Hey! Look! Here I am! Over here! I’m back! (Sound of thunderous applause). Thanks! Wonderful to be here!

I know that you, like most people, are probably scratching your head quizzically, asking yourself “Who is this doofus who calls himself Mighty Magnificent Mogambo in the next paragraph, which doesn’t even make sense?

And who cares that he is back, which is not to mention why am I reading this stupid crap in the first freaking place?”

Or perhaps you are wondering “Where have you been all this lonely, lonely time, oh, Mighty Magnificent Mogambo (MMM), that you can now announce your triumphant return to the dispensing of wit and wonder about things such as, oh, I dunno, maybe, for example, how we are frantically screaming ‘We’re Freaking Doomed (WFD) because of all the absolutely INSANE amounts of money and the INSANE amounts of accompanying debt created by the evil Federal Reserve and all the other dirtbag central banks around the world’ all these many, many years?”

I am happy to answer your question, or to answer any question that is not “Do you always eat like a pig?” (Answer: no, not always).

The real answer is that I have been sort of sidelined, stupefied and stunned into some kind of “shock reaction” to heretofore unseen titanic seismic economic events concerning fiscal and monetary policy, the monstrous interplay of which I can only vaguely contemplate, but with a shudder.

It all started, as these things sometimes do, innocently enough.  I was watching an episode of Gilligan’s Island (“Don’t pick those strange flowers, Gillian you idiot!”) to hopefully catch a scene with the adorable Mary Ann, while simultaneously reading Chuck Butler’s Daily Pfennig newsletter during the lulls in the action, like when there is nobody in the scene except Gilligan and the Skipper (“Listen to The Wise Mogambo (TWM) and don’t pick those strange flowers, Gillian you idiot!”).

Then, suddenly, out of nowhere, I was metaphorically slapped in the face (“Whack! Whack!”) by Mr. Butler when he revealed the alarming fact that the M2 Money Supply in 2000 was $4.673 trillion, and that today it is $13.386 trillion!

If my editorial use of an exclamation point in that last sentence did not serve to alarm you as it does other Junior Mogambo Rangers (JMRs) around the world and throughout the cosmos, then let me disabuse you of your laughable Pollyanna attitude by rudely pointing out that this is Something Really, Really Significant (SRRS)!

And the exclamation point is to, well, you know.

Anyway, then Mr. Butler, perhaps to make sure of our complete comprehension despite being already alerted by my clever and judicious use of exclamation points in the paragraphs above, goes on “imagine that if you will!”, which is a sentence fragment, replete with his exclamation point, that I lift wholesale so that one can be fully prepared to get to the following factoid that (drum roll, please) this is “a 186% increase in Money Supply here in the U.S. in 16 years.”

Yikes!

In case your blood has not immediately turned to a corrosive, ashy slurry congealing icily in your veins, I laboriously make the necessary calculations (by, first, tracking down some guy who remembers how to figure this stuff on an HP12C) only to discover, to my horror, that this means that the money supply has been increasing at 6.4 % per year!  Yikes!  Per Freaking Year (PFY)!

Yikes! Yikes!

Yet, yet, yet, this is when GDP growth has been less than a quarter that!  Yikes! Yikes, Yikes! No wonder that the velocity of money has been slowing!

The screeching terror and disgusting flecks of spittle flying out of my mouth are easily explained by the simple, ugly fact that inflation in the money supply necessarily means inflation in prices!!!

By this time, you know what three exclamation points mean, I am sure.

And this is because it is inflation in prices that destroys economies; GDP falls when fewer and fewer people can afford discretionary spending, and economies crash when fewer and fewer people can afford to buy absolute necessities.

And how much debt has sprung from this poison fount of fiat currency? Egon von Greyerz of Matterhorn Asset Management AG writes that “global debt going from virtually zero one hundred years ago, to $230 trillion today.

Within this astronomical figure is personal debt that cannot be repaid and government debt that will not be repaid. In addition there are unfunded liabilities and derivatives in the quadrillions.”

Quadrillions of dollars! At least two million billions of dollars! Or, if you prefer, two billion millions of dollars! Either way, a lot of moolah!

And with the GDP of The Whole Freaking World (TWFW) added together being somewhere around $80 trillion, the paltry lower figure of $230 trillion is (gulp!) almost 300% of GDP!

And, closer to home, let’s not forget about a towering $20 trillion national debt, or our massive $500 billion per year trade deficit, or the staggering $1.3 trillion in annual federal spending deficits!!  More yikes, as handily indicated for your convenience by the use of two exclamation points!

And let’s not forget all about those three overpriced, highly-leveraged markets.

Tens of trillions of dollars could be lost from these never-seen-before, nosebleed market valuations going down, and STILL be above real, long-term value!

This means that everyone involved (which is you, me and everybody else with two dimes to rub together, whether they like it or not) is, or should be, absolutely fixated on making sure, sure, sure that nothing, nothing, nothing bad happens to the stock, bond and housing markets due to a pesky, yet easily-remedied, insufficient supply of new money with which to continually bid prices higher and higher.

And now we know why President Trump has surrounded himself with a lot of people associated with Goldman Sachs (“The vampire squid”) and the financial services industry, who have apparently always proven more than willing to do secret, slimy, corrupt things so that they reap the benefits of the inflation in asset prices, using money that the evil Federal Reserve creates, which causes the inflation in prices in the First Freaking Place (FFP)!

And with a fiat currency, a willing Congress and a complicit evil Federal Reserve making it all possible, it seems more and more obvious that Many, Many More Trillions Of Dollars (MMMTOD) will be created in the years ahead, and that things you buy are going to get much more expensive.

A Dow Jones Industrial Average of 30,000? Sure! 50,000? No problem! 100,000? Easy as pie!

A $25 taco? Sure! A $50 taco? No problem! A $100 taco? Easy as pie!

So forget about picking those strange flowers, Gilligan! Make it easy on yourself, and go back to an earlier episode where you were mining gold and silver on that eponymous desert isle, finding huge nuggets which you were easily digging out of loose sand with a makeshift shovel made out of a lousy tortoise shell, for crying out loud.

And why?

Because history has shown that the value of gold and silver always survive such monetary insanities, especially the insane Keynesian jibber-jabber that currently holds the world’s monetary system captive, and is directly responsible for the bankrupting mess we are in.

So, back to gold and silver, Gilligan.

And maybe get that adorable Mary Ann to help you, perhaps prancing about as a delightful diversion from the ugly backdrop of a world descending into an economic hell about which not even Dante dared to write.

Soon enough, you will be agreeing with me that “Whee! This investing stuff is easy AND pleasant!”

Regards,

The Mogambo Guru
for The Daily Reckoning

The post Home Again, and Hello Dante appeared first on Daily Reckoning.

Did you ever notice how dinnertime conversation always seems to get around to somebody asking you for money? Or they want you to spend some of your Precious Mogambo Time (PMT) with them, “doing” something “together as a family” where you act like a “real father” for “a welcome change”?

Me, too! Weird huh?

And are you really, really getting tired of politely replying “Go to hell”, only to have them unexpectedly get all angry and anti-social, for absolutely no reason? Like some vicious bi-polar demons from hell?

Me, too! Again, weird huh?

Anyway, the reason that I bring this up is that last night’s dinner began with the kids having some stupid-yet-serious discussion about some stupid zombie show on TV. Zombies, no less!

Naturally, being the ever-loving and devoted father who frets over the education of his darling children, I am already aghast that half of young people today have “no problem” with socialism.

At the risk of going off on a tangent where I become predictably hysterical with outrage, this is absolute proof that our schools have been taken over by evil socialists and communists to spread their laughable, long-discredited, low-IQ theories of “all you need is love and an expanding money supply.”

And now we’re discussing zombies, as if they really exist! Zombies, for crying out loud!

I deftly seized the moment to provide some educational value to the conversation which was obviously, by this time, sorely lacking.

So I helpfully offered “Did you notice that zombies never have any money? I mean, it’s no wonder they dress so badly! And why they don’t go to the dermatologist for their awful skin conditions!”

Immediately, all conversation stopped. I was, of course, hoping that they were, at last, having an epiphany about the importance of a functional monetary system.

