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More beanie propeller spinners

Richard Daughty
...the angriest guy in economics
The Mogambo Guru
February 17, 2004

Foreigners, bless their hearts, continue to pour their money into buying American sovereign debt, and last week was no exception, as they bought up another $4.4 billion, taking their total of assets held at the Fed to $1.116 trillion. I will pause for a moment while you rub your eyes in disbelief. This staggering sum, as huge as it is, is equivalent to half of the federal government's budget for the entire next year. And now I will pause a moment while you gasp and stare at that in disbelief. And it is, admittedly, only representative of just a fraction of what the foreigners bought in total, and now I will pause a moment while you run screaming down the street in disbelief.

In the last year alone, in this one lousy account at the Fed, foreigners have soaked up $252 billion of American debt, an amount that represents more than 10% of the bloated federal budget. Now I will pause for a moment while you drop to your knees and scream, "If there is a God, kill me now!"

This conspicuous consumption now takes on added significance, now that the G-7 has realized that the value of currency is not totally dependent on seven central banker boneheads getting together and flapping their lips. If they fail to talk the dollar up, it will mean that every one of those bonds that those foreigners bought for the last few decades will be going down in ex-Forex value, handing a loss to every numbskull who bought into that American government debt fiasco. And then they will, according to theory, commit suicide at the crushing losses and personal financial devastation, and thus the congenial idiots are removed from the gene pool. And it only gets worse, much worse, from here, if history is any guide.

Paul Krugman, columnist for the New York Times, and don't get me started on that horrid little Leftist rag of a newspaper and as such is truly a Fifth Column destroying my country from the inside, which I publicly admit is probably a gross and unfair exaggeration, but that's the way I am, has weighed in on the Bush budget, such as it is, and he is, predictably, outraged. His column is actually entitled "Bush Brings us another Bogus Budget." Now, as a guy who is unnaturally attuned to things alliterative, I gotta say that I am enthralled at that title, all those "b's" acting as bookends, so it LOOKS symmetrical at the same time as it is alliterative! I stand and applaud, clap clap clap!

But it not enough to be a god of alliterative prose, and thus Mr. Krugman is a big bully who is able to stomp all over the poor Mogambo, who tries so hard to be witty and write clever copy but is handicapped by a complete lack of talent. And while we are on the subject, "having no discernable talent of any kind" is NOT, and believe me when I say that I have tried and tried, and I repeat, is NOT enough to get you one of those "handicapped" parking stickers, and I hope you will stand with me to howl our frustration and outrage of dismay, and shout "Where is justice for the Mogambo?" No, I am going to continue to harass Mr. Krugman, even if I have to park in one of the regular spots at the far end of the parking lot to do it, because I think that, in this case anyway, 1) he deserves it and 2) he is not here to defend himself.

So, that is why I continue, "Oh, he is not outraged at the SIZE of the budget. No, he is outraged at HOW it is achieved, namely through the expedient of deficits. His solution? Typical Leftist Garbage (TLG): raising taxes!"

This guy, this Mister Paul Krugman, and you can tell by the way I spelled that out that I am working myself into one of my "spells," and I call your attention to the way I used the word "spell" in two completely different ways, which is my pathetic way of trying to be clever in a literary way to emulate Mr. Krugman, but obviously failing again, and now I am more despondent than ever. Anyway, he calls himself (director's note: use sneering, sarcastic, and disrespectful tone) an "American economist." And yet here he is, the very antithesis of an economist, who seeks to (director's note: cue trumpet fanfare, and use a bold, confident tone of voice) increase the general aggregate standard of living for everyone, and then everyone will be happy, happy, happy, and happy little children play in sun-dappled yards with adorable little puppies, who are also very happy, and then we will be even more, ummm, happy. But Mr. Krugman, and note that the soundtrack has gone very somber and dismal and has these horrible minor chords containing crashing disharmonies, wants to LOWER the aggregate standard of living by calling for higher taxes! And more taxes on top of that!

I call myself, among other things such as "Ultimate Love Muffin" and "God's Gift To Women," an economist, but at least I take the trouble to wear a propeller beanie so that everyone will know what a deep thinker I am, and give a hint of the true value of my opinion. His idea, as is the idea of all the Horrible Leftist Trash (HLT) of the world, is that government is never too big. The bigger, the better, because that means that the wonderful government is are doing more wonderful things for more wonderful people to try and make their lives better and - dare I say it? - more wonderful! Ain't that wonderful? They just occasionally find that they don't have the money to expand as fast as they want. And then they get all bummed out, and then they spend their considerable time coming up with ways that the government can GET more money out of me. And some out of you. But mostly out of me, as far as I can tell.

Finding out that their big-hearted ideas not only don't work, but that they actually make everything worse and worse, just like Austrian Economics and the entire history of the world have proved over and over and over, does NOT, however, bum them out. It only doubles their resolve. And I think it was Ambrose Bierce who penned the definition of a fanatic, as well as I can recall, as "One who redoubles his efforts after losing sight of the objective."

And if there is one thing that I have learned after all of these years of people telling me things for my own good, and doing horrible things to me for my own good, and hiding my checkbook for my own good, it is that, and you might want to write this down because it is a real pearl of wisdom, you do not get good advice from a fanatic. If you COULD get good advice from a fanatic, I would probably have signed over all my worldly goods and now be living on a religious commune somewhere in the desert, waiting for the day when we are transported to an idyllic parallel world in another dimension by a race of invisible beings from outer space, whom I call "blorgs."

