-- Posted Thursday, 28 February 2008 | Digg This Article
| Source: GoldSeek.com
With all the panic born of desperation happening all around us, it is not surprising that Total Fed Credit expanded $8.5 billion last week, taking us back to $867 billion of pure bank credit, which was turned into money when somebody borrowed it from a bank, increasing the money supply and providing the financing for inflation in prices. Wonderful. Just freaking wonderful.
Interestingly, even with this latest boost, growth in TFC is still slowing, which would be obvious if we plotted the thing out on logarithmic graph paper, which I don't do partly because I don't understand logarithmic graph paper, but mostly because it would mean doing actual work. And since I am already not doing work I am supposed to be doing because I am lazy, screw that!
But if TFC was plotted out on this mysterious logarithmic paper, the line on the graph would be sloping down, even though the line on the familiar linear graph of TFC would still be going up! One graph of Total Fed Credit is going down while the other is going up! Weird! People want to know, "What can it mean?"
It can mean a lot of things, I guess, but mostly it means that money is still being created, although it is not being created as fast as it is usually being created, probably thanks to me personally calling the Federal Reserve all the time so that I can clue them into how economics really works, since they seem to be so clueless. And to let the receptionist know right off the bat that I am a force to be reckoned with and that I know what I am talking about, I always demand to speak to, "Fed Chairman Ben Bernanke, the idiotic neo-Keynesian econometric halfwit loser who is in charge of handling the disastrous inflationary consequences of his damnable predecessor, the satanic Alan Greenspan!"
Well, I never actually got through to Mr. Bernanke, but I am sure that I am having an effect at the Fed, because just as the receptionist is putting me on hold, I can hear her saying, "It's him! That Lunatic Mogambo Moron (LMM) is on line six!"
But we are not here to talk about how I can't get through to the dim bulb chairman, or how the receptionist staff at the Fed has a pool where they place bets on how long I will stay on hold before hanging up in disgust, how long before I start making disgusting slurping noises while eating or drinking something, and I hear there is also a long-shot side-bet of "audible fart". No, we were talking about how the linear graph of Total Fed Credit is going up, meaning that more money is being created, but the logarithmic graph of Total Fed Credit is going down, indicating that the rate of money creation is going down.
And since almost every dollar in existence was created out of thin air at the instant someone borrowed from a bank (as that is the bizarre kind of economy that we have in the United State), every one of these borrowers was then obligated to pay back more than was borrowed, and all that interest compounds and compounds, which means that the money supply must keep growing in a geometric fashion forever, too, compounding and compounding.
But irrespective of whether it does or it does not, you should be getting very panicky about this monetary crap, and you should be buying as much silver, gold and commodities (like oil) as you can get your frightened, grubby mitts on, thus getting rid of the little bit of dollar-money you have left over after building an expensive fortified bunker in the back yard, and supplying that sucker with armaments, stored food and beverages, because a money supply that grows in a compounding fashion like that makes consumer prices rise in a corresponding geometric manner, which causes social unrest, such as we see in the headline at NYTimes.com, "Rising Inflation Creates Unease in Middle East".
The article starts right off with, "Even as it enriches Arab rulers, the recent oil-price boom is helping to fuel an extraordinary rise in the cost of food and other basic goods that is squeezing this region's middle class and setting off strikes, demonstrations and occasional riots from Morocco to the Persian Gulf", and, "In Yemen, prices for bread and other foods have nearly doubled in the past four months, setting off a string of demonstrations and riots in which at least a dozen people were killed." Killed!
The good news is that none of the killed people were named Mogambo, so I'm OK, and the difference between them and The Mogambo is that one has a bunker, gold and some serious firepower, and at least dozen others don't.
There is a lesson in there for all of us!
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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 Thursday, 28 February 2008 | Digg This Article | Source: GoldSeek.com
