I usually have a "get prepared" to visit John Williams at his famous
shadowstats.com site so that I am "feeling no pain", and this time I was happy,
as his headline was "Inflation, Money Supply, GDP, Unemployment and the Dollar
- Alternate Data Series".
As for inflation, his calculation of the Consumer Price Index (CPI) "reflects
the CPI as if it were calculated using the methodologies in place in 1980",
which I note is back when inflation was a measurement of the change in prices
of things that you buy, and not, as it is now after the villainous Alan
Greenspan and Michael Boskin came up with their ludicrous "hedonic"
measurements of inflation with which to disguise it.
Anyway, Mr Williams's honorable and time-honored methodology
shows inflation in prices running about 6%, which is a horrendous rate, and is
a big shock to those who have just swallowed the government's estimate of CPI
as being a negative 1.3% over the last year!
Mr Williams's estimate of the M3 money supply (the broadest definition of
'money') shows that it is growing at about 6%, which, although startling to
those of us who are seemingly predisposed to getting hysterical about such
monetary idiocy because it causes inflation in consumer prices and which is the
Worst Thing That Can Happen (WTTCH), is actually down from the boiling 17%
growth in M3 money supply at the beginning of 2008!
Wow! What a deceleration! This certainly has something to do with his
calculation that year-over-year change in gross domestic product (GDP) is down
by a whopping 5%.
Even worse, M1, the narrowest definition of money since it is essentially
defined as "cash", has exploded to an outrageous 16% growth since the beginning
of 2009!
This is plenty bad news if you are afraid of inflation in consumer prices,
which is different from being afraid of the CIA tapping into your computer and
discovering all that pornographic filth and hate mail (for example, "Dear
Federal Reserve, I always hated you morons for creating so much money and
credit that it caused roaring bubbles in the stock market, the bond market, the
housing market and the size of government, and now your outrageous excesses to
stupidly supply the financing to let the federal government try and buy its way
out of a well-deserved bankruptcy will soon cause roaring inflation in consumer
prices as the value of the dollar tanks, and my stupid relatives are getting
laid off and are coming over here asking me to loan them some money, and I
reply, 'Why don't you sell some of the gold and silver I have been screaming at
you to buy all these years? It's way up in price!' and they admit, 'We didn't
buy any' and then I say, 'Then why would I loan money to someone who is so
stupid that I hate everything about you, including hating that stupid look on
your stupid face' and then they say to me, 'We always thought you were kidding
when you said you hated us' and then I say to them, 'Now you know, you moron!'
all of which has caused a lot more tension at home, as you can imagine, which
is the last thing I need right now").
And as bad as that is, the really bad news is that measuring unemployment the
correct way shows that it has now shot past the 20% mark! One out of five
unemployed! This is Great Depression stuff! Yikes!
All of which brings me to one of the stories that you don't hear about when
discussing the Great Depression, which is that the people who did not own gold
or shares of gold miners all wanted to own them, and would have, too, if their
paper assets had not taken all their money away!
"Which is kind of like right now!" I thought to myself after getting the news
after I had finished the scheduled Perimeter Security Check outside of the
Mogambo Bailout Bunker (MBB), whereupon I was settling down to read an essay by
Gary Gibson, managing editor of Whiskey and Gunpowder, who had done a little
research and found that the Federal Reserve just reported that "US household
wealth dropped $11.1 TRILLION since 2008 - $5.1 trillion of that in the last
three months alone." Yikes!
I assume that he has not mastered the use of the exclamation point, which would
have made his sentence end, more appropriately, "the last three months
alone!!!!"
And lest I be remiss in giving to you Earthlings another heaping helping of
Secrets Of The Cosmos (SOTC), which is my mission here on your miserable
planet, way out here in the middle of what we sophisticated interstellar
travelers call "No Freaking Where", here it is: Buy gold when your government
is acting irresponsibly, which is, admittedly, most of the time, which should
make you Squeal With Glee (SWG), "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
