It's Time to Get Real About Your Investments

Thoughts from the Frontline

CleaningOuttheAttic
BYJOHNMAULDIN

JUNE6,2015

ASixPointPlantoRestoreEconomicGrowthandProsperity
CleaningOuttheAttic
RestructuringtheTaxCode
Designinga21stCenturyGovernment
MoreThanJustDrillBabyDrill
TheresaLotMore
NewYork,Maine,andBoston
ThreeweeksagoIcoauthoredanopedfortheInvestorsBusinessDailywithStephenMoore,founderoftheClubforGrowthandformerWallStreet
Journaleditorialboardmember,currentlyworkingwiththeHeritageFoundation.Ourgoalwastopresentasimpleoutlineofthepoliciesweneedto
pursueasacountryinordertogetusbackto34%annualGDPgrowth.Aswenoteintheoped,StephenandIhavebeenengagingwithanumberof
presidentialcandidatesandwithothereconomistsaroundthetopicofgrowth.
Wespentagreatdealoftimegoingbackandforthonavarietyoftopics,tryingtogetdowntoafewideasthatwethinkmakethemostsense.Ishould
notethatfewpeoplewillreadthepiecebelowwithoutbeingupsetbyatleastoneofoursuggestions.Thegoalwastonotjustlistthestandard
Republicanfixesbuttoactuallycomeupwithaplanthatmightgarnersupportacrossthepoliticalspectrumonwaystoaddressthecriticalproblem
ofhowtogetthecountrybacktoacceptablegrowth.
Partofthechallengewasreducingwhatcouldhavebeenabooktojust800words.Todaysletterwillstartwiththeactualoped,andthenIwill
expandonsomeofthepoints.ReadersandfriendshavebeenpressingmetooffersomeideasastowhatpoliciesIthinkweshouldpursue,sohere
theyare.Ihopetheopedwillcreatesomethoughtfulresponse.Itwouldbeniceifwecouldgetafewcandidatestoembracesomeorallofwhatwe
aresuggesting,even(ormaybeespecially)someofthemoreradicalparts.
(Ihavemadeafewveryminoreditstotheoped.)
ASixPointPlantoRestoreEconomicGrowthandProsperity
ByJohnMauldinandStephenMoore
Thedismalnewsof0.2%GDPgrowthforthefirstquarteronlyconfirmedthattheUSisinthemidstofitsslowestrecoveryinhalfacenturyfrom
aneconomiccrisis.
Coulditbethatatleastsomeoftheragewe'veseeninthestreetsofBaltimoreisaresultofapaltryrecoverythathasn'tbenefitedlowincome
innercityareas?
Weareatleast$1.5trillionayearbehindwherewewouldbewithevenanaveragepostWorldWarIIrecovery.
Whilemanyblamealackofsufficientdemandandeveninsufficientgovernmentspending,ourviewisthattheprimaryfactorsbehindthegrowth
slowdownareanincreasinglyintrusiveregulatoryenvironment,aconfusingandpunitivetaxscheme,andlackofcertaintyoverhealthcarecosts.
Eachofthesefactorshascontributedtoaclimatewheregrowthisslowandincomesarestagnant.Theseareproblemsthatcannotbesolvedby
monetaryandfiscalpolicyalone.
Togetrealgrowthandincreasedproductivity,weneedtodealwiththerealsourceofeconomicprogress:theincentivestructure.
Thecomingpresidentialraceoffersanopportunityforcandidatestoputforthconcreteandcomprehensiveideasaboutwhatcanbedonetocreate
highereconomicgrowthasopposedtoplatitudesandpiecemealideasthatdon'taddresstheentireproblem.
Thetwoofushavemetwithseveralcandidatesanddiscussedtaxreformandothereconomicgrowthissues.Weofferheresomesolutionsofour
ownforthemtoconsider.
1.Streamlinethefederalbureaucracy.Governmenthasbecomemuchliketheneighborwhohashoardedeverymagazineandoddknickknackfor
50years.Theatticandeveryroomarestuffedwithitemsnoonewouldmiss.ThesizeoftheUScodehasmultipliedbyover18timesin65years.
Therearemorethan1millionrestrictiveregulations.
Enoughalready.It'stimetocleanouttheattic.Thepresident,withsomeflexibility,shouldrequireeachagencytoreducethenumberofregulations
underitspurviewby20%,attherateof5%ayear.AndthenCongressshouldpassasunsetlawfortheremainingregulations,requiringthemtobe
reviewedatsomepointinordertobemaintained.
Further,ifnewrulesareneeded,thenremovesomeoldones.Stopthegrowthofthefederalregulatorycode.Wehaveenoughrulestodaylet'sjust
makesurethey'retherightones.
2.Simplifyandflattentheincometax.Maketheindividualincomerate20%(atmost)forallincomeover$50,000,withnodeductionsfor
anything.Reducethecorporatetaxto15%,againeliminatingalldeductionsotherthanwhatisallowedbystandardaccountingpractice.Noperks,
nospecialbenefits.
Further,taxforeigncorporateincomeat5%10%,andletcompaniesbringitbackhometoinvesthere.Thisstrategywillactuallyincreasetax

