Pizza to The People! Richard Daughty ...the angriest guy in economics The Mogambo Guru Archives Jun 7, 2005 - It was a week of extraordinary excess (WOEE) everywhere you looked in the shadowy world of modern money. At least, that is the way that it looks to me, as I nervously peer out of the periscope of the heavily-fortified Mogambo Bunker, cowering in abject overpowering fear, and predictably crying and whining about how I want my mommy to come and make everything okay again. First off, the Federal Reserve has apparently started down the dismal path to economic hell of Ultimate Money Debasement (UMD), namely the last-ditch desperation move classically known as direct monetizing of debt. They have now sunk so low that they are now engaging in the worst behavior that a central bank can engage in, namely creating money to buy government debt, which is commonly known as "monetizing" the debt. It's not much this week, $2.4 billion, but it is a lot all of a sudden. In effect, the Federal Reserve (which is, I hasten to point out, a private bank) creates money-- poof! --for itself and buys government debt with the money. It's that simple! Magically, money has appeared out of nowhere! The total, aggregate debt load has not, unfortunately, changed, but the total amount of money sloshing around is greater! If you keep a close eye on your finances, you realize that you do not have more money. Likewise, I do not have more money. So if YOU do not have more money (I point to you) and I do not have more money (I point to myself) then (audience shouts in unison) "Then who the hell DOES have more money?" The answer is, of course, that the BANKS have more money! I know what you are thinking. "Wow! What a racket, huh?" This brings us to today's timeless gem from the Mogambo's Famous Treasure Trove of Valuable Lessons In Life (MFTTOVLIL), and this lesson is that when you get a chance to make a wish, maybe by wishing upon a star, or blowing out the candles on your birthday cake, or rubbing a magic lamp and a genie pops out or something, you should wish to own a country's central bank. You can create money out of thin air, anytime you want, and buy anything you want with it! Cool! But, and notice how my voice cracks pitifully as I pour out my despair, so much money has already been created, so achingly much money, so damnably impossible much money, has been created and borrowed. Reluctantly, I rise up from my chair and stagger over and look out the window, and I cry out in horror as I note that MORE money and credit are STILL being created right now, every minute of every day, all around the freaking world! And a lot of that the money is being used to buy some of everything, sometimes a LOT of everything, including stocks and bonds and houses and government, which drives prices up. And when a bond goes up in price, then that automatically means that the imputed yield goes down. Thus, interest rates are low! It's as simple as that! And so long-term rates, which are most affected by market forces, have gone down, but short rates, which are more affected by Fed actions, stayed up. The difference in interest rates between the short and long terms narrows, and thus the yield curve flattens. Now, if long-term interest rates keep falling and falling, and eventually fall below the interest rate on short-term debt, you get the famous inverted yield curve. That means you have achieved the absurd condition where you are getting paid less money for loaning your money for a longer term, and at higher risk! Hahahaha! Of course, Alan Greenspan thinks that this is not necessarily bad, according to Reuters, which reported that the Federal Reserve chairman said that an inverted yield curve was not necessarily an indicator of a recession these days. He admitted that it USED to mean exactly that, back before the Federal Reserve got into Permanent Liquidity Mode (PLM), when he said, according to Reuters, "It's ... certainly the case that history suggests that it's usually, or has been, an indicator -- a forward indicator -- of softening economic activity." See? He actually admits that an inverted yield curve always has been an indicator of what he calls "softening economic activity!" He then he went on to say that "I suspect, however, that we have changed the structure of flow of funds and relationships amongst the various interest-rate tranches by maturity such that I'm not sure what such a configuration, should it occur, would mean." You are going to be surprised that I agree with him 100%. He is exactly right. Interest rates are no longer the result of a tug-of-war between borrowers and savers. There are no savers anymore. Savings have been replaced by instant liquidity, as part of the Federal Reserve's new Permanent Liquidity Mode (PLM) philosophy and