He, and remember we are talking about Paul Krugman and not the blorgs, although once I get started talking about myself I don't know when to stop, starts off by positing that "The prime cause of giant budget deficits is a plunge in federal government's tax take." Well, duh! I mean, he makes the Big Money for THAT? Hahaha! Okay, okay, cheap shot.

But I like that: Even HE admits it is a "taking." His attitude is that everything would be fine if only the government could effect some more "taking." In that regard, he figures that repealing all the tax reductions would be a dandy idea, as if a guy who bills himself as an economist, or has any idea what in the hell economics is all about, could actually believe that raising taxes, reducing the ability of the citizens to buy things, is a good idea. And you can tell by the way the little propeller on my beanie is spinning - going "whirr whirr whirr" - an infallible indicator, that it is not a good idea.

Anyway, Paul (and if you were here you would have been impressed with the way I pronounced "Paul," as it kinda went like "PAAAaaaaAAAaaaAAAaaaauuulllllll-ah!" which is a jeering, snotty affectation that I have perfected, and if Mr. Krugman had been here he would have died of shame, on the spot!) figures that increasing personal incomes taxes would garner, oh, about $180 billion right off the bat. I said, because he said, $180 billion. That's more than $1,300 in extra taxes for everybody who has a job in the whole freaking country. As to this huge sum, he says, "That would help, but one hopes that politicians realize that it's not enough." Gaaaaahhhhh!!! My heart! My heart is exploding! I'm dying here! I'm being murdered by Bizarre But Typical Leftist Philosophy (BBTLP). It's never enough!

And this guy wants, as an economic pick-me-up, to increase taxes? With superhuman effort, the Mogambo takes conscious control of his quaking muscular body, a study in rippling manly manliness in an almost too-perfect sculpted way, and resists the urge commit mayhem with something of the clip-fed variety, and says, through clenched teeth, "Let me rephrase that so that historians of the future can read my words and quote me exactly: Paul Krugman, yes, THAT Paul Krugman, wants to increase taxes as an economic stimulant!" And I even included that exclamation point there at the end so those future historians won't have to add it themselves. My little gift from me to them. And if you ARE one of those historical researchers of the future reading this, then, you're welcome.

He goes on to say "Another major course of revenue could be a crackdown on tax loopholes." And where did these "tax loopholes" come from? From the government, his own precious government, exercising fiscal policy to effect more business spending, which is legislation that was passed to, theoretically, further the greater interests of America, and put people back to work in the expansion. The idea was that if the government gives businesses some special incentive to spend and invest money, then in the big macro picture this will produce some wonderful, and lasting, effects. It doesn't, of course, in the long run. But in the very short run it always produces some effects that are, in the short run, seemingly beneficial, but which, as we said, in the long run, really, you know, bite the big one (BTBO).

He finishes off by saying that "An administration that actually tried to make corporations pay their taxes might be able to find $100 billion or more each year." He did not mention where the hell corporations "might be able to find $100 billion or more each year." Usually, corporations have a hard time locating staplers and copier paper, much less $100 billion. So, that's another $700 per employed American in higher prices that the final consumer will have to pay in the form of, and I repeat for emphasis, higher prices. So, in just these two items, Mr. Krugman has saddled each of us workers in America with another $2,000 per year in higher prices and direct taxes! Fabulous. And now you know why I have no respect for American economists or the NY Times, who uses precious ink to print that, and here I will use the linguistically correct term, crap.

And let me be perfectly clear here: The effect on the economy, as far as money being spent is concerned, is unaffected by government spending or the lack of it. The money is going to be spent, one way or the other. Either you spend it or the government spends it. But, and this is the crucial point which is why I am writing on the blackboard, PAHYLLBBTIGTBOTFEBTITWPOWIHBYYYAEDDADADUIAHAMTIRFS, which is a shorthand way of saying "Pay attention here, you lazy little bastards, because this is going to be on the final exam because this the whole point of what I have been yammering yammering yammering about every day, day after day after day, until I am hoarse and my throat is raw from screaming," but when the government spends it, you end up with what we have today, which is a voracious, megalithic government economy, which operates to give the government what it wants, which is to kill you and drink your blood. If YOU spend it, on the other hand, what you get is a voracious, megalithic private economy, which operates to give people what THEY want, which is probably highly reminiscent of Pottersville in the Capra movie "It's a Wonderful Life," where the whole downtown is Party Central, and the theater marquee promises "Girls! Girls! Girls!"

In that regard, and by that I mean A Big Government Economy and not "Girls! Girls! Girls!", although I can see where you would jump the track, I direct your attention to this week's editorial commentary in Barron's by Thomas G. Donlan, entitled "Deficits Do Matter" with the subhead "How we invest borrowed money is key to the economy's future vitality." This is pertinent because we are using the borrowed money to sustain and enlarge a government-centric economy, where more and more people who cannot get a real job, or even deserve to have one, rely on the government giving money to them.

But if the economy is a private one, then perhaps some of what the people of the USA want would be wanted by foreigners, too, and then we could export some of that stuff to them, and help reverse the trade deficit. Unfortunately, nobody wants what the government wants, and so there is no exporting at all. But all of those foreigners are busily making things that we want, and we buy them, and ergo, we have a huge trade deficit. In the meantime, we make bigger government, which those foreigners do NOT want, and so they do not buy any. And we end up paying for the whole thing.

