Interesting article copied below. Is this guy an alarmist or does he make frightening sense ?
All views welcome.
A MOGAMBO, A MACHINEGUN AND A BOOM
by The Mogambo Guru
I am, as hard as it is to believe, getting freaked out
more and more. The Federal Reserve didn't increase total
dollar credit by much, but they did continue accelerating
down the Road to Economic Hell (RTEH) by buying,
outright, $2.4 billion of debt last week.
In short, the US government borrows by issuing debt, and
the Federal Reserve creates the money to buy the debt.
Bingo! This not only creates more money and credit, the
thing that got us to this point, but funds the activities
of the government! Gaaahhhh!
The bigger news in this filthy area of the economic
world, for me, is that foreign holdings of US debt
deposited at the Fed went up by a whopping $7.6 billion
last week. Whew!
The biggest, scariest thing of all was that nominal US
incomes dropped meantime. And when you adjust nominal
incomes by the reduction in buying power from all the
inflation around here, then it is no wonder that
inflation-adjusted incomes dropped so much, too.
But I wail like a wounded banshee (ooOOooOOoo!) when I
realise that the government's piddly little chain-
weighted, hedonically adjusted statistical adjustment to
incomes for inflation is around two percent. At that, I
laugh this Big Booming Mogambo Laugh (BBML)...
Hahahaha!
I am here to tell you, with the courage found only in a
guy fully clad in body armour and sporting a machinegun
in one hand and a flamethrower in the other, that
inflation is a lot higher than two or three
percent...horribly higher. It is like somewhere in the
range of six to nine percent, at least. So when you
adjust incomes for the real rate of interest, then the
drop in real, inflation-adjusted incomes is getting to be
pretty significant.
I am finally not screaming and angry and scared and
hysterical over what is happening in the world of
inflation, central banks and governments; namely getting
bigger and meaner and more insane with every tick of the
clock. This cannot, and will not, end well. Tick tock.
But let me put it a non-clock oriented way: Booms have
never worked out in all of history, except at the
beginning, where it has worked every time. You always get
a boom when you stimulate, stimulate, stimulate the
economy, year after year. The endings never worked out
well, because inflation in prices always results from
inflation in money and credit.
And here we are again, standing up to our ears in debt at
another ending of a period in which monetary and fiscal
sins were indulged in, the boom happened, and now we are
again standing by the side of the road on the way out of
town with the company payroll under our arm, one step
ahead of auditors and creditors, inflation rising up to
devour everything. My only consolation is that at least I
got out with a few bucks, and my kids are old enough to
beg, so they will be fine.
But it is inflation that is the killer. For example, in
my little hometown Leftist rag of a newspaper, the St.
Petersburg Times, we have been getting stories of how the
rise in gasoline prices is squeezing people, and how they
are coping...mostly by cutting back.
And what do I mean by "cutting back"? Well, consider
alert reader Charlie R, who writes:
"Yesterday I was at a local Ford dealership. Sales were
very, very slow. Across the street is a Chevy dealer. Six
months ago they had 16 salesmen, today only eight, and
are about to let more go. A muffler and tyre shop laid
off half of its employees. A furniture store is about to
close the doors."
Here is the exact place where The Mogambo weeps, and the
Mighty Heart of the Mogambo (MHOTM) breaks, because this
is the price of inflation. Driving the car, at work, in
your sleep, wondering, wondering, wondering how in the
hell you are going to pay all of this money, when you
ain't got no money, and you ain't a-gonna get no mo'
money, neither!
Somebody, I forget who, noted that the latest University
of Michigan consumer sentiment also produced a stock
market crash signal, in that it had a one-month fall that
was the biggest drop in fifteen years or something.
What does one do? Well, The Mogambo starts borrowing
money like crazy. And when that (predictably) doesn't
work anymore, I work double shifts at the traffic lights,
wearing my sign that says, "Homeless. Crazy. Pleaze help!
Help me! Give me money or I will take down your license
plate number, track you down, and you will be sorry!"
And I don't want to hear from any of you about how this
is extortion and the poor woman hasn't had a good night's
sleep ever since she looked in her rear view mirror and
saw me writing her tag number down, because this is not
about who is extorting who, or who threatened who, or who
did what to somebody's ugly yard ornaments.
No, this is about inflation in prices that comes after
you have inflation in the supply of money and credit
because the Federal Reserve and its goons across the
world acted like halfwits and morons
Without an increase in wages, people can't afford to buy
as much stuff!
Regards,
The Mogambo Guru
for The Daily Reckoning
Mogambo Sez: President Bush has opened the Strategic
Petroleum Reserve in response to high gasoline prices,
and thus temporarily driven down the price of oil.
But nothing has fundamentally changed, except to get
worse. So, Mogambo Tip O' The Day (MTOTD) is to buy oil
and oil stocks, as not only is demand still outpacing
supply, but Bush has to refill the SPR pretty soon,
adding to demand.
Ergo, oil prices will shoot back up. And the gold lease
rates on gold have started back down, which usually means
that the people that manipulate the price of gold are
trying to manufacture a lower gold price.
In practice, this means that you can soon buy gold on the
cheap. Do so, or suffer the consequences of having your
spouse and family laugh at you and say hurtful things
like:
"Hell, even an idiot like The Mogambo knew to buy gold!"</pre>
All views welcome.
