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The Mogambo Theory of Currency Relativity

By: Richard Daughty, The Mogambo Guru - The Daily Reckoning

-- Posted Sunday, 14 October 2007 | Digg This ArticleDigg It! | Source:

I have been advised over and over again to consider foreign currencies as an investment, and I have declined over and over again because I think that all foreign currencies are, being as polite as I can, pieces of crap. Now, I realize that there are many who question my authority to say such a thing, ("Who in the hell do you think you are? You're nobody and you're nothing!") and even my capacity to make such a statement ("You are an idiot!").

Both caveats are unfortunately true, and this is just a teeny, tiny part of the heavy cross I must bear. Nevertheless, these people who so cavalierly insult The Mogambo are going to find that not only are foreign currencies pieces of crap, but that somebody has repeatedly run over their garbage cans and smashed their mailboxes, which will perhaps teach them a lesson both about currencies and insulting psychotic lunatics. A two-fer!

But this is not about revenge and how it is so sweet, but about fiat currencies, about which I have so little respect that I make rude noises which resemble long, undulating farts, a style hopefully indicative of the particularly revoltingly redolent variety, as befits my low opinion of fiat currencies in general and rapidly inflating ones in particular, which they all are.

And not only that, but these fiat currencies are routinely multiplied by the banks using miniscule amounts of reserves in a wildly-inflationary fractional-reserve banking paradigm, just like the United States does with the dollar, and that means that all their currencies are crap, too, just like the U.S. dollar, and the purchasing power of each unit of each of these currencies will always be going down, just like the U.S. dollar, and the only stupid "strength" that they can muster is to be fractionally stronger than other stupid fiat currencies and other more extreme fractional-reserve central banking idiocies, namely (as if you had to be told) the U.S. dollar and the wildly inflationary Federal Reserve.

That means that anybody who says (as I read in a newsletter recently) that "the decline in one currency always reflects the rise in another currency" is wrong, wrong, wrong.

For example, imagine, if you will, that I am in the hospital emergency room, bleeding profusely from three gaping gunshot wounds to my chest (all off-center, poorly grouped and thus non-lethal thanks to my wife being such a lousy shot), but I am being ignored by a disinterested, hateful medical staff, whose worsening lack of attention to me and my medical problem has forced me to now refer to them as, "Soulless, thieving, murdering, sadistic quacks and ghouls".

But if the guy sitting right next to me has only one such sucking chest-wound bullet hole inflicted by his wife, then his marriage is some whooping big damned success? Then how come when I try and "level the playing field" with a little self-medication by merely taking the morphine IV drip of this lucky guy, everybody gets all bent out of shape?

For one thing, it's a matter of Einstein's relativity; two entities are in relation to each other, so that one currency appears to be moving ahead and one appears to be falling behind, but the reality is they are both falling, falling, falling in purchasing power and they are saying in their little currency voices, "Oooh! Help us! We're faaaaalllliiiiing!"

It's just that one is perceived as losing value less fast, and so it is just a matter of time, and the contraction of time, which explains why the speed of light is a perceived constant, and why one currency moves against another because one of them is seemingly standing still.

Einstein, whom everyone thinks is such a hotshot intellectual giant, did not see the obvious correlation to how the speed of inflation in prices are functions of how insanely, traitorously stupid, stupid, stupid your central bank is in creating the enormous gravitational mass of excess money and credit, and thus inflation will kill your currency and your economy.

And yet people think Einstein was such a hotshot, and I am reduced to begging for money outside of the supermarket and selling loose cigarettes to school children just to make ends meet!           

I bring this up because the Nobel Prize for economics is coming out this week, and I sure could use the huge wad of cash that comes with the Prize, and I finally deserve it this year, as I have just neatly connected Einstein's Relativity with money! Brilliant! And by the time the Nobel Committee finds out I have no idea what in the hell I am talking about, the awards ceremony will be over, everyone will have gone home and moved on, and everybody will be happy, especially me, since I'll have the money.

And you don't have to take my word for it, as I have recently proved it with a famous Mogambo Global Survey (MGS)! Since China is experiencing price inflation of 6.5%, and everybody else on the planet is experiencing price inflation of more or less than that (but always more than zero) let's ask your typical citizen around the globe what he thinks about that!

The patented MGS research methodology is that I randomly pick up somebody's phone so that I don't get charged for the long-distance call, randomly dial an area code and a random phone number, and when someone answers, I ask, "What do you think is the best thing to do with a fiat currency that a central bank is devaluing by constantly creating excess money and credit in the banking system?"

The answers, of course, were probably all over the map, but since I don't speak any foreign languages, all their replies sounded like, "How jongg moi gram geschlag hooigang!" or something equally as foreign-sounding, but I think I got enough of the gist of it to learn that they were going to take their money and buy gold!

Therefore, the Important Mogambo lesson (IML) distilled from this important survey is that not even stupid foreigners want their own inflating money! They want gold!

And a little informational sidebar is that we also learned that these foreigners are rude, nasty little people who have so little regard for scholarly research that they get really snotty just because you call them at 2 AM (their time) as part of this important, important research survey, like their not being able to sleep is my fault or something!

So, this study has shown that foreigners don't want their own money, and they do want gold, but you want their money and don't like gold? What can I do but laugh in wonder and amazement, "Hahahahaha!"?

P.S. To get The Daily Reckoning sent directly to your inbox, sign up for our free email newsletter, or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.

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 Sunday, 14 October 2007 | Digg This Article | Source:

Visit The Daily Reckoning's website.


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