Apparently I am one of the few who appreciates the Theater of the Absurd in the
Bloomberg news article that reported "President Barack Obama nominated Ben S
Bernanke to a second four-year term starting Jan 31", which clearly means that
nobody else in their right mind would take the job as chairman of the loathsome
Federal Reserve now that we are on the precipice of a Long Period Of Woe
(LPOW), and only a clueless Princeton academic (the worst kind!) like Bernanke
has the galling arrogance to think that he, alone in all the world's long
history of people wrestling with this same problem, will come up with some
wonderful plan to painlessly eliminate crushing government debts, crushing
personal debts, and crushing business debts, and then everything will be fine
again! To this, I laugh "Hahaha!" which is the unmistakable Mogambo Laugh Of
Contempt And Ridicule (MLOCAR).
You can hear the contempt in my voice when I rhetorically ask, "And on what
does he base this sublime stupidity?" The answer
is: The same neo-Keynesian economic trash (nKet) stupidities that got us into
this mess: creating excess amounts of money and credit!
Again we hear the MLOCAR, perhaps even more mockingly!
When the repellent Alan Greenspan did this monetary madness when he was
chairman of the stinking Federal Reserve from 1987 to 2006, he created enough
money to enable huge bubbles in stocks, bubbles in bonds, bubbles in consumer
spending, bubbles in houses, bubbles in derivatives, bubbles in the size of
government (thanks to the national debt in 1987 being US$2,350 billion growing
to $8,100 billion in 2006 when he left), and constant, simmering, exponentially
growing inflation in the prices of everything.
And he did all of this - and more! - by creating about $10 billion a month in
new Fed credit, which was, of course, multiplied by the banks and all loaned
out, down to the last dime, thanks to their being under the control of the
despicable Greenspan and his foul Fed, and thus - thus! - had absolutely no -
no! - provision for reserves of any - any! - kind against anything - anything!
- going wrong with any - any! - of their loans or depositors!
You can tell by the weird - weird! - punctuation in the preceding paragraph
that I am really losing my grip on things, and I am glad that you cannot see
the way my lips are comically flapping and the drool of stupefaction runs down
my chin when one realizes that the banks making riskier and riskier loans of
deposits without maintaining reserves against potential losses, somehow
bizarrely believing that by reassembling debt, where the interest rate reflects
(among other things) risk, they could make risk disappear! Hahaha!
But this is not the reason for the Screaming Mogambo Outrage (SMO), but the
sudden, terrifying Question From Hell (QFH) that is hanging, like the
aforementioned drool (some of which is now in my lap) on my trembling lips, as
I am sure that it is yours, namely, "How much money must the monstrous Federal
Reserve create from now on to accommodate at least $7 trillion of governmental
deficit-spending over the next decade?"
Actually, I was hoping that you would ask me that because I can tell by the way
you are not screaming in fear and outrage that you are ready to know that the
news is out that the federal deficit-spending over the next 10 years is $9
trillion, every dime of which the Federal Reserve will have to create out of
thin air.
But what you may not realize is that this gigantic figure, which is just the
borrowing needs of the federal government, which doesn't even include the
additional hundred or so trillions more - more! - that will have to be created
so that people and businesses can get back to borrowing and spending their
little hearts out! And all of this new debt in a country where gross domestic
product (GDP) is only $14 trillion? Hahahaha!
The funniest line was when Obama said, in his nomination, that everyone is all
chummy nowadays in Washington, and he calls the chairman of the Federal Reserve
by his first name, as in "Ben approached a financial system on the verge of
collapse with calm and wisdom", which may be true in the "calm" part of the
compliment, but as for "wisdom"? Hahaha!
If he had any wisdom, you would think he would have said something during all
those years he was the head of the economics department at Princeton, and then
perhaps we would not be in this mess now! Wisdom? Hahahaha!
And if he truly had any wisdom, he would be buying gold, silver and oil, which
are guaranteed to shoot to the moon from all of this insanity, which makes
investing so easy that one can only say, "Whee!"
But we'll never know, because I can never get through when I call the Fed, and
either get mysteriously disconnected or put on "indefinite hold", even after I
specifically tell the receptionist "I want to know if Ben Bernanke is buying
gold, silver and oil, or is he some kind of moron who actually believes that
stupid neo-Keynesian crap that comes out of his stupid mouth instead of
believing in the economic lessons of the last 4,500 years?"
So while we will never know about Mr Bernanke, who is now the collegial "Ben",
you can be sure where I stand and why I will be proven right, which is why you
can call me The Mighty Mogambo (TMM).
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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