Porter's Making His List... and Checking It Twice

'A debt jubilee is the only way to avoid a depression'... The Fed and Congress' Jubilee-like behavior... The stage was set... Why a pandemic started it... Porter's making his list – and checking it twice...

We couldn't make this stuff up if we tried...

The headline of an opinion column on the Washington Post's website on Saturday read: "A Debt Jubilee Is the Only Way to Avoid a Depression."

We've heard this one somewhere before...

Our founder Porter Stansberry has been banging the drum for years to alert everyday Americans about the (now obviously apparent) fragile condition of our financial system...

Longtime Digest readers know Porter wrote an entire book, The American Jubilee, about all the dangers lurking beneath the surface that have now reached the mainstream amid the COVID-19 pandemic.

For years, Porter has called this situation a national "nightmare" and talked about the resulting financial system "reset"...

Specifically, he has shown how today's environment paralleled the times leading up to previous "Debt Jubilees," like the one in 1933...

Then, in the throes of the Great Depression, America experienced a rise in "populism" in society, rock-bottom interest rates, and tremendous wealth inequality... And it has been the same story in the past decade after the 2008 financial crisis.

Importantly, Porter has also detailed how readers can protect and even grow their wealth in times like these... and that's exactly what he's doing again this Thursday in a special, free event.

Click here to sign up to make sure you don't miss it... The action starts promptly at 3 p.m. Eastern time.

This feels like a 'crisis of epic proportions'...

Before you read the Washington Post column (apologies if you have already), we'll remind you that as far back as 2015, Porter said that within five years we'd see a "new crisis of epic proportions."

He added that the way we live, work, travel, retire, invest... everything is going to change. Some of it in ways we would never expect.

As we sit here, holed up at home and staying six feet away from people outside amid the world's first pandemic in a century, Porter's words sure ring prescient – even if no one could have imagined things playing out this way...

Porter took the idea further in recent years by describing in detail the idea of a Debt Jubilee... about how governments, over centuries, have wiped a heavy debt slate clean for their people – and not without consequences, of course...

We suggest reading a pair of Digest Masters Series essays here and here authored by Porter on March 24 and March 25, 2018.

In these essays, adapted from the first chapter of The American Jubilee, he describes why a "jubilee" was likely to happen in the current context, which he compared to the Great Depression era...

What we're experiencing today is eerily similar to what happened in the 1930s... right before the biggest and most radical Debt Jubilee in American history.

The economic comparison is stunning.

Interest rates hit zero leading up to each of these periods...

The government went into mega money-printing mode during both periods...

Printing money caused the stock market and other risky assets to boom during both periods... boosting the wealth of the rich, but doing nothing for the poor...

The stage was set for America's 'next Debt Jubilee,' Porter said...

Much like in the March 17 Digest when we wrote, "It feels like there's two different economies running at the same time," Porter continued in The American Jubilee...

We are living in a world of two different Americas. For the wealthiest 40% of the population, life is good. Asset prices are rising... and wages are finally starting to increase.

For everyone else, life is getting worse...

For the bottom 60% of America, consumer debt is high and wages are stagnant. Most of these folks would have difficulty raising even a few hundred dollars for an emergency.

These folks have less than $20,000 on average saved for retirement. Physical and mental health is deteriorating. And death rates are soaring. Premature deaths are up by 20% since 2000.

After understanding this, it makes a lot of sense that a pandemic sparked the fastest bear market ever...

Think about what has happened over the past few weeks...

Those of us who can work from home still are – as long as we can find some time among dealing with children, family, and eating and drinking – but "normal" business in the so-called "real" economy is upside down.

One-third of the country's population is literally on lockdown. We're seeing massive impacts on airlines... restaurants... tourism... and sports. Anything "in person" is just not happening. Gross domestic product ("GDP") is expected to tumble in the high double-digits.

In the meantime, the health care sector – which makes up roughly 20% of American GDP on its own – is under incredible stress. And as our colleague Thomas Carroll noted in the March 13 Digest, this outbreak should only serve as a "fire drill."

