MoGu's Rent-a Moose Suit...
...the angriest guy in economics
The Mogambo Guru
Aug 30, 2006
-- Things just do not make sense to me anymore, and it is that
bewildering confusion and "fear of the unknown" that
brings out the paranoid and panicky side of me, against which
modern pharmaceutical science stands powerless, their expensive
nostrums bouncing off of my frantic paranoia like bullets bounce
off of Superman's Buns of Steel.
What kind of confusion? Well, for instance, Total Fed Credit
was down another $4.2 billion last week, although credit in the
banks is still expanding like crazy, which means, by definition,
that debt is still expanding, which means that the money supply
should be expanding, but I see that the money supply is not very
And the national debt is still increasing at about $3 billion
per day. And getting worse every damned day, as if someone actually
believes that an always-failed-in-the-past, guns-and-butter fiscal
policy is not inflationary and suicidal! Confusing!
But these horrific things apparently mean nothing to anyone except
Chicken Little, gold-bug, Austrian school of economic thought,
loudmouth crackpots like me. And indeed, the bigger news seems
to be that America's central bank elite, ordinary bankers, underlings,
assistants, friends, hangers-on and miscellaneous "others"
are/were meeting in Jackson Hole, Wyoming. They meet there for
their annual super-secret conference, where I suspect that they
smoke crack and gobble Ecstasy, which would explain the bizarre
way that they think, especially that weird "lowering interest
rates will fix any problem" idea that they seem fixated
The running joke this year is about whether they see a moose
or not, which they jokingly imbue with the oracular power to
predict a growing economy. Yuk yuk yuk. And sure enough, we get
actual video footage of a sad, sick old moose wandering around
out in the distance. I mean, the place is swarming with FBI people,
CIA people, NSA people, security people, police people, television
crews and noisy whatnot, so it really is a wonder that some desperately
sick and/or old, starving moose will accidentally wander close
enough for a cameraman to record the event, to the delight of
Then I heard that Bernanke's speech was not about inflation!
It was not about, for instance, the housing bubble that is bursting.
Nor about the roaring debt problem, both public and private.
Nor about roaring global money supplies, nor the falling U.S.
dollar, nor the dangerously rising price inflation, nor how they
have to soon admit that they are all complete, blithering idiots
for believing their laughable economic theory about how lowering
interest rates, to encourage taking on more debt, will always
work its incomprehensible magic, or any of that important stuff!
The topic was, instead, some insipid, throwaway blather about
"globalization" and how it has progressed surprisingly
faster and bigger than any time in history, and that they are
all pleasantly confused as to why this happened. They all agree
that it is a good, good thing for America, of course, and they
are all sure that everything will be simply perfect, perfect,
perfect from now on, even though they wonder, you know, why?
At this outrage, I leapt to my feet in anger and ran up to the
television screen, and putting my nose so close to the screen
that I am sure they must be able to see me, I am yelling "Why?
Do you want to know why globalization progressed so fast and
so far, you morons?" That was supposed to be just a rhetorical
question, but suddenly the whole family started whining, and
the kids are crying "Mom! Mom! Make him stop! For the love
of God, mom, please make him stop!" and my oldest daughter
is looking comically heavenward and wailing "O, Death, where
is thy sting?"
And then the wife pipes up and says "No, dear, we do NOT
want to know why, because we already know why! It's because of
the Federal Reserve, isn't it?" Before I could admit that
it was, she snarls "Isn't it? Admit it, you big blowhard
Mogambo bastard (BBMB)! Admit that it's because of the Federal
Reserve! Go ahead! Admit it!" and I replied, in my usual
Witty Mogambo Way (WMW) "Shut up, shut up, shut up! All
of you just shut the hell up!" and then I ran out, my little
heart breaking, and my eyes stinging with bitter, bitter tears.
Later, after having a few drinks with my new close friends down
at the nearest bar that has cheap, greasy food and cheap liquor
(served in greasy glasses), I realized that she was right. It
was because of the Federal Reserve! But that brought up the odd
question; if my family can figure it out, then how come the only
guys who can't figure it out are the Federal Reserve and the
guys whose living depends on toadying to the Fed so that they
can go to swell conferences and act important and charge clueless
clients the big money?" Then I thought "Maybe they
This is when I hit upon my Fabulous Mogambo Idea (FMI). My idea
was to rent a moose suit and go to Jackson Hole. Masquerading
as a real moose, I would casually wander up, all docile and cutesy-wootsie
moosey-like, close enough to the conference to get everyone's
attention. Then I would bellow, really moose-like, "The
Spirit of the Moose says: Send me Ben Bernanke!" and then
he would come out and say "What do you want, moose?"