Or, as the handsome and dynamic Bill Bonner says, and remember that he and Addison Wiggin wrote the amazing best-seller book "Financial Reckoning Day" so he must know something about this whole economic thing, "While factory employment slumps, people get jobs in nursing homes, restaurants and brokerage houses. What's wrong with that? Nothing, really. Except that, somehow, Americans will have to pay for all the things they import from overseas."

So, getting back to Paul Krugman, and believe me that this is as distasteful to me as it is to you, increasing taxes will increase the federal government's "tax take." Well, duh. It will also reduce your income. They win, you lose. And there is no theory of economics that I know about, or heard about, or read about, or heard hinted at, or suggested, and Paul Krugman himself offers no clue, either, where reducing the income of citizens, and/or increasing the prices that citizens have to pay, is ever a good idea. Ever! EVER! Although I can envision FDR bending over the microphone and intoning, "We have nothing to fear but Mogambo himself. What this country needs is the invigorating tonic of higher taxes and higher prices, just like Paul Krugman suggests!"

To the contrary, both of them are very, very bad ideas (VVBI), and it says so explicitly in every book on economics that you care to pick up and throw at me. So it seems perfectly reasonable to ask "Who is this Paul Krugman? And if he is not a very, very bad economist (VVBE) , then why does he advocate such very, very bad ideas (VVBI)?"

The meeting of the G-7, or G-8, or G-13, or G-string, or whatever they are calling it these day, was in Florida last Friday, where all the central bankers and the preening little squirts who hang around them all get together and wear their wizard hats and brandish their magic wands try to, again, turn lead into gold. They need to come up with some Big New Plan (BNP) that will, hopefully, ameliorate the horrors unleashed by their Previous Big New Plan (PBNP), which was hatched to hopefully ameliorate the horrors of the Big New Plan Before That (BNPBT), which was hatched to hopefully, well, you get the idea. The lesson is that central bankers getting together, especially ones as clueless as Alan Greenspan, and it seems that they are ALL as clueless as Alan Greenspan these days, to hatch new plans designed to fix the disaster of their last plan will, naturally, result in another fiasco, and then they will have more meetings, and hatch more plans, and create more disaster, and then get together some more, and hatch new plans, and on and on until I am dizzy and have to sit down.

What they decided to do, and I hope you are, like me, sitting down for this, although hopefully not as dizzy, was to let the dollar fall. In this way, everything that those foreigners sell us will cost more, unless those selfsame foreign producers accept a lower price for their goods and services. On the other hand, it will make American exports cheaper, so that they can raise prices. Now, step back and take a look at what I have written on the blackboard. On the left we have imported goods and services costing more. On the right we have domestic goods and services costing more. So, and here is where I get to show off my math wizardry, I grab a piece of chalk and scribble furiously on the blackboard that, combining terms and eliminating similar terms, it reduces to E=CM, where "E" is "everything" and "CM" is "costs more."

That is why the idea of a central bank was anathema to the Founding Fathers, who looked at history and saw that every stinking time any nation had a central bank that it destroyed the country. And that is why they purposely made no provision for one in the Constitution, and argued among themselves why it is necessary NOT to have a central bank, and why they required that money be only silver and gold, which was, they hoped, enough to prevent anybody from destroying the currency by printing up too much of it.

If the Founding Fathers were alive today, they would, as Yogi Berra might say, roll over in their graves.

Daily Reckoning is a website that has some really witty writing, and they prove it when they write, "Dear Mogambo, you suck." No, wait! They didn't really write that, but I bet they think it often enough, since everybody is out to get me and everybody hates me, but anyway what they REALLY wrote is "Stagflation describes a world of rising consumer prices without economic growth. Slumpflation will serve as a handle for an economy that is in decline...even while consumer prices rise." Slumpflation! Hahaha! I'm laughing through my tears! Booha hooha hooha, which is a cross between boo hoo hoo and ha ha ha.

And if you want a real good example of slumpflation, just remember to take your pills, eat right, get some exercise, and that way you will manage to live long enough (a few months ought to be enough) to see those OPEC jerks wake up one morning and realize that they have been selling their dwindling supply of oil for dollars that are going down in purchasing power, and that everybody is laughing at them and calling them "chumps."

Oops, it looks like the OPEC people are tired of people laughing at them for their stupidity, and this morning announced that they have decided to cut production, so as to bring the price of oil up. So all that that taking of your pills and getting exercise was for nothing, as you did not have to wait at all. All of which proves, as I have been telling my wife, that exercise and sensible eating are worthless, and now all I have to do is similarly prove the benefits of idleness and gluttony.

Speaking of witty guys, that Alan Abelson, who writes the "Up and Down Wall Street" column for Barron's, is among the most erudite and clever writers who are writing about money matters to today. I could happily quote him at length, and would, if I could be sure that nobody would look at it and say, "Hey! This Abelson guy is really good! The Daily Reckoning was right! The Mogambo DOES suck!"

