What Went Wrong With The 21st Century?

Authored by Bonner & Partners' Bill Bonner, annotated by Acting-Man's Pater Tenebrarum,

Fools and Rascals

And it’s time, time, time

And it’s time, time, time

It’s time, time, time that you love

And it’s time, time, time…

– Tom  Waits

Tom Waits rasps about time


“So how much did you make last night?”

“We made about $15,000,” came the reply from our eldest son, a keen cryptocurrency investor.

“Bitcoin briefly pierced the $3,500 mark – an all-time high. The market cap of the entire crypto market shot up, too… with daily trading volume also rising.

“And remember, this is still a tiny market. Most people don’t own any crypto-currencies. Most people don’t even know what crypto-currencies are. The whole market is only one sixty-fifth the size of the entire gold market. There’s a lot of room to grow. Eventually, everyone will be using cryptos.”


Bitcoin is going bonkers again – from a technical perspective, it has just overcome another major resistance level. The chart is highly reminiscent of the chart of gold in the late 1970s (see further below) – click to enlarge.


The rise of cryptocurrencies is our subject for this week. According to our source, cryptos are not only the most profitable investment in the history of mammon…  but also the most important innovation in the financial world since King Croesus minted the first gold coin in Lydia, in modern-day Turkey, nearly 3,000 years ago.


Lydian gold stater minted under King Croesus ~540 BC.


We have been connecting the dots. Between money and economic growth. Between real money and real resources. Between gold and crypto-currencies. Between gold, crypto-currencies… and time.

Today, we stand back – and our mouth drops open as we behold a bigger picture – a breathtaking tableau worthy of Bruegel or perhaps Bosch. Yes, there are the sinners and the saints, the fools and the rascals, the blessed and the damned. All there.

The scene brought to light by the latest connecting of dots answers the No. 1 economic question of our time: What went wrong with the 21st century? The simple answer: Economists backed a truck over it.


Gold in the late 1970s: the chart pattern is eerily reminiscent of the one that has formed in BTC over the past few years. Of course, bubble patterns almost always display certain similarities, but they are particularly conspicuous in this case (if one zooms further out and includes the rally into the initial gold peak in 1974 and the subsequent mid-cycle correction into 1976, the similarities are even more striking – we will show such a longer-term comparison in an upcoming post) – click to enlarge.


Flaming Dud

To bring readers fully up to speed, the 21st century has been a flaming dud. In practically every way. Despite more new technology than ever, more PhDs, more researchers, more patents, more earnest strivers than ever before sweating to move things ahead…

And despite more “stimulus” from the Fed ($3.6 trillion) than ever in history, U.S. GDP growth rates are only half of those of the last century. And household incomes, after you factor in inflation, are flat.

In fact, by some calculations – using non-fiddled measures of inflation – growth has been negative for the whole 21st century. Meanwhile, there are more people tending bar or waiting tables… and fewer people with full-time breadwinner jobs. And productivity and personal savings rates have collapsed. And those are only the measurable trends.

Political and social developments have been similarly dud-ish – including the longest, losingest war in U.S. history,  the biggest government deficits, the most vulgar public life, the least personal freedom and, in our hometown, Baltimore, a record murder rate.

What went wrong? Herewith, a hypothesis. It suggests three “causes,” all three linked by a single shared element: time.


From the valuable possessions department: Time


Elastic Measure

First, we no longer have real money. We have been operating with the feds’ fake dollars since 1971, when President Nixon finally took the U.S. off the gold standard. These fake dollars have no connection to time.

They are unlimited in supply, unrestrained by available resources, and unhinged from the real world. Like an elastic tape measure, they give you no way to honestly or accurately measure value.

So mistakes, misallocation of resources, and claptrap projects waste time and resources.

Some examples:

  1. On Main Street, malls got overbuilt – as retailers expanded with cheap credit to sell products to consumers who couldn’t afford them.
  2. On Wall Street, private equity hustlers and corporate insiders borrowed heavily at ultra-low rates, paid themselves huge fees and bonuses and left their businesses to go broke (Sears…  Payless).
  3. In Washington, the Deep State used fake money to transfer real wealth to itself, its clients, and its cronies (defense contractors, Big Pharma, insurers, even private prison operators). The federal government is now looking at average deficits of $1 trillion a year over the next 10 years – which would have been impossible to fund with real money.


Mountains of debt and not much to show for it – click to enlarge.


Second, we have too much debt. The consequence of having an almost infinite amount of “money” to lend at derisorily low rates is that you end up with a lot more debt. Consumer, business, and government debt, even stock market margin debt, are at or near record highs.

Debt is a burden that the past imposes on the future. As the weight increases, it becomes harder and harder to move forward. (In their book This Time Is Different, Harvard professors Rogoff and Reinhart showed that as debt increases, growth declines.)

