And that explains why Bloomberg reports, “Economic policy makers are signaling they plan to leave emergency stimulus in place even as the global economy pulls out of recession, delivering what Credit Suisse Group AG and Bank of America Corp. call a ‘sweet spot’ for financial markets.”

Well, being a guy who almost never turns down a chance to be scornful and gratuitously rude in response to ridiculous things being said by people who are supposed to know better than to sound so abysmally stupid, let me interpret that for you.

By “sweet spot” they mean a spot where Ben Bernanke and the other central bankers produce excess money and credit by pulling it right out of their nasty butts, and as for how “sweet” it is, look around you! Doesn’t it resemble a world going down the (in keeping with the “butt” theme) toilet? How sweet is that? Hahaha!

And now, although I groan aloud at the idea and my disgusting way with metaphors that seem to center around excretory functions lately, the central banks are promising more of the same, only much more of the same, and probably much, MUCH more of the same, but the same, nonetheless, only, like I said, much, much more, like in “so freaking much money that the whole financial landscape is changed into something weird where the laws of economics don’t even work anymore”, which was hitherto thought impossible but which is, obviously, not.

This confusing, disorienting “weirdness” is why I was happy to get an email from Junior Mogambo Ranger (JMR) David R., as it came just in time to indicate that, yes, things are weird! Thanks!

And, as a bonus, I see that I could use the email as a handy rebuttal to, as far as I could tell, everybody’s opinion that the only people who read my stupid Mogambo Guru newsletter are mental defectives and weirdo crackpots, with assorted gold bugs and gun nuts, and creepy guys who like looking at long-legged women dressed in short skirts and high heels.

Anyway, you can sense his high-powered intelligence when he asks, “Will this current experiment in fiscal insanity require a few hundreds of quadrillions MORE violations of the (economic) Rule Of Law before it all collapses into an economic black swan singularity? Is this where Hawking meets Von Mises??” which he closed with the rare “double question mark” as punctuation.

I was especially appreciative of this choice of punctuation, as it says, “Not only am I a smart guy who reads, or has read, the Mogambo Guru newsletters either once or perhaps many, many times and fully enjoyed them all, each more than the last, perhaps because the newsletter deserves to win a Pulitzer Prize or some other distinguished award that has a large cash component, but I also have an IQ so high that I can utilize various punctuation options in clever and highly emphatic ways, as befits my high intelligence, which you would not ordinarily know about me because people know that I read the Mogambo Guru newsletter, and those people are, (so I hear) mental defectives and weirdo crackpots, which I am not.”

I mention this only because Trichet, the head of the European Central Bank, said that he was willing to continually and always create more and more money, and that “it would be premature to declare the crisis over”, and decided that the European Central Bank should hold its benchmark rate at a record low of a measly 1%, which may have been what caused Bloomberg to decide to add the cryptic “to keep handing as much cash as banks want for up to a year at that rate”!

And on this side of the Atlantic, it gets weird that Bloomberg reported Fed Bank of Dallas President Richard Fisher as saying, “We are likely to see a prolonged period of sluggish economic performance”, which is odd, because I don’t remember the mission of the Federal Reserve, a private bank owned by who-knows-who, being able to achieve “prolonged periods of sluggish economic performance.”

The Fed was, as I recall, charged with maintaining a “stable currency”, which they have manifestly failed to do, seeing that the dollar has lost 96% of its value since 1913, which is now officially “enough of all of it that it can be considered to be all”, a lesson in “rounding off” that I learned after I took a lousy $20 from my wife’s purse when she wasn’t looking, and when I came back, there she was, bad mood and all, holding her stupid purse like I needed some kind of audio-visual materials to refresh my memory or something. So, to keep it from being a total loss, I gave her what I had left: 80 cents.

“But,” I explained, “you got back 80 cents, which is only a loss of 96% of the original $20, which is the same loss that the Federal Reserve has given us in the purchasing power of the dollar, but you don’t make a big fuss with the Federal Reserve! You won’t even sign the hate mail that I write for you to send to them, with your signature and your fingerprints on the paper, wherein you protest their glaring incompetence and their neo-Keynesian econometric stupidities!”

Well, let me tell you that I never, ever heard the end of the story about that damned $20. Never! But I noticed, and constantly protested, that nothing is ever, ever said of the 80 cents I gave her back. Nothing!

And why is that? Because it proves that, as far as she is concerned, I have lost “all” of the money, which she demonstrated by throwing the handful of change right at my head from point-blank range. One of the quarters hit my forehead with a “thunk!” where it left a red mark and a little lump, and when I cried out in my pain and mortal anguish, she laughed and said, “Good!” which shows you the kind of crap that I put up with around here all the time.

