The keen-eyed David Galland, managing director of Casey Research and regular
contributor to The Daily Reckoning, notices something amiss.
First he notes, staccato-style for emphasis, "Record total debt. Record
government deficits. Record trade deficits. Massive additional government debt
financing required to keep the doors open and avoid reneging on social
contracts directly affecting the quality of lives of millions of people around
the globe - the US, Japan, and Europe especially."
Then, in a surprise move, he throws out, with the same punchy style, "Near
record-low interest rates", whereupon he asks, with
what I assume is a cynical and mocking tone to his voice, "Anything strike you
as out of place?"
Immediately, I instinctively blurt out, "Near record-low interest rates is an
anomaly because a nation of deadbeats who can't pay their debts now should be
charged higher interest rates to borrow money to offset the increased risk of
non-repayment to the lender, at least, and a little something extra to offset
the loss of buying power of the currency due to overproduction of money by the
despicably foul and feeble-brained Federal Reserve!"
In my excitement, I had forgotten that I was reading this at work, but was
reminded when my officemates shouted out for me to shut up, shut up, shut up,
which I, embarrassed, did.
Then I went back to Mr Galland's essay just in time to read that the Fed's
"beige book" of economic conditions makes it "clear that the Fed is (finally)
beginning to understand the entrenched and endemic nature of this crisis. While
the notes are written in shamanic double-speak, the point is clear: members of
the Fed don't expect the economy to get back on track until 2015 or 2016." Yow!
Five or six more years of this no jobs, higher consumer prices, falling asset
prices, higher taxes, lower income, and ruinous economic malaise crap before it
gets better? Yikes!
And that's, of course, assuming it doesn't get worse and collapse in the
meantime, which is exactly what I think will happen, mostly because I am a
paranoid, cynical little pipsqueak who doesn't believe that the horrifying
problems caused by the long-term creation of too much money and too much
government spending will be "fixed" by creating more money and more government
spending.
But maybe "that's just me", ya know what I mean?
And it turns out that it might be just a matter of definition! I define "fixing
the economy" as "People not living on the streets or in their cars or surviving
by eating garbage, rodents, weeds and government handouts to keep from starving
to death because there are no jobs, and won't be for a long time until after
they are all dead."
On the other hand, the Federal Reserve defines it with the incomprehensible and
preposterous phrase "to converge fully to its longer-run path as characterized
by sustainable rates of output growth, unemployment, and inflation consistent
with participants' interpretation of the Federal Reserve's dual objectives" of
low inflation and low unemployment, which means, with fuzzy criteria like
these, "Inflation in the money supply until we die from inflation in prices, or
until more people have jobs, whichever comes first, although it won't be more
people having jobs."
Mr Galland is apparently not impressed with my gloomy interpretation, and notes
that the "simple reality", as scary as it is, is that the Federal Reserve "is
waking up" to, as I put it, the ugly fact that their ridiculous neo-Keynesian
econometric idiocy coupled with a fiat currency has allowed disastrous booms to
go to extremes so that the entire structure of the economy is so distorted and
bloated with cancerous expansions of the money supply and size of government
that, as he says, the "structural underpinnings of the economy are damaged
beyond any quick or easy fix."
I admire his optimism, but after a little judicious Mogambo Editing Magic
(MEM), I instantly remove all sense of optimism, yielding the sad truth that
"the structural underpinnings of the economy are damaged beyond any fix."
The good news, in the face of all of this terrible calamity, is that you can
still buy gold, silver and oil at bargain-basement prices, because at the rate
that the terrifying Barack Obama administration and the profoundly incompetent
and corrupt congress are spending money, and at the rate the Federal Reserve is
creating the money to finance the spending, inflation in consumer prices is on
its way, and these low prices won't last long!
And then, because you bought at these low prices, it's, "Whee! That investing
stuff was 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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