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| The Mogambo I Hate Bernanke Club
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- Things are happening hot and heavy. For one
thing, Bush nominated Ben "Blooper" Bernanke, the
most arrogant and clueless economics dunderhead in the USA,
to replace the retiring (and good riddance) Alan Greenspan
as chairman of the Federal Reserve. So immediately m Spanky
and me and the rest of the gang formed the Mogambo I Hate
Bernanke Club (MIHBC). Doug Gillespie, of Gillespie Research,
says he wouldn't be in my stupid club if I paid him, but as
far as Mr. Bernanke is concerned, he says "Personally,
I think this is a horrendous choice."
Naturally, one of the most arrogant and clueless
Congressional dunderheads, Sen. Chuck Schumer, who spends
his time proving that he is out of his depth in general and
waaayyyy over his head on the Senate Banking Committee, said
he "felt confident" that Bernanke "knows the
Fed's job is to fight inflation." Hahahaha! What an idiot!
This is the same Bernanke moron that is infamous for saying
that he WANTS inflation, and actually refers to his stupid
idea of fostering continual, simmering inflation as the benign-sounding
term "targeting inflation"! Hahahaha! One moron
praising another one! Hahaha!
So hooray for Thomas Donlan, the editorial page editor for
Barron's, whose editorial this week, entitled "The Dollar's
Long Dive", is an indictment of the supreme idiocy with
which we have behaved these last seventy mournful years or
so, as manifested, as Mr. Donlan clearly shows in his essay
and graph, which charts the absolute ruination of the buying
power of the dollar since 1933, and the especially since 1971.
And, further, it is a classic argument for gold.
But I bring this up because, most importantly, he writes "the
damage to the dollar's purchasing power in the post-war period
came not in the onslaught of historically high inflation during
the 1970s, but in the continuous drip drip of compounding
some inflation every year." Exactly right! And this constant
inflation, this constant ruination of the dollar, is exactly
what the jackass Ben "Brainless" Bernanke says he
wants! He wants to "target inflation" so that the
dollar is continually debased, more and more, just like this!
Now you know why I am standing on the roof of my house screaming
screaming screaming in outrage and fear "We're freaking
doomed!" and I am listening to doomed people on the ground
yelling at me to shut up and come down off the stupid roof,
or at least put some pants on.
And Mr. Donlan is also exactly right with his observation
that "Holders of gold have one advantage; they know there's
no promise backing them up, just the experience that gold
holds its value in the marketplace. Considering the value
of the political and financial promises illustrated in (the
destruction of the buying power of the dollar), we ought to
demand similar market security for our money." Hahahaha!
We had it, dude! It was in the freaking Constitution that
money shall only be of silver and gold! But we sat there with
these big stupid grins on our big stupid faces, and we stood
by and watched without a whimper as that commie bastard FDR
destroyed the stability of the dollar by confiscating our
gold, and again in 1971 when Nixon cut the final link between
the dollar and gold. Thus, the money was open for destruction,
and it was thus destroyed, and if either of those two horrible
people were alive today I would walk up to them and slap their
big stupid faces until the security personnel jumped me and
wrestled me to the ground, probably poking me with their Tazer
stun guns, going zzt! Zzt! Zzzzt! Ow! Zzzt! Ow! Zzzt! But
it would be worth it!
So more and more inflation is guaranteed now
that we have a mental defective as chairman of the Federal
Reserve, who is actually going to consciously work to keep
inflation at some "low" level, about 2%, instead
of at zero, like it is supposed to be at maximum. If you are
even barely minimally competent in elementary economics, you
are naturally horrified at the prospect, and wish that you
would wake up from this nightmare, but it just goes on and
on, hour after hour, until you suddenly realize that you are
wide awake, and this "targeted inflation" thing
is real life! And now you are REALLY freaking out! So what
to do? Do like everybody else in all of history has done when
things got like this: Buy precious metals! As David Morgan
of the Silver Investor so succinctly said, "Precious
metals is the only asset class with a positive correlation
coefficient with inflation."
