- Things are happening hot and heavy. For one thing, Bush nominated Ben "Blooper" Bernanke, the most arrogant and clueless economics dunderhead in the USA, to replace the retiring (and good riddance) Alan Greenspan as chairman of the Federal Reserve. So immediately my Spanky and me and the rest of the gang formed the Mogambo I Hate Bernanke Club (MIHBC). Doug Gillespie, of Gillespie Research, says he wouldn't be in my stupid club if I paid him, but as far as Mr. Bernanke is concerned, he says "Personally, I think this is a horrendous choice."
Naturally, one of the most arrogant and clueless Congressional dunderheads, Sen. Chuck Schumer, who spends his time proving that he is out of his depth in general and waaayyyy over his head on the Senate Banking Committee, said he "felt confident" that Bernanke "knows the Fed's job is to fight inflation." Hahahaha! What an idiot! This is the same Bernanke moron that is infamous for saying that he WANTS inflation, and actually refers to his stupid idea of fostering continual, simmering inflation as the benign-sounding term "targeting inflation"! Hahahaha! One moron praising another one! Hahaha!
So hooray for Thomas Donlan, the editorial page editor for Barron's, whose editorial this week, entitled "The Dollar's Long Dive", is an indictment of the supreme idiocy with which we have behaved these last seventy mournful years or so, as manifested, as Mr. Donlan clearly shows in his essay and graph, which charts the absolute ruination of the buying power of the dollar since 1933, and the especially since 1971. And, further, it is a classic argument for gold.
But I bring this up because, most importantly, he writes "the damage to the dollar's purchasing power in the post-war period came not in the onslaught of historically high inflation during the 1970s, but in the continuous drip drip of compounding some inflation every year." Exactly right! And this constant inflation, this constant ruination of the dollar, is exactly what the jackass Ben "Brainless" Bernanke says he wants! He wants to "target inflation" so that the dollar is continually debased, more and more, just like this! Now you know why I am standing on the roof of my house screaming screaming screaming in outrage and fear "We're freaking doomed!" and I am listening to doomed people on the ground yelling at me to shut up and come down off the stupid roof, or at least put some pants on.
And Mr. Donlan is also exactly right with his observation that "Holders of gold have one advantage; they know there's no promise backing them up, just the experience that gold holds its value in the marketplace. Considering the value of the political and financial promises illustrated in (the destruction of the buying power of the dollar), we ought to demand similar market security for our money." Hahahaha! We had it, dude! It was in the freaking Constitution that money shall only be of silver and gold! But we sat there with these big stupid grins on our big stupid faces, and we stood by and watched without a whimper as that commie bastard FDR destroyed the stability of the dollar by confiscating our gold, and again in 1971 when Nixon cut the final link between the dollar and gold. Thus, the money was open for destruction, and it was thus destroyed, and if either of those two horrible people were alive today I would walk up to them and slap their big stupid faces until the security personnel jumped me and wrestled me to the ground, probably poking me with their Tazer stun guns, going zzt! Zzt! Zzzzt! Ow! Zzzt! Ow! Zzzt! But it would be worth it!
So more and more inflation is guaranteed now that we have a mental defective as chairman of the Federal Reserve, who is actually going to consciously work to keep inflation at some "low" level, about 2%, instead of at zero, like it is supposed to be at maximum. If you are even barely minimally competent in elementary economics, you are naturally horrified at the prospect, and wish that you would wake up from this nightmare, but it just goes on and on, hour after hour, until you suddenly realize that you are wide awake, and this "targeted inflation" thing is real life! And now you are REALLY freaking out! So what to do? Do like everybody else in all of history has done when things got like this: Buy precious metals! As David Morgan of the silver Investor so succinctly said, "Precious metals is the only asset class with a positive correlation coefficient with inflation."
Because Mr. Morgan is a real classy guy, he did not mention that the ugly corollary of this, and when I bring it up, he crinkles up his nose at me like he just stepped in something icky that the dog left in the yard, but as a guy who HAS stepped in a lot of icky things that the dog has left in the yard, I fearlessly stand right up and say that this means that all the OTHER asset classes have a negative correlation with inflation, meaning that as inflation goes up, their values go down! Hahahaha! Welcome to the world of "targeted inflation", dudes and dudettes! And Americans think they are going to finance their comfortable retirements with asset classes (stocks, bonds, houses) that are negatively correlated with inflation at the same time as the new, and young, chairman of the Federal Reserve has expressed his overt intention of creating inflation because he actually believes some bizarre theory that inflation is something GOOD? Hahahaha! We deserve to be poor! If we swallow that stupid crap then we proved to be ignorant and stupid, and that is why we will be bankrupted and poor!
