 Guns, Gold
& Groceries
Richard Daughty
Archives
The
Daily Reckoning
...the angriest guy in economics
The Mogambo
Guru
November 18, 2004
- The stock market going up at the same time as the dollar going
down, with all the other economic headaches both domestic and
foreign, is just too, too weird for me, and I thank my lucky
stars for the calming effect of modern pharmaceuticals, doctors
who are not squeamish about keeping me overly-sedated and a wife
who prefers it that way. Otherwise, I would be in Pure Mogambo
Panic Mode (PMPM), and remember that I am the guy who invented
the concept of hooking a machine gun to a motion detector just
because I was merely "anxious" about something, probably
about those Girl Scouts and their cookies and how it may NOT
be just a coincidence that our whole bankrupting mess started
about the same time as they started peddling their delicious
treats door to door. So it was with trepidation, which I define
as "Hoping that my heart doesn't explode from the shock"
that I meandered through the Market Laboratory section in Barron's.
I see that a lot of the money for the recent spike in the stock
averages last week came from Total Fed Credit going up $1.4 billion,
and the Fed continued that blatant monetary fraud known as U.S.
Government Securities Bought Outright, and it was up another
$1.8 billion. So if we add these two numbers together for some
reason, mostly because I want to show off that I am competent
to add two small numbers together ("Watch me cipher, Uncle
Jed!") and it yields a bigger number, which makes the government
look bad, we get, wait a minute here while I get my calculator
out, $3.2 billion dollars. If this number looks familiar to you,
perhaps it was due to a recent newspaper headline that you probably
saw, "Armed Lunatic Screaming About $3.2 Freaking Billions
of Freaking Dollars in One Freaking Week!"
And then we cruise on over to the actual banking side of the
system and note that they ALSO bought up a lot of government
debt last week, if you are the kind of person who thinks that
$5.1 billion is a lot. I am, personally, one of those old-fashioned
guys who still thinks that 5.1 billion of anything is a lot,
and especially that 5.1 billion of anything in one crummy week
is a lot. And when we are talking about money, if you are the
kind of person who thinks that 5.1 billion dollars is, likewise,
a lot, then we have something in common. And since we think so
much alike, maybe you would like to buy me a beer and we can
talk about it. And as long as you are paying, then maybe we can
get really drunk, and hopefully forget about it, and then we
can talk about other interesting things, like how the
waitress has a big case of the hots for me, even though she tries
her best to hide it underneath a thin veneer of sneering hostility.
And while we are still snooping around in the banks, I notice
that Required Reserves never seem to go up, although every time
I get out a book on economics I am always reminded that 1) I
am an idiot and that I don't seem to understand any of this stuff,
and 2) I am always reading things like how banks set aside reserves
as some big percentage of liabilities, and the starting place
for every example is that we are asked to assume that reserves
are 10% of liabilities. Keeping this classical 10% figure in
mind, I look around at the banks and I am surprised to note that
Required Reserves are always essentially unchanged, especially
since the banks' assets and liabilities have both been increasing
like gangbusters all this time, all these years, right along
with the growth in M3, and right along with the growth in total
debt extant throughout the whole freaking country until, and
I think I read this somewhere but I know it is about right, the
total debt (personal, business, local, state and federal governments)
is now over 400% of GDP. 400%! Note the use of the exclamation
point, which is a clever literary device I am using at this particular
place to indicate emphasis since I cannot come over to your house
and grab you by the scruff of your neck and force your head down
until you agree to look at it, and then I laugh (Hahaha!) at
the expression on your face as the enormity of it sinks into
your brain. My knees buckle at the very thought of owing four
times as much as everything this whole freaking country produces
in goods and services in a whole year. And this is right along
with the growth in house prices, and right along with the growth
in the price of every damn thing you can name that can be measured
in money, and especially those things that can be measured in
terms of MY money.
But Required Reserves are still hovering around some piddly $45
billion, while Liabilities are north of $4.5 trillion, which
makes Required Reserves a nice, round 1%. One percent! Now you
know why almost all economic disasters start in the damn banks.
