I was too scared to look at Total Fed Credit myself (the "money from thin air"
stuff that the Fed keeps pounding into the banks) because it seems to me to be
turning into a Gorgon - a creature so hideous that if you looked at one, you
would turn to stone; of course, in my case I was turned into a stone-hearted
paranoid lunatic gold bug, and now I spend my time bellowing in outrage and
fear at the sheer amount of money that is being created all of a sudden to
satisfy the stupefying, staggering spending that governments are doing.
That, anyway, is my excuse for my recent lassitude, which is the term I use
because I have heard the words "lazy and worthless" applied to me enough to
last me a lifetime, thanks.
I also use it to explain my drinking problem, which I then handily
use to explain all my other problems, including poor work performance,
disastrous family relations, and sociological dysfunctions, mostly centered
around loudly denouncing Alan Greenspan, erstwhile chairman of the Federal
Reserve, who single-handedly caused all of the problems we have today by the
insane policies of the Federal Reserve to create excess amounts of money and
credit that created the huge boom which is now, predictably, going bust, plus a
few heaping helpings of contempt for the US Congress for their collusion with
the Fed so as to finance their constant, irresponsible deficit-spending, the
Supreme Court for allowing it all, and the voters who consistently elected
people who did this to us. To name a few.
To be fair, I first tried sending hate mail and harassing the neighbors, but
did it do any good? No! Nobody listens!
But, like all my other problems, simply ignoring the increase in "high powered
money" (lassitude or not) doesn't make it go away, and sure enough, Doug Noland
in his Credit
Bubble Bulletin reports that Federal Reserve Credit jumped up by
another staggering sum last week, this time by a terrifying US$142 billion! In
one week!
Mr Noland, unlike me, will do actual work and research (which probably explains
why he is a respected commentator regarding economics, while I am, ummm, not),
and thus can tell us that this increase in Fed credit made it rise "to a record
$2.198 trillion, with a historic 9-wk increase of $1.310 trillion. Fed Credit
has expanded $1.325 trillion y-t-d (171% annualized) and $1.332 trillion y-o-y
(154%)."
I gasp in amazement that the total sum of Fed-supplied credit to the banks,
accumulated bit by bit since the Fed was founded in 1913, totals $2.19
trillion, more than half of which was added in the last nine weeks alone!
Hahaha! We are so freaking doomed! Hahahaha!
I notice that nobody else was laughing with me, as the Hollow Laugh Of The
Damned (HLOTD) is not widespread enough yet, as first you have to get through
the other "stages of shock", namely Denial, Anger, Fear and Bargaining before
you reach Acceptance of the situation and you realize that, yes, we are
freaking doomed because we overly expanded money and credit, just like all of
history and the Austrian school of economics long ago proved, and which has now
been proved again. Thus the HLOTD.
And if yin equals yang, and if karma has to level, then the bust that follows
the expiring boom of the last whole third of a century ought to be (using the
precise term) a Big Mogambo Lulu (BML).
But creating staggering sums of money is not just what we Americans are doing,
but everybody else is doing it, too! For example, the Wall Street Journal
reports that the Chinese have their own $586 billion "Social Stabilization"
stimulus plan, which "will go toward building highways, railroads and
airports".
This, in case you are wondering, is in addition to the massive infrastructure
spending that "had been increasing by an average of 20% annually for the past
30 years", and which has resulted in a "national highway system that is
scheduled for completion this year" after "30,000 miles of expressway were
built in the past decade."
Now, the new plan is for the highway system to "stretch 53,000 miles by 2020,
surpassing the 47,000 miles of interstate roads in the US currently", which is
comparable since "China has roughly the same land area as the continental US."
I bring this up because it is said to be part of president-elect Barack Obama's
plan to also increase infrastructure spending as part of a big stimulus plan,
and when you add it all together, I can't help but figure that the one
sure-fire investment for the Whole Freaking Next Decade (WFND) is obviously
cement and inflation.
And if you want to talk about inflation but don't want to talk about its
horrors, or how gold and commodities will rise in price and how you ought to be
buying gold with every bit of money that you can scrape together because of the
inflationary collapse that is pre-destined by all of this massive creation of
money and credit, then there is nothing else to talk about, I guess.
But if you do NOT buy gold and commodities, then one day it will be ALL you
will want to talk about! Except for when you want to talk about how you envy
those who did!
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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