Saddled by electronic pixie
dust By The Mogambo Guru
Total Fed Credit, which is that electronic
pixie dust that magically creates available credit
in the banks, which turns into money when somebody
borrows it from the banks, which increases both
debt and the money supply, was actually down by
US$2.9 billion last week, taking us back to $861.7
billion. Not much, I admit, but a negative number
is a long, long way from the usual positive
zillion or so dollars per week, as has been the
terrifying habit of the Fed since 1997.
For those who fancy the technical analysis
side of things, the long-term chart of Fed Credit
shows a marked deceleration in the growth of Fed
Credit since March 2007. To those whose
inclinations run towards calculus, the second
derivative (the rate
of
change of the rate of change) has gone negative.
I'm not sure I understand any of it, but I
am sure that none of this means anything good, as
the economic system with which we have saddled
ourselves is not the good kind of "saddled", like
when you are on your hands and knees as your wife
rides you around the bedroom, whacking you on the
butt with a riding crop and shouting, "Yahoo!
Prepare for a full galloping frontal assault, my
Powerful Mogambo Stallion (PMS)!", but rather the
other kind of "saddled", where not only does your
wife NOT do any of this fun stuff or even want to
discuss it, but you can't even go out and hire
professional jockeys because inflation is so bad
that prices are too high, and they are getting
more so all the freaking time, and then you REALLY
understand the ugliness of the term "saddled" when
describing an economic system!
Like the
kind that John Stepek at MoneyWeek.com reports has
England all in an uproar: "The price paid for
goods leaving factories rose 5.7% year on year,
which is the highest rate since 1991. Wholesale
food prices were up 8.5%, while petrol prices were
up by almost 23%. Overall, input prices were up an
incredible 18.9%."
And it doesn't take a
real genius to see that higher costs for producers
means they will have to charge higher prices,
which means that when Brits buy something from now
on, they will pay higher prices.
And it is
going to get worse for Brits, as Ian McAvity
shares a BBC item that indicates that the British
government and bankers are just as slimy as the
ones we Americans have, according to the article's
title, "Secret Bank Rescues To Be Allowed".
Reading on, horrified at the concept of the
government handing out unknown amounts of money
with no accountability, we astonished to see that
it is true, and, "Chancellor Alistair Darling has
proposed that failing banks should be able to
receive help from the Bank of England in secret",
so that there would not be an, "immediate adverse
impact on consumer confidence"! Ha ha ha ha! A
delayed impact, as the last-to-know are handed the
empty bag after everyone else has fled, is okay,
though! Hahahaha!
And the inflation in
consumer prices that huge creations of money and
credit will cause, secret or not, will be
explosive; sort of how Iraq is so explosive and
anti-American, which may be because of religious
fanaticism, or maybe Iraqis lack "consumer
confidence", or maybe because prices are so high
that people are just naturally angry, and they are
looking around for the reasons why they can't
afford to feed their children, and they see that
America's Federal Reserve has created so damned
much excess money and credit, and forced all the
other central banks around the world to increase
their own stocks of money and credit with which to
soak up all these dollars and thus prevent their
own currencies from getting so strong (as there
would be many sellers of dollars and few buyers,
meaning that the price of dollars would go down)
as to crimp export sales to those selfsame,
idiotic, consumption addled, debt-besotted
American morons, and now prices are too high as a
result of all that monetary inflation!
Well, of course I can't prove any of this,
but that has never stopped me from making wild,
baseless accusations in the past, especially when
the evidence of the economic crimes committed is
so blatant; Iraq had a price inflation rate of 12%
in December 2007! This was relatively good news,
as inflation was 65% last year, which is, I
assume, before their government learned how to lie
about inflation statistics from watching how
America started that deceptive crap, and now
governments around the world seem to all be doing
it, like we ordinary citizens are too stupid to
notice that prices are always going higher, much
higher, and we are increasingly (as the saying
goes), "Out of money before we are out of month"!
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.
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