Necessinflation

By Richard Daughty "The Mogambo Guru" November 2, 2005 www.dailyreckoning.com

- The Fed actually drained a little credit last week, taking it down $3 billion. Why? I figure they were all too busy partying too much and drinking too much and pinching each other on the butt too much. Probably giggling too much while the do it, too. Now that Ben "Bird Brain" Bernanke has been chosen to take over the Federal Reserve, they know that when the guy running the show actually WANTS inflation, as he manifestly does, then it is time to celebrate with a big, blow-out toga party, using some petty cash to get some kegs of beer and some of whatever in the hell they are smoking that makes them think their stupid little New Age theories could possibly work in the real world.

But I have not personally gone to the Federal Reserve to check on them, as I feel kind of crappy here lately, mostly as a result of getting violently sick whenever I read about how Alan Greenspan (whom I consider the absolute worst central banker in American history) is such a hot shot because of his "deft" handling of an Argentina crisis, or a Russian crisis, or a Korean crisis, or a Mexican crisis, or a Philippine crisis, or a Long Term Capital Management crisis, or a Y2K crisis, or blah blah blah. I can hardly read one of these stupid articles without gagging and sticking pins in a voodoo doll of the guy who wrote it, because what none of these clueless, dimwit "journalists" seem to understand is that Alan Greenspan CAUSED all the crises in the first damned place by creating so damned much money for so long, and all that money eventually percolated into all these other things, and after awhile it got into trouble after causing bubble after bubble all over the place. Then something inevitably bad happened as a result. And then to try and "help" by correcting his stupid mistake, he continually jammed MORE money into the economy! Astonishing! He "fixed" the problem he caused by driving interest rates down to insanely-low rates, and thus insured that we would soon suffer from more price inflation that inevitably follows such reckless monetary inflation!

Now I must pause, as I have just re-read what I just wrote, and I made myself sick again. Urk. Taking a deep breath and gobbling a taco for strength, I feel life returning to the brawny arms of The Mogambo (BAOTM), and ducking into a nearby telephone booth, I emerge again as the mighty loudmouth Mogambo (MLM)! Now I have a new, vibrant vigor in my voice as I say that all of this Alan Greenspan crap is the opposite- the exact freaking opposite, I tells ya! -of what a competent central banker is supposed to do! If he really WAS a good central banker, none of these bad "crisis" things would have happened in the first damned place! If Alan Greenspan was a great central banker, his 18 years in office would have been one of smooth, orderly, non-inflationary growth with a generally rising standard of living for everybody, instead of the disgusting piece of crap we call the American economy and, as the logical extension, the global economy. In fact, this theme is echoed in the title of a book by a guy named Karl Hosch which reads "The Whole World Is Going To Crap!!!" and I note that the three exclamation points are his.

But what we got from Alan Greenspan and the buttheads that infest the Federal Reserve, as I ceaselessly point out over and over and over again mostly because there is something seriously wrong with me, is the opposite of what we should have gotten. Even Bill Bonner at the Daily Reckoning wonders why it is that "Bloomberg reports that wages are rising more slowly than at any time in the last 24 years" and if this is true, then he wonders "If Alan Greenspan has performed such a good job of managing the economy, you might wonder why people are not earning more money."

And they are obviously NOT earning more money, and in fact the lack of money is what is prompting Wal-Mart to suggest that Congress raise the minimum wage. Wal-Mart CEO Lee Scott said that, "We can see first-hand at Wal-Mart how many of our customers are struggling to get by. Our customers simply don't have the money to buy basic necessities between pay checks."

Perhaps this is what prompted a witty British guy named Jonathan P. to write that while inflation may be "tame" to the boneheads in government, for us out here in the real world we have "Necessinflation" which he defines as "Everything that is ‘necessary’ to life is increasing in price. Shelter .Energy .Food .Utilities .Medical." Hahaha! Exactly!

And it will get worse and worse because there is no upper bound on inflation, since, as William Grigg, of the New American Magazine, so accurately points out, "We will never run out of zeroes." Hahahaha! Exactly! The attitude of the Congress and the despicable Federal Reserve is "$1 today, $100 tomorrow, $1,000 next week! Who cares? Hahahaha!"