But I will take that risk to include this gem of his: "Just to reassure you, we're not predicting the end of the world. Western civilization, maybe, but not the world." Hahahaha! I like this so much that I am not only going to steal it, but I am going to say that I, the Mighty Mogambo, thought of it first, and that Mr. Abelson, lowly scribe, was stealing it from me! That is why Mr. Abelson has been avoiding me all these years; he's ashamed to look me in the face! And when his lawyers come predictably storming up to my front door, I will lapse into my patented childish crying and pathetic blubbering and say how sorry I am, and then I'll drop down to my knees and start absent-mindedly picking invisible lint off of the cuffs of their pants, and how I promise to never do it again, so please please please don't hurt me, and anyway I don't have any money, but I do have this paper that says I am adjudicated incompetent, and besides I'm only six years old, for crying out loud, and then I'll start getting indignant and use excessive profanity at them for their daring to persecute a helpless and darling six-year-old boy for merely having an opinion, and then they will talk amongst themselves awhile and decide that it is not worth harassing such a dimwitted little twit like me, and then they will all go away and I will chuckle to myself "Suckers!"

Anyway, Mr. Abelson is not only very good at tossing out memorable bon mots, which he stole from me, as we just learned, and please remember that this is my Official Story, but he is also good at finding guys who have something profound to say, and who can pontificate with a little wit thrown in. And to illustrate this point, I will now take us to Seth Klarman, who is top dog at Baupost Group, who, in referring to the on-going bull market, says "If this is not another full-blown mania, it's a fairly good facsimile." Hahaha! Mr. Abelson goes on to say that Mr. Klarman is "puzzled" by "what today's speculators could possibly be thinking" when they are constantly borrowing money to buy grossly overvalued assets.

I'll tell you what they are thinking, Mr Klarman. They are thinking that the Fed and the Congress have made it a point to bail out every jackass person, company, county, city, state, and country around the globe who acted like greedy, brain-dead morons, and have been doing it as long as most of us can remember. And so, obviously the Fed and the Congress are going to bail them out, too, if this whole investment mania goes bust, because that is what they do. While you have not seen the term "moral hazard" in a while, although it was real popular in the literature a few years ago, which is what is at the root of this kind of damn-the-torpedoes, full-steam-ahead, brain-damaged recklessness, this is exactly what it is.

So let me assure you that literally everyone in the world believes, and I believe, and you believe, and we all believe, that the government IS going to do The Government Two-Step, which is (step one) twiddle some monetary knobs and levers, and (step two) legislate new fiscal policy. The only thing we disagree about is that they believe that everything will always be better and better forever, and that if anything ever goes wrong, then all they have to do is to do another little dance of the Government Two-Step, and before you know it, we will be back on track, and we will just be merrily waiting for the conductor to shout out "Next stop, Utopia!" I, personally, do not believe this, and neither does any person who ever lived in all of history, even the ones a long time ago who DID believe this at one time when they were alive, and who subsequently saw that they were wrong, very wrong, and now they are now all dead, and there is probably a message for us in there somewhere.

Bill Murphy of Le Metropole Café, which is a website about financial stuff and not a place where you can order a coffee and a Danish, which I found out to my great embarrassment, and if I hear Moron Mogambo one more time I am going to really lose my cool, is abuzz with everybody commenting about the weird things going on with silver, and how there is none to be had, and suppliers are running out, and how futures and options indicate some big move in physical silver sometime between March and July, and all kinds of exciting stuff, by which I mean totally bullish on silver. I mention this because silver is so seriously under-priced against every metric you can come up with that a big upward move seems inevitable. And when you throw in Ted Butler's compelling story about wholesale corruption and manipulation in the COMEX market, it sorta makes you itchy to, you know, lay in a little stash of silver. Or a big stash of it. And this is one of those cases where "more really IS better."

John Loeffler is the host of Steel on Steel, and wrote an interesting article entitled "How Local, State and Federal Governments are Doing Battle with their Citizens." I was not aware that those government dudes were at war with anybody but me, so it was nice to know that I am not battling those nasty dudes all by my lonesome. The article was published on the eco.freedom.org website, and if you want a real good look at the future, then I suggest that you go there and read it for yourself, but I cannot bear to bring such sad tidings. First off, he shows his smarts by showing you that he has a real good grasp of where our problems came from when he says, "Sixty years of social(ist) programs, deficit spending, monetary inflation, and Keynesian economics have left the U.S. economic system in a shambles. We are currently in the middle of a prolonged bear market rally with no real recovery, because little debt was discharged at the so-called 'bottom,' and thus we're fueling the current 'recovery' with even more debt and consumer spending. The slide into a massive recession will continue over time." Maybe if he had used the term "slumpflation" it would have added a little levity, and then it would not seem so bleak.

Then he goes into what will be the predictable response of the government, because there is ALWAYS a government response to even the most insignificant item you can imagine, and especially so when things get to this point. And it is scary and ugly, and is guaranteed to end very badly, as all desperation end-game government "remedies" always end badly for the beleaguered citizens, and to keep you from having nightmares I will not go into the gory details. But if you are not aware of that fact, then perhaps I have hit upon the reason why you got straight "D's" in history class.

As you Mogambo historians already know, I am "giving something back" by teaching a few classes in "How to Jam Bluegrass Fiddle in One Easy Lesson" at the local music store, although it always takes longer than advertised because I am as clueless about how to play the violin as I am clueless about everything else. But this is not a prelude to the listing of my personal problems, although I do not enjoy listing them as much as everybody else does, and I typically do not start off enumerating them by noting my lack of hygiene or social skills like most people do, and if my wife or friends or neighbors are reading this, then, yes, I'm talking about you.

