Take my buying power ...
please By The Mogambo Guru
John Stepek at MoneyWeek.com writes, "As
Evans-Pritchard points out, the dollar's collapse
is all very well - but which currency is it going
to be allowed to collapse against? Most of Asia
relies to a significant extent on exports to the
US, so they have no desire for a strong currency.
In Britain, we have much the same problems as the
US, so a jump into sterling from the dollar is a
case of frying pans and fires, many would say."
I look up from my notes and I realize that
he has not mentioned
the
fall in the value of the dollar against the yuan
(CNY), either, and how the stupid Congress - as
un-freaking-believable as it sounds - wants to
impose tariff sanctions on Chinese imports to
"punish" them for not allowing the dollar to fall
in buying power, ignoring the fact that higher
prices punish us, too! Hahaha! It would be more
entertaining to burn our money and wear signs
around our necks that say, "Take our buying power!
We're freaking morons!"
Well, Mr Stepek
doesn't seem to appreciate the significance of the
"sign around the neck" imagery, and neither does
Samantha Buker, writing at Whiskey &
Gunpowder, but she says the same thing when she
says that the "yuan is undervalued by anywhere
from 15% to more than 40%".
I look at Mr
Stepek and he looks at me with a disdainful look
that I instantly recognize as, "We both hate you,
Mogambo!", then cuts through all of that
theoretical "the yuan will rise and cause us lots
of inflationary problems" crap by reiterating
essentially the same thing by saying, "Indeed, the
most recent statistics show that the cost of
imports from China in the US have risen in dollar
terms for three straight months now. The price of
imports in July was up 0.9% on a year ago - the
highest ever rise."
And all of this money
was created so that the American government could
slide into the stinking swamp of communism, as
over one-half (the majority) of Americans get
their income from government, which (I guess) is
the bizarre reason that the majority of people
keep electing collectivist commies!
On the
other hand, the childish American whine of "take
care of me!" will teach us that Winston Churchill
was right when he said, "The inherent vice of
capitalism is the unequal sharing of the
blessings. The inherent blessing of socialism is
the equal sharing of misery."
And all of
this money will, of course, cause the dollar to
fall in value without doing us much good as
expoters, as Stephen Roach of Morgan Stanley says,
"Optimists may draw comfort from the vision of an
export-led renewal arising from a more competitive
dollar. Yet history is clear: No nation has ever
devalued its way into prosperity."
First
he says, "So far, the dollar's weakness has not
been a big deal," and then he bursts into a bit of
mortgage-related wit and says, "That may now be
about to change. Relative to the rest of the
world, the United States looks painfully subprime.
So does its currency." Hahaha! Subprime America!
How apropos!
And speaking of currency
devaluations, Michael Nystrom at BullandBear.com
asks, "Have you noticed? Chairman Ben (not to be
confused with that all-powerful chairman from
another time and place, Chairman Mao) has recently
acquired a new nickname. No longer is he referred
to merely as 'Printing Press' or 'Helicopter' Ben,
those playful nicknames of yore, which poked fun
at his threats to stave off deflation via massive
inflation. Those silly nicknames no longer
accurately depict the amount of inflation he is
prepared to produce, nor the destruction that such
inflation will inevitably cause."
As to
the moniker "Helicopter" Ben, Junior Mogambo
Ranger (JMR) Joe R calculates that "Bernanke's
first problem would be that $38 billion in $100
bills weighs 836,000lbs. The Huey helicopter has a
payload capacity of 3,000lbs, so Ben would need
278 Huey helicopters." Oops!
Mr Nystrom,
who isn't worried about 278 stinking helicopters,
proceeds onward with, "Ben won't merely be tossing
money from helicopters, content to let it flutter
to the ground. His new nickname signals that he's
deadly serious about his mission and he's pulling
out the heavy artillery to prove it. The new
nickname references the destruction the Fed's
policies will inflict. Say hello to B52 Ben, who
stands on the ready to carpet-bomb the world with
the catastrophic effects of the inflation bomb."
B52 Ben! Hahaha! Perfect, I like that!
However, trying in vain to top him, I proffer
Brainiac Ben, as his mind is like an old computer
proving the old adage, "garbage in, garbage out",
as he is proved to be unparalleled at remembering
facts and equations, but has absolutely no
capacity for critical thought or independent
reason, for if he did, his mind would have long
ago rebelled at the incomprehensible stupidity of
his precious little economic theories and his
arrogant little econometric idiocies, and he would
be an Austrian school economist, like all
intelligent and good looking people of the world.
But he is not!
Martin Hutchinson, writing
The Gotterdammerung of central
banking (ATol, Sep 26) at
PrudentBear.com, is apparently appalled that I
would think myself either intelligent or handsome,
and merely says, "It is now clear that all the
intellectual advances in central banking of the
last 300 years have disappeared. Gone with the
wind are the concept of 'moral hazard', the idea
that central banks should be independent of
political control, the idea that lowering interest
rates might cause inflation and the knowledge that
widespread deposit guarantees and bank bailouts
impose huge long run costs on taxpayers and the
economy. In 1720 when the financial world was
young and innocent this would have been
forgivable; today as then it is likely to bring
economic chaos in its wake."
I am getting
tired of this reluctance to be mean-spirited,
gratuitously malicious or just plain hateful about
Alan Greenspan or Ben Bernanke, but before I can
leap to my feet and shout, "Alan Greenspan was a
vicious monster who has destroyed the dollar and
the United States! And Bernanke, too!", Bill
Fleckenstein interrupts me to write, in the
Contrarian Chronicles, the perfect headline;
"Bernanke: The anti-Robin Hood", with the subhead,
"By slashing the Federal Funds rate, the Federal
Reserve chief robbed from the country's future to
give a gift to Wall Street. And a lot of ordinary
Americans will end up getting hurt." Bravo!
Perfect!
And you will be seriously hurt
unless you bet against such a stupid move on the
part of the Fed. By buying gold, silver and oil,
you will not be hurt, as their prices will rise to
offset the inflation that is killing everyone
else, but you will make so much money that you can
hurt other people by saying, "Ha! You were stupid
and are now poor! I was stupid and am now rich!"
The difference is who you are going to pick to
believe is correct; all of human history or a
couple of dirtbag, lying Fed chairmen, no matter
how stupid you are.
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,
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