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Richard Daughty "The Mogambo Guru"

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Financial Pop Quiz

By Richard Daughty "The Mogambo Guru"      Printer Friendly Version
Oct 27 2008 11:58AM

I was watching the incredible economic catastrophe unfolding in front of my eyes, my heart pounding, eyes glassy and staring, when I thought I heard the sound of gunfire outside the Mogambo Big Beautiful Bunker (MBBB), signaling that the oppressed masses were rising up in angry rebellion at the inflation in prices that dooms them all!

Running to the periscope, I nervously peered out, but there was nothing. Everything in the crosshairs looked normal. It later turned out that the explosions I heard were actually the sound of my brain blowing individual neurons to bits, as it refused to believe what my eyes were seeing.

Such as the news from Junior Mogambo Ranger (JMR) Stephen F., who says, "The latest Federal Reserve H3 report shows another giant leap in the monetary base, another 8.2% in the past 2 weeks, on top of the 7.65% increase Sept 10-24."

This is Truly, Truly Staggering (TTS)! And to show you how staggering, perhaps it is time for a Mogambo Pop Quiz. Answer this multiple-choice question: "Inflation in the money supply is the precursor to…

  1. Inflation in consumer prices,
  2. The ugly death of the economy, meaning the economic death of you and everybody you know because rising prices will eat you alive, or
  3. All of the above, and plenty more things that are too ugly to even talk about, except maybe that prostitutes will be everywhere."

And now inflation in the money supply as an "economic good" has, predictably, failed again, and Alan Greenspan is the filthy bastard who did it to us this time, while Ben Bernanke and his odious, low-IQ "economics PhD"-ilk infesting the nation's universities share the blame for their erroneous active participation and encouragement due to their complete lack of any real insight or intelligence.

As a result of the latest failure of a fiat money that has resulted in ruination, just like all the other experiments with a fiat money have ended in failure for the last 2,000 years, the S&P500 is now down to where it was in 1997, which is 11 long years ago, which means that everybody who bought the shares of the S&P500 since 1997 has lost money both in nominal terms (since the price of the shares has gone down), but also more in real, inflation-adjusted terms, because in the meantime the U.S. dollar has declined in value by about 60%, meaning that everybody who was stupid enough to think that they would make a profit by "buying and holding" stocks over the long-term has now lost 60% of their buying power! Hahaha! Morons!

Once again, the overwhelming majority of schools that teach economics, or any other scientific discipline for that matter, never even noticed that it is mathematically impossible for the majority of investors to make real, inflation-adjusted money by investing! Everybody puts one dollar into the market and then everybody takes two dollars out? It's insane!

It's so obvious, and yet almost nobody ever said, "Hey! This 'universal investing for retirement' is the stupidest Ponzi-scheme crap I ever heard of, at least for the majority of investors, and sometimes, like now, for all investors! We must be morons!"

What can I do except laugh scornfully, "Hahaha! Yes, you are morons!"

And it is all because of a fiat money and credit, which gets created to excess because government people are corrupt, and they are corrupt because of their greed and short-sightedness, and they want free money to spend, which they get, which increases the money supply so much that it causes prices to rise so much that the economy is freaking destroyed, and not in a good way like Godzilla stomping on Tokyo and, somehow, enabling them to control the world market transistors and transistor-related markets from then on.

Since I could see that the line in front of me at the supermarket was very long, and I could see that the stupid people around me were in sore need of education, I generously started into a loud one-sided discussion about the evils of a fiat currency, the demonic Federal Reserve and the despicable Congress when, suddenly, Gail (whose name tag cheerily said, "Hi! My name is Gail") thrust a piece of paper into my hands with a snarl.

Startled, I noticed it was an essay by Robert Singer, submitted to, who notes, "Behind every foreclosure and American Dream there is a fiat currency", which I not only agree with, but I said so by loudly exclaiming, "Aha! Exactly!"

Stymied in my efforts to educate my fellow shoppers about a fiat currency, I thought I would, instead, talk about precious metals, and how anybody who knows anything about economics and fiat currencies - like my good friend Robert Singer and I - knows that gold and silver is "the place to be" when a government is acting so insane as regards money.

Gail, with an agility I found startling, jumped over the checkout counter, snatched the essay from my hand, and, thrusting it back into my face, angrily pointed out that Mr. Singer had already covered that ground by quoting the famous Ted Butler as saying, "Few know that, as a result of a structural deficit that lasted for more than 60 years, world silver inventories have been depleted to levels 90% less than what existed 65 years ago. Few know that, as a result of this depletion caused by industrial consumption, there is actually less investment silver in the world than there is gold, even though gold is more than 50 times the price of silver. Few know that silver has the largest concentrated short position in financial history." Yow!

Seeing that Mr. Butler was getting all the attention, I interrupted and said, "Hey! Ted! If gold is $840 an ounce and silver is about $11, then the gold/silver ratio is 76, not 50!"

You could tell by the look on his face that that I had missed the point, but before I could be embarrassed again, Gail had finished bagging my pitiful little bag of groceries that, unfortunately, ate up my last remaining money, and I only had time to say, "Silver! Buy silver! It's the most undervalued commodity in the History Of The Freaking World (HOTFW)!"

She replied, "Just take your groceries and go home". And although I cannot be certain that she followed that up by saying, "Creepy old man!" under her breath, every video camera in the store will readily verify that I said, "Buy silver and make a lot of money! Or buy gold, and not make so much money; or buy neither and be stupid and broke, morons!"

Then I went home. Bought a little silver. I don't know what they did. Probably nothing. Morons.

The MOGAMBO GURU, e-economic newsletter,
by Richard Daughty, the angriest guy in economics.



Editor's Note: 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.

The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications.