-- Posted Sunday, 1 June 2008 | Digg This Article
| Source: GoldSeek.com
At the drop of a hat, it seems, almost anything can predictably get me worked up about inflation, and I was just getting ready to, you know, go freaking ballistic about how the damned Federal Reserve has condemned us to the Hell Of Inflationary Horror That Makes The Mogambo Scream His Guts Out In Terror (HOIHTMTMSHGOIT) with its insane-yet-irresponsible over-creation of money and credit for all these long lonely decades (and especially so since 1997!), when Barron's cuts me off by noting that "a recent analysis of oil prices over the past 50 years, adjusted for the increase in the money supply as measured by a gauge known as M3", shows that "the price of a barrel of petroleum today should be LOWER than it was in 1959".
And why isn't crude oil today priced lower than at anytime in the last half of a freaking century, but instead is a zillion times higher?
I think to myself, "That question is easy! It's because the damned Congress (except Ron Paul) let the damned Federal Reserve create so much money and credit, so insanely much money and credit, so freaking damned insanely much money and credit that the purchasing power of the dollar was destroyed in the process, and that means that things priced in dollars will go up in price, such as oil, as we see here!"
Naturally, I was startled and surprised that I knew the answer to a question! After all these long, lonely years of teachers calling on me in class and asking me some stupid questions to which I had no answer - or even any clue! But where I learned that, like all cornered, paranoid rats, I instinctively get vicious and belligerent, snarling and biting, ruthlessly clawing my way out of the situation.
But now, at last, I know the answer! I raise my hand to get permission to speak so that I can show off, but then I figure, "What's the point? Nobody will believe the Austrian school of economics after all these decades, especially after every one of them has been indoctrinated in that whole neo-Keynesian, 'deficits don't matter', 'inflation doesn't matter', 'lowering-interest-rates-works-every time without limit', econometric crapola of a stupid, stupid, stupid economic theory, which is my excuse for wasting my health and my life by getting drunk and having a ruined family life."
So you can imagine that I was pretty despondent, in that I knew the answer, but resigned myself to being ignored again. Instead, imagine my delight and surprise that Barron's correctly "lays the blame for surging petro prices squarely at the feet of Uncle Sam, particularly the Federal Reserve"! Hooray for Barron's!
Again, I am despondent because it shows that Barron's no longer needs me to call them up and yell into the phone, "We're freaking doomed, you bozos, because the Fed is creating so damned much money and credit that a roaring inflation will descend upon us! Why don't you alert the nation, or put me on the cover and I'll do it for you, you morons!"
Well, maybe I finally got through to them, or maybe they got smart because the cover of this week's Economist magazine screams out "Inflation's back", but with the qualifier "but not where you think", which is their clever way of saying that America and Europe are not the centers of the universe, but that "Double-digit prices rises are about to afflict two-thirds of the world's population."
The Economist dryly notes, "the average world inflation rate has risen to 5.5%", because central bankers made a mistake "to hold monetary policy too loose", which brings up the pivotal point that "it is worrying that global monetary policy is now at its loosest since the 1970s: the average world real interest rate is negative." Hahaha! Negative!
It's "worrying", they say! Hahaha! Monetary policy is so loose that real interest rates (the nominal interest rate less the rate of inflation) are less than zero, and they think it is "worrying"? Hahahaha! Talk about British reserve and understatement! Hahahaha! Wow!
The net result is that not only is this self-serving, world-wide spider's web of "investment professional" cretins tying up everyone's money for up to 30 years or more, at yields that are at record lows, so that for the rest of your life you are derisively known around the office as "old buy-at-the-top", but they are also guaranteeing that you will suffer a huge, huge net loss as the market price of your debt goes down as interest rates rise!
And you think that interest rates are NOT going to climb dramatically, handing huge, huge, HUGE freaking losses to any idiot stupid enough to own debt that is so grossly, grossly, grossly over-priced? Do you actually, really, truly believe that interest rates will always stay below the rate of inflation? Hahahaha! Stop it! My sides are hurting from laughing! Hahahaha!
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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 Sunday, 1 June 2008 | Digg This Article | Source: GoldSeek.com
