Richard Daughty

The Gold Report interviewed John Williams of ShadowStats.com, who said, “I continue to track M3, the Fed’s broadest measure of the money supply until it ceased publication in March of 2006. Generally, the broader the measure of systemic liquidity, the better it serves as a predictor. In terms of giving a signal for the economy, you have to adjust the growth for inflation.”

I admit I was kind of dozing off by this time, daydreaming of the bacchanalian excesses made possible by gold and silver shooting up in price as a result of the insane increases in new money being created by the foul Federal Reserve. My reverie seemed so much more interesting than what I thought would be one of those academic exercises where smart people talk about things I don’t understand because I am stupid, and probably wouldn’t care about even if I wasn’t so stupid.

With a sudden start, I realized I was wrong! There is quite a lot of useful information in, “What’s happened historically is that every time the year-to-year change in the inflation-adjusted M3 has turned negative, the economy has followed in a recession, or if already in a recession, the downturn has intensified.”

Now, there is nobody more attuned than I to the potential catastrophe inherent in something that has happened “every time,” mostly about how I can tell you sad, sickening, sorrowful stories about money lost by betting on “what’s happened historically,” stories that will make you cry if you have any compassion or empathy, which I suspect you don’t, and neither does anybody else, and you are all secretly happy that I lost money and suffered a loss, which is what I always suspected about all of you deceitful bastards.

However, this is not about my raging paranoia or that I am a cynical old man who sees treachery everywhere, but that the M3 money supply has turned negative, inflation-adjusted, which is, as in “every time,” significant!

I was planning on calling Mr. Williams on the phone to ask him, “Did you mean ‘every time’ literally, as in ‘can’t-miss guaranteed?’” But perhaps Mr. Williams demonstrates real paranormal abilities by anticipating my call and replying – before I even asked! – that “Those signals don’t come very frequently; but when they do, they are extremely reliable.”

Extremely reliable! That’s the kind of market timing I am looking for, man!

And if you are looking for something else that is “extremely reliable,” I note that gold and silver have performed admirably for the last 4,500 years!

Mr. Williams’ data points to an economy going down, even though I see the foul Federal Reserve creating $100 billion of new money per month so that the government can spend it, and it is all Very, Very Frightening (VVF) to those of us (me) who are (is) frightened (scared out of my freaking mind) by the prospect of catastrophic inflation in prices and economic collapse.

This, in contrast to the seeming historical guarantee of gold and silver, makes it all so easy that you happily think to yourself, “Whee! This investing stuff is easy!”

The Mogambo Guru
for The Daily Reckoning

Richard Daughty

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.

  • http://internet Jon Malikowski

    God, but I love the Mogambo.

Recent Articles

In the Year 2024

James Rickards

Panopticon goggles? Severe market panic in 2018? Gold confiscation by 2020? Jim Rickards' shocking thought-piece in the spirit of A Brave New World or 1984. Click to see how markets, economics, your money, gold, privacy, wealth building and more look a decade from now in the year 2024...


Our Ebola Stocks Could Double Overnight

Paul Mampilly

I believe we are in the midst of one of the greatest profit opportunities you’re ever going to see in your lifetime. Stop listening to what the government is telling you. Turn off CNN. Forget what you see on the news. And for God’s sake, forget about the market crashing. Right now, we are in the early innings of the greatest profit opportunities of the 21st century. A biotech boom that’s about to hit epic proportions thanks to Ebola. If I’m right, we are going to see Ebola in New York, Los Angeles, San Francisco and Miami. And when this happens, every single stock that has anything to do with Ebola is going to soar. Let me explain to you how I believe this huge Ebola bubble is going to unfold.


Why We Hold Hard Assets II

Henry Bonner

Right now we’re seeing a surge of strength in the U.S. dollar, as the bottom falls out of our competitors’ currencies, and Jim Grant has the best analysis of what it means for investors. For one, it means the Federal Reserve can’t keep interest rates low forever. And mainstream investors may be very surprised when the Fed gives in…


Housing Bulls Gave Up Here… Big Mistake

Greg Guenthner

Another one of Wall Street’s broken forecasts has plopped a new trade in your lap. If you’re listening to the lunatics on the financial news, you’re hearing that there’s no hope for the markets. Just get rid of your stocks and pound sand. Better safe than sorry—none of these talking heads want to get bullish on anything right now because they’re afraid to look like an idiot if the market keeps dropping. For them, selling stocks now is your only chance to make it to the end of the year without pawning the family cat to buy Christmas presents. Can the market survive? Greg Guenthner explains…


A Quarter-Century’s Conclusion on Our Cancer Woes

Ray Blanco

Breakthrough technologies can hold the most undiscovered money-making potential. What we’ve accomplished in a quarter century with cancer research could make you serious money and save countless lives. Ray Blanco has more on this ground breaking story...