practice. What the Federal Reserve has done is to produce more "liquidity" all the time, which gets borrowed by someone like you, although not as good-looking as you, and the borrower (you) uses the money to play the spread between different pieces of debt, in effect borrowing money short-term at low rates, and lending the money long-term at higher rates. You then pocket the difference! What a racket, huh? And when it comes time to make a payment on that first loan, you merely saunter into a bank, and borrow some more just-created "liquidity"! You then use this second, bigger loan of instant liquidity to do the interest-rate spread thing TWICE more; once to pay the interest on the first loan, and the other one to provide some more pocket money for yourself! Sweet! And this can, theoretically, go on, and on, and on, forever. So therefore the actual interest rates are immaterial! The only important thing is that there is a difference between short-term interest rates and long term interest rates! That's it! The only difficult thing is that it takes massive amounts of leverage to make it worthwhile when the yield curve is flat. Borrowing a million dollars at 4% to buy a bond that pays 4.0001%, resulting in a cash-flow of a measly $100 a year, is hardly worth the trouble. But let me leverage up, maybe putting up only $10 as my part of this deal, and suddenly I have made ten times my initial investment! I only put up ten stinking bucks and made a hundred! All it takes is a bank that is willing to do it. That, sadly, is how it is nowadays. And to everyone who thinks that this can work out in the long run, I say, "Look at my face to see my contempt for you, and hear my mocking ridicule echo in your ears as I say hahahahaha!" because, and you might want to write this down because it seems to be some big secret or something, eventually the money gets to be SO huge that it starts going into those things OTHER than stocks, bonds, houses, and government, and they start showing up as price inflation, and everybody gets all crazy, and it gets worse and worse, and people are screaming bloody murder, and the nightly news is full of people rioting because prices are so high, and there is The Mogambo in the middle of it, screaming louder than anybody, "Pizza to the people! Pizza to the people!" Or perhaps you would rather listen to Eric Fry, of the Rude Awakening column, who writes, "For starters, throughout the ages, bond yields and commodity prices have tended to move up and down together ­ not at every single moment, but over long sweeps of time. Over the last few years, however, bond yields have strayed from commodity prices like an unfaithful spouse. But we expect this philanderer to return home fairly soon, in which case, bond yields would rise." Which means bond prices would fall, handing a lot of people some hefty losses, losses so big that not even Superman could lift it. Stephen Roach, on the same subject, writes "Real interest rates -- both short and long -- are still far too low for sustainable growth in the global economy and for stable conditions in world financial markets. Yet central banks -- especially America's -- have been reluctant to lead the charge in normalizing the rate structure. The best we have gotten from the Fed is a policy rate that has gone from negative to zero in real terms over the past year. I continue to believe this is ultimately a recipe for disaster." Nevertheless, he reluctantly acknowledges that "At some point over the next year, I wouldn't be shocked to see yields on 10-year governments test 3.50% in the US, 2.50% in Europe, and 1% in Japan." Whew! After all that, and notice how I am drained and winded from the ordeal, to make matters even worse, the Treasury printed up and issued more actual dollars. How much? I will wait until you are seated. Comfy? Okay, they printed up, last week, another $6 billion in actual cash! Where in the hell is $6 billion in cash going all of a sudden? I have no idea, personally, but I am sure that it is due to government corruption, and it also adds to the overall money supply, which will, once again, cause just that little bit more inflation down the road. It just never stops. - And as another interesting piece of trivia, foreign central banks bought up and stashed at the Fed another $15.5 billion last week. Last week! This is a huge chunk of buying in one gulp, maybe the biggest single-week purchase in the history of foreigners buying US debt. - On the web site FromTheWilderness.com we read "It is easy to cast Dr Greenspan as the befuddled 'Mr. Magoo' leading America to economic and financial ruin. However, such a denigration of this man's abilities is entirely misleading and dangerously erroneous. The Fed has some of the finest financial and economic brains on the