No, I bring this up to reply to all those people who always want to know what I look like, and when I send them a photo of Tom Cruise then they send it back with very insulting comments attached, and how they are so tired of waiting for my photo to be shown on "America's Most Wanted." So, go to TheBluegrassShop.com, and click on the newsletter, and you will discover that I am on the cover again this month, and I am extremely proud to announce that the candid photo was snapped during one of those rare moments when I was not drooling or scratching some body part in total confusion.

Jim Powell, who is a senior fellow at the Cato Institute, wrote an interesting and highly entertaining piece at Barron's Online entitled "The Real Deal: How FDR's New Deal Prolonged Unemployment," which averaged 17% from the period 1933-1940. Well, there are those (Mr. Powell and me, for two) who say that FDR and his New Deal idiocies have produced higher unemployment ever since, and there is also this one other guy (me) who not only says that same thing, but throws in, for no extra charge, a really snotty attitude to put a little zip into it. So I am a hell of a bargain, so I suggest that you choose the Mogambo Monthly as your source of news and gossipy innuendo, half-baked ideas, nonsensical lunacy, and a heaping helping of good old-fashioned homicidal paranoia.

Perhaps the wittiest thing, well, maybe not witty per se, but it made me smile, is when he quotes a guy named David M. Kennedy of Stanford, University, who is credited as being one of the first major players in the field of history hotshots to write a book about the excesses of FDR, published in 1999, entitled "Freedom From Fear." It won a Pulitzer Prize, if that means anything to you, whereas Nobel Prizes are seemingly handed out at random, given the sad history of who has won them, especially in the field of economics. Anyway, Mr. Kennedy wrote of the New Deal, "Whatever it was, it was not a recovery program." Hahahaha! The picture that flashed into my mind was the intrepid, handsome reporter (me) interviewing this David Kennedy fella on camera, see, and he is standing there with his hair all akimbo, his tie blown back over his shoulder, looking ashen and wild-eyed, and he is describing the barren landscape of devastation that we see in the background, while the star reporter (which is, to remind you, me) asks "What in the hell happened here, Mr. Interviewee?" and then stands dumbfounded as the disheveled scientist says "Whatever it was, is was no gentle Spring zephyr!" As I said, hahahaha! Well, if Soupy Sales said it, trust me, you would be rolling in the aisles right now.

But this is not what I want to vent my considerable spleen about. No. What has me all ornery is that FDR, and you know that I am going to insert the descriptor "commie bastard" in there sooner or later, so we might as well get it over with, because I am famous for hating him for what he has done to America, and what he has led Democrats to do to America ever since, is that he exercised his power to control wages and prices, trying to keep them, paradoxically, high. And impose tariffs. And propose huge spending programs. And amass enormous debts. And all of that stuff that ruins economies.

Imagine an advisor the French Court circa 1795 striding into an audience with the King, or the Queen, dropping to one knee and bowing his head in supplication, saying, "The people are starving, your Majesty! They grumble amongst themselves, your Royal Highness! We feel rebellion is nigh! What shall we do, oh wise King, or Queen, as the case may be?" and the King or Queen or whatever it was, says "Hey! Now here's an idea! Let's double their taxes! And make the price of bread and fuel go, ummm, higher and higher! And make ALL prices stay wonderfully high, and execute anyone who charges a lower price!" And then the court advisor says "What? Have thy senses forsaken thee, my Lord? Thy plan is madness, and we shall be consumed by avenging Death at the hands of our subjects for our folly!"

And then the King, or maybe Queen, and I blush to admit that I haven't finished casting all the roles yet, and in fact the only role that IS filled is Brad Pitt playing me, but anyway the Monarch rises up and thunders "What? Dost thou thinkst thou art the Mogambo to speak to me thusly?" Well, in the original script, this is where I, dressed as the Mogambo in matching cape and propeller beanie, shout from the gallery, "What, ho! Did I hear my name?" and then I swing down on this rope - wheeeeeeeeee! - to land with a big theatrical thud in the middle of the action, my granite profile perfectly limned against the backdrop of the city in flames, and it has these soaring trumpet fanfares in the soundtrack to let the audience know that their hero has arrived for a big dramatic scene and everything. Very exciting stuff.

Now, with that, I shut my briefcase, turn to address the jury, and say "And that, ladies and gentlemen, is that. My case is thus proved; some kind of Mutant Mole People really DO live below the surface of the earth, and they are trying to kill us." Oops. Sorry! Wrong movie ending! No, wait, what I meant to say was that what FDR did was to raise taxes and costs dramatically, which are never a good thing. And promoted expensive, colossal programs which made everything worse. And which I explained to the King or Queen of France in 1795, and they ignored me, too. And look what happened to them. Don't YOU make that mistake.

Mr. Powell suggests, in his summary, that "The last thing we need is another New Deal. What people need is for government to cut taxes, cut spending, cut through thickets of regulations, provide stable money, let people enjoy bargains, and get out of the way so that free markets - and the job market - can flourish."

Now I never met this Jim Powell fella, but anybody who advocates that the government start acting like they had some smarts certainly has my vote, and if he had T-shirts for sale I'd probably buy one just to show people whose side I'm on.