It is spooky. In fact, every time the wife and I are on our way
somewhere in the car, she productively uses the time and opportunity
to list a few hundred of my most recent faults that have come
to her attention. And then it predictably gets into that crap
about how I don't pay any attention to her, and things would
better if I would only listen to her once in awhile, and blah
blah blah, and pretty soon my mind is wandering, and I am in
Mogambo Land, a wonderful place where there is no central bank
supplying excess money and credit, and the people are very happy
because prices seem to float ever-so-gently downward, and there
is no inflation, and everybody is enjoying a rising standard
of living, and there is no Big Freaking Government and little
birdies come and sit on my shoulder and sing songs to me that
sweetly go "tweet tweet tweet." And then I start thinking
about economics, because all I ever do is think about economics,
and this is because, and you might want to write this down because
it is THAT important, everything is always about, and I will
pause here to sound a loud fanfare on this trumpet ("Blaaaattttt!")
to indicate emphasis, the money. To repeat myself, and it bears
repeating: Everything is about the money. In fact, the answer
to Question Number 7 on last night's homework assignment (which
is, if you recall, "Nothing is EVER about anything except___________(fill
in the blank)") is "money."
But after awhile, while my wife is winding up her remarks about
my more glaring personal faults and is starting to get into what
I call Rhetorical Question Mode, which involves her asking things
that start off with "And just what in the hell were you
thinking when you"), I look forlornly out of the window
of the car, gazing at the passing cars, and I see the people
driving those cars, and I think to myself "All this debt
misery I write about, and am fearful about, and am getting more
and more nervous about, and now that I am talking about it I
can hear those voices in my head getting louder and louder, is
being borne by you. And you. And you." And as each car goes
by, I think of their dire financial situations that are at the
root of the total debt in the American and economies of the world,
and my heart goes out to them.
But not for long, as I then remember what usually happens next,
and these same people I am feeling sorry for are going to be
rioting in the streets, trying to break into the Mogambo Bunker,
that citadel of reinforced concrete and hair-trigger weaponry
where resides The Mogambo, proving once again that I was right
when I said that everybody is out to get me. But it ain't a-gonna
be no free ride, as I have what one reader (whose email I have
inadvertently deleted and so cannot give credit where credit
is due) termed GG&G, which is Guns, Gold
& Groceries, and if you don't want to get caught in a crossfire,
then keep your damn kids out of the Neutral Zone!
Meanwhile, back in economics land, foreigners decided that they
would hold their noses, bite the bullet, and buy another $5.1
billion of US debt and store it at the Fed. If you go to the
Mogambo Dictionary, you will find that when I say "foreigners"
in this context, I mean foreign central banks. And the reason
that these foreign central banks started buying our debt again
is that these selfsame foreign central banks are reeling from
the pain of listening to people, powerful people, with money
invested in US debt, who are screaming on the phone, everybody
wanting somebody to get up off their big butts and make us Americans
do something about our financial problems because they are losing
money on their portfolios. Now, if you are like me, you assume
that all foreigners are backwards idiots who dress funny and
stuff their portfolios with cheese and the icky parts of dead
animals. In reality, it turns out, their portfolios are crammed
with, along with the aforementioned cheese and animal pieces,
US debt and equities. The downside is that after awhile the cheese
starts to stink, the meat products go rancid, and, once their
dollar holdings are exchanged/translated back into their local
currency, they are finding that the whole portfolio stinks.
So the foreign central banks call Alan Greenspan on the phone,
who has Caller ID, and so he knows it is them calling, and so
he doesn't answer the phone, and goes back to saying nasty things
about The Mogambo. So after awhile, they get tired of waiting
on the phone, listening to it ring and ring and ring, and so
they give up trying to get us Americans to strengthen the dollar
by acting like responsible grownups. Then the foreign central
banks choose the Mogambo path, and if you look up The Mogambo
Path (TMP) in your Mogambo Dictionary (MD), you will find that
TMP is "taking the easy way out, with overtones of irresponsible
and imbecilic." The idea is, and follow me closely here
because this is the essential crux of the whole plan, that if
everybody acts like irresponsible monetary morons (IMM), then,
somehow, derivative-like, everybody wins and everything works
out fine. I don't know how they do it, but they figure they can
do it.
