I get a real laugh ("Hahaha!") out of the
US emergency stimulus program of just giving away
$150 billion in $800 increments to various
citizens, who total, I assume, 18,750,000 people
at 800 clams apiece. Hahaha! Free money! We have
now reached the point where the economy is so
screwed up from the Federal Reserve's
neo-Keynesian econometric stupidities that they
are reduced to urging Congress to give money away
to keep the economy from imploding because they
can't find people to loan money to at interest
rates that are less than the rate of inflation?
Hahaha! We're doomed!
And now, when every
measure of inflation everywhere is higher than
even profligate, lying bankers will admit is above their
"comfort level" because they
have flooded the economy with so much money for so
long, the Federal Reserve is again advocating that
more money and more debt flood into the economy by
reducing the Fed Funds rate to 3%!
Bob
Wood of Kaizen Managed Assets opines that, "The
amazing thing is that not a day goes by that
either my local newspaper or the FT isn't filled
with stories about rapidly rising consumer prices.
The last thing any central bank should be doing is
trying to inflate an economy already burdened by
rapidly rising prices. And that is exactly what
they want to do now! If this is not madness,
nothing else is."
In case you were
wondering, $150 billion is actually chump change.
Hell, the federal deficit alone is over $600
billion a year! So $150 billion merely matches
three months' worth of federal borrowing due to
their overspending! Hahaha!
And the
federal budget is about $3.4 trillion a year,
resulting in federal spending (when actual
deficits from "supplemental appropriations" are
included) of more than $4 trillion a year! For
crying out loud, total GDP, which is the total of
all the goods and services created (and consumed)
by the United States in an entire year, is only
about $14 trillion!
And if that is not
enough to make you gag up blood, when unfunded
liabilities are accrued and added, the federal
deficit alone, according to the Government
Accountability Office, was $4.5 trillion last
year! The actual deficit was bigger than the
budget itself! Yow!
Then we come to the
startling realization that federal government
spending is about $8 trillion, more than half of
GDP! And when you add in the states and local
governments also borrowing and spending, borrowing
and spending, borrowing and spending, too, you are
suddenly talking about 75% of GDP being government
spending!
And now some piddly $150 billion
is going to make a big difference in preventing
the overdue bust at the end of the biggest boom
the world has ever seen? Hahahaha! Stop! I'm
laughing so hard my stomach hurts! Hahahaha! Stop!
Stop! Hahahaha!
Wiping my snotty nose with
one hand, with the other hand I turn to Mike
Whitney, writing at InformationClearingHouse.info,
who writes, "The Bush 'Stimulus Package' is the
biggest and most obscene hyper-inflationary
swindle ever perpetrated on the American people.
It's a $100 billion, taxpayer-funded bailout that
is being slapped together at breakneck-speed to
forestall a collapse in consumer spending, an
exodus of foreign capital, and a painful slide
into recession."
Naturally, you
immediately think of gold at a time like this, and
how you don't have enough, and how you wish, wish,
wish you had picked up a few more ounces. But if
you did not, then you were not alone, as Rick
Ackerman of Rick's Picks newsletter had been
skeptical of gold, too, but started his latest
column with the headline "Zealous Deflationist
Sheds Gold Doubts". He writes, "Gold at $10,000 an
ounce? Gurus and hard-money advocates have been
predicting it for decades, ever since currencies
began to seriously decouple from bullion in the
1930s. I've been skeptical of such forecasts
myself, mainly because my deflationist imagination
has always envisioned a world in which public and
private bankruptcy had become pervasive. With
credit unavailable, cash in extremely limited
supply, and asset values wiped out by forced
liquidations, who, I asked, would supply the
bidding power to push bullion quotes into the
stratosphere?"
Now, I figure, he knows the
ugly truth; governments will create and spend as
much money as they can, and there is the money he
was looking for. And for proof of that, all we
have to do is look at the Bush "stimulus plan" to
give away free money, or look at Zimbabwe to see
how it can be done, as that godforsaken country
has printed so much money and created so much
price inflation that they are now forced to issue
a 200,000 Zimbabwe dollar bill, worth about US$4
or so. (Well, it must be a lot less by now, since
it has been a few days since the news of the new
money came out; price inflation in Zimbabwe is
running at about 50,000% a year).
Perhaps
because of this stimulus plan thing, or perhaps
because of the Zimbabwe thing, or because of
something else, like maybe how the CIA was
controlling his brain with some kind of neural
neutralizer ray gun or something and now their
budget has been cut and the agents are reassigned
to the "war on terror" or something, but whatever
it was, Mr Ackerman now says, "But that doesn't
mean an ounce of gold cannot get bid up in the
meantime to $10,000, however fleetingly, before
the fiat money that is still accepted in exchange
for gold has been exposed as a fraud."
Making up for lost time, perhaps, you can
almost hear new-found enthusiasm in his voice when
he says, "Take it from a deflationist who once
scoffed at the notion of $10,000 gold: This rally
is the real deal, and the $1,000 supposed
'barrier' is looking more and more to me like a
launching pad."
Then, my Acute Mogambo
Senses (AMS) detected a voice tremor, suggesting
that maybe his mind was rebelling against the
sheer intellectual corruption and desperation of
the coming "tax rebate" giveaway, and it shocked
him back into the gold camp. Well, this is my
interpretation of why he hints, "Deflation might
eventually knock gold back down to earth, so that
bullion will have 'merely' retained its purchasing
power in spades, but there is a lot of inflating
to be attempted (futilely) by the central banks
before that is likely to occur."
Then I
knew I was right about it being the stimulus
program that has unnerved him when he went on to
say, "the chicken-in-every-pot that the US
government is about to offer Americans via a tax
rebate is so puny and belated a 'solution' as to
be laughable. Even if such Keynesian quackery
could work, and even if the government were to
enact a big enough giveaway to thwart deflation
for perhaps a year or two - say, by offering every
household a new Chevy Tahoe or a kitchen-remodel -
it would only put us that much deeper in debt,
since Congress would be spending money created
from thin air rather than raised through taxes."
I love it! "Keynesian quackery"! Hahaha!
The perfect phrase! I leap to my feet and shout
"Bravo! Well said, young sir! Bravo!"
Well, Mr Ackerman may have changed his
mind about gold, but he has not changed it about
giving me the slightest opportunity to run my
Stupid Mogambo Mouth (SMM) about how wonderful
gold is, and how "preserving wealth" is exactly
what gold does, when all around it things are
losing their measure of "wealth", and I get more
and more worked up until I am demanding that you
immediately get up off of your dead, fat butt and
go out and buy some gold right now. And silver,
too!
To prevent this, he immediately goes
on to say, "If you think the stimulus measures
being promoted by the government will help restore
the US economy to health, then by all means, sell
your gold assets and buy shares in Chrysler. For
our part, we will reiterate our belief that gold
has been, and will continue to be - at least for
the foreseeable future - the no-brainer investment
of our lifetime."
No-brainer investment!
That's the kind of thing I need, as I have no
smarts of my own! Then I hear Ted Butler saying
the same thing about silver, and I am confused,
and I want to buy some of each. And a pizza. A big
one.
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
