Etaoin
03-27-2006, 07:10 PM
Do you realize what the Fed has done to the value of the dollar since 1913? You don't? Never fear, the Mighty Mogambo is happy to enlighten us...
FULL FAITH AND CREDIT!
by The Mogambo Guru
Many a Truth Is Said In Jest!
I am sitting, alone, in the Impenetrable Mogambo Bunker Of Ultimate
Defensive Posture (IMBOUDP), and voices that insist they are my
"family" are begging me to open the blast-proof door and at least give them back the TV remote control. So, I decide to ask them an easy question to find out if they are really my family or, as I suspect, nefarious imposters. So, I shout out, "Hey! Morons!" and someone shouts back, "We don't like being called morons, daddy!"
And so, I say, "Okay, Einstein. Do you know what the Federal Reserve has
done to the value of your money since the Fed was created in 1913, only
faster, and faster, and faster, until you can't catch your breath anymore?
Huh? Do ya, moron?" And they admit, "Well, no. But we know that's why
you have locked yourself in there with the TV remote!" Triumphantly I
exclaim, "Then you're all morons!"
Please notice that I asked them an easy question, when I could have
asked them something more difficult due to its recent-osity, such as: "Do you know how much more debt the U.S. Congress just authorized to be loaded onto our breaking backs?" The answer is, in case you were wondering, $781 billion, bringing the total official U.S. Treasury debt limit to just under nine trillion dollars. In case you, for some reason, like seeing
all the zeroes, it is written out as $9,000,000,000,000.00. That's nine
huge, insanely gigantic trillion dollars, which comes to roughly about
$90,000 for everybody who has a job in the whole country. At 5% interest, your government will pay out $450 billion a year just in interest payments alone! Which is, again, roughly about $4,500 for everybody who has a job.
Anyway, the Senate Finance Committee Chairman, Charles Grassley, who
is, they say, a Republican Senator from Iowa, said that they are passing
the huge increase in the national debt limit because "It is necessary to
preserve the full faith and credit of the federal government." Hahahaha!
Meanwhile, this same Senator and his fellow Senate buddies have also,
according to the Associated Press, been working on their proposed
version of next year's budget, and have "adopted a $2.8 trillion budget
blueprint that anticipates deficits greater than $350 billion for both this year and next."
Wait a minute! The government he so proudly represents, budgets only a
$350 billion deficit for the next fiscal year and yet, the same
government, at the same time, allowed the U.S. Treasury to issue $781
billion in new bonds, which is only enough to last them about a year?
That is more than twice as much? Hahaha! This is too rich! "Full faith and
credit!" This is the Senate Finance Committee Chairman saying this!
Hahaha! "Full faith and credit!"
Wiping bitter tears of laughter from my eyes, I next read that, as a
kind of comic coda, Ben Bernanke, chairman of the horrid U.S. Federal
Reserve,
has announced that the sheer reputation of the Federal Reserve will be
enough to keep interest rates lower than they otherwise would be.
Hahaha! Another example of "full faith and credit." Hahaha!
This is the same U.S. Federal Reserve that, last week, created another
$4.7 billion in Total Fed credit, which itself is the subject of the popular Mogambo Scout campfire song, "Fount of Fiat Money from Thin Air,"
which ends with the famous Mogambo Death Chant (MDC): "We're all very
doomed! We're all very doomed!"
I laugh because this is true "theater of the absurd" at its absolute
best! It reminds me of one of my first junior-management jobs, when I proudly proposed that we tell the stockholders that we are going to have a $30,000 deficit (which sounded better than "That stupid Mogambo idiot produced a loss after only three weeks on the job"), but instead, we borrow massively against the "full faith and credit" of the company to get as much cash as we could get our filthy hands on - more and more, until it added up to a fortune for each of us. Then, we all quit the stupid, now-bankrupt company and it's board of directors, and we retire in splendor!
Like Senator Grassley, R-Iowa, I thought it was a great idea! Maybe my
Greatest Mogambo Idea (GMI) ever! Alas, my budding career as hot shot
executive and "world's youngest zillionaire" was cut tragically short
by the pandemonium in the boardroom following my presentation, what with the chairman slumping in his chair, clutching his chest in pain and
pointing his stupid finger at me, screaming, "He's the anti-Christ! He's the
anti-Christ!" But, this Grassley dork gets re-elected time after time
for the exact same thing! See? I told you everyone is always out to get me!
