I always get a kick out of people - like the author of this week's "Buttonwood"
column in The Economist magazine - who say that tax revenues to government are
suffering because they spent all the inflated tax revenues they got all these
years, and now the revenues are gone, gone, gone but all the programs and
government-paid employment remain! Hahaha! Another downside of acting like
idiots.
The revenues, of course, came from the stock market bubble and the bond market
bubble and the housing bubble and the consumer spending bubbles, instead of
"storing up surpluses in the fat years so as to cushion their finances in the
lean ones", which makes me laugh a big ol' Mogambo Laugh of Scorn (MLOS) -
hahaha! - at the idea of a government "storing up tax
surpluses", like money is corn or something! Hahaha!
You can tell he doesn't want to get into an argument with me, and says that
"governments were sorely tempted to spend their inflated revenues", which makes
me laugh, too, at the sheer simplistic childishness of the remark because I
can't think of any government or entity of any kind, anywhere in space and
time, in any sector of the universe, which was never "tempted" to spend extra
money on something!
Even the idea of it makes me laugh in a cruel and sardonic way that could only
come from the Cruel And Sardonic Mogambo (CASM), who has been known to enjoy
this very "extra money" phenomenon when he "accidentally" lets it slip at
dinner that a whole handful of change fell out of my pocket in my car, just to
watch them scramble and fight each other for a chance to feel around the
driver's seat, fighting each other off, pulling them away and taking their
place, escalating the violence, driven to acts of aggression by their greed and
the mere suggestion of "extra money"!
That's when I yell out, "Hey, kids! Since you are bent over like that and your
face is down there, how does the seat smell where I sit on my Fat Mogambo Butt
(FMB)? Hahahaha!" proving that some things are just naturally funny!
If you, too, think that the government can stash away excess tax revenues, then
please wait until I have stopped laughing and then tell me how, and where (but
mostly how) they could do such a thing, and I will make you famous! The
government can "save up" a trillion or so dollars? Hahaha!
Then this Buttonwood guy said, "As countries try to eliminate the shortfall, it
is tempting to hope that they will do so purely by cutting waste in public
spending", which is another concept that I don't understand, because whether
the spending is wasteful or not, spending is spending and income is income.
And so it is not so much the waste as it is the Sheer Freaking Size (SFS) of
government spending that makes me crazy with fear and outrage that such a thing
is allowed to happen just because some cowardly US Supreme Court weenies ruled
in 1933 - and upheld at every challenge since then by every subsequent
cowardly, traitorous Supreme Court - that the US dollar did not have to be
gold, as literally required in the Constitution, but could be made of paper and
electronic digits backing up IOUs and just about any silly crap the government
wanted, and now we are going to pay the price for being such idiots as to have
let that happen.
Of course, he did not get into this kind of pessimism, where I figure people
are this close (hold up thumb and forefinger almost touching to indicate
"almost") to digging up and eating the dead, the Food and Drug Administration
has to establish new dietary guidelines on recommended maximum daily intake of
formaldehyde and embalming fluid, and where necrophiliacs are alarmed and
pushing for "protected minority" status and all those attendant luscious
government benefits.
However, and perhaps thankfully, he does not go quite that far, but ominously
adds that, in all honesty, cutting government spending is going to be hard
because "they won't (and probably can't). So they will find other things to
tax." Yikes!
I say "Yikes" because if there is one thing you can say about a tax, it makes
prices go up for the final consumer by at least 100% of the tax, which is
inflation in consumer prices, which is The One Freaking Thing (TOFT) that you
DON'T want! TOFT!
But we got it anyway, and in a recent study by Florida International University
Center for Labor Research and Studies, they found that the cost of living, in
Florida, is up 25% in six years! Unforgivable!
But you will be surprised (as in the top of your head blowing off and you begin
to bellow, like The Mogambo, "We're freaking doomed!") to know that this
compounds out to what sounds like a piddly 3.8% inflation a year, but which
obviously isn't piddly, or I would not get so upset, and then people (like me)
would not start yelling in fear and panic, and there would not be a big
commotion, and things would not be said, like, "Buy gold, silver and oil right
now because your government is acting like monetary and fiscal idiots, or else
you are an idiot and you are as stupid as you look!", and then you try to, you
know, calm the guy down by complimenting him by telling him that his wife has a
nice butt and I have the hots for his teenage daughter, and then he gets all
upset about THAT for some reason, and then threats are made and blah blah blah.
You know .. The same old thing.
But this is not a question of ancient animosities originally involving, as far
as anyone remembers, a barbecue grill, or even the continued heated argument
about the definition of "warning shot", but that 3.8% annual inflation is a
horrible, terrible thing, as it compounds to a 25% increase in prices in six
short years, which is just about what the horrible Ben Bernanke (with his
"targeted inflation" crackpot idea) actually wants: To inflate away the burden
of debt by, astonishingly, everyone going farther into debt so as to increase
demand to make prices rise! Gaaahhhh!
I know that you, because you are a Junior Mogambo Ranger (JMR), have a brain
that hurts in trying to comprehend the economic enormity of what the Federal
Reserve, with the blasphemous blessing of Congress, is doing, and what Ben
Bernanke proposes to do which is to purposely cause inflation in prices of
about 3.8%, and your fevered brain that recoils in horror at such an idea is
cooled only by knowing that you own gold, silver and oil, and so whatever
happens, you are going to be OK, and will make money on these chumps ... Maybe
(and probably) a lot of money without doing any thinking whatsoever, 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.)
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