The bartender looks at me and snarls, "You are unhappy when the Federal Reserve
creates new money and credit, which increases the money supply, which increases
consumer prices and aggregate debt, and that is why you say you drink and come
in here to torment the waitresses with your stupid leer and crude innuendo. And
now you are unhappy when the Fed DOESN'T increase money and credit, and that is
why you are drinking?"
With the little bit of muscle control I had left, I lifted my head up off of
the bar and opened one bleary, bloodshot eye to look at him. I decided that he
looked stupid, and I was going to tell him so, but I found that my lips would
not move as soon as I tried to
say, "Go to hell, you ugly, stupid little troll!"
As my head suddenly collapsed back onto the bar with a thud, my eyes
involuntarily opened and I got a good look at the bartender, who was a hell of
a lot bigger than I thought! Whew! Even in my semi-conscious and
hyper-aggressive alcoholic stupor, I knew that it was a good thing that my lips
were paralyzed!
Actually, it was a good thing I was, umm, indisposed, as I did not have to then
waste my Precious Mogambo Time (PMT) explaining to him that it is Too, Too Late
(TTL) for this stupid country to act like responsible, intelligent people, and
now our only options are to allow the Federal Reserve to continue to inflate
the money supply with suicidal, reckless abandon and have Congress legislate
more and more slimy tax schemes to continue "saving America" by enriching
themselves and their friends by virtue of both the tax wheezes and the massive
deficit spending that Congress will doubtlessly embark upon.
All of which means, to be perfectly blunt, lots of creation of money and credit
and lots of inflation in prices, accompanied by lots of screaming, crying,
wailing and gnashing of teeth as we adjust, painfully, to a drastically reduced
lifestyle of less consumption, thanks to higher prices, higher and higher, more
and more every day, with anguished complaining and whining the whole way. Well,
that's what I plan to do about it, anyway.
In fact, you will be, too, as it is exactly like when Junior Mogambo Ranger
(JMR) Joe McD reports, "My brother is a chemist for a worldwide company. He
told me yesterday that Dow Chemical, one of his biggest suppliers, raised
prices by 20% three months ago, and now just announced another 25% price hike."
Now, mostly because I am a big, whiny crybaby who scares easily, I am not going
to calculate the annual inflation of a 20% hike in prices which was followed by
another 25% hike three months later, but off the top of my head it is close to
200% a year! Yikes! I feel another wave of paralysis washing over my previous
paralysis, and now I am having trouble breathing and my heart is pounding,
pounding in my chest as if to explode. I ask myself sarcastically, "Hmmm! I
wonder if crushing chest pains means anything?"
But paralyzed or not, the fact remains that Total Fed Credit actually went down
by US$5.5 billion last week, taking the Fed's total down a little bit, to $883
billion. TFC is still high and within the Fed's usual "another $10 billion per
month" rut that they have been in for the last 10 freaking years in a freaking
row, and is $33 billion higher than this time last year, too.
So why am I so disconsolate that the Fed is not increasing money and credit,
and so is not increasing the money supply and so is not increasing inflation in
consumer prices? Shouldn't I be happy?
No, because it is too late to stop now! We are truly doomed, as so much debt
has been created that it is impossible to pay it back. Not even close!
Of course, there are those who say that I am just a Loudmouthed Drunken
Degenerate Idiot (LDDI), which is something I hear a lot, probably because it
is true. But it is not true that Your Cheatin' Heart by Hank Williams is
the only song I ever play on the jukebox.
My other favorite song is the one I wrote for the new movie I.O.U.S.A.,
but which was never used, and they never even returned any of my calls, either.
It's called, "Let's get naked and really monkey-love nasty because it is the
only thing we will have left after the Federal Reserve has finished destroying
us by creating too much money and credit, aided and abetted by a corrupt,
craven Congress that wanted to borrow and spend hundreds and hundreds of
billions of dollars a year, every year, now amounting to a debt of over $9.5
trillion, spending us into a debtor's grave, and we racked up a trade deficit
of $800 billion a year, too, do wah diddy diddy."
I thought that ending tag with the "too, do" would have sold it, but I guess
not.
Anyway, even the worthless dregs of society like me can still be right, as I
obviously am, if you care to look at this item from Ned Davis Research that I
hold in my trembling hand, which shows that Total Credit Market Debt as a
percentage of GDP is now a staggering 350%! The actual figures are $49.614
trillion in debt against a $14.6 trillion GDP! Yikes! We've already spent
three-and-a-half times as much as we've made getting the boom this far. How in
the hell can we get it to go farther when we owe 350% of our gross incomes!
Gross!
To most people, including me, such numbers have no meaning beyond a numbing
incomprehension, like when my wife says, "This is the third time in the last
month that you came home late, stinking with the stench of whatever gutter in
which you were wallowing", as I seem to remember her once saying, back in our
younger days, that she would be "HAPPY if I came home stinking like a sewer
only three times a month!", essentially "moving the goal posts" - which makes a
cruel mockery of the whole number system, ya stupid old hag!
Of course, she denies making such a statement, and she has no interest in the
number system, but that is not important now. The importance of Total Credit
Market Debt as a percentage of GDP is that this is a NEW record of
indebtedness, and the previous high was achieved at the end of the Roaring
Twenties as the Federal Reserve acted like irresponsible morons then, too, and
total credit market debt topped out at the then-whopping 260% of GDP around
1930! Now we are (gulp!) a third higher than that!
Parenthetically, this "260% of GDP" Great Depression record was matched in
2000, which provides one more possible reason why the despicable Alan Greenspan
at the despicable Federal Reserve pounded interest rates into the toilet and
created a bubble in money and credit that created the bubble in housing that is
now dragging the USA into the toilet.
Note the repeated use of the word "toilet" and be instructed. Concentrate on
the word "gold" and be enlightened.
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