planet." Personally, I say "Huh?" Alan Greenspan and the other Federal Reserve knot heads are not brilliant. They are merely clever, in that they managed to prove something that is not true, exactly as Aristotle, Ptolemy and many brilliant others all "proved" that the earth is the center of the universe, and that the earth is flat. And let's not forget all the brilliant doctors, who determined the exact number of leeches that it takes to cure a fever. And how about those guys who determined the exact number of angels that can dance on the head of a pin? They were all clever, but none of them were brilliant. If Alan Greenspan and the rest of those Federal Reserve morons WERE brilliant, they would have immediately seen that the whole Keynesian, econometric idiocy that they so ruthlessly champion is a real piece of ugly stupidity, and that Mises and that whole Austrian crowd are exactly right. As proof, the Austrians have proved, time and time again, that Keynes was wrong, and yet, the idiot Keynesians have never disproved a single idea of the Austrian Business Cycle Theory, which brings into question whether they are even clever or not! And beyond that, the economy is proceeding along exactly as Mises and the Austrian-school economists have confidently predicted, whereas the Federal Reserve has been so wrong, for so long, that they have had to resort to constant, drastic, over-the-top measures! Can it be any plainer than that? Sheesh! But as long as people are taking on debt, the question becomes "How much debt can an economy take on?" The answer is usually something glib, maybe something on the order of "Obviously not forever, there is a limit how far into debt you can get." But is this actually true? Perhaps there IS no limit to how much debt can be shouldered! And so when the economy is faltering, a central bank can just create money and credit like it is gushing out of a fire hose! The crowd cheers! And thus the brave Federal Reserve struts around, preening like they are hotshot heroes, courageously extinguishing the destructive fires of stagnations, and deflations, and recessions, and depressions, and all the other unimaginable suffering that always accompanies the collapse of an economy, which collapses because too much freaking money and too much freaking credit were created during a previous boom. Can it always, always, always pull this amazing trick off? My standard answer is, "Hahahahaha!" If it could happen, then everybody would have always been doing it. And when they did try this silly crap, it always ended in disaster, and THAT is why intelligent countries do NOT try it, and actually take steps to make sure that nobody tries it. Until now. Until Alan Greenspan. Putting on my famous Mogambo professor propeller beanie (a black mortarboard, with propeller and tassel. Snazzy!) I explain that this means that there will be inflation in prices. And sure enough, we have massive, roaring inflation in four things. 1) stocks 2) bonds 3) houses and 4) government. The prices of food and energy and all that basket of stuff in the Consumer Price Index are not being impacted too much. Although it should include, besides the staples of pizza and beer, also other wildly popular things, like illegal drugs and prostitution. But you can't just call them up and ask the Consumer Price Index people and ask them about this serious omission. OhhHHhhh, nooOOOooo! For one thing, the receptionist doesn't know how to even route my call, although my question is a simple one about the substitution effect. Namely, if one item increases in price or utility, to what degree will the savvy consumer substitute a cheaper item? For example, if steak increases in price but chicken does not, then you will, according to the theory, buy more chicken and less steak. She wants to know "What about the substitution effect do you wish to know, sir?" So I tell her "I want to know the calculus of the substitution effect if a fruit or a vegetable is used as a sexual aid. Namely, do you add an amount for the increased utility to the price of the said fruit (Exhibit A) or vegetable (Exhibit B), or is it a subtraction from the price of other similar sexual aids, except that that they have batteries and go buzzzzzzz?" Well, she starts stammering and gets all huffy, and while she is screaming for her supervisor, there was a knock at the door, and it was the guy with the pizza. I instinctively knew I had to make a choice: either to stay on the line , or answer the door and take a short flight to what I call Mogambo's Heavenly Pizza Place (MHPP) where you eat delicious pizza, and all the other members of your family are stuffing pizza into their faces so fast that nobody is running their fat yaps or screaming death threats at me, and the sudden silence is wonderful. Well, it