Forbes magazine reports this as U.S. Treasury Secretary John Snow
warning Congress that they had better pony up $781 in new borrowing authority because it was "critical to provide certainty to financial markets that the integrity of the obligations of the United States will not be
compromised." Hahaha! Integrity? At the last possible minute the debtor
got his creditors to extend more emergency credit, and this is your
"integrity?" Hahahaha! Or maybe "integrity" is the government lying
about inflation, which tricks somebody into loaning their money too cheaply to the lying government, and thus, the United States pays back the loans with cheaper dollars, thus screwing the lender out of precious buying power. Hahaha! "Integrity!"
This is also the same U.S. Treasury that, the day after President Bush
signed the enabling legislation, somehow sold $78 billion in government
debt in one day, taking us from $8,270 billion in national debt to
$8,348 billion! Hahaha! Ten percent of the entire increase in the debt limit,
in one lousy day! Hahaha! "Integrity!"
Afterwards, instead of having a cigarette and telling me that he will
respect me in the morning while pressing cab fare into my hand, Mr.
Snow complimented Congress for "protecting the full faith and credit of the nited States" by allowing him to plunge the massively over-indebted
nation further into debt by another $781 billion.
Parenthetically, why $781 billion? I explain thusly: Because $780
billion would be too little, see, and $782 billion would be too much. Thus
informed, you think to yourself, "Gosh! Ya think so?" Well, no, I don't,
and I don't think that the Washington Post does either. They report,
"Mr. Bush has managed to rack up more new debt during his five years in
office than the entire debt amassed by the United States through 1988. And there is more to come: The president's budget envisions the debt rising to $11.5 trillion by 2011."
Well, it looks like the President and The Mogambo disagree as to what
we "envision" the national debt rising to by 2011, because I say it will
be a lot higher than another $3 billion (30% higher) in five years! Look at
the graph! It's exploding! We're talking another $5 or $6 trillion - at
least! So much debt makes me howl like a banshee in my fury! OwwwwWWWwwww!
Okay, I see that the police have arrived and are demanding that I stop
screaming, "We're doomed!" over and over. They also want me to come
down off the roof. My lesson plan shows that I was going to launch into a
Senseless And Ceaseless Mogambo Tirade (SACMT) about how increases in debt and money lead to price inflation and economic collapse. But all is not lost! You can learn the same lesson if I turn things over to Doug
Noland, of the Credit Bubble Bulletin at PrudentBear.com, who calmly reports, "The February Consumer Price Index was up 3.6% y-o-y. February Import Prices were 7.4% higher than a year ago."
I pause on my way down to pay attention to the response of the crowd to this terrible news about inflation in import prices. Nothing!
Instantly, I return to the studio and hit the "replay" button, and sure enough, Mr. Noland clearly and unequivocally said, "February Import Prices were 7.4% higher than a year ago." And yet, there was no response from the crowd! Somebody coughed nervously. Otherwise, it was eerily silent, except that in the background you could faintly hear The Mogambo screaming, "Noooooo - 7.4% inflation! We're doomed!" as they dragged him into the back of a police car. And then it was quiet, and finally, everyone went home.
Until next week,
The Mogambo Guru
for The Daily Reckoning
Mogambo sez: I notice that the gold lease rates posted at Kitco.com are
again converging to a rough singularity. In fact, short rates are
actually higher than longer rates! If this resolves like it usually does, then
soon the price of gold will shoot up and the lease rate spread will widen.
It works to the advantage of the market manipulators in the same way that the yen-carry trade works, except that the rate spreads in gold are easier to manipulate, move a lot more, and move a lot faster.
The SEC has approved the Barclays' proposed silver Exchange Traded
Fund! Let the fun(d) begin! Hahaha!
But these are just mere trading observations, when the obvious truth is
that any time is the right time a) to be in love, and b) to buy silver,
gold, oil and damned near any commodity you can name - and for a long
time, too!
And you can buy both gold and silver - and not have to worry about
annoyances like shipping costs and hefty storage fees - with EverBank's
Metals Select. Click here for all the details:
Trade Gold and Silver From the Comfort of Your Own Home
http://www.everbank.com/direct.asp?idpage=pro_met_lan&referID=11639 (http://www.everbank.com/direct.asp?idpage=pro_met_lan&referID=11639)
Editor's Note: Richard Daughty is general partner and COO for Smith
Consultant Group, serving the financial and medical communities, and
the
editor of The Mogambo Guru economic newsletter - an avocational
exercise
to heap disrespect on those who desperately deserve it.
The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning
and
other fine publications. If you're inclined to read more, you'll find
the
whole Mogambo here:
Sunshine Monetary Policy
http://dailyreckoning.com/Writers/Mogambo/DREssays/MG032106.html (http://dailyreckoning.com/Writers/Mogambo/DREssays/MG032106.html)
FULL FAITH AND CREDIT!
by The Mogambo Guru
Many a Truth Is Said In Jest!
