I don't like to quote Alan Abelson from his Up & Down Wall Street column in
Barron's because (I admit) I am jealous of his talent and success. And while we
are talking about me, I also admit that I am a petty and vindictive kind of
creepy guy who is not very smart, but very paranoid and armed to the teeth.
And I use not only this as an excuse for my rotten behavior, but also the fact
that he never quotes me, either, as he has an obvious disinclination towards
idiots like me, and has, in fact, apparently instructed his receptionists (even
the temps!), to never put my calls through to him, and to never take a message,
because I have simply lost count of the times when I tried to get through to Mr
Abelson so that I could tell him that the damnable Federal Reserve is creating
so much money and credit that the
resultant rise in prices is going to destroy this freaking country, like
inflation in prices has destroyed every other economy in the entire history of
the world when any country was so stupid, so brain-dead, so retarded and so
deliberately obtuse that they inflated their money supply with a stupid fiat
currency and the willing collusion of corrupt banks and government regulators.
Of course, this leads me to extolling the virtues of a gold standard money,
which the government could not inflate/debase, which means that prices cannot
inflate unless alchemists found a way to turn other metals into gold! Hahaha!
But this not about the gold standard, but about how Mr Abelson quotes S Dewey
Keesler of SDK Capital saying that emerging markets are in for some significant
declines, including the Shanghai exchange, with is "already down 50% from is
peak".
Not to make light of a 50% drop in a stock market, but I already knew this, but
I was not prepared for his follow-up remark that the Shanghai exchange still
has "a long way down to go." Yow!
I was going to use this as more proof (as if I needed it) that it is a
mathematical certainty that a majority of investors must lose money in the long
run so that a small minority can make a profit, which would, of course, lead me
to get viciously snotty and also note with some venom that the Wall Street
middlemen will make fortunes for doing a lousy job, and then I will get
apoplectic that the government got used to all the taxes on all the profits for
all those years and created permanent programs with the money, also paid for by
the losing majority of investors!
And now it ain't gonna keep happening, and it's all over, by which I mean, of
course, "We're freaking doomed!", which may have been what prompted Mr Abelson
to report that Mr Keesler correctly sees that "there's no way out for
developing nations" except to "adopt more stringent monetary policies". Hahaha!
What makes me laugh is that Mr Keesler got credit for such a real softball,
slow-pitch question, as there is NEVER any way out of ANYTHING inflationary
except to "adopt more stringent monetary policies!"
And since we are talking soft, fluffy, slow-pitch questions, I'll ask one: What
monetary policy is the best and most stringent? Easy one: The gold standard!
And how much gold is there in the world to accomplish this feat? There are
about 120,000 tonnes of gold in the world, of which they say that 30,000 tonnes
are owned by central banks, and the other 90,000 tonnes of gold are privately
owned by people around the world.
There are, in case you were wondering, 32,150.75 troy ounces per tonne, making
all the world's gold worth about US$3.4 trillion, at $900 an ounce.
In America, the national debt is $9.4 trillion, almost three times the value of
all the gold in the freaking world!
The total, accrued obligations of the American federal government now total
around $70 trillion, which is 21 times more than the value of all the gold in
the world!
And yet you do not see that gold is thus grossly, preposterously, ridiculously
under-priced, so much so that I laugh in scorn at those who are not buying it?
And don't get me started about how silver is so much more under-priced, as it
makes my eyes pop out in disbelief at its low price, and to tell you the truth,
all that popping makes my eyes hurt like hell.
Anyway, Mr Abelson sums up the economic situation by saying, "The consumer is
plainly hurting from the tightening squeeze of skimpy income and stingy hiring,
on the one hand, and on the other, the remorseless inflation that's daily
causing him (and her) so much angst. The longer investors refuse to face up to
the bitter truth about the economy, the credit mess, the shambles that is
housing, contracting corporate profits and the shaky underpinning of the
market, the worse the shock when the day of reckoning comes."
And then, echoing the sentiments of The Mogambo even though he is unaware of
it, he ominously says, "We hope we're wrong. We're convinced we're not."
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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