- In other news, the Federal Reserve raised the Fed Funds rate,
which is the rate that bankers use to lend among themselves,
by the least amount that they could get away with, which was
another measly quarter point. This brings us aaaaaaallllll the
way back to, let me check that figure again, 2%. This microscopic
interest rate, which is still less than the rate of even "official"
inflation, is very, very low. The audience intones as one, "How
low, Mogambo?" and I say "So low that it is down around
the lowest point that anybody who is alive has ever seen in nominal
terms, and in real, inflation-adjusted terms, lower than at anytime
in the last 450 million years of Earth history, although there
are fossil records of an extinct species of fungus that lowered
interest rates to a mere fraction of the rate of actual inflation.
The details are sketchy, but I point out that they ARE extinct,
and they were a fungus."
In a slap to the face of The Mogambo, which becomes painfully
clear if you read between the lines of the actual statement that
accompanied the Fed notice of a hike in rates, you see clearly
that the Federal Reserve hates my guts and they are saying that
The Mogambo is a big fat liar. I say that inflation is high,
and they say that inflation is low. And not only is inflation
low, but it is "under control", too!
The little propeller on my Mogambo Propeller Beanie (MPB) is
spinning around and around with a little whizzing sound! The
Federal Reserve says, and you can tell by the way I am laughing
in my manly Mogambo way (MMW) that this sounds stupid
to me, inflation is "under control"? Hahahaha! Inflation
in prices is never under anybody's control! That's why prices
go up in the first place, jerk! It's like trying to hold an inflated
balloon underwater! If you stop pumping more air into the balloon,
the task never gets harder. If you start letting air out of the
balloon, the task gets easier. But if you keep pumping more and
more air into the balloon, making the balloon bigger and bigger,
then you may be, MAY be, able to keep this up for awhile. But
I am here to tell you that if you think you can keep this up
forever, then using the Amazing Mogambo Vocational Aptitude Test
(AMVAT), I confidently conclude, by looking at your test results,
that you are a born American economist! Congratulations! I say
you should immediately quit your stupid job, a job that is not
utilizing you and your fabulous brain as a brilliant economist,
and go to work for the Federal Reserve.
But while we have the Fed feeding us a big fat lie like that,
the Europeans are not so sanguine. Consumer prices over there
are rising at a 2.5% rate, which is, oddly enough, almost exactly
the same as our "official" inflation. They are scared
and worried, while we hotshot Americans, drawing exclusively
on our own historical record of the last forty short years, proclaim
this as "low" and "under control"! What makes
this so sad is that the poor Europeans, running around in their
bare feet and saying things like "Sacre bleu!" and
"Blongqvist gesorten!" because they cannot afford shoes
and Europe has a lot of prickly things that hurt your feet, have
not had the fabulous benefits of an American education. So they
do not realize their own folly or how silly they seem to us Americans.
They don't listen to us Americans when we tell these Euro-numbskulls
that inflation at 2.5% is low, benign, tame, under control, not
worth worrying about, because the government says so! This makes
it all okay! See how easy this stuff is?
Yet, the stupid Euro-trash, babbling along in their stupid foreign
languages, think that just because the entire 5,000-year history
of inflation indicates that 3% inflation is Truly Bad News (TBN),
and just because it has always worked out for the worse for the
entire 5,000 years in a row, that inflation approaching 3% is
somehow bad. How quaint, eh?
Who is right? In this corner, wearing red, white and blue trunks,
we have the Americans, using a mutant strain of bizarre economic
theory that grotesquely grew from the Keynesian cancer, now sick
and coughing, facing an economic Armageddon after only forty
years of acting like big-spending morons. In the other corner,
wearing the blue trunks with the white stars, we have the Europeans,
who rely on the lessons of 5,000 years of economic history.
