MoneyTec 2.0 - Online Forex Traders & Brokers Social Networking Community » Trading Talk » Fundamental Trading

[novice]

from:

http://www.321gold.com/editorials/da...hty022305.html

We need to take more of those blue pills
Richard Daughty
...the angriest guy in economics
The Mogambo Guru
Archives
February 23, 2005

- The week had a lot of interesting surprises, in my personal Mogambo opinion (IMPMO), which is unique among the universe of opinions, in that it is the only one that comes with the coveted Mogambo Guarantee Of Worthlessness (MGOW), which itself costs ten bucks, plus a shipping and handling charge of another ten bucks, plus tax, tag and title, bringing the total to, let me check that calculator again, fifty bucks, which is such a huge premium over value (zero) that I ought to get some kind of prize.

But if I print on the face of the MGOW certificate the word "fifty" and numerals "50", then you could use them as money if you could find some other dimwitted guy who was ALSO willing to use MGOWs as money to use in a trade, whereby I trade a worthless MGOW certificate for fifty bucks worth of stuff, and then I quickly haul it out of his store and into the trunk of my car and then I beat it out of town.

The problem is that finding guys willing to take MGOWs as money is the hard part, as people are not as stupid as you think, even though you take a look at the socialists and class-warrior dorks that they elect to our governments, and you think to yourself "Whoa! These voters are idiots if they think that such things are sustainable!" And yet nobody in the schools or the media say anything any different, so they all must think that way, too, and so you know right away those morons can't be that smart, either. But (and this a little self-test) if you think that the people who infest the schools and the media ARE smart, then that says something ugly about YOU!

Then I discovered, quite by accident, that if I remind the guy that I am armed and not in possession of all of my faculties, then I can usually get them to go along with me on the MGOW-as-money thing, especially when I remind him of what happened to that Girl Scout troop who were selling cookies and refused to play ball with me on this MGOW scheme of mine, and I distinctly told them how this was a great "opportunity" which implies a risk premium that has to be paid. But I guess they figured that since they were just little girls and it was broad daylight, that nobody would pick on them. Ha! They obviously did not figure on The Mogambo, who has learned his lessons well at the feet of layers and layers of government. Now, my target of choice is ONLY the weak and defenseless. Naturally, they then usually say "OK" and I can usually scarf down a whole box of Thin Mints between the time anybody calls 9-1-1 and the time the squad cars start showing up.

But now I sitting in a holding cell downtown, trying to convince the police to, instead of harassing me, go after the REAL criminals! So I am gently explaining to them, with charts and diagrams, how they should go after Alan Greenspan, as he is the enemy of our money and our country. So I am calmly saying things like, "The Federal Reserve is destroying our money! Can't you see that, you freaking idiots? Or is this the precinct where they send all the morons, the cretins, misfits and the borderline mentally-ill halfwits?"

Of course they look at me with that blank glazed look on their faces and that powdered sugar on their chins. So I say, "Okay, let me show you what I mean. Take a twenty dollar bill out of your wallet. Now hold it up to the light and look just to the left of the face on the bill." So he takes out a twenty, and holds it up to the light, and while he is squinting at some mysterious spot on the bill, I jump out of my seat, grab the twenty, and tear it into tiny pieces with my teeth, snarling like an enraged predator jungle cat as I am doing it, only with more spittle and coughing, and my zipper was down, too, which really spoiled the effect. Suddenly, he is screaming "Why in the hell did you do THAT?" and I say "What? I didn't do anything!" And he says, "Yes, you did! You tore up my money!"

So, once again I have to take some of my valuable Mogambo time (VMT) to explain to these numbskulls that I did not actually destroy his money. I merely destroyed his aggregate buying power by some small amount. But all the rest of his money still has approximately the same buying power. So all he lost was a tiny little bit of buying power! And what is a measly twenty bucks compared to his total net worth, measured in the tens of thousands of dollars, sometimes in the hundreds of thousand of dollars, and sometimes measured in the millions and billions of dollars? It's almost nothing! The fact is that he has been losing more buying power than that every damn day of the week for the last, let me check my watch here, ninety-two years since the horror known as the Federal Reserve was created. And while I only devalued his buying power by one lousy twenty-dollar bill, Alan Greenspan has spent his life devaluing all of your dollars, and especially so since 1998, and this horrible, twisted little man has issued so much money and credit that it has grossly devalued ALL of your dollars, and thus ALL your purchasing power, by an amount that is a LOT worse! The mind reels! And he is whining about one lousy double-sawbuck?

And thus I was particularly interested in how the Fed increased Total Fed Credit by $7 billion last week, which isn't a lot, but is a long way from any supposed "tightening." And I was also very, VERY interested, registering a 5.7 on The Mogambo Richter Scale (TMRS), which is a precise measurement of how out-of-line something seems to be, in Total Public Debt, which means that John Snow's Treasury Department issued a whopping $55 billion of new debt in one week (insert video footage of a balloon being blown up), $44 billion of that issued in (insert video footage in fast-forward mode to show a balloon being quickly blown up) ONE DAMNED DAY! (Insert video footage of me with head exploding and getting all over the walls. NOTE TO SELF: erase the soundtrack of wife screaming in the background "Oh, for the love of God! Can't you do any damn thing that doesn't make a damn mess? You clean that up! I'm NOT cleaning that up!" and I am yelling back "Well, I'm not going to clean it up either, as I am the artist! I am an artist, do you hear me? AND the producer and the director, and I call the shots around here, and somebody else cleans up the set after a shoot!" But I gotta remember to save the part where she says "You want a shoot, do you? You want a shoot? Well, I'll give you a shoot, you hateful little bastard!" and then there is the sound of running and yelling and doors slamming and glass breaking and me screaming, and then a lot more running and doors slamming and gunshots and more screaming, way off in the background, sirens).

But as I was saying, Gross National Debt ballooned to $7,701,022,542,261.61 (seven trillion, seven hundred and one billion and change) as of 10:00 Tuesday morning. A week ago, on 2/14/2005, the figure was only $7,630,849,109,540.36. This works out to $70.3 billion in new debt in eight days, which is about six times par (the average increase in national debt is about $2.2 billion per day) for those jerks. As if we don't have enough to worry about, what with Alan Greenspan and his ridiculous Federal Reserve destroying our money by their insane over-issuance of money and credit, blatantly encouraging us to plunge farther into un-payable debt, but George W. Bush and his bunch of economic lunatics are smothering us with MORE debt.

But I don't even mention this stuff to these moron cops. In professional Mogambo mode (PMM), I keep gently explaining, explaining, explaining, in simplified terms that even they can understand. I say "It's happening right in front of your eyes! Or are you so stupid that you can't even read numbers printed on a page, you moron fascist pig cops? Watch my lips, and maybe it will sink into your thick cop heads: Alan Greenspan is destroying your money! And when your money is being destroyed, then the buying power of your money is destroyed. And when the buying power of your money is destroyed then, then it manifests itself chiefly in price inflation. And when you get price inflation, then you buy less goods and services with each paycheck, month after month, and then you start looking for ways to cut expenses." Which is bad enough, but it gets worse when pretty soon everybody is looking at MY expenses, and the next thing you know everybody wants to know is why I am spending so much time in run-down bars, getting drunk as a skunk and complaining about the Federal Reserve, and how if it wasn't for them we'd still have nickel beers, and you can bet that as soon as I start talking about getting a tall, frosty mug for five cents, suddenly everyone is all ears.

But while I am secretly longing for the quiet and darkness of that seedy little bar and its all-Hank Williams jukebox, I realize that will have to wait, as I am still trying to explain to these policemen about the debasement of their money. "And then you, and your families, and the whole economy and society will be destroyed, because this is", I leap onto the desk as part of my big Mogambo moment (BMM), "the Mogambo Iron Lesson Of Economics (MILOE)! Namely, that when your money is destroyed, then the next item on the agenda is YOU getting destroyed. But you are arresting ME? Are you naturally stupid, or do you get that way by sitting on your fat butts all day, eating donuts and ignoring the Crime Of The Century!" Suddenly I am struck that this is kinda catchy, and maybe I'll work that into a new book! Yeah! I'll write a best-selling book! "The Crime of the Century!" Yeah! That's my ticket outta this hellhole! All about how the Federal Reserve issued so much money and credit, which means that they financed the creation of huuUUUuuuuge amounts of debt, lots of which went into seedy bars, proving that there is always a silver lining somewhere!