So there are several lessons here. One is that even a girl can throw a quarter hard enough to hurt the hell out of your forehead if she is standing close enough and is angry enough, and another lesson is to not spend the money you take from your wife’s purse for a few days to see if she notices it missing, and if she does, then you can seize the purse, saying, “Let me look in there!” and surreptitiously put the money back in the purse while rifling around in there so that you can “find” it and, holding it aloft, triumphantly say, “Hey!”

The biggest lesson is that the Federal Reserve is still destroying the dollar by creating so many more dollars so that the government can borrow them and spend them, which means that you should be buying gold, silver and oil in a Freaking Mogambo Panic (FMP), using the dwindling purchasing power your dollars.

And if you don’t, then you can take comfort in that you are in the majority of investors that must lose so that the minority of investors, who do, can make the money which makes it all so easy that you find yourself saying, “Whee! This investing stuff is easy!”

Thank the Fed For Your Lack of Purchasing Power originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

But apparently I am alone on this “don’t build the damned thing at the airport” crusade, probably because my warning is too late and the gold depository is already built, and there may be other reasons why it would be a good idea to build it at the airport.

So why did they build it in the first place? Apparently, so it “would support Hong Kong’s emergence as a Swiss-style trading hub for bullion and would lessen London’s status as a key settlement-and-storage center” – for whatever that’s worth.

But getting with the action and being a “team player”, the Hong Kong Monetary Authority, “which functions as the territory’s unofficial central bank, will transfer its gold reserves stored in other vaults to the depository later this year”.

And how much gold are we talking about? “The monetary authority reported $63 million in physical gold reserves as of July 31, according to its International Reserves and Foreign Currency Liquidity statement”, which doesn’t seem like a lot, as I would have about that much gold – personally! – if my wife had always worked two or three jobs (instead of one job and children, which eliminated the whole economic advantage of “putting the old lady to work”!) and if I had been extraordinarily lucky in investing the money. And if somebody rich had left me some money in their will. A lot of money.

Anyway, it’s not all that much, although Martin Hennecke of Tyche Group Ltd. said that gold and the ability to securely store it could be “appealing to regional central banks unnerved after watching the global financial system teeter on the verge of implosion last year”, and that “Central banks are increasingly aware of the importance of having gold reserves at a time of financial crisis and having it easily available at their own disposal”.

Of course, this makes me laugh and say, “Like who? You ever heard of the central bank gold agreement, where central banks are still, after all these years, selling gold into the markets in a controlled way? Hahaha! Does that sound like ‘central banks are increasingly aware of the importance of having gold reserves at a time of financial crisis’ to YOU? Hahahaha!”

Of course, he takes no notice of me, and may be talking about the results of marketing efforts that “will be launched to convince Asian central banks to transfer their gold reserves to the Hong Kong facility”.

As we have just learned, one would be ill-advised to discount the effectiveness of modern marketing methods, which were able to create buyers for quadrillions of dollars’ worth of derivatives with the pitch that by cutting up and reassembling risky debt, no matter how much the more the merrier, you can make risk disappear! Hahaha!

Or perhaps the attitude for gold has changed, like Ed Steer’s gold and silver daily newsletter quoting Dennis Gartman as saying, “we get the sense that something really quite ominous is upon us and that some news…and clearly not good news…is waiting out there on the market’s periphery that shall tend, on balance, to weigh heavily upon stock prices, shall weigh heavily upon government intervention efforts; shall weigh heavily upon the global capital market’s collective psychology.”

The result is, he says, that “we have the sense that we are at an historic turning point for the gold market,” and one of those things that indicates as much is that, as you would expect, gold is in demand as exemplified by “The CEF [Central Fund of Canada] bullion vehicle closed at a 13.6% premium to NAV, a recently high level.” Wow!

So gold is in such demand that investors are willing to pay a 13.6% premium over the gold holdings of CEF? Wow!

It’s like I’ve been saying; buy gold, silver and oil because your government is acting irresponsibly with the money, and now people are finding out for themselves how good that advice is and how it is so easy that they probably gleefully shout, “Whee!” although the only person I ever heard gleefully shouting was me.

Gold and the Asian Airport originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

The revenues, of course, came from the stock market bubble and the bond market bubble and the housing bubble and the consumer spending bubbles, instead of “storing up surpluses in the fat years so as to cushion their finances in the lean ones” which makes me laugh a big ol’ Mogambo Laugh of Scorn (MLOS) – hahaha! – at the idea of a government “storing up tax surpluses”, like money is corn or something! Hahaha!

You can tell he doesn’t want to get into an argument with me, and says that “governments were sorely tempted to spend their inflated revenues” which makes me laugh, too, at the sheer simplistic childishness of the remark because I can’t think of any government or entity of any kind, anywhere in space and time, in any sector of the universe, which was never “tempted” to spend extra money on something!