Alert Reader Jan E. sees us laughing, and writes that he doesn't see anything funny about this, but instead he sees "More signs that the economy is not growing. There are more vacant stores in my town. All of the marginal businesses are closing up. And I, like some of your other readers, am receiving catalogs from companies I haven't heard from in years. But the biggest sign comes from a friend-of-a-friend who works for a company that provides dancers for bachelor and birthday parties. He says the summer business was flat. The worst they have seen in years. Now you know things are bad when guys don't even have money to pay girls to take their clothes off!" Now, that IS bad news!

This purported lack of money to spend is apparently borne out by the report by the Commerce Department that said spending, adjusted for inflation, fell 0.4 percent last month. And not only do we not have any money to spend, but we are not saving any money either, as the savings rate was less than zero- less than zero! -for the fourth straight month in a freaking row! And it has been falling for a decade, and hovering around this low level for years!

And it will get even worse than that, since mass layoffs hit their highest in four years, and durable goods fell again, this time falling 2.1% in September.

And why is this happening? Is that what you are asking me, Binky? I'll tell you why, and without screaming at you, since I love you so much I can refuse you nothing. This is happening because prices are rising faster than wages. It's as simple as that!

And now you want to know, "Why is that?" Well, before I can really get cranking with one of my patented Mogambo screaming hissy-fits (MSHF) about inflation and how it is a very bad thing (VBT) and how the Federal Reserve is evil incarnate for creating all this inflation, here comes Sean Corrigan, investment strategist at Sage Capital, who notes that "Nobel Prize winner Elias Canetti wrote in his 1960 work, 'Masse und Macht': 'One may say that, apart from wars and revolutions, there is nothing in our modern civilizations that compares in importance to [inflation]. The upheavals caused by inflations are so profound that people prefer to hush them up and conceal them."

I patiently try to explain to Mr. Corrigan that this is not about the actual horrors of inflation, but the audience drowns me out by furiously chanting "Skostak! Shostak!" Responding to the crowd, Frank Shostak explains in his essay "Is the Fed an Inflation Fighter or Creator?" at Mises.org, that "Once the money supply increases it sets in motion a process of impoverishment, which also sets in motion the dreadful boom-bust cycle."

And so I guess that the reason that Ben "Blowhard" Bernanke is so desperate to "set in motion" another boom-bust cycle is that we are now suffering the impoverishment part of the whole boom-bust cycle that Mr. Shostak alludes to. When you don’t have enough money to spend anymore, you are impoverished.

And when people don't spend, economies don't work, and that means that asset prices will go down, and that means that the holders of stocks, and the holders of bonds, and the holders of housing, and all those tens and hundreds of millions of government parasites will suffer impoverishment, too, as everything goes down. This is the dreaded "deflation" that Ben "Bunghole" Bernanke is so desperate to prevent, and rightfully so, that he is on record as saying that his policy is to deliberate destroy our money by inflation! Which makes everything worse! Hahaha! Welcome to the lunacy known as central banking!

Of course, what they HOPE will happen is that stocks will increase in price (inflation in stocks) and bonds will increase in price (inflation in bonds) and houses will increase in price (inflation in houses) so that we can have an increase in the price of government (inflation in government). Unfortunately, asset targeting is almost impossible, and so all that new money will end up as inflation in lots and lots of other things, too. In fact, in everything.

Even more importantly, and you can tell that it is important by the way the pathetic Mogambo weeps piteously as his mighty Mogambo heart (MMH) breaks at the thought, the poor (who are already impoverished) will be further impoverished by the inflation. And if there is one thing that I am sure of, it is that there are lots more angry, desperate poor people (with nothing to lose) than there are rich people (trying to keep from losing what they have), and anybody who has seen any old movies about the French Revolution or the Russian revolution or heard the stories of Weimar Germany instantly recognizes that nothing good EVER comes out of further impoverishing the poor!

But we were not talking about poverty or how The Mogambo can't afford to go out for a lousy donut and coffee anymore, and even when he could afford it the snotty little cashier refused to wait on me because she says I gave her "the creeps," but about how that miniscule decrease in Total Fed Credit was more than made up for by foreign central banks, who bought up, and stored at the Fed, another staggering $8 billion in US debt last week! Eight billion! Dollars! Which was real handy because the Treasury is now issuing new debt at breakneck speed, up almost $100 billion in two lousy months! And up fifty billion dollars in the last three weeks alone!

