I am a guy who thinks that such huge explosions in money supplies around the
world and the explosions in government deficit-spending around the world will
lead to catastrophic explosions in inflation in prices, probably around the
world.
I am also a guy who thinks that inflation in prices is the Thing Most Feared
(TMF) in the whole world in terms of total sheer misery and suffering, judging
by the entire last 4,500 years of history, except for, maybe, the plague.
Naturally, for one so dyspeptic and predisposed to paranoia because the people
in charge are apparently overpaid, corrupt morons, I am visibly shaken at the
news from Bloomberg that "The consumer-price index increased 0.2 percent for a
fifth
straight month, led by higher fuel costs, Labor Department figures showed today
in Washington." Yikes!
Inflation never stops! Even in a recession/depression like we have now! It's
terrifying!
Anyway, since insane levels of massive governmental deficit-spending of fiat
money created by central banks is a world-wide phenomenon, there will be a
massive inflation in consumer prices as a result of all of this unbelievably
much new money being poured into the economy via governmental deficit-spending,
and already the government is forced to report 2.6% inflation.
This is actually down from last month's 2.7% inflation, and so immediately I
get angry emails from people saying, "Dear Mogambo Stupid Head (MSH), You say
that inflation is raging because of all the money that the Federal Reserve is
creating, so how do you explain Bloomberg reporting 'Excluding energy and food,
the so-called core index unexpectedly fell 0.1 percent, reflecting a drop in
new-car prices, clothing and shelter'? You can't explain it because you are
stupid and you are wrong and everybody hates you! Sincerely, Anonymous Reader."
Well, as nice as it is to hear from my sister like that, it is doubly enjoyable
this time because she is so wrong that I rate her as one who "has her own head
up her own nasty butt" and I can hardly wait until Thanksgiving when everybody
will be around the table and I can remind her of that ugly fact, getting back
at her for what she said about me last year, by reminding her that she is so
stupid (audience shouts out, "How stupid, Marvelous Manly Mogambo (MMM)?") that
she forgot to read farther into the article to learn that costs are being held
down because "Even with higher production and material costs, US companies are
reluctant to pass on the expenses to consumers", which includes Wal-Mart, "the
world's largest retailer", which "reported fourth-quarter sales that trailed
its projection after cutting grocery and electronic prices" which, in a
nutshell, explains why I am now screaming, "Inflation is here, you morons! It's
being temporarily absorbed by businesses and their stockholders making less
money, and sometimes taking losses!"
That ought to shut her up pretty good, I figure, and if not, then I'll scream
at her until she confesses that she did not consider that the government now
uses Hedonic Measurements of inflation, such as how that the turkey she is
jamming into her pie-hole used to start getting stale and dried-out after a
week or so in the refrigerator. But now, perhaps with the addition of small
amounts of preservatives as part of a secret government experiment involving
adding tiny little bits of nuclear waste during processing to produce enough
radioactivity to kill all organisms that touch it, the leftover turkey will be
just as tender and delicious a year from now as it is today!
Maybe even glowing, so you can make a sandwich in the dark!
This increased shelf life of the cooked turkey obviously increases the value of
the turkey tremendously, and it also helps to deplete the nation's nagging
problem of its stockpile of dangerous, clumsy and expensive-to-store nuclear
waste, producing a double benefit! Double!
Thus, the government calculates that the new, extra benefits of having turkey
available for consumption for more days of the year (which is not a problem for
my sister since she seems to be eager to eat lots of food, and she'll probably
finish the turkey carcass off pretty quick!), and simultaneously achieving a
profound social good of disposing of dangerous radioactive waste, means that
the turkey can never go up in price! Only the rising price of the new benefits
makes it LOOK like it, because it costs more dollars per pound! Hahaha!
I am sure that she will come back with some of her stupid blah blah blah, but
no matter what she says before I interrupt her, I am going to tell her that,
even worse, the Labor Department report went on to say that "The CPI is the
broadest of the three monthly price gauges from the Labor Department because it
includes goods and services", which was put in there to make you yawn and skip
over the part that said that prices "showed 1.4 percent gains in both the cost
of imported goods and wholesale prices in January"! Wowser!
As I said, inflation is the only thing that makes sense when considering such
unbelievable, incomprehensibly massive increases in government
borrowing-and-spending, overshadowed only by the enormous increases of money
created by the Federal Reserve, and which makes sense since every doofus is
town is yammering about how "inflation is impossible" and how "deflation is the
bigger problem" since deflation means that the over-indebted middle class, the
over-leveraged rich, the bloated financial services industry and the socialist
government would lose, while inflation would affect mostly the poor, which are
always the ultimate victim.
My suggestion to the poor? Buy gold, silver and oil immediately, because they
will all rise right along with inflation, and probably more. Probably a lot
more!
And if you don't think that "the poor" today, after a half century of one
bleeding-heart congress after another finding ways to give them money and
benefits, cannot come up with 20 bucks a month to buy an ounce of silver, then
you don't know squat about "the poor" in America today.
My suggestion to everyone else? Surprise! It's the same! That makes it easy to
remember, as in, "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 2010, The Daily Reckoning.)
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