This at the same point in time and space that we idiot Americans have now reached the milestone (insert loud fanfare of trumpets going taa-daaaaaa!) of $8 freaking trillion dollars in federal government debt! That's right! You heard it here, folks! Last week we went over the mark of eight trillion strangling smackeroos of debt! And it is getting worse exponentially, meaning that every month not only are we deeper in debt than ever before, but in magnitude it is worse than the previous month by the biggest percentage, too. You may interpret the way my head is comically spinning around and I am vomiting up black bile and blood in my supreme Mogambo outrage (VUBBABIMSMO) that this is not a good idea, and in fact this is a very bad idea, and in fact it is the most suicidally-stupid thing that a nation can do and that is why I am embarrassed to be an American and am scared like hell at the coming consequences.
As a little Mogambo perspective (LMP), in June of 2002, just three short, teensy weensy years ago, the Gross Public Debt was "only" $6 trillion. In three years, the federal government borrowed and spent two trillion dollars! The federal government, the boneheads that we install in Congress by actually voting for them, increased the national debt by a third in only three years! To give you a sense of the awesome size of this one debt, the entire Gross Domestic Product, the GDP of America, which is the sum total of all the goods and services produced in the whole freaking country in a whole freaking year, is less than $12 trillion!
And this is just federal debt, and does not even include state and local government debts, which soared by hundreds and hundreds of billions of dollars, nor business debt or personal debt, which altogether soared by trillions and trillions of dollars in just three stinking little years!
And it was all created by the damned Federal Reserve and that horrible little jackass Alan Greenspan. In fact, the total federal debt of the United States government doubled- doubled! -under Greenspan's 17 years! It took since the founding of the damned country to amass three trillion dollars in debt, and then this Greenspan weenie comes along and more than doubles it in seventeen years!
I am so furious that by now I am choking in rage and gasping for breath, and can hardly get the words out that the amount of government securities bought outright by the Federal Reserve is up more than $500 billion- almost triple where we started! -since Alan Greenspan took over! This is actual money of the people of the United States that the Federal Reserve (which is NOT part of the government and is, in fact, just a cartel of private bankers), now owns! And how do they own it? They printed up money for themselves, and used it to buy the debt! That's how! And now we taxpayers, every year, have to pay taxes to pay the interest and (theoretically) the principal on all of that debt that the Federal Reserve owns! My God! How stupid can one nation be and still manage to not poop in its pants?
E. Petersen, writing on FMNN.com feedback, is a guy that comprehends the problem exactly when he writes "The bankers get their profits off the interest from the money they create out of thin air and we get stuck with the byproduct of inflation robbing us of our purchasing power. We loan them money, yet we get stuck with reverse interest (inflation) and they get the profits." Exactly! Exactly!
But continuing with my hissy-fit about the banks, get a load of this: In 1991 total loans and leases in the nation's banks was about $1.2 trillion. Now, only fourteen years later, loans-and-lease debt in the banking system is $5.4 trillion! Debt owed to the banks more than quadrupled!
And it gets worse! In September 1991, total real estate loans in the banks totaled $398 billion. Last week, total real estate loans in the banks totaled $2.8 trillion! 700% more mortgage debt! In four short years! Seven times as much mortgage debt! My God! And you are NOT in full lock-down mode somewhere safe, gobbling tranquilizers like candy, with your finger nervously on a trigger? I am impressed! You must have nerves of steel! Then that means you did NOT hear Dr. Kurt Richebächer when he said that "The thing to realize, of course, is that the housing bubble is many times more dangerous than the stock market bubble, because it involves the whole banking system."
But this is not about how you are so strong and brave, but I am just a weakling crybaby who has locked himself in the bathroom like a cowardly little wussy with a weak bladder. This is about inflation, and as a result of the Federal Reserve creating all this money and credit (debt) for so damned many years, price inflation is everywhere, and the debt that fueled the inflation is everywhere, too, but, unfortunately, deflation is starting to peek its head up everywhere, too. But this is not only true in the normal sense of some prices getting too high, like stocks and bonds and houses, but also true in the opposite, namely that some prices are too low.