And I am not the only one thinking about the dollar. Addison Wiggin, of the DailyReckoning.com site, writes, "Just consider that the dollar has 'only' fallen 8.3% the past year... but it translates into a $124 billion loss for foreign stockholders!" I know what you are thinking. You are thinking, "Who the hell cares about a bunch of foreigner stockholders? Screw them!" It is one thing for us Americans to be really stupid and think that we can borrow and spend our way to Utopia. Only idiots can believe that is possible, and so if you see a country trying to do that, then you know that they are a bunch of idiots. It's simple! Therefore, since we are doing it, we are idiots! We proclaim it to the world "We're idiots!" It's not like we are trying to hide anything, or that we had broken any laws, or cooked up some bogus business plans to borrow money under false pretenses! And yet these foreign morons are buying into our economy? Hahahaha! And then they wonder why we laugh at them! And I am supposed to get suicidal because they lost money investing with idiots! Hahahaha!

He goes on to say, "But if history is any guide, this dollar crisis could last seven to nine years." With my Patented Mogambo ESP (PMESP), I see these little question marks appear in your minds, and while Mr. Wiggin is far too busy and important to answer questions from common riff-raff like you and me, I will anticipate your question. "What is the result of losing 15% of your purchasing power per year over a period of only nine years?" Well, it looks like a dollar will still possess twenty-three cents of purchasing power at the end. In other words, it would mean that your standard of living has dropped by 75%. It will then take four dollars to buy the same basket of goods and services that you could buy for a dollar nine years ago, which is, paradoxically, today. Hahahahaha! Welcome to the world of price inflation that follows a long and big jump in monetary inflation, which we have had in spades under Greenspan!

And all of this increase in money is due to an increase in debt, because that is how money springs into being. Again quoting Mr. Wiggin, "Personal spending shot from $3.8 trillion in 1990 to $6.6 trillion in 2000 - a $2.8 trillion jump. Between 1990 and 2000, personal debt zoomed from $3.6 trillion to over $7 trillion - a $3.4 trillion increase." Now, an increase in debt is bad enough, but it can be ameliorated by an increase in income, right? So did income increase? Well, no really. Then why did people go into so much debt? As usual, The Mogambo is scratching his head, tying to come up with an answer when he doesn't have a clue. But Mr. Wiggin thankfully comes to my rescue and says, "People borrowed the money because they expected their stocks to go up forever. They certainly weren't expecting better pay. Salaries had only increased $2.1 trillion over the decade."

So Alan Greenspan rammed interest rates into the toilet so that people could go farther into debt, and thus afford to buy stuff, and thus save the economy and the world. The upshot is provided, again, by Mr. Wiggin, whom I am starting to really get peeved at because I can't seem to get a word in edgewise here, "But Greenspan made a big mistake. The problem wasn't that Americans weren't borrowing or spending enough... the problem was that they'd already borrowed and spent too much!" Exactly!

Jim Puplava at FinancialSense.com sees me and Mr. Wiggin yakking it up about inflation, which reminds me that he as written one of the more popular essays in recent weeks, and it is entitled "The Three Faces of Inflation". He writes, "Inflation, which is caused by excess money and credit, has three ways of expressing itself through: rising consumer prices, rising asset prices or a rising trade deficit." Sensing an opportunity to run my own big fat mouth for a change, I say "And sometimes all three at once!" I can tell by the looks on their faces that they are not thrilled at my rude interruption, so I sit back down in my chair and try to act like it wasn't me who interrupted them.

Mr. Puplava goes onto say that history DOES sometimes repeat. He writes, "What we are seeing unfold today is an all too familiar pattern in history. All great inflations have a common characteristic to them. We see the same sequence in development, same price patterns, and similar movement in wages, rents, and interest rates. They all begin in periods of prosperity and they all end tragically. You can't debase money without consequences. Like previous price revolutions, the most rapid price increases appear in the price of energy, food, shelter, and raw materials. These are the items most in demand during periods of population growth and expansions in the supply of money. Demand starts at the bottom of the consumption chain and then works its way upward. Basic necessities are the least inelastic in their supply."

So where is he leading with this? Reading on, we discover where. HE says "We are heading towards the terminal and final stage of this price revolution that began in the 20th century. In the final stages of price revolutions there are greater imbalances, which create greater instabilities." He then provides us with a quote from The Great Wave, by David Hackett Fischer. "Prices surge and decline in swings of increasing amplitude. Markets of many kinds-capital markets, commodity markets, labor markets-become dangerously unstable. Production and productivity decline or stagnate, while prices continue to rise; together these trends create stagflation. Political instability increases, and with it comes social disorder, internal violence and international war. The cultural system becomes dangerously unstable; internal conflicts of value and identity grow more intense." So, would it be a good trading point to play the VIX? Apparently so!

- Over at Kitco we see that gold lease rates have risen dramatically, and have apparently bottomed. Hmmmm. But before you declare the onset of the gold bull, Paul van Eeden says "This rise in the gold price, as has been the case for the past three years, is mostly a dollar phenomenon. It's a bear market in the dollar, not a bull market in gold." To which I add, "Not yet, anyway. But with all the countries on the face of the freaking planet expanding their money supplies with heart-stopping insanity, it soon WILL be a global bull market, as price inflation will follow their monetary inflations, too!"

Speaking of inflation, I know that you are tired of me talking about it. Now let's take a look at it up close and personal. The latest report shows that the January monthly prices for imported consumer goods (other than automobiles) increased 0.4 percent, the most since January of last year.

The cost of ALL imported goods last month was 6 percent greater than in January 2004. Excluding petroleum, they were up 3 percent from the same month last year. The price of oil jumped 27% t in the last twelve months! And today (Tuesday, 2/22) the price of a barrel of crude jumped by over two bucks, to over $50 a barrel! And while we are at it, let's take a look at producer prices. As Bloomberg puts it, "The 0.8 percent increase in the Labor Department's producer price index, excluding food and energy, was the most in more than six years."

Eerily similar, the Yahoo! News report said, "The producer price index, which measures prices received by farms, factories and refineries, moved up 0.3 percent in the month, the department said. But the core index, which strips out volatile food and energy prices, shot up 0.8 percent, the biggest gain since December 1998."

For those of you who cannot bear the thought of being labeled a gold bug or having any similarity to The Mogambo for that matter, but still want to participate in the price inflation, a reader code-named Shepardess notes that "The MOST prized possession in post WWI Germany [and post WWII] was cooking oil, cigarettes and booze."

- The Christian Science Monitor writes that, "Foreigners worry about the stability of the dollar because Americans are overspending. There's the growing budget deficit, of course. But of equal importance for currency traders is the $617.7 billion imbalance between what the US buys and what it sells abroad. Americans are spending about 5.7 percent more than the nation itself produces. At the moment, the US must borrow $55 billion a month, $1.8 billion a day, to finance its massive deficit in international payments. Over time, the decline in the dollar should readjust that balance, since US exports will become more competitive and imports more expensive." Which is exactly what we are seeing!

- Thomson Financial, an information firm in New York, says that "A boom in foreign purchases of US firms, now seen as a bargain, may have started. Last year, 1,126 US businesses were sold to foreign buyers, up from 1,032 in 2003 and 980 in 2002." This is how Thomas Jefferson came to say something about how fiat money will ruin us and that we will, and I am quoting from memory "Wake up homeless on the continent their forefathers gave them." They will have strong money and we will have weak money, and thus they can buy us, lock, stock and barrel.

- One of the big arguments for privatization of Social Security is that Chile has had personal retirement accounts for quite awhile, and that "Established in 1981, Chile's personal savings account system has yielded an average of 10 percent return on investments. The primary investment vehicles are stocks and corporate and government bonds." This is statistical quackery, and do not listen to anybody who parrots this nonsense.

- A reader named Darrin sent an interesting little bit of research that he has done. He writes, "Here's a little something that I noticed a few months ago. Pennies dated 1981 and earlier are 3.11 grams of 95% copper, or about 2.95 grams of copper. Expressed in units that the rest of us understand, there is 1 pound of copper in 153.5 pennies. "The latest copper price from kitcometals.com is $1.51 per pound. It is nearly worthwhile to take the change jar and the kid's piggy bank to a scrap metal dealer. "The people around me don't quite grasp currency debasement, inflation, world markets, and all of that economic stuff, but when I show them that even pennies aren't what they used to be, it looks like they begin to get the message."

