-- Posted Friday, 30 May 2008 | Digg This Article
| Source: GoldSeek.com
The Economist magazine says that as wildly inflationary as is the growth in the money supplies of the United States, the EU and the whole freaking developed world, now that you mention it, it is worse in the developing world, as "Money supplies are growing almost three times as fast as in the developed world"! Yikes!
My surprise was such that I almost missed it when they said that it all seems very likely since wages are growing at 30% a year in Russia and about 20% in China! My God! It's the dreaded wage-price spiral!
Guts churning at these prospects of runaway inflation, I read on and discover that "As the Fed cut interest rates, emerging economies that link their currencies to the dollar have been forced to run a looser monetary policy, even though their economies are overheating. Emerging economies with currencies most closely aligned to the dollar, notably in Asia and the Gulf gulf, have seen the biggest price rises."
And in case you want to know if the dollar is aligned with the dollar, then - Hahaha! - yes, the dollar is most certainly aligned with the dollar, and therefore, as the Economist magazine says, we well see "the biggest price rises."
And don't think that you can do better by investing in the stock market, because you can't. And if you think you can, then let me quote from an article titled "Catch two-and-twenty" in The Economist magazine, which again reminds us of a mathematical certainty, which is that "The average fund manager cannot earn more than the market. After costs, he must earn less".
Easily extrapolating from fund managers (which I do not care about) to me (which I do care about) and then to you (which you probably care about), this is the same thing as saying that "the majority of investors must lose buying power so that a small minority can gain buying power, and if you think that you can retire by investing in the stock market or the bond market, then I laugh 'hahahahaha' at you and call you names that imply that you are stupid!"
Well, the Economist magazine obviously does not want to get into discussing who is stupid or who is the most irritating and truly hateful little man that they have ever encountered, even though one of the weirdest things I ever encountered was later in the article where it said that "in more exotic asset classes, the long-term expected return may be zero"!
My mind screams out "What? What in the hell kind of a stupid asset class has a long-term expected return on zero? This is insane! InsaaaaAAAaaane!"
Later on, paradoxically, the article goes to report that pension funds and endowments have "traditionally" invested in "shares and property" because "they are in for the long haul and can ride out short-term fluctuations", even though the article started out saying that "the average fund manager cannot earn more than the market"! Hahahaha!
Next, I bring up Gary North, writing at LewRockwell.com, who notes that the Standard & Poor's 500 index "briefly went above 1560 in October. That exceeded its peak on March 24, 2000, when it closed at 1527."
To be as generous as possible, he doesn't use gold to wring inflation out of the prices, but uses the most manipulated, most fraudulent, most corrupt indices of inflation; the Consumer Price Index.
And even doing that is not much help, as Mr. North says that "since 2000, the consumer price index has risen by 21%. To break even, the index would have to be at 2124, to pay the 15% capital gain tax and get the investor out at 1847, net." Hahaha!
Again, it's proved that the majority must lose money in the stock market so that a small minority can make a profit, and the longer the term, the more certain is the loss.
And another Law of Economics is that gold soars to undreamt-of heights when large financial bubbles deflate, in case you were thinking it was hopeless and thus you were confused at my Utter Mogambo Calmness (UMC) in the face of such disaster.
To tell intelligent Earthlings about gold being their financial and economic savior, and to remind them that the Austrian school of economics already exists in case they want to know why, is why I was sent to this planet, although it's tacos and pizza that makes it bearable!
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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 Friday, 30 May 2008 | Digg This Article | Source: GoldSeek.com