Then, dramatically, I would heroically jump out of the moose
suit and shout, in a thick, Boris Badenov-and Natasha type Russian
accent, "Ha! It is neither moose nor squirrel, but I, The
Then, hoping that the camera crews get this on film before the
security people get to me, I bellow "The globalization happened
because someone paid for it, you stupid dork-face! It was bought
and paid for! So, the highly pertinent question from the Spirit
of the Moose is; 'Where do you think the financing for all that
unprecedented globalization came from, you big stupid-faced jerk?'
Then, after a short dramatic pause, I continue, waxing eloquent
in my moment of glory, "Since you obviously have no clue,
I'll tell you! The financing for the whole thing came from the
Federal Reserve, you butthead, which created so much excessive
money and debt, year after year, so that the government could
sell bonds, year after year, so that the government could have
an endless orgy of deficit-spending, year after year, and everybody
ended up with money! Money to freaking burn, dude! And crippling
debts to match! And the money all ended up in the pockets of
the rich, as it must, because it is the rich who lend money,
and the debt ended up in the pockets the poor, who must borrow
Out of the corner of my eye I see figures sprinting towards me,
and so, speaking more quickly, I hurriedly exclaim "And
then all the other central bankers around the world were forced
to do the same thing, to keep their currencies from getting so
strong against a rapidly inflating, depreciating dollar! And
all that money, all that mountain of money and debt, was used
to expand, expand, expand! There's your damned globalization!"
The next thing I knew, I was calmly explaining in a very loud
voice to the FBI men-in-black who were dragging me away into
an unmarked black limousine, "Nobody wanted to have the
dollar fall, and so that is why the foreign governments created
the money to buy up all of those dollars! They suicidally devalued
their own money, too! We're all freaking doomed! Can't you see
that, you ignorant, moron cops?"
At this point, Officer A said to Officer B, "I think he's
resisting arrest. Let's shoot the tranquilizer gun at him again!"
and I am screaming "I am not resisting arrest! I'm motionless
and handcuffed, you stupid pigs!" and Officer B says "That
sure sounds like 'resisting arrest' to me, Officer A!"
But this is not about how the rest of the day is a big blank
in my mind, or about moose suits, but about the current Jackson
Hole conclave, and how Bernanke is astonishingly reported to
have said, of all the things he could possibly have said, "The
challenge for policymakers is to ensure that the benefits of
global economic integration are sufficiently widely shared."
What? I can't believe my ears! What kind of commie/socialist
crap is that from a banker? My hands are visibly shaking at the
The phrase "ensure that the benefits are shared" means,
of course, "Have the government take money and power from
somebody, and give it to me and my friends."
And who are these "friends?" He quickly supplies an
answer by saying "For example, by helping displaced workers
get the necessary training to take advantage of new opportunities."
Hahahaha! Is this man personally aware of any real success in
"training displaced workers" (who are fired only because
they cost too much per hour) to take advantage of "new opportunities"?
I'm not! Hahahaha!
And the reason is that there ARE no "new opportunities"
to enable the overpaid American worker to make more money per
hour than some cheap foreign labor, dude! If there were, then
foreign labor would be doing it already! Hahaha!
So, believe me when I say that if there really WERE "new
opportunities" against which foreigners could not compete,
then wages would be rising in that industry, and money would
be moving there, and there would be lots of shadowy people all
over the damned place, furtively trying to get a little of that
early action, legal or not.
This is underscored by reader Baldy, who writes that he learned
a valuable lesson from the old Bre-X gold fraud. He writes "When
Bre-X was hot and heavy here, I met a young Aussie geologist
at rugby, and he said there's no gold there. 'How do you know?'
asks I. 'No illegals!!!' he replied."
-- From News.Yahoo.com we get the news that "Bundesbank
President Axel Weber ruled out the use of Germany's huge gold
reserves to help fill the gaps in federal budget. Asked by the
mass-circulation daily Bild whether the German central bank could
simply sell some of its gold to plug the gaping holes in the
budget that the government wants to fill by means of an increase
in valued-added tax (VAT), Weber replied: 'You can't be serious.'
He then uttered the economic truism that "Such one-off measures
are never a good idea."
