All of this monetary crap, and the inevitable government responses, means that
huge inflations and deflations in relative prices will re-shape this country
and this world, and that means that I need more gold, silver and oil as vital
protection against the financial upheavals it guarantees, a Mogambo Blast-Proof
Bunker (MCPB) nearby in which to keep them, and more ammo, frozen pizza and
pornography against the boredom of ignoring my wife and kids pleading, "Please
come out of there and let us have the TV remote back!"
My only revenge is that I can buy gold while I am in here, and I am pleased
that I was able to find somebody to agree with me, too, even though he will
unfortunately not officially acknowledge my existence, agree to endorse my
theories, or even answer the damned phone after the little bastard abruptly
hung up after
hearing them the first time, but I can still quote Jeff Clark from his work at
Doug Casey's Big Gold newsletter, where he says, so sarcastically that I can
almost taste the bile, "If the bull market in gold were over, it would mean
that inflation was under control, the dollar's long-term problems had been
solved, the government had become restrained in printing new money, banks were
healthy, house prices had stabilized, a surprising new source of energy had
been discovered, unemployment was diminishing, and everyone was smiling."
Exactly! I rose to my feet to applaud, and I shouted out "Exactly! Bravo!", to
not only prove that for once in my life I had a thought that preceded the
action (instead of my usual tactic of "acting without thinking" and then
blaming the catastrophic result on other people), but that it was perfectly
phrased, too!
I fully endorse his theories, and I think that he should return the favor and
endorse mine, which are mostly that we are freaking doomed just like all the
other times in history when people were doomed by their stupid government
creating excess money and credit to spend on one supreme idiocy or another,
usually eventually resulting in the government desperately spending even MORE
money for an expensive war, so as to produce an economic stimulus through
president Dwight Eisenhower's "military-industrial complex", get rid of a lot
of the excess population at the same time, impose martial law, confiscate and
nationalize things, and distract the stupid citizens from their usual panic
about how they are starving to death.
Without even noting that this is exactly what I had Just Freaking Said (JFS),
he writes, "Due to the bloating federal deficit and the big-dollar promises the
politicians have made, but that the US can't possibly pay, further rapid growth
in the money supply lies ahead. And that means more inflation, which means the
dollar's recovery will turn out to be temporary. And more debasement of the
dollar equals higher gold."
In fact, he also figures that we are a lot worse off than anybody knows, and
already the money supply has been expanded to the point where, "Today the US
inflation rate is 13.4%, almost as high as the worst of the 1970s", and that
"Inflation is out of control and getting worse."
The words "inflation is out of control and getting worse" should be enough to
give you a heart attack, unless you happen to have a copy of the new book by
Mike Maloney, Guide to Investing in Gold and Silver, which contains the
most calming-yet-riveting revelation right at the beginning, right in the
Preface, which is real handy!
He writes, "For the last 2,400 years a pattern was continually repeated in
which governments debase their money supply", and "as the debasement
progresses, the population senses the loss of their purchasing power. Then
something miraculous happens. Through the free market system, the will of the
public causes gold and silver to automatically revalue."
At this point, I have read almost half of the first page of the Preface, my
lips are tired from all that reading, and I find that I disagree with Mr
Maloney right off the bat, as I can tell him, and you, from bitter, bitter
experience that the public (as exemplified by my own family) does not merely
"sense" their loss of buying power, but they feel it very keenly, and are
whining and complaining about it every freaking day of their lives.
And I have to listen to their crap about how they need more money because
prices have gone up so much, and they want me to give them more money, all the
time more money, and if I don't give them actual cash, then they will just
charge it on a credit card, like I am so stupid that I don't scan the monthly
credit-card statement and can actually see how much money they are spending on
stupid crap, like shoes!
And there is nothing wrong with any of them that getting up off of their fat
butts and getting outside for some exercise once in awhile wouldn't cure.
So, I was going to get into a "thing" about how self-centered my family is
because, I mean, it's not like they were buying gold and silver with the money,
which I could understand, but suddenly it all seemed so irrelevant when Mr
Maloney writes, "In doing so, it accounts for all the currency that was created
since the last revaluation."
The word "zounds!" flashed across the screens in the Greed Center of my finely
tuned Mogambo Money-Grubbing Mind (MMGM) when I tried to even contemplate the
price of gold when it again miraculously revalues to "account for all the
currency that was created since the last revaluation", mostly because it seemed
like a lot, off-hand!
Now I am curious to know how much an ounce of gold would be if the US$829
billion in actual US cash-and-coin that exists was netted against the 261
million ounces of gold that the Fed is supposed to have. Hmmm!
So, I keep dividing $829 billion by 261 million ounces of gold, and most of the
time I get the answer "$3,176.24 per ounce", which sounds really nice, and
which sounds even nicer when you realize that this figure is too, too low, even
without adding in the additional revaluation of gold to account for all of the
money that has been created around the world, and how little gold they have
against those mountains of currency!
Whee! This economics stuff is easy!
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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Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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