Shielding the world from folly
By The Mogambo Guru
From Reuters we get the headline "The Banks Are Cheating Us", with the subhead
"Hong Kong investors protest Lehman Brothers losses", which made me laugh,
"Hahahaha!" and think, "Welcome to the real world, Hong Kong chumps!"
The article starts off, "Angry Hong Kong investors, some banging gongs and
others waving banners, scuffled outside a bank on Friday as frustration mounted
over losses tied to investments linked to failed US bank Lehman Brothers," and
"Several hundred investors, many of them elderly retirees, marched to eight
banks which had sold Lehman structured products, demanding compensation for
their losses" because the banks were guilty of "misleading investors on the
risks involved".
And it wasn't just them, either, as "Investors in Singapore and
Indonesia have also hit the streets in protest, expressing outrage that the
failed products they bought were actually complex derivatives."
Now, normally you would think, "What a bunch of dummies! Demanding compensation
for their losses just because some slick stock and bond hustlers talked them
into sinking all their hard-earned money into some now-worthless crap? Hahaha!
Welcome to the real world! And now they want their losses covered by the
government? Hahaha! What do they think this is, communist Russia? Hahaha!"
Apart from the fact that the English philosopher Herbert Spencer said, "The
ultimate result of shielding men from the effects of folly is to fill the world
with fools", the joke is actually on me, as these Asian investors actually
think that they deserve compensation for their stupidity by using the stupidity
of us Americans as a model, as our stupid government and central bank are
creating untold zillions of dollars to do that very thing!
And part of it is first jacking up Total Fed Credit to get the new credit into
the banks, and sure enough, it was up another stunning US$62 billion last week,
taking the total to a staggering $1,872.948 billion, which is up an
also-staggering $1,010.325 billion in the last year! My God! Total Reserve
credit was up more than 117% in a year! A freaking year! Twelve months! More
than doubling!
And if you are one of those people who write to me and say that I am just a
stupid guy with bad breath, poor posture, and minimal social skills, I can only
say "Touche!" but one of the few things I do know is that an increase in the
money supply means that there will be an increase in consumer prices as all
those additional dollars end up bidding for things in one marketplace or
another, thus driving up their prices, and pretty soon the prices of food and
energy and housing and everything else are rising so much that it is causing
distress among the poor, and they are rioting in the streets, while the middle
class will be drained of every penny's worth of buying power, gold will be
shooting to the moon in response to a devalued dollar, and you Earthlings will
realize the True Mogambo Significance (TMS) of having gold, guns and grub,
because no matter what happens, with those you can buy your way out, shoot your
way out, or wait out a siege, in which case you will want to stock your bunker
with tasty grub, extra ammo, and enough booze to deaden the horror of watching
the outside world disintegrate under the onslaught of so much inflation.
On the other hand, one can infer the same thing from the fact that the new
Gross Domestic Product Deflator is 4.2%! In other words, inflation in prices
is, across the entire aggregate economy, 4.2%! Yikes!
This is so horrifying that during Halloween a few weeks ago, I made a
last-minute decision to change my choice of costume. Originally, I was going to
dress up as the beautiful ballerina whose heart has been broken in a tragic
misunderstanding and ultimate betrayal, and who is now packing an Uzi to track
down that lying bastard and make him pay, big-time.
Instead, I went as inflation: I stuck the head of a doll into my mouth so that
it looked like I was eating somebody alive. When I knocked on the door, a man
answered and we all said, "Trick or Treat!" and then the guy looked at me and
asked, "What are you supposed to be?" I told him, "I am inflation, and I eat
people alive!"
Mostly, the joke fell flat, and the rest of the conversation quickly turned to
why a raving lunatic my age would be trick-or-treating among children, and
wearing such a disgusting and incomprehensible costume, too.
I told him, "Because the new GDP deflator was 4.2%, you moron! And if that is
not enough of a 'trick' for you, then you are too stupid to have candy, and so
I am going to take all yours! Hahahaha!" Then I made a grab for the bowl of
candy he had, and we tussled back-and-forth over it, candy flying everywhere,
him yelling to his wife to "Call the cops! Call 911!" and me yelling back that
he is a moron who doesn't deserve any damned candy because inflation in prices,
as a result of this insane inflation in the money supply means he won't have
any candy because nobody will be able to afford to buy candy, and the inflation
is going to kill everybody, including him and all these stupid little kids,
whereupon all the kids ran away, screaming and crying, and I was yelling, "If
you think that this 4.2% GDP deflator is bad, you little morons, wait until the
rest of the inflation in prices gets here as a result of the trillions and
trillions of new dollars in various stimulus packages being concocted Around
The Freaking Globe (ATFG), with more and more to come!"
By this time, I suddenly lost my grip on the candy bowl and the door was rudely
slammed into my face. I kept ringing his doorbell and yelling for him to open
the door and get a taste of the misery of inflation that all these trillions of
new dollars are going to cause, and how he is an idiot to be cowering in there
and spending his money on stupid trick-or-treat candy instead of spending it on
gold and silver.
I was getting louder and louder, until I saw a police car turning the corner.
Then I figured I had imparted enough wisdom, and snagged enough free chocolate
candy, for one night.
It was the least I could do to help a neighbor!
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,
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