

-- Posted Thursday, 10 January 2008 | Digg This Article | Source: GoldSeek.com



My eyes flickered open. It was morning. I knew something was wrong. I was right, as I soon learned: Total Fed Credit exploded by $18.2 billion last week! Wow! Big move! The terrible news had apparently been instantly conveyed to the family and neighbors, as the whole neighborhood was quiet and deserted. The little cowards somehow sensed that I would go berserk at such insane monetary policy, as I usually do, but this time they were wrong. I figure it was just businesses doing an extraordinary end-of-year panicky clutch at cash, for whatever reason, as they desperately try and get their books in order for the annual midnight, December 31 deadline, and the Fed and was just being accommodative, because if there is one thing that you can say about the Federal Reserve, it's that they are accommodative� To a freaking fault. Of course, there are many other things that you can say about the Federal Reserve, all of them uncomplimentary, and all of them said by me at one time or another, always interspersed with cursing, and spitting, and screaming, vowing bloody revenge and standing out in the street trying to get the stupid neighbors to do a little cursing and spitting and screaming and vowing bloody revenge, too, about the terror of inflation in prices that is descending upon them, but they are always too busy being stupid to listen. And to be fair, I never used the word "accommodating" when referring to the Federal Reserve constantly destroying the dollar and the American economy with their lunacy of constant inflation by monetary excesses, which lead to horrifying increases in prices. "Accommodating" means, for instance, that the family lets me have first pick of the pieces of fried chicken at dinner, instead of getting into a fistfight with me about who gets what. No, what the Federal Reserve has done to us is much, much worse than being merely "accommodating." And things are going from bad to worse, as the Associated Press reported that, "The Federal Reserve announced Friday that it is increasing the amount of money available to banks through the new auction process it created to ease the nation's severe credit squeeze. The Fed again pledged to continue the auctions 'for as long as necessary.'" If this is not horrifying in itself, because you are a "numbers person", the facts and figures are that "The Fed said that it will increase the amount offered at each of the next two auctions from $20 billion to $30 billion, a 50 percent jump. Those two auctions will be Jan. 14 and Jan. 28." $30 billion of new money every two weeks? $780 billion more money and credit jammed into the economy in a year? Wow! We're so freaking doomed! Not surprisingly, "The Fed announcement indicated that the auction process it began last month has been successful in providing a source of loans for cash-strapped banks." Hahaha! Free money is popular? Hahaha! Who knew? Hahaha! Popular? Of course it's popular, especially when the market is already pricing in a 0.50% cut in interest rates by the Fed in a couple of weeks, if not before! Therefore, any government debt bought now would go, theoretically, up in price if the Fed lowered interest rates! Popular? Of course it's popular! What in the hell did you THINK would happen? Hahahaha! But there is One Main Reason (OMR) why so much money was created last week, even though there is no reason for me to laugh so heartily at the inflationary horror that is developing right in front of my Bloodshot Mogambo Eyes (BME); somebody wants to borrow it, and the Fed and the banks desperately want somebody to borrow it, and the government desperately wants somebody to borrow it, and so the banks keep making loans so that the stupid banks and the whole dysfunctional system doesn't go belly-up like they should. Or maybe all this borrowing has something to do with what Jennifer Hughes in the Financial Times is writing about when she says, "Here we go. The books are closed and 'busy season' for auditors has arrived. A slowing economy and banks' rising caution over lending is expected to spark a rise in business failures." And maybe the businesses know that the auditors are going to be especially keen-eyed, as Ms. Hughes says that this bust "inevitably will produce the age-old question of 'where were the auditors?'" Oops! Did you notice how I veered off the subject, which was that I was self-righteously heaping scorn and ridicule on the Federal Reserve, into some tangential crap about auditors? To try and salvage as much prior momentum as I can, I start off with a "Slowpoke" cartoon by Jan Sorenson, in which it is revealed that the "Nobel Prize Loser" in economics was "Jan Graffer - inventor of the 'Graffer Curve' illustrating the economic benefits of drawing theoretical curves for a living." Hahaha! This is another example of, "It's funny because it's true!" categories, as when one considers that the Federal Reserve is this selfsame "Nobel Prize Loser" in economics, in that they derive the benefit of employment and awestruck deference of the whole country and the Congress, and are allowed to risk the entire economy of the United States as they experimentally tinker with their precious little computer models and their incomprehensible, error-laden equations to guide their disastrous monetary policy! Did I say "disastrous"? It's worse than that! They are an utter, dismal failure at it! So tragically have they failed to provide "stable prices", meaning zero inflation, that 97% of the original dollar's buying power of 1913 (when the Fed was created) is gone! And worse, now we have the monstrous Ben Bernanke actually wanting to "target inflation", which means to deliberately create inflation in prices, as part of official monetary policy! Insanity! And at 321Gold.com we get the amazing fact that on Monday, December 31, the National Debt was $9,229,172,659,218.31, which was a "New all-time high", which means that something very interesting must have happened over the weekend, because Friday, December 28, two days previously, the National Debt was only $9,120,549,682,475.62! Wow! Almost $129 billion in two days! And Bernanke is talking about creating inflation in prices even as all this money and debt is being created, and even as John Williams at shadowstats.com proves that inflation in prices is running at over 10 freaking percent right freaking now! This 10% level is, at every point in history except right now, the place where people are rioting in the streets and bankrupted people are jumping from window ledges because they are ruined, and all the way down they can hear the words of The Mogambo echoing in their ears, "You should have bought gold when I told you to, but noooOOooooo! Not you! You are too smart to listen to a street bum named The Mogambo Guru, and too stinking cheap to loan me a lousy five bucks! No, for someone as smart as you, it's too easy to just to look at the whole rest of economic history to see what happened to every other dirtbag country that let its dirtbag government spend the poisonous fruits of the creation of excess fiat money and credit!" Well, I figure that is all they "hear" in their heads, as most buildings aren't that tall, and so I never really get the chance to say, "And what happened to the people who bought gold, you halfwit lowlife moron? They were the 'new rich'! Which is what you would be, if you had listened to me and bought gold!" To be fair, gold is not gaining value as much as the dollar is losing purchasing power, as is obvious if you look at gold when priced in barrels of oil, or bushels of wheat, or any of the tastier pork products or pizzas containing them, which hurts most of all. 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 Thursday, 10 January 2008 | Digg This Article | Source: GoldSeek.com

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