doesn't take a scholar in the Mogambo Scout Handbook (MSH) to know my decision and how I reached it. And to make sure that the pizza was not poisoned, I made him eat a piece, and it was real hot, and he burned his mouth, and he starts hollering and getting all fussy like it is MY fault or something! I mean, I just took a load of that kind of crap on the phone, and now I gotta take another heaping helping of it from the pizza delivery guy? I mean, I can't win here! Anyway, after lunch I called back later and this time I asked a different question, and this time I politely ask, in that charming way that I have that even has a name of its own, The Mogambo Charming Way Of Being Charming (TMCWOBC), "Concerning the substitution effect in pet ownership. If you have sex with your dog, what is the calculus of the substitution effect vis a vis money spent on hookers? And if I get mugged on the street, and I get even meaner and unpleasant and unhappy than I am, how is that reflected in the Consumer Price Index?" I ask these things not because I am a childish little pervert (even though I am), but because you are going to see more and more of these kinds of things, as desperate people start resorting to desperate measures. - Speaking of the prices of things, Paul Kasriel of Northern Trust now weighs in with his timely observations about the prices of things. "A basket of consumer goods that cost $100 to buy in 1921 cost over $1000 to buy in 2004. The slope of CPI steepened dramatically starting in the second half of the 1960s. That's when our guns and butter fiscal policies started. The U.S. abandoned convertibility of the dollar into gold in August 1971. It is interesting, and I don't think coincidental, that the highest 10-year compound annual rate of growth in the CPI, 8.7%, occurred in the 10 years following the severing of the U.S. dollar - gold link. "The CPI marches inexorably higher and higher," he writes, "meaning that it takes more and more dollars to buy the CPI basket of goods and services. Does it take more and more ounces of gold to buy the CPI basket? No. In 2004, it took 2.58 ounces of gold to buy the CPI basket - about the same as it took in 1997, 1976 and 1973. It also took about the same number of ounces of gold to buy the CPI basket in 2004 as it did in 1942. The CPI in 2004 was 1059 percent higher than it was in 1942!" And it is not just the CPI basket that has been protected by gold. From the Liberty Dollar people we get an email that asks, "So I wondered what the actual statistics were of gold vs. interest from a bank saving account." They asked Jim Davidson of The Indomitus Report for his opinion, who replied, "Gold has out-performed traditional bank savings accounts available in the USA by 844% since 1999. In other words, $1000 invested in gold on 21 May 1999 would have appreciated in value by 53.15% by 22 May 2005 whereas the same amount placed in a passbook savings account would have grown by just 6.3% assuming monthly compound interest. Over the past five years, gold has been more than eight times better for the average American than interest from a Federal Reserve bank. " So what is the upshot of all of this? Mr. Kasriel goes on to explain "Despite establishment assertions that the dollar is 'sound,' investors should prepare for further declines in the value of the dollar and plan their investments accordingly. History shows that no government, after going on a fiat monetary system, ever reverses course until its paper currency is destroyed. There is no reason to believe this time will be any different." And since there is, as he says, no reason to believe that this time will be any different, where was money made all the OTHER times in history when paper, fiat currencies destroyed themselves? But since you are the clever grasshopper that has transcended into my chi, you saw that I was going to use this as a perfect segue into a recommendation to own gold. I am proud of you, young one! Another guy who is not enamored of fiat currency is Bill Haynes, whose essay, "Abandoned Gold Standard Guarantees Inflation", appears on on LewRockwell.com. "In the 34 years before Nixon closed the gold window," he writes, "the money supply in the U.S. grew less than two fold. In the 34 years after Nixon's action, the money supply expanded 13 fold. The Fed's massive inflation of the 1990s resulted in the greatest advance in stock market history. Continued inflation is now pushing housing prices to record levels. Automobiles now cost more than houses did only thirty years ago." - From Bloomberg we also learn that some people never, ever learn, as evidenced by the blurb that "New Jersey's pension, with a shortfall estimated at $25 billion or more by state officials, plans to put money into investments such as real estate