Gary North, of the newsletter Reality Check, sees my eyes bugging out of my head about this national debt thing, and condescendingly pats me on the head like I am an idiot (did I mention he is also a real good judge of character?), and reassures me that this is chicken feed. "The on-budget debt is merely the tip of the iceberg. The off-budget debt -- mainly Medicare -- is now in excess of $65 trillion, according to Prof. Kent Smetters, who testified before a Congressional committee in February, 2005. In fiscal 2006, this figure will rise to $68 trillion."

Getting back to the national debt, Mr. North says "The debt-o-meter will roll over at least once more during the present Administration. A recession will get it to roll over twice. I am betting on twice." So he figures that not only will we have a recession, which means that The Mogambo will be fired at the first opportunity in a general downsizing ("Scram, bozo!"), but that the national debt will balloon by another $2 trillion in three years? Yow! Yow! Yow!

- GDP was reported up at 3.8% at an annual rate, which is actually up from last quarter, when growth was 3.3% or something. Simultaneously, the Gross Domestic Product deflator, which is the inflation figure that you use to discount the rise in nominal GDP (sales in dollars), rose to 3.1%, up from 2.6% in the previous quarter! My God! All the ethically-corrupt wonks in Washington, working like the demons from Hell that they are, can't find some way to keep the inflation statistics any lower than this??? Note the use of three question marks, which is a clever literary device I am using to indicate sneering incredulity with a distinct undertone of contempt.

The part that makes my mouth hang open in stupefaction and lets a rivulet of drool slide down my chin is that this means that the 3.8% reported gain in adjusted-GDP, combined with the 3.1% deflator, means that the economy was/is growing at a nominal 6.9%? Hahahaha! Don't make me laugh! I am here to tell you that nominal GDP is NOT growing at 6.9% AND that inflation is a hell of a lot more than some piddly 3.1%, or even 4.7%, as is reported in Barron's and the Economist magazine. Ergo, the real, inflation-adjusted economy is not growing at all, and is, in fact, stagnant at best and, even worse, is almost certainly contracting.

- We now know that the Bush administration is, officially, the most irresponsibly profligate of any administration in living memory, as the Cato Institute reports that "The increase in discretionary spending — that is, all non- entitlement programs — in Bush's first term was 48.5% in nominal terms. That's more than twice as large as the increase in discretionary spending during Clinton's entire two terms (21.6%), and just higher than Lyndon Johnson's entire discretionary spending spree (48.3%)."
Bush has now allowed the increase in federal spending to exceed even that of Lyndon Johnson, the previous record-holder, as the most irresponsible spending dolt. But it was not just Bush, as it was the Congress that proposed, and the White House merely duly authorized, the jillions and gazillions of dollars in spending (and deficit-spending) in the past few years. And that is just the on-budget stuff! If you include the non-budget items, and all the offshore shenanigans, and the Social-Security and Medicare mess, then you will get a number so big (audience shouts out "How big, Mogambo?") that you will find yourself screaming screaming screaming in your sleep and your children will run in, dressed in their cute little footie pajamas, and ask "What is the matter?" and you will tell them, with tears in your eyes, "The Mogambo was right ! We are freaking doomed!"

And of course a lot of this humongous mountain of money found its way back to the government. Sure enough, the Treasury reports that federal revenues rose in the last fiscal year by 14%, which translates into an additional $274 billion flowing into the government. In case you are keeping score, corporate taxes increased by 47%, and individual income taxes increased by 15%. Which they spent on creating more entitlement programs!

- Robert Kiyosaki, writing and essay entitled "Why Savers Are Losers" on Finance.Yahoo.com, says "My poor dad believed in saving money. 'A dollar saved is a dollar earned,' he often said. The problem was he didn't pay attention to changes in monetary policy. All his life he saved, not realizing that after 1971 his dollar was no longer money. You see, in 1971 President Richard Nixon changed the rules of money. That year, the U.S. dollar ceased being money and became a currency. This was one of the most important changes in modern history, but few people understand why."

