I am hoping that someone from the media will ask me about my current thoughts
on the "deflation or inflation" debate, but they probably won't, since the last
time I held a Mogambo Press Conference (MPC) where they asked me that question,
the reporters screwed it all up and seemed to fixate on the fact that I yelled
at them, "If you think that the government or the Federal Reserve is going to
allow a true deflation, which is a fall in the money supply, when they have the
ability and authority to create as much fiat money and credit as they want
(literally without limit!) then you are the biggest idiots in this entire
Quadrant Of The Galaxy (QOTG)! Get out! Get out of my office, you morons! Get
out before I kill you all!"
Naturally, they reported in great depth about that and how I chased them into
the parking lot with a baseball bat, blah blah
blah; but what they did not print (a glaring omission that fits with all the
other shortcomings of a biased liberal media), was that I was yelling at them
the whole time, "And if you think that a temporary fall in prices due to
temporary lack of demand means that prices will remain down when all the other
producer costs of taxes, insurances and labor are NOT going down, but instead
are going up, then again I laugh (hahaha!) in rude scorn and contempt at your
stupidity if you think everyone will remain in business when they are always
losing money!"
I thought that they would at least pick up on my last memorable line, "Then how
much will a macaroon cost when nobody makes macaroons? Hahaha! Run! Run out and
get sterilized immediately before you pass on your defective genes by producing
any mutant children, too, you morons!"
So as I wait for the phone to ring for Round Two, it occurs to me that I'm not
sure I know what in the hell I am talking about, because if total loss of
wealth in America is around $10 trillion or so, then a few trillion in proposed
deficit-spending and TARP spending is certainly not going to offset that! Ergo,
if unrealized losses are counted, then the money supply will be going down
despite the wild injections, right? Deflation! Not inflation!
Many people look at this contradiction as further proof of my Mogambo Schizoid
Nature (MSN), but it is not, as there will come a time when some chart in the
future will show the upward-sloping curve of monetary and fiscal excesses of
the Federal Reserve crossing the downward-sloping curve of falling asset
prices, and then the Super- Duper Hyperinflationary Hell (SDHH) will truly
begin!
So the Big Freaking Question (BFQ) is: How long before the hyperinflationary
phase about which I have been yammering begins - bringing back up the prices of
stocks, bonds and houses so that the moronic government can once again wallow
in a sea of tax receipts? Hahahaha!
The rude laughter in response to the BFQ is because, in case you are just
arriving here from Mars and are not up-to-speed on current events, the terrible
mission of the despicable Fed and stupid Congress at this point is to create so
much money, so damned much money, so staggeringly damned much money that they
will, literally, be able to buy everybody out of bankruptcy, thus explaining
the "Hahahaha!" because such massive amounts of money will drive lots of other
prices to the moon, too, and the rioting and suffering of chaotic social
unraveling because the prices of food, energy and necessities are so high will
mean that nobody is going to care about some stupid stocks, bonds or houses!
Hahahaha!
Well, as one would expect in a declining economy, Bloomberg.com reported that
"US business activity shrank in January for the fourth consecutive month,"
which they say is "a sign the downturn in manufacturing may worsen this year."
At this, I laugh and say, with the usual gratuitous snotty attitude, that "The
fall in employment in the manufacturing sector for the Last Few Freaking
Decades (LFFD), as jobs and whole industries were shipped overseas, has been a
sign that manufacturing 'may worsen', you morons!"
I added that "you morons!" at the end so that Mr Bloomberg would see it and say
to himself, "Hey! This guy is right; manufacturing employment has been falling
for years and years! This means that the people who currently write for me are
a bunch of idiots! I'll offer this Mogambo fellow a nice, cushy job at a huge
salary to write for me and then people will see what in the hell is going on!"
Well, as a guy who is incorrigibly lazy and incompetent, I understand that a
job offer would truly be a miracle, but I am getting used to needing miracles,
and with the way things are going, I will need a miracle to keep my job, my
marriage, and my life since I just know that one of the damned kids or a
co-worker is going to be "Et tu, Brute?"
And it is not just me needing a miracle, but lots and lots of people, as the
Institute for Supply Management's "business barometer" has just "decreased to
33.3, the lowest reading since March 1982, from 35.1 the prior month."
Helpfully, they add "Readings below 50 signal a contraction", as if the
whopping 5% contraction was not enough to make your heart go "thud".
This squares perfectly with the Commerce Department's report that says, "Gross
domestic product contracted at a 3.8% annual pace from October through
December", which is not only bad, but it is, instead, Bad, Bad News (BBN) in
that "the US economy shrank at the fastest pace since 1982 in the fourth
quarter as consumer spending slid the most in the postwar era."
Everything was bad, as the reading of new orders fell to 30.7 from last month's
31.5 reading, "the production index declined to 29.7 from 32.4", and, worst of
all, the "employment index dropped to 34.8 from 39.2", which is a stunning 11%
drop! Yikes!
And, since all things are connected to all things, and apparently keeping with
the "since the postwar era" theme, they add, "Slumping demand may lead to more
firings this year after the economy lost 2.6 million jobs in 2008, the most
since 1945."
You are probably wondering why I am not bringing up signs of inflation in
prices, since complaining about inflation in consumer prices and warning about
inflation in consumer prices and screaming my guts out in fear of inflation in
consumer prices is about all I do anymore, making life into a living hell for
my wife, children and neighbors as a result.
Well, the reason is that I was saving it for last, figuring to play a little
joke on you where I would wait until you got pretty bored with unemployment
figures and "barometers" of various economic variables, and then when you were
relaxed and unsuspecting, probably saying, "This is boring! Why am I reading
this Stupid Mogambo Crap (SMC)?" I would hit you with it right between your
eyes, and the impact would be so great that you would say, "Wow! We're freaking
doomed, and that Damned Loudmouth Mogambo (DLM) was right when he said to buy
gold, silver and oil to protect ourselves from roaring inflation in prices, and
we owe a real debt of gratitude to the DML for such uncommon wisdom!"
This terrible-although-instructive news is that the report includes the
terrifying news that "A measure of prices paid for raw materials increased to
39.8 from the prior month's 32.7 reading", which is an 18% increase!! In one
month!!!
Serious scholars who delve into the more arcane aspects of the Teachings Of The
Mogambo (TOTM) instantly notice the surfeit of exclamation points in the above,
as befits such a Serious, Serious Increase (SSI) in prices!
For an example of the horrors to come, The 5-Minute Forecast notes, "For the
first time in their history, the Girl Scouts of the USA this week announced
they will be making smaller cookies and putting less in each box ... but still
charging the same price."
Lest one think that the Girl Scouts are a bunch of greedy, inflationary pigs
like bankers and the Federal Reserve, Girl Scout spokesperson Michelle Tompkins
explains that they are just another victim of the inflation in prices caused by
the Federal Reserve creating all that excess money and credit (inflation in the
money supply), and that the by-laws of the Girl Scouts of America forbids their
being armed with AK-47 assault rifles with which to take Washington, DC by
storm, which was my suggestion, as I figured, "Who would shoot a cute little
Girl Scout?"
Well, she did not say that officially, of course, but her meaning was clear
when she said that putting fewer cookies in each box, but charging the same old
price "was the only alternative".
Reflect again on gold, silver and oil, and now Girl Scout cookies, and be
instructed!
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 2009, The Daily Reckoning.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