revenues.
3.Replacethepayrolltaxwithabusinesstransfertaxof15%,whichwillgivelowerincomeworkersabigraise.Companieswouldpaytaxontheir
grossreceipts,minusallowableexpensesintheconductofproducinggoodsandservices.
Nearlyeveryeconomistagreesthatconsumptiontaxesarebetterthanincometaxes.Further,thistaxcanberebatedattheborder,soitshould
encouragedomesticproductionandbepopularwithunionworkerssinceitmakesUSproductsmorecompetitiveinternationally.
4.Providecertaintybykeepingtaxrateslowthroughataxlimitationconstitutionalamendmentthatwouldrequirefuturetaxincreasestobe
passedby60%oftheCongress,incombinationwithabalancedbudgetamendment.
Werealizethatimplementationofthesemeasurescouldbesomewhatjarring,sowe'dsuggestphasingtheminoverfourtofiveyearsmorethan
enoughtimeforeveryonetoadjust.
5.Rollbacktheregulatorystate.Recognizethatmanyfederalagenciesarestillmiredinthemid20thcenturyifnotthe19th.It'stimetodesigna
regulatorysystemthatfostersjobsandgrowthwhileprotectingcitizens.
Let'sstartwiththeeasytarget:theFoodandDrugAdministration.TheUnitedStatesisthewellspringofbiotechnologicalresearch,yetmoreand
moreofouroriginalresearchisbeingtakenoverseasforfurtherdevelopment,producingjobsoutsidetheUS
AbipartisancommissioncandesignanewagencywithanewregulatoryregimeandbringittothefloorofCongressforavote.Insteadofasystem
thatmakesdrugcreationprohibitivelyexpensive,favorsBigPharmaandexportsjobs,let'sharnessthepowerofUSentrepreneurs.
Streamlinetheprocesssohealthcarecankeepupwithresearch,therebyloweringhealthcarecostsandprovidinghealthieroutcomesforeveryone.
Thenstartwiththenextregulatoryagencyuntilallhavebeenupdated.
6.DrillforAmerica'sdomesticenergyandusetheroyaltiesonfederallandstoretirethedebtand/orfundneededinfrastructurerepairinsteadof
raisingtaxes.Anestimated$2trillionofroyaltiesandotherfeescouldberaisedbydrillingonnonenvironmentallysensitivelands,andthiswould
reduceUSrelianceonforeignoilwhilebreakingthefinancialbackofmanyterroristnetworks.
Growthisthesolutiontonearlyeverysocial,economic,andfinancialprobleminAmerica,andwearen'tgettingenoughofit.Thisisaplanthat
putsUScompetitivenessfirstandbringsmiddleclassjobsbacktoAmerica.Weareeagertoseewhichcandidatesineitherpartyembracethis
prosperityagenda.
CleaningOuttheAttic
Letsbeclear:inasocietyascomplexasours,weneedregulations.Weneedregulationsthatprotectconsumersandleveltheplayingfieldforall
businesses.Buteverybodyknowstheregulatorycodehasgoneberserk.TherearerulesonthebooksthatweretherebeforeWorldWarIIandmakeno
sensetoday,buttheyrestillthere.Therearewholedepartmentswhoseonlypurposeistoaccumulatepaperthatprovidesnorealsocietalbenefit.
Ourpurposehereisnottogetridofregulationsbuttomakeusthinkabouthowmanyandwhatkindsofregulationsweactuallyneed.Rightnow,
regulationsnevergoawaywejustaddnewones.Everytimearegulationisadded,somebodyendsuppayingmoremoney.Further,alotofregulation
istherejusttoprotectcurrentbusinessincumbentsandtocreatebarrierstoentryfornewcompetition.Ifyouthinktherepublicisgoingtocrumble
becausewehave20%fewerregulations,theresnotmuchwecantalkabout.

