put Keynesian policies and unsustainable welfare state models to the ultimate test. Greece just failed that test. Several more countries will fail.”

Oy. If you follow Dan’s bizarre reasoning, check out Strategic Short Report right here… we’re practically giving that away too! You’d be crazy to follow Dan’s thoughts, though… everyone knows “deficits don’t matter.” Reagan proved that.

And who could possibly be worried about a correction? Man… Dan’s lost all his marbles.

  China is “on a treadmill to hell,” Jim Chanos — another nefarious alarmist — told Charlie Rose on Friday. From the get-go, we’re not concerned. If you’re ever ran on a treadmill, you’d know they go nowhere… and you can step off anytime.

“They can’t afford to get off this heroin of property development,” Chanos insists. “It is the only thing keeping the economic growth numbers growing.” But what does Chanos know? He got lucky when he outed Enron. He’s just blowing smoke now… trying to scare everyone about a property bubble in China… pfff, whatever, Jimmie.

  Last, we cannot believe a barbarous relic like gold is at a four-month high today. At $1,165 this morning… it’s as if the people of the world are losing faith in the longevity of fiat money. Why now, with global economies so robust and awash with cash?

Crazy old coot gold bugs…

  “Hey, come on, now, China isn’t 8 feet tall,” a reader writes, agreeing with that maniac Chanos. “They have a horrible demographic problem 50 times worse than our baby boomers, due to one child per family and tens of millions of unmarriageable men in the next decades (the government needs to open a brothel chain there, or is that for the bourgeoisie?), desertification, pollution — all of those ‘externalized’ costs are coming back to bite China (and the world) in the rear. China has tremendous internal tension: The wheat eater Hans hate the rice eater Cantonese; restive Muslims; the coast prospers while the interior dries up. They spend 10% of GDP to protect the CPPRC and keep it in power.

“I would sell them short — not soon, but 20 years from now, China will collapse.”

The 5: We can see we’ve got our work cut out for us convincing all you hysterical alarmists who’ve been reading The 5. This really is a “goldilocks economy”… China included… not too hot, not too cold.

  “Regarding the Canadian new housing bubble,” another writes, referring to Friday’s 5, “the main cause, as many of your readers may know, is record-low mortgage rates, thanks to the bank of Canada. Combine that with other government stimulus, such as home renovation tax credits, 5% down payments and the fixation Canadian baby boomers have for homes and this is what we get. Of course, it will all end in tears in a few short years, maybe just in time for my kids to buy their first home.

“Incidentally, the unemployment rate here in eastern Ontario just rose to 9.6%, according to the local media. The high Canadian dollar is adding to the effects of the recession in this and other parts of the country by pressuring manufacturers who export. Of course, they lobby the government to keep interest rates down, which feeds the housing bubble (see above).

“Keep up the good work at The 5.”

The 5: Thanks, we will… but you’re way off, pal. Government knows best. America’s housing administration sponsors 3.5% down payments and gives homebuyers 8,000 free dollars. That kind of advanced policy thinking is why you Canadians will always be living in our shadow.


Addison Wiggin

The 5 Min. Forecast

P.S. I.O.U.S.A.: Solutions was aired on CNN this weekend, mostly to deaf ears. “No one watches CNN anymore,” say the progressives, who were mounting a campaign to stop the network from broadcasting the film.

For our part, we were invited on The Big Money Show, hosted by our friend Steve Cordasco, to discuss it. Just before us? Roger Hickey — the man who called I.O.U.S.A. “deficit hysteria” and lying “propaganda.” (Check out the interview here.)

Judging by Steve’s conversation with him, he hasn’t even seen the film. For all the stones he’s thrown, he didn’t even know who made it… or that it advocates getting health care costs, among other spending, under control. And reform of a tax system that pays out to 40% of the nation’s citizens, rather than collecting anything from them.


“The result,” says a Yahoo Finance write-up of the report Bill Bonner was complaining about above (which was also cited by Steve on the show) “is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10% of earners — households making an average of $366,400 in 2006 — paid about 73% of the income taxes collected by the federal government.

“The bottom 40%, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.”

Viva, la recovery!

P.P.S. We have a few thousand copies of our unique Agora Financial edition of I.O.U.S.A. left from our transaction with the Peter G. Peterson Foundation. You can get a copy for free, right here. Well, not really “free,” of course… but a gift to you, from your alarmist, subversive, right-wing conspirators at The 5. Cheers.

P.P.P.S. Thanks to Ian Mathias for contributing a commendable level of sarcasm to today’s 5.


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