- A lot of people were watching Alan Greenspan testify at the House Finance Committee, and like a lot of us, most thought it was a laugh-riot. Peter Schiff of EuroPacific Capital is one of them, and in an essay entitled "Greenspan Tells More Whoppers" writes "Like a kid in a candy shop I don't know where to start in refuting these claims. Perhaps the most memorable moment of the entire spectacle was Congressman Ron Paul quoting Greenspan to Greenspan, requiring the chairman to admit that his younger self was wrong. Unfortunately, Greenspan the younger was not wrong, just early. It seems only fitting that in a testimony fraught with contradictions, Greenspan's greatest critic was in fact himself."

Personally, I missed most of it, as I was caught up in the clutches of the American healthcare system, and while I missed almost all of the testimony, I am able to lend credence to the reports that there are a lot of people on Medicaid and Medicare, because let me tell you that it is the damn truth, as the only other patients I ever saw, the whole damn time, were old and/or poor, although all of them were better looking than me, and better dressed than me, and smelled better than me, which none of them seemed to tire of pointing out.

Apparently, I was the only guy in the whole system that had private insurance. And if you think that puts you in the front of the line, think again. Normally, it SHOULD give you a certain advantage, as you, the epitome of all that is good and beautiful in America and one of the few guys who actually shells out money for his own health insurance, should be encouraged to move ahead in the long queue for limited life-giving services, and you should be allowed to step in front of deadbeat losers like them anytime you want. And yet (and this is MY experience anyway), when you make some stupid skinny old lady with her stupid IV bottle sit on the damn floor so that YOU can take her nice, comfortable chair in which to wait for the doctor to stop sexually harassing the nurses, then everybody gets all huffy like I've done something wrong! I mean, it's not like I'm hurting her! I even say to her, "Hey, babe! Since you're down there, if you polish my shoes, I'll pay you a quarter!" but she turns me down! She's old and poor, and my taxes and my high fees are paying for her damn "free" medical care, and yet she refuses to accept gainful employment and maybe make a few bucks and maybe pay for her own damn health insurance! And yet, somehow, she thinks SHE is the victim here! It doesn't make any sense to me!

But I get a few minutes to quickly catch some of the testimony. As soon as I walked in and turned on the TV and turn off the VCR which is still in "pause" mode from where I was screening a how-to video on making a machinegun out of old washing machine parts (and believe me when tell you that the future, the price of THAT particular videotape beauty is going to skyrocket in price as we begin to pay for our economic sins!), my stomach convulses into a knot, as there is Alan Greenspan listening to a question and he licking his lips, with his beady, rat-like eyes darting from side to side in panic, and I know that he knows, although I don't know HOW he knows, but he knows that I am suddenly watching him, and he senses that I am using my Secret Mogambo Vision (SMV) to stare into the foul darkness of his soul, a soul so corrupt that is going straight to Hell when he dies for sinning against the Eleventh Commandment, "Thou shalt not debase thy money", which is one of the little-known and long-suppressed Missing Commandments, recently discovered by me, The Mogambo, while using a variation of the Da Vinci Code search algorithm to find hidden messages in the Bible. The theory is that God gave Moses more than Ten Commandments, but the others weren't very popular, and so the tablets were put into the basement of one the government buildings and forgotten.

But the mystery of the Missing Commandments is now revealed, thanks to the Da Vinci code, which involves going through every page looking for "hidden" words that are written backwards, or diagonally across the page, or something. Unfortunately, as it is being used now, it is a very labor-intensive process, and so therefore very unpopular with lazy guys like me, who want instant fame and fortune for doing as little as possible and who are upset and angry when we don't get them, and people call us childish, and make fun of us, and pretty soon my own family won't sit with me in restaurants because the restaurant always has this convenient "policy" where they can refuse service to anyone, and that apparently includes older men screaming and crying and kicking and whining because he didn't get as much love and money as he wanted.

But in a moment of "Eureka!", I was inspired to hurry things up, and forthwith I invented the Mogambo Method Of Enhancing The Da Vinci Code Search Engine (MMOETDVCSE). It's all very complicated, of course, but in essence I go through the Bible and circle those words and letters that spell out what I want to find, going page by page, and searching for letters only in that area of the page that corresponds to using a roughly sine wave function that goes on page after page, because when you print out my results on a computer, man! It looks impressive as hell! This beautiful regular pattern is going up and down the page, like some undulating wave out on a gently rolling ocean. It screams "Proof!" which in itself screams "Nobel Prize for The Mogambo, because he could sure use the money!"

The essence of this Missing Commandment is "Money shall be only gold and silver" which is eerily echoed in the Constitution of the United States itself, a point that I will bring up in my next book, "The Mogambo Explains How the Founding Fathers Knew of the Missing Commandments". But you can see that governments, being the dirt bags that they naturally are, would not like the idea of not being able to print up as much money as it wanted, anytime it wanted, to spend on anything it wanted. As for other Missing Commandments, details are sketchy, but one of them seems to be something about "Thou shalt not secretly lust after high-school cheerleaders unless you are likewise a high-school boy or high-school lesbian". To tell you the truth, I find this one to be a little hard to obey, too, and if this is an example of Missing Commandments, then you can see why I have lost interest in pursuing this whole line of Biblical investigation.

But I'm looking at the TV screen and you can see by the expression on his face that his heart has turned to some mutant, stone-like material like the stuff that must be clogging up the arteries in his brain when he realizes that The Mogambo is out there, watching his every move, and it is not going to be pretty, because I am going to criticize his every word, deed and action, tearing his ass up every chance I can. And if I don't get any chances, then I will make up some lies about him that I hope will get him in trouble, and that brings up my brilliant Mogambo insight (BMI) that all our economic problems could have been prevented if we had appointed someone younger to be the chairman of the Federal Reserve, instead of Alan Greenspan, who is a zillion years old, and if we had instead appointed a YOUNGER Fed chairman, then I could call up his mother and tell HER what her idiot son is doing, and SHE could do the rest for us!

But one line that keeps ringing in my head is when Alan Greenspan said that maybe one reason why foreigners keep buying American debt is that our debt is so safe. Well, as far as getting money back and paid, then, yes, I guess it IS "safe." After all, as long as we have paper and ink, we can always print you up as many dollars as you like! And with electronic blip money, the creation of more and more money is even easier.

But this is not the Mogambo definition of "safe", as my definition of safe is that I am saving buying power, and I expect to get all my buying power back, with interest. For example, suppose that I am on my way to the army surplus to get that spiffy self-propelled cannon that I have had my eye on, when I am accosted on the street by a guy who convinces me to take that money, "invest" that money in some American debt, and in a few years I get all my money back, and a little something extra to pay me back for the pain of having postponed the gratification of consumption for those few years, and then I will have enough money to buy the cannon AND a few rounds of that special ammunition that they keep in the back storeroom that they don't tell anyone about.

THAT is how it is supposed to work, as interest rates typically are higher than both inflation and tax reduction added together. Nowadays, interest rates are, as hard as it is to believe, less that the sum of these two! People who are idiotically "investing" in US debt are voluntarily losing purchasing power, because the dollars they get back after all those years won't buy squat! Hahahaha! Suckers! They are voluntarily making themselves less wealthy! That IS a conundrum! But as it is REALLY working, the chump who buys American debt will only get back enough money to buy half of a cannon! Hahahaha! So you have suffered the pangs and regrets of postponing glorious, delicious, wonderfully satisfying consumption, but you also lose half a cannon!

In fact, he said as much! He said: "We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power." But he can! He is guaranteeing less purchasing power by his every word and deed since 1998!

Ron Paul asked him whether a gold standard would prevent the government from amassing such huge debts. He replied, "I think we have been remarkably successful, in my judgment mimicking much of what the gold standard does I think in that context so far we have maintained a stable monetary system." Hahahaha! What an idiot! His monetary system has ZERO is common with a gold standard! What does he think we are? A bunch of chumps that we don't know what a gold standard is? Hahahaha!

Then he REALLY goes bananas when he says, "I do not think that you could claim that the central bank is facilitating the expansion of expenditures in this country" Hahahaha! I am laughing so hard in contempt and rage I am spitting up blood! What a lying moron!