Oooh! Oooh! I know this one! I raise my hand, because I know why! It's because of the inflation that you get as a result! So I am waving my arm around like it's caught in a damned whirlwind and my eyes are pleading "Ask me why! Please ask me!", but he pretends that he doesn't notice me, and so finally I yell out "Ask me, you stupid idiot!" which was, apparently, the wrong thing to say, as he immediately turned away from me and went on to say "In spite of all these increases in prices, the federal government's economists say, 'Inflation is low. It's under control.' " Aha! So it IS about inflation, just like I said! Feeling real smug and self-satisfied, I cross my arms and have this stupid, smarmy grin on my stupid face as he continues, "They are allowed to say that because the government is charged with only monitoring inflation in consumer prices -- not asset prices." Exactly right! So I jump up, startling the hell out of poor Mr. Kiyosaki, and say "Exactly right! We have had roaring inflation in stocks, and bonds, and houses, and the size of government for freaking decades! All financed by the damned Federal Reserve, always creating more money and more credit! But they never talk about that! NoooOOoooo! They never want to talk about that! They only say things like 'Go away Mogambo, you hateful and stupid little man!' and then they send over a goon squad from the CIA to 'talk' to me, but it never does any good, and that is why they are all out to get me!"

At the irritating sound of my whiny voice, he looks over at the security guards clumped around the sides of the auditorium, makes some kind of sign with his hand, and flicks his head towards me. I see them converging on me, and I can feel their little rat-like eyes burning into me, and I know I should run, but I can't! I stand spellbound as he continues "The consumer price index (CPI) is the pressure gauge the government watches because they want to make sure the consumer is happy finding bargains at Wal-Mart, which is easy because China is forcing consumer prices down."

At that moment, two big, beefy stooges with their stupid little security guard uniforms and their stupid little security guard badges are hauling me down the hall, and I am screaming back "Wal-Mart? You say Wal-Mart?"

So he never got a chance to hear my clever rebuttal, but apparently this Kiyosaki guy ain't heard the news that Wal-Mart's prices are not quite the bargain they once were!

- Lawrence Roulston of ResourceOpportunities.com wrote on Kitco.com about his experience at a gold show, and it was entitled "Meltdown or Muddle?" Naturally, since I think I am so witty, I remark "Well, if it was a meltdown, then there would be a puddle, not a muddle! Hahaha!" But nobody laughed, as usual, and I sneer at these puny Earthlings and how their primitive brains cannot comprehend the sublime, subtle humor of the Mogambo (SSHOTM). After a little embarrassed silence, Mr. Roulson finally breaks the tension by going on to opine that the biggest concern preying on people's minds is "the outlook for the US economy. Government debt, consumer debt, escalating government deficits, the war in Iraq, terrorism, the wilting dollar, and now the devastation on the Gulf Coast, are all serious issues. But, will these factors lead to an economic collapse?"

He implies that it is easy to be like the cowardly Mogambo, going all to pieces over this stuff and screaming that the sky is falling and hiding under the bed in fear, but he reminds us that "It is important to look beyond the headlines and superficial analysis and think through these issues" and in particular to "go back a few years and re-read the doom and gloom forecasts from so many commentators. Granted, some of the events that were forecast have come to pass. Yet, in spite of the mounting difficulties, the US economy continues to grow and prosper. It is not the level of growth that many people would like to see, but it is a very long way from the apocalypse that was forecast by so many."

That's right! The doom and gloomers are wrong! I am a doom and gloomer. Ergo, with airtight Aristotelian logic that is unassailable (and believe me I have tried), I have been, alas, wrong. Especially about the housing boom, which I missed completely because I made the same mistake that is so common amongst us out here on the edges of reality and sanity, and I am talking us poor, pathetic creatures who can barely contain our fear and anger and fear (which I mention twice because it is central to my new legal defense), and sense of sheer panic, so that we can't sleep, and haven't slept for weeks and weeks because it is freaking us out so bad, and now we are paranoid and insane with, as I indicated previously, fear.

And we are wrong because we doom-and-gloomers always make the same big mistake (SBM) that we always make. In fact, it is SO common (audience shouts out "How common, Mogambo?") that it even has a name: Same Big Stupid Mogambo Mistake, which is usually referred to by its acronym, SBSMM in the official literature. And if SBSMM is NOT mentioned in any official literature that you read, then that proves that they are censoring what you are reading, and that they ARE out to get me. And you, too!

