My poor, spinning head was on the bar,
comfortably resting in a pool of what smelled like
stale beer and something moldy, when the bartender
pokes at me and asks, "What's the matter with
you?" I opened my bloodshot eyes and squinted up
at him, and knew that I could not explain to him
the significance of John Williams at
ShadowStats.com reporting that his new
calculations show that M3, the broadest measure of
the money supply, is now condemning us to an
inflationary hell.
But for some reason my
lips were all numb and refused to work, so I just
pointed to where Mr Williams writes, "Money Supply
M3 Growth Continues Rising, Monetary Base Surges
At Annualized 20% Pace", and "On a similar basis,
annual M2 growth would stand at 7.2%, up from 6.9%
in February. The increasing signs
of
accelerating money growth remain
coincident with the Fed's increasing
re-liquefaction of illiquid assets held within the
financial system."
He looks at it, then he
looks at me with a bored expression on his face,
and says "Yeah? So?"
Trying to think of a
nice, friendly way to explain that inflation in
consumer prices always follows inflation in the
money supply, I ask, "What is your name, sir?" and
the barman replies "Frank."
So, picking my
words carefully to keep with the new "friendly
conversation" theme, I politely say, "Well, then,
you're an idiot, Frank! A big, stupid moron! In
fact, all you stupid people in this bar are
stupid, because you all think that you are not
going to be destroyed by the fires of an
inflationary hell that is going to consume you and
everyone you love, because the Federal Reserve is
destroying the dollar right in front of your eyes
by creating so damned many of them, which they are
now doing just trying to delay the inevitable
catastrophic collapse brought on by the same
damned Federal Reserve creating so damned much, so
incredibly damned much, so impossibly damned much
money in the first place, creating mountains and
mountains of debt and money and over-valued assets
over the last few freaking decades, and especially
since 1997! You're all morons, and you are all
freaking doomed! Doomed!"
Well, all my
efforts to be nice were for naught, as usual, and
they all wanted to argue with me and call me nasty
names, and someone suggested not serving me any
more alcohol and to make me leave, which I mention
just to show you the kind of morons we have
hanging out in bars these days, and how I was
right when I called them "stupid".
But not
one of them said, as I expected, "You're right, oh
Wise And Glorious Mogambo (WAGM)! We grovel at
your feet in supplication and beseech you to
please, please, please impart wisdom to tell us
how to turn this to advantage, or at least tell us
how to save our nasty stupid butts from, as you
say, doom!"
If someone had asked me, I
would have told them to buy gold and silver, and
they will prosper, just like all of the other
times in history when a butthead government
allowed the over-creation of money and credit by
the stupid banks, which sentenced the currency and
the economy to inflationary collapse, and gold
soared as everyone turned to gold as there was
nothing else that could do the job of preserving
wealth.
And if they had shown their
gratitude for such terrific advice and said
something like, "Oh, thank you, thank you, thank
you, Mighty, Mighty Mogambo (MMM)! Let us show our
gratitude by plying you with alcoholic beverages
and tacos until, you know, you puke!", I would
have told them to especially consider buying
silver, which is such a freaking bargain that
every time I look at it, I think to myself "I
can't believe silver is selling for this piddly
little price! I should buy some more silver!"
And I would, too, if I could figure out a
way to get another US$20 out of my wife's purse,
as I have already used the other 20-spot here at
this stupid bar and I am far, FAR too drunk to
noiselessly pull off the heist.
And
speaking of gold, Antal Fekete of the Gold
Standard University writing at GoldSeek.com
reminds us that "Seventy-five years ago this month
Franklin Delano Roosevelt ... closed the US Mint
to gold. Recall that the Mint had been established
by the constitution to protect the people's right
to sound money."
If you are like me, then
you are not in the mood for a damned history
lesson, as the scars of high school and history
class are still too, too fresh, even after all
these years.
But the result of closing the
Mint, says Mr Fekete, is that we got "the
irredeemable dollar", which he considers "the real
culprit" of the mess we are in. "It has taken the
chickens 75 years to come home to roost," he
writes. "Come home they will with a vengeance. The
past 75 years were a period of unprecedented
turbulence in the financial markets. Yet never
during those 75 years has the nation faced a
graver monetary crisis than it is facing now. The
banking system of the country threatens to seize
up. The credit system is facing a violent
collapse."
And what does gold at $1,000 an
ounce have to do with "violent collapse", if
anything? He gravely intones, "$1,000 gold is a
milestone - on the road to hell."
Having
been married and a father for a long, long time, I
know firsthand all about hell, and it will be
Very, Very Ugly (VVU) from now on!
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