As examples of prices getting too high, I include every damned thing I have to pay for these days, whether I want to or not. And speaking of prices that are too low, have I mentioned in the last five minutes that silver is so freaking low in price that I am drooling all over myself in greedy anticipation of the coming rise in the price? I did? Well, did I mention that I was angry because I don't have any money with which to buy both silver AND a nice pizza? I did? Oh, yeah! Now I remember! That was when you told me that I won't EVER have any more money unless I work more, which I will not, because I am lazy and totally worthless, and I seem to remember that I also told you to shut the hell up (STHU).
But this is not about how the long-suffering Mogambo is beset on all sides by enemies both real and imagined, none of whom can keep their stupid opinion to themselves, but about silver, and how it is so cheap, and that is why I am grabbing you by the lapels of your coat and pulling you up close to me so that I can scream in your face, and as you wiggle to break free of my iron grip you gag on my fetid breath while I am bellowing about how silver is so cheap that only an idiot- AN IDIOT! -would NOT be buying as much silver as he could get his hands on.
And the reason I am so particularly strident is that silver is suddenly even MORE grossly under-priced, and I say this surprising thing because the Journal of Nanotechnology has just published a medical study that has been described as "groundbreaking", wherein they report that silver nanoparticles of silver kill the HIV-1 virus, and thus (if true), is a cure for AIDS! A freaking cure for AIDS! Of course, the authors are not suggesting that, nor is anybody with any sense of responsibility or common sense even suggesting it, but you know that The Mogambo has no such scruples, and goes to the extreme every time, with or without any factual basis at all.
And not only that, but (and you can tell by the way I am happily jumping around in childish glee that this is more good news MGN)) the authors furthermore conclude that silver will almost certainly kill all other viruses, too, which is what the colloidal-silver people have been saying for years, although without the techniques of nanotechnology to prepare the silver, their results were poor. But can you imagine the price of silver if it really IS, thanks to nanotechnology, a new "silver bullet" medicine (that is, literally, silver!), that can instantly kill all bacteria, viruses, molds, fungi, and cooties in your body, curing you 100% of everything with a single dose? It would be freaking priceless! And you can buy pure silver right now for less than eight bucks an ounce! This seems odd, considering that if this works out even fractionally as well as I think it can, all six billion people on this planet are going to want medicinal silver for themselves and their animals, and that is a LOT of silver, dude! And the price of silver will get so high that people in the future will look back and marvel among themselves, saying "Golly! The Mogambo was right for a change!"
The study was conducted by a "collaboration" between the University of Texas and Mexico University, and is, so it is reported, "the first medical study to ever explore the benefits of silver nanoparticles." They are already beginning to look, excitedly I'll bet, at using silver nanoparticles to kill Methicillin resistant staphylococcus aureus, which is popularly known as the "super bug" because it is so resistant to all anti-bacterial drugs. And if this silver thing is lethal to ALL viruses, then the dreaded avian flu becomes just one more pesky virus!
All I can say, knowing as little factual information as I do, but augmented with an overactive imagination and endless greed and that handily fills in all the gaps, is "wow!" And you can still buy the stuff for less than eight bucks an ounce? Again, wow!
But trust me when I say that
the pharmaceutical companies are going to want to, as Barney
Fife once remarked to Sheriff Andy Taylor, nip this silver thing in the bud, because "You
can look it up in any book you want to, but they all recommend
the same thing; bud nipping!"
Ominous for GM, the stockholders and the pensioners, okay. But how about the rest of us out here in the real world? Huh? How about us nobodies where the closest we ever get to a new car is when one the neighbors gets a new one, and they come strutting over like they are such hot stuff? And they say things like "Oh! I see you are still driving that piece of rusted crap you call a car! Why don't you at least wash it, you lazy bastard?" and then I want to know who he is calling a lazy bastard, and he says he is talking to me, and then they launch into this thing about how much nicer THEIR new car is, and want to show it off, and I am supposed to act like I am happy for them, but I am really angry and resentful and filled with a murderous envy and too much of a lazy bastard even to walk over and spit on his car. So I say, "Screw GM and Ford and all their stupid pension plans. How about the rest of us? Where is our social justice?"
