I was in the Mogambo Bunker, leisurely
calculating the risk-reward ratio between trying
to stuff the last, lingering piece of that huge
pizza down into my gorged stomach and maybe
throwing up, versus putting it in the refrigerator
and having somebody in the family take it and eat
it, which they will do even if I leave a note on
it saying that it is mine, and that if anybody
takes it, I will track them down and kick some
serious butt.
But my ruminations were put
aside when I saw that in the banks, the results of
their stupidity is seemingly made suddenly,
terrifyingly manifest in that non-borrowed
reserves in the banks collapsed by -US$8.751
billion, which is a huge negative number, meaning
that bank capital is going up in smoke as a lot of the
crappy, stupid, insane loans
they made go bad! I want to laugh, "Hahahaha!" at
the banks, as being busted out has never been more
deserved, and ditto the stupid investors who
looked at all those annual reports from all those
banks but never said, "Whoa! This is freaking
insane! Let me sell that stupid bank stock before
everybody else finds out what in the hell is going
on!"
Of course, there is no end to
duplicity and corruption in the banks anymore, and
so it is but child's play to diddle with numbers
in accounts and ledger entries to get Total
Reserves back up to its $41.639 billion
more-or-less average by doing something tricky,
like letting banks move losses off their balance
sheets into Special Purpose Investment Vehicles or
something in, say, an off-shore account in a
related subsidiary in which they have a 0.0001%
stake or more, or changing what is counted as
reserves ("You could sell the building and all
future cash flows, so that should count as
reserves!"), or using a 15-year moving average of
past reserve balances as "reserves".
John
Williams at Shadowstats.com had noticed it, too,
and says, "In December 2007, total borrowings from
the Fed topped 36% of total reserves, then the
highest proportion seen since 46% in March 1933,
when President Franklin Roosevelt declared a 'bank
holiday' and closed the banks."
Who knows
what in the hell is going on? It's bad, it's
blatant corruption, and it will not help in the
long run, anyway, sort of like an idiot
psychiatrist saying, "Those new pills seem to be
helping you!", when, in fact, the only thing that
re-connecting with reality has done for me is to
be confronted with a truer, starker, uglier
reality of the Federal Reserve destroying my money
and my country, which makes me MORE fearful and
angry!
Well, to be fair, I also no longer
feel compelled to jump to my feet, run to the
window, and shout, "We're freaking doomed, you
morons! Your stupid, un-constitutional fiat money
and unlimited fractional-reserve banking in the
hands of an intellectually corrupt Federal Reserve
and a willing accomplice in the Congress (except
Ron Paul) will destroy you with inflation in
prices, just like it has destroyed every other
stupid country that has ever dared commit such
halfwitted folly!"
But you are not
interested in my medication regimen or its
efficaciousness, although you will need some heavy
medications yourself when I give you another
interesting bit of news, which is that the Fed's
stash of US Securities Owned Outright dropped
again, by $4.9 billion last week, which takes
their stash down $60.5 billion from levels a year
ago!
My God! This is the dropping of the
last pretense of the Fed. Not only have bank
reserves not gone up in 10 years by so much as a
dime, but the Treasury bonds that the Fed bought,
by creating the money to buy them, are also
disappearing! As Dorothy Parker so famously said,
"What fresh hell is this?"
Well, to be
fair, it will theoretically not be a "fresh hell"
soon, as the Fed cut its Fed Funds rate (the rate
at which banks have to lend to each other) by
another 0.50%, taking that rate down to 3%. That's
a drop of 1.25 percentage points in a week or so,
down from 4.25%, which is slashing interest rates
by (astonishingly) about a third! It is said to
be, by people who actually look these things up
instead of just pulling facts and figures out of
thin air like I do, the biggest plunge in 20
years! Wow!
Things are getting Very, Very
Serious (VVS) when the Fed is slashing interest
rates with abandon and the government is literally
sending out money to people, which is the
predictable end-game panic of a bizarre economic
theory propounded by a ridiculous Federal Reserve
and the majority of morons who teach and comment
on economics.
But before I get into a real
Honking Mogambo Snit (HMS) about it, perhaps I
could take the easy way out, thanks to Junior
Mogambo Ranger (JMR) Tom D, who sent a link to
"Jim Miles: House of Cards" at
Palestinechronicle.com, whose subhead says it all
for me: "Perhaps it is just all numbers and the
economy can once again go percolating along as the
economists juggle their statistics and print more
money and everyone believes that the financial
house is stronger than a house of cards."
He goes on to calmly imply that I am right
that the sublime idiocy of modern econometric,
neo-Keynesian economics is beyond farce when he
writes, "Economists do use mathematics a lot,
especially statistics, but there is no scientific
method of experimental deconstruction that relates
to what they do, which is mostly talk about the
wonderful statistics they create. Statistics, for
those who have studied them without delving into
the details, can be used for both sides of many
arguments, according to the manner in which a
phrase is turned around that statistic and what
supporting data are included or left out."
Exactly!
For example, Larry Kudlow,
strident CNBC market shill, says he does not care
about a $400 billion deficit because he looks at
it as a small percentage of GDP! Hahaha! $400
billion is about $4,000 for every non-government
worker in the country, you moron! And this is just
one year's freaking deficit!
In fact, the
$3.1 trillion federal budget, even without the
$600 billion or so that will be added to
Congressional spending through "supplemental
appropriations" during the year, means that the
federal government alone is budgeting itself to
spend, this year alone, $31,000 per non-government
worker in the country! Hahaha! This is truly
insane!
But lunacy about economics is not
confined to CNBC, and in fact Mr Miles notes that
the study of money and economics was "coined at a
time when economics was encountering
emancipation", and that is the beginning of when
economics gave "birth to progenies and prodigies;
dark extensive moon-calves, unnameable abortions,
wide-coiled monstrosities, such as the world has
not seen hitherto!" - as he quotes from The
Secret History of the Dismal Science: Economics,
Religion and Race in the 19th Century, Levy,
David M and Peart, Sandra J - which certainly
pertains to the current neo-Keynesian econometric
abomination holding sway in America and, I shudder
to say, the world.
Now that last piece of
pizza is cold. Damn! Is there no end to the
miseries inflicted on us by the Federal Reserve?
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.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
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