Because Mr. Morgan is a real classy guy, he
did not mention that the ugly corollary of this, and when
I bring it up, he crinkles up his nose at me like he just
stepped in something icky that the dog left in the yard, but
as a guy who HAS stepped in a lot of icky things that the
dog has left in the yard, I fearlessly stand right up and
say that this means that all the OTHER asset classes have
a negative correlation with inflation, meaning that as inflation
goes up, their values go down! Hahahaha! Welcome to the world
of "targeted inflation", dudes and dudettes! And
Americans think they are going to finance their comfortable
retirements with asset classes (stocks, bonds, houses) that
are negatively correlated with inflation at the same time
as the new, and young, chairman of the Federal Reserve has
expressed his overt intention of creating inflation because
he actually believes some bizarre theory that inflation is
something GOOD? Hahahaha! We deserve to be poor! If we swallow
that stupid crap then we proved to be ignorant and stupid,
and that is why we will be bankrupted and poor!
This at the same point in time and space that we idiot Americans
have now reached the milestone (insert loud fanfare of trumpets
going taa-daaaaaa!) of $8 freaking trillion dollars in federal
government debt! That's right! You heard it here, folks! Last
week we went over the mark of eight trillion strangling smackeroos
of debt! And it is getting worse exponentially, meaning that
every month not only are we deeper in debt than ever before,
but in magnitude it is worse than the previous month by the
biggest percentage, too. You may interpret the way my head
is comically spinning around and I am vomiting up black bile
and blood in my supreme Mogambo outrage (VUBBABIMSMO) that
this is not a good idea, and in fact this is a very bad idea,
and in fact it is the most suicidally-stupid thing that a
nation can do and that is why I am embarrassed to be an American
and am scared like hell at the coming consequences.
As a little Mogambo perspective (LMP), in June of 2002, just
three short, teensy weensy years ago, the Gross Public Debt
was "only" $6 trillion. In three years, the federal
government borrowed and spent two trillion dollars! The federal
government, the boneheads that we install in Congress by actually
voting for them, increased the national debt by a third in
only three years! To give you a sense of the awesome size
of this one debt, the entire Gross Domestic Product, the GDP
of America, which is the sum total of all the goods and services
produced in the whole freaking country in a whole freaking
year, is less than $12 trillion!
And this is just federal debt, and does not
even include state and local government debts, which soared
by hundreds and hundreds of billions of dollars, nor business
debt or personal debt, which altogether soared by trillions
and trillions of dollars in just three stinking little years!
And it was all created by the damned Federal
Reserve and that horrible little jackass Alan Greenspan. In
fact, the total federal debt of the United States government
doubled- doubled! -under Greenspan's 17 years! It took since
the founding of the damned country to amass three trillion
dollars in debt, and then this Greenspan weenie comes along
and more than doubles it in seventeen years!
I am so furious that by now I am choking in rage and gasping
for breath, and can hardly get the words out that the amount
of government securities bought outright by the Federal Reserve
is up more than $500 billion- almost triple where we started!
-since Alan Greenspan took over! This is actual money of the
people of the United States that the Federal Reserve (which
is NOT part of the government and is, in fact, just a cartel
of private bankers), now owns! And how do they own it? They
printed up money for themselves, and used it to buy the debt!
That's how! And now we taxpayers, every year, have to pay
taxes to pay the interest and (theoretically) the principal
on all of that debt that the Federal Reserve owns! My God!
How stupid can one nation be and still manage to not poop
in its pants?
E. Petersen, writing on FMNN.com feedback, is
a guy that comprehends the problem exactly when he writes
"The bankers get their profits off the interest from
the money they create out of thin air and we get stuck with
the byproduct of inflation robbing us of our purchasing power.
We loan them money, yet we get stuck with reverse interest
(inflation) and they get the profits." Exactly! Exactly!
But continuing with my hissy-fit about the banks, get a load
of this: In 1991 total loans and leases in the nation's banks
was about $1.2 trillion. Now, only fourteen years later, loans-and-lease
debt in the banking system is $5.4 trillion! Debt owed to
the banks more than quadrupled!
And it gets worse! In September 1991, total
real estate loans in the banks totaled $398 billion. Last
week, total real estate loans in the banks totaled $2.8 trillion!