That's bad news, considering I (Corey McLaughlin) heard from a nurse working in a major New York hospital who described the scene there as "apocalyptic."

Perhaps a better way would have been to test many, many more people earlier and quarantine those who tested positive for up to three weeks. (The virus apparently lived on the Diamond Princess cruise ship for up to 17 days after passengers disembarked.)

But what do we know?

We don't think many people could have predicted exactly how our leaders and decision-makers would react to the pandemic. And we don't think anyone could have imagined our politicians and workplaces telling most of us to stay home for at least a few weeks.

But as we begin to look back, financially speaking, America's Federal Reserve-juiced way of doing business – stemming from the financial crisis of 2008 and 2009 – wasn't prepared to survive the sort of supply and demand shock we've now seen from the COVID-19 pandemic...

Corporate America's reliance on debt, like aircraft maker Boeing (BA) for instance ($27 billion in outstanding debt and rising), means any disruption of regular cash flow has the potential to create widespread bankruptcies – and threaten the livelihoods of millions of Americans – as stock prices crash.

Today, we're effectively in a recession and, just as Porter predicted, the federal government has stepped in to treat COVID-19's economic symptoms in unprecedented ways.

Porter wrote in The American Jubilee about how the calls for debt forgiveness for most Americans on "Main Street" were likely to grow in the next crisis...

The federal government is free to print all the money it needs to pay government debts. Private households are different.

The only ways out of private debt are to pay it, to default, or to have it forgiven with a Debt Jubilee.

Today, America's low-income households don't have the funds to service the money they owe. It's mathematically impossible. And politicians will never allow tens of millions of our poorest citizens to go bankrupt.

Seeking a 'cure,' the Fed has fired the 'bazookas' – and somehow, Congress has managed to do the same...

Yesterday, we said the central bank has gone "to infinity and beyond," to quote the fictional Buzz Lightyear character in the classic animated Disney (DIS) movie Toy Story.

As our colleague and DailyWealth Trader co-editor Drew McConnell wrote this morning, one of the Fed's five voting members, Neel Kashkari, said in a nationally televised interview Sunday night that the central bank has the power to print money into the ether...

"There's an infinite amount of cash at the Federal Reserve," Kashkari told 60 Minutes' Scott Pelley. "We will do whatever we need to make sure that there's enough cash in the banking system."

As Drew noted, this "money from nothing" idea will eventually have consequences, like inflation, but the bank is only thinking about the now...

To help stabilize the economy during this coronavirus crisis, some folks expect the Fed will print a total of more than $10 trillion. Whatever the number is in the end, it will be a lot. And we already know at least one of the outcomes...

Printing new money devalues the dollars that are currently in circulation. At some point, it's almost guaranteed to cause inflation. The prices for just about everything will go up.

But that's the last thing on our leaders' minds right now. With the U.S. economy basically at a standstill, they're far more worried about deflation – or prices dropping – due to lack of demand.

It's easy to forget, but the Fed has two mandates from Congress... 1) maximizing employment, and 2) maintaining "stable" prices for the goods and services we all purchase (and indirectly, moderate long-term interest rates).

Those mandates were made law in the Federal Reserve Act of 1977, as the country dealt with "stagflation." As Porter wrote in the September 22, 2017 Digest, that just so happens to be only six years after the U.S. last experienced a Debt Jubilee in 1971...

That's when Nixon repudiated our government's debt by abandoning the Bretton Woods gold-standard system and telling our creditors, who had been promised payment in gold, to "go pound sand."

Since then, total debt in America has soared from around 100% of GDP to close to 400% of GDP. Many of you can remember the 1970s. The violent protests. The soaring inflation. The feeling that the country was coming apart at the seams.

Well, this time will be about four times worse. The jubilee is coming. And you'd better get ready for it.

Porter ended with, "Keep a copy of this Digest filed away... Share it with your friends. And remember where you first heard about the coming jubilee."

Today, Congress has now stepped in with the Jubilee-like promises to the American public...

The full text of the arrangement hasn't been released yet as we write, but the virus-related stimulus package is expected to total $2 trillion. And according to reports, the framework will include...