I am sitting, alone, in the Impenetrable Mogambo Bunker Of Ultimate
Defensive Posture (IMBOUDP), and voices that insist they are my
"family" are begging me to open the blast-proof door and at least give them back the TV remote control. So, I decide to ask them an easy question to find out if they are really my family or, as I suspect, nefarious imposters. So, I shout out, "Hey! Morons!" and someone shouts back, "We don't like being called morons, daddy!"
And so, I say, "Okay, Einstein. Do you know what the Federal Reserve has
done to the value of your money since the Fed was created in 1913, only
faster, and faster, and faster, until you can't catch your breath anymore?
Huh? Do ya, moron?" And they admit, "Well, no. But we know that's why
you have locked yourself in there with the TV remote!" Triumphantly I
exclaim, "Then you're all morons!"
Please notice that I asked them an easy question, when I could have
asked them something more difficult due to its recent-osity, such as: "Do you know how much more debt the U.S. Congress just authorized to be loaded onto our breaking backs?" The answer is, in case you were wondering, $781 billion, bringing the total official U.S. Treasury debt limit to just under nine trillion dollars. In case you, for some reason, like seeing
all the zeroes, it is written out as $9,000,000,000,000.00. That's nine
huge, insanely gigantic trillion dollars, which comes to roughly about
$90,000 for everybody who has a job in the whole country. At 5% interest, your government will pay out $450 billion a year just in interest payments alone! Which is, again, roughly about $4,500 for everybody who has a job.
Anyway, the Senate Finance Committee Chairman, Charles Grassley, who
is, they say, a Republican Senator from Iowa, said that they are passing
the huge increase in the national debt limit because "It is necessary to
preserve the full faith and credit of the federal government." Hahahaha!
Meanwhile, this same Senator and his fellow Senate buddies have also,
according to the Associated Press, been working on their proposed
version of next year's budget, and have "adopted a $2.8 trillion budget
blueprint that anticipates deficits greater than $350 billion for both this year and next."
Wait a minute! The government he so proudly represents, budgets only a
$350 billion deficit for the next fiscal year and yet, the same
government, at the same time, allowed the U.S. Treasury to issue $781
billion in new bonds, which is only enough to last them about a year?
That is more than twice as much? Hahaha! This is too rich! "Full faith and
credit!" This is the Senate Finance Committee Chairman saying this!
Hahaha! "Full faith and credit!"
Wiping bitter tears of laughter from my eyes, I next read that, as a
kind of comic coda, Ben Bernanke, chairman of the horrid U.S. Federal
Reserve,
has announced that the sheer reputation of the Federal Reserve will be
enough to keep interest rates lower than they otherwise would be.
Hahaha! Another example of "full faith and credit." Hahaha!
This is the same U.S. Federal Reserve that, last week, created another
$4.7 billion in Total Fed credit, which itself is the subject of the popular Mogambo Scout campfire song, "Fount of Fiat Money from Thin Air,"
which ends with the famous Mogambo Death Chant (MDC): "We're all very
doomed! We're all very doomed!"
I laugh because this is true "theater of the absurd" at its absolute
best! It reminds me of one of my first junior-management jobs, when I proudly proposed that we tell the stockholders that we are going to have a $30,000 deficit (which sounded better than "That stupid Mogambo idiot produced a loss after only three weeks on the job"), but instead, we borrow massively against the "full faith and credit" of the company to get as much cash as we could get our filthy hands on - more and more, until it added up to a fortune for each of us. Then, we all quit the stupid, now-bankrupt company and it's board of directors, and we retire in splendor!
Like Senator Grassley, R-Iowa, I thought it was a great idea! Maybe my
Greatest Mogambo Idea (GMI) ever! Alas, my budding career as hot shot
executive and "world's youngest zillionaire" was cut tragically short
by the pandemonium in the boardroom following my presentation, what with the chairman slumping in his chair, clutching his chest in pain and
pointing his stupid finger at me, screaming, "He's the anti-Christ! He's the
anti-Christ!" But, this Grassley dork gets re-elected time after time
for the exact same thing! See? I told you everyone is always out to get me!