In the old days, the remedy would have been to vote Republican, as the Democrat Party and their perpetual New Deal thing is bound to destroy us, and the fact that they persist in believing that it won't, even when shown that it ALWAYS destroys anybody who tried it, only proves that they are too stupid to comprehend their folly, and thus will never change. But, alas, now, and I hang my head in profound sorrow as I say this, Bush has even eliminated even that traditional alternative, and so your only option is to go out this November, resolute in purpose, and elect me, the Mogambo, as President of the United States! And when you take Mogambo Guru and shorten that to MoGu, and append that to the potus as the acronym for President Of The United States, then you get Mogupotus, which is kind of fun to say. Go ahead, try it! Mogupotus! Fun, huh? You bet it is! Mogupotus! Mogupotus!

And as much fun as it is to say Mogupotus, and once I have gotten started I'm finding that I cannot stop, Mogupotus Mogupotus Mogupotus, it is only a tiny part of the huge benefits that will accrue from taking the course suggested by Mr. Powell and me, the Mogambo. So send all your money to me and we'll get this election thing on the road. And if you can't bring yourself to vote for me, for the Magnificent Mogupotus, then you can still write your elected representative and demand that they start acting like responsible adults, and suggest that they can get a good start on that by calling Mr. Powell on the phone and asking HIM what in the hell they should do. And then, of course, doing it.

But like a bulldog with a nasty disposition, I can't let this FDR thing go, and I will say that the glorious day when America is freed from the shackles of the legacy of FDR will come about only after a wrenching adjustment, involving lots and lots of pain and suffering for at least a generation, or two, or three, or four. This is because we have spent the intervening decades building FDR's idiocies into a foul, devouring monster, the framework of which IS the American economy. And there is no way to liquidate that filthy mess, because to do so is to liquidate the American economy, without additional decades of suffering and misery, as history proves without exception.

But wait! Luckily for us, we are a nation that is known to enjoy the delay of gratification and denial, and saving money, and acting sensibly, and taking responsibility, and behaving honorably.

It's a good thing that we aren't Americans, who are NONE of these things! Hahahaha! Oh, wait! We ARE Americans! Oh, crap!

Perhaps this explains the phenomenon of Lou Dobbs , who is an avuncular and charismatic guy who knows absolutely nothing about economics as far as I can tell, but who wants to be helpful, as do all Leftists, as do we all, and he has his own TV show about business and money. A dangerous combination, sort of like Paul Krugman and the NY Times, which is my clever way of referring to a previous section of the MoGu, and thus tie the whole thing together as some powerful literary device that I really don't understand, but there it is.

But somehow, and I cannot explain this, he has gotten it into his head that jobs going overseas is some huge calamity without any saving grace. Apparently, and I say "apparently" because I mostly get bored with him, or irritated with him, or angry with him, or furious with him, or filled with homicidal rage at him, and don't stick around watching his show for long because trained professional attendants are usually soon wrestling me to the ground and trying to pry the remote control out of my hands to change the channel on the theory that maybe then I'll settle down, but probably not, because by now I'm screaming like a banshee and vowing a horrible revenge against Lou Dobbs and the guys who produce his show and the sponsors for their crimes against humanity, and how we are all doomed doomed doomed! Dooooooooomed, I tells ya!

But every night before that Act III crescendo while that I am merely channel-surfing through the dial like any normal American, minding my own business and wiping drool from my chin and shoveling some salty snack food into my snack-hole that is immediately above my drool-less chin, but whenever I hit on his show there is inevitably some segment of his show where he demonizes those companies that are sending jobs offshore to take advantage of cheaper labor. He even asks viewers to send him the names of companies that are moving jobs offshore, which reminds me of Salem witch hunts, so that he can officially demonize them or something. Maybe send them hate mail, although I will offer Mr. Dobbs the benefit of my experience, which is that hate mail has no effect at all, as I have been sending the United Nations a continuous stream of hate mail with the theme "Drop dead, you nasty bastards!" but, as far as I can tell, they are all as healthy and alive as they ever were.

But Mr. Dobbs makes no mention of the fact that these companies are doing that so that they can sell American consumers inexpensive stuff. We get to buy cheap stuff, made by foreigners, instead of making us Americans buy expensive stuff, made by Americans. But so certain is he of the nefarious nature of this practice, that he is (insert deep and moody soundtrack to indicate some evil conspiracy), "keeping a list" of those companies who do this huge favor for us consumers. Ooooh! Keeping a list!

And what is the exact crime with which these companies guilty? And I bring this up as a point of law, as the local constabulary is now aware that "locking me up and throwing away the key" is not an allowable punishment for "acting like an idiot and screaming about monetary policy and fiscal policy idiocies and in general creating a disturbance," because they could not pinpoint the exact crime with which I was being charged, although everyone agreed that "sending me up the river" for a long, long time was a great idea. So, what was the crime? For letting you buy bargains. You are allowed to buy inexpensive stuff. Now I will insert my expensive animated short, where Lou Dobbs is all dressed up as the Queen of Hearts in Alice in Wonderland and he is shouting "Bargains? Off with their heads!"

Now Lou is showcasing the AFL-CIO, who see themselves as the glorious and brave vanguard of The American Working Man And Woman Who Need To Pay Higher Prices For Everything (TAWMAWWNTPHPFE), which is getting its members to march around huffing and puffing about how this outsourcing jobs is so awful. And they are striding up the steps, heroes into the fray, to the White House or something, carrying signs and banners and making big noises, and they want the President and the Congressional bozos to, hold onto your hats, "do something."

