In today’s Daily Journal, a free e-letter from Porter & Co., we’ll explore:

Over the holidays, I spent two weeks in Argentina with my wife, Shannon.

A little more than 100 years ago, it was the wealthiest country in the world. It then experienced an incredible decline. From the end of World War II until two years ago, Argentina saw an almost continuous decline into poverty. Its government promised the masses benefits it couldn’t possibly afford. And it started a war with Great Britain to delude and distract the masses.

Meanwhile… virtually all the wealth left the country. By 2023 Argentina was ranked 72 out of 197 countries in per capita GDP. From first place to 72^nd. Same country. Same people. Same resources. Vastly different outcome.

Once the Paris of the West, Buenos Aires now looks like a bombed-out hellscape. And as we traveled around the country – to Mendoza and Bariloche – we saw failing infrastructure and shocking levels of poverty.

My old friend, Eduardo Elzstain, hosted us for an afternoon at his spectacular farm in Patagonia. Now in his mid-60s, since his early 30s, Eduardo has been one of Argentina’s leading investors. In 1991, following yet another hyperinflationary collapse, Eduardo partnered with George Soros to re-build Eduardo’s grandfather’s commercial property company, Inversiones y Representaciones S.A. (NYSE: IRS). After launching a New York listed ADR in 1994 at $23 per share… the company now trades around $16.

Including dividends, IRSA (as it’s commonly called) has produced an annualized return of 2.34% since its IPO. It is very difficult to build wealth in a country that’s constantly destroying its economy with inflation. But compared to most assets in Argentina, Inversiones y Representaciones’s performance has been heroic.

The key? Long-term financing at fixed interest rates. If you know the currency you’re borrowing is going to collapse, then you want to borrow as much as you can. By the time you pay it back, it won’t be worth anything. Borrow dollars. Repay pennies.What’s changed about the company over the last few years is probably invisible to most investors. But I know these changes make it a vastly higher-quality business. I first described what was happening at Hovnanian back in 2022, when I wrote about the company in one the very first issues of my newsletter The Big Secret On Wall Street. 

As an American, you’ve been taught to stay out of debt. But in the bizarro world of a country in a hyperinflation, borrowing heavily is a viable path to maintaining your wealth. That’s why in my own trading account I’ve been using 2x leverage – buying assets (gold, silver, Bitcoin, mortgages, and high quality equities) that I’m certain won’t decline as inflation continues to grow. I’m up 130% in my personal account over the last year.

But I wish I wasn’t. Returns like this aren’t normal and they presage a disaster.

The mirage of America’s prosperity is collapsing before our eyes and yet most Americans still do not understand what’s happening.

Let me try to explain it this way…

The America you grew up in doesn’t exist anymore. Just walk around any major city in the country. These people do not share our values, our culture, our aesthetics, or our innate sense of responsibility. But it isn’t only unconstrained immigration that’s led to the end of America.

There’s a reason young people can’t afford housing. There’s a reason they can’t afford to have a baby. There’s a reason they can’t afford to go to college.

The reason: government spending is now 40% of GDP.

If you include healthcare – which is so tightly regulated it is a de facto arm of the government – then government spending is 60% of GDP.

America isn’t the land of the free anymore: it has become the largest and most dangerous socialist republic in the world.

That’s why there’s a communist mayor in New York City.

And what happens to huge socialist countries? They quickly collapse because of fraud, waste, and inflation.

That’s not the America we knew, but that is definitely the America we live in today.

In Argentina, after Juan Perón came to power in 1946, he took over the central bank. He implemented a raft of tariffs, designed to protect politically favored businesses. He spent the country’s hard currency reserves on state projects and the military. By 1955 the entire country was bankrupt and the inflation rate was 40% a year. Hollywood turned him and his wife Eva into heroes, of course.

And that wasn’t the bottom – it was only the beginning. Argentina didn’t hit bottom until two years ago. Once the public has been manipulated into believing they can get something for nothing from the ballot box, it is very difficult – virtually impossible – to change that mindset.

That is what is about to happen in America.

The U.S. national debt is up $2.25 trillion in the last year alone. That’s $8 billion a day. So far, in this fiscal year, which started in October, the U.S. has a cumulative deficit of $601 billion – a $2.4 trillion annual run rate. Interest on our federal debts (~$40 trillion) will cost taxpayers around $1.5 trillion annually.

That’s roughly 40% of all income taxes collected.

