Foreign central banks, proving that they are just as stupid and corrupt as I
thought they were, continue to buy US Treasury and agency debt with both hands,
and their holdings stashed at the Fed jumped a big $26 billion last week as a
result!
I ended that with an exclamation point because when I multiply $26 billion a
week times 52 weeks, I get $1.352 trillion, a headache and a feeling of
impending doom, which I figure in some primordial, primitive way MUST be
significant, thus explaining my use of the exclamation point.
The new total holdings of these foreigners, in that one account alone, is a
huge clot of debt for which they have paid a cumulative $2.710 trillion,
although with interest rates trickling upwards, they
surely lost some money as the prices of bonds went down. Hahaha! Morons!
And so with all of this foreign money flooding into Treasury and agency debt,
and all the new money pouring out of the Federal Reserve spigots, and then all
this new money pouring out of the government spending spigots, it is not too
surprising - although still more than merely terrifying - to see the monetary
base jump to $1.801 trillion from $1.706 trillion just a couple of weeks ago.
(Editor's note: There was a long silence on the tape, until finally it
continues ... ) "I hope that you can still hear me, as I am now in full
lockdown mode in the Fabulous Mogambo Bunker (FMB), suddenly scared out of my
mind in a panic attack because the money supply surged 5.6% in two weeks, a
cancerous growth rate that, if annualized, suggests that the money supply will
grow to $7.426 trillion in One Freaking Year (OFY)! OFY!"
And if you think that such terrifying increases in the money supply are not
possible because responsible, intelligent people will not allow it, then I
laugh - hahaha! - at your childish optimism and point out that the money
supply, now $1.801 trillion, is monstrously up from one year ago when the
monetary base was a mere $825 billion! Wow!
If the money supply can double in one year, why can't it quadruple in one more
year? Who's going to stop them? You? Hahahaha! We're so freaking doomed!
On the other hand, from another perspective, John Williams at shadowstats.com
figures things the "old-fashioned" way, which is to say, in this case, the
pre-Bill Clinton way, and he figures that the M3 money supply is - sacrebleu! -
falling, and is now down from its high of about 17% growth in 2008 to only
about 7% now, which is still "terrifying", but down from "suicidal."
Then I read that Mr Williams figures that the unemployment rate, measured the
old-fashioned way, is about 20%!
Naturally, my heart is thumping and I am panicked at the thought of 20%
unemployment, which means either that I will soon probably be fired, too, or
that I will be pestered by relatives who were fired and who now want to borrow
money, like they have some secret plan to pay me back or something, and when I
politely ask, "Where is all the gold, silver and oil that I told you to buy all
those years, you morons?" they will say how they did not buy any gold, silver
or oil, and then I will laugh - hahahaha! - in their stupid faces and tell
them, "Then your misery is your reward for being stupid!" which will
doubtlessly cause already-hateful family members to be even MORE hateful, like
their incredible stupidity is MY fault or something! See the kind of crap I
have to put up with around here all the damned time?
Desperate for better news, even in comparison, I am strangely relieved that
shadowstats.com calculates that the inflation in consumer prices (when measured
the pre-Clinton way) has plummeted from a blistering 9% in 2008, and now
inflation has fallen to about 2.5%, which is still Very, Very Bad (VVB) in both
absolute terms and historical precedent, but it's at least a meager straw at
which to clutch in panic and desperation.
Fortunately, by buying gold, silver and energy, you are never in a panic and
you are never desperate because by owning them you are thusly guaranteed -
guaranteed! - by 4,500 years of human history to be holding the only things
that will hold their value as the idiotic ruling class destroys a fiat currency
by creating too much of it simply because they want to and there is nobody that
can stop them.
And that is also why it is all so, so easy, and why you, too, will say, "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.)
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Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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