Perhaps my plaintive cry for justice is what prompted Doug Noland to write in his Credit Bubble Bulletin on PrudentBear.com "I would expect stress in auto-related risk markets to be contagious." So Weiss says "ominous" and Noland says "contagious." All eyes turn to The Mogambo, who says simply "Sell equities and bonds and houses now!"
As bad as that is, Mr. Weiss makes a bolder prediction than that, and figuratively says that Greenspan is going to cut our throats on his way out the door. I can't swear to it under oath or even under the administration of powerful truth-serums, but I thought I heard wolves howling in the distance when he predicted that "November first will mark the beginning of one of the greatest interest-rate moves of our lifetime. That's when Fed Chairman Greenspan will have his first Open Market Committee meeting since Hurricanes Katrina and Rita, and when he will have his first opportunity to do something about the recent surge in inflation."
Here is where he makes his crucial, make-or-break forecast. "It's a foregone conclusion that he will raise rates. He's done precisely that 11 times in a row. But those rate hikes were a mere quarter of a point each. Now, with inflation surging, he's going to have to jack up rates much more quickly. He has no choice."
No choice? He has no choice but to slow down an economy that is already slowing down? Well, Mr. Weiss is the voice of reason. But listen to the New Age economics as espoused by Ben "Call me Butthead" Bernanke, the next failure as chairman of the Federal Reserve. This Bernanke guy, whom I will now refer to as Ben "Big Bozo Butthead" Bernanke in a fit of gratuitous and vicious disrespect mixed with irritating-yet-pointless alliteration, is already on record as saying that the Federal Reserve stands ready, to buy stocks, bonds, houses, other assets, and even raw land, to keep deflation from happening! The Federal Reserve has already bought up, for its own enrichment, $725 billion in US debt, so what's another few hundred billion dollar's worth of assets disappearing into the greedy maw of the Federal Reserve? Hahahaha! We're idiots!
In a country of normal people, someone in the central bank daring to even utter such words, even in jest, even by a new-hire mailroom clerk in the basement, would have caused the horrified citizens to rise up, riot in the streets and storm the Federal Reserve building in Washington, D.C. with flaming torches, and the mobs would have carried The Mogambo on their shoulders as I heroically lead them in their blood-thirst for vengeance against a central bank that would even contemplate such a move!
I mean, it is inconceivable to me that we're going to stand around drooling all over the front of our shirts in our incomprehension of the simple fact that the banks are ready to create enough money, out of thin air, for themselves to buy- for themselves! -all the property and assets in the country! The banks would own everything! And we Americans are standing around with these blank looks on our stupid faces like this is, duuuh, all okay with us! Duuuh! Hahahaha! No wonder we are going to be destroyed: We're idiots! We are truly, as a nation, a bunch of first-class dumbbell halfwits.
But this is not about how Americans are the biggest bunch of ignorant nincompoops in history, squandering the entire wealth built up by own forefathers, until we are now just the idiot inbred offspring who have spent all the money, and are, even worse, in debt up to our ears. Oops! Wait a minute! I was wrong! This IS about how Americans are the biggest bunch of ignorant nincompoops in history! My mistake!
- This Bernanke thing has me all a-twitter, and all I can think about is self-preservation, and that means gold. Peter Brimelow MarketWatch.com quoted Bridgewater Associates as saying, "Many of the world's oil exporters have a penchant for holding gold; if they only held 1% if their incremental wealth in gold, the incremental oil revenues flowing into these countries would raise the investment demand for gold by 25%."
Now this is really interesting to me, as I am a big believer in that old theory that says that since the supply of gold is relatively inelastic, then I know that the supply of gold cannot possibly increase enough to satisfy a sudden 25% increase in demand, and so the price must rise by enough to reduce that damned increase in demand until supply can increase enough to affect prices again. "Hmmm!" we say to ourselves. Remembering the wisdom we were given as young grasshoppers ourselves, we retreat back a few steps from all of this heavy theoretical action, and we realize that from an up-close-and-personal view, otherwise known as The Official Mogambo Creed Of Greed (TOMCOG), that this means that profits, maybe even huge profits, perhaps even gigantic profits, are to be made somehow! Hahahaha! Lovely, lovely profits!
Bridgewater ended with its own investment conclusions, further reinforced with a fundamental rationale: "We remain long gold and a basket of other commodities, largely from a monetary perspective, as central bankers continue to devalue money in order to create a cushion against deflation."
