I took one last shot of bourbon as an essential anesthetic before I dared
venture to that foul den of evil incarnate known as the Federal Reserve, and I
am glad I did! I realize that I should be numb to these sick excesses of the
Federal Reserve, but I am not sure that I will ever become numb to, for
example, last week's stunning $75 billion increase in Total Fed Credit, which
is, literally, the fabled "money from thin air" of story and song.
This is the stuff that gets multiplied by the banks, which causes big increases
in the money supply because that credit turns into real money when somebody
borrows money from a bank, which goes into the bidding up of prices for things
(because there is not really anything else you can do with borrowed money!)
And what did the Fed do with the money? Well, last week, it used
$36 billion to buy a chunk of US government securities for itself! And it
probably loaned foreign banks some cash, because they bought up a whopping $24
billion of US debt last week, too! All in One Freaking Week (OFW).
And it is this bidding up of prices, a terrifying inflation in the prices of
consumer goods, which is the nightmarish horror that always brings down whole
countries, which is why the "problem" of inflation was solved by the Founding
Fathers and written into the Constitution, which still requires that money be
gold and silver so that the money supply could not vastly expand, thus
preventing inflation in prices.
Only this can prevent the stinking, filthy government from - with or without
the help of a bunch of scumbags known as the Federal Reserve - increasing the
money supply and creating the dreaded inflation as a result.
Of course, we are here because all the damnable Supreme Courts since 1933 have
agreed that the government can ignore this part of the Constitution, turning
back case after case.
And it seems to me that the study of history, as I have gleaned from TV
documentaries and movies, is just the same, sad, stupid, selfish story of
long-term governmental fiscal and monetary malfeasances that evolve the economy
into a cesspool of corruptions and idiocies (like "Invest for the long term!"),
and most major problems seem to end only when handsome Hollywood movie stars
heroically fight wars and kill a bunch of foreigners.
Not being a Hollywood movie star (which is another Sad Mogambo Story (SMS)
where a complete lack of talent and only halfhearted effort cruelly conspire
against me), I have also keenly noticed that while the Hollywood stars rarely
get killed, a lot of us ordinary folk DO get killed, sometimes only dying after
a long period of gruesome agony so that the Hollywood star can show compassion
as he walks past us on his way to do something heroic, get a medal and have sex
with the only beautiful girl in a hundred miles.
So, for these and many, many other reasons, inflation in the money supply
leading to an inflation in consumer prices is a Particular Mogambo Phobia (PMP)
of mine.
That "fear response" to the terrors of inflation in prices explains why I pay
such close attention to Total Fed Credit, which in turn explains why I drink so
heavily and have so many "accidents" with my medications, which in turn
explains why I am surly and incoherent most of the time, but never insensate
enough that I can stop myself from at least muttering under my breath, "We're
freaking doomed!"
Fortunately, I am never so anesthetized that I don't stop yelling at people to
buy gold, silver and oil, because these are three things whose prices are
destined for a Major Price Increase (MPI) thanks to Federal Reserve and
Congressional stupidity, which will, oddly enough, create a job opening when I
take my sudden riches in hand and quit my stupid, dead-end job, only to skip
town under suspicious circumstances and rumored to be having one hell of a good
time, someplace a long, long way from here.
Contemplate upon that delightful future as an option, which comes free, free,
free with gold, silver and oil.
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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