There are times when I feel pathetically lost and lonely, adrift
in a sea of bewildering confusion and unnamed dreads, here in the Mogambo
Bunker Of Paranoia And Despair (MBOPAD). Dispirited by the
overwhelmingly bad economic outlook everywhere (and bad everything else, too) I
languidly look out of the periscope, almost absent-mindedly scanning the perimeter
for both real and imagined enemies.
Which is not to mention, of course, watching for family members
sneaking up on me, each variously wanting me to give them money, take them
somewhere, or (shudder) do something useful.
In such moments, I idly begin to wistfully remember the good old
days of blissful naiveté about economics, which is before I found out about the
Austrian school of economics, which led me to completely comprehend the
unbelievable Keynesian econometric insanity — insanity, I tells ya! — of
excessively expanding a fiat currency, especially over an extended time.
And I remember suddenly realizing, with a blood-curdling shriek
of transcendental horror, how this — yes, this! – “excess money” thing is going
to destroy everything, engendering the famous-yet-pithy phrase We’re Freaking
Doomed (WFD).
Oh, naysayers always shouted hurtful things like “Shut up, you
idiot Mogambo jerk!” and “Daddy, I can’t hear the TV with you acting loud and
weird about the evil Federal Reserve again!”, yet I know this WFD thing for a
fact – for a fact! – because big, long-term increases in the money supply has
always destroyed every other dirtbag, low-IQ nation in history that ever, ever,
EVER tried, or even allowed, such (how shall I delicately phrase this, perhaps
with a gratuitous-yet-stupid alliterative twist?) simply stupendously staggering
stupidity.
I mean, today we have complete access to the entire corpus of
data and historical facts about economics stretching back to the Garden of Eden
when a snake loaned Eve an apple, and we have Mises.org happily dispensing, for
free, the eternal wisdom of the Austrian school of economics, and yet we let
lowlife Keynesians dictate a monetary policy of constant expansion and outright
monetizing of government debt, despite knowing all of this? Are you freaking
kidding me?
And then using the newly-created credit to actually buy
government debt (monetizing debt)? Are you freaking kidding me?
And now there are an increasing number of anecdotal rumors of
central banks creating the money to actually buy equities and commercial debt
to keep stock markets up? What the #*! &%?
At the risk of repeating myself, again I ask, but with a more
strident, hysterical undertone of soul-searing trauma to my prolonged, pitiful
wail of dismay, “ARE YOU FREAKING KIDDING ME?”
The good news? The only way this can be good news is that, I
admit, I was wrong when I once foolishly anticipated that we would be destroyed
by huge radioactive dinosaurs that angrily shoot laser beams (zzzzt!) out of
their eyes and rockets (whoosh!) that shoot out of their mouths. Probably with
Tokyo the first to go. You heard it here first, in case it actually does
happen.
But mostly I think back to my mortal terror and complete
overreaction to even the teensiest, weensiest increases in the money supply,
because it eventually causes inflation in consumer prices, which is always,
always Bad Bad News (BBN).
But in my sloppy, self-pitying solitude here in the top-secret
MBOPAD, I have had to time to think, and thus have epiphanies, clearly showing
where I made my mistakes about so many things.
So many, many things.
For one thing, and more to the point of this
stupid-yet-meandering cry for help, I did not comprehend the sheer,
incomprehensible, awesome power of a unfettered fiat currency created literally
without any limit whatsoever, especially so with a willing government to
encourage it, or even pass legislation that mandates it, and a central bank not
only fiendishly creating the excess cash and credit, but using it to buy assets
to create scarcity, and thus higher prices!!!!!
I sense a ripple in The Force as Junior Mogambo Rangers (JMRs)
around the world, and throughout the cosmos, instantly recognize to their
collective horror that the use of five exclamation points as punctuation is a
clever Secret Mogambo Code (SMC), used in this case to indicate an overwhelming
emphasis.
Or, in keeping with the trend in punctuation, an overwhelming
emphasis!!!!!
With such unfettered torrents of cash and credit cascading into
the economy vis the evil Federal Reserve creating it willy-nilly and using it
to buy stuff, it is but child’s play for them to elevate prices in the housing
market, the bond market, the stock market, the incomprehensibly huge
derivatives markets, and any other market you can name. All it takes is more
cash.