- Proving that some people cannot seem to ever learn, I have been invited by David Bond, of TheSilverInvestor.com, to be the keynote speaker at the 2005 Silver Summit this September, held in Coeur d'Alene Idaho, even though he was the guy who invited me there last year, and so he knows perfectly well how I am, and how I get, and how I was, and how I got, and there is no reason to think I will be any better than that this year, and probably a lot, lot worse. Please do not contact me about how to register your righteous outrage, as justified as it may be, and this includes coming right to my house to register your noisy complaints, as I always end up expending too much expensive ammunition in the course of my polite rebuttals.

And if you DO plan to attend, all I can say is that you will probably never forget it, no matter how much you want to, or how many years of expensive therapy, drug use and heavy alcoholic consumption you devote to trying to erase the memory from your mind. At least that is what LAST year's attendees are whining about.

- AMERICAN ECONOMICS: You have two cows. You sell one and force the other to produce the milk of four cows. You profess surprise when the cow drops dead. You put the blame on some nation with cows, and naturally that nation will be a danger to mankind. You wage a war to save the world, and grab the cows."

Substitute cars for cows, and substitute oil for milk. Then finally, substitute Iran for "some nation with cows," and then you will know why it is only a matter of time before we invade Iran, which was the whole point of Condoleeza Rice's visit to Europe, as far as I can tell.

Don't believe me? Well, I'm proud of you! That shows that you have SOME smarts, after all. But perhaps you will listen to the Aden Forecast: "These big commodity price rises have always coincided with major wars throughout history. And the current rise will probably coincide with the war on terror. In other words, wars and/or geopolitical tensions will likely increase in the years ahead."

Ugh.

***** The Mogambo Sez: - The NYSE Specialists are suddenly now getting very short, and if you think that this a sign to go short, then you are thinking like I think, which usually means that you aren't taking enough of those blue pills.

And did the recent zoom of gold and silver prices makes you think that maybe you ought to get some of each? If so, then good for you, because it shows you are paying attention! And people who pay attention tend to prosper!

[evolve]

The Mogambo rules

[jshagenbuch]

where is the site where i can read his daily commentary?

[novice]

321gold.com, kitco.com and the dailyreckoning.com post his columns. A new one on average about every two week, but if the money supply increases at a faster rate so do the columns and the rage in them. I guess that would be Mogambo inflation caused by monetery inflation (a nice chance over price inflation caused by monetery inflation).

latest 6/4/2005:

http://www.321gold.com/editorials/da...hty040605.html

Some days, it's not even worth chewing through the restraints
Richard Daughty
...the angriest guy in economics
The Mogambo Guru
Archives
April 6, 2005

- In last Thursday's Wall Street Journal, we read that the White House has a plan to divert $1 billion from the fund that compensates the victims of crime. If they were going to send that money to me, then of course I would be a big supporter of such a plan. Unfortunately, they are not, and you can tell by the way I am frowning and acting like a spoiled little brat that I am not happy about it one little bit. No, what they want to do is to use the money to cut the deficit, see, as if one lousy billion dollars is going to make a freaking tiny little teensy weensy dent in the budget deficit, which is expanding at a pace that will take us to, probably, close to a trillion dollars for the year! $1,000,000,000,000! This is just the freaking deficit, and it is 8 freaking percent of the damned economy! And this incomprehensible sum is just the deficit part of Congressional spending, which is money that they spend by borrowing, and thus putting us all deeper into debt as a country.

Probably as a side effect of the medications I am taking so that I don't go completely berserk about the monetary insanity of the USA and wind up invading the Federal Reserve armed to the teeth and determined to "clean out that nest of mentally-ill rats and traitors to save America," I feel an instinctual drive to add a crude insult to my opening remarks. So let me add "the bastards!"

And why would I blame the Federal Reserve, when it is Congress spending all this money? Because the damned Federal Reserve creates the money to get borrowed! If there were no accursed Federal Reserve acting like the brain-dead chumps that they are, and adhering to the ridiculous tenets of their precious New Age economic theory, as soon as Congress authorized such deficit-spending extravagance, the world economy would come unglued. Interest rates would go to the moon! Money would flee the country, and the economy would tank! This feedback mechanism is what used to keep Congresses from acting like insane morons. No longer.

With a $2.2 trillion budget and a deficit of $1 billion deficit, then it seems to me, remembering my old school days where the teacher would ask me a question and I would reply that I did not know the answer, if you divide one of these numbers by the other one, you will show that the deficit is 46% of the budget! And, if the damn Treasury keeps borrowing money at this rate, the budget deficit as a percentage of GDP will then exceed 8% of GDP! Hell, Japan, far and away the world's biggest idiots as concerns monetary policy, is only running a budget deficit of 6.5% of GDP, and we American bozos are still "officially" at a budget deficit of "only" 4.4% of GDP, which is bad enough to cause old timers (which is defined in the Big Mogambo Dictionary (BMD) as "anybody who disagrees with the monstrous economic idiocy of constantly stimulating the economy and thus fueling inflation and don't start talking about inflation because that really sets The Mogambo off and he is liable to have a heart attack ('urk!') and plotz right here on the floor."

Bill Buckler, who writes the Privateer newsletter, and who is, coincidentally, addressing this very topic, says "If the US credit expansion does no more than stay on its fourth quarter of 2004 trajectory, it will generate new credit to the tune of $US 3.425 TRILLION over the current year. By the end of 2005, the total will be close to 29.25% of the US GDP. That is a TOTALLY out of control situation. At the present level of expansion, total US credit markets will stand at around $US 40 TRILLION in less than nine months. That total will then be around 350% of the TOTAL US economy. Historically, this is a debt load which breaks ANY civil economy."

The result is that "If the US federal government even slows down their rate of deficit spending, the US economy dives into an economic recession. If the Federal Reserve slows down its credit expansion, the US economy dives into a steep economic recession. Both institutions are fully aware of this, so they will NOT slow down. This being the case, it is simply a matter of time before the world slows down or even stops its funding of US external deficits. The result will be a US economic recession and a plunging $US."

Even the Chinese are doing this same silly crap! We read that the China Daily has reported that "China plans to use money tied up in state-owned assets to deal with a boom in retirees expected in 15 years' time. State assets, such as stock in large companies, will be converted into funds that can help fill China's 2.5-trillion-yuan (300-billion-dollar) pension shortfall."

This brings up two questions: 1) where is all of this money supposed to come from? And 2) why are they doing this? Well, they never get around to telling us where in the hell all this money is going to come from that will 1) buy up whole swaths of old, decrepit Chinese infrastructure, and 2) support legions of Chinese retirees for the rest of their lives.

As to the "why" question, it is simplicity itself. "To avoid a major financial crisis, China is trying to abandon its previous 'pay-as-you-go' system, where people in the workforce pay directly for the support of retirees in the expectations that later generations will do the same for them." Sound familiar? It should! It's the Chinese equivalent of our Social Security system! Only this one is in China, which is a large country on the other side of the world, and it is packed full with 1.3 billion Chinese people, according to press bulletins. The article goes on to say "Instead, the government aims to establish a new system where each individual saves money for himself on a personal retirement account." Yow! Privatization of Social Security!

- If you want to see the face of the future of technology, an historical milestone has been reached, according to "Meet the Mind Readers," an article by Ian Sample in the 3/31/05 Guardian. His pithy summary is "Paralysed people can now control artificial limbs by thought alone."

The actual moment in history is "There's a hand lying on the blanket on Matt Nagle's desk and he's staring at it intently, thinking 'Close, close,' as the scientists gathered around him look on. To their delight, the hand twitches and its outstretched fingers close around the open palm, clenching to a fist. In that moment, Nagle made history. Paralysed from the neck down after a vicious knife attack four years ago, he is the first person to have controlled an artificial limb using a device chronically implanted into his brain."

- I thought it was funny that a recent study shows that Harvard student are dissatisfied with Harvard, at the same time as an op-ed piece by the horrid Michael Boskin appeared in the Wall Street Journal. Boskin is the Stanford economics "professor" who developed the actual statistical methods of lying about inflation, namely the infamous "hedonic" adjustments that have distorted the Consumer Price Index so much that it has become a joke among economists, so that the government could get off cheap. Speaking of which, this Boskin loser still thinks that the CPI is STILL overestimating inflation by 30-40 basis points! Hahahaha! What a lying moron! And Stanford University gave him a job? My god! Have they no shame? Is there nobody actually at Stanford that thinks that inflation is really only 1.6%? And that it still overstates inflation, so that inflation is "really" 1.2%?