Excitedly, I decided to start the tutorial with the basics. “And they are so lazy and stupid that they don’t even try the barter system!” I said. “The zombies could offer some labor, like babysitting the kids for the weekend so the desperate parents could get away for a long, relaxing retreat, in exchange for the brain of a dead relative who died recently!”

Alas, they just sat there, looking at me with that blank look of incomprehension upon their faces, but, thankfully, not actually drooling in their slack-jawed bewilderment.

Quickly wrapping up this important lesson about zombies, ruinous monetary policy and the evils of socialism with a triumphant flourish, I said “And now their money is ruined, they are ruined, and everything is a nightmarish, deathly dystopian mess. But note how they are still greedy little socialists, wanting to eat your brain without paying for it! Hahahaha!”

Naturally, I wanted them to suddenly say “Dad! How brilliant! A wonderful way to segue from popular culture into a devastating and withering attack on socialism and modern monetary policy! Tell us more!” while my wife would sit beaming with pride, instead of everything immediately ending with someone abruptly crying, jumping up and storming out, screaming hysterically about how they hate me, wish I was dead, worst father/husband/lunatic in the world, blah, blah, blah. You know. The usual.

Instead, to my amazement neither happened. Perhaps trying a new tack to shame me into behaving like a “normal” husband and father, they took up the theme that I, they, and the whole family would benefit if I cared about things other than monetary policy, gold, tasty snack foods, and, of course, television.

Stung at the bitter criticism, I wanted to acidly reply right in their nasty faces “Not care about gold and silver when the damnable Federal Reserve is committing every monetary sin ever thought of by anyone, anytime, anywhere in the history of the world, to expand government spending, by exploding the money supply, and now actually buying securities for itself to force asset prices up? Are you insane?”

But I didn’t say it. I admit I was distracted, as I was simultaneously thinking of an essay by Chuck Butler of EverBank, who recently wrote “The 10 largest Central Banks now own assets totaling $21.4 trillion!”, and which is a “10% increase from the end of last year”, and an essay by David Stockman, of the eponymous DavidStockmansContraCorner.com, who wrote “at a nosebleed 25X reported GAAP earnings, and after an 18% decline from their September 2014 peak already, the broad stock market is more over-valued than any time in history, including the peaks before 2008, 2000 and 1929.”

Any time in history! 1929! Ever! Yikes! Do you think this kind of insane bubble market could possibly exist without an exploding money supply? Hahahahaha!

Instead of going down that dark road, I decided to lighten the mood. “Hey! It’s riddle time! You like riddles, don’t you?” I jovially asked. “So, answer this: How is having gold like having children?”

Surprisingly, they replied almost in unison “Because you love gold and you hate us!”

Shocked that they would think such a terrible thing about their own loving dad, I had to gently admonish them “The riddle is how are they ALIKE, you morons, not different!”

Things went surprisingly downhill at that point, and nobody even tried to solve the riddle.

Of course, the answer is obvious when you think about it. The answer is that kids are like gold because they are both necessary investments and insurance in the future, but, in the meantime, a really giant pain in my Big Mogambo Butt (BMB).

How, you ask? Why is gold such a pain in my BMB? Well, owning silver and gold, and storing silver and gold, and safeguarding silver and gold is, as previously mentioned in a paragraph above, a giant pain in my Big Mogambo Butt (BMB), especially when you drop a roll of ounces and they go skittering all over the place and you have to crawl around on your hands and knees looking for them under furniture, and you hit your head, and you get dust bunnies and spiderwebs all over you, and it’s, well, take it from me, a giant pain in the BMB.

Ditto having kids is a pain in my BMB, but they will be valuable one day when I am old and will need people to wait on me hand and foot, wiping drool off my chin, endlessly ferrying me back and forth to a long list of medical professionals, and serving as volunteer organ donors in case, you know, I need a little something in the “transplant” vein.

I can hear you asking “What in the hell is the point? Is there a point to any of this? Do you ever have a point, you moron? Or is it that you are willing to marginally extend your own life by a few years by harvesting your children?”

Yes, there is a point, as I will now make, since that you have asked so nicely. The point is that nobody can stop the monetary insanity, and the Federal Reserve and the other central banks must keep creating cash and credit until it is, literally, no longer possible.

Why? Because so much, so terrifyingly much, so stupendously much, so unbelievably much debt is owed that it is utterly impossible to even start trying to pay it back, because the economy would completely and cataclysmically collapse if we did.

So, cleverly summarizing, it is ruinous bankruptcy now for everybody if we stop going into more debt, but it is possible to keep the game going a little longer with ever-larger infusions of new cash and credit so that we have a bigger, MORE ruinous bankruptcy later on.

And it is not just Wall Street insiders who would suffer. Public pensions are underfunded by grossly unpayable amounts, all retirement savings of all private pensions are invested in the stock and bond markets, and government is getting bigger and bigger.

In short, We’re Freaking Doomed (WFD): Eventual WFD if we keep amassing more and more un-payable debt, and we’re likewise WFD if we stop, as the saying goes, Right Freaking Now (RFN).

Then will be the time for “Money, money, money! Saving pensions! Saving jobs! Saving banks! Saving everybody and everything, as far as the eye can see! And if there are really zombies, then them, too!”

And then it will be time for consumer inflation to soar as it destroys the economy (as history says it inevitably will) and it will be time for gold to pay off (as history says it will), and time for the kids to pay off what they owe me (one way or the other) for putting up with them all these years.

In the meantime, I have some Happy Mogambo News (HMN)!

You can relax! Take five! Take a break! Smoke if you got ‘em, because governments and delusional Keynesian economists will do everything they can to make sure it is not today, or anytime really soon, regardless of how devastatingly worse it will eventually make things. Maybe featuring zombies.

And so, with a little more time to accumulate silver and gold to make sure you will not financially die, and organ donors maturing at hand to make sure that you don’t literally die, you gotta realize that “Whee! This investing stuff is easy!”

Regards,

The Mogambo Guru
for The Daily Reckoning

The post Zombies for Dinner appeared first on Daily Reckoning.

I have been advised many, many times that I would suffer a lot less seething hostility from co-workers, neighbors and family members (including the one, not mentioning any names, that promised to love, honor, ‘til death do us part with this ring I thee wed blah blah blah) if I would stop being so critical of people, to the point of cruelly belittling these, what is the word I am looking for? morons.

Like the evil Federal Reserve and self-delusional Keynesian econometric lunatics, for example.

As for the vast majority of people who do not, or ever did, deserve such ill-treatment, I am ashamed of myself, and I apologize.

My defense is that I, of course, suspect treachery everywhere.

So, naturally, when I don’t immediately find somebody actually sticking a knife in my back, putting poison in my food or wanting to borrow my car, I keep looking for subtle signs of such treachery until I eventually find them, cleverly unveiling dark, nefarious plots, logically deducted from clues in something said, or not said, or did, or not did, done, did.

You’re all against me. I know it. You know it. We all know it.

Then again, there are (and this is the important part!) those who deserve abject humiliation and the full weight of the Scorn Of The Angry Mogambo (SOTAM) jumping up and down on their preposterously inflated egos.

One of these people has written an article in the Economist magazine, in the category of self-proclaimed “Big economic ideas” wherein one can, I assume, theoretically find true economic wisdom, which in this case entails an explanatory subhead “What economists can learn from the discipline’s seminal papers.”

Wow! With that kind of a buildup, I am sure that you are, as am I, as are we all, breathlessly tingly with excitement! Hopes are soon dashed, however, when the doofus writes “Much as doctors understand diseases but cannot predict when you will fall ill, economist’s fundamental mission is not to forecast recessions but to explain how the world works.”

Hahahaha! I am laughing so hard that my stomach hurts! Ouch! Hahahaha! Ow! Call the aforementioned doctor! Hahaha!

“How the world works”, but recessions are not part of how the world works? Again, hahaha!

Suddenly and surprisingly composing myself, I ceremoniously stand, reach out my arm in a theatrically grand gesture, and thunder “Friends! Romans! Countrymen! Lend me your ears! The Whole Freaking Point Of Economics (TWFPOE) is to forecast recessions with enough lead time so that you can stop the silly monetary and/or fiscal crap you are doing, letting the body, in keeping with this ridiculous medical analogy, heal itself!”