• Direct payments of $1,200 to most individuals making up to $75,000, or $2,400 for couples making up to $150,000. The amount decreases for individuals with incomes above $75,000, and payments cut off for individuals above $99,000.

• Expanded unemployment benefits that boost the maximum benefit by $600 per week and provide laid-off workers their full pay for four months

• $367 billion in loans for small businesses

• $150 billion for state and local governments

• $130 billion for hospitals

• $500 billion in loans for larger industries, including airlines

• Creation of an oversight board and inspector general to oversee loans to large companies

• Measures prohibiting companies owned by President Donald Trump and his family from receiving federal relief

Forget for a second if $1,200 or $2,400 is enough money to get everyone through this... especially if many businesses are essentially shut down longer than imagined. (Will we get another round of stimulus if the virus endures into the summer months?)

But during the negotiations, we also saw reports of partial student-loan forgiveness at least being part of negotiations. That's a hallmark of a jubilee.

The point is, considering the debt-loaded state of our economy – and all other major ones around the world – it's reasonable that we hear more calls for policies like these in the weeks and months ahead...

After all, the Fed apparently has a blank check and is not afraid to use it.

If you've followed Porter's guidance over the years...

You know that in 2000, he predicted the dot-com bust... And that in 2008, he predicted the collapse of mortgage lenders Fannie Mae and Freddie Mac.

And you know he hasn't only offered up these ideas and warnings about a coming jubilee... He has also provided guidance on how to survive it.

It's what he wrote about in his book, The American Jubilee. The ethos at the heart of his book informs many of the investment picks of our editors and analysts in various publications.

Longtime readers know Porter is most interested in "capital efficient" companies...

These companies won't need bailouts. They're healthy enough to make it through times like we're seeing today. These companies keep providing wealth for their investors in good times and bad... forever.

Today, those beliefs haven't changed at all... In fact, in a way, what he'll explain during his special presentation on Thursday afternoon is the culmination of his life's work.

We can't give away too many details about Porter's presentation here, but we do know he believes there's potential for the market to rebound quicker than many experts expect...

And there's a select group of investments you'll be happy you owned when that happens. In short, Porter is making his shopping list... and, excuse the pun, checking it twice. On Thursday, he'll tell you what he plans to do with $1 million of his own money right now.

For all these reasons and more, we urge you to check out Porter's free presentation at 3 p.m. Eastern time on Thursday. (And Stansberry Alliance members, watch your inbox over the next day. We'll send you all the details in an e-mail.)

We're now less than 24 hours away from Porter's event. Remember, it won't cost you a penny to tune in... We only ask that you reserve your spot in advance right here.

New 52-week highs (as of 3/24/20): none.

In today's mailbag, feedback on yesterday's Digest about "the bottom" and COVID-19's possible influence on November's election results... Do you have a question or comment? As always, send your notes to feedback@stansberryresearch.com.

"I just read yesterday's Digest about sentiment and thinking where the bottom will be summary from your editors. Great stuff!

"To support your views I can tell you that over here in Europe things look a bit the same sentiment wise. I try to read a market comment every day written by a 'specialist' who is now 24 years of age and started investing a 'long time ago' as a 13-year-old (out of courtesy I'm not mentioning his name) – so at about the end of the financial crisis and the beginning of the longest bull market ever. This man has hardly ever experienced down days, let aside a bear market.

"With markets up strongly last Monday and yesterday this analyst boldly wrote that the 'bottom bell had sounded.' So my take is that the real bottom will be reached when this person starts writing after a surge of one or two days that it is no use to start buying because stocks will never go up again. Remember the famous 'Death of Equities' cover in the Eighties?

"I will keep you up to date when there are important indications over here." – Paid-up subscriber Ludo G.

"If Wuhan virus is still hovering around by election time, only the most enthused voters will venture out to vote.

"Who do you think has the most enthusiasm on his side? Trump or Sleepy (and getting sleepier by the day) Joe?" – Paid-up subscriber Gary S.

All the best,

Corey McLaughlin
Baltimore, Maryland
March 25, 2020