Even the idea of it makes me laugh in a cruel and sardonic way that could only come from the Cruel And Sardonic Mogambo (CASM), who has been known to enjoy this very “extra money” phenomenon when he “accidentally” lets it slip at dinner that a whole handful of change fell out of my pocket in my car, just to watch them scramble and fight each other for a chance to feel around the driver’s seat, fighting each other off, pulling them away and taking their place, escalating the violence, driven to acts of aggression by their greed and the mere suggestion of “extra money”!

That’s when I yell out, “Hey, kids! Since you are bent over like that and your face is down there, how does the seat smell where I sit on my Fat Mogambo Butt (FMB)? Is it as sweet as I think it is? Hahahaha!” proving that some things are just naturally funny!

If you, too, think that the government can stash away excess tax revenues, then please wait until I have stopped laughing and then tell me how, and where (but mostly how) they could do such a thing, and I will make you famous! The government can “save up” a trillion or so dollars? Hahaha!

Then this Buttonwood guy said, “As countries try to eliminate the shortfall, it is tempting to hope that they will do so purely by cutting waste in public spending” which is another concept that I don’t understand, because whether the spending is wasteful or not, spending is spending and income is income.

And so it is not so much the waste as it is the Sheer Freaking Size (SFS) of government spending that makes me crazy with fear and outrage that such a thing is allowed to happen just because some cowardly Supreme Court weenies ruled in 1933 – and upheld at every challenge since then by every subsequent cowardly, traitorous Supreme Court – that the dollar did not have to be gold, as literally required in the Constitution, but could be made of paper and electronic digits backing up IOUs and just about any silly crap the government wanted, and now we are going to pay the price for being such idiots as to have let that happen.

Of course, he did not get into this kind of pessimism, where I figure people are this close (hold up thumb and forefinger almost touching to indicate “almost”) to digging up and eating the dead, the FDA has to establish new dietary guidelines on recommended maximum daily intake of formaldehyde and embalming fluid, and where necrophiliacs are alarmed and pushing for “protected minority” status and all those attendant luscious government benefits.

However, and perhaps thankfully, he does not go quite that far, but ominously adds that, in all honesty, cutting government spending is going to be hard because “they won’t (and probably can’t). So they will find other things to tax.” Yikes!

I say “Yikes” because if there is one thing you can say about a tax, it makes prices go up for the final consumer by at least 100% of the tax, which is inflation in consumer prices, which is The One Freaking Thing (TOFT) that you DON’T want! TOFT!

But we got it anyway, and in a recent study by Florida International University Center for Labor Research and Studies, they found that the cost of living, in Florida, is up 25% in six years! Unforgivable!

But you will be surprised (as in the top of your head blowing off and you begin to bellow, like The Mogambo, “We’re freaking doomed!”) to know that this compounds out to what sounds like a piddly 3.8% inflation a year, but which obviously isn’t piddly, or I would not get so upset, and then people (like me) would not start yelling in fear and panic, and there would not be a big commotion, and things would not be said, like, “Buy gold, silver and oil right now because your government is acting like monetary and fiscal idiots, or else you are an idiot and you are as stupid as you look!”, and then you try to, you know, calm the guy down by complimenting him by telling him that his wife has a nice butt and I have the hots for his teenage daughter, and then he gets all upset about THAT for some reason, and then threats are made and blah blah blah. You know… The same old thing.

But this is not a question of ancient animosities originally involving, as far as anyone remembers, a barbecue grill, or even the continued heated argument about the definition of “warning shot”, but that 3.8% annual inflation is a horrible, terrible thing, as it compounds to a 25% increase in prices in six short years, which is just about what the horrible Ben Bernanke (with his “targeted inflation” crackpot idea) actually wants: To inflate away the burden of debt by, astonishingly, everyone going farther into debt so as to increase demand to make prices rise! Gaaahhhh!

I know that you, because you are a Junior Mogambo Ranger (JMR), have a brain that hurts in trying to comprehend the economic enormity of what the Federal Reserve, with the blasphemous blessing of Congress, is doing, and what Ben Bernanke proposes to do which is to purposely cause inflation in prices of about 3.8%, and your fevered brain that recoils in horror at such an idea is cooled only by knowing that you own gold, silver and oil, and so whatever happens, you are going to be OK, and will make money on these chumps… Maybe (and probably) a lot of money without doing any thinking whatsoever, which is why I say, “Whee! This investing stuff is easy!”

The Mysterious and Elusive “Extra Money” originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

Perhaps it is my Refined Mogambo Sense Of Humor (RMSOH), or perhaps it is my equally-refined Mogambo Sense Of Scorn (MSOS), but either way, using a diseased, lying, filthy, corrupt, thieving rat as a metaphor for Congress is the funny-because-it’s-true part! Hahaha!