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Thereagain,thepresidentshouldhavesomeflexibility.Maybethenumberofregulationseachagencyisrequiredtoreduceshouldbenot20%but15%,
ormaybeitshouldbe23%.Butletsatleastmakeanattempttorationalizetheregulationswehaveandcreateaprocessforrationalizingthenumber
ofregulationsonanongoingbasis.
Thiswillnotcreateabusinessnirvana,butitwillhelpincreaseproductivityandprofits,whicharetheenginesofgrowth.
RestructuringtheTaxCode
Igetthatourproposalswithregardtotaxesareatadmorecontroversial.Ourgoalhereistochangetheincentivestructure,actuallyincreaseincome
forthebottomhalfofthecountry,andatthesametimemakethetaxstructuremorefair.
Notethatweremovedalldeductionsforeverything.ThereissomethingwrongwithaworldinwhichyouandIpaymoretaxesthanGeneralElectric
does.A15%corporatetaxwillactuallycollectmoretaxes,whencoupledwitha5to10%taxonoffshoreincome,thanwearecurrentlycollecting.
LarryLindsaywilltellanyonewhowilllistenthatwecouldgetridofallothertaxesifwewenttoa21%valueaddedtax,andwewouldproducethe
sameamountoftaxrevenue.Thinkaboutthatforamoment.Noincometaxes,nocorporatetaxes,noMedicaretaxes,noSocialSecuritytaxes.No
tariffs.Nothing.
Inaperfecteconomicworld,Iwouldadoptthatplan.Consumptiontaxesarefarmoreeconomicallyefficientthanincometaxes.
Butinourdiscussionwithavarietyofplayers,wefoundthattheappetiteforgettingridofallincometaxesisjustnotthere.Soweoptedforaflattax.
Thehigheryoumakethebusinesstransfertax,theloweryoucanmaketheincometax.TherearesomedifferencesbetweenaBTTandaVAT,butthey
arecousins.

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ButwhatourproposaldoesisallowfortheeliminationofSocialSecuritytaxesonboththepartoftheemployeeandtheemployer.Thiswould
essentiallygivea6.2%raiseonthefirst$118,000ofincometoeveryworkerinAmerica.TheamountsbusinessesdontpayfortheirportionofSocial
SecuritytaxeswillhelpoffsettheBTTtheywillpay.
StephenandItoyedaroundwithmakingthetaxonincomefrom$50,000$100,000aflat10%,risingto20%above$100,000.Icouldlivewiththat
orjustnothavetaxesstartuntilyoumake$100,000.
Thepointofsettingcorporateandincometaxesatsuchalowrateisthatiteliminatestherationalefordeductions.Youdontneedamortgage
deductionifyouremakingover$100,000andonlypaying20%.Gettinga20%deductionisnotgoingtomakeyoudonatemoneytoacharityforthe
taxbreak.Therearesome3200+taxloopholesforcorporations.Someofthoseloopholesapplyonlytoonespecificcorporation.Howwrongisthat?
Weneedtogetthegovernmentoutofmicromanagingtheeconomy.Shutdownalltheloopholes.Period.
TheaverageRepublican,myselfincluded,willrebelagainsttheideaofcreatinganewtax(thebusinesstransfertax)thatwouldbeeasyforDemocrats
toincreasewhentheygettheopportunity,whichtheyinevitablywill.
So,ifRepublicansgiveDemocratssomethinglikeaBTT,theDemocratscangiveus,asapartofthedeal,aconstitutionalamendmentthatlimitsthe
abilitytoraisetaxesandrequiresabalancedbudget.Ifonesideortheothercanget60%ofthevoterstoagreetoraisingtaxes,thenmaybeweshould
dothat.Andifwerequireabalancedbudget(takingintoaccountthatthegovernmentwillrunadeficitduringrecessions,sothatadjustmentshaveto
bemade),thenCongresswillbeforcedtoconstructabudgetbasedonouractualincome.
Whilewedidnthavetimetogointoitintheoped,theincentivestructureforDemocratstogoalongwouldbethatintheinitialnegotiatingphase
therewouldbesomeflexibilityinsettingwhatthepercentageofincometaxedbytheBTTwouldbe.Youcouldevenhavesomeflexibilityintheflattax
levels.
WhileraisingtaxesisanathematoStephenandtomanyotherconservatives,Ipersonallywouldbewillingtopay12%moretaxinexchangeforan
amendmentthatwouldgivemecertaintyaboutthefutureofmytaxes.
Thatextrarevenuecouldgoalongwaytowardmakinghealthcaremoreavailable,too.ThisofcourseassumesthattheUScontinuestoprovideasafety
netforallofitscitizens,thatwesomehowfigureouthowtodealwithhealthcareandawaytopayforit,bothnowandinthefuture.Welfare,
disability,andothersocialsafetynetprogramswouldnotbeaffectedbythesesuggestedchangesintaxes.