While these Bridgewater guys did not mention Bob "Bongo for Brains" Bernanke by name, but this whole "preventing deflation" thing is pure Bernanke.
And believe me when I tell you that when guys start exiting the stock markets, with losses, and they are being herded into bonds, which is the only other big market that can absorb so damned much money all at once, they are going to be upset that bonds are going down in value due to interest rates going up. Then they are going to be as angry as I was when I noticed that my entire portfolio used to be able to buy exactly 1000 frozen pizzas, but after all of this inflation, my quarterly statement shows that my portfolio can only buy 960 pizzas. This is when they start saying to themselves "The Mogambo was right! We're freaking doomed!" and then they start wondering what in the hell they could buy that would at least stop the deterioration in their buying power. And they will, as all the other people in history eventually have, finally realize that the only safe place to go, when things get like this, is gold.
And speaking of gold, the World Gold Council says that "India's gold consumption is expected to rise 33% in 2005 to 850 tons due to higher income, good harvests and, we will add, a booming stock market. Much of those profits are going into gold." And the buying of gold has already started, as they note that in India "Consumption, excluding recycled gold, rose 57% to 508 tons in the first half of the year, up from 322 tons in the first half of 2004." Compare that to the 642 tonnes of gold that India consumed during the whole of last year!
AlJazeera.com reports that there is more to this Indian buying of gold than meets the eye, and that "Indian households are on a record gold-buying spree as oil price-driven inflation threatens to wipe out savings from rising incomes in one of the world's fastest-growing economies." What? People flocking to gold to flee inflation? I thought that whole idea was a relic, as so loudly proclaimed by the Anglo-Saxon central bank bozos for the last seventy years! And according to the mutual fund salesmen, too, for the same seventy years.
The problem is, as Al Jazeera reports "The income of middle class Indian families has been going up with the economy growing at a robust 7% to 8%, but putting their savings in banks is yielding little as the interest rate of 4% to 5% is barely on a par with the inflation rate." In short, they are getting screwed out of the purchasing power of their money, just like we are, and they, in response, are plowing their money into gold rather than leave it in the damned banks, while we Americans put MORE money into overpriced stocks and overpriced bonds and overpriced houses! Hahahaha! No wonder we get no respect!
They go on to report that the price of gold is expected to "rise another 5% to 10% by the year-end as more people invest their savings and demand for jewellery soars during the October to February festival and marriage season." Wow! Talk about a wealth of bullish factors!
And, as sort of an icing on the demand cake, it is reported that funds in Europe are now buying gold, too, because of inflation worries, which only adds to the strongly bullish case for gold.
But the world of gold is as full of crooks as everywhere else, as
the World gold Council also notes that the central
banks are so desperate to keep the price of gold
from rising and exposing the inflation that is actually roaring
that "The Washington Agreement to limit gold
sales to 500 tons is a farce. This past fiscal year ended 9/3/05,
they sold at least 552 tons and the figure may actually be 574.6
tons. So much for transparency and veracity."
- The other big, BIG news is the coming report from the new tax panel, who have all these hot shot suggestions for changing the tax code. Before you get your hopes up, Ron Paul (R-Texas) reports that the president's advisory panel "consists almost entirely of Washington beltway insiders who have absolutely nothing in common with ordinary American taxpayers. The members are former Congressmen and Senators, DC think tank scholars, university professors, and-- unbelievably-- a former commissioner of the IRS!"
Rep. Paul thinks that "The reform panel should have two simple goals: make taxes lower, and make taxes simpler. But during several hours of discussion last week, the various panelists talked about everything but those two objectives. Instead they embraced the practice of using the tax code as a tool for social engineering, debating what exemptions, credits, and deductions should be tinkered with to steer taxpayers toward or away from certain activities." Hahahaha! Exactly! Central planning! This is how our government has morphed into a socialist/communist nightmare!
I have read a little about the new tax plan, and I have heard a little about the tax plan, but I will not go into many of the details, as the important point is this: The same amount of tax revenue will be raised. Taxes are not going to be cut. The same huge, strangling wad of money will be ripped out of the economy by either taxing businesses (who merely add the taxes they pay into the prices they charge for their products and services, thus creating literal price inflation whenever taxes are increased), and/or reducing the buyer power of the final consumers (by reducing their incomes as a result of the higher income taxes) at the same time as they are paying the higher prices on all goods and services (that came from the increase in taxes that businesses pay) and/or the decline in purchasing power of the dollar, as measured in the inflation in prices. So, one way or the other, nothing will really change. The only difference is WHO is paying the taxes up front.
