-- Posted Thursday, 4 October 2007 | Digg This Article
Finally, the Federal Reserve showed its true inflationary colors, and Total Fed Credit went up by $6.6 billion last week. The significance of this is when you take another $6.6 billion in bank credit and multiply it times the current fractional-reserve multiplier (infinity), this calculates out to (according to my rough calculations) exactly 6.6 jillion gazillion umpty-ump quintillion dollars that can be created by the banks, which is just about enough money to bail out everybody in the Whole Freaking World (WFW), which (according to the bizarre current economic theory and practice) is the new purpose of a central bank; create a bubble by creating too much money and credit (which finances the bubble) and then bail everybody out of the ensuing bust by creating another bubble by creating too much money and credit again and again! Hahahaha!
This is the "genius" of Alan Greenspan? Hahaha! What a moron! Hahaha! I laugh in Utter, Utter Mogambo Contempt (UUMT), which unfortunately sounds like a sick raccoon retching and coughing, and which probably explains why, as John Hoefle at Executive Intelligence Review says in his essay, "The Bankers Know: Something Catastrophic This Way Comes", that, "By now, most people are aware that former Federal Reserve chairman Alan Greenspan is on a 'not my fault' tour, proclaiming to everyone who will listen that he is not to blame for the collapse of the financial system. By saying he 'didn't really get it,' Sir Alan is choosing to cloak himself in the mantle of incompetence, in the hope that he won't go down in history as the worst central banker of all time."
But incompetence and inflation is what a central bank is all about! According to the Inflation Calculator, it takes $21 in 2007 dollars to buy the same stuff that $1 would have bought in 1913 when the monstrous Federal Reserve was created! And even using these biased statistics, the dollar has lost half its value since 1984! That's 14% inflation per year since just before Alan Greenspan took over the Federal Reserve! 14%!
And we are getting ready to create more money and more inflation, as the U.S. Senate approved a bill to raise the national debt limit by another $850 billion, taking the National Debt to a stunning $9.815 trillion dollars, which the government will dutifully spend as soon as they can. As Anthony Cherniawski at the Practical Investor newsletter noted in astonishment, "What is intriguing is that none of the U.S. news services are covering this event." Indeed!
And it is not that the world needs more money or the inflation it causes, as we learn from the front page of Tuesday's Wall Street Journal about a rare Puer tea, which went from $5 a cake last April to $35 in China recently. "Puer's popularity," the Journal explains, "reflects how China, awash with cash and slim on investment outlets, is primed for speculation."
In short, too much money looking for somewhere to go! No wonder stock markets are going up, despite the utter idiocy of it!
And now add to this potent inflationary monetary cocktail the news that Chinese workers' wages rose by 21% YOY in the first quarter, and are even higher now, and how that is going to add to a Chinese wage-price spiral of monetary-inflation, price-inflation, monetary-inflation, price-inflation that they already have, and how that means that the prices of stuff are going to freaking go to the moon for them and everybody else, and how I am going to lead off the Mogambo Evening News (MEN) with this horror tonight, and maybe deserve a Pulitzer Prize for it, that I will not win, again, because 1.) I have no talent and 2.) Everyone is against me.
Now add in the news from Tony Sagami of MoneyandMarkets.com about "The Official Launch of the China Investment Corporation." He reports, "The China Investment Corporation (CIC) is the new $200-billion sovereign investment arm of the Chinese government." $200 billion! Wow! The government is going to invest $200 billion sometime soon!
Along with now allowing Chinese citizens to invest in foreign countries, "All this new money is going to add even more fuel to the already red-hot China markets." And world markets, too!
And if that is not enough, on the same page was a headline that said the same thing, namely that all of this money being created will-nilly means that "Global Scramble for Goods Gives Corporate Buyers a Lift."
In short, grossly excessive amounts of money and credit are constantly being created and spent with unbelievable abandon, and that means inflation in consumer prices heretofore found only in nightmares, history books and old newsreels is (standing up with a groan and looking out of the window) just over the horizon over there, and is here today in the form of stock markets setting insane records and bond markets setting insane records.
It's going to get really weird, and really ugly, really soon.
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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.
-- Posted Thursday, 4 October 2007 | Digg This Article