and hedge funds under rules approved yesterday by the retirement fund's board." - As an illustration of the absurdity of central banking, one need look no further than the Bank of Korea's governor Park Seung in a speech hosted by his boss, the Bank of Korea. He put his gigantic brain to the task, and after a lot of grunting and groaning from the effort, called for more socialism, which he characterized as some wonderful global, coordinated, concerted action to correct the US trade and fiscal deficits, which he says are "symptomatic of imbalances in the international economy." Well, duh! He goes on to say, 'There are limits in resolving trade imbalances through foreign exchange rate adjustment alone. In this light, we should broaden international cooperation for structural restructuring among nations." Huh? Structural restructuring? Did he really say "structural restructuring?" What in the hell is THAT? Now, for those of you who are familiar with The Mogambo, either personally or by having looked through voluminous case files and court records, knows I am not the brightest star shining in the intellectual firmament, although I pretend to be, in haughty defiance of all the accumulated evidence to the contrary. But I am sensing, deep down in that part of the brain stem that is concerned with self-preservation, that when one really looks at "structural restructuring" what he means is Schumpeter's "creative destruction." In this case, they create, we get destroyed. - The Organization for Economic Cooperation and Development (OECD) is warning that the U.S. current account deficit will hit $900 billion or 6.7 percent of U.S. gross domestic product in 2006. This is a new world record for a country that has not imploded on itself by this time. The trade deficit is now over $700 billion a year. Stay tuned. Stephen Roach of Morgan Stanley doesn't want to wait, and says "What worries me the most in this regard is the coming US current account adjustment. History is devoid of examples where external adjustments are not accompanied by falling currencies and rising real interest rates. The logic of portfolio diversification suggested the day of reckoning was likely to come sooner rather than later." - A reader of Rick Ackerman writes to suggest a good future career option for the legions of new real estate agents. "The future" he writes, "(is) in foreclosures, not the origination business." - It is apparently part of come weird mental illness that compels me to criticize Alan Greenspan at every opportunity, and here I am doing it again. Recently he made a comment that only the last people to buy a house at these high prices would get hurt in a downturn in real estate. Nobody laughed at him. That shows you what a boob he is, and what boobs his audiences are. For one thing, the boom in real estate has caused the assessed value of my house to rise right along with it, and now my taxes are much higher. So I am getting hurt right now. Further, the people who are now paying most of their incomes on these houses are not enjoying the consumption of other things. So, unless their satisfaction with their bigger house is also bigger, thus getting more satisfaction in return for the higher price, then they are suffering a fall in their standard of living. So they are getting hurt, too. And rents will probably rise, so everybody who rents gets hurt all along the way. So for Greenspan to say that only the last buyers get hurt in a housing bubble shows what a jackass jerkwad he really, really is. - Paul Kasriel and and Asha Bangalore of Northern Trust have noticed that the Chinese pay no attention to The Mogambo, so they are taking up my cry. They write, "I will add to the unsolicited advice - anchor the renminbi to gold. The Chinese monetary authorities give stability as one rationalization for pegging the renminbi to the U.S. dollar. But is the dollar a stable anchor? Would anchoring a currency to gold provide longer-run price stability? That is, would anchoring a currency to gold preserve the purchasing power of that currency? The sum and substance of all this is that anchoring the renminbi to the dollar is a recipe for Chinese inflation. Anchoring the renminbi to gold is a recipe for long-run price stability." - Chris G. has an idea on how to get legislators on the anti-inflation bandwagon. He writes "We permitted our lawmakers to award themselves and others of their ilk (bureaucrats and judges) pensions that are indexed to inflation. This, of course, should never have been permitted, because now they do not care about inflation. They have been immunized. Remove the indexing, and I suspect we would see a very different approach to their management of the economy. The rest of us must not only suffer from the ravages of the disease of inflation