I thought it was significant that the
Conference Board's (1) latest release of their US
indexes of Leading, Coincident and Lagging
Indicators showed that the Leading Indicator
(forecasting business activity 6-12 months down
the road) rose 0.4, to 137.9 from a revised 137.5.
Not much of a future!
The Coincident
Indicator of current conditions was up 0.2, to
105.0 from a revised 124.8. And even less of a
present!
The truly horrible news is just
what I have been screaming about
these many, many months and
years, in that the Lagging Indicator reveals
inflation and burdens, and it was, again, up the
most, rising 0.6, taking the indicator to 129.9
from a revised 129.3.
Inflation in prices
is going to kill us, thanks to the despicable
Federal Reserve creating so much money and credit,
thanks to the despicable Congress (except Ron
Paul) who aided and abetted the Fed in this
monetary inflation because they love to
deficit-spend money, and thus they need this
creation of excess money and credit, and thanks to
the traitorous Supreme Court, which has since 1933
consciously and deliberately chosen to ignore the
part of the Constitution where it says that money
shall only be of silver and gold, and that no
state will ever make anything a legal tender other
than silver or gold, and thus the Supreme Court
let the government let the Fed create excess money
and credit, which will make prices rise, which
destroys the economy and the lives of everyone.
Alarmed, I can see that people are
gathering up their things to leave just as I am
getting started with my speech! Apparently, most
people have already heard my patented, "Inflation
is going to eat your guts out, and eat your
children's guts out, and eat your parent's guts
out, and you will all die a horrible death as a
result!" speech. They have never believed me, and
they know that I think that they are idiots
because of it.
So, hurriedly, I motion for
Peter Schiff of Euro Pacific Capital to take the
microphone and talk some sense into these idiots
in the audience. I shout out, "Okay, listen up,
you morons! Mr Schiff here is going to tell you
about inflation!"
I step aside, and Mr
Schiff says, "Inflation has only one cause and
that is the Federal Reserve itself. In the United
States, the supply of money and credit is
regulated by the Fed. Since inflation is by
definition an increase in the supply of money and
credit, only the Fed can create it."
I
look out over the audience to see if anything is
sinking into their heads, but all I see is people
glaring at me with that familiar look of hatred in
their eyes. So I mischievously ask, "What would
happen if the Fed didn't create more money and
credit?"
He easily replies, "If the money
supply were held constant, increases in some
prices would be offset by decreases in others. The
result would be no overall inflation."
No
inflation! To make sure that nobody misses this
important point, I grab the microphone right out
of his hand and I scream, "No inflation in prices!
No inflation in prices! It's a paradise! No
inflation!"
Mr Schiff, taken aback by my
sudden outburst, gingerly takes the microphone
back and says that, "In fact, without government
created expansions of the money supply, the
natural tendency of prices would be to decline as
technology allowed for more efficient production
of goods and services."
I am beside myself
in anger! If it had not been for the damnable
Federal Reserve, we would all have a rising
standard of living, as prices would be declining
in line with productivity increases! We would
approach Nirvana when we could buy more stuff with
every freaking dollar, instead of what we have
now; a falling standard of living as we must buy
less stuff with every devaluing dollar.
Mr
Schiff summarizes it as "So while most regard the
Fed as the primary inflation fighter, in reality
it is the sole inflation creator."
And
sure enough, the proof was not long in coming, as
in the October 18 issue of the Wall Street
Journal, some weenie named Harvey Rosenblum (who
is "executive vice president and director of
research at the Federal Reserve Bank of Dallas")
penned an article titled "Fed Policy and Moral
Hazard" that is actually a clarion call to rise up
as an angry, drunken mob and overthrow the Federal
Reserve, and (speaking of throwing) throw them all
in prison for treason and treachery, making them
pay for their crimes by being chained to a tree in
the park and charging people a quarter to poke
them with a stick.
What Mr Rosenblum
actually admitted was, as un-freaking-believable
as it sounds, that "The FOMC seeks to foster an
economic environment characterized by low and
steady inflation"!
This, of course, brings
up the quote of the famous economist John Maynard
Keynes, who correctly said, "By a continuing
process of inflation, governments can confiscate,
secretly and unobserved, an important part of the
wealth of their citizens. There is no subtler, no
surer means of overturning the existing basis of
society than to debauch the currency. The process
engages all the hidden forces of economic law on
the side of destruction, and does it in a manner
which not one man in a million is able to
diagnose."
Keeping as calm as I can be,
especially given that I am agreeing with Keynes,
for crying out loud, and being as polite as
possible, I leap to my feet and shout "Wrong, you
blubbering halfwit! The purpose of the FOMC is to
have an economy where inflation is zero or less!
Zero! What part of 'zero' is so freaking confusing
to you, you despicable piece of worthless Fed
trash, or do I have to come up there and slap your
stupid face until you understand?"
I was
happy with my performance, as I thought that I
controlled myself pretty well, considering that
inflation is rising even faster than Mr
Rosenblum's "low and steady" inflation. And what
do they do about it? They just lie about it!
Inflation is actually running about 10% right
freaking now! But the Fed says that "official
inflation" is at about 2%, which is bad enough,
since 3% inflation in prices is the historical
cutoff between people being merely scared and
grumpy and people rising up to overthrow the
damned government!
And to show you how
this loathsome, lying and abject "see no
inflation" stupidity is working out in real life,
for the one-sixth of the US population that is
receiving Social Security benefits, the new
cost-of-living increase in their monthly benefit
will be 2.3%, which comes out to about an extra
$24 a month! Hahaha!
And it is not just us
Americans who have a foul, monstrous central bank,
as is proved by the apparent slip-of-the-tongue
that came from European Central Bank (ECB) chief
Francois Trichet, whom Barron's reports as having
said: "Our monetary policy stands ready to counter
upside risks to price stability, as required by
our primary objective."
Immediately, my
mind (like yours, I am sure) screamed out "Upside
risk? Did he say 'upside risks'? What in the hell
is an 'upside risk' to price stability versus a
'downside risk' to price stability?"
Yes,
it does mean that the ECB is ready to act in case
too much price stability breaks out! Hahaha! That
seems to be the point! Hahahaha! We're freaking
doomed!
Note (1) The Conference
Board is a non-profit global business organization
supported by business executives that holds
conferences, convenes executives and conducts
business management research. The organization
produces Leading Economic Indicators for the
United States and other countries. It also
produces the Consumer Confidence Index, the
Consumer Internet Barometer, the CEO Confidence
Index, the Help Wanted Advertising Index, and
other major indicators that have an impact on both
business and the financial markets. (Source:
Wikipedia)
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.
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Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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