I always make sure that I have taken all my pills before I look at the
end-of-month money supply figures, which turned out to be a good idea, because
growth in the money supply in the United States known as M2 has been, as they
say, quite anemic for the past several months.
I think it's bad news, which seems paradoxical because I am always screaming my
head off about how inflation in the money supply is a bad thing because
inflation in the money supply causes inflation in prices, which is The Thing To
Be Feared (TTTBF) because that is going to destroy us, and yet here I am
whining in Real Mogambo Terror (RMT) because the money supply is NOT
increasing, thus apparently proving, as my wife says, that I "cannot be
pleased".
Perhaps you realize that this must be bad news because you, too, are dizzy from
the unexpectedness of it all, as you would
think the money supply would be going To The Freaking Moon (TTFM), what with
Fed Credit still increasing at almost $20 billion a month, the national debt
taking a monstrous leap of $184 billion in April alone, and consumer
installment debt actually going up by a few billion in March, which is not to
mention the creation of money around the world by central banks so that
governments can deficit-spend, deficit-spend, deficit-spend, spend, spend!
But, as any child can tell from looking at the chart or the numbers, the M2
money supply is not going TTFM, and is kind of stuck at $8.512 trillion. Hmmm!
I decide to do a little detective work, and soon find, perhaps not
coincidentally, that the S&P 500 index is back to where it was in 1998,
giving investors, on average, literally zero nominal gain from the stock market
after 12 years of faithful investing, and (appallingly) less than that - less
than zero! - after deducting the fees, costs, expenses and taxes paid by the
investors.
Naturally, I am on my feet in a Predictable Mogambo Outrage (PMO), yelling
"This proves, once again, that the majority of investors must lose money and/or
buying power so that a small minority of investors, if any, can make a small
profit, which they usually can't do, either, after paying taxes, fees and
expenses, and especially after deducing the loss of buying power of each dollar
that occurred between the time they bought the asset and when they sold it,
meaning that, in this case, they have lost about a third of their total buying
power since the BLS itself calculates that $1 in 1998 has the same purchasing
power as $1.34 today, thanks to the damnable Federal Reserve creating so much
money! So they would have to have had a 50% gain, instead of zero gain, just to
get even!"
I look around and notice nobody is listening, so I mutter sarcastically under
my breath, "Hahaha! Nice investing, suckers! Just remember to 'invest for the
long term!' Hahaha!"
And then I remembered about the wisdom of buying gold, silver and oil, and I
chuckled anew, only this time with a cozy satisfaction that, "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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Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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