Third, we waste too much time. Internet revolutionaries had scarcely found their pitchforks when – in these very pages – we wondered whether the innovation would turn out to be a great boon to the economy or just a time waster like TV.

Now, 20 years into the Internet Era – with all its POTUS tweets and Facebook whistles – we can see it is a bust. At least for economic growth. The average Joe now spends 5.6 hours a day consuming digital media (that’s in addition to the five hours he spends watching TV!).

Is he learning how to increase productivity? Is he sharpening his masonry skills? Is he studying ancient Greek or brushing up on his calculus? Nah… he’s on a porno site. Or a political rant on Twitter. Or a Facebook blab-fest.

And precious time goes by.


Wasting time on the intertubes… far right: wasting time before the advent of the internet


Ultimate Constraint

Fake money causes people to waste time and money. And central bank policies discourage savings by lowering interest rates – even pushing them into negative territory. Instead of saving them for the future, resources are consumed today.

These mistakes accumulate as debt, which then forces people to spend more time servicing the mistakes of the past. Meanwhile, the internet gives people a new way to waste time. At home. At work. On the high plains. Or in the lowlife back alleys. People spend their precious time on idle distractions and entertainments.

That leaves fewer people doing the real work that progress requires – saving, investing, and working for the future. Time is always the ultimate constraint. You can substitute one resource for another. You can switch from oil to solar, or copper to aluminum. But there’s no swapping out time.

There’s nothing like it. Get on the wrong side of time, and you are out of luck.



VD (not verified) Philo Beddoe Thu, 08/10/2017 - 09:37 Permalink

wait till quantum computers crack buttcoin while central banks pull out their fiat from thin air to teach the debt-slaves a lesson...there's a reason gold has been used as money for over 6k years, and every hundred or so there's that "game changing" innovation, but this time it's different in crypto. 

In reply to by Philo Beddoe

ThirteenthFloor JRobby Fri, 08/11/2017 - 00:14 Permalink

++. Yep.

It took JFK about 20 months to understand the corrections needed.

1) issue silver certificates instead of FRNs
2) get the CIA back to its charter
3) severely cut income taxes on the working force
4) reduce military spending and shrink the MIC

It took the CIA only 10 months to devise a plan to kill him, and stop the US from that treacherous(/s) path Jack was taking us down.

In reply to by JRobby

The Cooler King (not verified) Thu, 08/10/2017 - 09:12 Permalink

So I guess, since the bitcoin market is "so small" and therefore "has so much more room to run", the natural solution is for every man, woman, & child, to max out the credit card right now and BUY 1 bitcoin each. Watch the price rocket to the moon, and then have EVERYBODY pay off their portion of the $20 trillion national debt. I doubt anyone would be bothered by that because, naturally, bitcoin was created by egalitarian 'do gooders' whose only desire was to level the playing field against those evil GREEDY banking cartels. NOBODY who buys bitcoin is greedy in any way. Voila! Problem solved! Maybe we could build a few DEATH STARS with the excess proceeds and blow ourselves (& Mars) up before Elon Musk even gets there. So easy, a caveman could do it! #WINNING!

Apocalicious The Cooler King (not verified) Thu, 08/10/2017 - 09:13 Permalink

While facetious, I can tell you as I age, the thought of buying lots and lots of inflation sensitive (i.e. things that go up when the value of money goes down) on debt becomes more appealing. If it works, I win. If it doesn't the banks lose, which means I still sort of win. Frankly, I'd rather die with loads of debt that banks have to eat - and enjoy the ride - then live like a pauper and leave my kids ten grand, after taxes and funeral expenses. Plus, a foreclosure is soooo much easier to deal with than estate sales and clearing out all my shit.  

In reply to by The Cooler King (not verified)

FreeNewEnergy Apocalicious Thu, 08/10/2017 - 09:45 Permalink

I upvoted you because that's what I've been thinking, and, to some extent, doing.Got a bunch of credit cards and a settlement on the fake foreclosure of my deceased father's house (he died in debt, but with lots of "things"), bought some land, silver, lots of useful things, and skedaddled to flyover country. Just bought a 35" camper to go with my 29" motorhome. Buying more solar panels, too, before the rush.Still buying silver using 0% interest credit and rolling it over. It's a plan. Bankruptcy is a plan. Complete financial collapse is a plan. I figure, if the global economy goes completely tits up, the small amounts I owe on 15 credit cards wouldn't even be worth contesting in court for the big boyz, considering how many people with $60k or more in debt they'd be trying to chase down.The difference, for me, is that I have land, water, and woods, so I can grow things, water them (and myself if need be), and supply heat from downed trees. Most other people are vastly different. They get their food from a grocery store. Water and heat come from public utilities.

