-- Posted Thursday, 17 April 2008 | Digg This Article
| Source: GoldSeek.com
Total Fed Credit, the actual source of the fabled Money From Thin Air (MFTA), was surprisingly down by $8.7 billion last week, which is NOT the kind of thing you need if you are trying to buy your way out of the big stinking mess you have made. And you can believe me as a guy who has tried to buy his way out of a lot of embarrassing messes over the years!
First thing you do, usually, is carefully forge your wife's signature on some stupid forms so that you can quietly draw down your savings or tap the kids' college funds or something. Sure enough, the Fed's own stash of government debt was suddenly down another $28 billion last week, about 5% of their total stash gone in one week, as those Fed weenies flail around in their hysterical panic at the mess that they have made with their ridiculous neo-Keynesian, econometric theory and laughable computer models.
Like, one of the supreme stupidities of the Federal Reserve is thinking that there is no upper limit on debt, and now they believe that growth in asset prices via additional money and debt is more important than controlling inflation in consumer prices, which is caused by the additional money and debt! Hahahaha! Theater of the Absurd at its best!
And it isn't just the Greenspan and Bernanke weenies, but also Milton Friedman, the "father of the monetarist school of economics", who never saw too much debt as a problem, and who only cautioned that the money supply should not grow too quickly. As Darryl Robert Schoon of drschoon.com writes, "Markets dependent on credit-based paper money produce increasing levels of debt until the amount of debt becomes unsustainable. This is where we are today. The growth, contraction and coming collapse of debt based credit markets is Friedman's legacy, not free markets. Friedman's theories gave bankers the intellectual cover they needed to indebt America beyond its ability to repay and indeed survive. Hailed as the champion of the free market, Milton Friedman was, instead, its leading assassin."
As a result of all of this monetary madness in the past year alone, the dollar is down roughly 20% in comparative purchasing power against key currencies! In one year! What this means to you and me is that, on a stand-still basis for foreign exporters, we would have to pay prices that are 20% higher for our imports, just for them to break even when converting dollars back into their native currencies! Hahaha! We pay more for things! Welcome to the hell of a falling currency!
But there is so much panic that the Fed and the government are doing weird things, and sure enough, even a cursory glance at the repo market, as made handy at 321Gold.com, shows that absolutely astonishing sums of money are flying around through the banks, being lent on a short-term basis, to the tune of (hold onto your freaking hat!) $40 billion per DAY! And more! Per day!
And all of the money being pounded into the economy by the federal government and the Federal Reserve is finally making the prices of commodities rise in a general inflation. But with all this new money being created by the central banks looking for somewhere to go, the world is not producing any more commodities, as we learn from an interview of Jimmy Rogers, identified as a "private investor" in Barron's this week, who says, "the commodities market started in early 1999. But nobody had brought on any new supply of anything in the last 25 or 30 years. The last gigantic oil field was discovered in the 1960s. The number of acres devoted to wheat farming has been declining for more than 30 years. Food inventories are the lowest they've been in 60 years."
In short, be prepared for huge inflations in food prices, and generally all commodities, too, which will get so bad that it will "end in a bubble and hysteria", which he figures will peak in 2018. Maybe.
Anyway, he summarizes that "the real problem is that our foreign debt is increasing at a rate of $1 trillion every 15 months." Yikes! He's right!
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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, 17 April 2008 | Digg This Article | Source: GoldSeek.com