But, similarly, perhaps we can all admire Johnnie Cochran for being a great lawyer, although he used slimy tricks and despicable race-card bigotry to get O. J. Simpson acquitted of murder, even though Simpson was the most obviously guilty defendant in the whole history of jurisprudence, and not even Perry Mason would have taken his case.

Likewise, I am sure that we Americans now equally admire the achievements of the whole Hitler government, as they were just doing their jobs, too, and they likewise did them very well! Hahaha! What a comparison! Cochran, Boskin and Nazis! I'm sure I will be hearing from their lawyers, who will be all gung-ho about suing the hell out of The Mogambo until they learn that I have no money, and in fact I don't even have a chance of ever earning any, mostly because I am just a stupid lunatic with a loud mouth, and if they are going after the honor of the thing, they soon realize that there is no honor in suing a guy who goes around wearing nothing except an adult-sized disposable diaper and a big stupid smile, and who spends his time standing on street corners holding a sign that reads, "Will rant hysterically about monetary policy for food!"

But there are more and more people who receive income based on interest rates, which respond, theoretically, to inflation, as lenders don't ordinarily like lending muscular buying power to deadbeats like me, only to receive a piddly stream of income that provides less and less buying power because relentless inflation is chewing the dollar's guts out, and thus the lenders end up with less buying power than when they started, and then the lenders get all bent out of shape, and then they start calling all the people who are in arrears in their payments, and then the phone is ringing all the time, ringing, ringing, ringing, and I am hiding behind the curtains and telling my wife to tell them that I am not at home. No, tell them that I am out of town! No, wait! Tell them that I am out of the country!

And the despicable Michael Boskin was hired to invent this method of lying about inflation so that the government could screw a bunch of recipients out of some of their inflation-adjusted income. And if these recipients ever discover that they are being systematically screwed out of buying power (because price-inflation obviously reduces the buying power of each dollar), then that is when Michael Boskin will wish he HAD taken the advice of The Mogambo, and ran off into the woods and hid in a cave, hiding his face, begging for forgiveness and crying like a baby. Maybe poop all over himself, too, since nobody wants to deal with guys covered in crap. At least, that is how it has worked out for me!

And since we are talking about angry people getting screwed out of buying power, maybe I could mention a few of these people; Social Security recipients, people who save money and bondholders. Hahahaha!

Speaking of screwing people out of money and justice, the government has now decided to stop adjusting the yields on savings bonds every quarter. Now that yields have bottomed, and interest rates have hit their historic lows and are obviously heading back up, the bastards in government changed the rules, and your savings bonds now have a fixed and permanently-low interest rate! Hahahaha! No matter how high inflation gets, or how high interest rates get, you will be stuck right here! Hahahaha! Chumps! You trusted government with your money in return for their promises to offset inflation? Hahahaha! You get what you deserve, you nitwit!

- Kurt Richebacher's new sales piece is entitled "Here It Comes! The Dollar's 7-Year Slide," which is about as succinct as you can get; direction AND time. Heed and prosper, or ignore and suffer.

- It looks like the idea that the future will be a battle for water is heating up. From the AP in Shanghai, China, we learn "In Beijing, each resident has access to only 10,593 cubic feet of water a year, compared with the world average of 35,310 cubic feet." And worse, the needle on The Mogambo Bad-News-O-Meter (TMBNOM) dips to the bottom of its range as we read "Meanwhile, experts warned that more than 300 million rural Chinese lack clean drinking water since most of China's waterways are fouled by industrial effluent, untreated sewage and runoff of agricultural chemicals from fields." Editorial Mogambo comment (EMC): Yuck. The article goes on to say, "Only 47 percent of water in major rivers is drinkable, while half of all lakes are heavily polluted. And 35 percent of ground water is undrinkable due to pollution."

Perhaps the lesson is to invest in companies that deal with cleaning up or preventing pollution, and in desalinization devices, and maybe some share of bottled water companies, too!

- Paul Hein has a nice essay entitled "Give No Quarter" on the LewRockwell.com site. He must have been looking at how the metal in coins now cost more than the coins are worth, and he says to relax. "The mint says that the coins cost a nickel to produce. Americans will have to pay 25 cents apiece for them. This is a 'profit' of 20 cents per coin, and the mint, remember, is going to stamp out half a billion of them, for a net gain of 100 million bux. Nonsense! The actual cost of producing the coins is nothing. If you can pay for money with money, how can it cost you anything?" The Mogambo is delighted with Mr. Hein, and I hop up and down and clap my hands together in childish glee! Exactly! Hahahaha! He goes on to give an example, "How much would a bunch of grapes cost if you could pay for it with a couple of grapes? Suppose you pick up a large bunch of juicy, delicious grapes at the supermarket. The checkout clerk says, 'Those will cost you three grapes.' So you pick off three grapes and give them to her. Were the grapes expensive? Can you continue to afford them, even if the cost doubles to six grapes?"

Then he gets very philosophical, but important, if you think that casting aspersions on fiat currency is important, and I do. "If a slave-owner in the 19th century printed up some nice chits bearing pictures of himself (using his slaves to do the work, and produce the paper and ink) and then distributed them to the slaves as 'payment,' they could exchange the chits among themselves as money. Of course, they would have no claim on any assets of the master, but that wouldn't occur to them. That is precisely what defined their slavery, even if they thought of themselves as free: their chains were made of paper. So are ours."

- In his essay "The Decay of Paper Currency", Chris Mayer writes, "Inflation, as it is commonly known, has not always been the normal state of affairs." That is because the normal state of affairs is people trying as hard as they can NOT to let inflation get started. And I will tell you that a damned government letting a damned central bank actually try and create inflation ("to prevent deflation") is not normal for people who are not insane, either. But Mr. Mayer doesn't want to talk about that, and instead motions for me to sit back down and take a pill. With me safely out of the way, he quotes James Grant, who is the editor of Grant's Interest Rate Observer, who said "From George Washington to the A-bomb, prices alternately rose and fell... As Alan Greenspan himself has pointed out, the American price level registered little net change between 1800 and 1929." Now Mr. Mayer extrapolates from that "It took Rome four centuries to destroy its currency," he said. "Germany and Austria reached that point in just nine years, ending in the famous hyperinflations of the 1920s, and before that, Russia managed it in only five years."

Hahahaha! And if you think that is funny, then you will probably bust a gut to learn that Greenspan has devalued our money by 30% or so in the last few years alone, and the poor old dollar has lost about 98% of its value since 1913 when the filthy Federal Reserve was created! And if you think THAT is funny, then you are will probably fall down on the floor and die laughing to learn that the value of the dollar goes lower and lower every damn day, and will probably continue to do so for the rest of your life!

Then, like the poet that he obviously is, he writes, "Like the biting winds of nature that sculpt rock and carve stone, inflation and taxes will grind the greatest piles of fortune to dust over time. The road to extinction may be of indeterminable length, but the final destination of that road is not in doubt. The same can be said of all our paper currencies, be they yen or pounds, pesos or ringgit. All of them are on the same slide."

Niklas T. is another of those guys who comprehends the enormity of the problem. He writes, "Since all money is borrowed into existence, it is just a big Ponzi-scheme all of it. The entire world is victim of compound interest, and we know where that will end - eternal exponential growth of debt. Oh, not eternal really. It get interrupted by crashes." Hahahaha! And that is why Ponzi schemes are illegal when we citizens do them!

- Dan Ferris, of the Real Estate Shareholder letter, has an interesting take on housing as an investment, which is all the rage these days. "Experience plus my research into real estate has taught me that a house isn't really much of an investment, contrary to what everybody will tell you. It doesn't pay me a penny in rent or interest or income of any kind. I can't spend it without going into more debt. With investments, you're supposed to earn interest, not pay it! And if I sell my house, I have a choice to make: either use the proceeds for more real estate, or pay a big capital gains tax. My only return is the benefit of living in it."

Bill Bonner of the DailyReckoning.com site, is not just another pretty face, or even just a guy who has a face that is prettier than my face, which is everybody, as far as I can tell. So while I am dancing around singing "I feel pretty, oh, so pretty!" in some pathetic attempt to lie to myself so that I will not cry myself to sleep, he is doing actual economics work that concerns housing, and has noted that the bubble in housing has also created some problems for owners who think that they are going to rent out the expensive houses that they are buying, and make the mortgage payments with the rent money.. He says, "Likewise, houses now sell at an implied P/E of 34. That is, annual rental income for the average house would equal only 1/34 of the purchase price."

