Robbing the poor of Jeffersonian wisdom
By The Mogambo Guru
United States president Thomas Jefferson once said, "A government big enough to
give you everything you want is big enough to take away everything you have."
Naturally, I am jealous of Thomas Jefferson, as he gets quoted all over the
place, whereas the only time I was ever quoted was that time when I said, "I'm
innocent, I tells ya!" which made everybody laugh because everybody knew I
wasn't, since they had all that videotape evidence, two busloads of eye
witnesses, and the cranky old woman herself yelling, "That's him, officer!
That's the guy who called me a stupid, moronic, ugly, half-witted old bag
because I would not agree to buy more gold, silver and oil to somehow 'save
myself' from the economic collapse that he sees
coming as a result of the Federal Reserve creating all that excess money and
credit all those years, especially since 1997 when it REALLY got cranking! And
he wanted to me give him $20 as a donation to finance his trip to track down
Alan Greenspan, former chairman of the Federal Reserve from 1987-2006, and slap
his nasty, ugly face as but a small prelude to the punishment he deserves for
what he has done to the country and its money!"
So, still bearing the psychic scars of that nasty encounter (I never did get
the 20 bucks!), I never pass up an opportunity to show how I am smarter than
Thomas Jefferson, which I typically prove by merely showing that I am alive and
he is dead. I mean, he's dead! What in the hell was he thinking if he is so
smart?
But this time I can show the shallow thinking of Thomas Jefferson in another
way by merely showing what he should have said, which is, "A government big
enough to give you everything you want is big enough to take away everything
you have, and that is exactly what it will eventually do because that is what
it must eventually do if government is going to pay higher and higher bills as
inflation in the money supply translates into inflation in consumer prices, and
like a giant leech from Outer Space it will sink its fangs into you and suck
you dry of financial liquidity, either in taxation or inflation (but usually
both), and that is why I, Thomas Jefferson, and all the other Founding Fathers,
put into the Constitution the requirement that money can only be gold and
silver, which is to make sure that the government can't produce extra money and
credit and ruin everything with that boom-bust crap!"
Howard S Katz at thegoldbug.net is obviously not anxious to get into this
Jefferson-Mogambo debate, but writes, "the desire to live off the labor of
others is very strong", explaining the always-popular idea of the "common
people that their government would 'rob from the rich and give to the poor.'"
He immediately disabuses you of that silly notion by dryly noting, "No
government in history has ever done this."
Instead, because the government (in our case, through its proxy the Federal
Reserve) creates excessive amounts of money and credit, and all of this money
chases a fixed-in-the-short-term supply of goods and services, thus driving up
their prices, and thus the poor must consume less, and the money they spend
flows to the rich guys who borrowed the money in the first place! Hahaha!
We're essentially robbing the poor to give to the rich because the Federal
Reserve is creating so much money! Get poorer by having money! What a country!
Hahaha!
And the poor are being robbed at a faster and faster pace, as prices are
soaring for all kinds of things, as I note from the CRB index being up 9.2%
year-to-date. And the Goldman Sachs Commodities Index is up a whopping 16.1%
since January 1, and up a terrifying 43% over the last 12 months!
The latest Economist magazine's table of "Economic and financial indicators"
shows that "All-Items" have gone up by 25% in the last year, and that the
category of "Food" is up 41% in the last year! I am screaming my guts out in
outrage!
And the prices of commodities are not finished rising because the central banks
of the world are not finished increasing the money supply. I can say this with
confidence not because I am an arrogant, loudmouth know-it-all (which I am),
but this time I have a colleague in the famous Jim Rogers, who, according to
the title of the essay MoneyWeek.com, answers a perennial question with "Why
Commodity Prices Are Not Done Rising Yet".
Here is where I cleverly take the words of Mr Rogers and twist them around to
my benefit. Thus, I proudly announce in a press release that "Jim Rogers,
famous investor and economic seer, says that The Mogambo Of The Twinkling Blue
Eyes (TMOTTBE) is absolutely right, and that you SHOULD be buying gold, silver
and oil like the greedy little paranoid rat that you are, and if you are not
buying them, then you are going to be busted and miserable no matter HOW much
of a greedy little paranoid rat you are!"
Okay, he did not say that. But he did say, "There's been no major elephant oil
fields [of more than a billion barrels] discovered in over 40 years. Alaskan
oil fields are in decline; Mexican oil fields are in rapid decline; the North
Sea is in decline. The UK has been exporting oil for 27 years now. Within the
decade, the UK is going to be a major importer of oil again. Indonesia is going
to get thrown out (of OPEC) because they no longer export oil, they are now net
importers of oil. Within the decade, Malaysia is going to be importing oil. Ten
years ago, China was one of the major exporters of oil, now they are the
second-largest importer of oil in the world."
I can tell by the look of horror in your eyes that you are terrified that I am
going to use this instance of increasing demand versus falling supply as an
excuse to launch into another dreary lecture about how the prices rising and
falling is what makes supply equal demand, but I am not. It is my birthday
present to you. And if it is not your birthday now, then it will be one day,
and you already have my present, so don't go around saying, like my children,
"He won't even give us a birthday present and he won't even call us on the
phone on our birthdays, and if we call him, he says 'Me no speakee English!'"
Mr Rogers is apparently also afraid that I am going to launch into a Tiresome
Mogambo Lecture (TML) about how he ignores the whole supply/demand dynamic that
actually determines prices, and he cleverly cuts me off by saying, "Meanwhile,
you know what's happening to demand. Asia's been booming. There are three
billion people in Asia. America's growing. Most of the world has been growing
for the last 25 years."
On the other hand, "supply has gone down and demand has gone up for 25 years.
That's called a bull market."
He sums it up by saying, "the commodity bull market is not something that will
happen some day. It's in process right now, and it's going to go on for years
to come, because supply and demand are out of balance. And by the time we get
to the end of the bull market, commodities will go through the roof."
And gold, silver and oil will be right there in the lead, racking up the
greatest gains of all! Whee!
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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