-- Posted Thursday, 11 September 2008 | Digg This Article
| Source: GoldSeek.com
Being Scared Out Of My Freaking Mind (SOOMFM) comes naturally to a coward like me, and getting drunk is a successful coping mechanism, and so I was predictably smashed, but not too smashed, to at least take a look at the weekly release of the Total Fed Credit figures. I am sorry that I did, as I almost vomited in fear (which does not mix well with tequila, in case you were wondering) when I saw that TFC was up a staggering $9.5 billion dollars last week! In one week!
And as bad as this is from an inflationary perspective, this staggering sum is just the beginning, as the banks use this whopping increase in their accounts at the Fed to make more loans - big loans, huge loans, any amount of loans that they want! - without having to keep any money on hand as reserves, as is obvious just by noting that the banks have the exact same "required reserves" of the exact same $41 billion as they did in 1999! Hahaha!
In case you were wondering why I make such a fuss about it, TFC is the magical increase in credit-from-thin-air that the Fed can magically create in the banks by merely pressing a magical button, instantly (and magically!) giving the banks the capital wherewithal to make more loans, thus increasing the money supply (and the aggregate load of debts!) when the money is borrowed, which causes inflation in prices as this borrowed money is used to bid up the prices of goods and services, and which causes a lot of societal friction when people start going hungry because they cannot afford to buy food or energy, and then they start rioting and start electing even WEIRDER people, like McCain or Obama!
Perhaps all this money was used to buy the bonds that increased the national debt by about $90 billion in August! That comes out to a $900 increase in the national debt for every private-sector job in the country! In one freaking month! One!
Of course, being a consumer society that utilizes a fiat currency that springs into existence by virtue of debt, everybody must go farther into debt to make the system work, and sure enough, consumer installment debt zoomed $19 billion in June alone, and then another $5 billion in July, taking the total installment debt owed by American consumers to a staggering $2,587.4 billion, or $25,874.00 dollars per non-government worker in the country!
I bring this up because the latest report of employment showed that the U.S. unemployment rate is now at 6.1%, which is up from 5.7% a month ago. Worse, of the 7 sectors tracked in the report, only in government and education/healthcare is employment rising! Everybody else is shedding jobs! Yikes!
Bob Wood of Kaizen Managed Assets has also looked at the report, and says that although the government announced the news that another 84,000 jobs were lost and that the unemployment rate shot up to 6.1%, he says, "if the truth were known, it was a lot worse than that" because that number was derived after the Bureau of Labor Statistics assumed that 125,000 jobs were created using the birth/death model, "so the real loss of jobs was closer to 200,000. And while the managed unemployment rate was 6.1%, the broader measure that captures workers who can't find full time work, but whose first choice is to take one today, the unemployment rate is 10.7%."
And worse of all, since these are government figures, we know that everybody connected with them are lying, and the statistics are too low by half!
The Household Survey of employment also showed job losses, 342,000, so that Mr. Wood is driven to say, "So far this year, the official line from the government is that we've lost about 600,000 jobs in 2008", which is not to mention that almost 700,000 jobs were "assumed to have been created by the BLS using the birth/death con."
But no matter how you look at it, Andy Sutton of my2centsonline.com says, "the employment situation is bleak, initial claims for unemployment are well over what are generally used to 'call' a recession, and even worse, these job losses are causing an increase in individuals raiding retirement savings accounts."
And how much money is in those retirement accounts? Hahaha! Less than $50,000 on average! How long do you think you can live on what's left after paying taxes on $50,000 in today's high-inflation world where the prices rise daily and the dollar loses half its value every few years? Hahaha! We're freaking doomed!
If you are not laughing, then I know that you are not an owner of gold or silver, or even commodities, which thrive in times like these. So, learn to laugh by buying gold, silver and oil, and lots of them! The more, the merrier! Hahaha!
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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, 11 September 2008 | Digg This Article | Source: GoldSeek.com