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TheBTTandtheflatincometaxwouldnotgettriggereduntiltheconstitutionalamendmentpassed.Bothsideswouldgetsomething,andthe
economyofthecountrywouldbemuchbetteroff.
Whilewementioneditjustinpassing,IshouldbringupagainthebenefitstotradeandexportsofaBTT.AswithaVAT,theBTTtaxcouldbe
reimbursedwhenaproductcrossedtheborder,thusmakingourproductsmorecompetitive.Thatisgoingtobecomecriticalasthedollarbecomes
strongerovertime.Thereareanumberofeconomistswhobelievethatsuchastructurewouldbeahugeboosttoexportsandjobs.
Designinga21stCenturyGovernment
Muchofourbureaucracyismiredinthemiddleofthelastcentury,regulatingproblemsthathavelongbeensolvedandnotkeepingupwiththe
dramaticchangesintechnologyandcommercethatareoccurring.Asmentionedabove,theFDAisaprimeexampleofanagencythatneedstobe
reformed.Itshouldberedesignedandthenreplaced.Iadmitthisismypersonalhobbyhorse,asIamintimatelyinvolvedwithanumberofnew
biotechnologycompaniesthathavethepotentialforcreatingtrulyrevolutionaryhealthcarechangesandthatarespendingasmuchormoretime
navigatingthemazesoftheFDAastheyareresearchingnewcures.
TheFDAisdesignedtoimpededrugdevelopmentandhasalltoooftensloweddownthedevelopmentofnewcuresandtreatments.Itnowtakes15
years,onaverage,fortheagencytoapproveanewdrug(perNewtGingrich).Withalltheadvanceswevemade,weareintroducingnomoredrugsper
yearnowthanwedid25or30yearsago.
Thisisthesameagencythathasapprovedmorethan10multibilliondollarblockbusterdrugsforBigPharma,onlytohavetowithdrawtheir
approvallater.Justbecausetheyapprovesomethingdoesntmeanitsactuallysafe.Wewouldbefarbetterofftohaveacompletelyopensystem,with
everybitofdataavailableonline,sodoctorsandpatientscouldmakeinformeddecisions.
Alzheimersisgoingtocostsome$20trillionoverthenextthreeorfourdecades.Iknowofhalfadozencompaniesthataretantalizinglyclosetoa
cure,andoneortwothatIwouldactuallyputmoneyinto.Mostarenowhereclosetogettingapprovalforhumansafetytrialsofdrugsthatare
intuitivelyandobviouslysafe.
Withamorerationalprocess,onethatputsdoctorsandpatientsincontrolratherthanbureaucratswhoaretryingtoprotecttheirjobsandpersonal
fiefdoms,wecouldlowerthetimeandcostofbringingnewdrugsandcurestopeoplewhodesperatelyneedthem.Ifwerationalizedthecostofdrug
development,100entrepreneurialfundswouldformlookingtodevelopthenextnewdrug.Further,nichedrugsthatmighthaveonlya$200million

marketratherthana$2billionmarketmightgetdevelopedratherthansetaside.

