The 0.1% fall in sales at US retailers in July has been termed "unexpected" for
some reason that I don't understand since wages are not rising, consumer debt
is not rising, equity withdrawals are not increasing, unemployment is rising
and consumer price inflation is rising. So if retail sales had increased, where
would the consumer have gotten the money?
The question is a good one, and in fact it caused the Big, Beautiful Mogambo
Economic News Service (BBMENS) - the only inter-stellar news service in this
quadrant of the galaxy - to set a new precedent in their latest news broadcast
when they surprisingly changed their format from the usual overemphasis on
reviews of new pornography and their popular "What in the hell is it?" sidebar
where one guesses at the possible uses of various mysterious adult-themed
novelties and devices.
Instead, the BBMENS began its latest newscast with the sound
of ravenous wolves snarling and snapping as they ate people alive, who were
themselves screaming in terror and pain, a terrifying soundtrack that segued to
"Dateline: Earth. The recent, unsettling fall in retail sales is perfectly
'expected' now that consumer debt is at record highs, new consumer debt is not
increasing, overvalued leveraged asset prices are falling (wiping out any
chance for borrowing against equity) and high unemployment is still going up at
terrifying rates while consumer prices continue to rise as a function of the
fall in the value of the rotting dollar, meaning that inflation in prices will
soon be eating Earth people alive, as alluded to at the top of this broadcast
when you heard the sound of wolves eating people alive."
That is where the broadcast abruptly ended, I am sorry to say, immediately
switching to some late-breaking news story about a possible remake of Debbie
Does Dallas, this time in 3-D, which is interesting and all that, but
the part of the newscast that was necessarily deleted was the most poetic part,
which was, "All of these are but signposts to greater and greater catastrophes
in this same sorry vein as the Earth is propelled merrily along to what The
Mambo Mogambo (TMM) calls Death By Free Lunch (DBFL), a fatal condition where
idiotic governments in the thrall of mindless 'gimme gimme' democracy and
'gimme gimme' fascism and 'gimme gimme' socialism and 'gimme gimme' communism
obediently borrow and deficit-spend a fiat money, which is created to monstrous
excess by their central banks expressly for this very purpose, to benefit their
friends and themselves in the short run, but to the horrible detriment of
everybody in the longer run as all this new money percolates through the
economy to cause horrendous inflation in consumer prices and in the size of
government, and people start screaming in outrage and anger and rioting, not
because wolves are literally eating them alive, but because inflation in prices
and a bankrupt, ruined economy means that they can't feed their crying
children, and all of that incessant wailing is drilling into my head like an
ice-pick jammed through my ear and into my freaking brain, all because of the
loathsome Federal Reserve!"
The horror of such a thing makes adrenaline squirt into my bloodstream by the
seeming quart, making my thousand-horsepower brain click and whirr, causing me
to suddenly remember, in vivid detail, every insult, insinuation and
back-stabbing lie that anybody ever said to me, or said about me, or called my
mom and told her what I did, or wrote in a letter, attached it to a brick and
hurled through my window.
Hastily making a note to myself to update Mogambo Plans Of Revenge (MPOR)
against all these suddenly remembered people, my stimulated brain suddenly
recoils in horror at the realization of the economic terror of the derivatives
market, where so much, much, much global money is obligated in leveraged bets
that the total clot of it appears to be variously estimated to be between
US$600 trillion and $2.5 quadrillion, an amount which makes my stomach churn
into a knot, either from that weird-smelling 29-cent burrito I bought at the
gas station or because of the notion that most leveraged things must be "under
water" right now since the market values of the assets, from whence the
derivatives sprang, are down in value, although nobody knows it yet because
there is no market or sales of these derivative things and so nobody knows what
they are really worth, except in the broad sense, as in "mostly squat",
although, theoretically, they should (since they are essentially bets) sum to
zero! Hahahaha!
But we were talking about sales falling, not macroeconomic stupidity on a
colossal scale, and on that topic you will note that the percentage inflation
in prices is actually higher than the percentage decline in sales, which means
that although the consumer got less, they paid more. Gaaahhh!
And it is the concept of getting less but paying more that is so disastrous
that this, then, is the perfect place to tell you that if you do NOT want to
pay more to get less for all of your tomorrows, then buy gold, silver and oil
right with all of your todays, including today so that the rise in their values
matches the rise in the prices of everything else, and which is such an easy
way to invest that you can't help but exclaiming, "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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