But, to show you that even the European Central Bank is not much
better than our own despicable Federal Reserve, despite all their
tough talk, they belie their pious talk about being inflation
hawks, and are now laying in the gutter of central banking, fiat
currency and deficits, just like the idiot Americans. To wit,
they recently passed on a chance to raise interest rates up to
stave off incipient inflation. So once again political pressure
trumps integrity and smarts, which is another Very Bad Thing
(VBT). And if you don't believe me, read that 5,000 years of
economic history and show me where it WASN'T a VBT.
- The latest trade numbers came in, and of course we idiot Americans
were caught shoveling imported goods into our mouths with both
hands, although most of you were not making those disgusting
gulping and slurping sounds like I do, and for that my wife says
"thanks!" But The Labor Department soft-pedaled the
unnerving statistic that import prices rose 1.5% in October.
Now this 1.5% is not for the last year. This 1.5% price inflation
was for ONE LOUSY FREAKIING MONTH! In fact, if you want to talk
about the inflation of imports over the entire last year, then
prices are up a staggering 9.7%!
In a related vein, U.S. producer prices shot up 1.7 percent last
month. This is, so they say, "the biggest gain in nearly
15 years." Not only was energy a big gainer in price, but
food prices surged, too. Food! So much for inflation being "under
control"! Hahahaha!
To round out the picture, wholesale prices were up 1.7% in the
month of October, which works out to about a 21% annual rate.
As my hands clutched at my chest and I am screaming, a la Redd
Foxx, "This is the big one! I'm coming to join you, Elizabeth!",
alarmed passersby reminded me that the Federal Reserve says that
inflation is "under control." Whew! That was close!
What does all this mean? Several things. For one, it means that
The Mogambo has locked himself in the closet under the stairs,
clutching a machine gun to his chest and whimpering, "Inflation
is under control! Inflation is under control!" I agree that
is not much help. So instead of poking at The Mogambo with a
stick, trying to get him back to dealing with reality, let's
walk over and ask Peter Schiff, of Euro Pacific Capital, who
opines that prices rising are bad news. "In the end, both
total sales and profits will fall, as America businesses sell
fewer goods at higher prices. Real sales and GDP will fall, while
unemployment and consumer prices will rise. The ultimate result
will be a declining standard of living for average Americans."
I also just love the part where initial jobless claims rose last
week by 2,000 to a "seasonally adjusted" 333,000. As
a guy whose ears are still sore from being forced to hear the
lackluster "economists" of the world who used to say
that as long as claims were less than 300,000, then we are still
in expansion and that everything is wonderful, and in fact everything
is better than wonderful, and that you ought to get up off your
fat butt and go out and buy some stocks right now. But since
initial jobless claims are always above 300,000 nowadays, these
jerks don't say that any more. They are still advising you to
buy stocks, however, because everything is, as they say, wonderful.
But is you think that inflation is low, non-existent, benign,
controlled, contained, blah blah blah, then all you gotta do
it go to the mall and walk around. And while you are marveling
at the price tags and commenting to yourself "Hmmm! These
prices seem higher than I expected! It must be my imagination,
because Alan Greenspan tells me that there is no inflation, and
even if there was, it is under control!" And while you are
doing that, sooner or later you are going to hear a big ruckus,
and people will start running around yelling, and pretty soon
there are armed-and-armored SWAT team guys barricading the place,
and there is The Mogambo screaming at some poor teenage clerk
about how the prices are higher than last week, and higher than
last month, and higher than last year, and higher than I have
ever seen in my whole life, even when I was just a young larva,
as yet unacquainted with economics. The store's video camera
allegedly shows me kicking at the cash register and screaming,
"Maybe your cash (kick) register (kick) just needs a little
adjusting! I already know (kick) how the (kick) government adjusts
inflation (kick) figures, so I'll be (kick) happy to adjust the
price inflation (kick) in your cash register for you!"