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DontevengetmestartedonthestupidbiasagainstantiagingresearchattheFDA.TheFDAdoesnotseeagingasadiseasethereforetryingto
developadrugtocureitisnotintheirwheelhouse.Stemcelltherapiesthatcangiveyourenewedorgans?NotgoingtohappenintheUSunlesswe
changethings.Whatsgoingtohappenisthatweregoingtoendupshippingthesetechnologiesoffshore,becausethatstheonlywayUS
entrepreneurswhoaredevelopingthemwillbeabletobringthemtomarket.
Seriously,thesciencechangesalmostmonthly.Howcanyouexpectastemcellresearchertohonestlylockdownhisbreakthroughin,say,the
rejuvenationofthehumanheartandthennotwanttoupdatehistechniquesixmonthslaterasaresultofevenbiggerinsights?Thetechnologyis
movingfasterthanbureaucratscanregulateit.Theprocessasitcurrentlystandsensuresaregrettableoutcome:technologythatcansaveourlivesgets
touslaterthanitshouldorneverreachesusatall.
Iammostdefinitelyinfavorofadrugregulatoryauthority.Itisabsolutelycriticaltothesafetyofthepublic.Butweneedtodesignonefromscratch
thatiscapableoffunctioningintodaysscientificworldanddeliveringdrugsandtherapiesinatimelyandcosteffectivemanner.Thatiscertainlynot
theFDAoftoday.
JapanhasalreadygonealongwayinallowingstemcelltherapiestoadvanceafterwhatisessentiallyaPhase1trial.Yetthevastmajorityofallthe
intellectualpropertyonstemcelltherapiesoriginatesintheUnitedStates.EntrepreneursaregoingtomigratetoJapanbecausethatswheretheycan
actuallybegintomakeadifference.WhatwillhappenisthatwewilltrainJapaneseresearchersinthetechniquesofdevelopingstemcelltherapiesfor
antiaging,andthoseresearcherswillstartnewcompaniesandcreatejobs.Prettysoonanindustrythatshouldhavecreatedmillionsofhighpaying
jobsintheUSwillbelocatedinJapanandtherestofAsiainstead.Allbecauseourbureaucratsareinlovewiththeir19thcenturydrugregulatory
modelandtheirfiefdoms.
Everybodyhasafavoriteagencytheywouldliketoseereplacedwithamodernversion.Frankly,everyregulatorybodyshouldberethoughtfrom
scratchinthelightofthe21stcenturyandtechnologicalchange.Weshouldbeinthebusinessoftryingtoencourageentrepreneursandbusinessesand
guidingthemeffectively,whilemakingsuretheystaybetweenthewhitelines.
MoreThanJustDrillBabyDrill
Finally,Anestimated$2trillionofroyaltiesandotherfeescouldberaisedbydrillingonnonenvironmentallysensitivelands,andthiswouldreduce
USrelianceonforeignoilwhilebreakingthefinancialbackofmanyterroristnetworks.
TheUnitedStatesisclearlyonapathtoproducingthemajorityofourenergyfromrenewableresourcesatsomepointinthefuture.Iapplaudthat
trendandthinkweshouldallworktomakethathappen.Butinthemeantime,naturalgas(andnuclear)canhelpusproducethepowerweneedina
muchmoreenvironmentallyfriendlyway.Andnaturalgasispartoftheequationforfuelcells,whichwillbeahugegamechanger.

