Volcker punctures the nonsense
By The Mogambo Guru
Paul Volcker, the legendary former chairman of the Federal Reserve who
heroically and against powerful political opposition defeated raging inflation
arising from massive government spending in the 1960s and 1970s on wars and
increased entitlements, and who is now mysteriously part of the ridiculous
Barack Obama team of economic nitwits occupying in the White House, has finally
said something.
After all these months of sheer economic idiocy flooding from the White House,
Congress, the Federal Reserve and everywhere you turn, Paul Volcker has finally
spoken.
And, even more deliciously, he said it to Fed vice chairman Donald Kohn, one of
the arrogant, lowlife mental defectives whose egregious monetary actions got us
into the mess we are in, at
some dorky "question-and-answer session at a conference" in Nashville,
Tennessee.
As the Wall Street Journal reports, "The former Fed chairman grilled Mr Kohn
over the Fed's effort to convey that it considers a 2% inflation rate to be
appropriate for the US economy in the long term" and he, "questions how the Fed
can talk about both 2% inflation and price stability".
Mr Volcker actually said, "I don't get it", which is a Big Fat Lie (BFL),
because he understands it perfectly, but he is just so polite and so politic
that he finds it hard to say, as I would have so succinctly put it, "How in the
hell can you talk about purposely creating at least 2% inflation in prices and
then talk about the Fed's duty to pursue price stability at the same freaking
time, which gives rise to the expression 'talking out of both sides of your
mouth at the same time', and also gives rise to an occasion for me to call you
a lying halfwit economic ignoramus who thinks that everybody else is so stupid
that you can say such utter preposterous crap like this to me and think I am
going to swallow it!"
I mean, the idea for the damned Federal Reserve in the First Freaking Place
(FFP) was to make sure that inflation did NOT get above zero! The Federal
Reserve was given extraordinary, probably unconstitutional powers over all the
money and banks of the United States, to provide them with a "flexible" money
supply and with the awesome power of a fiat currency to do it with, on the
condition that they "promote price stability", which means zero inflation in
prices! Zero!
I mean, how freaking simple can it freaking be?
And not only does "price stability" mean Zero Freaking Inflation (ZFI) in
prices, it has ALWAYS meant zero inflation in prices, and yet, now,
astonishingly, here is an obviously complete failure, the Federal Reserve
vice-chairman, presiding as he does over a busted economy of his own making,
telling us that, as Mr Volcker explains, "people in a generation are going to
be losing half their purchasing power" thanks to 2% inflation! Gaaahhh!
Now, having a currency that is losing half its purchasing power may not mean
anything - absolutely nothing! - to an incompetent government and autonomous
agencies staffed with obviously incompetent people who all can, and will,
double their own salaries at their whim. "Prices rise? Give yourself more
money!"
It means a bit more, however, to people who have private-sector jobs, as wages
will only slowly increase to match the gradual doubling in prices as wage
increases trail inflation with a lag, which means that workers will suffer
financially the entire time.
And even after wage and benefit adjustments, and even after some theoretical
cessation of inflation in prices, private-sector workers will never really
catch up, and will therefore almost certainly suffer permanent net-wealth
impairment.
And a currency that loses half its purchasing power means a lot to those on
fixed incomes, like retirees living on annuities or fixed retirement benefits,
and who will never, ever see an increase in their incomes from those sources,
but who must still pay the doubled prices, and then higher and higher prices
from there, if they live that long.
But a currency "losing half its purchasing power in a generation" means the
most to those people who do not have jobs at all, and those who cannot have
jobs, and therefore they have no income at all, but who still must pay all the
doubled prices!
And although Mr Kohn does not use the word "sacrifice", or the phrase "The
Federal Reserve is going to make it possible for the government to steal you
blind", or admit that "The people of the United States and the world are going
to be consumed in the fires of inflationary hell so that the Federal Reserve
can continue to create misery and failure, while having fun playing around with
their completely idiotic neo-Keynesian econometric stupidities, an absurdity
that has completely captivated the dunderheads in the major universities of the
dumbed-down USA, like Princeton, which has such low academic standards that Ben
Bernanke, the bozo that is now the chairman of the Federal Reserve, was the
head of their economics department! Hahaha!"
So while Mr Kohn is careful not to say any of these things, he does say that
acting so insanely as to deliberately try and cause the horror of (at least)
continual 2% inflation in prices gives the Federal Reserve "a little more room
... to react to an adverse shock to the economy". Hahahaha!
Excuse my laughter, but this laughable pipsqueak says that everyone must suffer
a falling standard of living over, at least, the next generation, so that the
Fed can create so much money, flooding the world with money to loan and
literally buying up old loans, that they can pound interest rates down, down,
down lower than the rate of inflation, which the WSJ notes, is "the usual
remedy for recession"! Hahahaha!
And if inflation in prices is "the usual remedy for recession", then it
certainly is!
And while the inflation in consumer prices is not (yet) raging out of control
and there are not yet food riots in the streets, the JOC-ECRI Industrial Price
Index just shot up to 72.63 from 69.75.
And as for what to do about it, I can only tell you that there has never been
anything better than gold, which, now that I think about it, says it all!
Whee! This investing stuff is easy!
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