without access to their vaccine, but we have to pay for their lousy #%@#*&^ indexed pensions with our disappearing money! And even when they go on to prove themselves to be utterly corrupt (as our federal government just has), we raise not a whimper - when what is clearly called for are barricades, storming the walls of parliament, and summary executions!" Then he asks "How do you remain so calm?" Answer: silver, gold. oil and large-caliber weapons. - The U.S. Department of Labor has issued its latest calculation of productivity, which is the measure of output per hour of workers, for the first quarter of 2005. They report that the revised seasonally adjusted annual rates of productivity change in the first quarter were: 2.6 percent in the business sector, 2.9 percent in the nonfarm business sector, 4.4% in manufacturing." This is also a measure of is how much businesses are able to get rid of employees, since the ones that they don't fire are able to produce as much or more. George Ure of UrbanSurvival perhaps says it best when he writes, "Government statistics on productivity are a lot like the government trying to figure out how fast a car is going by reporting how many speedometers have been sold, how big the new speedometers are, and similar nonsense. Remember, higher productivity can mean fewer jobs, everything else being equal." Doug Noland has also taken a look at them, and says "More remarkable, however, were the much larger revisions to the growth of hourly compensation and unit labor costs Unit labor costs were revised to a 3.3% rate in the first quarter from 2.2%... Moreover, when the revised data are viewed over a longer time, the emergence of a worrisome - and sudden - inflationary trend emerges. Through all of 2001, unit labor costs only rose by 0.3%, in 2002 these costs fell by 0.6%, while during 2003 they edged 0.1% lower In the third quarter of last year, however, it moved into positive territory with a 1.5% increase, a 3.0% rise in the fourth quarter and in the first quarter, the rate was 4.3% above the level in the first quarter of 2004." And if there is one thing that you can say about rising labor costs, it is that they eventually show up in higher wholesale prices, which will later show up as increases in retail prices, which is where you and I come into the picture, and which is the part of inflation that is so ugly. - Speaking of jobs, the initial claims for unemployment increased by 25,000 last week to 350,000, according to the Labor Department. Oops! But before you go crazy at this huge increase in people losing their jobs, a Labor Department wonk said "A part of the increase you are seeing is attributable to temporary layoffs in the auto industry,'' and these layoffs accounted for, according to him, "a significant portion'' of the rise in the number of filings. I am sure that the people laid off from the auto industry feel a lot better knowing that! But remember when the last employment report showed a gain of 78,000 jobs? Well, that gain was produced by assuming that there were 207,000 other jobs created. Without them, the report would have showed that 129,000 jobs were lost! Hahaha! Thank goodness for the birth/death model, eh? - Everyone seems to think that France's rejection of the European Constitution means something bad for the euro. Maybe. But what it means to me is that people will have more money in their pockets to spend, now that they don't have to pony up billions of euros, more and more every year, to build the socialist structure and infrastructure to house another huge trans-Europe layer of government, that is going to want to spend more and more every year, sending money to those who "need" it And now, since the European Constitution is dead, they can keep their money. So the euro should, under those circumstances, get stronger, right? - Speaking of gold, the gold lease rates are high. This usually indicates a coming rise in gold. But the nominal rates are dropping from recent highs, which usually augurs a coming drop in the price of gold. Who the hell knows? - For those who think that real estate is the fast lane to riches, Bill Bonner of the DailyReckoning.com is here to burst your bubble, no pun intended. "Prices of American residential real estate, in real terms, are up 66% over the last 114 years. But all the increases happened in just two brief periods: right after WWII and since 1998. Other than those two periods, the real price of housing was either flat or falling." And there is even more. "The big difference between the period following WWII and the present era was that back then the U.S. economy was growing and healthy", whereas. America had not only the biggest trade surpluses in the world, but wages were going up." Do you STILL think that houses will continue to go