But here in America we routinely plug budget holes by the use
of one-off ideas, like going farther into debt, and like selling
land, buildings, ports and toll roads to foreigners. And now
California is proposing a whopping new $4 billion tax on oil
producers, so that the money can be used to propel California
to the forefront of the alternative-fuels bandwagon via massive
government intervention in the economy. Hahaha! What commie morons!
Perhaps this rush to alternative-fuels is why George Kleinman,
the Editor of Commodities Trend, says that the future is in corn,
and that "The corn market is forming a significant bottom.
Just as the era of cheap energy is behind us, 2006 is the last
year of cheap corn. The reason is ethanol. With 100 ethanol plants
either already up and running or close to production and another
35-plus due to come online next year, corn usage for fuel will
The question is "What do you mean by 'surge'?" I ask
that because I remember that "everybody" warned that
if they took off my ankle-monitor and just let me run loose in
the community, then complaints would "surge". But while
I admit that total complaints were up, I would hardly call it
a "surge", and, besides, it was mostly crybaby whining
from people who deserved what they had coming to them.
Mr. Kleinman, suddenly realizing the kind of dangerous, hotheaded
weird-o that I am, involuntarily recoils in horror, and hurriedly
launches into the "surge question" by saying "An
average ethanol plant uses 18 million bushels of corn annually.
Corn usage for ethanol will grow in 2006 by 300 million bushels
versus last year and is projected to rise by more than 500 million
bushels in 2007 versus this year."
What will happen (in case you were wondering) is that all this
new demand for corn will drive up the price of corn, and this
will drive up the price of corn meal, and that will drive up
the price of taco shells, and that will drive up the price of
tacos, and that will drive up the number of times I scream about
the high price of tacos WHILE I am eating the tacos, and pieces
of taco are flying out of my mouth, which makes a big, disgusting
Mogambo mess (BDMM) in the restaurant, and all the other customers
are sickened by the sight and sound of it.
So in response, the government will almost surely reduce the
subsidy that they currently pay to farmers to idle their land,
effectively paying farmers not to grow anything. Now, farmers
will, instead, be encouraged to grow commodities, especially
corn, and doubly especially the kind that makes ethanol, and
triply especially the kind that makes good taco shells. Then
they will all plant corn, and buy farm machinery, and hire farm
hands, and farmers and everybody else will make some big, big
money in the coming inflation in commodities, and the US economy
will be saved once again by an inflation.
But while we stand, united as a nation, aghast at the thought
of inflation in the price of yummy tacos, let's take a look at
some other inflation, such as from John Hussman, of the Hussman
Funds, who calculates that "Over the past year, consumer
price inflation has clocked in at 4.15%. Producer price inflation
(finished goods) has been a similar 4.12%. But if you look at
intermediate goods, we're currently at an inflation rate of 8.83%.
That's the most abrupt widening in the spread between intermediate
and finished goods since the 1973-74 oil crisis."
By this time, I am, of course, fixated on getting some tacos,
and I am impatiently tapping my toe in my exasperation, as if
to say "Hey! John! I'm a busy guy here, so get to the punch
line so we can get to the lunch line, okay? Will inflation go
up, or down? Up or down? Up? Down?" But before I could even
ask, he tells us. "Moreover," he says, "if we
look at points in history when prices for intermediate goods
have outpaced prices for finished goods over a 6-month period,
we've also seen, on average, an acceleration in the PPI finished
goods inflation rate over the following 6 months."
Here is where The Mogambo would have lost it, and started screaming
in fear and panic about how "inflation is going to kill
us and we're all freaking doomed!" and blah blah blah, but
notice how classically understated and calmly he sums it up by
saying "So if there is credible evidence to be found of
weakening inflation pressures, it wasn't to be found in last
week's CPI or PPI reports."
But they will be, soon enough, and the lesson seems to be "Buy
-- In the Aden Forecast we
read "China's commodity imports alone have grown more
than tenfold over the past 15 years." Wow! Compounded, this
works out to 16.6% a year!
And what did they get for this massive commodity import boom?
Inflation. Just listen to Doug Noland, in his Credit Bubble Bulletin
at the PrudentBear.com site, as he quotes International Herald
Tribune's Carter Dougherty writing "During 20 years
in the toy business, Anthony Temple has reveled in the bounty
of inexpensive stuffed animals, coffee mugs and resin figurines
on sale in China.
