Total Fed Credit went down by US$9.6 billion last week, which is, in comparison
to their wild excesses of late, not that much, and certainly nothing to get
excited about. Sort of like how my boss is unimpressed that she only got one
letter last week, instead of the usual five, from disgruntled customers
complaining about how I called them "morons" because they were not buying gold
and silver in response to the government acting like monetary and fiscal
idiots.
And if you are wondering, "Like what kind of monetary idiocy, Magnificent Manly
Mogambo (MMM)?" then all I have to do is smile enigmatically and silently point
to where it shows that the US Federal Reserve used some of the money that they
created to buy up another whopping $9.3 billion in Treasury debt, agency
debt and miscellaneous other worthless debt from banks last week. Last week!
The surprising thing to me about last week is that the reserves in the banks
went down over $102 billion in the same proverbial One Freaking Week (OFW),
which is one of those things that seems like a lot, but what it really means to
me is that the banks are flush with cash after selling their toxic assets to
the Fed, and they were not using the Fed-supplied reserves because nobody was
borrowing any money. Simple!
Not so surprising, but equally as simple, the Monetary Base went down by $103
billion last week, too, since bank reserves are included in it.
This must all be pretty unnerving to the foul Federal Reserve and the complicit
Congress, as they all desperately want taxpayers to "eat the losses" of
bankrupted morons-in-suits, which is, of course, an outrage, but that is, alas,
the way it has to be because the numbers are Too, Too Huge (TTH), and the time
when we could have averted all of this by getting our sorry butts back on the
gold standard (as required by the Constitution!) was long, long ago in the '60s
and '70s. If then!
Of course, we would never have become a gigantic "welfare state", which is made
manifest with something in the USA Today recently about how one out of every
six dollars of income in America is now in the form of a government check for
some kind of public assistance.
I sneer, as an increase in people wanting a government check is hardly news,
and it goes along with how governments (local, state and federal) now have
budgets so big that they, combined, spend half of all money spent in the USA,
which is The Big, Big Problem (TBBP), and which has been growing since the '60s
when we stopped being a nation of people "yearning to breathe free" and able to
"pursue happiness" in a free-market capitalist economy, and instead morphed,
cancer-like, into one where the government equalizes outcomes by redistributing
money from the successful (progressive taxation and "negative tax") and jobs
from the competent (affirmative action).
And since it is too late to stop now, and since there are no solutions (since
nobody in all of history has been able to find a solution to the problems of a
malignant, distorted, big-government "services" economy choking on obscene
levels of debt both public and private), then there is only one thing left to
do if you are using a paper money; attempt the impossible again by again
printing up more money! Hahaha!
Of course, it is impossible from the start, sort of like how my "happy
marriage" was impossible from the start, and we were hardly out of the church
when she is yammering at me to get a job.
I mean, if the total output of goods and services of the course of a year
(gross domestic product - GDP) of the USA is around $14 trillion and the GDP of
the whole world is around $50 trillion, it all pales to insignificance compared
just with the sheer amount of losses at risk in derivatives alone, a clot of
pure Vegas gambling contracts which is variously calculated as totaling from
hundreds of trillions of dollars up into the quadrillions of dollars, which is
not to mention the huge debts supporting bubbles in stock prices, bond prices,
housing prices and size/spending of government, a situation made temporarily
tolerable by abnormally low commodity/food/energy/ prices and insanely low
interest rates.
This is, obviously, an absurd situation made possible only by the staggering
stupidity and appalling arrogance of the Federal Reserve, a sad situation made
horrifyingly manifest by its horrid chairman Alan Greenspan during the crucial
period 1987-2006, where he blithely created all the money, credit and an
"anything goes" lack of regulatory oversight that financed and allowed all the
absurd debts incurred, an ignominious feat made possible by the
almost-impossible-to-believe incompetence and self-serving arrogance of
Congress, decade after decade, consistently deficit-spending and further
distorting the economy with every dollar, and both were abetted by a corrupt
education system that wasn't smart enough to see the obvious historical fact
that such a bizarre big-government system could not endure and a lamebrain
"free press" that came to be populated by "journalists" who passed off the
garbled facts of self-professed "expert economists", woeful ignorance and
personal biases as "news."
Uh-oh. By that distasteful outburst, I can see that my medications are wearing
off! I soon find that contemplating the iron-clad security of gold and silver
doesn't help much, and only the actual fondling of an ounce of gold and an
ounce of silver in my hands can calm me down after getting worked up about how
sheer incompetence destroyed America.
And after a few minutes alone with my gold and silver, securely ensconced in
the fabulous Mogambo Bunker Of Ultimate Paranoia (MBOUP) and ruminating about
how 4,500 years of human history says I am doing the smart thing by buying
gold, I actually find myself saying, "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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