700% more mortgage debt! In four short years! Seven times
as much mortgage debt! My God! And you are NOT in full lock-down
mode somewhere safe, gobbling tranquilizers like candy, with
your finger nervously on a trigger? I am impressed! You must
have nerves of steel! Then that means you did NOT hear Dr.
Kurt Richebächer when he said that "The thing to
realize, of course, is that the housing bubble is many times
more dangerous than the stock market bubble, because it involves
the whole banking system."
But this is not about how you are so strong and brave, but
I am just a weakling crybaby who has locked himself in the
bathroom like a cowardly little wussy with a weak bladder.
This is about inflation, and as a result of the Federal Reserve
creating all this money and credit (debt) for so damned many
years, price inflation is everywhere, and the debt that fueled
the inflation is everywhere, too, but, unfortunately, deflation
is starting to peek its head up everywhere, too. But this
is not only true in the normal sense of some prices getting
too high, like stocks and bonds and houses, but also true
in the opposite, namely that some prices are too low.
As examples of prices getting too high, I include every damned
thing I have to pay for these days, whether I want to or not.
And speaking of prices that are too low, have I mentioned
in the last five minutes that silver is so freaking low in
price that I am drooling all over myself in greedy anticipation
of the coming rise in the price? I did? Well, did I mention
that I was angry because I don't have any money with which
to buy both silver AND a nice pizza? I did? Oh, yeah! Now
I remember! That was when you told me that I won't EVER have
any more money unless I work more, which I will not, because
I am lazy and totally worthless, and I seem to remember that
I also told you to shut the hell up (STHU).
But this is not about how the long-suffering
Mogambo is beset on all sides by enemies both real and imagined,
none of whom can keep their stupid opinion to themselves,
but about silver, and how it is so cheap, and that is why
I am grabbing you by the lapels of your coat and pulling you
up close to me so that I can scream in your face, and as you
wiggle to break free of my iron grip you gag on my fetid breath
while I am bellowing about how silver is so cheap that only
an idiot- AN IDIOT! -would NOT be buying as much silver as
he could get his hands on.
And the reason I am so particularly strident is that silver
is suddenly even MORE grossly under-priced, and I say this
surprising thing because the Journal of Nanotechnology has
just published a medical study that has been described as
"groundbreaking", wherein they report that silver
nanoparticles of silver kill the HIV-1 virus, and thus (if
true), is a cure for AIDS! A freaking cure for AIDS! Of course,
the authors are not suggesting that, nor is anybody with any
sense of responsibility or common sense even suggesting it,
but you know that The Mogambo has no such scruples, and goes
to the extreme every time, with or without any factual basis
at all.
And not only that, but (and you can tell by
the way I am happily jumping around in childish glee that
this is more good news MGN)) the authors furthermore conclude
that silver will almost certainly kill all other viruses,
too, which is what the colloidal-silver people have been saying
for years, although without the techniques of nanotechnology
to prepare the silver, their results were poor. But can you
imagine the price of silver if it really IS, thanks to nanotechnology,
a new "silver bullet" medicine (that is, literally,
silver!), that can instantly kill all bacteria, viruses, molds,
fungi, and cooties in your body, curing you 100% of everything
with a single dose? It would be freaking priceless! And you
can buy pure silver right now for less than eight bucks an
ounce! This seems odd, considering that if this works out
even fractionally as well as I think it can, all six billion
people on this planet are going to want medicinal silver for
themselves and their animals, and that is a LOT of silver,
dude! And the price of silver will get so high that people
in the future will look back and marvel among themselves,
saying "Golly! The Mogambo was right for a change!"
The study was conducted by a "collaboration"
between the University of Texas and Mexico University, and
is, so it is reported, "the first medical study to ever
explore the benefits of silver nanoparticles." They are
already beginning to look, excitedly I'll bet, at using silver
nanoparticles to kill Methicillin resistant staphylococcus
aureus, which is popularly known as the "super bug"
because it is so resistant to all anti-bacterial drugs. And
if this silver thing is lethal to ALL viruses, then the dreaded
avian flu becomes just one more pesky virus!