Now, I admit that I am not, actually, a doctor. Nor have I ever portrayed one on TV, although I am sure that I would be great at it. Maybe have my own TV series, titled “Handsome Doctor Hollywood.”

Yet, even with my appalling lack of medical education, training or even a bare minimum of intelligence, my credentials are sufficient to EASILY tell that you are going to get sick and DIE — and soon! — when you drink nothing but whiskey, eat nothing except yummy doughnuts, get no exercise, smoke, take recreational drugs with borrowed syringes and are continually swapping bodily fluids with strangers, or, as Frank Sinatra put it, strangers in the night, exchanging glances, wondering in the night, what were the chances.

Since we are surprisingly comparing the mission of economists to doctors, I cleverly change direction to maybe make a few quick bucks. So I change my name to Hotshot Doctor Mogambo (HDM), and say “Hey! This doctor thing could be fun! Let’s put on a white lab coat, bring the patient in, and look at the lab results!”

Glancing at the reports, I instantly see that this is the part of the medical profession that is really unpleasant: Telling the patient bad news.

Ideally, as a new doctor, I want my patients to be young and beautiful women, in perfect health despite wearing scandalously little clothing and having a fawning, father-figure fixation, or be a healthy guy who is such a looney-tunes hypochondriac that he will pay outrageous sums of cash for whatever quack therapies I can dream up at the prestigious Mogambo Institute Of High-Priced Therapies For Miscellaneous Complaints (MIOHPTFMC) to cure his imagined ailments.

With my spiffy new professional medical demeanor applied to economics, I try to hide from the patient that the sad results from the economics lab tests are, to be brief, that everything that can be bad (pause for effect) is bad. Bummer.

Manufacturing is down. Prices are up, but wages and jobs are down. Bond yields are less than squat. Entitlement (transfer) spending and expansions of eligibilities are up, government spending is up, the evil Federal Reserve is still busily monetizing government debt (cash and credit created out of thin air to buy new government-issued debt) by more than (yes, I said “more than”) a terrifying trillion dollars (yes, I said “trillion dollars”) a year, every year, year after year, and its effect on the money supply means that price inflation, though curiously and bizarrely subdued given the extremes of Quantitative Easing, is, nonetheless, predictably up.

The worst of all is that debt levels, public and private, which are already at insane levels, are even MORE than (yes, I said “more than”) insane and everyone is also MORE than (yes, I said “more than”) tapped out.

Worst of all, the “misery index,” which sounds vaguely medical in nature and thus entirely apropos for this doctor farce, is numerically just the unemployment rate (which is now just fictional data manipulated by the government), plus inflation (which is ditto manipulated), is, woefully, up.

I say “woefully up” because, as we phony medical professionals say, you ain’t seen nothin’ yet. Trust me. I’m a doctor, or at least pretending to be, so you can believe me completely.

Well, unemployment is way up if you count the people who are not working but would like to be working, but can’t find a job because jobs are disappearing or, perhaps as in my case, everyone hates me and rudely throws me out of their offices after contacting my previous employers, so take your stupid job and shove it, jerk.

And the unemployment rate is REALLY up if you count, although the government doesn’t, the people who are not working and SHOULD be working instead of voluntarily sitting around the house, alternately swilling and gobbling the aforementioned whiskey, doughnuts and drugs, which was where my illustrious new career as a doctor began, if you recall from a previous paragraph.

I know what you are thinking. You are saying “Enough with this playing doctor crap! Go back to being The Magnificent Mogambo (TMM), whose timeless wisdom shines like a beacon across a vast sea of ignorance and stupidity as concerns things economic (like the evil Federal Reserve), so that we may hear what to do to save ourselves (i.e. get rid of the Federal Reserve and stabilize the money supply by letting interest rates find a balance between borrowers and savers).

Thus may we happily prosper from your transcendent tutelage, even though what you say is always the same monotonous harangue about listening to the lessons of history and the Austrian school of economics, which is the only true theory of economics.

And to the dullards amongst us, expound at length as to the horrors of what happens when supplies of fiat currencies yield to corrupt government pressures to expand, and for all clear-thinking, handsome and intelligent people to properly respond by buying gold and silver bullion with hysterical abandon because they are so Completely Freaked Out (CFO).”

Well, even though I am now proudly a newly-minted quack doctor to both the economy and rich Hollywood stars, I know from years of experience about the staggering corruption in every government agency and the horrid Federal Reserve, and that they all know that it is important, important, important that nothing, nothing, nothing bad, bad, bad happen, happen, happen to the housing market, the stock market or the bond market because the entire freaking economic well-being of the whole freaking country and, by extension, the world (which, as a pointless acronym, would be EFEWBOTHWFCABETW, which is, upon reflection, too unwieldy, so just forget I even brought it up) is so vitally, vitally, vitally dependent upon these markets not only remaining at these preposterous, scandalous, sky-high valuations, but continuously getting even more, even more, even more so, so, so!

Theoretically forever!

And with the ability of the evil Federal Reserve to create literally unlimited amounts of cash and credit, they can keep these markets going up, by the aforementioned theoretically forever, by literally buying the assets by simply creating more, more, more cash and credit with which to continue flooding the economy, which increases the money supply (and the accompanying debt load), which makes prices rise more, which makes the Federal Reserve monetize more debt with which to flood the economy, which increases the money supply (and the accompanying debt load), making prices go up, everything going around and around, and up and up, until it (pausing for breath) literally can’t continue because prices increase so fast that it is impossible to create enough cash and credit to pay them.

This is how price inflation comes to destroy everything.

And with the unbelievable corruption in the gold and silver markets, which are the only sound money and the last refuge of desperate people being destroyed as their money is destroyed, their prices will continue to be suppressed.

You get the picture. We’re Freaking Doomed (WFD).

But take heart! I asked Manager Dan at the grocery store “Are you buying gold and silver, currently at prices that are laughably low, or are you some kind of idiot who needs a good dose of Doctor Mogambo’s Stupidity Cure (DMSC), which is me slapping the hell out of your face (whap whap whap!) until you get some smarts about buying gold and silver when your own government, and governments around the world, is allowing and abetting such terrifying expansions of the money supply? Huh? What’s it going to be, Dan? Huh? What? Huh?”

He said, and this is a direct quote, “Yes! Yes, I am buying physical gold and silver! Gold and silver bullion! Yes sir! Lots of gold and silver bullion! Anything you want, mister! Just don’t hurt me. And please just take your groceries and quietly leave the store! Nobody wants any trouble!”

No trouble! See how easy and pleasant this whole thing is? No trouble! Gold and silver bullion in hand! Whee! This investing thing is easy!

If you don’t believe me, then listen to Manager Dan. What are the chances that BOTH of us can be wrong?

Regards,

The Mogambo Guru
for The Daily Reckoning

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The post Me and Manager Dan appeared first on Daily Reckoning.

Where have I been? I admit I was cowering, like the spineless little weasel that I am, in the Mogambo Secret Temporary Bunker (MSTB), which I cleverly constructed in the living room using an overturned couch and some strategically-placed cushions.

That’s where I got an email from Junior Mogambo Ranger (JMR) Phil S., who sent an interesting essay he ran across. It was concerned with what we both, as educated people who recoil in mortal horror at suicidal Keynesian econometric lunacy, are both deeply, deeply concerned.

Namely, the incomprehensibly impossible conditions in the world economy, completely saturated, as we are, with massive, unpayable burdens of backbreaking debt, and now terrifyingly teetering, teetering, teetering on the very, very verge of complete cataclysmic collapse, which is not to mention the sudden-yet-stupid appearance of completely gratuitous alliteration.

Bad times, indeed.

In summation, the author dryly noted that “conventional and unconventional policy tools aren’t working.” My Initial Arrogant Mogambo Reaction (IAMR), of course, is to reflexively snort in dismissive derision (“Ha!”) and predictably rise in loud, self-righteous rebuttal to say “Hey! You! Hold it right there! Policy tools of creating massive amounts of debt and the accompanying ballooning of the money supply aren’t working to goose the economy as they used to, alright, but in reality, they are working exactly as they always work: At first they can, and then they can’t! Because that’s the way it works! Hahahaha!”

I generously waited a moment for that superb Mogambo profundity to sink in, thus allowing time for journalists to eagerly jot down the delicious bon mot. Disappointingly noting neither, I disdainfully thought to myself “Pearls before swine! Morons! I hate you! I hate you all!”