This should have enormous initial effects, as lots and lots of money comes out of things that no longer have a tax advantage (thus incurring a tax liability on any gain), and a bull market in something else, which is, as I understand it according to Jim McTague of Barron's, "savings, corporate investment and exports." Dividends are to be tax-free, see, which should, theoretically, drive up the value of stocks, which is, I figure, half the purpose of this whole tax plan idea in the first place. And the plan will, theoretically, drive DOWN interest rates as a result of all of this new supply of funds stemming from the increased saving, which is probably the other half of the purpose of this tax plan.
But the plan is, of course, doomed to ultimately fail, as there is no way to avoid the bankrupting pain of working off all of the enormous economic excesses and malignancies that have come from the horrible Federal Reserve financing all the spending, for all those decades, creating more, and more, and more, and more money, credit and debt.
- The Conference Board released their index of economic indicators. The leading indicator fell, and since this is the indicator of future production, fell, indicates that production should fall in the future. If you look it up, you will learn that falling production means less profits, and stock prices don't like it when profits fall.
Perhaps this is why the Business Council says that "Less than 15% of CEO's polled expect business conditions to improve over the next six months, from 40% in the previous survey in February. Only 27% expect improvements to continue in their industries, down from 43.2% in February. Twenty-one percent now expect pricing power to increase, down from 28% in February. "
More bad news (MBN) is that the coincident indicator index, which is a gauge of current economic activity, fell, too. This index tracks payrolls, incomes, sales and production, and it seems to coincide with the general economic slowdown that so many people are noticing.
The worst bad news WBN) is that the index of lagging indicators rose, which is a kind of measure of future inflation, which goes, again, along with the burgeoning inflation that you see everywhere and that I am always complaining about. So, to sum up for you busy executives, future business is bad, current business is bad, and inflation is rising.
Typically, as we have seen people, gravitate to gold when these kinds of things start happening. Not surprisingly, David Chapman, of the International Forecaster says "Now, all your money should be in gold and silver related assets, oil and gas stocks, short positions and a small amount of cash. If you do this five years from now you will be multimillionaires. This is a lock you cannot lose." Now this is certainly good news to those people who are already long in gold and silver and oil and gas. But why is it a "lock", meaning that we cannot lose this bet? Mr. Chapman explains, "There is no way out for the world economy."
He does not explain WHY there is no way out, but I will. Attend my words, lowly grasshopper! Verily I say unto you that the reason why there is no way out for the economy is that the problem itself is caused by too much money and credit having been created, and the problem will NOT be solved by creating MORE money and credit. It's as simple as that.
And in case you were wondering do I have any empirical evidence that this cure-by- continuation theory will not work, I can say "Yes, if you will believe the result of every other country in the whole history of the freaking world that debased their own money by over-issuance, which is what all of them did at one time or another, and who all tried to create more money and credit to fix the problem, which always failed because it made things worse, every freaking time in history. And that is why I am sure, without a shadow of a doubt, that it will not work THIS time, either!"
- I see by the clock on the wall that it is time for the segment of our show that we call News From The World Of Technical Analysis. First off, we have Robert McHugh, Ph.D. of Main Line Investors, Inc., writing that "We currently have five Hindenburg Omens on the meter from September 2005, and thus remain in dangerous waters, regardless of what rallies occur over the next week or two."
Then we have David Yu, who notes that "Both the VIX and the Trin indexes leave little doubt in my mind that rather than looking at the recent market decline as a bottoming process, it may be in fact just the beginning of a major topping process. And, it's got a very long way to fall."
Now Peter George of InvestmentIndicators.com walks up and says that if we are talking about technical indicators, then "If we take August 1999 as starting point for the current 'bull run', then we have completed the first 6 years of a total 12-year super-cycle. That leaves another 6 years to go - termination date August, 2011 and ultimate target $3,500 an ounce" for gold. Oooh! A 700% gain in six years! Nice!