All I can say, knowing as little factual information
as I do, but augmented with an overactive imagination and
endless greed and that handily fills in all the gaps, is "wow!"
And you can still buy the stuff for less than eight bucks
an ounce? Again, wow!
But trust me when I say that the pharmaceutical
companies are going to want to, as Barney Fife once remarked
to Sheriff Andy Taylor, nip this silver thing in the bud,
because "You can look it up in any book you want to,
but they all recommend the same thing; bud nipping!"
- Martin Weiss, of Money and Markets, apparently wants to
move the discussion from the theoretical future to the "here
and now" and has taken a look at the GM problem and proclaimed
"Bottom line: This is Mission Impossible; and General
Motors is a financial nuke with a short fuse." This got
me to thinking. Oh, not about GM or the pensions, which are
both screwed. No, this is about how long would a fuse have
to be to set off a nuclear bomb and get away, thus living
to tell about it? The next thing you know, these two humorless
ruffians from the Homeland Defense Department are at the door
wanting to know why I am thinking about nuclear weapons. I
am so unnerved by this visit by this little government goon
squad that I have forgotten why we are here, which is to make
money on somebody else's misery. Mr. Weiss brings me back
to reality when he writes "Consequences for the stock
market: Ominous."
Ominous for GM, the stockholders and the pensioners,
okay. But how about the rest of us out here in the real world?
Huh? How about us nobodies where the closest we ever get to
a new car is when one the neighbors gets a new one, and they
come strutting over like they are such hot stuff? And they
say things like "Oh! I see you are still driving that
piece of rusted crap you call a car! Why don't you at least
wash it, you lazy bastard?" and then I want to know who
he is calling a lazy bastard, and he says he is talking to
me, and then they launch into this thing about how much nicer
THEIR new car is, and want to show it off, and I am supposed
to act like I am happy for them, but I am really angry and
resentful and filled with a murderous envy and too much of
a lazy bastard even to walk over and spit on his car. So I
say, "Screw GM and Ford and all their stupid pension
plans. How about the rest of us? Where is our social justice?"
Perhaps my plaintive cry for justice is what
prompted Doug Noland to write in his Credit Bubble Bulletin
on PrudentBear.com "I would expect stress in auto-related
risk markets to be contagious." So Weiss says "ominous"
and Noland says "contagious." All eyes turn to The
Mogambo, who says simply "Sell equities and bonds and
houses now!"
As bad as that is, Mr. Weiss makes a bolder
prediction than that, and figuratively says that Greenspan
is going to cut our throats on his way out the door. I can't
swear to it under oath or even under the administration of
powerful truth-serums, but I thought I heard wolves howling
in the distance when he predicted that "November first
will mark the beginning of one of the greatest interest-rate
moves of our lifetime. That’s when Fed Chairman Greenspan
will have his first Open Market Committee meeting since Hurricanes
Katrina and Rita, and when he will have his first opportunity
to do something about the recent surge in inflation."
Here is where he makes his crucial, make-or-break
forecast. "It’s a foregone conclusion that he will
raise rates. He’s done precisely that 11 times in a
row. But those rate hikes were a mere quarter of a point each.
Now, with inflation surging, he’s going to have to jack
up rates much more quickly. He has no choice."
No choice? He has no choice but to slow down
an economy that is already slowing down? Well, Mr. Weiss is
the voice of reason. But listen to the New Age economics as
espoused by Ben "Call me Butthead" Bernanke, the
next failure as chairman of the Federal Reserve. This Bernanke
guy, whom I will now refer to as Ben "Big Bozo Butthead"
Bernanke in a fit of gratuitous and vicious disrespect mixed
with irritating-yet-pointless alliteration, is already on
record as saying that the Federal Reserve stands ready, to
buy stocks, bonds, houses, other assets, and even raw land,
to keep deflation from happening! The Federal Reserve has
already bought up, for its own enrichment, $725 billion in
US debt, so what's another few hundred billion dollar's worth
of assets disappearing into the greedy maw of the Federal
Reserve? Hahahaha! We're idiots!