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ThereisamazingamountofenergylockeduponfederallycontrolledlandsinthecontinentalUSandjustoffshore.SteveMoore(coauthoroftheop
ed)hasalmostfinishedabookthatwillbecalledFuelingFreedom,whichshowsthattheUScouldearnasmuchas$2trilliondollarsinroyaltiesand
userfeesoverthenextfewdecadesbyallowingenvironmentallysensitiveuseofourpubliclands.Thosefundscouldbeusedtopartiallyfinancebonds
thatcouldtotallyrenewourcrumblinginfrastructure.
Wecouldbuildasmartgridthatwoulddramaticallyreduceourelectricityusageaswellaspollutionandhelpdrivedowncosts.Wewoulduse
infrastructurebondstojumpstarttheprogram,butitcouldfinanceitselfovertime.Ourwaterinfrastructureiscrumblinginmanycities.Somecities
loseasmuchas30%oftheirwaterasaresultofleaky,inefficientsystems.Watergenerallyhasatollorfeesattachedtoitsusage,sotheeliminationof
wastecouldhelpfinancethebondsaswell.
Carehastobetakenthatstatesandcitiesdonotseeinfrastructurebondsasfreemoneyforbuildingbridgestonowherebutratherasthenecessary
rebuildingwemustdointhenext10years.
Allofthischangewillmeannewjobs.Andjustastheinterstatehighwaysystembroughtthecountrytogetheranddramaticallyimprovedproductivity,
beingmoreefficientwithourwaterandpowerresourceswoulddeliversimilarbenefits.
(Bytheway,nextweeksOutsidetheBoxisanexplosiveandfascinatingstudywhich,amongotherthings,showsthattheUSandmuchofthe
developedworldarebecomingmuchmoreefficientusersofresources,contrarytopublicperception.WaterusageintheUShasbeenflatfor30years,
evenwith90millionmorepeople!)
TheresaLotMore
Thesearejustafewideas.Thereisalotmorethatcouldandshouldbedone.Education,retraining,makingsureeveryonehasaccesstofastand
inexpensivecommunicationseverythinghelps.

The2016presidentialcampaignoffersthecountryanopportunitytohaveanationalconversationaboutthefuturedirectionsweshouldtake.How
muchhealthcaredowewant,andhowdowewanttopayforit?Howdowedealwithincomeinequality?Doweraiseallincomes,ordowepenalize
smallbusiness?Howaboutsomethoughtonhowmanypeopleareincarceratedandeffectivelylockedoutoftheworkforcebecausetheyhavea
nonviolentfelonyontheirrecord?

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ItismyhopethatthepopulistdemagoguesontheGOPsidewillbesidelinedassoonaspossiblesowecanhaveanadultdiscussion.Thereareenough
seriouscandidateswhohavethoughtfulpositionsthatIamlookingforwardtothedebates.
(Sidebar:IattendedasmallgatheringWednesdaynightwhereLindseyGrahampresentedhisviews.Ihavealsohadsimilarmeetingswithother
candidates,amongthemRandPaul.PaulandGrahaminadebate?Nowthatcouldbefunandoffersomerealchoices,notmerelynuancedversions
ofthesamething.Andnotjustonforeignpolicy.MarcoRubioandTedCruzhavedifferentviewsonimmigration.Healthcare?Monetarypolicy?We
needthesedebates.
Myunderstandingisthatthenetworksaregoingtolimitthedebatestonomorethantenpeople.Grahamgotoffagoodlineonhowtheychoosewho
isonstage.IfitspopularityandnameID,thenwemayseeBradPittontheGOPdebatestage.
CansomeonepleaseofferHillarysomeseriouscompetitionontheDemocraticsidesoshehastoactuallyspelloutpositionsandtelluswhereshewants
togo?Ifyoucantgetspecific,ifyouranswersaresoundbites,movebacktotheporch.TheDemocratsneedtohaveeverybitasintenseadebateasthe
Republicansaregoingtohavesovoterscangetasenseofwherewewanttogofortherestofthecentury.
NewYork,Maine,andBoston
IamsittinginasingleengineplaneonarunwaywaitingtoflytosomewhereinthebooniesofNewHampshireasIfinishthisletter.ItisaSwissmade
Pilates,oneofthesafestaircraftmadeanywhere.Anditsquitecomfortable.IamflyingwithPeterBoockvar(LindseyGroup)andTrishRegan(of
Fox).WewillbemeetingmyfriendsGaryShilling,MarcFaber,DavidRosenberg,andafewothersforasmallretreat/conferencewherewewillall
presentanddebateforthenextfewdays.IhaveknownaboutthisgatheringforyearsandhavebeenJonesingtogetaninvitation.Imreallylooking
forwardtoit.
ThenSundaywerentacaranddrivetoVermont,whereIwillspendafewdayswithMauldinEconomicspartnersOlivierGarret,EdDAgostino,and
DavidGalland,talkingbusinessandplanningfortherestoftheyear.IwillstartreadingabookthatPatCoxhasjustfinishedonthefutureofbiotech
whileputtingthefinishingtouchesonmyownnewbook,whichisoutnextweek.
Tuesdayweflyhome,andthenthefollowingSundayIambackinNewYork,wherewewillberentingasmallapartmentforthewholemonth.Iam
goingtoparticipateinanewtechnologyexperimentthatIjustcouldnotturndowntheopportunitytobeinvolvedin.Thefutureissomuchcloser
andcomingsomuchfasterthanyoucanpossiblyimagine.AndofcourseinAugustIwillgotoMainefortheannualfishinggathering,andlaterthat
monthIllvisitafewfriendsintheBostonarea.