A MOGAMBO, A MACHINEGUN AND A BOOM
by The Mogambo Guru
I am, as hard as it is to believe, getting freaked out
more and more. The Federal Reserve didn't increase total
dollar credit by much, but they did continue accelerating
down the Road to Economic Hell (RTEH) by buying,
outright, $2.4 billion of debt last week.
In short, the US government borrows by issuing debt, and
the Federal Reserve creates the money to buy the debt.
Bingo! This not only creates more money and credit, the
thing that got us to this point, but funds the activities
of the government! Gaaahhhh!
The bigger news in this filthy area of the economic
world, for me, is that foreign holdings of US debt
deposited at the Fed went up by a whopping $7.6 billion
last week. Whew!
The biggest, scariest thing of all was that nominal US
incomes dropped meantime. And when you adjust nominal
incomes by the reduction in buying power from all the
inflation around here, then it is no wonder that
inflation-adjusted incomes dropped so much, too.
But I wail like a wounded banshee (ooOOooOOoo!) when I
realise that the government's piddly little chain-
weighted, hedonically adjusted statistical adjustment to
incomes for inflation is around two percent. At that, I
laugh this Big Booming Mogambo Laugh (BBML)...
Hahahaha!
I am here to tell you, with the courage found only in a
guy fully clad in body armour and sporting a machinegun
in one hand and a flamethrower in the other, that
inflation is a lot higher than two or three
percent...horribly higher. It is like somewhere in the
range of six to nine percent, at least. So when you
adjust incomes for the real rate of interest, then the
drop in real, inflation-adjusted incomes is getting to be
pretty significant.
I am finally not screaming and angry and scared and
hysterical over what is happening in the world of
inflation, central banks and governments; namely getting
bigger and meaner and more insane with every tick of the
clock. This cannot, and will not, end well. Tick tock.
But let me put it a non-clock oriented way: Booms have
never worked out in all of history, except at the
beginning, where it has worked every time. You always get
a boom when you stimulate, stimulate, stimulate the
economy, year after year. The endings never worked out
well, because inflation in prices always results from
inflation in money and credit.
And here we are again, standing up to our ears in debt at
another ending of a period in which monetary and fiscal
sins were indulged in, the boom happened, and now we are
again standing by the side of the road on the way out of
town with the company payroll under our arm, one step
ahead of auditors and creditors, inflation rising up to
devour everything. My only consolation is that at least I
got out with a few bucks, and my kids are old enough to
beg, so they will be fine.
But it is inflation that is the killer. For example, in
my little hometown Leftist rag of a newspaper, the St.
Petersburg Times, we have been getting stories of how the
rise in gasoline prices is squeezing people, and how they
are coping...mostly by cutting back.
And what do I mean by "cutting back"? Well, consider
alert reader Charlie R, who writes:
"Yesterday I was at a local Ford dealership. Sales were
very, very slow. Across the street is a Chevy dealer. Six
months ago they had 16 salesmen, today only eight, and
are about to let more go. A muffler and tyre shop laid
off half of its employees. A furniture store is about to
close the doors."
Here is the exact place where The Mogambo weeps, and the
Mighty Heart of the Mogambo (MHOTM) breaks, because this
is the price of inflation. Driving the car, at work, in
your sleep, wondering, wondering, wondering how in the
hell you are going to pay all of this money, when you
ain't got no money, and you ain't a-gonna get no mo'
money, neither!
Somebody, I forget who, noted that the latest University
of Michigan consumer sentiment also produced a stock
market crash signal, in that it had a one-month fall that
was the biggest drop in fifteen years or something.
What does one do? Well, The Mogambo starts borrowing
money like crazy. And when that (predictably) doesn't
work anymore, I work double shifts at the traffic lights,
wearing my sign that says, "Homeless. Crazy. Pleaze help!
Help me! Give me money or I will take down your license
plate number, track you down, and you will be sorry!"
And I don't want to hear from any of you about how this
is extortion and the poor woman hasn't had a good night's
sleep ever since she looked in her rear view mirror and
saw me writing her tag number down, because this is not
about who is extorting who, or who threatened who, or who
did what to somebody's ugly yard ornaments.
No, this is about inflation in prices that comes after
you have inflation in the supply of money and credit
because the Federal Reserve and its goons across the
world acted like halfwits and morons
Without an increase in wages, people can't afford to buy
as much stuff!
Regards,
The Mogambo Guru
for The Daily Reckoning
Mogambo Sez: President Bush has opened the Strategic
Petroleum Reserve in response to high gasoline prices,
and thus temporarily driven down the price of oil.
But nothing has fundamentally changed, except to get
worse. So, Mogambo Tip O' The Day (MTOTD) is to buy oil
and oil stocks, as not only is demand still outpacing
supply, but Bush has to refill the SPR pretty soon,
adding to demand.
Ergo, oil prices will shoot back up. And the gold lease
rates on gold have started back down, which usually means
that the people that manipulate the price of gold are
trying to manufacture a lower gold price.
In practice, this means that you can soon buy gold on the
cheap. Do so, or suffer the consequences of having your
spouse and family laugh at you and say hurtful things
like:
"Hell, even an idiot like The Mogambo knew to buy gold!"</pre>