Fortunately, I controlled myself and my fearsome Mogambo Fists Of Rage (MFOR) long enough to continue “It’s a law! It must be an economic law of some kind, emanating from some unseen order permeating space and time! A cosmic imperative! The Force is with us!”

I dare say this with some real authority because I actually know for a fact that this same thing, and I am talking Same Exact Damned Thing (SEDT), has happened thousands of times in the last 2,500 years here on Earth: A dirtbag government allows stupidity as concerns debt and the money supply, everything bankrupts itself, things collapse, everybody suffers, hordes of invaders sweep in, and then it starts all over again from nothing, an economy eventually rising from the ashes by turning the ruins into tourist attractions selling T-shirts and tasty food.

And in case you are as curious as most Earthling carbon-units, this SEDT has happened TRILLIONS of other times on countless other planets, too. And in just this one, lousy quadrant of the galaxy!

In fact, innumerable intergalactic research papers have shown that, invariably, some dirtbag, low-IQ creatures living on some dirtbag, low-IQ planet decided “Hey! We should stop wallowing in slime on the bottom of the ocean, where everyone evolved with fins and a developed brain is always pooping on us from above! We need a fiat currency!

That way, we can expand the money supply and buy an expanding, eternal prosperity for ourselves! Then we can evolve into higher-order beings, perhaps intelligent enough to understand that we can’t, in reality, do this kind of foolish fiat-money crap without paying a terrible price, and we should stop now before it’s too late. But we won’t! Whee!”

And they don’t. Like I said, trillions of times.

“So, relax,” I keep telling myself. “There is still much malignant magic in a fiat currency, bubble, bubble, toil and trouble! Much more than is dreamt of in your nightmares, my dear Horatio!”

Uh-oh! Alert Junior Mogambo Rangers (JMRs) instantly recognize that my bizarrely lapsing into a mishmash of misremembered Shakespearean soliloquies is always a bad sign, portending (dare I say it?) trouble ahead.

Then again, perhaps the hard, bitter lessons of marriage, children, stupid neighbors, crappy careers going nowhere but down, and bizarre Keynesian monetary policy portending bankruptcy and ruination have taught me, pausing for a little self-pity, that there is ALWAYS trouble ahead, and everything crappy can always get a lot MORE crappy.

And usually does, too!

And, for me, it’s usually because I don’t have the money to buy myself out of another crappy mess by establishing making restitution, or establishing a fake alibi, or framing somebody else, or bribing lawyers, or intimidating witnesses, or faking my own death to start over with a new life in some tropical paradise driving a snazzy convertible with fancy hubcaps and a great sound system.

But — unlike real life! — the evil Federal Reserve can happily create as much money as it wants! Anytime it wants! And so can all the other central banks of the world, too! And (hold onto your hat!) they are!

In fact (still holding onto your hat), according to something I read, I forget where, for at least the last 6 weeks, an incredible $1.5 trillion dollars in new credit was created worldwide! Every week! Every Freaking Week (EFW)!!

And here in the USA, hundreds of billions of dollars are continually springing into being, overnight!

And the Federal Reserve has, believe it or not, given itself the power to create the money to buy financial assets for itself, thus reducing the supply of assets in the market, while at the same time increasing the supply of money looking for assets to buy! More demand and less supply means higher prices!

With the awesome, towering power of buying unlimited assets with unlimited money the Fed creates for itself, you can be sure that nothing bad will permanently happen to the banks, the stock market, the bond market, the housing market, the auto loan market, the student loan market, the derivative market or government deficit-spending or anything else, because if they don’t, it’s “Game Over, Player One.”

Oh, sure, the Fed will let markets sink and rise, up and down, around and around, probably dramatically, so as to allow the sleazy banks and the ethically-bankrupt financial sector to profit from manipulating the markets and transferring investor money to themselves. Just like always. No problem. They’ve been doing it for years.

This fixes to assets markets.

But what about the real commercial economy? You and me, and kids and spouse who never seem to shut the hell up about wanting things?

Well, it comes down to somehow getting a lot of new, free cash and credit into the hands of people who will spend it (especially by borrowing against future infusions of cash!), thereby goosing (honk!) consumer spending, goosing (honk! honk!) the economy and further goosing (honk! honk! honk!) prices in all the markets.

Ergo, putting on my Mogambo Memory Cap (MMC) and turning the power up to maximum, I begin to remember, remember, remember like it was yesterday, perhaps in that classic book Economica Mogambo, that I have theorized that a 50% tax cut is just what the doctor ordered, and easily administered: At the bottom of your tax return, divide by 2. Send that, and keep the rest.

“After all,” I added, “the total of personal and business federal tax paid is less than a few lousy trillions of dollars, while the government has been increasing the national debt by almost a trillion dollars a year for almost a decade! A Whole Freaking Decade (WFD)!”

So, waxing philosophic, what’s another trillion and a half of new government debt to cover the now-missing tax receipts?

And, with a snotty air of contempt on my lips, I know that with their simplistic Keynesian mathematical mumbo-jumbo, the Fed will show that the multiplier of new money entering the economy (which was usually about 4) will increase to at least 6 because the lack of taxes on each new dollar no longer gradually erodes its buying power as it passes from hand to hand, giving the economy a sudden increase of a mind-boggling $9 trillion in new buying power!

And with a ludicrously out-of-control fractional-reserve banking (where reserves held against loans) are almost non-existent, we are suddenly talking over a (gulp!) quadrillion potential dollars, just from the Federal Reserve! Which is not to mention all the other desperate governments and central banks around the world who would LOVE to do this crap!

So why am I saying this again now? Because Ben Bernanke, disgraceful former chairman of the Federal Reserve, has, so the rumor holds, visited the government of bankrupt and massively over-indebted Japan to explain why his previous advice to drown in massive amounts of debt didn’t work, and now to advise them to literally give people money.

Unfortunately, it will end, years from now, in disaster when the skyrocketing cost of food and energy (“death by price inflation”) caused by this insane mega-expansion of the money supply makes people grumpy and things grind to a halt.

And gold and silver prices? To the moon, baby! Talk about your cosmic imperatives!
With such certainty, what can one say except “Whee! This investing stuff is easy!”?

Regards,

The Mogambo Guru
for The Daily Reckoning

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The post The Law of Cosmic Imperative appeared first on Daily Reckoning.

Lately, the world is understandably all nervously atwitter about many things, mostly whether things economic…

For example, the overvalued stock market, the overvalued bond market, the overvalued housing market, overextended banks, overextended governments, overextended government promises, overextended businesses, and overextended citizens all adding up to incomprehensibly enormous and ludicrously large debt loads, etc.) will come crashing down in a stinking, staggering, stupefyingly monstrous, huge, honking heap of utter, utter ruination.

Perhaps, pausing for breath, due to something (shall we soothingly-yet-ominously say) untoward happening.

“Untoward happening.” It’s a nice, vaguely sinister phrase, and so handy when the kids whine something like “And what if we DON’T stop acting like greedy little snot-nosed, mental-defective brats who want new cellphones and nicer cars, like all our friends whose fathers are not stingy, paranoid, whack-job weirdos like you, and that’s why we hate you, in case you were wondering?”

Now, being a good father who lovingly tries to educate his children by screaming at them (supplying that all-important emphasis), you knew that when they were young, their attention spans were limited and they were still thinking too concretely to understand abstract concepts. Understanding this, you, as the considerate and loving parent, could calm them down and conveniently end the conversation by explaining “Shut up.”

Now that they are older, you have to explain everything, all subsumed under the heading “You’re morons!”

Now, as the thoughtful and dedicated parent, you patiently explain to them “For some mental-defective reason, you morons refuse to comprehend absolute necessity of buying gold and silver when faced with the suicidal enormity of the Federal Reserve creating so much cash and credit that everything…

Including the Entire Freaking Economy (EFE) and half the population, directly depend on the gargantuan, gluttonous government continuing to deficit-spend more and more money, inflating the money supply above the already-enormous inflated level which allowed all assets to inflate into these dangerous, deadly bubbles!”