up in price? Hahahaha! What an optimist! Well, maybe. Axel Merk, of the Merk Hard Currency Fund, writes that house prices may continue to climb as the Fed continues its monetary extravagance. "We have long argued that the U.S. economy is too leveraged to allow the Fed to aggressively raise rates to curb the housing bubble and inflation that is creeping through the supply chain. Any forceful action would cause the housing bubble to collapse and throw the economy into a severe recession. For now, it looks like the Fed opts for continued growth rather than correcting imbalances. Inflation that has been creeping up will be fostered and entrenched in more and more sectors of the economy." And that is my bet, too. The Fed will not fight inflation. The Fed now wants to (and I still can't believe that this is happening), foster inflation, which they will translate, somehow, as growth. Without even acknowledging my addition to his comments, he continues "In the meantime, the yield curve is flattening. On the one hand, we have a slowing economy; on the other hand, we have an accommodating monetary policy that has contributed to numerous capital misallocations ('bubbles' in modern parlance). As long as the Fed is artificially boosting the economy, we are setting ourselves up for an ever more severe adjustment process when it does happen." - I see where General Motors is planning to lay off 25,000 people over the next few years. Again, the little worker-bees are paying for the gross stupidity and mismanagement by the executives at GM, all of whom are obviously making more than they are worth, which is zero. You can get this kind of bad management by hiring The Mogambo as a big shot executive, who is willing to work real cheap because I am stupid and incompetent. So attention GM shareholders! If you want to have your debt downgraded to junk, the shares of the company to lose value, the shuttering of whole plants, ruining the lives of thousands of people, then hire me to run GM! No wonder Kirk Kerkorian wants to buy the company; if it is doing this well with management this bad, one can only salivate at the prospect of what the company can do with even marginally competent management! - Mark Fadiman on FreeMarketNews.com did a Google search to see how the popularity contest between the horrible Keynes and the fabulous Mises shapes up. The news is very, very good. He writes that "The score is Ludwig Von Mises 357,000 and John Maynard Keynes 326,000." Perhaps waxing enthusiastic and philosophical, he goes on to say "Ironically, this historic intellectual shift is not being documented by an increasingly paralyzed Big Media. But it is, perhaps, the first ­ and greatest ­ story of the 21st century." Man, that WOULD be good news! - To show you another area where inflation is running rampant, thanks to all of this creation of money and credit by the Federal Reserve, a Bloomberg report by Kerry Dooley Young reports that "About 1.3 million adults in the U.S. lose their employer-sponsored health insurance with each 10 percent average rise in premiums, according to a study from the University of California, Berkeley. Companies have been shifting a bigger portion of insurance costs to employees The average employee contribution for a family insurance plan last year rose to $3,156, or 32 percent of the total cost, from $1,670, or 25 percent, in 2000." This means that the average employee is now paying, $1,486 MORE per year, or, $123.83 per month MORE. And even at that, it is it less than a third of the total cost! Meaning that the annual health insurance bill is $10,800 per employee! You want inflation? I'll SHOW you inflation! And when they drop their health insurance, then their healthcare costs which they can't possibly pay, will be stuck onto the bills of everybody else, which will make our price inflation in our premiums even worse, which makes more people drop their coverage, and then their healthcare costs, which they can't possibly pay, on and on and on. Ugh. ***The Mogambo Sez: All the weird, dysfunctional things that make me recommend buying gold are getting more and more weird and dysfunctional. Richard Daughty email: RichardSmithGroup@verizon.net Daughty Archives Provided as a courtesy of Agora Publishing and The Daily Reckoning 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. Recent Gold/Silver/$$$ essays at 321gold: Apr 19 Gold: Ignore Sell Signals & Buy  Morris Hubbartt 321gold    Apr 19 Doctor Copper Has A Message on Inflation  Tom McClellan 321gold    Apr 19 Gold's Remarkable Breakout  Adam Hamilton 321gold    Apr 16 Gold Stocks: Good Times Are Here  Stewart Thomson 321gold    Apr 12 Gold & Silver: The Start Of Something Big?  Morris Hubbartt 321gold    Apr 12 Gold, Miners Overboughtness  Adam Hamilton 321gold    321gold Inc