I usually get a nice laugh when I read anything by Paul Krugman, whom I regard
as just an infamous Princeton academic leftist, a know-nothing neo-Keynesian
econometric hack, and an economics columnist for the leftist newspaper NY Times
whose writings are lapped up by an incompetent press even as he was
incompetently lapping up everything that the disastrously incompetent Alan
Greenspan (erstwhile chairman of the Federal Reserve whose deliberately obtuse
monetary incompetence has destroyed the dollar and the US), was doing with
monetary policy at the Same Exact Time (SET) that Krugman was all of these
things, but who never said a discouraging word, and who is now completely
surprised at the way things have turned out!
The reason I bring this up is that one of his latest articles was picked up by
my little far-leftist hometown rag, the St Petersburg
Times, out here in the sticks, and it carried the title "Deficits Saved the
World".
Like I said, I usually get a laugh from what he thinks, but this time I did
more than laugh. In fact, Serious Mogambo Scholars (SMS) around the world
recorded it as the date of the first appearance of the never-seen-before,
I-didn't-know-I-had-it-in-me verbal explosion now officially known as The
Mogambo Guffaw (TMG) as it rocketed from my lips, flying out into the ether,
echoing off the neighboring houses, making dogs bark, bark, bark as if to say,
"The Mogambo is right! This is stupid! Hahaha! Bark bark bark!"
I was having such a good time that I guiltily thought maybe I was too hasty in
denouncing the guy from the title alone, which I admit isn't really fair and
maybe, just maybe, he was, you know, joking, using a joke to relieve the
tension, and maybe something like, "The economist was sitting at a bar and
heard a guy saying to the bartender, 'My cat has always had a defective butt,
and all it does is eat, sleep and crap all over everything, sort of like the
Federal Reserve doing nothing but eating the purchasing power of our money by
creating too much of it, sleeping on the job as the new money creates bubbles
and inflation, and now that the paid-for booms have turned into the inevitable
busts, everything craps all over everything else. Now everything in my house is
ruined and everything in the economy is ruined!' So the economist thinks to
himself, 'I used to think I was an economist, but now I see I am just a
defective cat's butt!'"
This is such a good joke that it made me want more, so I quickly scanned the
article for the word "cat" and/or "butt", or any serious discussion of possible
remedies like "This US$9 trillion government budget-deficit over 10 years is so
insane that we should rise as a nation in outrage, revolting against the
established order, and installing The Fabulous Mogambo (TFB) as emperor or,
even better, a living god to rule over us and get us back on a gold standard
where the money supply does not rise, where the standard of living continually
rises as inflation gently falls, and government is limited in the amount of
taxes it can raise because there is a limited, fixed amount of money to go
around, and that means that the only way for the government to get money is to
directly take it from the people, instead of the government using an expanding
money supply of fiat currency and irresponsible levels of fractional-reserve
banking to insidiously confiscate the buying power of people's money with
constant inflation."
But I was soon disabused of that notion, as right off the bat he writes that
the $9 trillion of deficit spending (which I note is only the budget deficit,
and does not even include the non-deficit spending that is "paid for" in the
budget, which is at least twice as big!) seems like "a terrifying number" to us
bozos out here, but through the lens of his powerful genius he can easily see
that "The truth is more complicated and less frightening", by which he means
that people like me are little crybaby sissies, screaming in anger and sheer
outrage at the sheer fiscal incompetence that produced almost $12 trillion in
national debt, even more trillions in business and private debts, and the
staggering monetary insanity of the Federal Reserve in creating all the money
and credit that made it all possible by enabling the borrowing that produced
all the gigantic, towering, suffocating, crushing debts that are behind
unbelievable booms in stocks, booms in bonds, booms in houses, booms in
consumer spending, booms is derivatives, booms in size of government and booms
in just stuff, stuff, stuff that are all now, terrifyingly, imploding.
Mogambo scholars noted that a variant known as the Scornful Mogambo Guffaw
(SMG) first appeared when Mr Krugman explained, "Here's one way to look at it",
which is that "We're looking at a rise in the debt/GDP ratio of about 40
percentage points", which I was SURE was a joke because the implications of a
massive 40% rise in debt/gross domestic product are so profoundly dire, but was
NOT a joke, as he unbelievably went on to say, "The real interest on the
additional debt (you want to subtract off inflation) will probably be around 1%
of GDP, or 5% of federal revenue. That doesn't sound like an overwhelming
burden." Hahahaha!
Pardon me for laughing with such contempt, as I would go to jail if I sold a
debt that made such a deal! You're allowed to subtract out inflation to make
the deal sound better? Hahaha! If inflation is running 25%, we would pay 26%
interest, as it is still only 1% over the inflation rate? If inflation was
100%, somebody would loan money to the government at 101%? Wow!
Suddenly, with visions of oceans of dollar bills in my eyes and my brain
shifting into overdrive at the possibilities afforded by instant wealth beyond
measure, I clearly see a career change ahead! Wow! Let me at those old people!
There's money to be made scamming people with this kind of reasoning!
Hastily, I assemble my preliminary Mogambo Sales Pitch (MSP), which is, "Sign
here, pops! And sign here! And here! Initial this! Now I will loan you some
money where the interest rate you pay, after subtracting out inflation as per
the great Paul Krugman, is only 1%! You are getting money at an after-inflation
rate of 1%, you stupid old man, which is very good deal for you, so if you
don't want something to happen to someone you love, you'll sign here! And here!
And here! Initial this! Hahaha!"
Well, a bunch of trusting old people who don't want something to happen to
their cat or their car usually "sign on the dotted line" pretty quickly ... But
real investors? Since when? What kind of a screwball halfwit investor would
loan money to the US government, now grotesquely changed into a particularly
corrupt kind of government that is best likened to a nest of greedy, diseased,
thieving, lying rats, where an investor would get a measly 1% over inflation,
no matter how high inflation went?
Well, maybe they will, but I say they won't, but they will eventually buy gold,
silver and oil, even though currently they don't, which seems, to a discerning
Junior Mogambo Ranger (JMR), to be the perfect opportunity to buy them before
their prices explode to the upside, just like history shows they always do when
a government acts so bizarrely, which is why I 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.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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