Of course, you could, trying to do the best job of parenting that you can, also explain that the government NOT continuing to increase the deficit-spending means that the fabled Keynesian multiplier (which actually does exist and equates to around five, as do most multipliers) will go into reverse, and five dollars of spending will disappear with every dollar not created and deficit-spent.

But getting back to the basics of Explaining Things To Stupid Kids (ETTSK), now would be a good time to throw a little guilt in there, too. You can add “How can you embarrass me, over and over, for not knowing that silly Deficit-Spending Crap (DSC) always ends badly with an inflationary hell for things you need to live, and with a deflationary hell for paper assets?”

Finally, as a coup de gras, appeal to their greed. This is where you can casually throw in “And then gold and silver will again reign supreme, as they always do, and then you can — glory of glories! — have all the money you want! Piles and piles of money! All for you!”

Nowadays, alas, they are old enough to have learned at least a smattering of the Austrian school of economics, and thus they know that those piles and piles of money that I tantalizingly refer to won’t buy squat because of the lack of buying power of each dollar, thanks to the monstrous over-issuance of cash and credit by the evil Federal Reserve.

As a case in point, take a look at the pitiful case of Zimbabwe, as I suggest everyone do: They printed so much cash in a single decade that their old Zimbabwe dollar is literally worthless, and their economy (once a shining star of all of Africa) has collapsed to the point where they again need foreign aid, just to keep their citizens from starving.

So you can understand my irritation that my loving family ignores all that, and greedily prefers nutritious food, decent clothing, washing machines that don’t leak, dental care and all the rest of the luxuries that I cannot afford, even if I WASN’T furiously using every available dime to buy gold and silver because (all together now!) We’re Freaking Doomed (WFD)!!! Doomed!

Okay, now that I have you all worked up, you can relax. Yes, it’s WFD one day, but maybe — just maybe — not yet! The soothing-yet-terrifying truth is that with ethically corrupt governments and a fiat currency, there are a lot of things that can be done. A lot!

They can, as an extreme example, literally create enough fiat money to buy Every Freaking Thing (EFT) that exists. Every stock. Every bond. Every house. Every debt. Every everything. All they need is a willing seller.

More realistically, the government can deposit fiat money into your bank account (“free money”). They can send you a check (“advance tax rebate”) through the mail, or let you claim it on your next tax return.

They can let you deduct actual debt from your tax return (thus lowering your debt), while simultaneously letting your creditors claim a 100% tax credit to offset their loss! Everybody wins!

In short, there is nothing that they can’t do. And there is nothing to stop them, now that the government has passed laws that allow them to do illegal acts in the name of protecting national security and/or the integrity of markets.

So whither the markets? Well, with monetary and fiscal powers like that, it would be child’s play to let the markets sink a while, flushing out the weaker and less well-connected hands, reducing the prices of assets from “bubble la-la land” to “buy territory,” consolidating repossessed assets in the banks, and inflicting real pain on people and their retirement plans.

Then it’s just a matter of sitting back and waiting until the frantic call goes out through the land: “Somebody do something! Make the government do something!” which is the green light to goose markets up via Keynesian deficit-spending, building the bubbles back, and thus giving the banking and financial-services industries another chance to set up another flimflam, by which they will profit and we will lose.

So, not buying gold and silver against the certainty of calamity that has occurred thousands and thousands of time throughout history, on scales both large and small, despite desperate, frantic actions by all the thousands and thousands of affected governments and millions and millions of affected people?

Hahahaha! One choice has never succeeded and one has never failed, and you ask me which one to choose? Hahahaha! Obviously, I have to explain it to you as if you were a child: Shut up! Hahahaha!

If you were older, perhaps you would know to buy gold and silver, your parents would be proud of you, and that, best of all, “Whee! This investing stuff is easy!”

Cheers,

Mogambo Guru
for TheDaily Reckoning

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The post All Together Now! We’re Freaking Doomed (WFD)!!! Doomed! appeared first on Daily Reckoning.

I was feeling particularly low, having sunk into a sloppy, self-pitying, tequila-fueled, drunken introspection after (again) failing to achieve blissful Nirvana, this time per my wonderful new (“Why didn’t I think of it before?”) theory, which is to finally attain true transcendence through sheer, strict gluttony.

Gloomily, as I sat, slumped, I burped, and, in a moment of blinding enlightenment, clearly saw that I was such a shocking, colossal failure at so, so many things.

Including (paradoxically) any discernable skills on how to handle failure, for crying out loud, despite having had so, so much of it, which makes me think I am even MORE stupid than everyone thinks, which makes me feel even worse.

Then, just as I was ready to hit bottom, having dimly decided to give the glories of gluttony one more try (but this time with less bacon and more pornography), was absolutely delighted to read that Ben Bernanke was paid $250,000 to give a speech. A speech!

I was reborn! The reason for my new-found zest for living is because Ben Bernanke is BOTH a total, monumental failure as a former chairman of the Federal Reserve (I mean, look around you!), and an arrogant Keynesian dorkface chump if there ever was one. Yet, look at the loot!

One speech! A quarter mill! I mean, this guy is absolutely, completely delusional by actually thinking, and believing, that laughable Keynesian econometric gibberish (to replace falling consumer spending with more government spending) can prevent the horrific economic collapse that always comes after radical expansions of the money supply that distorts the whole price structure of everything into a bloated, inflationary insanity.

And what did we get, in terms of the aforementioned bloated, inflationary insanity? Well, buckle your seatbelt, because I’m going to tell you!

Peak bond prices so high that interest rates are almost literally zero! The S&P 500 peaking at a P/E ratio so high that it is in the “historically high” range! Housing prices that cost an incredible four times the average income! An $18 trillion national debt, more than 100% of GDP! Total (government, business and personal) debt of an astonishing $60 trillion, against an entire GDP of only $17 trillion!

Government spending (federal, state and local), school systems and myriad taxing authorities together spend about 40% of GDP!

And a huge, unfathomable derivatives market that, combined with accrued government obligations, totals in the multi-quadrillions of dollars! This is thousands of trillions of dollars! Quadrillions! Truly incomprehensible sums!

And taxes, taxes, taxes upon taxes everywhere!

And a vast ocean of laws upon laws! Regulations upon regulations! Bubbles, bubbles, bubbles upon bubbles! Excessive repetition upon excessive repetition, which gets complaint upon complaint.

In the late 18th century, of course, you could write stupid sentence constructions like that last one, and nobody would say anything. But at the same time, France sentenced John Law to death for essentially doing this same damned thing: Creating paper money to excess, disastrously expanding the money supply, which ruined France with price inflation and economic misery.

It got so bad that Marie Antoinette (as I understand it) had to advise the French people to eat cake instead of bread.

Perhaps (the historical records are very sketchy here) she suggested a nice, chocolate layer cake with a thick, creamy icing, yum, yum. The perfect breakfast!

Nevertheless, maybe because of consuming all that sugar in all those cakes they ate, the French peasants got all huffy at the hyperinflationary prices, starvation and economic ruination that comes from such insane expansions of the money supply, leading to the French Revolution, the rise of Napoleon, and yadda yadda yadda, and yet — and yet! — here are again! Creating waaAAAaaay too much money upon waaAAAaaay too much money!

Anyway, Dan Cofall, of the eponymous Dan Cofall radio show, was musing about how Christine Lagarde, whom I will graciously introduce as the delusional Keynesian low-life socialist French honcho of the infamous International Monetary Fund, said that it was better to just pay the interest on debt, rather than paying it off.

As outrageous as it sounds to me, or Mr. Cofall, or any right-thinking people, for a slimy banker to suggest that you, and by extension, governments, perpetually stay in crushing debt instead of paying it off, she is, alas, correct, from the point of view of the banks, governments and the gigantic, vampiric financial services industry. Why?

Because the banks have created the oceans of money in order to lend it, and the money went out into the economy. Year after year, decade after decade! The money supply went up, bank interest income went up, businesses went up, tax collections went up, consumer spending went up, government spending went up. Everybody’s a winner, it seemed!

Now, if a debtor decides to pay off a debt, the money has to be accumulated by the debtor, thus taking the money out of the money supply, and use it to pay back the bank. The salient point is that the money supply shrinks, the bank is not earning any more interest income, and things go from bad to worse. Much worse.