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ThislastweekinNYCwasamazing.IreallyhadwhatIthoughtwasawideopenscheduleandjustplannedtorelaxandreadandwrite.ButIhadthe
opportunityhearGeorgeGilderpresentanewpaperonusinginformationtheoryasabasisfordevelopinganeweconomicmodel,andthenJimGrant
andSteveForbesrespondedtohim.Grantquipped,ItwillbeacolddayinJunebeforeIshareastagewithGeorgeGilder.Anditwasunseasonably
coldthatday.
IhavebeenfriendswithSteveForbesforalongtime,andhisresponsewassothoughtfulandfullofwisdom.Thatiswhytheinterviewshedoeswith
meareamongmybest.Hisquestionscarefullyguidemeandkeepmeontopic,becausethosequestionscomefromafullyinformedintellectthatis
preparedandunderstandsbetterthanIdothetopicswearediscussing.
ThenthenextnightwasthedinnerwithLindseyGraham.SteveMoorewasthere,aswellasArtLaffer(ithadbeenyearssinceIhadseenArt)and
theninthemiddleofdinnerGeraldoRiveraandJuanWilliamswalkedin.Abitmuchforthiscountryboybutalotoffun.Geraldopointedlyasked
Grahamhowhethoughthecouldmakethefinalcut,andtheSenatorlaidoutaninterestingmapofhisproposedjourney.NolesslikelythanBarack
Obamasin2007,Iguess.IhavebeenfollowingtheGOPpoliticaldebatesfor40years,aftervotingforGeorgeMcGovernin1972.Ihaveneverseenthe
racefortheRepublicannominationthiswideopen.Iwouldpersonallydismissatleasttencandidates,butitwouldbeadifferenttenfromyoursor
thoseyourneighborsandfriendsmightchoose.Ifwecankeeptheprocessfromturningintoanembarrassingfoodfight(arealpossibility,as
Republicansalwaysseemtobeabletoshootthemselvesinthefootandthenreloadanddoitagain),Ithinkourupcomingdebatesmightactuallyhelp
createanewpoliticalagenda.
Hey,Icandream.
Haveagreatweek.Findafewbooksandsomefriendsandenjoyyoursummer.
Yourhopingtogetustalkingaboutproductivityanalyst,

