-- Posted Wednesday, 19 December 2007 | Digg This Article
| Source: GoldSeek.com
From Asia Times Online my eyes lit upon the essay, "How central bankers could save the world" by Chan Akya. "Wow!" I thought to myself, "This is terrific! I thought banks were there to destroy the world by destroying currencies and economies by creating too much money and credit! But they can now save the world by doing this? Let me excitedly read on and thus be enlightened!"
The sound of laughter was not Mr. Akya chortling at me and my ignorance, which is a nice change of pace, but he was laughing at the climate change discussions in Bali, where their ridiculous Big Plans To Save The World (BPTSTW) from the "global warming" of man-made emission and pollution are being hatched.
He says, first off, that these people may have a point, as all industrial activity obviously creates undeniable pollution. The problem is worse because, "by and large, the world economy thrives on consumption, and especially the American kind", which is proved when he quotes the statistic that "the US economy supplies one in five dollars of global consumption. This, added to the second dollar supplied by Europe, is what pushes global warming. All told," he sums up, "various publications cite different figures, but it would not be hazardous to assign some 30% of global emissions to the US current account deficit", which is a rough third of $780 billion a year. Hahaha! Our gluttonous consumption is causing global warming!
He sees me mulling this over and snickering at the irony of it, and he quickly grows impatient waiting for me to come to some rational conclusion, which is going to be "never", because as soon as I saw him looking at me with that expectant look on his face, I forgot what in the hell he was talking about.
"This," he finally says, "is what the Greens miss completely - they count the emissions of China and India in the same league as those of the US and Europe, and that is wrong because a substantial portion of Asian emissions goes to the manufacture of goods consumed in the US."
The bottom line? If we just stop consuming so damned much stuff, the pollution created would automatically fall! And the central banks can accommodate that by stopping their insane expansions of money and credit! It's that simple!
And who is to blame? For once it is not me, as I seem to get the blame for most things around here, but instead it is, "To a large extent, the twin forces of a disingenuous Fed (euphemism for outright liars) and harmony-seeking Asian central banks (euphemism for dumb no-gooders who wouldn't get a job flipping burgers if their uncles hadn't made them the governors of the People's Bank of China or Bank of Japan or whatever) allow this circle of deficit-financed consumption to persist."
And for these moronic central bankers allowing "this circle of deficit-financed consumption to persist", I grab John Stepek of MoneyWeek.com and stick him right in their stupid faces, because he uttered the most profound truism of such a transcendent magnitude that no central banker in the world today has even guessed at it. He gloriously said, "If the bank wanted to prevent sharp falls in house prices, it should have prevented the sharp rise in house prices." Exactly!
He follows that up with, "What goes up must come down. Falling house prices will hurt - I'm not going to deny it. A house price boom is not a good thing - it creates all sorts of distortions in the economy. But that's the trouble. Our economy has been propped up by house prices and the availability of cheap debt for so long that as it ends, the unwinding of all those distortions will be very painful."
Always looking for a chance to be cruel to people who are better than me in any way, I disrespectfully said, "Not for me, John! I have gold and I have no debts to pay! Therefore, I do not have to suffer at all, and instead I will wax rich! Rich! Rich and haughty! And the tabloids will be bursting with the exploits of 'The Gold Bugs' who are hogging all the good hot-spots of the world because we are 'The New Rich' and some of us are 'The Rich, The Kinky And The Paranoid', which will make a terrific soap opera on TV!"
Well, the bad news is that no TV producer will return my call about this fabulous new TV show, and I soon forgot about it when I read the AP report that "Orders to U.S. factories unexpectedly rose in October although much of the gain reflected higher energy prices." Hahahaha!
This is too, too rich, as I am always finding humor in contemplating the economic horror of high consumer price inflation, and because it hits so spookily close to home! I mean, consider this coincidence: At the same time as this factory orders news hits the wires, for the first time in more than five years, Mogambo Intergalactic Enterprises (MIE) had unit sales fall by 50%. Oops!
With such lackluster demand, we of the executive staff naturally fired damned near everybody, just like the last time this happened, and we spent most of our time stealing cash and assets with both hands and giving each other these fabulous Golden Parachute severance packages with the money that we looted from the employee pension fund.
But in the midst of this "restructuring", one of the little go-getters down in the research department, who didn't notice that we fired him, says that he noticed the good news that we were able to increase prices by 100%, so it looked like we had more business than we really had, and on paper we actually broke even! We sold half as much, but we charged twice as much, which surprised the hell out of us executives, I'll tell you, although some of us seemed to recall something about this in MBA school.
Anyway, prices going up is why it looks like factory orders increased, and is the reason why I am gagging up blood, and if any of it gets on your shoes, don't come running to me because I never said that economics was pretty.
And like the troubles at MIE, "much of the strength came from a big jump in the cost of petroleum and other energy prices, which pumped up orders at oil refineries and chemical plants." So they, too, are showing a profit only by raising prices? Yow! We're freaking doomed! Ugh.
Mogambo sez: It's not, as the book title suggests, a Brave, New World, but it is going to take Brave, New People to face the ugly world that the central bankers have created.
And there is nothing than can make you more brave in the face of this mess than having gold, silver, oil stocks and commodities of all kinds, as this inflationary disaster is just getting started. Although your panic about it should have started a long time ago!
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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. Click here to visit the Mogambo archive page.
-- Posted Wednesday, 19 December 2007 | Digg This Article | Source: GoldSeek.com