As an aside, to those who like to hyperventilate over the velocity of money (which is merely GDP divided by the money supply) as an indicator of economic health, remember that GDP can actually shrink and collapse, but the velocity of money still can go up (seemingly indicating economic health) if the money supply was shrinking by more than the GDP collapse!

And collapsing it is! R. Davis ConsumerMetricsInstiture.com reported that “the Bureau of Economic Analysis (BEA) reported that the economy was contracting at a -0.17% annualized rate,” which is bad enough, but that these BEA buttheads came to that conclusion only after they “assumed a very mild dis-inflationary annualized deflator of -0.06%.” What? A negative inflation rate? Outrageous!

As I remember, ShadowStats.com calculates that price inflation is definitely somewhere north of 6%! 6%! 6%!

I deliberately used repetition to produce the handy and infamous-yet-ominously meaningless “666,” to indicate that things are getting outrageous.

I was just about to angrily climb onto my soapbox to, again, denounce the lying rat-faced lowlife bastards that infest government who produce such lies, when Mr. Davis does it with much more elegance and class than I when he notes that “ Interestingly, during the same quarter the far more responsive Billion Prices Project (BPP) recorded positive annualized inflation of +1.56%. If the BPP inflation metric was used to deflate the nominal BEA data the economy could be shown to be contracting at more than -1.79% annualized rate.”

And if the inflation rate of 6% was used to accurately reflect real GDP growth, then yikes! We’re Freaking Doomed (WFD)!

Now, I don’t claim to be an expert historian about the world, or boast that I can remember famous dates or people, or even dimly recall that last week I said I would finally clean out the damned garage after all those other times I said I would clean it out, but always forgot for some perfectly understandable and forgivable reason or another, but about which hardly a day goes by without hearing some yammer yammer yammering about it. Damned memory! Damned garage!

But, as it happens, I actually DO know that, in The Whole Freaking History Of The World (TWFHOTW), a shrinking money supply is Never A Good Thing (NAGT), and, in general, is Always A Bad Thing (AABT), because now there is, literally, not enough money to keep the status quo going; some (most) things are going to have to come down in price, and some (most) people are going to lose money as the whole price structure of everything, everywhere, adjusts to the changes.

And with everything now jiggered into the bubble stock market, the bubble bond market, the bubble student loan market, the bubble housing market, and the bubble banks, you can see why the Federal Reserve, the financial services industry, and the government are so desperately, frantically, terrifyingly intent on forcibly manipulating/rigging everything, and why they lie about everything.

And so what to do in a world of make-believe and financial bubbles? Gold and silver, of course! Gold and silver are bargains, bargains, bargains like no other bargains in history. To pointlessly return to bizarre sentence construction, they are bargains upon bargains, and I mean Right Freaking Now (RFN), too!

I hear you scoffing, saying “Such a rude and arrogant fellow, this Mogambo! However, I remain unconvinced, haughtily rejecting gold and silver, ignoring both 2,500 years of compelling world economic history and this repellent little man whom the rabble call Mogambo The Fabulous (MTF).”

Now it is MY turn to scoff, as your snide remarks affect me not. I get worse at home. Like how you didn’t even touch on how I eat like a pig, but with less manners. Amateurs!

Perhaps if this was TV, and if this was a Chinese dinner in the Twilight Zone, the episode would end with your fortune cookie ominously reading “You will soon learn a valuable lesson, but only after it is too late.”

It would be better, I think you will agree, for you to heed the lesson of history: Buy gold and silver. And then maybe the Twilight Zone episode would end happily, with your fortune reading “You will soon find true love, vast riches, and live happily ever after,” which is like a dream come true!

Unless, of course, you are married at the time. Rats!

So, however it works out with your new love and all that money, it’s just two more of the many, many benefits of owning gold and silver. At the risk of repeating myself, whee!

Regards,

Mogambo Guru
for The Daily Reckoning

Ed. Note:

The post The Fortune Cookie Knows appeared first on Daily Reckoning.

Who says you can’t have comedy in economics? Dave Gonigam, of the 5-Minute Forecast, upon being told that “Up to half of U.S. shopping malls will be gone in another 15-20 years” by retail consultant Howard Davidowitz, asked why.

Mr. Davidowitz replied “This isn’t rocket science. What’s going on is the customers don’t have the f(#&ing money”!

Now, Mr. Gonigam’s funny punchline to the setup of people not having money to spend:  “Oh… that.”

Hahaha! “Oh,” pause for effect, “that.” Hahaha! Fabulous!   It’s all in the timing!

Despite the welcome merriment, even the most lackluster Junior Mogambo Ranger (JMR), even after a long night of drinking tequila right out of the bottle, would instantly note that my delighted laughter, despite my obvious enjoyment of the clever writing, is both mirthless and cold, my thin lips drawn back in a horrible grimace, and my Famous Mogambo Levity (FML) is delivered through clenched teeth, as befitting the horrific news that people (including me, dammit) have less disposable income to spend.

It’s the Ugly, Ugly Thing (UUT) that the evil Federal Reserve never talks about, although it is part of the collapse of the grotesquely bloated debt loads being borne by governments, businesses and people, to finance current consumption and to acquire and hold overpriced assets, that were all bought using tons and tons and tons of borrowed money created, out of thin air, by the evil Federal Reserve, which made the prices of things go up.

And it is not just me that is scared about this stuff!  Maybe he is not occasionally pooping in his pants from fear, like me, but Mike Maloney of Goldsilver.com had an essay that particularly caught my eye, titled “Delusional Keynesians Pushing Us Over A Cliff.”

Now, that’s the kind of title that pops! It’s the kind of title that I would use if I ever wrote anything that wasn’t just The Same Old Mogambo Crap (TSOMC), as it automatically makes one instantly think “Hey! He’s right! This is outrageous! Surely, this essay by Mr. Maloney must be a call to arms! Rise up, patriots all! Gather ye, to storm Washington, D.C., waving flaming torches and pitchforks, and turn out the foul, festering Federal Reserve into the angry streets, whereupon the frightened Keynesians would flee for their sorry lives into the dark, dank night, crawling off somewhere dismal to die of shame for having actually believed the same, old, tired conceits and idiocies behind Keynesian economics, an infamy compounded when they worshipped themselves as heroes even as they turned a blind eye to the mounting disasters and bankrupting bubbles of their totally discredited theories. Worsening year after year after year, the wailing of suffering ringing loud in our ears!”

Well, it affects me like that, anyway. And that last part about “Worsening year after year after year, the wailing of suffering ringing loud in our ears” kind of rhymes and has a nice rhythm, so you know it must be true! True, I tells ya!

And when this whole economic thing falls apart because of the horrid Keynesian Federal Reserve, pooping in their pants now and then will be the LEAST of people’s worries.

But, then again, I could be just another frightened old man with poor sphincter control who has read too much economics and too much history, who sees all that accumulated 2,500 years of monetary and inflationary wisdom turning to horror because of, as always, the abuse of the money supply.

Given that the supreme idiocy of Keynesian economics, and thus the foul Federal Reserve, tragically dedicates itself to constantly expanding the money supply to accommodate increased government deficit-spending and increasing debt levels everywhere, is it not axiomatic that the aggregate price of things must increase, to absorb all this new cash? Where else is it to go?

Well, to my dismay, it’s finding its way into rental housing with higher rents, and higher food prices (aided, no doubt by the recent mandated increases in minimum wages).  Bloomberg Businessweek magazine reports that Chipotle Mexican Grill “is raising prices from 4 percent to 6 percent on its beef burritos and bowls.”

Yikes! Inflation in food prices! If burritos today, can higher-priced tacos be far behind? Horrors!

And this avalanche of new money is going into stocks and bonds, too, so that the prices of bonds is so high that the yield is, nominally, zero, and the real (inflation-adjusted) yield is less than zero. Less than zero! Madness!

And with the S&P500 sporting a P/E of 20 and more, margin debt is at the nosebleed levels. Normally, this would be a Big Lookout Below (BLB) caution, but JMR Phil S sent the chartoftheday.com graph showing that “Today’s chart illustrates that investing in the S&P 500 during the six months of November through and including April accounted for the vast majority of S&P 500 gains since 1950. While the May through October period has seen mild gains during major bull markets (i.e. 1950-56 & 1982-97), the overall subpar performance during the months of May through October is noteworthy. Hence the saying, ‘sell in May and walk away.’”

