Total Fed Credit, from whence comes the fabled "money from thin air", from
whence comes inflation in the money supply, from whence soon comes inflation in
consumer prices, from whence comes social distress and upheaval, was up another
US$2.5 billion last week, which is about average, if you are keeping score,
which I do because it Freaks The Hell Out Of Me (FTHOOM) when I think of all
the inflation in prices that will necessarily result.
This continual inflation-stoking idiocy was bad enough, even taking a
prophylactic handful of whatever miscellaneous
medications or alcoholic beverages (or both) were readily at hand before
cautiously looking at that particular Total Fed Credit number.
The part that sent me screaming in fear and outrage this week was the
mysterious catch-all category labeled "Other Federal Reserve Assets", which
ballooned by $14.2 billion last week! $14.2 billion! And in other mysteries,
the Fed's cache of "US Government Securities Owned Outright" surprisingly fell
by $15 billion last week, too! Zounds! Big money is zipping around the place!
Whew!
If you are like me, you are by now shoving random tranquilizers into your mouth
with one hand and gripping a loaded handgun with the other, shaking in absolute
fear and nervously asking yourself, "What, what, what in the hell is going on?"
Don't look to Ben Bernanke, chairman of the Federal Reserve, for answers,
because that clueless, neo-Keynesian halfwit has no idea what in the hell he is
doing, which I prove by noting that he is on record as saying on May 17 that
"We do not expect significant spillovers from the subprime market to the rest
of the economy or to the financial system." Hahaha! How wrong can you be? We're
freaking doomed!
And, more horrifyingly to everybody, foreign central banks are doing everything
they can to "help" us, too, and bought up another huge freaking $8.5 billion
load of US debt through the Federal Reserve last week, meaning that the
government is now sending more of your taxpayer money out of the country into
the pockets of foreign central banks, to the total terrifying tune of roughly
more than two trillion dollars at this point, or more exactly,
$2,156,411,000,000.00. I notice that the sheer horror of it actually seems
enhanced by displaying all the numerals.
And this is just a part of it! Total national debt is already over $9 trillion,
which looks like $9,120,000,000,000.00! Gaaahhhh!
Now you know just a teensy, weensy part of the reason why the Fed is creating
so much money and credit; it has to, just to pay the interest on the debt! All
of which will turn into, I am sorry to say, inflation in prices. Oh, I can see
looks on your distrustful faces as you rudely disparage my facts, figures,
intellect and musky body odors!
Fortunately, I am prepared for your antagonism; I merely quote Doug Noland from
his Credit Bubble Bulletin, who said, "During the year 2007, it became clear
that the Federal Reserve had lost control of inflationary forces. The year
ended with Import Prices up 11.4% y-o-y, the Producer Price Index up 7.2%
y-o-y, and the Consumer Price Index up 4.3% y-o-y. Despite a weakened economy
and another year of dollar devaluation, the US Current Account Deficit remained
in the neighborhood of $800 billion. Coupled with huge speculative outflows
seeking profits from global inflation, the world was absolutely inundated with
dollar liquidity."
Closer to the brink in 2007 Asia Times Online, January 3, 2008)
My heart is pounding at this barrage of bad news, and I turn the radio off. But
in my mind, I can hear the words, "the Federal Reserve had lost control of
inflationary forces" echoing around and around, and I am holding my head in my
hands in total anguish, crying out, "No! No! Noooooooo!"
And they can't stop because the government needs so damned much money. In fact,
it is so much money that nobody actually knows how much, or why, or even where
it goes! Don Grove recently wrote a synopsis of the review of the consolidated
fiscal 2007 financial statement of the United States which was recently
released, and notes that, "For the 11th year in a row, Comptroller General
David Walker, the Nation's Chief Auditor, stated that the GAO [Government
Accountability Office] could not give an opinion on the government's financial
statement."
Mr Walker's actual statement was, "Because of the federal government's
inability to demonstrate the reliability of significant portions of the US
government's accompanying accrual basis consolidated financial statements for
fiscal years 2007 and 2006, principally resulting from certain material
weaknesses, and other limitations on the scope of our work, described in this
report, we are unable to, and we do not, express an opinion on such financial
statements." What?
Hey! My wife finds out that I took a lousy 20 bucks out of her purse when she
foolishly left it unattended for a new minutes, and it's some Big Freaking Deal
(BFD) around here, with lots of screaming and crying and throwing things in
childish frustration, while she just stands there telling me to calm down, calm
down, calm down, and how I have to give her the money back or I'm "going to get
it!" and not in a good way, either!
But she is completely okay with fact that the comptroller of the United States
can't tell if the government is bankrupting the country because they are a
lying, corrupt, brain-dead bunch of fifth-columnist fascist/socialist weenies,
or because they just don't know how to do their jobs!
And, worse, she refuses to see the dichotomy between the two situations,
especially since I already spent the money and can't get any more to pay her
back. So I am trying to explain to her that, "The damned government can print
up all the money they want, any time they want, which will be paid for in more
monetary inflation and economic dysfunctionality, and then it goes into price
inflation and social decline, ending in total collapse and failure, and then
you will be GLAD that I owe you a lousy 20 bucks so that maybe I will let you
into the Famed Mogambo Bunker (FMB) with me out of sheer gratitude, so get off
my back and shut up, shut up, shut up about the damned money!"
Well, to make a long story short, she never shuts up about it, and she doesn't
care about my "stupid bunker". But one day she will, because the government and
the Federal Reserve never stop killing the dollar and the economy, and we're
all freaking doomed, but the people in the bunkers and the people with gold
will be the last to go!
Well worth 20 bucks, I'd say!
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 2008, The Daily Reckoning.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
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