But this is not about how I am a paranoid lunatic, but about making mistakes. So what IS this big mistake, this SBSMM? The big mistake is: We always completely underestimate the government's response! And there is ALWAYS going to be a government response, because when something goes bad, or starts going bad, or may start going bad, or is not going good, or is not going good enough, then there is ALWAYS a government response!

And if you are at all familiar with the results of previous government responses (total failures) then you know why we doom-and-gloomers are so doomy-and-gloomy, and always will be, too.

For example, Jim Puplava, speaking on his Financial Sense Newshour, does not mention the fact that nobody is as doomy or as gloomy as I, but he does demonstrate that he is hip to the government-response thing. He says, "We will put price caps on energy. We will put windfall profits tax into effect. We will raise taxes. We’ll raise interest rates. We will increase government interference in the economy. In other words, we will add all the wrong ingredients to the bonfire and make the fire grow. Unfortunately, that is the lesson of history."

- The Economist magazine writes "A central bank cannot prevent oil prices giving a one-off boost to inflation, but it can try to prevent this feeding into higher wages and prices. To ensure that the rise in inflation is only temporary, central banks need to increase interest rates at least in line with inflation. If central banks hold interest rates unchanged as inflation rises, this would imply lower real rates and hence an easing of monetary policy."

I jump to my feet and exclaim, "And this is exactly what we are seeing, dudes!" They go on like they didn't hear me, but notice how they steal my thunder when they say "Global monetary policy is still unusually lax by historical standards. In America, despite 11 increases in interest rates since June 2004, real rates are still negative and below any reasonable notion of the 'neutral rate of interest' at which monetary policy is neither stimulating nor restraining the economy. In other words, the Fed will need to keep pushing up interest rates into 2006." Well, this morning they raised the Fed Funds rate by another quarter of a percent for the twelfth time in a row, so maybe the Economist knows what it is talking about, unlike the stupid Mogambo!

But did they say "unusually lax"? Hahahaha! I would have said "preposterously low" or "insanely low" or "stupidly low" or "pounded down to almost insignificance by a bunch of brain-damaged weenies at the Federal Reserve as they desperately try and extricate the economy from the ruination and damnation inflicted on it by these same Federal Reserve morons, what Aubie Baltin, PhD, derisively calls "Socialist Neoclassical economists", who ruined our money with their ridiculous and stupid economic theories which have been discredited over and over and over again." But I can see how this is too wordy, so let's stick with their terse "unusually lax."

But it is not just us Americans suffering from inflation! Interest rates are rising around the world, as one country after another is being forced to do something about inflation in prices, which is what always comes after an inflation in the money supply, which they are all STILL encouraging! This is bad, bad news (BBN) for two reasons that I can think of without thinking or getting up off my lazy butt, which suits me fine: 1) Financing the purchase of anything gets more and more expensive, and 2) all the hundreds of millions and billions of people who bought any American debt, any of that immense ocean of debt that we have issued over the last few decades, are now looking at losses, and they will incur more and more losses for a long, long time into the future (because bond prices fall as interest rates rise) until interest rates stop rising, and these people are going to be angry every minute of every day as they watch their wealth melt away. So they are sitting on losses, both real AND incipient, made all the more huge and overwhelming by the amount of leverage that they used to buy the bonds in the first damned place!

I am not worried about the Europeans getting angry, or the Japanese. It is the Chinese that I am worried about, as I have seen too many Kung Fu movies not to know that when you have a lot of Asians around, sooner or later there is going to be a lot of fighting, hands and feet flying around, punching and kicking the hell out of everybody and everything, and you had better know what you are doing when mixing it up with those dudes!

Already the Chinese consume half of the cement used in the world, a third of all the coal used in the world, 40% of the world's steel, a fifth of the world's copper and aluminum. And they also make half of the world's shoes, most of the video games that are rotting our brains out, 80% of all the toys sold in America, and most of everything else you can name, from cell phones to computers and furniture and beyond!