I gotta admit that this is always impressive, and with the Fed in permanent QE mode (where the Federal Reserve, beyond creating money to buy government debt, is actually creating money with which to buy stocks, bonds and housing, and admitting to manipulating every other market), with Obama desperate to avoid at least one failure in his eight years and to insure that nothing untoward happens before now and the 2016 presidential election, with the Euro area ramping up its own QE, with the Federal Reserve as an always-willing buyer that can create, at a whim, all the fiat money necessary to buy, literally, everything that exists, a rising stock market for a long, long time seems like a lock to me.

And with all these disasters going on, you would think that gold and silver would be soaring, since in all the other times in the past 2,500 years when this kind of monetary, fiscal and economic insanity prevailed, they did!

But gold and silver are NOT soaring! Jeff Clark of Casey Research asked John Williams of Shadow Stats “to calculate the gold price in March 2015 dollars (the latest data available) based on the CPI-U formula from 1980.”

The results?  “Adjusted for the 1980 inflation measure, the gold price is approaching its bear market low of 2001.”

“In fact,” he goes on, “gold is now below the 1975 price when it became legal to own it again! These data clearly show that when measured against a more realistic view of inflation, gold is dramatically undervalued.”

He beat me to the punch about how urgent it is that you buy gold and silver to protect yourself, when he went on “And with total worldwide debt levels up by a whopping $57 trillion since the end of 2007, the need to own it is as important as ever.”

And be cheered that this “gold is undervalued” idea is not news to a lot of people, who ARE buying gold and silver at these incredible bargains.  And while there is no actual evidence that they exclaimed “Whee! This investing stuff is easy!” when they did, I am sure they were thinking it because it was so obvious.

And if a clueless cluck like me can see it, then you know it must be true. Whee!

Regards,

Mogambo Guru
for The Daily Reckoning

P.S. Be sure to sign up for The Daily Reckoning — a free and entertaining look at the world of finance and politics from every possible angle. The articles you find here on our website are only a snippet of what you receive in The Daily Reckoning email edition. Click here now to sign up for FREE to see what you’re missing.

The post The Only Laugh in Keynesian Economics appeared first on Daily Reckoning.

I was having a dream. A wonderful dream, a magical dream where beautiful Hollywood starlets were pleading to seduce me, en masse, in return for giving them leading roles in my next blockbuster film, “The Federal Reserve Is Eating Topless Pole-Dancing Vixens Alive, And Horribly Destroying The Rest Of Us, Too.”

It’s a sad tale of monetary insanity where the Federal Reserve created so incredibly much excess money and credit. It’s perhaps even tragic, and which is why the film was initially titled “The Federal Reserve Is Slowly Eating You And Your Children Alive,” which could be more or less tragic, depending on your perspective towards children, and how they grow up as insatiable mutant parasites, always wanting something from you, like “love,” and “quality time” and picking them up from the dentist or some dumb soccer game, when what they REALLY want is for me, I mean you, to cough up increasing amounts of cash and backbreaking debt supporting them, year after year after year, growing more and more surly, until you can’t remember a time in your life when you were not miserable and wondering aloud “Oh, Death, where is thy sting?” Perhaps plague-like in many respects, one could say.

And then later, when they are adults, they want to come back “home,” dragging spouses and children along, to live in their car, parked in your driveway, plugged into YOUR extension cords and using YOUR electricity to heat their electric blanket at night and run their stupid hotplate all day, and always knocking on the door, wanting to use the bathroom, or beg for food, or something. Always something.

But I realized it was a clumsy title anyway, and likely to be mistaken. And it did not convey the vital message of how the prices of things, most tragically food and energy, go up because of the creation of excess money and credit, and how it destroys the people and the economy.

Well, actually, that’s a lie. The vital message of the film is that it contains many scenes of scantily clad young ladies prancing about, dressed only in their scandalous dainties, for no particular reason at all, except to heavily target the teenage-boy demographic so as to maybe, you know, make a few bucks out of this movie thing.

Nevertheless, the OTHER vital message is that the price of things DO go up when the money supply goes up. For instance, the money supply has been steadily going up since 2003, to pick a date at random, and now the price of a one-day adult pass to a Disney attraction is going up in price again, to about $100, which is a doubling in price since 2003.

Think about the implications if you are considering retiring! In twelve years of the money supply expanding and things constantly getting more expensive, the prices of things double! And if you live another twelve years, prices will double again! Yikes! How does THAT impact how much money you have to save every year?

And then I read something, somewhere, somehow, as I dimly remember it, associated with DailyReckoning.com, in an interview with Alan Greenspan, the evil satanic monster who started this whole “insane creation of cash and credit” somewhere around 1987. He was asked, as I recall, about the current fad of bemoaning such huge disparities in wealth, where a small minority of people owns such an overwhelming majority of total wealth, while the vast majority of people have little, if any, wealth at all.

And you wouldn’t have any wealth, either, if you capitulated to your kids whining about how you are the most tight-fisted, stingiest and most hateful parent in the world just because you won’t buy them some new toy, or clothing fad, or medical “treatments” by some quack doctor who think all their problems are mental, and are all caused by me being a dysfunctional and clearly crazy whack-job, driven madly incoherent from the knowledge that the evil Federal Reserve has created, and is creating, so much excess money and credit, and the horrible, terrifying things that are going to happen because of it. How could it NOT drive me crazy?

But getting away, for the moment, about what a lousy father and husband I am, and back to the wide disparity of wealth thing, Greenspan said (get this!) that the Federal Reserve had “nothing” to do with it! What?!?!? The mind reels!

This, then, is where I am shown that I cannot be trusted to interview someone who says something like this, because I would have snarled as I leapt across that table, grabbed him by his ugly necktie to haul his nasty little face up close to mine, so that I could scream at him at the top of my Outraged Mogambo Outdoor Voice (OMOV), replete with foul flecks of sour spittle flying out of my mouth, getting on his glasses and hitting his sprinkling his face, making it all the more disgusting and surreal.

I would scream “Then just from where in the hell did all the oceans of money and credit come, to first create, and then bid up the prices of, all that so-called ‘wealth’ in the first place, if not from the damnable Federal Reserve, which is the only place it CAN come from, you lying, creepy little man?”

Of course, he would stammer and wiggle, and try some of that famous Greenspan double-talk, and I would laugh — hahahaha! – loudly and scornfully — with maximum disdain! — at his vile treachery.

Yes, laughing, even as the economy crumbles around me, the disparity of wealth being only ONE of the cancerous, bloated, mal-invested things caused by the monetary treachery of the Federal Reserve under Greenspan, continued by Bernanke, and now by Yellen, as evidenced by Michael Lombardi at profitconfidential.com compiling a few dismal economic nuggets, such as the National Association of Realtors data showing that home sales are declining, that the Fed bank at St. Louis reports falling orders for durable goods at U.S. manufacturers, and that, predictably, the Census Bureau reports that inventories are rising (i.e., things are not getting bought).

This could explain why the Institute of Supply Management Purchasing Managers’ Index (PMI) fell to an inching-along reading of 53.5 this past January, which is painfully near the index’s 50 cutoff between business expansion and contraction.

That rate of decline to “economic contraction” reading of less than 50 is worrisomely rapid, and Mr. Lombardi apparently agrees with me, and notes that the index is “down from 58.1 in August of 2014.” The economy is (gulp!) collapsing.

This decline of manufacturing activity may explain how, as newsletter writer Mark J. Lundeen shows, electrical usage amazingly stopped growing in 2008. The last seven years of non-growth is the longest, by far, decline in total electricity usage since 1930. 1930!

That’s 85 years!

As Mr. Lundeen says, that while economic growth is always talked about in dollar terms, “electrical power consumption is a real world measurement of economic growth,” which seems to fit the data pretty good, as far as I can see.

Maybe a little TOO good, if you are one of us unfortunate folks who see calamity at every turn because you are aware of the horrible long-term effects of moronic, debt-besotted Keynesian “stimulus” stupidities.

And Junior Mogambo Ranger (JMR) Phil S has been sending me scary articles about the dramatic decline in the Baltic Dry Index, which is an index of shipping costs. This measure of ocean shipments has plunged to new lows, heretofore undreamt of, which is the point where transport ships are being actually dismantled due to oversupply of ships and lack of goods needing to be shipped.