I remember it because I was reading the comic strip before I fell asleep on the couch, snoring and snorting and having a wonderful time while taking a well-deserved nap after spending the busy morning writing hate mail to the Federal Reserve (“Dear Morons, I hate your guts because you are the weenies who have so little intelligence that you let the foul Alan Greenspan, chairman of the Federal Reserve 1987-2006, create So Damned Much Money (SDMM) and with So Damned Little Oversight (SDLO) that it allowed massive, MASSIVE bubbles in debt that produced bubbles in stocks, bubbles in bonds, bubbles in houses, bubbles in consumer spending, bubbles in derivatives, and huge, backbreaking bubbles in size and cost of government, and now we’re freaking doomed! Sincerely, Anonymous in Florida and fed up with you clowns!”).

I was just in that delicious part of my nap where I usually begin dreaming of wonderful things that might have been, had I only been prescient enough to say, “Marry you? What? Are you freaking crazy or something?” or “Have some kids? What? Are you freaking crazy or something?” but still buying lots of gold, silver and oil with which to get Fabulously, Fabulously Rich (FFR) so that I could tell lots and lots of other beautiful women, “Marry you? What? Are you freaking crazy or something?”

Let’s just say that fantastical things were getting dreamed up pretty good, if you catch my drift, when the kids come running in with a copy of Barron’s in their hands, yelling, “Wake up, daddy! Wake up! You can raise our allowances even if your income is down! There’s a way to do it! Wake up!”

I was lazily rubbing the sleep from my eyes and carefully watching to see if any of them came close enough that I could reach out and smack them for so rudely waking me up, which I feel empowered to do because that is what my wife did to me for doing the same thing just the other day.

I mean, there I was, early in the morning before the sun was even up, nervously looking at our finances and coming to the only conclusion I could; “The kids have got to go!” Before I knew what I was doing, I went running into their rooms, honking an air horn and anxiously yelling, “Get up! Fire! Get up and get out of the house! Emergency! Get out! Get out of the house!” whereupon they all went rushing outside in their pajamas and I locked all the doors so they couldn’t get back in.

It was, I admit, probably my most pathetic, desperate attempt to clutch at the only straw I had left, a move that led to the aforesaid incident of my wife hitting me, and the police watching her do it, yet doing nothing about it, and the kids wailing, “We’re so traumatized! He’s a horrible person who doesn’t give us enough money in our allowances! Boo hoo hoo!”

But they were right about the S&P 500 “paying more while making less”! The companies in the S&P 500 have been paying out $21.45 in dividends, which is whole multiples of the $7.90 that they have been actually earning, probably explaining why the index sells at a price so high (over $1,000), that the price-to-earnings ratio is 128! Hahaha! Unbelievable! Hahaha!

So, as the kids rightfully pointed out, the companies in the S&P 500 are paying more than they are making, and so there must be a way for me to pay them more than I make, too, and the only reason that I don’t give them more money to offset their rising costs is that I am stingy and hateful, which is true but not breaking any new ground, just as it is also true that buying these stocks at the price of the index would take an investor 128 years of getting everything the companies earn just to break even! Hahahaha!

It gets weirder when you realize that the companies would go broke long before that, because they are always paying out more than they make!

So I look at them and say, “And what kind of Stupid Moron Crap (SMC) is that?”

It was heartbreaking to see the disappointment in their eyes and hear it in their tender, young voices as they were telling me how monstrously cruel I am and how much they hate me, but I am still buying gold, silver and oil with every dime I can manage to keep out of the greedy, grubby hands of the kids, wife, family members and bill collectors, and soon they will understand why, and, if they are good, like not ever again waking me up from a nap, grow fabulously wealthy, insanely wealthy, preposterously wealthy along with me and all the other people who are buying gold, silver and oil as a defense against unbelievable government deficit-spending and monstrous amounts of money creation by the Federal Reserve, which is so ridiculously easy that you hear yourself saying, “Whee!”

Debt for Dividends originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

The interesting part is that the new prime minister, a guy named Hatoyama, said “he’ll avoid more bond sales, so new spending will depend on his success in shrinking the bureaucracy and public works programs”, which is so laughably, ludicrously impossible, especially in such a corrupt, lopsided economy that it makes me, a stupid American who really doesn’t know what in the hell he is talking about, who lives thousands of miles away, in another country and hemisphere, turn up his nose at the sheer stink coming from that idea! Phew!

Of course, this valuable piece of Righteous Mogambo Scorn (RMS) is because it is obviously, obviously too, too late for that.

It is too late, just like it is too late here in the USA, and just like it is too late almost everywhere else, too, where years and years of increasing government spending and control means that government IS the economy, and shrinking the size of government obviously shrinks the economy! Hahahaha! Oops!

So, to the Japanese, I say, “Hahaha! Too late for that, you dumb Japanese chumps! Now you are going to pay a huge penalty for being such morons with your fiat money, and then especially involving the idiot Americans and their fiat money!”