So what do they want the President and the Congressional bozos to do? Like every other grubby self-interest group, they want Congress to give them something for nothing. In this instance, they want Congress to pass laws making sure that overpaid Americans can have their jobs as long as they want them, regardless of the consequences, and while they are at it, how about throwing in some more benefits?

And this sorry spectacle is Exhibit A to show why there are very few AFL-CIO people who win prizes for having smarts. If they had any smarts, they would know that the jobs are moving overseas precisely because the Congress has ALREADY been "doing something," namely passing more and more legislation mandating that employers provide more and more benefits to more and more people, and passing regulating legislation to make the very act of doing business in America more costly and onerous. This drives up costs to the company, which drives up the price of the goods and services produced by the company. And that means that union labor has to get higher wages to pay the higher prices, and that makes the company raise prices some more, and the next thing you know, those sneaky Chinese are able to produce the same goods, but at a mere fraction of the cost. And this is, somehow, unfair.

And since nobody wants to pay higher prices, they don't, and sales fall. And then the company looks around, and says "Hey! How come nobody is buying our products?" Then the company goes down to the WalMart and notices that every boob that walks in off the street can buy the exact same product at a retail price that is lower than the company's wholesale price! Then some genius MBA figures out that the way to get costs down is to get rid of these high-priced employees and then go someplace where they have low-cost employees! And, in the bargain, they hopefully get a business environment that is relatively free of the aforementioned legislated regulatory burdens that are suffocating every business transaction, too. So they move offshore. And the customers love it! And the company starts making money again! And management loves it! The stockholders love it!

But when the AFL-CIO crowd and Lou Dobbs, and notice how I have slipped into my childish mode and taken my crayons and drawn mustaches on their pictures and blacked out some of their teeth so that they look as intelligent as they sound, arrive at the White House, indignant and demanding. And then they find out that Congress is already working against them by borrowing and spending, and the Fed is printing up humongous gobs of money for this exact effort, and all this monetary inflation is filtering through to prices, like it always does, and this gives an added whammy to the upward rise in prices, which makes the problem of the company worse, and adds impetus to management's deciding to move production offshore!

And you don't have to believe me, and I realize how hard it is to believe anything that a raving lunatic like me says, and I see that you are thrown off by my thong bathing suit and the propeller beanie, and I can tell by your eyes that the Tele Tubbies flip-flops don't bring the whole ensemble together as I had envisioned. But perhaps you will listen to Jude Blanchette, at Mises.com, in an article he wrote entitled "The Bogeyman of Lost Jobs," and who, I am sure, dresses real nice and doesn't even OWN a propeller beanie. In the same vein as the Mogambo, and please do not hold that against him, he writes "The regulatory burden placed upon manufacturers leaves them at a severe disadvantage with the rest of the global playing field. Countries that don't have the list of draconian environmental and workplace regulations, not to mention mandated benefits and compulsory unionization, reap the benefits of flexibility."

Then Lou and all his buddies in the unions all decide to ignore the Mogambo and ignore Mr. Blanchette, and their little pea-brains decide that what they will do is to stand around wringing their hands and sending up pitiful wails of anguish, hoping that hand-wringing will produce a solution, and getting viewers to rat on companies who are planning to sell production to customers are bargain prices. But it is all for naught, and they might as well have stayed home and gotten off a few more hate-mails to the United Nations, but the Government Is On The Job (GIOTJ) already! What they have done, well, more exactly, the Federal Reserve, is to engineer a fall in the worth of the dollar by making them worthless by virtue of their printing up so damn many of them.

Therefore, when the dollar has finally been debased enough, the $50 an hour job that the union people want will be roughly equivalent to what an illiterate peasant Chinese congenital idiot at the very bottom of the wage scale makes for standing around in the rice paddies for an hour. Then jobs will magically flow back over here, and the Chinese workers will get to complain about how we Americans work so cheap, and they can spend their time complaining to Lou Dobbs and THEIR government about how Chinese jobs are moving offshore to America. Problem solved!

Of course, there is a price to be paid, as there is always a price to be paid. And I am reminded of this as I notice that a targeting-laser beam from a government sniper is wavering on the wall near my head, and this is the price I pay for being a loudmouth malcontent, and in fact one of my many charming personalities is Malcontent Mogambo, which flopped as an Official Collectible Action Figure, and the price to be paid is that I get John Ashcroft and his Patriot Act goons getting all huffy just because I hate all their guts for that they are doing to my country. And the price for the devaluation of the dollar, and the resultant inflation will be paid, as it is always paid, by the poor, and the old, and the people at the low end of the wage scale, and then people not so low on the pay scale, and the people above them, until, finally, everybody is feeling pain.

As my snotty little coda, I will add that as prices rise, the AFL-CIO will find that their incomes, even at $50 an hour, are not rising as fast as prices. Like, for instance, the price of oil. In that regard, perhaps it becomes clearer why we invaded Iraq, killed thousands of them, kidnapped their leader, and just took over the joint.