In a country of normal people, someone in the
central bank daring to even utter such words, even in jest,
even by a new-hire mailroom clerk in the basement, would have
caused the horrified citizens to rise up, riot in the streets
and storm the Federal Reserve building in Washington, D.C.
with flaming torches, and the mobs would have carried The
Mogambo on their shoulders as I heroically lead them in their
blood-thirst for vengeance against a central bank that would
even contemplate such a move!
I mean, it is inconceivable to me that we're
going to stand around drooling all over the front of our shirts
in our incomprehension of the simple fact that the banks are
ready to create enough money, out of thin air, for themselves
to buy- for themselves! -all the property and assets in the
country! The banks would own everything! And we Americans
are standing around with these blank looks on our stupid faces
like this is, duuuh, all okay with us! Duuuh! Hahahaha! No
wonder we are going to be destroyed: We're idiots! We are
truly, as a nation, a bunch of first-class dumbbell halfwits.
But this is not about how Americans are the
biggest bunch of ignorant nincompoops in history, squandering
the entire wealth built up by own forefathers, until we are
now just the idiot inbred offspring who have spent all the
money, and are, even worse, in debt up to our ears. Oops!
Wait a minute! I was wrong! This IS about how Americans are
the biggest bunch of ignorant nincompoops in history! My mistake!
- This Bernanke thing has me all a-twitter, and all I can
think about is self-preservation, and that means gold. Peter
Brimelow MarketWatch.com quoted Bridgewater Associates as
saying, "Many of the world's oil exporters have a penchant
for holding gold; if they only held 1% if their incremental
wealth in gold, the incremental oil revenues flowing into
these countries would raise the investment demand for gold
by 25%."
Now this is really interesting to me, as I am
a big believer in that old theory that says that since the
supply of gold is relatively inelastic, then I know that the
supply of gold cannot possibly increase enough to satisfy
a sudden 25% increase in demand, and so the price must rise
by enough to reduce that damned increase in demand until supply
can increase enough to affect prices again. "Hmmm!"
we say to ourselves. Remembering the wisdom we were given
as young grasshoppers ourselves, we retreat back a few steps
from all of this heavy theoretical action, and we realize
that from an up-close-and-personal view, otherwise known as
The Official Mogambo Creed Of Greed (TOMCOG), that this means
that profits, maybe even huge profits, perhaps even gigantic
profits, are to be made somehow! Hahahaha! Lovely, lovely
profits!
Bridgewater ended with its own investment conclusions, further
reinforced with a fundamental rationale: "We remain long
gold and a basket of other commodities, largely from a monetary
perspective, as central bankers continue to devalue money
in order to create a cushion against deflation."
While these Bridgewater guys did not mention
Bob "Bongo for Brains" Bernanke by name, but this
whole "preventing deflation" thing is pure Bernanke.
And believe me when I tell you that when guys
start exiting the stock markets, with losses, and they are
being herded into bonds, which is the only other big market
that can absorb so damned much money all at once, they are
going to be upset that bonds are going down in value due to
interest rates going up. Then they are going to be as angry
as I was when I noticed that my entire portfolio used to be
able to buy exactly 1000 frozen pizzas, but after all of this
inflation, my quarterly statement shows that my portfolio
can only buy 960 pizzas. This is when they start saying to
themselves "The Mogambo was right! We're freaking doomed!"
and then they start wondering what in the hell they could
buy that would at least stop the deterioration in their buying
power. And they will, as all the other people in history eventually
have, finally realize that the only safe place to go, when
things get like this, is gold.
And speaking of gold, the World Gold Council
says that "India’s gold consumption is expected
to rise 33% in 2005 to 850 tons due to higher income, good
harvests and, we will add, a booming stock market. Much of
those profits are going into gold." And the buying of
gold has already started, as they note that in India "Consumption,
excluding recycled gold, rose 57% to 508 tons in the first
half of the year, up from 322 tons in the first half of 2004."
Compare that to the 642 tonnes of gold that India consumed
during the whole of last year!
AlJazeera.com reports that there is more to
this Indian buying of gold than meets the eye, and that "Indian
households are on a record gold-buying spree as oil price-driven
inflation threatens to wipe out savings from rising incomes
in one of the world's fastest-growing economies." What?