In reply to by Apocalicious

Lucretius FreeNewEnergy Thu, 08/10/2017 - 12:30 Permalink

Wise move in my opinion. I just picked up a teens/twenties 4 cyl. International w/magneto ign, with a 7500kw alternator hanging on the end... After a bit of love and labor, and a propane conversion, I'm my own utility! Thats enough power to run my tiny kingdom,well, shop, etc, and maybe a neighbor, if they are really REALLY nice to me. Bitchez!
There is no point in saving. I'm trying to use everything up NOW, "Sustainable", save the planet my AZZ!
You never own anything, you just get to rent it from the state .

In reply to by FreeNewEnergy

Reichstag Fire Dept. The Cooler King (not verified) Thu, 08/10/2017 - 10:42 Permalink

As a Libertarian, I see only one problem with your plan...Taxation is theft and is used to pay for the interest said "National Debt". ALL government spending is "new" spending with newly printed money.Refuse to use the little green cash debt notes and it's over right there!Use some other kind of medium of exchange.Disclosure: I stack gold but I'm not against crypto...just an alternate medium of exchange...if I could find a way to get paid in either, I would do it.

In reply to by The Cooler King (not verified)

falak pema Reichstag Fire Dept. Thu, 08/10/2017 - 11:17 Permalink

taxation is no moar theft than Kings and Popes filling their own pockets and Capitalist monopolies or oligopolies skimming off the top of a so called "free market"; in fact a front run racket where all true competition is not allowed.At least the taxes are justfied in a place of debate where the arguments and trade-offs and reasons for redistributive mechanisms of taxation are made PUBLIC to those who vote for the legislators.In the case of Capitalism the scam is opaque and protected by corruption of the elected; time and again. No debate and no transparency; just strong armed private law and graft.How can any adult talk such fact proven fallacy like it were printed in concrete of timeless truth, all in the name of a vacuous philosophy called "libertarian"... A libertarian who denies reality ? Having said that : excessive taxation is a crime against the people as much as excessive corporate crony front run profit making off the top.Its two of a kind.Only way out : open debate and reform of the legislative/executive/judicial systems of we the people. If not, may the devil take u.

In reply to by Reichstag Fire Dept.

A. Boaty Thu, 08/10/2017 - 09:10 Permalink

In April, 2005, Dr. Michael Burry invented the credit default swap on sub-prime mortgage bonds. The rest looks like footnotes and commentary.

shizzledizzle Thu, 08/10/2017 - 09:10 Permalink

Central Bank Intervention for $500 alex. I'm thinking that when things start to head south the SNB is going to unwind their $80 something billion in holdings as rapidly as possible (not to mention other central banks) and the narrative from the FED will be "We HAD TO jump in and buy those assets (stocks). Never mind that we have been buying them for the past 8 fucking years off the record but now we have admitted it. Our hand is forced by our other stupid hand. SInce everyone now knows this there is no need to look at our balance sheet in detail. Yours in christ, Janet Yellen

WallHoo Thu, 08/10/2017 - 09:13 Permalink

The same thing that went wrong ever since the end of the middle ages(somewhere around 1600s). A debt based economy... Everything else is a silly rhetoric for the left-right  armies...

SillyWabbits Thu, 08/10/2017 - 09:24 Permalink

It’s time to wake up! That’s what time it is. Libertas, Fraternitas, Equitas! For whom? Who promotes it? Who practices it? Are there hypocrites? Who are they?

falak pema Thu, 08/10/2017 - 09:43 Permalink

What went wrong with the 21st century from your perspective is :  that "towering colossus" that heralded the NWO-- to force manu militari regime change on others and to crow over the world like it were its own oyster--now looks like the Colossus of Rhodes...One of the seven wonders of the Old Western order : Pax Romana, Pax Byzantium, Pax Francorum, Pax Espagna, Pax Francaie-Pax Napoleon, Pax Britannica... now Pax Americana.Looks like its time for an Asian Pivot! The sons of Gengis Khan !Yikes! But that is how the wheel of fortune turns! What we sow we now reap in western lands.But coming back to Croesus and the first golden coin he minted--I wrote on that score here at the Hedge--I also pointed out what Solon said to Croesus when he got cleaned out by Cyrus on his rise to ruling the ancient world : all that glitters is not gold buddy, we greeks know that and we have as antidote our belief in Laws and in Logic and in self defence... it will challenge both the Imperial wishes of Cyrus, as the greed of your own strain...I am sure History will prove that! Solon needs to rise once again in the West. Not a Croesus clone called the Duck !And don't blame the economic shamans, they were just providing the justification for their Masters of Universe...Friedman and Nixon etc.

John Humphrey Thu, 08/10/2017 - 09:30 Permalink

What went wrong with the 21st century? Very simple answer and obvious to anyone. Western societies let liberals have their way. That's what's wrong. Period.