Forbes magazine reports this as U.S. Treasury Secretary John Snow
warning Congress that they had better pony up $781 in new borrowing authority because it was "critical to provide certainty to financial markets that the integrity of the obligations of the United States will not be
compromised." Hahaha! Integrity? At the last possible minute the debtor
got his creditors to extend more emergency credit, and this is your
"integrity?" Hahahaha! Or maybe "integrity" is the government lying
about inflation, which tricks somebody into loaning their money too cheaply to the lying government, and thus, the United States pays back the loans with cheaper dollars, thus screwing the lender out of precious buying power. Hahaha! "Integrity!"
This is also the same U.S. Treasury that, the day after President Bush
signed the enabling legislation, somehow sold $78 billion in government
debt in one day, taking us from $8,270 billion in national debt to
$8,348 billion! Hahaha! Ten percent of the entire increase in the debt limit,
in one lousy day! Hahaha! "Integrity!"
Afterwards, instead of having a cigarette and telling me that he will
respect me in the morning while pressing cab fare into my hand, Mr.
Snow complimented Congress for "protecting the full faith and credit of the nited States" by allowing him to plunge the massively over-indebted
nation further into debt by another $781 billion.
Parenthetically, why $781 billion? I explain thusly: Because $780
billion would be too little, see, and $782 billion would be too much. Thus
informed, you think to yourself, "Gosh! Ya think so?" Well, no, I don't,
and I don't think that the Washington Post does either. They report,
"Mr. Bush has managed to rack up more new debt during his five years in
office than the entire debt amassed by the United States through 1988. And there is more to come: The president's budget envisions the debt rising to $11.5 trillion by 2011."
Well, it looks like the President and The Mogambo disagree as to what
we "envision" the national debt rising to by 2011, because I say it will
be a lot higher than another $3 billion (30% higher) in five years! Look at
the graph! It's exploding! We're talking another $5 or $6 trillion - at
least! So much debt makes me howl like a banshee in my fury! OwwwwWWWwwww!
Okay, I see that the police have arrived and are demanding that I stop
screaming, "We're doomed!" over and over. They also want me to come
down off the roof. My lesson plan shows that I was going to launch into a
Senseless And Ceaseless Mogambo Tirade (SACMT) about how increases in debt and money lead to price inflation and economic collapse. But all is not lost! You can learn the same lesson if I turn things over to Doug
Noland, of the Credit Bubble Bulletin at PrudentBear.com, who calmly reports, "The February Consumer Price Index was up 3.6% y-o-y. February Import Prices were 7.4% higher than a year ago."
I pause on my way down to pay attention to the response of the crowd to this terrible news about inflation in import prices. Nothing!
Instantly, I return to the studio and hit the "replay" button, and sure enough, Mr. Noland clearly and unequivocally said, "February Import Prices were 7.4% higher than a year ago." And yet, there was no response from the crowd! Somebody coughed nervously. Otherwise, it was eerily silent, except that in the background you could faintly hear The Mogambo screaming, "Noooooo - 7.4% inflation! We're doomed!" as they dragged him into the back of a police car. And then it was quiet, and finally, everyone went home.
Until next week,
The Mogambo Guru
for The Daily Reckoning
Mogambo sez: I notice that the gold lease rates posted at Kitco.com are
again converging to a rough singularity. In fact, short rates are
actually higher than longer rates! If this resolves like it usually does, then
soon the price of gold will shoot up and the lease rate spread will widen.
It works to the advantage of the market manipulators in the same way that the yen-carry trade works, except that the rate spreads in gold are easier to manipulate, move a lot more, and move a lot faster.
The SEC has approved the Barclays' proposed silver Exchange Traded
Fund! Let the fun(d) begin! Hahaha!
But these are just mere trading observations, when the obvious truth is
that any time is the right time a) to be in love, and b) to buy silver,
gold, oil and damned near any commodity you can name - and for a long
time, too!
And you can buy both gold and silver - and not have to worry about
annoyances like shipping costs and hefty storage fees - with EverBank's
Metals Select. Click here for all the details:
Trade Gold and Silver From the Comfort of Your Own Home
http://www.everbank.com/direct.asp?idpage=pro_met_lan&referID=11639 (http://www.everbank.com/direct.asp?idpage=pro_met_lan&referID=11639)
Editor's Note: Richard Daughty is general partner and COO for Smith
Consultant Group, serving the financial and medical communities, and
the
editor of The Mogambo Guru economic newsletter - an avocational
exercise
to heap disrespect on those who desperately deserve it.
The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning
and
other fine publications. If you're inclined to read more, you'll find
the
whole Mogambo here:
Sunshine Monetary Policy
http://dailyreckoning.com/Writers/Mogambo/DREssays/MG032106.html (http://dailyreckoning.com/Writers/Mogambo/DREssays/MG032106.html)