People flocking to gold to flee inflation? I thought that
whole idea was a relic, as so loudly proclaimed by the Anglo-Saxon
central bank bozos for the last seventy years! And according
to the mutual fund salesmen, too, for the same seventy years.
The problem is, as Al Jazeera reports "The income of
middle class Indian families has been going up with the economy
growing at a robust 7% to 8%, but putting their savings in
banks is yielding little as the interest rate of 4% to 5%
is barely on a par with the inflation rate." In short,
they are getting screwed out of the purchasing power of their
money, just like we are, and they, in response, are plowing
their money into gold rather than leave it in the damned banks,
while we Americans put MORE money into overpriced stocks and
overpriced bonds and overpriced houses! Hahahaha! No wonder
we get no respect!
They go on to report that the price of gold
is expected to "rise another 5% to 10% by the year-end
as more people invest their savings and demand for jewellery
soars during the October to February festival and marriage
season." Wow! Talk about a wealth of bullish factors!
And, as sort of an icing on the demand cake,
it is reported that funds in Europe are now buying gold, too,
because of inflation worries, which only adds to the strongly
bullish case for gold.
But the world of gold is as full of crooks as
everywhere else, as the World Gold Council also notes that
the central banks are so desperate to keep the price of gold
from rising and exposing the inflation that is actually roaring
that "The Washington Agreement to limit gold sales to
500 tons is a farce. This past fiscal year ended 9/3/05, they
sold at least 552 tons and the figure may actually be 574.6
tons. So much for transparency and veracity."
And it isn't even the Washington Agreement scumbags that are
playing games with precious metals, as the Council notes that
Comex warehouses show their gold holdings at six million ounces,
"yet commercials have sold 20 million ounces."
- The other big, BIG news is the coming report from the new
tax panel, who have all these hot shot suggestions for changing
the tax code. Before you get your hopes up, Ron Paul (R-Texas)
reports that the president’s advisory panel "consists
almost entirely of Washington beltway insiders who have absolutely
nothing in common with ordinary American taxpayers. The members
are former Congressmen and Senators, DC think tank scholars,
university professors, and-- unbelievably-- a former commissioner
of the IRS!"
Rep. Paul thinks that "The reform panel
should have two simple goals: make taxes lower, and make taxes
simpler. But during several hours of discussion last week,
the various panelists talked about everything but those two
objectives. Instead they embraced the practice of using the
tax code as a tool for social engineering, debating what exemptions,
credits, and deductions should be tinkered with to steer taxpayers
toward or away from certain activities." Hahahaha! Exactly!
Central planning! This is how our government has morphed into
a socialist/communist nightmare!
I have read a little about the new tax plan, and I have heard
a little about the tax plan, but I will not go into many of
the details, as the important point is this: The same amount
of tax revenue will be raised. Taxes are not going to be cut.
The same huge, strangling wad of money will be ripped out
of the economy by either taxing businesses (who merely add
the taxes they pay into the prices they charge for their products
and services, thus creating literal price inflation whenever
taxes are increased), and/or reducing the buyer power of the
final consumers (by reducing their incomes as a result of
the higher income taxes) at the same time as they are paying
the higher prices on all goods and services (that came from
the increase in taxes that businesses pay) and/or the decline
in purchasing power of the dollar, as measured in the inflation
in prices. So, one way or the other, nothing will really change.
The only difference is WHO is paying the taxes up front.
This should have enormous initial effects, as
lots and lots of money comes out of things that no longer
have a tax advantage (thus incurring a tax liability on any
gain), and a bull market in something else, which is, as I
understand it according to Jim McTague of Barron's, "savings,
corporate investment and exports." Dividends are to be
tax-free, see, which should, theoretically, drive up the value
of stocks, which is, I figure, half the purpose of this whole
tax plan idea in the first place. And the plan will, theoretically,
drive DOWN interest rates as a result of all of this new supply
of funds stemming from the increased saving, which is probably
the other half of the purpose of this tax plan.
But the plan is, of course, doomed to ultimately fail, as
there is no way to avoid the bankrupting pain of working off
all of the enormous economic excesses and malignancies that
have come from the horrible Federal Reserve financing all
the spending, for all those decades, creating more, and more,
and more, and more money, credit and debt.