Anyway, crude and rude xenophobic insults and senseless bigotry aside, an example of this is that, here in America, the birthplace of sheer stupidity in central banking (by which I mean the disastrous Federal Reserve), our economic performance as a result of the same kind of constant stimulus is that non-farm payrolls have been falling and are now about back to where they were in 2000, meaning absolutely zero (non-farm payroll) growth for 9 years!

A lot more people seeking the same number of jobs is pretty bad, especially when the number of people is still rising while the number of jobs is actually still falling! Yikes!

Meanwhile, however, the government has spent its time growing bigger and bigger, like a huge, cancerous, oozing lump that is growing on your neck and already people are being repulsed by both the sight and the smell of it, and now there are 6% more people on “government payrolls” than there were in 2001, which is only the tip of the iceberg.

And, as if to add insult to injury, they all make more money than you! Hahaha! For the first time in history, the average pay of a government employee is higher than the average wage of non-government employees! And when you add in their generous benefit packages, they make a lot more, and they are not going to take it kindly that you want them to suffer losses in pay and employment like us average morons out here.

So that is One More Big Reason (OMBR) why the government will keep borrowing more and more and spending more and more, which is why the Federal Reserve must create more and more money and credit, which expands the money supply more and more, which makes prices go up more and more, sometimes in bubbles, which must, and always do, bust back to their intrinsic value.

And such government and banking insanity as we are seeing today is the One Big Reason (OBR) – perhaps THE One Big Reason (TOBR) – why you must buy gold, silver and oil, apart from it being, you know, so easy that you squeal with girlish delight, “Whee! This investing stuff is easy!”

Until next time

The Mogambo Guru
for The Daily Reckoning

The Government-Based Economy originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

Well, to be fair, it is not capitalism that condemns millions to poverty, but instead the poor are doomed by the destruction of the purchasing power of the little bit of money that they get and things cost too much for the poor to afford them, and which is deliberately caused by a government so stupid (audience shouts out “How stupid, Wonderful And Wise Mogambo (WAWM)?”) that it deficit-spends money on the poor to alleviate their poverty by allowing the Federal Reserve to produce large, persistent expansions in the money supply with which to buy up the government debt, an expansion of the money supply which erodes the purchasing power of the money, so that the little bit of money owned by the poor doesn’t buy as much!

If the education system of the USA were not so egregiously bad, he would know that fact, and everybody would know that fact, and so when he went to some producers and said he wanted them to finance a new documentary about how capitalism is evil and (I assume) communism is good, they would have laughed in his face and said, “Hahahaha! Where did you get such a stupid idea? Are you some kind of moron?”

Or, alternatively, he could have saved a lot of time and just come to me and asked me and I could have told him, “Hahahaha! Where did you get such a stupid idea? Are you some kind of moron?”

Unfortunately, he did not learn anything from all of that, and actually has the movie concluding that, unbelievably, “Capitalism is an evil, and you cannot regulate evil. You have to eliminate it and replace it with something that is good for all people, and that something is democracy.” Hahahahahaha!

The use of the extra-long “Hahahahahaha!” is my clever way of indicating that this is where a Junior Mogambo Ranger (JMR) who has achieved even a glimmer of True Mogambo Enlightenment (TME) starts laughing in Sublime Mogambo Scorn (SMS)! Hahahahahaha! Just like that! SMS! Hahahahaha!

I thought I was calmed down and was reaching for a bottle of something alcoholic so as to deaden the pain of my stomach hurting from so much laughing when I started laughing all over again when my eyes again fell across the idea that democracy replaces capitalism! Hahahahahaha! I never heard anything so stupid! Hahahahaha!

The first thing that comes to mind, of course, is “Did democracy finance his stupid documentary, or some capitalist?” Hahahaha!

Beyond that, the mind reels! While we are at it, why not replace the production of expensive gasoline not with democracy, but with a super-majority voting system? And we could heat our houses with gang rule! And we can replace expensive food with some dictatorship! Wow! There’s no end of what you can do if you are willing to be ridiculous! Hahaha!

The dismal fact is, in case you were wondering, that capitalism in free enterprise is the only hope that the poor have, if not by sheer dint of theoretical argument that creating jobs is vastly superior to government handouts, then by the complete lack of any successful enrichment of the poor by any other method, mostly because they involve the government creating more and more money which destroys the purchasing power of the little bit of money that the poor had.

But since we Americans have decided, with a stupidity that absolutely staggers the imagination, to prove, once again, that exact same, sad, sorry lesson repeated and repeated over 4,500 years of history, then investing becomes easy when another lesson from that same 4,500 years of history is to own gold!

In fact, it becomes so easy that you can’t help but giggle, “Whee!”

