I was still poring over the latest from
John Williams at Shadowstats.com, when I noticed
that he wrote that the "Year-to-year change in
September retail sales was a gain of 5.0% versus
3.8% in August, before any inflation adjustments",
but that inflation is getting so bad that it
"could wipe out much of the reported sales gain,
after adjustment for pricing increases".
The horror of what he was saying crept
into my Puny Mogambo Brain (PMB); people paid more
money, but bought less stuff!
Yikes! What in the hell kind
of bizarre economy do you call that?
Now,
retail sales picking up like that appears to be
healthy economic growth, until you remember that
these are merely raw, nominal sales, which is the
same thing as my wife taking the credit card and
charging some clothes, food or medicine for
herself and the kids, and when I open the bill, I
thunder, "You bought food, clothes and medicine
last month, too, and not only are you now buying
them more, but you have never spent this much
before! Where in the hell am I supposed to get
this much additional money to pay for these
additional frills, you worthless trash?" With a
sniff, she says, "They aren't additional frills!
Prices are up so high that I actually bought less
stuff, you stupid creep!"
I decide to
ignore this evidence of inflation in prices, and
decide that my wife's explanation seems just a
little too glib for me. So I question her further
by saying, "Are you lying to me, you lying,
spendthrift witch, who likes to see me be so poor
that I can't afford that snazzy new set of golf
clubs that I need and you deserve to go to hell
for it?", and she yells back, "No, YOU go to hell,
you cheap bastard!"
Naturally, I don't
accept this kind of underserved criticism, and I
scream back, "No, you go to hell and take those
ugly, mutant, halfwit Earthling children of yours
with you!" which causes her to mysteriously get
all angry, like I said something wrong! Even
though SHE is the one spending all the money, and
it is ME that is suffering for it! See what kind
of silly crap I have to put up with around here
all the damned time?
Mr Williams appears
completely disinterested in how my greedy, hateful
family is spending me into the poorhouse, and
actually seems to take their side in the argument
when he says that inflation in prices is pushing
up the bills for everybody for everything, and
more and more people and entities are spending
more and more money because prices are rising so
fast.
He even says, probably thinking he
was making a wry joke, "As to the happy news that
the gimmicked federal deficit for fiscal year 2007
was just $162.8 billion, versus $248.2 billion in
2006, keep in mind that the gross federal debt
rose by $500.7 billion in the same fiscal 2007, to
$9.008 trillion."
Hey! That's right! The
government simply budgeted more borrowing, which
they did, and so the budget deficit appears lower
on paper, even though they borrowed and spent more
than they budgeted! At that ugly news, I found my
hands clenching into Powerful Mogambo Fists Of
Outrage (PMFOO)!
But he was not through
with me yet, as he went on to report that the
federal government will find that "the financial
statements for the year will show a deficit based
on generally accepted accounting principles likely
well in excess of $4 trillion, come mid-December".
Four trillion bucks a year in current and
deferred federal government spending! A third of
GDP! Yikes!
And it gets worse than that,
believe it or not, as we learn from Chuck Butler
of Everbank, who reports in his famous Daily
Pfennig missive that (to paraphrase) the economy
is crap, and the budget deficit is going to get
worse, in that "Treasury issuance is expected to
rise 50% this year! OUCH! It seems the slowdown
that no one wants to admit is happening has
reduced tax receipts for the first time since
2003."
And if that was not bad enough,
Peter Grandich of the Grandich Letter states that
"state pension plans have deteriorated from a $20
billion surplus in 2001 to a $381 billion deficit
last year, according to the National Association
of State Retirement Administrators (NASRA). This
deficit means the assets they have in their
portfolios today aren't enough to cover the
present value of the long-term retirement promises
they made!"
The skies grow dark and
werewolves howl in the distance. Ahhhh-oooooo!
Werewolves! Werewolves of inflation! Ahhhh-ooooo!
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,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