As further proof, The Mogambo notes from deep within his secret bunker way out in the spooky and haunted woods that these Chinese guys are going to have a strong currency and we are going to have a weak one, and they are going to have a lot of rich and middle-class Chinese people with money to burn, and they are going to want a lot more things that taste good. And that takes farmland, and that means that foreign nationals are going to, as I figure it, come over here and buy up all the farmland with their strong currency, sort of like the US used to do back in the days when we were younger and stronger and had a mighty currency, and we strode around buying up whole swaths of land and resources anywhere we wanted to in the whole world, and kicked the local population off the land or made virtual slaves of them, if we could, and used the land and resources to make stuff for us Americans, to the impoverishment of the indigenous population, and we laughed at them "Hahahaha! We are the Yankee, capitalist-pig exploiters of your environment and your stupid economy!"

So I am predicting, in that fearless-yet-foolish way that is always my downfall and dismay, that cropland in the USA will be, one of these days, enormously expensive.

And there may be some divine retribution in there somewhere, as alert reader Richard P. quotes Morris Cerullo, the president of World Evangelism, as saying that a coming world-wide financial crisis "will be so long and so severe that even the rich, who are usually exempt from such things, will be affected." Even more surprisingly, and the reason I bring this up, is that he has also predicted that "wars in the future will be over farmland and not oil fields."

- Mike Shedlock of GunsAndGunpowder.com is still concerned about the problems at General Motors, and rhetorically asks "Is that the extent of GM's problems?" Well, since he asked, I was going to casually mention that 1) I obviously don’t know what "rhetorically" means, and 2) I have written extensively to both GM and Ford about naming a snazzy new car after me, maybe something like the "Mogambo Supercar Supreme-o." But I never heard from them, and they did not snap up the generous Mogambo offer (GMO), which proves that THEY were idiots, NOT me, as so rudely alleged in most of their civil cases against me, nuisance lawsuits initiated so that I would stop bothering them about the Mogambo Supercar, which they deny the existence of TO THIS DAY! I mean, I tell Mr. Shedlock to call General Motors up on his cell phone and ask GM about the Mogambo Supercar, and they will say "What in the hell are you talking about?" which will PROVE it's true!

But apparently Mr. Shedlock has heard this story before, and ignores my challenge. Instead, he elects to say "Let's summarize all of the problems I can think of off the top of my head: 1. Falling sales. 2. Enormous debt. 3. Union strife. 4. Delphi and supplier problems. 5. Cost disadvantages versus Toyota to the tune of several thousand dollars per car 6. Poor management. 7. Poor quality versus foreign competition.8. Lack of industry vision. 9. Medical benefit problems. 10. Pension woes."

So I am standing there, waiting for him to at least MENTION the whole Mogambo Supercar tragedy, and what a fiasco it was, and how it is I who is the real victim here, and not the bunch of incompetent boneheads running the joint, and not the equally incompetent boneheads who kept buying GM and Ford stocks and bonds, and using these stocks and bonds(and forgive me for turning away, but I cannot help but laugh at the sublime Theater of the Absurd humor, even in the face of such a profound tragedy) to fund their own retirements! Hahahaha!

And far be it from me to mention that Ford ruined both the Mustang and the Thunderbird, and General Motors ruined the Firebird and the Oldsmobile, so what in the hell can you expect from losers like that?

- Alert reader Norman Z sent me the note that David Dodge, who is the chief honcho dude at the Bank of Canada (the Canadian central bank), supposedly said "The world should expect an abrupt and disorderly economic correction in (by) 2007." Now, I cannot verify this report, but I say that I could not agree more, which I cleverly indicate by saying "I could not agree more." And if you want to see what happens to the price of gold when "an abrupt and disorderly economic correction" happens, then you are about to get a real lesson.

Nick Chase, author of The Contrarian's View newsletter, has a warm place in my heart because not only does he have nothing good to say about Ben "Bonkers" Bernanke, the new chairman of the Federal Reserve, but he is also very hip to what the ramifications are of so much money and credit being created. As another feather in his cap, he also agrees with Mr. Dodge, in that "In 2006 will come the hangover after the party.... the bear market will return with a vengeance."

- The Gold Report reports "Dubai wants to be the Switzerland of the Arab world and a world financial center. So they're doing the smart thing." As evidence of that, they note that Dubai will "launch a gold futures exchange on Nov 22, with South Africa’s Standard Bank among 50 founding members. Gold and silver options contracts would be launched in the first quarter of 2006."