Fighting Capitalism With Capitalism originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

And remember… This is the Federal Reserve! This is a lousy private bank operating irresponsibly, at the behest of the Congress, and whose shadowy owners include, to one degree or another, foreigners and foreign central banks that are operating by the grace of their own governments which are just as corrupt and desperate as our own, but it was the Fed that created enough money to buy a trillion dollar’s worth of US government bonds for itself! A trillion!

It’s called “monetizing the debt”, which Ben Bernanke said, in response to a direct question about it recently, that the Fed would “never” do! “Never” has now been re-defined to mean “continually?” Hahaha! Too much!

As an astute observer, you figure this must be pretty bad, gauging by the way I make a Very Loud Mogambo Fuss (VLMF) about it and droplets of spittle are flying from my flapping lips at supersonic speed as a throbbing vein is bulging out on my forehead.

And since a lot of this money was spent to buy government debt, how big was the federal budget deficit? You will be sorry you asked, and if you want to know the actual size of the actual federal deficit for the actual last year because you are pretty sure that the government is lying to you about the real size of their deficit-spending, then you have also come to the right place, because Treasury Public Debt is, as of last Friday, $11.797 trillion, whereas 12 lousy months ago it was $9.667 trillion, meaning that even if you are not sober enough to get this damned calculator to work or see those tiny little numbers, you can do the subtraction in your head!

The actual, in-your-face federal deficit was $2.130 trillion in the last 12 months! The deficit-spending by Congress is a whopping 15.2% of GDP, for crying out loud!

And if you are collecting unemployment, then you will be interested to know that the federal contribution to your check could have been painlessly almost doubled, as, according to Wikipedia, the 2009 federal budget had $360 billion for “Unemployment/Welfare/Other”, while the budget also had another $260 billion that could be used to help you out, but had to be spent for “Interest on National Debt.”

In short, if the damned government did not borrow and spend us into the poorhouse, causing your unemployment and impoverishment, the government would have had another $260 billion to help you and the other unemployed instead of only being able to budget $350 billion!

And this brings up the interesting point that since the national debt is $11,790 billion and this “interest on the national debt” is $260 billion, this means that the government is paying an average of 2.2% interest! Wow!

And remember that this $2.130 trillion increase in the national debt is just the deficit in Congressional spending, which doesn’t even include the $2.6 trillion in the budget that was “paid for” by offsetting revenues!

So, being the cantankerous sort that I am, suspecting treachery at every turn and disaster at the hands of the corrupt, the ignorant and the stupid that we lovingly call “Congress”, let me note that the morons of Congress have spent $2.6 trillion, plus $2.1 trillion equals $4.7 trillion, which they spent in a $14 trillion economy! The government is spending the equivalent of 34% of GDP! Gaaahh!

And it is going to get worse and worse because the Fed is doing the more and more of the same thing that created the economic problem in the first place! Gaaahhh! We’re freaking doomed!

But this time, instead of over-reacting, I sigh in relief – aaaaaahhhhhh! – as I remember the last 4,500 years of history when governments acted monetarily and fiscally irresponsible, and how owners of gold, silver and energy did very, very well, which is the whole point of this investing stuff!

And the fact that it is so easy makes you say, “Whee!”

Never Say Never to Monetization originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

As weird as that is, it gets weirder later in the article when Peter Orzag of the White House’s Office of Management and Budget (OMB), whom the article called “Mr. Obama’s top budget man”, has “tried to put a positive spin on the situation. By 2019, he argued on his blog, America’s primary deficit (the difference between revenue and spending excluding interest payments) would be only 0.6% of GDP.”

Excluding interest payments? Hahaha! Why in the hell would you exclude interest payments? Hahaha! You shake your head in amazement that this is the kind of Silly, Stupid Crap (SSC) that is everywhere these days! “Excluding interest payments”! Hahahaha!

Immediately I realized that, again, I was too hasty, and this brilliant little stratagem could solve my problems at work! My main problem is that money comes hard these days, customers don’t buy as much these days, and they don’t want to spend what little money they have with (and I quote) “a disagreeable moron” like me these days, which makes me fear for my job and the bankruptcy of the company these days.

However, with this new ploy in hand, now we’ll see who the moron is when I cleverly arrange for the company to borrow money with an interest-only/ balloon-payment-at-the-end loan, that comes due after I retire, so that it looks in the meantime like money is coming in but no money is going out because I “exclude interest payments”! It’s like free money! Hahaha!

I know there is an obvious flaw in the plan, and it gets even weirder when you learn that this same Mr. Orzag and this same OMB, for some bizarre reason that I assume only makes sense if you are mentally ill or taking drugs, or both, presupposes that “the average interest rate on government debt in 2019 is the same as the rate of economic growth.” What? Hahaha!