- In last Thursday's Wall Street Journal, Edward Prescott, who
is the most recent winner of the Nobel Prize in Economics, has
written an op-ed piece entitled "Why Does the Government
Patronize Us?" The thrust is that we Americans are a smart
and educated bunch of people who can be trusted to provide for
our own retirement, which shows that this Prescott guy is a certified
idiot, even though he has that Nobel Prize under his arm, is
a senior advisor at the Federal Reserve Bank of Minneapolis,
and is a professor of economics. You'd think with all that going
for him, he would show a little smarts. He doesn't. He only shows
education. An AMERICAN education, as if I had to say it.
The sad, sad fact is that before there was Social Security, people
did NOT provide for their own retirement by investing money in
the stock market. Back then, people saved a few bucks, they got
old, and then they passed on their little family farms to their
ungrateful children, who took care of them on the farm until
they died.
But some did invest their money in the stock market. Then, because
the damnable Federal Reserve spent the entire decade of the 20's
creating lots and lots excess money and credit (just like now)
and people invested that money into the stock market, they all
lost their butts in the end. Then nobody had any money. And so
the Great Depression came along, and not that many people had
farms anymore, and although they did not have any farms, they
still expected that their children would take care of them. And
the children did, for the most part. But not all of them. And
people who didn't have farms or money tended to starve, and the
last thing anybody wanted was a bunch of old people hanging around
eating the groceries. Then the Chamber of Commerce started noticing
that there were all these damn people starving all over the place,
and they said to themselves "Whoa! This looks really bad
in our brochures!"
So the jerks in the government, namely the detestable FDR and
that whole contingent of Democrat asses, decided that what we
ought to do is create a big welfare program to take money away
from people who work, and give it to people who didn't. In this
case, old people.
And then through the years the butthead Democrats decided that
since the Social Security welfare program was so popular, that
they would increase and enlarge it, and include more and more
people in it, so that today more than a quarter of the entire
population of the USA gets a monthly check, a welfare check,
through the Social Security system.
Now the whole stupid, bankrupting mess is coming to its predictable
and inevitable end. So what is the answer? Well, it is obviously
too late to listen to The Mogambo, who heroically got into his
Time Machine and went back to help them out, and whose fabulous
idea it was to storm the White House and slap FDR's nasty little
face until he stopped cramming his whole foul communist New Deal
down the gullet of America, and if his wife, that damned commie
twit Eleanor, happened to come into the room, we'd give her a
few pops across the chops, too. But nobody listened to The Mogambo,
and here we are.
So, to ask again, what do we do? To listen to this Prescott bozo
and a lot of other bozos, the idea is to privatize Social Security,
see, so that Americans can once again throw all their money into
the stock market (to the joy of the Wall Street crooks who will
consume the lion's share of all that money, just like they always
do), so that once again we can act like morons who think that
you can get something for nothing, so that once again we can
have mass unemployment and misery on a scale unprecedented in
history when the stock market again succumbs to the inevitable
force of gravity. At the end, of course (and here is where he
reveals his loathsome Democrat credentials) he suggests that
the payouts from the Social Security pot of money be means-tested,
meaning that if you manage to save a few nickels by retirement,
then the guys who did NOT manage to save a few nickels can have
YOUR nickels.
Specifically, he suggests that the government require you to
put three-quarters of your Social Security contributions into
individual retirement accounts. And here is where it gets weird,
as he says "The other one-quarter of Social Security contributions
would finance welfare and increase the labor supply, resulting
in higher output and an increase tax revenues." What? Where
in the hell did THAT come from? One minute we were cruising along,
privatizing Social Security, investing money in the stock market,
maybe stop off for a burger and a milkshake, and then-- bam!
--from out of the blue we're going to increase the labor supply?
Increase tax revenues? Did he really say it would increase the
labor supply? Hahahaha! Did he really say it would increase tax
revenues? This guy won a Nobel Prize in economics? Hahahaha!
