Being Scared Out Of My Freaking Mind (SOOMFM) comes naturally to a coward like
me, and getting drunk is a successful coping mechanism, and so I was
predictably smashed, but not too smashed, to at least take a look at the weekly
release of the Total Fed Credit figures. I am sorry that I did, as I almost
vomited in fear (which does not mix well with tequila, in case you were
wondering) when I saw that TFC was up a staggering $9.5 billion dollars last
week! In one week!
And as bad as this is from an inflationary perspective, this staggering sum is
just the beginning, as the banks use this whopping increase in their accounts
at the Fed to make more loans - big loans, huge loans, any amount of loans that
they want! - without having to keep any money on hand as reserves, as is
obvious just by noting that the banks have the exact same
"required reserves" of the exact same $41 billion as they did in 1999! Hahaha!
In case you were wondering why I make such a fuss about it, TFC is the magical
increase in credit-from-thin-air that the Fed can magically create in the banks
by merely pressing a magical button, instantly (and magically!) giving the
banks the capital wherewithal to make more loans, thus increasing the money
supply (and the aggregate load of debts!) when the money is borrowed, which
causes inflation in prices as this borrowed money is used to bid up the prices
of goods and services, and which causes a lot of societal friction when people
start going hungry because they cannot afford to buy food or energy, and then
they start rioting and start electing even WEIRDER people, like McCain or
Obama!
Perhaps all this money was used to buy the bonds that increased the national
debt by about $90 billion in August! That comes out to a $900 increase in the
national debt for every private-sector job in the country! In one freaking
month! One!
Of course, being a consumer society that utilizes a fiat currency that springs
into existence by virtue of debt, everybody must go farther into debt to make
the system work, and sure enough, consumer installment debt zoomed $19 billion
in June alone, and then another $5 billion in July, taking the total
installment debt owed by American consumers to a staggering $2,587.4 billion,
or $25,874.00 dollars per non-government worker in the country!
I bring this up because the latest report of employment showed that the US
unemployment rate is now at 6.1%, which is up from 5.7% a month ago. Worse, of
the seven sectors tracked in the report, only in government and
education/healthcare is employment rising! Everybody else is shedding jobs!
Yikes!
Bob Wood of Kaizen Managed Assets has also looked at the report. He says that
although the government announced the news that another 84,000 jobs were lost
and that the unemployment rate shot up to 6.1%, "If the truth were known, it
was a lot worse than that." This is because that number was derived after the
Bureau of Labor Statistics assumed that 125,000 jobs were created using the
birth/death model, "so the real loss of jobs was closer to 200,000. And while
the managed unemployment rate was 6.1%, the broader measure that captures
workers who can't find full-time work, but whose first choice is to take one
today, the unemployment rate is 10.7%."
And worse of all, since these are government figures, we know that everybody
connected with them is lying, and the statistics are too low by half!
The Household Survey of employment also showed job losses, 342,000. This drove
Mr Wood to say, "So far, this year, the official line from the government is
that we've lost about 600,000 jobs in 2008", which is not to mention that
almost 700,000 jobs that were "assumed to have been created by the BLS using
the birth/death con".
But no matter how you look at it, Andy Sutton of my2centsonline.com says, "the
employment situation is bleak, initial claims for unemployment are well over
what are generally used to 'call' a recession, and even worse, these job losses
are causing an increase in individuals raiding retirement savings accounts".
And how much money is in those retirement accounts? Hahaha! Less than $50,000
on average! How long do you think you can live on what's left after paying
taxes on $50,000 in today's high-inflation world where the prices rise daily
and the dollar loses half its value every few years? Hahaha! We're freaking
doomed!
If you are not laughing, then I know that you are not an owner of gold or
silver, or even commodities, which thrive in times like these. So, learn to
laugh by buying gold, silver and oil, and lots of all of it! The more, the
merrier! Hahaha!
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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