As usual, I put on an adult-sized diaper and my tinfoil hat in careful
preparation to look at the change in Total Fed Credit last week, and it is a
good thing I did, too, because the Federal Reserve (as expressed in their
secret motto "We Are Evil") created, out of thin air, a new US$29 billion in
bank credit! Wow!
The interesting part is that the Federal Reserve used that new money - and a
lot more - to buy $62 billion of US government debt last week! Hahaha! What a
fraud! $62 billion! In one week! We are so freaking doomed!
Now, if you are having a hard time understanding my words because I am so
outraged that I am actually incoherent, or you are disgusted by the way drops
of frothy spittle fly from my
hysterical lips as I loudly scream, scream, scream, "We’re freaking doomed!"
what I am trying to say is that all of the economic problems we have, and all
of the economic problems of everyone around the world, were caused by former
Fed chairman Alan Greenspan creating what was, back then, a staggering $10
billion a month in more Total Fed Credit, which was then multiplied dozens of
times over by the banks and financial centers, and which drove up asset prices
so high that they are now falling, to the dismay of people who own assets and
the greedy government which rakes off a nice Chunk Of Change (COC) from those
assets.
And now here - here! - is Greenspan successor Ben Bernanke’s monetary insanity
to create, in One Freaking Week (OFW), $62 billion whereas it took old
Greenspan an entire month to come up with $10 billion! Yow! This is indeed
insanity!
And how did the loathsome Greenspan accomplish such horrific feats? Easy! He
used the power of the Federal Reserve to create money out of thin air, year
after year, for almost two continuous decades, which appeared as a credit on
the books of the banks, ready for lending, which the banks then loaned out as
Huge Freaking Multiples (HFM) of that money! And it just kept on going like
that, year after year!
And then the money - all that money, all that staggering tonnage of dollars -
eventually ended up in the hands of ultimate American consumers, who used the
money to buy consumer stuff from overseas, creating a trade deficit, so that
foreigners ended up with all those dollars, which those governments had to
"monetize" by creating more of their own currency to keep their money from
getting scarce in relation to the absolute glut of Greenspan’s dollars flooding
the world, all of which is the fabled "savings glut" that turned into a
"savings inflow" into the United States, blamed by the idiotic Bernanke for
causing the housing boom! Hahaha!
As Daffy Duck would say, "What a maroon!"
And speaking of maroons, Bernanke, who saw none of this happening, recently
said that he sees "tentative signs that the sharp decline in economic activity
may be slowing", which made me laugh for many reasons, firstly because an idea
for a witty Mogambo Editorial Cartoon (MEC) flashed into my mind.
In the MEC, a man has fallen from the top of a skyscraper, and as he plunges
down, Bernanke shouts, "Flap your arms! Flap! The little bit of lift will slow
your descent, and we will see signs that your sharp decline may be slowing!"
Well, even though my wonderful idea is so marvelous that it would have been the
obvious winner of a Pulitzer for "Best Editorial Cartoon", the idea did not
even get off the ground, as I kept being distracted by the question, "Why did
this guy fall off the building?"
Then I decided that he fell while trying to escape government predators, so I
had to draw a bunch of people labeled "government" looking down from the top of
the building and saying, "We know you have lost your job and your house, and
that half of your retirement savings and other investments are gone, prices for
everything are rising, and you are desperate ... But we need to raise your
taxes! A lot!"
Then I decided it needed "something". So I thought to add some naked ladies
because I like naked ladies, but I couldn’t decide how to actually work that
into the theme of the cartoon, even though they all had that seductive, "come
hither" look in their eyes and were saying, "I want you, Mogambo! Take me!"
which suggested the seductive "free lunch" promises of Congress and the Federal
Reserve, which was another way to go.
And then this "free lunch" thing brings up the grim fact that the national debt
has shot up over $11.2 trillion, thanks to the Federal Reserve creating the
money so that the government could spend it!
So, instead of working on some stupid cartoon, I decided to just grab you by
the collar and shout, "We’re freaking doomed by a spendthrift Congress spending
tons of new money created by the evil Federal Reserve!" into your terrified
face; but I realized this will never suffice to convince you of the terror,
especially with you wriggling and struggling to break free from my Powerful
Mogambo Grip (PMG), so I will give you some actual numbers, which ought to make
you feel better because it makes me look like I am an idiot.
As a guy who spends a lot of his time being outraged and vocal about how
inflation in prices is going to destroy us all as a result of all of this
global creation of money, it was particularly surprising to me when I first
read the Associated Press report that "Over the past 12 months, consumer prices
have fallen 0.4 percent, the first 12-month decline since a similar drop for
the year ending in August 1955."
So, my face is red, and I hear you say, "Prices are going down! It’s a
deflation! So let go of me, you Stupid Mogambo Idiot (SMI)!"
Well, the joke is on you, as prices really aren’t going down as, "Core
inflation, which excludes energy and food, rose 0.2 percent last month,
matching the gains of the past three months", and in fact, "Over the past 12
months, core inflation has risen 1.8 percent."
And inflation in prices is going to get a lot worse, as the loathsome and
thoroughly despicable Federal Reserve is financing the absurd stimulus programs
of Barack Obama so much that (audience shouts out, "How much, Marvelous Mogambo
Master (MMM)?") on Wednesday, April 15, the national debt was $11,218.8
billion, while on April 8, One Freaking Week (OFW) earlier, the debt was
$11,145.4 billion, which is not only $73.4 billion more, but is also a Hell Of
A Lot Of Money (HOALOM) in OFW!
And thus we are naturally led to the point where I tell you, with sincerity in
my voice and a crazed look in my eyes, that HOALOM in OFW means that if you are
not buying gold, silver and oil in response to such monstrous fiscal and
monetary irresponsibility and outrageous insanity, then there is something
very, very wrong with you, and you deserve the ruinous punishment that will be
inflicted on you very, very soon.
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.)
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