- The Conference Board released their index of economic indicators.
The leading indicator fell, and since this is the indicator
of future production, fell, indicates that production should
fall in the future. If you look it up, you will learn that
falling production means less profits, and stock prices don't
like it when profits fall.
Perhaps this is why the Business Council says
that "Less than 15% of CEO’s polled expect business
conditions to improve over the next six months, from 40% in
the previous survey in February. Only 27% expect improvements
to continue in their industries, down from 43.2% in February.
Twenty-one percent now expect pricing power to increase, down
from 28% in February. "
More bad news (MBN) is that the coincident indicator
index, which is a gauge of current economic activity, fell,
too. This index tracks payrolls, incomes, sales and production,
and it seems to coincide with the general economic slowdown
that so many people are noticing.
The worst bad news WBN) is that the index of
lagging indicators rose, which is a kind of measure of future
inflation, which goes, again, along with the burgeoning inflation
that you see everywhere and that I am always complaining about.
So, to sum up for you busy executives, future business is
bad, current business is bad, and inflation is rising.
Typically, as we have seen people, gravitate
to gold when these kinds of things start happening. Not surprisingly,
David Chapman, of the International Forecaster says "Now,
all your money should be in gold and silver related assets,
oil and gas stocks, short positions and a small amount of
cash. If you do this five years from now you will be multimillionaires.
This is a lock – you cannot lose." Now this is
certainly good news to those people who are already long in
gold and silver and oil and gas. But why is it a "lock",
meaning that we cannot lose this bet? Mr. Chapman explains,
"There is no way out for the world economy."
He does not explain WHY there is no way out,
but I will. Attend my words, lowly grasshopper! Verily I say
unto you that the reason why there is no way out for the economy
is that the problem itself is caused by too much money and
credit having been created, and the problem will NOT be solved
by creating MORE money and credit. It's as simple as that.
And in case you were wondering do I have any
empirical evidence that this cure-by- continuation theory
will not work, I can say "Yes, if you will believe the
result of every other country in the whole history of the
freaking world that debased their own money by over-issuance,
which is what all of them did at one time or another, and
who all tried to create more money and credit to fix the problem,
which always failed because it made things worse, every freaking
time in history. And that is why I am sure, without a shadow
of a doubt, that it will not work THIS time, either!"
- I see by the clock on the wall that it is
time for the segment of our show that we call News From The
World Of Technical Analysis. First off, we have Robert McHugh,
Ph.D. of Main Line Investors, Inc., writing that "We
currently have five Hindenburg Omens on the meter from September
2005, and thus remain in dangerous waters, regardless of what
rallies occur over the next week or two."
Then we have David Yu, who notes that "Both the VIX and
the Trin indexes leave little doubt in my mind that rather
than looking at the recent market decline as a bottoming process,
it may be in fact just the beginning of a major topping process.
And, it's got a very long way to fall."
Now Peter George of InvestmentIndicators.com
walks up and says that if we are talking about technical indicators,
then "If we take August 1999 as starting point for the
current 'bull run', then we have completed the first 6 years
of a total 12-year super-cycle. That leaves another 6 years
to go - termination date August, 2011 and ultimate target
$3,500 an ounce" for gold. Oooh! A 700% gain in six years!
Nice!
In a sort of reverse technical analysis, or maybe a case of
"the dog that didn't bark", alert reader Juan M.
sees the government's Plunge Protection Team as being active
in the market, as he notes that the latest CPI and PPI data
should have sent gold shooting up, "just for a start,
and sent stocks and bonds down the drain. The fact that it
didn't happen suggests that the PPT is just the visible head
of a huge financial octopus embracing most of the world by
inventing an Orwellian reality. "
Well, I have no doubt that the PPT is in the market, or that
the CIA is spying on us all and that one day it will be "us"
against "them" and that my wife and family will
be with "them" and I will realize that I was right
to mistrust them and hate them all these years!