Of course, The Economist gets it wrong when the say, “Federal debt will read 77% of GDP in 2019, up from 41% in 2008”, in that they are only counting the federal debt held by the public, and conveniently ignoring that whole freaking giant glob of debt held by the Social Security Trust Fund and dozens and dozens of other places where public money has been “invested” by buying government bonds and thus giving the cash to Congress to spend, a fact that is so obvious that it makes me laugh in Utter, Utter Contempt (UUC) at such a rookie mistake, which makes you wonder what kind of boneheads they are hiring at The Economist magazine since the actual debt is almost $12 trillion and the GDP is $14 trillion, making the debt-to-GDP ratio 86% already!

But before I get too hard on The Economist magazine, I will note that they are exactly right when they say that the reappointment of Ben Bernanke as chairman of the Federal Reserve “ignores the fact that Mr. Bernanke was complicit in creating the loose monetary conditions which fuelled the financial frenzy in the first place. As a governor of the Fed earlier this decade, he was even more convinced than Alan Greenspan that central banks had no business raising interest rates to head off asset bubbles.”

The good news in the article is that polls show that Americans are waking up the fact that the Federal Reserve is a disastrous failure and it has ruined the dollar and America, which I interpret from the news that “Americans think less of the Fed than of the Internal Revenue Service.”

And since the smart play is to buy gold, silver and oil when the government is behaving so badly, the best news was not in the article at all, but for us greedy money-grubbers who want to make a lot of money without working and think that gold, silver and oil is the way to do that because that is what seems to be the lesson of the last 4,500 years, it is wonderful news that the majority of investors are not yet buying gold, silver and oil, which makes sense because it is mathematically impossible for the majority of investors in anything to make a profit, and only a minority betting against the crowd can, by mathematical imperative, make a profit!

You cannot see the Utter Mogambo Sincerity (UMS) in my eyes, and so you will just have to take my word for it that this is only one – one! – of the many, many reasons why I say, when buying gold, silver and oil, “Whee! This investing stuff is easy!”

Clairvoyant Economists Still Pessimistic originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

Thanks, Roger! I always had a hard time believing in the unbelievable “Cash for Clunkers” program, where the government astonishingly gives up to $4,500 to people who buy a new car!

This is a subject which is very interesting to me because I happen to be a guy who owned a whole series of clunker cars and trucks over the years because I couldn’t justify the expense of a new vehicle/a good vehicle/a better vehicle/a vehicle that wasn’t rusted/a vehicle where parts and pieces didn’t fall off/a vehicle that usually started because they were completely paid for, thus costing me exactly nothing per month in principal and interest payments, and which needed only the legally-required minimum of liability insurance.

In short, the cost of driving those old cars and trucks was almost zilch, which fitted my budget perfectly, as I thought I would need the extra money for dating, but which turned out not to be the case. In fact, I found that women usually disdained both me and my cars, and they would say hurtful things like, “Hey! It stinks in here! Or is that you?” and, “At least clean out the old, moldy pizza boxes and chicken bones so I won’t be more disgusted than I am just sitting next to you!” and yammer yammer yammer.

That is, however, when I learned one of the Immortal Lessons Of The Mogambo (ILOTM), which is that as long as you had a good set of brakes on your ratty old car, a case of cheap oil in the trunk, a long siphon hose and a girlfriend who had a nice car in which to ride around, you could get along pretty good!

Not “getting along” as good as the federal government, however, which can (and did) just decide on a plan to sell a couple of trillions of dollars in new debt, whereupon the Federal Reserve will create the money, like when the Fed bought $30 billion of US government securities, directly increasing the money supply by the amount of the new debt! Now THAT’S what I call “getting along pretty good!” Hahaha!

Now, suddenly, sad sack people like me, whose incomes are so low that we have to drive rusted-out, beat-up old clunkers that cost almost nothing to own or operate, that nobody would steal, which were completely paid for, for which you only needed the minimum of liability insurance, would suddenly decide to buy a very expensive, shiny new car and begin paying upwards of $400-$500 a month for the new car and the big new premiums for the required higher insurance coverage? Hmmmm!

Perhaps this is why Bloomberg reports that “Consumer spending in the US rose in July as Americans jammed auto showrooms to take advantage of the ‘cash for clunkers’ program while avoiding other purchases”! Yikes! Avoiding other purchases! This is NOT the kind of thing from which economic recoveries are made!

And to suddenly start paying all of that money, every month for the next seven years or so, is not to even mention the effort of always having to wash and wax the new car, which is hard, disagreeable work that you don’t get paid for, which is like being punished for having a new car!

So, the only explanation that makes sense is that since people can stop paying on their house but still live in it because the bank doesn’t want to evict them, people will start living in their cars and stop paying on them, too! What are the car companies going to do? Evict a family onto the street by repossessing the snazzy new car in which they are living? Hahahaha!