In a sort of reverse technical analysis, or maybe a case of "the dog that didn't bark", alert reader Juan M. sees the government's Plunge Protection Team as being active in the market, as he notes that the latest CPI and PPI data should have sent gold shooting up, "just for a start, and sent stocks and bonds down the drain. The fact that it didn't happen suggests that the PPT is just the visible head of a huge financial octopus embracing most of the world by inventing an Orwellian reality. "
Well, I have no doubt that the PPT is in the market, or that the CIA is spying on us all and that one day it will be "us" against "them" and that my wife and family will be with "them" and I will realize that I was right to mistrust them and hate them all these years!
But part of the gold mystery may be that the price of gold went down because the gold lease rates went down. The way I figure it, see, some central bank with gold wanted to get the price of gold down because a rising price of gold is so unnerving to the investors of the world, particularly foreign creditors, that it might cause a panic and these foreigners would look at all those American stocks and bonds that they own and say to themselves "Yah so fong won hangsho ah-so!" which, if you permit me to translate into pidgin English, means "Dollar-denominated assets him stink like dead rat in rice bowl!"
So, to get the price of gold down, these central bankers dropped the rate for which they will lease gold, called the dealers on the phone and ordered them to lease and flood the market with gold, driving the price down, and thus making it look like nobody is nervous! In fact, all that gold selling looks like people are less scared! Hahahaha!
And lastly we end our Technical Analysis Workshop with Paul Kasriel of Northern Trust, who says that he has been looking at the money supply, and "for the first time since 1995, the real M2 money supply is contracting on a year-over-year basis. Contractions in real M2 typically lead to recessions." This goes along with the inverted yield curve, which ALSO typically forecasts a recession.
- Someone named Sky works in the retail grocery industry, and he writes to the Free Market News Network and says "We have had THOUSANDS of price changes in the past month and a half, and they are all UP, yet my wages sure as heck have NOT risen! People are already going more for the generic brands and I have had a hard time keeping up with the demand with those particular items."
And I am here to tell you that the consensus is that there is a big, ugly slowdown in business activity all over the place in America, as judged by the number of responses I got to my stupid suggestion that there is a slowdown. I have never received so much confirmation to one of my stupid observations before. This is, if course, contrary to the official story about how well things are going and how everything is just peachy. But since it is apparently common knowledge, I am sure you are already aware of this and you were only waiting for The Mogambo to confirm it for you by issuing the Official Mogambo Pronouncement (OMP). Well, now you got it!
This is some bad news if I ever heard it. Not the OMP, because everybody knows that The Mogambo is a real stupid guy, you can take my word on that, and so this is just another of his stupid OMPs that nobody takes seriously. No, this is bad because this means that the velocity of money is slowing, and if there is one thing about money, it is that it obeys the equality MV=PQ, where money supply times velocity of money must equal the price of things times the quantity of things sold.
Well, P (price) is already going up, so to keep Q from falling, then the product MV must increase! But V is decreasing, too! And if Paul Kasriel is right, then M is falling, too! So Q (the quantity sold) must be falling off a freaking cliff!
- Tim Iacono is apparently getting real tired of hearing me yammer yammer yammer about inflation in house prices, and in his essay entitled "Home Ownership Costs & Core Inflation", he wonders "What would core inflation be today if home prices were included?"
The answer? Mr. Iacono says "5.3%." I gulp. He goes on to note, "A similar calculation for headline inflation yields 7.3%." My eyes bug out in fear, as inflation is the thing that can, and will, destroy us, and 7.3% inflation is plenty capable of doing that.
The stupid idea of "core inflation", remember, excludes food and energy, but it does include housing. Bringing up this core inflation crap brings a gruff retort from Peter Schiff, of Euro Pacific Capital, who writes "The perception that inflation is not a problem so long as 'core numbers' remain relatively unaffected will one day be rightfully regarded as one of the poorest collective judgments in an era replete with similar lapses of common sense." Again, another shining example of us Americans demonstrating our profound stupidity.
****Mogambo sez: Load up on oil and oil-related stocks, because the guaranteed decline in the dollar, now that Ben "Bizarro" Bernanke is going to take over the Federal Reserve, means that OPEC will raise prices. They will do this not because they hate us, which they do, but because they don't want dollars. They want units of buying power in their own currency, and when the dollar falls in value, as it will, thanks to the idiocy of the Federal Reserve and their incestuous leadership by mental defectives like Ben "Blockhead" Bernanke, the OPEC nations get fewer units of their local buying power when they trade in those petro-dollars in the Forex market. Ergo, they must charge a higher price for oil. It's as simple as that!
Oct 25, 2005