-- Posted Thursday, 8 May 2008 | Digg This Article
| Source: GoldSeek.com
I woke up in the famous Mogambo Fortress Of Paralyzing Fear (MFOPF) just before dawn, bathed in sweat after another restless night of nightmares about inflation. The nightmares come in two varieties, in case you were wondering. The first variety is that my wife, children, family members and creditors are all demanding that I give them more and more money, while social workers and judges are standing behind them, urging them on, and I am running and running, but I can't seem to get away. Over my shoulder I yell "You'll never take me alive!" and they all yell back, "That suits us fine, you Stinking Mogambo Tightwad (SMT)! We just want your money!" and I scream and scream and scream at the prospect.
The other variety of nightmare is that little microbes that look just like Alan Greenspan (former chairman of the Federal Reserve whose insane monetary policies have destroyed the dollar and the American economy and have condemned us, for One Big, BIG Thing (OBBT), to death by inflation in consumer prices, and God knows what all else, too, because there will be lots of "elses", all of them bad) are literally eating my internal organs, which causes an intense pain in my wallet, and I am running from doctor to doctor looking for a cure, but all the doctors look like Hillary Clinton shrilly demanding everything I own (probably because her bright idea is to come up with more and more unfunded mandates to force more and more healthcare providers to provide more and more healthcare to anyone who asks for it, whether they can pay or not, which they can't, or they don't, which is why they all turn to me to pay for everything, which is probably why I am having this nightmare all the damned time).
But now awake, I brushed the sleep and tears from my swollen eyes and yelled into the intercom for somebody to please bring daddy a cup of coffee ("Or else!"), when I noticed that it was quiet. Too quiet. And anybody who has ever seen an old movie on TV knows that when things are quiet, too quiet, it means danger, mostly in the form of bullets or arrows suddenly flying your way, at which point you turn to your own bullets and arrows, and it's a hell of a tussle from then on.
Sure enough, no sooner had I decided that I did not have enough bullets and arrows in prepared response to this sudden quietude than I discover the reason for the quiet; Total Fed Credit at the Federal Reserve was down by $4 billion last week! And the total amount in this fount of miraculous credit is seemingly stuck at $864 billion, which is not only down for the freaking week, but is also down since last freaking YEAR at this time!
My hands shook so much at this news that I dropped some bullets and arrows, which is usually a bad thing to happen. The reason for my being so startled was that this Total Fed Credit is the magical stuff from which loan-able funds magically appear on the books of the banks, which is turned into money when somebody borrows it from the bank.
That's how the money supply grows these days, which means that money literally comes from debt, as unwholesome and bizarre as that sounds, and as unwholesome and bizarre as that actually is. But this is not leading to one of my Predictable, Loud And Tiresome Mogambo Editorials (PLATME) about the absolute stupidity of the fake, fiat money that we use as currency, or the sheer preposterousness of allowing the banks to act so stupidly in creating so much money and debt, or about sheer insanity of disregarding the requirement, per the Constitution, that money be only of silver and gold so that money would not lose buying power due to over-issuance of money, mostly because that boat has sailed and now we are freaking doomed.
Instead, this is about the terrifying ramifications of not doing it anymore, as seems to be the case, which is where we find out exactly what is meant by the word "doomed".
In short, once you get started with an idiotic economic system like this, debt must never stop growing because everyone owes both the money AND interest, and that means that money must never stop growing, even if you are just paying the interest that is due this money that was borrowed!
Therefore, your blood should run cold when you see that Total Fed Credit, the actual source of new dollar debt, it is not growing. As I was contemplating how my blood got suddenly colder, I was taking a long pull from a bottle of really cheap tequila to try and calm my ragged nerves about this lack of additional TFC thing.
It didn't work. I just got sloppy drunk. And I dropped the bullets and arrows again, which, fortunately, stopped it from being quiet, too quiet. But I am still, obviously, nervous and drunk, and for good damned reasons, too. I think I'm going to puke, and for a lot of reasons, too.
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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, 8 May 2008 | Digg This Article | Source: GoldSeek.com
