The pinecone currency of Camptown
By The Mogambo Guru
If you are a person who thinks that there are conspiracies everywhere and that
there are secret, coded messages everywhere too, you may be interested to learn
that from CaseyResearch.com I have noted one of these "secret significances" in
his latest newsletter; it contains only four exclamation points in the whole
thing.
The first exclamation point is at the top, where you are told you can "Sign Up
Free!"
The second exclamation point is found in a snippet in the header,
"$700! - Gold logs a close above the magic number."
Tellingly, the other two appear in the actual text in the section written by a
guy named "Ed Steer" (Steer. Get it? Steer? Like steering you to safety? And
you call yourself a conspiracy buff? Ha!) that are down near the end of the
newsletter, and actually used in adjacent sentences! Is that significant or
what?
Anyway, the first sentence says, "The World Gold Council is predicting that
India's gold consumption this year will be north of 1,000 tonnes!" Immediately
following, the next sentence includes the only other exclamation point; "That's
a 50% increase over last year and a whopping 40+% of 2007 gold production!"
Perhaps this is significant in that the rest of the article says that this all
comes, "in the face of the worst economic, financial and monetary crisis the
world has experienced since 1929", which is bad enough, but I think it is good
news that "the Gold/Silver Cartel is about to crash and burn" because that
means, to me, that anybody owning gold and silver are going to get stinking
rich, rich, rich as the two metals explode upward from their suppressed prices.
And mightily suppressed they are, too, as their prices have gone nowhere even
though, as MoneyandMarkets.com reminds us, "As recently as just five years ago,
foreigners had loaned $3.2 trillion to America. The amount the United States
owes to foreigners has grown by leaps and bounds - to $3.9 trillion in 2003 ...
$4.8 trillion in 2004 ... $5.4 trillion in 2005 ... $6.4 trillion last year ...
and now over $7 trillion!"
With a national debt now registering north of $9 trillion, does that mean that
only $2 trillion is owed to Americans? Hahaha!
Perhaps this would explain why Marc Parent at mparent7777-2.blogspot.com leads
off his column with the growth in M3 money supply, which is the biggest,
baddest, all-inclusive estimate of money supply, which includes everything that
could possibly be construed as money.
There is some difficulty in calculating M3, of course, such as in getting true
and reliable information from "institutional money market mutual funds, time
deposits in amounts of $100,000 or more, repurchase agreement liabilities of
depository institutions (in denominations of $100,000 or more) on US government
and federal agency securities, and Eurodollars".
But all of that is, fortunately, not my problem, as calculating things is
actual work, and I don't do work unless I get paid a lot of money for it, and
usually not even then, which is why nobody pays me money to do work anymore,
which is probably why I have no money.
Fortunately, both Parent and John Williams at shadowstats.com are not as lazy
as I, and after busily working, working, working while I am goofing off, they
independently get answers that agree on direction and general magnitude, and it
looks like M3 in the US is growing at almost 14 freaking percent a year now!
Fourteen freaking percent!
Normally, I would soon begin the traditional Screaming Insane Mogambo Phase
(SIMP) of the discussion, as the ramifications of an increasing money supply
means increasing prices, and all over the world people are getting angrier and
angrier about the way that consumer prices are rising, but are paradoxically
happy that the increasing money supply is also financing higher prices for
stocks, bonds and houses, and how this means that people are as stupid as the
proverbial "bag of hammers", and thus I scream because I assume that screaming
at them is the only thing that can get through those thick skulls of theirs
that inflation is a Bad, Bad Thing (BBT).
So I was just drawing in a big, deep inhalation breath in preparation, when up
jumps Junior Mogambo Ranger (JMR) Grant E with the perfect example, which may
prove instructive!
"While on a camping vacation this summer," he begins, "my son and two other
friends started playing an interesting game. They all set up 'shops' to sell
things - basically anything that wasn't tied down or in use in the campsite.
The real interesting thing was they used pinecones for money.
"So it starts out that a pre-enjoyed pop can goes for 5 pinecones. Sniffing the
empty red wine bottle, a couple of pinecones. As the game progressed, the kids
found that the supply of pinecones was virtually unlimited as they scrambled in
the adjacent woods to gather up the money. I watched this unfolding
demonstration economy with fascination!
"Suddenly the prices of things started going up. That pre-enjoyed pop can -
well, that'll cost you 10 pinecones now! There were so many pinecones in
circulation that soon buckets of them were being offered for some of the more
prized pop cans. My son, who now had declared himself the bank, was now running
a lottery!! More bucket loads of pine cones came flooding in."
Beyond the humor ("This was just too funny to watch" he says), the lesson was
that "it proved that even kids playing a simple game can show us the ways of
inflation. Monetary inflation begets price inflation. Pinecones or your
favorite paper currency, the fate will be the same."
Exactly! And that is why I sigh, and cry ... my, oh my, how I cry and sigh.
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 2007, The Daily Reckoning.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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