John Hussman of the Hussman Funds obviously knows a lot more
about economics than this Prescott guy, and he writes "Without
cuts in federal spending elsewhere, privatizing Social Security
will neither increase the 'rate of return' on Social Security
investments nor increase its solvency. This is the cruel fact
of equilibrium. Barring current spending cuts, any diversion
of Social Security taxes toward private accounts must be offset
by an increase in the issuance of government bonds. No new net
savings are produced by this shift." Which ought to take
care of Prescott's increase in labor supply and increase in tax
revenues.
And to show you that this Prescott guy gets a paycheck but obviously
doesn't write them, he says that the Social Security contributions
are only 12.4% of wages, as he conveniently forgets the required
Medicare surtax, which brings the total bite to 15.3%, which
means that the socialist government is grabbing almost one out
of every six dollars of your gross income as it is! But somehow,
maybe since it is a Medicare surtax, then it doesn't count or
something. But when you have 15.3% taken out of every dollar
of your income, I am here to tell you that I, The Mogambo, DO
think that there is a BIG freaking difference between 12.4% and
15.3%.
Obviously, the whole socialist/commie idea that you can have
a huge wealth redistribution program that will NOT be a huge,
gigantic bankrupting failure is the whole idea of the loathsome
Democrat Party, although there has NEVER been a huge, gigantic
bankrupting wealth redistribution program that was NOT a colossal
failure. And yet the Democrats keep on pounding that same stupid
idea, election after election after election, which proves my
point that the Democrat Party is the political party of the stupid
and the ignorant. And if you don't believe me, then listen to
one of them talk sometime, and you will walk away shaking your
head in disbelief that anyone could be so arrogantly stupid or
so purposefully ignorant, which of course, proves only my point
that that the Democrat Party is the political party of, in case
you weren't listening or you attention wavered, the stupid and
the ignorant.
And to further prove my point, in the very same issue of the
WSJ we have an article entitled "More Muscle, More God,
Less Shrum" by Dan Gerstein, which is a whining little piece
by a Democrat about how the Democrats lost the election to Bush,
and that to win the next election they have to "work to
convince the broad majority again that government can be an effective
agent for economic and social progress." This is probably
the most stupid thing that anybody can possibly say, which can
only come out of the mouth of a Democrat, because there is not
one damn example that I know of where government was "an
effective agent for economic and social progress," unless
you mean that you want to change them both for the WORSE, and
then, I guess he is right and I am wrong, because government
has proven, over and over and over again, that it is the best
agent to change economic and social things into a living hell.
But the whole idea behind privatizing Social Security is that
the government will force people to put money into the stock
market, and that will make stock prices go up. And it is this
anticipation of stock prices going up that is probably behind
this mini bull market we have been seeing here lately, because
all the fundamentals dictate that only a certified idiot would
be putting money into stocks at this point, ceteris paribus,
which means "all things being equal," but then again,
we know that all things are NEVER equal. And, I am sorry to say,
this privatization of Social Security is such a terrible idea
that is almost certain to become law. Not only is it a really,
really, really, really, really bad idea (RRRRBI), but I am absolutely
sure that the moneyed interests of Wall Street and the mutual
funds and the banks and money managers of every stripe are already
sending smarmy lobbyists and basketsful of money to Congresspersons
to make sure that this really bad idea is put into play.
- Darin G. sent an email and said that my stupid Mogambo crap
reminded him of a bumper sticker which read, "Where are
we going and why are we in this handbasket?" Hahahaha! Why
are we in the handbasket? Hahahaha!
- Doug Casey, editor of Casey Investment Alert and the International
Speculator, who has been doing this for 26 years, writes "The
way I see it, the dollar is on the way to reaching its intrinsic
value. This is a catastrophe for the average American, but boon
for those who follow the trend. I fully expect to see gold trading well over $1000 before Bush's term is
over." Let's see: four years gets me a 250% increase. Sounds
good to me! And if you want it to sound good to you, then I suggest
that you load up on gold and silver at the earliest opportunity,
which is, looking at my watch, right now.
