Today's forecast is ... hey, it's
lunchtime! By The Mogambo Guru
Total Fed Credit, that magical American
spigot from which flows bank credit, from which
money is created when somebody borrows the money,
fell $22 billion last week! $22 billion! My god!
This is horrible news for those (like Congress,
Wall Street, the banks and the Federal Reserve)
who are so preposterously and laughably stupid
that they think that constantly creating more
money, and more credit, and more debt, and more
inflation in prices is (hahahaha!) good for an
economy!
Sorry about that inserted
"hahahaha" in that last sentence, but I could not
hold the laugh inside me any longer, as it is just
too, too, too ridiculous that so many people could
actually believe
something so childishly stupid
and suicidal as to be dying for inflation!
Hahahaha!
And I use the phrase "dying of
inflation" because that is what happens when a
country is so stupid (audience shouts out, "How
stupid, Mogambo?") as to elect morons who let an
idiotic central bank conduct bizarre experiments
with the money and the banks, and thus the
economy, with their new theories and ludicrous
equations that "prove" that constantly increasing
the money supply will not lead to inflation in
prices, and if it does, then just create more
money and credit in order to "fix" it! Hahaha!
And speaking of morons who get elected, I
am pleased that Senator Christopher Dodd has
dropped out of the US presidential race, as I
consider him to be the most incompetent,
malfeasant loser in Congress, and the whole
subprime fiasco can be laid right at his door
since he was the chairman of the Senate Banking
Committee for all those years and he did not raise
one objection to any of that Federal Reserve crap
that got us here! The whole time, not one
objection! Pity Connecticut's shame for having
elected this loser.
But let's not dwell on
shame, as this will undoubtedly prompt my wife to
give everybody a loud earful of her "What it's
like to be married to The Mogambo" crap, which
quickly bores me to death, as it seems like I have
heard it every damned day of my life, and, to make
it worse, she doesn't add the new stuff that she
is upset about until the end, which could be
freaking hours from now, and believe me when I say
that it is not worth the wait to find out what is
new.
On the other hand, Federal Reserve
chairman Ben Bernanke has no such qualms about
shame, and said he is ready to take "substantive
additional action", which the media and markets
took as saying, "Rates are going down, dudes!",
although The Mogambo Inter-Planetary News Service
(MIPNS) interpreted it as "Inflation in prices is
going up, dudes!"
But
nobody wants to talk about inflation, since they
know that it freaks me out so much that I seldom
stop yelling about it once anyone gets started
talking about it, or mentions it in passing, or
even permits a freaking lull in the conversation,
and so you can be sure that they don't want to get
me cranked up about how rough society becomes when
the monster of price inflation is given steroids
during some "substantive action" by the Federal
Reserve. Instead, people want to know the meaning
behind the latest hit recording from The Fabulous
Mogambo All-Star Band about this very subject,
"How low, low, low will interest rates go, go, go
when the Fed's 'substantive action' kicks in good
and hard?" They notice that while it has a good
beat and it's easy to dance to ("I give it a 70,
Mr Clark!"), the lyrics never actually say how
low, low, low rates will go, go, go.
I
resist having to admit that forecasting actual
numbers is completely beyond my limited skill set,
for one thing, and it involves actual work to
derive - another Big, BIG Reason (BBR) why
forecasting always fills me with dread, probably
because Chaos Theory and Taleb's Black Swan
probability theory prove that forecasting is a
waste of time. Not to mention how people forecast
that marriage could be "good" for me, which is
another forecast gone horribly awry.
This
is why my standard answer to a forecasting
question is to shrug it off and look at my watch
as my clever way of saying "Hey! It's almost
lunchtime! Or coffee break time! Or I have to
leave because I have to be someplace important
that I forgot all about until just now, like maybe
just discovering that my watch is broken!"
Fortunately, Bill Bonner here at The Daily
Reckoning either does that kind of forecasting
work or knows someone who does, whereas the only
people I know are the kind that can chug a whole
can of beer in one quick pull and burp real loud,
which always seems funny to us for some reason,
probably because we are all drunk as hell and it
is too early to start throwing up.
But I
am cold sober now, which doesn't help to disguise
my fear and outrage when Mr Bonner notes that "The
Fed is already lending money at real rates near
zero. Subtract the inflation rate from the Fed
funds rate and there is nothing left. If they cut
the rate again, they will be lending substantially
below zero."
Instantly, I run to my desk
to find a piece of paper, but find only bills with
"Last Notice!" stamped on them in red ink, like I
am going to somehow miss the fact that it is
written in 60-point type across the whole top of
the stupid letter or something. Anyway, the bottom
of the last page is blank, under the part where
some dork from "The Collections Department" has
signed off with, "PS, See you in court, loser!"
So I look at the Fed Funds rate, which is
at 4.25%, and that means that Mr Bonner thinks
that, if the Fed is truly lending money at real
rates "near zero", that inflation must be about
4.25% too, which I think is too low, as I glean
from the Infallible Mogambo Indicator (IMI), which
was developed out of noticing how much more I have
to pay for things all the freaking time and how I
note that every time I pay for something, it costs
more than the last time, and how I think of Alan
Greenspan and how I hate him all the more for it,
more and more and more, until I start waking up
after having a nightmare where I am frozen in
place and Alan Greenspan is a big scorpion of
inflation, with big teeth and a horrible grin on
his face, and he is slowly eating my legs off
while his barbed tail is reaching over and
stuffing the poison of too much money, too much
credit, too much debt, and too much government
down my throat, and I want to scream and scream
and scream and call out for help, but I can't make
a sound, until I wake up and find that the reason
that I can't scream or call for help is because my
wife has her hands around my throat, choking me in
a death grip while she is yelling, "Wake up! Wake
up, damn it! You're just having another nightmare
about your stupid inflation and your stupid Alan
Greenspan!", which is, of course, true, but which
doesn't explain why she is choking me to death.
Mr Bonner is no help, and ignores my red
face, the fact that the IMI is at redline, my
protruding tongue and my pleading eyes, to say,
"The Fed is also running the loosest regime in the
Western world," despite the fact that "Real
lending rates in both the Eurozone and Britain are
higher than they are in the United States, and
inflation rates in both areas are lower than those
in the United States."
And he knows, as I
know, as we all know, that it will get worse and
worse, as he makes plain when he says, "Still,
just listen for the helicopter ... the noise will
get louder and louder."
And the results of
this fabulous congressional oversight of the banks
by the egregious Mr Dodd and his coterie of
congressional losers? Larry Edelson at
MoneyandMarkets.com says that, "latest data shows
the broad supply of money in the US - formerly
known as the M-3 Money Supply - is growing at an
annual rate of more than 34%. That's super
inflationary!" Yikes! He's right; that is super
inflationary! We're freaking doomed!
Nobody wants to join me in condemnation of
Mr Dodd and the other halfwits on his stupid
little incompetent committee and in Congress
(except Ron Paul, the only guy there who even
vaguely understands what they are supposed to be
doing and why he should be the next president of
the United States), or the Federal Reserve, or the
banks. Nor does anyone want to share their pizza
with me or even let me have a sip out of their
stupid beer, so I have to distract them by saying,
"Hey! Look out the window! It's a UFO!" and then
snagging a little food and beverage from them
while they look away.
And why the
parsimony? Probably because we are all broke, as
Mr Edelson says that "All told, our debts have now
reached 460% of national income - an all-time high
- with no end in sight."
And that is why
soon, all across the world, people will be sitting
in restaurants and bars and saying. "Hey! Look out
the window! It's a UFO!" and snag your grub. Look
out!
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:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