Inflation by any other name…
And, of course, it would again bail out the damned banks, which
are theoretically on the hook for all that crushing debt, and simultaneously
giving banks the opportunity to loan MORE money to those wishing to cash in on
the inflationary bonanza.
And it would bail out all those pension funds that are woefully
underfunded as their assets soar in value.
And, of course, let’s not forget the economic expediency of
people spending more money, which is as simple as the government passing
legislation to hand out cash to taxpayers and businesses, probably as tax
rebates and tax credits. Whee! Free money everywhere!
How else to explain, thanks to the evil Federal Reserve (and the
other central banks of the world) creating So Damned Much (SDM) cash and credit
over the last three decades (or more precisely, since the horrid Alan Greenspan
started this suicidal crap around 1987) the economic horror-show is that the
stock market (P/E>23), the bond market (yield < zero), the housing market
(>4 x the average income), the student-loan market (over a trillion
dollars), the car-financing market (over a trillion dollars), the trade deficit
of over a half a trillion dollars per year, and the sheer, absolute festering
tonnage of an estimated, eye-popping $170 trillion in public and private debt
extant in the United States and the world, when the entire GDP of The Whole
Freaking world (TWFW) is a paltry third of that size? The world owes three
times as much as it makes already!
And how to explain the pervasive corruption of government and
business, such as (thanks to the work of GATA) the now-proven suppression of
gold prices by systemic fraud, effected through a collusion of commercial
banks, the central banks and the IMF, and yet nobody from the government has
shut it down and thrown them all into some stinking jail? Unbelievably, such
blatant, proven fraud and corruption is still allowed to go on and on, despite
actual admissions of guilt and documentary evidence!
The mind literally reels! Never, never, ever, ever, EVER (or
NEVER if you prefer) before in history has an economy tolerated such a twisted,
bastardized economy, let alone prospered from it.
Thus, I sadly come to the only conclusion possible: Economics is
dead. The central banks are officially the font from which literally all
economic blessings will now flow, including determining supply and demand (and
thus prices) for equities and assets.
The good news is, if you’re new around here, that investing in
equities should again be a no-brainer for quite a while yet! Always buy, since
that is what the Federal Reserve will do!
The other good news is that gold and silver, and probably oil,
will theoretically prosper much more, especially when the resultant terrifying
inflation in consumer prices finally wipes everybody out, from a real,
inflation-adjusted analysis, even as nominal (dollar-denominated) wealth
increases by leaps and bounds.
Eventually, though, assets will go to zero value, except gold,
as has been the case for all previous episodes of long-term gross mismanagement
of monetary policy.
And the legions of poor people? Bad news there. With no assets,
they will not prosper from the market-levitating magic of the evil Federal
Reserve, but they will pay continually higher and higher prices for everything
they need.
And then they, tired of suffering drab, dreary lives of
ever-costlier privation while listening to The Magnificent Mogambo (TMM)
bellowing “I told you this would happen, chumps!” and laughing in their faces,
“Hahaha!”, will rise up in an angry mob, dominating the nightly news with
videos of brandishing pitchforks and flaming torches, with screaming hordes
demanding that I, Mogambo The Magnificent (MTM), be given full dictatorial
control of the United States to stop this silly crap and imprison those who are
even tangentially responsible. All hail Emperor Mogambo!
Failing that, I assume that the angry mobs of poor people will
demand, as their second-best option, that the USA return to a gold-standard
money, or even gold-as-money as already required in the Constitution of The
United States.
At least they should. And they surely would, if they had an
inkling of what is happening to them, which they obviously don’t, because if
they did, we would not be in this mess to start with.
And if they did know, they would be buying gold and silver, just
as those who DO have an inkling of what is happening to them are doing,
because, obviously in light of this and all of what history clearly shows,
“Whee! This investing stuff is easy!”
Richard
Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the writer/publisher of the
Mogambo Guru economic newsletter, an avocational exercise to better heap
disrespect on those who desperately deserve it. The Mogambo Guru is quoted
frequently in Barron’s, The Daily Reckoning, and other fine publications. Visit his website.
Copyright © 2017 Richard Daughty
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