I say this because I read in The Financial Times that in the UK, “The number of people of working age living in a household where none of the adults work rose by 500,000 to 4.8m for the period April to June”, which is a huge number of people which is now “close to one in five households”, which I assume is a rough estimate of what is happening in the USA.

Instead of laughing in my usual mocking style to indicate the bizarre absurdity of an economic system where the unemployed are given financial incentives to buy new cars, let me instead merely urge you to buy gold, silver and oil with your every waking moment and your every last dime, whichever comes first, which says the same thing but with the “secret bonus feature” of letting you make a Whole Lot Of Money (WLOM) when their prices rise, rise, rise, which is good because you are going to need a WLOM when inflation in consumer prices catches up with the inflation in the money supply that will accommodate the inflation in government spending, thanks to the loathsome Federal Reserve allowing and abetting the inflations by merely creating more money, which makes buying gold, silver and oil such an obvious choice that you say, “Whee! This investing stuff is easy!”

Until next time,

The Mogambo Guru
for The Daily Reckoning

Evicted from Your Brand New Clunker originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

The reason is exactly what you would think: “The decrease in real GDP in the second quarter primarily reflected negative contributions from private inventory investment, nonresidential fixed investment, personal consumption expenditures (PCE), residential fixed investment, and exports”, which is where I ran out of breath, mostly because my heart was pounding in fear and my muscles were twitching as that old familiar, “fight-or-flight” rush of raw adrenaline squished into my bloodstream.

For some reason, I think that we are supposed to be calmed that these losses “were partly offset by positive contributions from federal government spending and state and local government spending.” Gaaaaaahhhh!

Since I find it hard to express the horror I feel as a result of GDP falling while government spending is increasing, I will not try, and instead focus on the arcane handling of imports which, of course, seems perverse, in that imports are a subtraction in the calculation of GDP, so that when imports increase, GDP decreases.

Not this time, though! You can tell by the way the birds have stopped singing and the world seems to have caught its collective breath that GDP went down even more than you think because imports decreased, too, which means that, again seemingly perversely, GDP was registered as having an increase as a result, when, in fact, everyone has been laid off and bankrupted as we die a horrible economic death, screaming in financial pain from letting the filthy Federal Reserve create so much money and credit all those years so that the corrupt Congress could borrow and spend us into the calamity of $12 trillion of federal government debt in a $14 trillion economy, and a system of governments and public sector agencies that spends, collectively, half of GDP, supports almost half of the population, and employs directly and indirectly about 1-out-of-3 workers! Hahaha! We’re idiots! We doofus Americans are bona fide idiots! Hahaha!

Oddly enough, apparently puncturing my “we’re idiots” stance, we know how to make a profit even as the economy collapses, and “Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $67.6 billion in the second quarter, compared with an increase of $59.1 billion in the first quarter.”

I say “oddly enough” because I figured that with sales falling and tax revenues falling, profits would be down. I was wrong!

Admittedly, accounting was never my long suit, especially the new kind of accounting where all kinds of strange, bizarre accounting-type things can happen, like how I end up owning myself and having to sue myself because I won’t pay myself some money I loaned myself against the equity of some money that I had previously borrowed from myself, which I can’t do because of the unrealized tax consequences of accrued future off-balance sheet liabilities of deferred contingent options and warrants collateralized into derivatives and related offsets, a condition which my computer model said could not happen in a million years.

Like I said, I am no expert on why businesses are making money, and I am certainly not sure why “Taxes on corporate income increased $40.8 billion in the second quarter, compared with an increase of $47.0 billion in the first”, which seems at odds with Barron’s reporting that the per-share earnings of the 500 largest companies in America (S&P 500) are, as of Right Freaking Now (RFN), a miniscule $7.90, while a share of the index sells for the laughable price of $1,029, meaning that the P/E ratio is a preposterous 130! Hahaha!

I laugh nervously because I am lost and scared, as I am not sure that Toto and I have ever been in this part of the enchanted forest before, because everybody seems to be insane enough to buy a stock at 130 times earnings, they seem to be stupid enough to accept record-high prices (and thus record-low yields) on bonds, even as a massive, multi-year, globally-coordinated “stimulus” of staggering amounts of money via “quantitative easing” gets into gear, but yet these strange people are not buying gold, silver and oil to capitalize on the blistering inflation in consumer prices this will surely cause!

But as astonishing as this corporate profitability is, for reasons I do not understand, I do know that the monetary base went to $1.733 trillion from $1.647 trillion the week before, which means that $86 billion of new money was created in One Freaking Week (OFW), and that is, fortunately, all you need to know to buy gold, silver and oil, which is what makes it so easy that you rejoice aloud, saying, “Whee! This investing stuff is easy!”

Feeling Good About a Falling US GDP originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.