-- Posted Friday, 20 June 2008 | Digg This Article
| Source: GoldSeek.com
I was in the middle of one of my better bitter rants about the despicable Federal Reserve creating too much money and credit, and the equally despicable Congress that lets them do it, and I was really cooking about how only the biggest idiots in world history are not buying gold and silver in response to such profligacy, and how I support legislation that would require adults who do not own gold and silver to have their foreheads tattooed with the words "Me stupid" so that everyone would know who they were, and I would not have to waste my Precious Mogambo Time (PMT) trying to educate them as we wait in line to get our stupid driver's licenses renewed.
This prompted a lot of discussion ("Kill that Vicious Mogambo Bastard (VMB)!), and in the tussle I lost my place in line and wound up at the end of the line, which made me angry, and none of them said that they were persuaded to use their renewed licenses to drive out and get some gold and silver, which made me so angry that I peed in my pants.
After that embarrassment, you can imagine my jealousy and envy that Dominic Frisby in Moneyweek.com sums it up in just a few sentences, and in terms that the average person can understand: greed.
He writes, "In the long-term it does not matter what central bankers say. What matters is what they have done. Gold and oil are going to go a lot higher. But how high? I'll tell you. Perhaps $8,500 for gold and $400 for oil."
The more quizzical of us might ask, "Why?", and as if to anticipate the question, he writes, "Here's why; central bankers can't talk down inflation", which is timely, in that both the USA and the EU are making noises about how inflation is too high, and how they are going to get up off of their fat, stupid butts one of these days after it is too late to do anything about it.
What will they do? Hahaha! They will, reluctantly, raise interest rates a teensy-weensy bit and try, try, desperately try to cool off the raging inflation that is the result of decades of monetary over-issuance. It won't, obviously, work, and in fact, raising interest rates makes prices rise in the short run as it increases the costs of all the financing that is done, up and down the line!
Perhaps the fact that nothing can be done explains their inaction, because if something could be done, somebody would have thought of it in the last 3,000 years of idiotic governments destroying themselves with creating too much money and credit. Nobody ever has. Nobody ever will.
That, for me, explains why, as Mr. Frisby says, "Despite all the rhetoric, nobody has actually done anything yet."
In the meantime, he observes me bellowing that people are ignorant, raving lunatics about money and inflation, which perhaps explains why he asks "Why, oh why would anyone buy a bond or a gilt? You might get yields of 3%, 4% or 5%, but the cost of living is patently rising by so much more than that. Virtually guaranteed to lose purchasing power, it just doesn't make any sense."
From that, he concludes, "The bubble, if it's anywhere, is in bonds and they, in my humble opinion, will be the next one to pop."
And it will probably be because the banks went bust, as they are the ones who create all the money to buy bonds, driving their prices to these lofty heights and interest rates to these laughable lows. And that time may no be far off, as I conclude from Junior Mogambo Ranger (JMR) Stephen D., who looked at the latest release of the FDIC Quarterly Banking Profile report, and was stunned to see that in the fourth quarter of 2007, banks had reported $5.8 billion in income, while restatements caused fourth-quarter net income to decline to a lousy $646 million.
JMR Stephen says, "Note what the FDIC is saying here. The banking industry reported $5.8 billion in earnings to its investors, but restatements took that total down by 89%."
I guess that Agora Financial's 5-Minute Forecast hears us talking about the banks, and chimes in with "The combined profits of all FDIC-insured banks plunged 46% in the first quarter. Banks in the U.S. made $14 billion less last quarter than they did the year before."
So no matter how bad your life is, it could be worse; you could be a bank! Stupid, greedy and broke! Hahahaha!
P.S. To get The Daily Reckoning sent directly to your inbox, sign up for our free email newsletter, or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
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, 20 June 2008 | Digg This Article | Source: GoldSeek.com