But part of the gold mystery may be that the price of gold
went down because the gold lease rates went down. The way
I figure it, see, some central bank with gold wanted to get
the price of gold down because a rising price of gold is so
unnerving to the investors of the world, particularly foreign
creditors, that it might cause a panic and these foreigners
would look at all those American stocks and bonds that they
own and say to themselves "Yah so fong won hangsho ah-so!"
which, if you permit me to translate into pidgin English,
means "Dollar-denominated assets him stink like dead
rat in rice bowl!"
So, to get the price of gold down, these central
bankers dropped the rate for which they will lease gold, called
the dealers on the phone and ordered them to lease and flood
the market with gold, driving the price down, and thus making
it look like nobody is nervous! In fact, all that gold selling
looks like people are less scared! Hahahaha!
And lastly we end our Technical Analysis Workshop
with Paul Kasriel of Northern Trust, who says that he has
been looking at the money supply, and "for the first
time since 1995, the real M2 money supply is contracting on
a year-over-year basis. Contractions in real M2 typically
lead to recessions." This goes along with the inverted
yield curve, which ALSO typically forecasts a recession.
- Someone named Sky works in the retail grocery
industry, and he writes to the Free Market News Network and
says "We have had THOUSANDS of price changes in the past
month and a half, and they are all UP, yet my wages sure as
heck have NOT risen! People are already going more for the
generic brands and I have had a hard time keeping up with
the demand with those particular items."
And I am here to tell you that the consensus
is that there is a big, ugly slowdown in business activity
all over the place in America, as judged by the number of
responses I got to my stupid suggestion that there is a slowdown.
I have never received so much confirmation to one of my stupid
observations before. This is, if course, contrary to the official
story about how well things are going and how everything is
just peachy. But since it is apparently common knowledge,
I am sure you are already aware of this and you were only
waiting for The Mogambo to confirm it for you by issuing the
Official Mogambo Pronouncement (OMP). Well, now you got it!
This is some bad news if I ever heard it. Not the OMP, because
everybody knows that The Mogambo is a real stupid guy, you
can take my word on that, and so this is just another of his
stupid OMPs that nobody takes seriously. No, this is bad because
this means that the velocity of money is slowing, and if there
is one thing about money, it is that it obeys the equality
MV=PQ, where money supply times velocity of money must equal
the price of things times the quantity of things sold.
Well, P (price) is already going up, so to keep Q from falling,
then the product MV must increase! But V is decreasing, too!
And if Paul Kasriel is right, then M is falling, too! So Q
(the quantity sold) must be falling off a freaking cliff!
- Tim Iacono is apparently getting real tired
of hearing me yammer yammer yammer about inflation in house
prices, and in his essay entitled "Home Ownership Costs
& Core Inflation", he wonders "What would core
inflation be today if home prices were included?"
The answer? Mr. Iacono says "5.3%."
I gulp. He goes on to note, "A similar calculation for
headline inflation yields 7.3%." My eyes bug out in fear,
as inflation is the thing that can, and will, destroy us,
and 7.3% inflation is plenty capable of doing that.
The stupid idea of "core inflation",
remember, excludes food and energy, but it does include housing.
Bringing up this core inflation crap brings a gruff retort
from Peter Schiff, of Euro Pacific Capital, who writes "The
perception that inflation is not a problem so long as 'core
numbers' remain relatively unaffected will one day be rightfully
regarded as one of the poorest collective judgments in an
era replete with similar lapses of common sense." Again,
another shining example of us Americans demonstrating our
profound stupidity. Ugh.
****Mogambo sez: Load up on oil and oil-related stocks, because
the guaranteed decline in the dollar, now that Ben "Bizarro"
Bernanke is going to take over the Federal Reserve, means
that OPEC will raise prices. They will do this not because
they hate us, which they do, but because they don't want dollars.
They want units of buying power in their own currency, and
when the dollar falls in value, as it will, thanks to the
idiocy of the Federal Reserve and their incestuous leadership
by mental defectives like Ben "Blockhead" Bernanke,
the OPEC nations get fewer units of their local buying power
when they trade in those petro-dollars in the Forex market.
Ergo, they must charge a higher price for oil. It's as simple
as that!
Richard Daughty, the angriest guy in economics
9241 54th Street North
Pinellas Park, FL 33782
727 546 5568
e-mail: scgcjs@gte.net
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