Dollar index can't flex its puny
muscles By The Mogambo
Guru
I am deep inside the Mogambo Last Line
Of Defense Bunker (MLLODB), locked and loaded, and
scared out of my Freaking Mogambo Mind (FMM).
Total Fed Credit was up $6 billion last week,
which was about par for the course for a Federal
Reserve that has interpreted its mission as the
total destruction of the United States and its
money by urging us to gradually borrow-and-spend
ourselves into bankruptcy and an inflationary hell
by lowering interest rates until we do.
To
those of us who were watching the loathsome Alan Greenspan
all
those years, this is nothing new, as is my venom
about the whole stinking mess.
The
thing that WAS new was the surprise in the Fed's
account called, "US Government Securities Bought
Outright", which was down last week! Down! By $5
billion! They were not creating money, but were
instead soaking up a little money from the
banking
system? Whoa! This can't be right! What in the
hell is going on here?
As mysterious as
that was, there is nothing mysterious about the
dollar falling in value, thanks to the Federal
Reserve always creating more and more of them, and
thanks to the desperate, no-holds-barred
government actions behind the scenes, which are
always a sure sign of a government in Deep, Deep
Trouble (DDT).
Now the poor old buck has
broken the 80 level on the dollar index, a
historically significant milestone of sorts as
there are rumored to be lots and lots of big bets
using that level as the dividing line between
breaking even and getting killed by the exchange
rate of the dollar.
As I recall, whenever
the dollar heretofore fell below 80, bad things
subsequently ensued, as prices for things went up
and caused a lot of misery. And not only for us,
but for everybody, as any foreigners getting paid
dollars under a contract signed weeks or months
ago (or, horror of horrors, years ago!) is
experiencing what is officially known in currency
exchange jargon as the Royal Screw Job (RSJ) when
they try to convert those dollars into units of
their local currency, and they see with horror how
they get fewer and fewer of them as time goes by,
and pretty soon the stupid owner of the stupid
business is sending your stupid supervisor into
your office yelling something that sounds like,
"Ha chow, mu gow!" which is (as I understand it
purely from context) an ancient Chinese idiom that
translates loosely as, "You stupid idiot! Pack
your stupid crap and scram, because you are
fired!"
The problem is so familiar that I
smile in warm recognition, which is that the
owner's wife, like everybody's wife, like my wife,
wants all the money that the husband has, just to
spend on herself and the damned kids, probably for
clothes, proper nutrition or medical attention for
their numerous imagined ailments that they are
always whining about (eg, "But daddy, my arm
really is broken!"), all of which are expensive.
And now the poor guy is getting even less money
per day because of the stupid contract denominated
in dollars, and the stupid dollars buy fewer and
fewer of the local currency, so he makes less
profit! Less!
The foreign business owner's
problem is that dollars that are being inflated to
worthlessness, which I hesitate to bring up
because many of you are clearly tired of my same
old Typical Mogambo Rant (TMR) about inflation and
how it is an economic and societal killer, and how
incomes always lag the rise in prices, making
people upset, and making me upset AND angry
because I actually KNOW that it is a government
plot, and that naturally leads to calls for
Americans to rise in noisy righteous outrage and
to follow The Mogambo, rallying behind his Mogambo
Flying Fists Of Outrage (MFFOO) to march on
Washington, DC, a juggernaut on a rampage of open
rebellion, proceeding relentlessly from one taco
stand to another, and from one vendor of tasty
beverages to another, and then to anywhere that
has a toilet, the whole freaking way.
Instead of subjecting you to that again, I
will merely turn the podium over to Scott Burns,
appearing courtesy of DailyReckoning.com. He
reports, "wages grew less than inflation during
eight of the nine years between '88 and '96."
Yikes!
I had anticipated that you would be
saying things like, "That was more than 10 years
ago! Then what happened?" My plan was to jump up
and comically say, "It got worse! Hahaha! We're
freaking doomed!"
But almost as if on cue,
I was preempted by Mr Burns immediately saying,
"Then, in the most recent 10 years, wages beat
inflation in almost two of every three years. But
the gain was so slight - just $10.61 per week for
the whole period." Hahaha! What? 26 cents an hour
is the total gain? Hahahaha!
In short,
"Incomes have been stagnant for at least a
generation." And that exquisite phrase means that
nobody made squat in higher income in almost 20
years! This is the genius of the Federal Reserve's
management of the economy? Hahahaha!
And
to see the horror of that, compare that with the
huge, gigantic, unbelievable rises in the size and
cost of government, which is still rising
exponentially today, and is being paid for by just
120 million of us non-government worker guys,
whose incomes are not going up.
Hey! I was
right! We're freaking doomed!
Richard Daughty is general
partner and COO for Smith Consultant Group,
serving the financial and medical communities, and
the editor of The Mogambo Guru economic newsletter
- an avocational exercise to heap disrespect on
those who desperately deserve
it.
Republished with permission from The Daily Reckoning.
Copyright 2007, The Daily
Reckoning.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
banking
system? Whoa! This can't be right! What in the
hell is going on here? 