- Bob Wood, of Kaizen Managed Assets reported that Jim Cramer, the manic stock picker on his own CNBC television show called Mad Money, "has deftly staked out positions on both sides of the debate. While pounding the table on his own show every day for which stocks he wants you to buy right now, I caught his appearance on the Colbert Report. Cramer said he was a long term bear on the domestic stock markets. You read that right. He's bearish long term on U.S. stocks."

- To show you the arrogance and intellectual impoverishment of business in America, get a load of this: "Auto supplier Delphi Corp. said Friday it has beefed up severance packages for top executives in order to encourage them to stay on as the company prepares for a major restructuring that could include bankruptcy." Hahahaha! These are the same guys who mismanaged the company into the toilet, but they are giving themselves more money to encourage themselves to not run away like rats deserting the ship, even as the employees, retirees, stockholders and bondholders are in the process of being screwed royally! Hahahaha! Delphi could have saved itself the money, as who in the hell would hire any of these blockheads anyway? Hahahaha!

- Bill Murphy of LeMetropooeCafe.com is really suspicious of the action in gold here lately. He says "The Gold Cartel knows their ill-conceived scheme to manipulate and suppress the price of gold is going down. The price of gold is going to take off in the months and years ahead." So the way to capitalize on this slimy mess is to buy gold whenever the price is manipulated lower like this. I will point out, in case you are wondering, that this strategy has worked like a charm for years, and everybody who bought when the price inexplicably fell like this made a nice profit when the price of gold subsequently rebounded, as it always does nowadays. And I am pretty damned sure that it will continue working like a charm, too.

The surprising thing is that Mr. Murphy says that the guys on the Comex "have rarely ever seen anything like it", but that Goldman Sachs, alone, is doing all the monster selling that took gold down so dramatically here lately.

And Mr. Murphy sees the Bush Administration in this mess up to their eyeballs, as the White House knows that "If the US stock and real estate markets go against them in a significant way, they know they are done for", and a rising gold price is always seen as a reason to sell stocks and bonds and houses. Ergo, White House complicity in rigging the gold market!

- From Doug Noland we learn that there is plenty of inflation out there to rattle the nerves of the faint-of-heart (me). He writes "For the week, the CRB index was little changed, with y-t-d gains of 13.5%. The Goldman Sachs Commodities index rose 0.3%, increasing 2005 gains to 40.1%."

And price increases are getting more ubiquitous too, as Mr. Noland remarks that "The National Association for Business Economics did their quarterly survey of members, and they report that their index of prices charged by member companies rose to the second-highest in the survey’s whole 24-year history.”

And it doesn't stop there, as the Commerce Department's latest PCE price index of inflation, which is the inflation measure supposedly favored by Alan "Jerkface" Greenspan, shot up 0.9 percent last month. Apparently this is the largest biggest rise in that index since February 1981, 24 freaking years ago.

But, you will be glad to know, that if you exclude food and energy, then the index only advanced a mere 0.2 percent. Hahahaha! To show you how far removed from reality this stupid PCE number is, over the past year it has risen just two lousy 2 percent! Hahaha! Prices have increased just two percent in the last year? Hahahaha! And this is Greenspan's favorite inflation indicator? With an idiot like that in charge of the Federal Reserve, now you know why I say that we are freaking doomed! Ugh.

****Mogambo sez: These temporary low prices for oil and precious metals are your chance to walk over and pick up some bargains, as all the things that are bedeviling us and our stupidly over-priced currency are not going to get better, but they are going to get worse and worse and worse. From the Financial Times we read "The Organisation for Economic Co-operation and Development forecast warned that the continued deterioration of the US current account deficit posed a risk to the US and to the global economy, at a time when the US deficit has risen above 6 per cent of gross domestic product and is forecast to rise to 7 per cent of GDP next year."

If this doesn’t seem important to you, then perhaps it will after they go on to say, "Few other OECD countries have ever managed to sustain imbalances of that magnitude without eventually experiencing sharp downward pressure on the value of their currencies.”

That means that the price of oil, gold and silver will be pressured to rise and rise and rise for the rest of your life, as the dollar will continue to fall and fall in value for the rest of your life. And since you can buy oil and precious metals cheaply right now, thanks to these obvious manipulations of the market, buy them all, and rejoice at your good luck! Whee!

Richard Daughty, the angriest guy in economics
9241 54th Street North
Pinellas Park, FL 33782
727 546 5568
e-mail: scgcjs@gte.net