And speaking of gold, Richard Russell, the guy who has
been writing the Dow Theory Letter so long that I hear that Moses
was once a subscriber, figures that gold
is in its ascendancy. "The second phase of a bull market
is usually the longest (in duration) phase. It's in the second
phase that the public begins to be interested in an item. And
it's in the second phase that the funds start to take their initial
positions in an item. I believe we're at the start of the second
phase in gold."
- There is an interesting site by a group of guys who call themselves
People For Mathematically Perfect Economy. They say that they
have deduced that the "practical lifespan" of the US
economy reaches only to approximately 2010.
- The South Korean Central bank decided, out of the blue, to
cut interest rates to a record low of 3.25%. The Korean central
bank boneheads have decided that a slowing economy is a bigger
problem than rising inflation. Wrong.
And how slow is their economy perking along? They forecast a
growth of 5.2%, which is a level growth that the Bush administration
would kill to have, and are killing to have. But by cutting rates
they figure that they are making sure that their economy grows
at least by 5% next year.
This may have something to do with the fact that the Korean won
is strengthening against the ridiculous US dollar, and that this
strength in the won is hurting their export market. Gosh! Ya
think so?
- Pat Buchanan says "Two predictions seem solid: the mighty
U.S. dollar has begun an inexorable decline, and the American
empire is coming to an end. The Dow is falling, the dollar is
sinking, our dependency on imported oil is growing, our country
goes billions deeper into debt every day, and U.S. forces are
stretched to the limit containing a medium-sized insurgency in
a medium-sized Arab country."
He also has a few choice words to say about us Baby Boomers,
and he notes that we "will likely go down in U.S. history
as the most self-indulgent and selfish." If not the most
self-indulgent and selfish, then the most stupid and ignorant,
for sure.
- Just to show you that we Americans are not the only stupid
people in the world, Doug Noland writes, "Mexican govt.
yields ended the week at 5.20%, down 2 basis points." I
amble over to look up Mexican consumer price inflation, and I
find that it is 5.4%. "Russian 10-year dollar Eurobond yields
added 5 basis points to 5.79%" and then we go and look at
consumer price inflation in Russia, and we find that it is 11.5%.
So the Fed policy of monetary excess is hurting everybody around
the world, as all those dollars seep into everything.
- Martin D. Weiss, Ph.D. who is the editor of Safe Money Report,
says that he is gearing up for the "official re-launch of
my father's Sound Dollar Committee, a non-profit, non-partisan
organization dedicated to fighting for an honest budget and a
sound dollar." Good luck! If I would only shut my fat mouth
for a minute, I am sure that I would be able to hear the FBI
tapping his phone and writing his name in the Official Enemies
List, which, although you never read about it in the papers,
is part of the Patriot Act.
- For those of you who like metaphors, here's one from Peter
Schiff of Euro Pacific, who writes that "The reality is
the dollar is weak, it's going to get much weaker, and there
isn't anything the administration can do about it. The situation
is reminiscent of a college student who parties all night instead
of studying. It's not that he wants to flunk, he would of course
prefer the honor roll. However, failure is the natural consequence
of his actions. Similarly, the administration would prefer a
strong dollar, but a weak dollar is the unfortunate result of
an American economy characterized by declining production, inadequate
savings, reckless consumption, soaring household debt, ballooning
federal budget deficits, and an overly-accommodative Fed."
"Those of you still holding dollars had better do some serious
reflection, and ignore all the talk about a mythical 'strong
dollar policy.' The alternative is to go down with a sinking
ship, as the captain stands saluting atop its bridge, waist deep
in water, assuring all aboard that 'a strong ship is in its passenger's
interest.' " Hahahaha!
Ugh.
*** The Mogambo Sez: Gold is
at a multiyear high, and if it weren't for that spike in 1980,
then it would be at an all-time high. But then, lots of things
will soon be at all-time highs in terms of price. That is the
inescapable end result of this whole ridiculous economic theory
that we laughably call Modern Economics.
November 17, 2004
Richard Daughty
Archives
 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.
321gold Inc
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