And speaking of real estate, Eric Fry, in his Rude Awakening column entitled Nobody's Fool, quotes Susan Walker, of Fox News, who says that Warren Buffet, the smartest and most successful investor in the world, "is not investing in real estate, an all-too-tempting alternative for regular folks who have some money they would like to invest but who don't trust the stock markets. In fact, as the most recent issue of 'The Elliott Wave Financial Forecast' points out, many people are 'now captivated by the concept of easy wealth through real estate...According to the National Association of Realtors, a stunning 25 percent of the 7.7 million homes sold in 2004 were purchased strictly as investments.'' Of course, these people figure that there is always going to be somebody coming along down the street, some dumb guy, like me, who will say "A jillion dollars for a house? Sure! Why not?"

- There are some guys who go beyond the problems with our monetary systems, and one of them is Dr. Edwin Vieira, Jr., Ph.D., J.D, whose essay on the NewsWithViews.com site is entitled "Will the Coming Monetary Crisis Provide Opportunity For Reform?" I think he answers his own question when he replies, "No! We're scroomed!!" And since a currency crisis is inevitable, then what happens next? Well, this is where Dr, Vieira comes in, who reminds us that it is not just the economic problems that will bedevil us, as history has shown us the depths of corruption to which legislators will stoop when their own spending/philosophical stupidities inevitably backfire on them. He says, "Even the most abusive precedents established under Roosevelt, however, will not define the outermost reaches of the 'emergency' powers contemporary public officeholders will seize in the event of a new monetary and banking crisis. Rather, they will employ whatever police-state tactics they deem necessary to deter and punish violations of their 'regulations, limitations and restrictions'--from fines and forfeitures of property to incarceration in prison cells, internment in prison camps, and interment in graves....As O'Brien told Winston Smith in Orwell's 1984, if one wants a picture of the future, imagine a boot stomping on a human face--forever." Or, as Edwin Clarence Riegel may have put it, "Not money, but a false money system is the root of all evil"

To show you an example of depth to which governments must sink when these Ponzi schemes get out of hand, the South Korean government, to quote the last Thursday's Wall Street Journal, "Made a last-ditch effort to tackle the country's household debt problem by announcing a package for Koreans with little or no income that practically writes off their debt."

The idiocy is that those who are on welfare are not obligated to repay their debts, and, as a bonus, are also relived of being stigmatized as "credit delinquents", so that they can continue to borrow more money from unsuspecting lenders, which they never have to repay, either!

If you are on welfare in that country, you don't have to repay the principal or even pay interest on your debt as long as you remain on welfare, which brings up the point about who in their right mind would ever get OFF welfare with a sweet deal like that?

The problem is that Korea is in recession, see, and the whole country has been, like the US, gorging at an orgy of credit. Which brings up a nice quote from the Elliott Wave International people, who were researching the history of major depressions in the U.S. from 1830 on. They say they were "impressed" that they were "All were set off by a deflation of excess credit. This was the one factor in common." Exactly! It's the Austrian Business Cycle Theory, over and over and over again!

But what is NOT answered in the little sidebar was what happens to the Korean lenders, the people who are owed the interest payments, which they are not going to get, or the original money that they expect to get back, which they are ALSO not going to get. Hahahaha! Chumps! It is exactly what they deserve, the morons! I mean, how stupid do you have to be to loan large amounts of money to people on welfare? Welfare pays so much in Korea that the recipients have so much money that they can afford to not only buy things, but also pay the high interest charges? My God! And they though this could last? Hahahaha!

It embarrasses me to mention it, I happen to be, uniquely, one of the most stupid people on the planet, and yet this even sounds stupid to me! But what is going to happen is that the creditors are just going to raise prices and interest charges on the people who DO pay, and that will be an "unexpected" consequence. And then when these people see how they are being screwed, and what a sweet deal this is for people on welfare, they are going to want a little of this gravy, too! And then people will run for office on a platform of "no payments, no interest loans for the little guy!" And that will be another "unexpected" consequence.

- Richard Greene's March 25, 2005 essay is entitled "Gold - The Forgotten Asset Class". He notes that "It has been over two decades since gold was widely referred to as an asset class by Wall Street and the media. It would probably be generous to say that even 1% of American investors have an adequate understanding of why at least a 10% portion of their assets should be safeguarded in gold and silver, primarily in bullion. An even smaller percentage understands that they must have physical possession or a custodian that can prove that they are holding their purchased gold in a segregated account. Unfortunately, we have found that the vast majority that has moved to protect their portfolios with investments in the precious metal sector are foreigners."

Foreigners have been buying gold? Is that why the price is over $400 per ounce? Well, who are these people, since it is not us hotshot Americans? He answers "The really sad part is investors from China, Japan, the Middle East, and India are taking advantage of any pullback to keep adding to their gold and silver holdings." So what does one do? I start to get to my feet to offer my suggestion, which is, of course, to buy gold. But he sees me stirring, and quickly adds, "The fundamentals for gold get better every single day as money expansion continues. Use declines in the prices of metals and the stocks to build a position as part of your portfolio. Speaking of gold, I notice that the gold lease rates have collapsed, which brought out a lot of leasing, which they turned around and sold, which could explain why the price of gold dropped last week". Most of us figure that gold is being manipulated down by the fabled Gold Cartel, the one that GATA and the Metropolecafe.com people are always yelling about.

Want more proof than the idiotic Mogambo standing in the middle of the road haranguing people as they drive by that gold is being manipulated and that this represents a golden buying opportunity, if they will excuse the pun, which they never do? Well then, maybe you will listen to the Charleston Voice when they say, "It is now becoming widely accepted that the world's central banks have shorted (sold) as much as 15,000 tons of their gold reserves in a concerted effort to suppress gold's price as measured in paper currencies."

And it is not just the gold and silver markets that are being rigged, but all the other markets, too, as chronicled in "The Invisible Hand (of the U.S. Government) in Financial Markets", written by C. Robert Bell and posted on Financialsense.com. His summary is "The U.S. government is manipulating all major U.S. financial markets-stocks, treasuries, currencies." The rest of the highly-informative article "shows how it is possible and how it is done, why it is done, who specifically is doing it, when they do it, and where they get the money to do it."

Even George Ure at UrbanSurvival.com reported that an article has appeared that indicates that The Mogambo was right when he said that that monetary policy, now operating for most of the last decade with all the taps open full, will prove ultimately to be a failure, even though the government is freely manipulating the markets via fiscal policy to keep it from failing. To wit: "Tax money was sent to the Office of Special Brokerage Services (OSBS), to which management of the reconstruction funds was assigned. The OSBS, quietly through third parties, purchased approximately $5 billion in stock in February, 2004. Another $9.2 billion was invested the following month. More than $14 billion earmarked for reconstruction was actually invested on Wall Street. The memo's author and date are unknown. This portion of the apparently classified document -- marked 'page 3' -- was mistakenly sent to Mid-America Seed Savers, a nonprofit organization in Lawrence, Kansas whose members had filed a Freedom of Information Act request for documents related to the Army's alleged distribution of genetically engineered wheat seed to farmers in Iraq" according to Stan Cox, who is a plant breeder and writer in Salina, Kansas.

It is all part of a gift to the Iraqis, they say, as "The OSBS has assigned portions of the fund's assets to individual citizens, based on voting rolls from the January election. Although he or she is not yet aware of it, each and every Iraqi voter now owns a Personal Reconstruction Account (PRA)". Until the unrest settle down, they figure that the accounts that will "continue to grow in value, safely, until violence in Iraq subsides and normal economic activity can resume. At that point, Iraqi citizens will be able to draw on their PRAs as needed, putting that money to work in their economy and stimulating private-sector solutions to the problem of reconstruction." Hahahaha! This is what passes for economic and financial management! Of course, the US markets going up will have wonderful domestic effects, too, and that is the whole point of it, because if we really, really, really cared about Iraqis we would have given them the money before we killed a couple of hundred thousand of them.

Everybody assumes that this is a hoax, especially since it came out on April Fool's Day. But after seeing the lies and frauds being committed every day by our own government, I am not so sure.

