12/07/10 Tampa, Florida – I was telling the doctor that I distinctly heard a popping sound inside my head when I saw that the foul Federal Reserve had created, last week alone, another $24.2 billion in Fed Credit, which was instantly turned into money when the Fed bought $24.2 billion of US government securities, and all in One Freaking Week (OFW)! It made a kind of “sizzling” sound.
Furthermore, a tortured howl of outrage boils up inside me (which tastes surprisingly like stale beer and pepperoni pizza) at the Sheer Inflationary Horror (SIH) of this creation of $24.2 billion in new money in One Freaking Week (OFW)!!
The doctor dismissed my complaint, but billed me anyway, although you can obviously see the seriousness of it by the use of two exclamation points, and by the use of another one at the end of this sentence used to explain the significance of the prior exclamation points! It’s self-proving! Proving!
Perhaps you are saying to yourself, “This seems to be important, as indicated by the sudden plethora of exclamation points, but for reasons which are not clear. Why am I wasting my time with this Stupid Mogambo Crap (SMC) anyway?”
If you are, indeed, asking yourself such a question, then lean forward and look deep, deep, deep into my bloodshot-yet-limpid blue eyes to see my Utter, Utter, Utter Sincerity (UUUS) when I tell you that “When the supply of money goes up, prices soon go up.”
And since prices going up is just another way of saying that a currency is doomed, a reader, Chet, wrote to Casey Research and said, “I fear that the dollar is doomed as are other fiat currencies, and time is getting short. So the question that came to mind is, what happens if one is invested in metal stocks or any vehicle that is denominated in a fiat currency, and that currency goes bust, blotto?”
As a guy who has been both bust and blotto many, many times, often at the same time, I deem myself somewhat of an expert on the topics, and so, without waiting for either David or Terry to give their response, I jumped up and replied, “What happens is that the price of everything adjusts according to supply and demand, just like everything else in the whole freaking world always does all the time, you moron!”
Chet apparently did not like my unsolicited response, and continued as if I had not just explained it, “What value does that investment retain? Does it become a total loss? Redefined into the currency of the locality that operations are in? Converted into some other New World Order monetary unit, SDR’s or nationalization of any regional assets by the locals? Is this impossible to plan for?”
Growing more frustrated by the minute, again I interrupt and politely say, “What in the hell is wrong with you, ya dimwit? The price, in the local currency, of everything will adjust. If bread is $2 a loaf, gasoline is $3 a gallon and gold is at $1,400 an ounce, will you better off if bread is $40 a loaf, gasoline is $60 a gallon and your gold is selling at $28,000 an ounce, assuming that prices adjust perfectly in proportion to the loss of buying power of the dollar due to over-issuance?”
Suddenly, I realized that the reason that Chet was ignoring me was that I was reading it on the computer, and people are looking at me while I am yelling at my computer screen, “Chet, you’re an idiot! The answer is no; thanks to gold, your financial situation will be exactly the same in terms of loaves of bread and gallons of gasoline!”
Embarrassed, I sat back down and pretended nothing happened, so that after a few minutes, everyone went back to work. I pretended to go back to work, too, but secretly I was thinking to myself, “While he will be unchanged, those who do not own gold, silver and oil will be worse off, even if temporarily offset by still having $1,400 in cash instead of an ounce of gold, and who will, in turn, be better off than the vast, overwhelming majority of the population who will be the worst off, as they do not have gold, nor silver, nor oil, and this is to say nothing of them not having $1,400 in cash!”
Unfortunately, these poor people still have to somehow pay $40 for a loaf of bread and $60 for a gallon of gasoline. Welcome to the wonderful world of inflation! Hahaha!
And the reason that you should be buying gold, silver and oil against the onslaught of the Federal Reserve and the federal government against the value of the dollar will become very clear, very soon.
In the meantime, rest your pretty head, my darling Junior Mogambo Ranger (JMR), as all you need to do is buy gold, silver and oil at your leisure, which is so easy that you, too, will happily exclaim, “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.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
My dear Mogambo Guru, the people buying the $40 bread and $60 gasoline will still retain there one vote and then elect any arthropod who will tax your gold to even the paying field (sic) LOL(LOL)
Dear Jack Nazor,
How can the government tax gold if-
They can’t find the gold a gold owner possesses? Many, Many gold coins were hidden away after 1933 and didn’t see the light of day until after 1975, when US Citizens could own gold legally and without any hassle by Uncle Sam.
How can a government successfully tax gold and its owner if both have traveled overseas? Again, after 1933 many US Gold coins ended up outside the reach of Uncle Sam (mostly hidden away in foreign safe deposit boxes.)
Governments the world over have tried, and failed miserably, to tax, extort, or outlaw the private possession of gold, yet gold still outmaneuvers the best bureaucratic bumbling actions.
Ben Bernanke said he wasn’t “Just Printing Money”. What I think he means by that is that he is printing A Whole Lot Of Freaking Money. (AWLOFM)
Dear Gu, Here is a small supply of exclamation points: !!!!!!!!!!!!!!!!!!!
have no need of them as I have slipped into a state of equanimity.
Meanwhile, try to ignore dumb ass posters who do not know the difference between ‘their’ and ‘there’
Mogambo,could you write a story on how retired people who cant enter the work for are getting screw.Bernack holding rates down are screwing millions of the elderly.thanks mikey o
Their savings isnt throwing off squat..mike
It’s true that if you buy gold through an ETF or in any fashion that can be taxed, you will, unfortunately, still lose big time. Say you had $100K of gold and then the $ drops to 10 cents. So you now have $1 million of the new Bernanke dollars. The gov sees the $900K as profit and will be asking you to hand over about 30% of it leaving you with about $600K. But now that the $ is only worth 10 cents, you’ve got only $60K of your original $100K left. Please tell me where the mistake is if I’ve made one.
O fearless Mogambo leader, if the dollar is devalued so that my $1400 ounce of gold is worth $28000, does that mean that if I own one gold future contract at the time of devaluation, then the value of my contract, which increases $1000 for each $10 increase in the price of gold, will go from $1400 to a value of $2,660,000 instantly? I would really like an answer on this from anybody. Am I thinking straight?