America’s experiment with paper money and unlimited government spending is a 50-year house of cards that’s collapsing.

And what is the government doing? Is the president cutting the military? Is he explaining to the American people that Social Security and Medicare are no longer affordable? Is he doing everything he can to balance the budget, so that inflation and interest rates can decline, making the debts more affordable?

Nope. He’s doing the exact opposite: President Donald Trump is calling for military spending to jump to $1.5 trillion in 2027 – up more than $500 billion from the current $901 billion level. He’s promising $2,000 “Trump Checks” to middle- and lower-income Americans, to ensure they continue to vote for more government.

The U.S. is spiraling into hyperinflation. This stuff is straight out of a Zimbabwe playbook. And just because the U.S. is the wealthiest country in the world, everyone believes that the government will get away with it. But it won’t.

Ask anyone who has lived in Argentina during the last 70 years.

How can you protect yourself? Find an asset you can safely borrow against. Get a 10-year or a 15-year mortgage, at fixed rates. Buy things you know will not decline in value during an inflationary period: trophy properties, gold, high-quality equities. I personally believe Bitcoin will continue to compound too. If you want a model portfolio to follow, see Porter’s Permanent Portfolio. It’s specifically designed to prosper during inflation.

But, whatever you do, do something. Inflation destroys people who do not take active steps to protect their wealth.

Watch the interview I did recently with one of the world’s pre-eminent investors in gold and other precious metals.

P.S. Shannon and I visited the Tipiliuke Lodge in Patagonia. Shortly before our visit, Amazon founder Jeff Bezos rented out the entire place. Fantastic property and the best hospitality I’ve ever had in my life. Here’s a casual picture of us at Tipiliuke’s “Black Bridge.” There are so many big trout in this stream you can see them swimming beneath you.

1. Exxon CEO calls Venezuela “uninvestable.” Following the removal of Venezuelan President Nicolás Maduro from power, last week President Donald Trump held a meeting where he urged the leaders of U.S. energy companies to invest $100 billion to rejuvenate the country’s oil production. During the meeting, ExxonMobil (XOM) CEO called Venezuela “uninvestable” without a total overhaul of the country’s legal and commercial systems. President Trump noted that he “didn’t like Exxon’s response” and that he would “probably be inclined to keep Exxon out” of the country. As we explained in the Daily Journal last week, convincing oil companies to invest in such a high-risk jurisdiction is one of the many hurdles to clear before we see a meaningful increase in Venezuelan oil production.

2. Google gains on artificial intelligence (“AI”) leader OpenAI. Last week, we noted that Alphabet (GOOG)’s AI platform, Gemini, was quickly eating into the once-dominant market share of OpenAI’s ChatGPT. This morning, we learned that consumer electronics giant Apple (AAPL) has decided to partner with Google to power Apple’s long-awaited AI features, including a major upgrade to its Siri virtual assistant expected to be released later this year. Apple currently partners with OpenAI to integrate ChatGPT into Siri, but the product has been widely criticized for its lack of cutting-edge functionality.

3. The battle for the Fed’s independence heats up. On Sunday night, Fed Chair Jerome Powell revealed that the Department of Justice launched a criminal investigation into him and the U.S. Federal Reserve. The probe centers on Powell’s June 2025 testimony regarding the renovation of the Fed’s D.C. headquarters – a multi-year project that is now estimated to cost $2.5 billion. While cost overruns on such massive projects are not uncommon, the allegation that Powell acted with criminal intent marks a significant escalation. Powell has defended himself, characterizing the charges as a pretext for political retaliation over his refusal to bow to President Trump’s demands for lower interest rates. With Powell’s term as chair set to expire this May, this conflict intensifies market uncertainty, as President Trump’s nominee to replace Powell could signal a definitive end to the Fed’s traditional independence.

On Friday evening, President Trump called for a one-year, 10% cap on credit card interest rates, effective January 20. The move appears to be a win for consumers – interest rates on credit cards now hover around 24%. However, while the Trump administration aims to make access to credit cheaper, these high rates allow issuers to serve higher-risk borrowers. As a result, while Americans could save $100 billion in interest, credit card issuers may no longer be able to underwrite lower-income borrowers. When the government limits profits, the unintended consequences are rarely benign.

Tell me what you think about today’s Journal or any other topic: [email protected]

Good investing,

Porter Stansberry
Stevenson, Maryland

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current portfolio page of the relevant service, here. To gain access or to learn more about our current portfolios, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.