- John Hathaway of Tocqueville Asset Management notes that he views the news that the "EU member states have agreed to relax constraints their budgets are subject to under the Stability and Growth Pact which underpins the euro" as containing very positive news for gold, probably the most positive news for gold in the past two years.

Why is he so bullish on gold from reading this? He explains, "The money supply of euros, according to the European Central Bank, is 6.6 trillion euros (M3 as of 1/05), equivalent at current exchange rates to $8.6 trillion. On the other hand, the monetary supply of gold, assuming all central bank gold is for sale (which of course it isn't at any given moment), is around $1 trillion. Removing central bank gold from the equation leaves a residue of monetary gold of approximately half this amount, a fraction of the euro money supply."

What does this mean to you and me? I'm glad you asked! And the reason I am glad you asked is that I don't have to say a word, and I can just sit here sucking a banana daiquiri through a straw, and all I have to do is point the Bony Mogambo Finger of Fate (BMFOF) to where Mr. Hathaway writes, "The bull market in gold, which commenced in August of 1999, will shed its stealth mode. We stand at the end of the beginning of the first leg in a multi year bull market in the metal."

- On Bloomberg we read that "Mexico's central bank today raised interest rates for a ninth consecutive month to slow inflation as commodity prices rebound and workers in Latin America's largest economy push for higher wages." Wow! Apparently, not everyone in this hemisphere is as sanguine as Greenspan and the Fed about inflation!

- And if you want the Mogambo Prediction (MP) on inflation rates, you don't have to wait around for me to sober up, but you can easily figure it out for yourself. All you have to do is go to the back two pages of the Economist magazine, and look at the huge rises in money supplies around the globe, and notice how many countries have short-term interest rates that are essentially at, or in many cases below, their own reported inflation rates! Money is so freaking cheap, around the damn globe, that it is insane!

All this cheap money is pumping up the prices of assets, which, in turn makes Ben Bernanke of the Federal Reserve start wetting his pants when he thinks that the prices of these ludicrously-overpriced assets might fall in price ("deflation'). His answer? More money! More inflation! Inflation-targeting! The Mogambo falls to one knee, weeping piteously, his mighty shoulders heaving with each sob, when he thinks of the inevitable pain that is surely ours if we continue to listen to such idiocy.

Well, creating more and more money is always the solution to every problem, asposited by the horrid Ben Bernanke, who has, thankfully, been appointed to the toothless, powerless and ignored intellectual wasteland known as the President's Council of Economic Advisors, and thus he is no longer in danger of doing damaging, stupid things as a Governor at the Federal Reserve, because if ever there was a lunatic halfwit, this Bernanke character is it, although he does not wear a cape and a propeller beanie like the Mogambo, who is ALSO a lunatic halfwit, and (for those of you who are new to the ways of the Mogambo (WOTM)) you can always tell the difference between only one of us has such a classy sartorial style.

Plus, Bernanke will be perfect for the job as economic advisor to President Bush, as Bush is intent on spending us into the poorhouse. And creating more money and credit and spending it like there is no tomorrow is Bernanke's prescription for everything, which is all they teach in the universities anymore, and which also that proves, beyond a doubt, that we Americans are the biggest bunch of idiots that ever walked on the face of the earth, because it takes a huge group of real morons to not only think that the problems caused by too much creation of money and credit, and the amassing of un-payable levels of debt, is MORE money and credit and debt, but they actually teach this preposterous idiocy in our universities! And to mix it all with a fiat currency, a central bank overseeing a fractional banking leverage of historical proportions, and a huge government that combines the worst elements of communism, socialism and fascism that, as I have argued before the Intergalactic Council back when Zorgg the Tyrant was crowned as Omnipotent Overlord of the Galaxy, proves that Earthlings are dumber than the Zylonian Glog-people in the Rigelian star cluster, which always gets a big laugh.

The New Age twist is that if everybody does it, then somehow it is OK. It reminds me of a cartoon I saw one time, where this scientific egghead type has covered the blackboard with a dense series of complicated equations, leading to the result, down at the end, where he has written "A miracle happens", and he is saying to a colleague, "It works perfectly until this last step here." Hahahaha! Welcome to Modern New Age Macroeconomics! Hahahaha!

But this is not about how stupid we are, but about how to use this natural, pandemic stupidity to make some money for ourselves, so that we can spend the rest of our lives living large and saying to friends and relatives and those snotty employees at the grocery store, "You laughed at me and mocked me!" I mean, it looks like it will work! Theoretically, when the prices of everything go up, so will the prices of stocks and bonds and houses, thus preventing deflation in those assets! And that is the point of the whole thing! What they refuse to acknowledge, to my astonishment, is all of the other problems that inflation cause.

To that end, Doug Noland has not only looked at the data, but has provided us with a little statistical analysis when he writes, "May crude oil jumped $2.43 to $57.27. For the week, the CRB index rose 1.6%, increasing y-t-d gains to 9.8%. The Goldman Sachs Commodities index surged 4.5% to a record high, pushing 2005 gains to an impressive 26.2%." And when prices increase faster than incomes, you are in a world of hurt.

And it is not just you and me that are pouring straight bourbon into a glass and chugging it down, hoping to calm our nerves at the signs of roaring inflation and maybe also help deaden that shrill harping from our wives who want to know when we are going to get up off of our big fat butts and do something useful around the house. No, others are also alarmed, as he relays a Dow Jones blurb by Arden Dale, who wrote "Investors in emerging-market mutual funds and hedge funds reversed course dramatically in recent days, staging a big pullout due to worries about inflation."

And if you think that oil is going to get cheaper, then the Amazing Mogambo (AM) closes his eyes and discerns that you are an idiot and have a wife that is sorry that she did not listen to her friends and family before she married you because they clearly told her that you are an idiot and even talking to me on the phone was a big mistake and now she is going to make me pay Big Time (BT) for that mistake, and although it is commonly said that only idiots would read the Mogambo Guru, I am sure that none of you actually think that oil is going to get cheaper, so that proves that you are NOT idiots. And if you ARE an idiot, and you think that oil is going to get cheaper, then you can throw off the shackles of your idiocity (SOYI) by merely reading this sentence from Bloomberg; "China's consumption of oil this year may rise 10 percent to 354 million metric tons because of surging demand for fuels, the China Petroleum & Chemical Industry Association said."

- Byron King, of the website Whiskey and Gunpowder, has written an interesting article entitled "A Hole in the Ground." Which was mostly a very interesting article about oil drilling and the problems associated with them, as if I haven't seen enough old movies on TV where the oil well suddenly gushes oil all over everybody and everything, and how they are all dancing around in their glee, and all I can think of is that I am glad that I am not getting that oil all over me because I am sure that I would have been wearing my good shoes, or my good pants, or my good shirt, or something, and they would have gotten ruined, and then my mother would be screaming and hollering and all hell would have broken loose and pretty soon I would be thinking of oil, as Byron King's title does, as just a nasty hole in the ground.

But I would not a much of a lunatic gold-bug weird-o crackpot if I did not mention that it was the part about the durability of gold that caught my eye. He said that in the beginning of the oil boom, each barrel of oil "sold for about $10, equal to half an ounce of gold back in those pre-Civil War days in the year 1860. Ten dollars was the equivalent of a week's wages for an average working man laboring in a factory -- that is, if he worked all seven days of the week."

So oil is worth, compared to today's price of gold, a half ounce of gold, or roughly $223? So, looked at in this way, gold I either expensive or oil is cheap. Or maybe both. But then again, a week's total compensation for factory workers is a lot more than an ounce of gold, namely $426 at today's prices. So now we have to decide if either gold is cheap or labor is expensive!

In a similar vein, Adam Hamilton of Zeal Intelligence newsletter, in an essay entitled "Gold/Oil Ratio Extremes 2" writes that the "venerable gold/oil ratio hit an all-time low, an abysmal 7.7. Second, note the incredible correlation between gold and oil prices in the last four decades. This strong dance between oil and gold is what makes the gold/oil ratio so valuable. It is amazing to now see the gold/oil ratio at its lowest levels ever."

He goes on to note that "Oil is just mid-priced and gold is very cheap when the relentless erosion of the US dollar's purchasing power via the Fed's endless fiat inflation is factored in." And since the Fed is still engaged in "relentless erosion" of the dollar, oil seems destined to get pricier and pricier. How much pricier? Well, since we have Mr. Hamilton on the phone, let's ask him! He says "In order to get to new all-time real highs, oil would have to catapult north of $95 per barrel and gold would shoot well over $1600."

