10/22/10 Tampa, Florida – I thought I had seen and heard it all after the ludicrous Ben Bernanke, asinine chairman of the Federal Reserve, announced that the official (and thus a lie!) 2% inflation in prices was too, too low, and he wanted higher inflation because, somehow, in some weird little fantasy world that only he and other neo-Keynesian econometric cyber-nerds can see, higher inflation is “consistent with the mandate of the Fed” to achieve stable prices (zero inflation)! Hahahaha!
This is so bizarre that I had a hard time dealing with it, as I have enough problems of my own in distinguishing reality from my own weird little mental world without this dimwit forcing his schizophrenia on me.
So I cleverly doubled up on some of my medications, which didn’t help much, although I finally did relax enough to unclench one fist.
Of course, the other mandate of the Fed came in the ’70s when Hubert Humphrey and other leftist weirdo morons changed the Fed’s charter to include a mission to, somehow, with magic perhaps but certainly with creating more and more money and driving interest rates down and down, always maximize employment. Maximize employment! How convenient an excuse for the Fed to create more money!
And speaking of maximizing, I thought I had, with this one statement by the chairman of the Federal Reserve to purposely create the horror of higher inflation, maximally achieved a state of complete loathing for the Federal Reserve.
With my newfound Maximum Mogambo Contempt (MMC) for Ben Bernanke and the Federal Reserve, you can imagine that I was not very surprised to see an essay with the title “Three Horrifying Facts About the US Debt Situation” by Graham Summers of gainspainscapital.com.
Initially, I was “ho-hum” mostly because I can, offhand, think of about a thousand horrifying facts about the US debt situation, and that is all without even touching upon the inflationary horror of the federal government deficit-spending untold trillions of dollars per year, year after year, increasing the national debt by borrowing an avalanche of money that the foul Federal Reserve magically creates out of thin air, and that the Federal Reserve will itself use, in an outrageous episode of historically treacherous monetary infamy known as “monetizing the debt,” to buy the trillions and trillions of T-bonds, a terrifying example of fiscal and monetary insanity that will, to wax poetic, reverberate through the ages.
You can tell by the way I ended that paragraph with a mere period instead of an exclamation point to denote horror and terror that I was pretty bored.
Well, I was, until he went on that, firstly, “The US Fed is now the second largest owner of US Treasuries” after just recently overtaking the stash of US bonds owned by Japan, “leaving China as the only country with greater ownership of US Debt.”
To his credit, he went on that the horror is that “we’re printing money to buy it. Setting aside the fact that this is abject lunacy, this policy is trashing our currency which has fallen 13% since June…as in four months ago. Want an explanation for why stocks, commodities, and gold are exploding higher?”
I raised my hand to make a comment about how, “We’re Freaking Doomed!” but before I could interrupt, he went on that, secondly, “There are only about $550 billion of Treasuries outstanding with a remaining maturity of greater than 10 years.”
Out of all this, he deduces the third point, which is that “The US will Default on its Debt.”
Apparently, he had a second thought about that “will default” thing, as he says, correctly, “either that or experience hyperinflation. There is simply no other option.”
I am happy to see that Mr. Summers still maintains some of that sunny optimism of youth, a quality that I completely lost years ago when the realization of the immense degree of stupidity and corruption in the world crushed my hopes, when he says that there are no other options except default or hyperinflation.
I say, ominously, which explains the scary and ominous soundtrack, that the other option is (pause for effect) “both.”
And speaking of “both” if ever there was a time when you should buy both gold and silver, this is it! And the fact that you can get them by merely plunking down depreciating Federal Reserve Notes in payment should make you giddy with delight, so that you giggle as you say, “Whee! This investing stuff is easy!”
The Mogambo Guru
for The Daily Reckoning
The Mogambo Guru
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. For podcasts featuring the Mogambo, click here.
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Yes, but the question is what comes after. Again, I see just two realistic options: either an asset-based money or go whole hog with fiat paper and reintroduce greenbacks backed by the “full faith and credit in uncle Sam” bypassing the Fed and the money-as-debt scam (kind of Ellen Brown’s proposal). The IMF / NWO money option does not seem much plausible to me. I expect both should be better of what we have now (provided that we will live long enough to see them -which is highly questionable).
I STILL can’t believe the obvious stupidity of supposedly well educated people re. inflation. They never account for the M4, like it doesn’t exist. We went thru intense inflation already, and absorbed it. Now, that bogus money loaned out by the ‘banks’ is going back to that ‘never never land’ of nothingness. Over 30T last I heard. So how, pray tell, will a measly 2T cause INflation, not DEflation? Yes, food and energy are rising, but, take a breath, prices are rapidly FALLING on most everything else.
David, Bernanke & Co. have promised to print money to the moon to prevent deflation. They will force it down our throats through bailouts, buyouts, stimulus packages, and even direct checks to taxpayers if they have to. Do you think the fed is not willing to buy up all 30 trillion of those trashy assets if they want to?
Prices are falling on everything but food and energy because people are broke, and need to spend all of their money on… food and energy! Who cares how much a tshirt or a laptop costs when the essentials of life are becoming more and more expensive
Dare I inquire? Am I still Freaking Doomed (FD) if I don’t buy oil? Or was failing to mention oil a Mogambo Accidental Omission (MAO)— brought on by the fact that Mogambo is naturally so distraught over the fact that the Federal Reserve is printing So Freaking Much (SFM) money and…Yada, Yada (YY)?
psst…David…
Your gonna hurt Mogambo’s feelings. He’s in a delicate state of mind. If he stops writing, it’s all on you.
And we need him.
One of the best books that I have read in the last few years was “How the World Really works” by Allen Jones. This book is actually a review of 12 books in 12 chapters. Written in 1996 it foretold the crash of 08 and put the blame where it belongs,on the bankers. Read it and get an accurate view of the world before you do anything else.
So, am I Totally Freaking Stupid (TFS) to be buying gold, silver and oil with cash, loading up on consumer debt to buy everything else? I make only minimum payments so I can fool the banks into thinking that I am a Totally and Reliably Stupid Customer (TARSC) who will pay them mostly interest for years and years and years, never paying my debt off?
I am counting on this hyperinflation so that one day, I can pay years and years and years of accumulated debt and interest
(YAYAYOADAI) IN ONE FELL SWOOP of a day and not really care about the greenbacks I’ll have to part with.
When will that day come? This is a good strategy, right?
Your life sounds overly challenging for you brother. I suggest you re-double up on the meds. If reality still eludes your mental grasp, call me in the morning.
David, its called hyper-stagflation. Already baked into the cake. Everyone is sitting on cash right now, and the reserve status of the greeback will go away. Dollars flow into U.S. Everything we have (cars, houses) goes down, everything we need (commodities) goes up. Accept it, go with the flow. Accept the energy of the wave, grasshopper.