-- Posted Wednesday, 29 October 2008 | Digg This Article
| Source: GoldSeek.com
Around here I am famous for many things (and many people have a fistful of restraining orders against me to prove it), but most of them are for always loudly recommending that people buy gold, silver and oil when their governments are acting like spendthrift, profligate, Leftist morons. Like now.
Undeterred, I am always soon back to screeching - again loudly - that everyone should be buying gold, silver and oil…while some people feel compelled to make helpful comments ("You should shut up and die, you idiot!").
Others have questions, such as, "Mogambo, why are you always recommending that people buy oil-related investments, and even buying and storing oil itself if they have an empty swimming pool nearby, a spare sink or a lot of empty bottles lying around the living room amongst the old newspapers, empty pizza boxes and old buckets of fried chicken, which would explain all the chicken bones everywhere?"
It is always difficult to know how to respond. To cover it up, I usually go into a Long Mogambo Harangue (LMH) about how oil has the most intrinsic energy per cubic unit of volume, how it has the most developed applications, the Utter, Utter Dependency (UUD) on oil for every aspect of modern civilization, or the fact that Peak Oil is obviously not a myth and how we have not only passed the point where half of the world's in-ground oil is used up and gone, but we are surely past the point where there will be much more oil discovered in large quantities, which is terrifying when considering how China is already demanding huge amounts of oil and their demand seems destined to increase.
As proof, you don't have to listen to me and my loud mouth this week, which many of you will be pleased to know, but you can read it at Bloomberg.com where they reported that China, which is already the world's second-largest energy user, "increased crude-oil imports to a record last month, taking advantage of falling prices, as domestic refining capacity climbed. Crude imports surged 46% to 20 million metric tons or 4.87 million barrels a day in September from a year earlier." Imports of oil went up by almost half! Half! In a year!
However, happily I no longer have to waste my Valuable Mogambo Time (VMT) with expressing my fear and horror of inflation in the price of oil, usually involving Sickening Spittle Spewing (SSS), which is hard to say five times in a row, and I usually end up being subdued by burly Security Guards or paramedics as I escalate a loud, disjointed, xenophobic, libelous, overtly threatening, irrational tirade against the villainous Federal Reserve, the utter, utter stupidity and corruption of the traitorous Congress (except Ron Paul), the Supreme Court, and anybody who even looks at me cross-eyed these days.
But that is not actually the point, and what I am trying to finally get to has already been perfectly stated in a Chevron Oil advertisement where they say, "It took us 125 years to use the first trillion barrels of oil. We'll use the next trillion in 30."
And you can soon see the effects of having a strong currency, as Bloomberg.com seems to report when they write that China can now export inflation. To wit: "China's trade surplus widened to a record in September as exports withstood the global economic slowdown and falling commodity prices reduced the import bill." Nice work!
No wonder all our Treasury secretaries always said that "a strong dollar is in the interests of America", and now we see that, similarly, a strong yuan is in the interests of China, as it makes oil, food and all imports cheaper!
And while headlines like how China's "Exports rose 21.5% from a year earlier to $136.4 billion after gaining 21.1% in August" seem wonderful and bright, the fact remains that China's trade surplus is only $29.3 billion, whereas our annual American trade deficit is 27 times higher - at about $850 billion.
On the other hand, there was another Bloomberg.com article that gave me the distinct idea that China's new rulers are complete economic morons, and they are going to purposely create price inflation in China so severe that people will starve to death in the streets because they cannot afford to pay the rising costs of food, so that there will be a large domestic uprising or a war where a lot of male Chinese people will die, which would solve a lot of their problems, as I gather from a Bloomberg.com article that "China's Communist Party aims to double rural incomes in a bid to boost domestic consumption.". Gaaahhh!
Well, if they think that doubling incomes will boost consumption, and that the higher consumption will be met by higher productions, then they are perfectly correct, and it will almost certainly work like a charm, too.
If you are like me, then you are NOT thinking about that at all, but rather you sat there, your mouth hanging open in stunned disbelief, your eyes bugging out, drool actually dripping down your chin, paralyzed in horror at the sentence "double rural incomes", and whole swaths of your brain's neurons turned to a burnt-out, cinder-like substance at the sheer inflationary monetary horror of such a thing, and you end up regaining consciousness looking up into the face of "Hi! I'm Steve!" the paramedic as he is trying to strap you down and take your vital signs while you are pleading, "Please, you have got to stop those stupid damned Chinese from doubling incomes! The inflation in prices unleashed from such monetary inflation will destroy them! Unleashed! Unleashed, I tells ya!"
Well, they finally let me go when resorted to the Mogambo Big Gun (MBG) where I politely inform them that I consider any further encroachment upon my person as a threat of physical violence against my person, and seeing as how this is a 0.44 magnum, the most powerful handgun on the face of the earth, it will blow their heads clean off, they had to ask themselves a question; 'Do I feel lucky?' and I so said, 'Well, do ya, punk?', and they said 'No!'"
Well, as I finish herding them out of my office and hearing them mumbling terrible things about me under their breaths, I read that the Bloomberg article goes on "The government aims to achieve those goals and eliminate 'absolute' poverty in rural areas by 2020." Eleven years! Gaaaah!
Now I am again on the floor, gasping for breath, clutching my pounding heart at the prospect of incomes rising at almost 7% a year to start with, and then at the prospect of the Chinese consumers figuring out that borrowing and consuming now is a smart move, since they will be paying back long-term loans with guaranteed higher incomes and a much cheaper yuan, thanks to all that inflation! Gaaaahhh!
We're all so freaking doomed!
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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 Wednesday, 29 October 2008 | Digg This Article | Source: GoldSeek.com