David N. Vaughn, is the power behind the newsletter "Gold Letter Inc." and he has penned an essay entitled, "Why Gold?" which was posted on the GoldSeek.com website. He makes the important point when he says, "Are you a history buff? Anyone familiar with their history knows that inflation is a definite result of sustained money growth & is inevitable." And he is exactly right, and thanks to Mr. Vaughn you have a good idea what the future holds if you take the time to read his stuff. He goes on to say, "Inflation is really what wrecked the ancient Roman Empire from the 3rd century on. Our point here is that anytime a currency is debased that inflation is an eventual certainty, even though it may be postponed for a while." Now I am not sure of all the causes of what wrecked the Roman Empire, but I think that it probably WAS the debasement of the currency, and the resultant price inflation, had something to do with it. In the original version, which I read as a boy in the original Greek, the whole gladiator rebellion thing started with Spartacus going out for a coffee and a smoke, and ended with him screaming "Five drachma for a lousy cup of coffee? This is outrageous! And I have to go outside to smoke a cigarette? I'm a damn gladiator, for crying out loud, and you are worrying about my health? As Lou Dobbs says 'Off with their heads!' "

You perhaps noted that Mr. Vaughn says that he is expressing "our" point, and while I am sure that he does not include me, the Mogambo, in his definition of "our," lt me assure you that the Mogambo DOES include himself in the category of "our" when anyone in the world is talking about those who are sure that a currency being devalued is a bad, bad thing, or that excess money and credit growth is the same thing, and both are inflationary at best, and completely destructive at worst, and soon you will get both, as in "It was the best of times, and it was the worst of times." So he can't keep me out of the "our" club in that regard, although he is within his rights to come over here and tear up my membership card into tiny little pieces and then throw them in my face, and excuse me while I answer the door, as it is probably him knocking.

To show you the depth to which commie-think has penetrated, let me quote from a guy named Gene Sperling, who is, according to his billing, the Director of Economic Programs for the Center for American Progress. You would think with an impressive title like that, that he is a force to be reckoned with. Alas, not so. He wrote an article entitle "Bush's Backward Retirement Plan," which apparently appeared in a Special to the LA Times. The source of the article should have tipped me off, but it did not, mostly because I'm pretty stupid and didn't even notice.

He wants the US government to offer, get this, "A progressive universal 401(k) account," into which the government would "provide the same matching contributions that 401(k) accounts in the private sector receive, through refundable tax credits."

The lesson? Save money, and the government will give you your money back! Save a thousand dollars, and the government will give you a thousand dollars! Then you will have two thousand dollars! If you are going down that stinking commie path, Mr. Sperling, why ask people to save at all? Why not just give them the money and be done with it? Why doesn't the government just give everybody free money? And, since we are talking about it, where will all this free money come from? And while we are talking about free money, where do I, the Mogambo, go to get some of this rich bonanza?

You would think that a guy who has the temerity to say that he is the top dog of, let me check that title again, "Director of Economic Programs," would have some smarts about fundamental economics. Again, alas, not so. He is not even aware that creating all this money and credit drives up prices, the very thing that has caused the poverty he is addressing! And why are people in poverty? Because after the poor have gotten finished with buying the things that they need to just stay alive, there is nothing left to save for retirement, because prices are always rising faster than their pitiful incomes. And prices rising to the point where everything is unaffordable was caused by the Congress and the Fed printing up money to give people, the very program you are advocating, and I mean the exacto-mundo same freaking program, for the last fifty years in a row!

And that, Mr. Sperling, if that is your real name, and if I went around saying things as preposterous as you I certainly would NOT use my real name and I would also wear some kind of disguise, possibly involving some snappy stick-on sideburns and a black leather bomber jacket to let the girls know that I am a lovable Bad Boy because girls love Bad Boys, is the result of your precious little government and your precious little Federal Reserve acting like the morons that they are, and doing the very thing you want them to do, more or less, already. And getting your precious little government to give them MORE free money is NOT going to make things better. To the contrary, it is guaranteed to make their plight exponentially worse one day soon. And what is your stupid solution going to be then? More of the same? Hahahaha!

In short, the LA Times is a horrible little Leftist rag, and Gene Sperling and his Center for American Progress is a huge misnomer, and is actually a Center for Communist Progress, which is not the same as Communist Martyrs High School, where George Tirebiter went to school, for all you Fire Sign Theater fans out there, but it IS where they all went to work when they graduated, I'll bet. So is Gene Sperling really George Tirebiter? Perhaps we'll never know. Sounds about right, though. Ugh.

---Mogambo Sez: I leave you with the immortal word of Dan Denning, "These five 'Signs of Financial Reckoning Day' lead me to believe that the financial economy is on its last legs." He has looked at what he believes are five good signposts of where money is going, and where it is going to, and then he, in a burst of genius, counts them up and finds that there are five of them, and then he uses the title of a best-seller book on economics, and puts it in the title of the article to make his point. I stand awestruck and speechless at the feat.

And he briefly mentions the attractiveness of gold in this scenario, while I, the Mogambo, take the low road, and grab you by the scruff of your neck and force your head down onto the table, and grind your face into a bar of gold, and say "This is gold, you idiot! Denning told you what is going to happen, and I am telling you how to make some money on it. So pay attention!"

Richard Daughty

Richard Daughty is general partner and C.O.O. for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise the better 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.

The Daily Reckoning

"Financial Reckoning Day: Surviving the Soft Depression of the 21st Century"

by Bill Bonner and Addison Wiggin.

You can buy it online from Amazon.

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