In light of that, he goes on to say "Neither oil nor gold should be considered expensive today in light of history, regardless of Wall Street's incessant anti-commodity propaganda. Meanwhile gold is so darned low in real terms that it hasn't even returned to mid-1990s levels yet! The folks who claim gold is expensive apparently don't understand inflation."

Apparently Goldman Sachs is thinking the same thing, and they are recently famous for having said that oil could go to $100 a barrel in the next tightening cycle, and this has caused quite a stir, which will soon evaporate, of course.

- Peter Schiff, of Euro Pacific Capital neatly encapsulates the dilemma facing the Federal Reserve, now that it is reaching the end of its irresponsible over-indulgence of cheap money, "To fight off the recession dragon, the Fed will look to brandish its only weapon, its interest-rate-cutting sword. However, the minute it does, it will be attacked by its other nemesis, the now much fiercer inflation dragon. To fight this monster, the Fed will reach for its other weapon, its interest-rate-hiking sword. Realizing that it cannot wield both swords simultaneously, it will slay neither, and be consumed by both." This is much classier than me yelling out of the window yelling "We're freaking doomed!"

- This part just showed up as a result of cutting and pasting, so I don't know who said it, but some woman asked. "So here's the most under-asked question of the year," she says. "If Warren Buffet[t] isn't putting Berkshire Hathaway's money in stocks [or in real estate], can this be a good time for anyone else to do it?"

- Antal Fekete, writing on Free Market New Network, has penned several "Goldbug Variations" articles, which is a clever adaptation of the musical Goldberg Variations. In them, he does not actually mention Bach, which you would kind of expect, but instead writes, in Goldbug Variations I" that "Bond speculation introduces distortions into the economy that will inevitably cause the downfall of the regime of irredeemable currency. It may or may not be through runaway inflation as in France during the last decade of the eighteenth century. It may be through runaway deflation. In either case, there will be enormous economic pain."

In the third installment, cleverly entitled "Goldbug Variations III" that "One of the more imbecilic ideas of dismal monetary science is that devaluation of the currency helps the country to export more and import less, thus rectifying the trade imbalance. It is absolutely amazing that economists do not find it repulsive to parrot this trash, apparently on order from the grant departments of the FR banks (in whose interest the policy of currency debasement clearly is). Currency devaluation makes your terms of trade with the rest of the world deteriorate. This means that you can import less for every dollar of export earnings as a result of devaluation." So there is the rub. If the dollar buys less, we buy less, the foreign seller gets less, and thus has less money to "invest" in American debt, which provides the credit with which to buy the imports in the first place. He goes on to say "Virtually all export items have imported ingredients, so devaluation makes them more expensive to produce, not less."

- Doug Noland has also tipped us off, courtesy of Bloomberg, that maybe putting a little investment money into cotton would be a good idea, because "China, the world's largest cotton consumer, will probably have a bigger shortfall next year because 2005 cotton acreage may fall about 11.5 percent, the National Development and Reform Commission said Prices of the fiber are expected to rise this year because global production may drop 9 percent while consumption may rise 2 percent, the commission saidciting international forecasts."

- And for those of you who have seen the full-suit-but-empty-headed morons parading around the set of CNBC talking about how corporations have all this money just sitting around in their vaults getting mildew all over it and how this bodes well for capex spending, Kate Welling, in an interview with Doug Noland, said "Andrew Smithers did a neat job in a recent report (published by his Smithers & Co.) of using the Z.1 to show that U.S. companies are anything but flush with cash. His contention, in fact, is that they're currently paying out more, in (paltry) dividends and share buybacks, than they're earning in profits-a situation that clearly can't go on forever, and has obvious negative implications for the stock market."

Then she gets back to something that always makes me prick up my ears when she ask (obviously playing the devil's advocate): "As long as the governments of the world keep running their printing presses, what's wrong with a using a little inflation to keep things moving along?"

And here is where we see the big difference between me and Doug Noland. I would have answered that question by screaming "What are you? Some kind of brain-damaged halfwit? EVERYTHING is wrong with a little inflation, you silly little twit!" which is, of course, a line I stole from Monty Python. But Mr. Noland, always the classy guy, cooly answers: "There are consequences-and they are not all benign." And it is not even just us! He says that inflation is "everywhere in the world. It's gone global. It's endemic. It's commodities, home prices, bond prices, stock prices, foreign real estate, emerging bond markets, emerging equity markets, Chinese real estate, for gosh sakes." And it is not going to get better, as "We have very highly liquid competitors now. And we are bidding against them for whatever we want or need." And notice that he is too much of a gentleman to mention that inflation is guaranteed, since all of the world's governments are actively printing whole mountain ranges of money for the bidding war!

He then proceeds to give her a little education about how the economy has been distorted into the malignant monster that it is. He tells her, "When I talk about 'financial arbitrage capitalism', I mean you are what you eat. The economy is how the financial sector lends. So if everything is a spread trade and no one cares about the underlying credit or the underlying economic return, how could you expect that to work well for the structure of the economy? It can't."

Then, looking at history, Mr. Noland talks about the crash 1929, "When the speculators got hammered and liquidity collapsed, the economy was so distorted that it couldn't function without that speculative liquidity." And this is why the despicable Federal Reserve continues trying to pound money into the system. Will it work? Hahahaha! And while I am busy laughing at the question, Mr. Noland seizes the microphone and says "It will keep working amazingly well, but only as long as the liquidity keeps flowing." So what is the problem? Well, if you had kept listening and not rudely interrupted by asking the question, you would have learned what the problem is. In Mr. Noland's own words "It's not sustainable."

- The job numbers surprised Bob Wood of Kaizen Managed Assets, too, and he stopped demanding that I pay back the money I owe him to take a look at the employment numbers and says to me, "The BLS confirms110,000 new jobs, albeit with 179,000 of those jobs the result of the birth/death model! And Kudlow is glowing at how strong the economy and job market are!" So, after adjustment, the March Jobs Data is actually lower by 69,000? Hahahaha! 69,000 jobs were actually lost! Hahahaha!

- Stephen Leeb, senior editor of the Complete Investor newsletter, says that there is a consensus that they yuan may be worth "five or six times its current value." In fact, he says that the currencies of China and India are going to "jump against the dollar-by at least four or five times". Now, I don't know how good YOU are at this investing thing, but for a loser like me, a 400%-500% gain is a nice investment tip !

But he is not done yet. Noting that the Chinese are producing stuff like crazy, he then extrapolates "Multiply 400%-500% unit growth times 400%-500% monetary growth, and you have yearly profits of over 20%... for the next 20 years." He deduces that you should have your money in China and India because that region will be "the main event - almost the only show on the planet -for the perhaps the rest of your life." How can this be, you ask? He has a ready answer, namely that that "half of the earth" is "no longer a mass of peons eking out an existence. Their 2.3 billion people are jumping from third-world status to first-world- in one generation."

Apparently even the sight of newsreels of the misery of the Depression is not enough to convince these people about the dangers of excess credit and money, and the horrors of the Weimar hyperinflation in Germany leaves them cold. I mean, you can see that the newsreels never show them watching TV, because they couldn't afford TVs, and the kids are not playing video games for the same reason, and they don't even have microwave ovens! And all because their money was debased to worthlessness, just like we are doing! I mean, how poor can you be?

And yet Bernanke and the rest of those low-IQ, New Age weenies at the Federal Reserve all say to look at how inflation is so low! It reminds me of the Monty Python sketch where King Arthur chops off the arm of the Black Knight, who denies that his arm is chopped off by saying "It's just a scratch!"

- I got this in the mail, and it is supposedly some of the dirty laundry of the 535 members of Congress. This is, so the letter goes, their record:

29 have been accused of spousal abuse
*7 have been arrested for fraud
19 have been accused of writing bad checks
117 have directly or indirectly bankrupted at least 2 businesses
3 have done time for assault
71 cannot get a credit card due to bad credit
14 have been arrested on drug-related charges
8 have been arrested for shoplifting
21 are currently defendants in lawsuits
84 have been arrested for drunk driving in the last year

Given the general quality of the people we routinely elect to Congress, I assume this is only scratching the surface of that iceberg. Ugh.

**** The Mogambo Sez: My wife saw a sweatshirt in a Wireless catalog that has written on it, "Some days, it's not even worth chewing through the restraints."