JohnMauldin
subscribers@mauldineconomics.com

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offeringdocument.Pastperformanceisnotindicativeoffutureperformance.Pleasemakesuretoreviewimportantdisclosuresattheendofeacharticle.Mauldincompaniesmayhavea
marketingrelationshipwithproductsandservicesmentionedinthisletterforafee.
Note:JoiningTheMauldinCircleisnotanofferingforanyinvestment.ItrepresentsonlytheopinionsofJohnMauldinandMillenniumWaveInvestments.Itisintendedsolelyfor
investorswhohaveregisteredwithMillenniumWaveInvestmentsanditspartnersatwww.MauldinCircle.com(formerlyAccreditedInvestor.ws)ordirectlyrelatedwebsites.TheMauldin
Circlemaysendoutmaterialthatisprovidedonaconfidentialbasis,andsubscriberstotheMauldinCirclearenottosendthislettertoanyoneotherthantheirprofessionalinvestment
counselors.Investorsshoulddiscussanyinvestmentwiththeirpersonalinvestmentcounsel.JohnMauldinisthePresidentofMillenniumWaveAdvisors,LLC(MWA),whichisan
investmentadvisoryfirmregisteredwithmultiplestates.JohnMauldinisaregisteredrepresentativeofMillenniumWaveSecurities,LLC,(MWS),anFINRAregisteredbrokerdealer.
MWSisalsoaCommodityTradingAdvisor(CTA)registeredwiththeCFTC,aswellasanIntroducingBroker(IB).MillenniumWaveInvestmentsisadbaofMWALLCandMWSLLC.
MillenniumWaveInvestmentscooperatesintheconsultingonandmarketingofprivateandnonprivateinvestmentofferingswithotherindependentfirmssuchasAltegrisInvestments
CapitalManagementGroupAbsoluteReturnPartners,LLPFynnCapitalNicolaWealthManagementandPlexusAssetManagement.InvestmentofferingsrecommendedbyMauldinmay
payaportionoftheirfeestotheseindependentfirms,whowillshare1/3ofthosefeeswithMWSandthuswithMauldin.Anyviewsexpressedhereinareprovidedforinformationpurposes
onlyandshouldnotbeconstruedinanywayasanoffer,anendorsement,orinducementtoinvestwithanyCTA,fund,orprogrammentionedhereorelsewhere.Beforeseekingany
advisor'sservicesormakinganinvestmentinafund,investorsmustreadandexaminethoroughlytherespectivedisclosuredocumentorofferingmemorandum.Sincethesefirmsand
Mauldinreceivefeesfromthefundstheyrecommend/market,theyonlyrecommend/marketproductswithwhichtheyhavebeenabletonegotiatefeearrangements.
PASTRESULTSARENOTINDICATIVEOFFUTURERESULTS.THEREISRISKOFLOSSASWELLASTHEOPPORTUNITYFORGAINWHENINVESTINGINMANAGEDFUNDS.
WHENCONSIDERINGALTERNATIVEINVESTMENTS,INCLUDINGHEDGEFUNDS,YOUSHOULDCONSIDERVARIOUSRISKSINCLUDINGTHEFACTTHATSOMEPRODUCTS:
OFTENENGAGEINLEVERAGINGANDOTHERSPECULATIVEINVESTMENTPRACTICESTHATMAYINCREASETHERISKOFINVESTMENTLOSS,CANBEILLIQUID,ARENOT
REQUIREDTOPROVIDEPERIODICPRICINGORVALUATIONINFORMATIONTOINVESTORS,MAYINVOLVECOMPLEXTAXSTRUCTURESANDDELAYSINDISTRIBUTING
IMPORTANTTAXINFORMATION,ARENOTSUBJECTTOTHESAMEREGULATORYREQUIREMENTSASMUTUALFUNDS,OFTENCHARGEHIGHFEES,ANDINMANYCASES
THEUNDERLYINGINVESTMENTSARENOTTRANSPARENTANDAREKNOWNONLYTOTHEINVESTMENTMANAGER.Alternativeinvestmentperformancecanbevolatile.An
investorcouldloseallorasubstantialamountofhisorherinvestment.Often,alternativeinvestmentfundandaccountmanagershavetotaltradingauthorityovertheirfundsoraccounts
theuseofasingleadvisorapplyinggenerallysimilartradingprogramscouldmeanlackofdiversificationand,consequently,higherrisk.Thereisoftennosecondarymarketforaninvestor's
interestinalternativeinvestments,andnoneisexpectedtodevelop.Youareadvisedtodiscusswithyourfinancialadvisersyourinvestmentoptionsandwhetheranyinvestmentissuitable
foryourspecificneedspriortomakinganyinvestments.
Allmaterialpresentedhereinisbelievedtobereliablebutwecannotattesttoitsaccuracy.Opinionsexpressedinthesereportsmaychangewithoutpriornotice.JohnMauldinand/orthe
staffsmayormaynothaveinvestmentsinanyfundscitedaboveaswellaseconomicinterest.JohnMauldincanbereachedat8008297273.