"But a buying trip this year for his company, Rainbow Designswas
a rude awakening. Traveling through the Pearl River Delta north
of Hong Kong, Temple found that cost increases - for raw materials,
but above all, for labor - dominated every discussion he had
with suppliers. Far from being eager to underbid each other,
Chinese companies talked about marking up their prices from 5
percent to 10 percent so consistently that Templebecame convinced
that these were not simply negotiating gambits. 'When I went
over there, I was under the belief that China is a bottomless
pit of cheap product,' Temple said. 'When I left, I was not.'"
10% inflation in prices to the wholesaler! As if to exacerbate
this news from his site colleague, Rob Peebles in his Random
Walk column ominously notes that "The International Herald
Tribune reports that China single-handedly knocked 2% off of
import price inflation in the Euro-zone every year from 1996-2005.
But things are changing. Higher material prices and wage pressures
are pushing up costs in China."
And then there is Richard T. Williams, who is the Director of
ICAP Equity Research, commenting on the latest Richmond Fed Survey.
He notes "significantly weaker business activity covering
almost 10% of the US economy. But even worse is the Prices Paid
component, which rose to 3.28% from 3.14% in the prior month."
-- Perhaps all of this is what prompted MarketWatch.com to report
that "The United States is headed for a recession that will
be 'much nastier, deeper and more protracted' than the 2001 recession,
says Nouriel Roubini, president of Roubini Global Economics and
professor of economics at New York University."
He says that "Every housing indictor is in free fall. As
the housing sector slumps, the job and income and wage losses
in housing will percolate throughout the economy."
Beyond that ugly volcanic eruption of bad news, he notes that
it gets worse, as "Consumers also face high energy prices,
higher interest rates, stagnant wages, negative savings and high
This housing bust is, in effect, the "straw that broke the
camel's back", and he says that "This is the tipping
point for the U.S. consumer and the effects will be ugly. Expect
the great recession of 2007 to be much nastier, deeper and more
protracted than the 2001 recession."
Not to be outdone, Jas Jain, Ph. D., the Prophet of Doom and
Gloom himself, takes it all to a new level in his new essay,
"The Pause That Depresses: Recession to Begin Within Six
Months and Depression Prior to 2008Q2" which is the shining
epitome of explanatory brevity, as the title itself is the perfect
Now, if a depression in the second quarter of 2008 is too, too
far away for you hotshot short-term traders, then how about the
next couple of months? If so, then you should be interested in
"A History of Autumn Declines in the Dow Industrials from
1997 to 2005" by Robert McHugh, of Main Line Investors.
He writes that "The Dow Industrials have declined sharply
every Autumn for the past nine years in a row, from 1997 through
2005, reflecting an interesting market psychology, and it is
setting up to do so again in 2006."
I don't know about you, but I am very impressed with "nine
times is a row. And more than that, he says that these were not
just "declines", but that "Five of the nine declines
were stock market crashes, with declines greater than 15 percent,
and a sixth was nearly a crash, plunging 13.2 percent! The smallest
decline was still a significant 4.7 percent."
So, in summary, the Dow went down every Autumn for the last nine
years? And six times the decline was greater than 13%? Ugh.
***Mogambo sez: The Big Mogambo Lesson (BML) that one
draws from history is that when this latter stage of the boom-bust
cycle is reached, people always rushed, more and more, faster
and faster, to buy gold and silver, and the price of these metals
soared, as people rushed, more and more, faster and faster, away
from the inflating currency.
It has happened just like that every time that a desperate or
brain-dead government committed the same economic sins (SES)
that we are committing today. To think that this one time in
history, for no reason at all, it will end differently, is pure
You can tell that I am working myself into one of my "spells,"
but before I can launch into another of my tiresome-yet-loud
tirades about how stupid people are, and how evil the Federal
Reserve is in creating all that excessive money and credit, Sol
Palha of Tactical Investor supplies the moral of the story when
he says "Live and think like an idiot, and you will invest
and reap the rewards of a moron."
As a moron myself, I can tell you with some authority that the
"rewards" that Mr. Palha thinks we morons reap will,
I assume, come in heaven, because I have never seen one.
Better you should "Live and think like a guy who can learn
the lessons of history, and you will invest and reap the rewards
of the literate!" which, in this case, is to buy gold and
silver. And lots of it!
Aug 30, 2006
Provided as a courtesy of Agora Publishing and The
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
and other fine publications.
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