Which, since you seem to be asking, is where we are, Right Freaking Now (RFN).

This all seems to me, Phil, all Junior Mogambo Rangers (JMRs) and family members who know better than to dare to disagree with me about anything, to be Bad News Indeed (BNI), on the order of something very, very, VERY ugly and horrifying, which is exactly what you would expect, because ugly and terrifying is what has always happened in the entire economic history of the world for the last zillion years when governments acted so irresponsibly! Hahahaha!

Yes, I again laugh, because it is obvious from the preponderance of historical examples (100% certainty) that this whole Keynesian lunacy would fail, and the economy would end up in catastrophe.

Which brings us to the Fabulous Timeless Mogambo Advice (FTMA) to buy gold and silver, which will become invaluable in terms of worthless paper currencies, which is another 100% certainty of the last couple of thousand years.

And with the sheer, staggering tonnage of longitudinal evidence like that, you would have to be a complete idiot, even more idiotic than I am, or more idiotic than my wife for agreeing to marry me in the first place, not to buy gold and silver bullion with a reckless, all-or-nothing abandon usually reserved for imminent life-or-death crisis situations.

And, you will be happy to know, fate is indeed smiling upon you, so that you can just walk in and buy the stuff at bargain prices, right now!

A glaring historical imperative and bargain prices?? You just gotta say “Whee! This investing stuff is easy!”

Regards,

Mogambo Guru
for The Daily Reckoning

The post The Movie They Should Be Talking About appeared first on Daily Reckoning.

At the bitter end of a long, long argument about it, I stubbornly maintain that being paranoid and hostile is not, in any real way, related to my being such a sub-par husband and father, which, now that we are talking about it, is actually the result of a lot of other people (not naming any names) having wildly unrealistic expectations that were WAY too high. Like, by a mile, in most cases.

On the contrary, being paranoid and hostile is a natural, organic reaction, namely, where sections of one’s DNA turn on or off as a self-preservation response to the huge exogenous shock to the nervous system of the evil Federal Reserve creating so impossibly much excess money and credit that asset prices (stocks, bonds, real estate) have been inflated to unbelievable, unsustainable heights, and half the country is now receiving a government check each month.

These are, unfortunately, big, big, BIG, economy-exploding things that are now long, long overdue for a huge, painful correction back to, in yet another irritating spate of Mogambo Pointless Alliteration (MPA), some scattered semblance of sanity.

Unfortunately, big deflations in asset prices would, at a leverage of 90% borrowed and 10% capital — or more! — cause instant, massive bankruptcy at the slightest downturn, since virtually all money is in the leveraged stock, bond and derivatives markets, whether you like it or not, which is kind of stupid of me to say since nobody would like it, which just proves how weird things are these days.

But who wouldn’t be an angry paranoiac after a lifetime of suffering treachery after treachery? Like, for example, how teachers, police, and court-appointed morons always immediately fixate on blaming me, as some mythical “bad parent,” for the misbehavior of my stupid children when they are accidentally left unsupervised for a few hours, or a couple of days, max.

Like all I have to do in life is watch a bunch of stupid kids, instead of out frantically scratching and scraping for more dollars with which to buy gold and silver to save the butts of the aforementioned stupid kids, and the sweet butts of their wonderful, delightful parents, when this whole bizarre, Keynesian-inspired deficit-spending stupidity finally destroys the world.

Or how about how I am always losing my stupid job? Why? Because the other employees secretly plot against me just because (they claim) I am lazy and incompetent so that they end up doing my work, too, even though we all know they hate me because I know that they are idiots who are not buying gold and silver in perilous economic times like these, even though I tell them over and over and over to do so. I mean, who’s the victim here?

Or how about all my neighbors being rude to me because they are hateful little rodent-people, bristling with resentment about being informed that they are stupid, as in one recent episode where I was charmingly friendly and convivial, casually asking a neighbor out mowing his stupid lawn, “Hey, moron! Are you buying gold and silver bullion because the evil Federal Reserve and all the other central banks of the world are creating so insanely much cash and credit, under the laughable delusion of Keynesian economic idiocies, that we are doomed to an inflationary collapse, or are you still a moron?”

And then they get all huffy because they refuse to understand. “Don’t be obtuse, you morons!” I haughtily say, knowing that they don’t know the definition of obtuse is to refuse to understand something, because then I would have something ELSE to throw in their stupid faces the next time they say to me, “Well, Mister Know-It-All Mogambo (MKIAM), you have been wrong about silver and gold for more than a year, so that anybody who listened to your stupid advice lost money, and they also lost all credibility by actually believing anything you said, you horrible man, whose own children think you are horrible, too, as revealed in the first paragraph!”

Like most Earthlings, they are morons about gold and silver, even though I have told them countless times How Things Always Are (HTAA), which is that you have to own silver and gold at the end of long monetary booms, and if you don’t, then you are a moron, regardless of any temporary aberrations caused by deliberate manipulation of the gold markets by the Federal Reserve. Nice and simple. So where’s the justice for ME?

But, mostly, my paranoia and hostility stems from contemplating the world’s One Big Problem (OBP). Namely, backbreaking debts created by central banks that are now so incomprehensibly huge, incalculably huge, so impossibly huge that it is an overwhelming sum, involving, as it does, virtually all the money, assets and debt in the Whole Freaking World (WFW), which is a pile so gigantically big that not even Superman, strange visitor from another planet with powers and abilities far beyond those of mortal men, could lift it.

And it’s all leveraged to the maximum, all-or-nothing hilt to magnify looming losses, with so much debt known and unknown, so many parts and players known and unknown, pandemic political corruptions and frauds known and unknown, with so many divided loyalties back-stabbing each other, with so many treacherous cross-currents, cross-ownerships, grudges and revenge blood-lust that it cannot possibly be understood except as the supreme, swirling, stinking cesspool of everything turning to valueless crap, stinking and swirling and spiraling down the old crapper, which, fortunately, is merely a problem of hydrologic engineering, which is VERY well-understood.

So, what’s new? Internal metrics of the stock, bond and housing markets deteriorating? Sub-zero bond yields? The Swiss voting on owning more gold? The evil International Monetary Fund (IMF) suggesting that we dump the fiat dollar and fiat euro in favor of a fiat Special Drawing Right (SDR) drawn on the selfsame IMF? Foreign countries forming trading blocs to the exclusion of the U.S. dollar? The Ebola virus being a Black Swan Event, or even a Butterfly Effect event? Asteroids plunging into the Earth? Volcanos erupting? Earthquakes? Drought? Invasions of ravenous vampire zombie space creatures from Mars?

It gets — yikes! — worse every day, in every way, and the only thing of which one can be absolutely sure, beyond a doubt, take it to the bank, is that the foul Federal Reserve, along with the other intellectually-corrupt central banks of the world, will create all the gigantic, exponential amounts cash and credit necessary to, if they have to, literally, buy up the entire stock market to keep prices high, just as they are doing for bonds. How can you NOT have stock market and bond market booms around the world when the central banks are busily creating the money and debt with which to buy stocks and bonds?

So you mock my paranoia and hostility, and my manic hysteria about buying gold and silver bullion? You ain’t seen nothin’ yet.

Regards,

The Mogambo Guru
for The Daily Reckoning

P.S. There’s only one solution that makes any sense when it comes to avoiding the Pure Economic Hell (PEH) we are all doomed to experience as the Fed continues to print money with impunity. And that’s to buy gold, silver and oil. But if you want a few more actionable ways to insulate yourself from the assured collapse of the global monetary system, your best bet is to sign up for The Daily Reckoning, for FREE, right here.

The post Hostile Paranoia: A Natural Reaction to Fed Money Printing appeared first on Daily Reckoning.

For several weeks, the tragic soul of The Mogambo has been troubled by subtle undertones in The Force, inexplicably using an old Star Wars metaphor, which brings up the interesting question as to how a Jedi light-saber would fare against a couple of belt-fed .50 caliber machineguns at point-blank range.

Other than pondering those kinds of deeply philosophical questions, it was the old “It’s quiet… Too quiet…” kind of thing, where you are always nervously looking over your shoulder, and seeing enemies lurking in every shadow, every nerve on the razor’s edge. Trigger fingers twitching, too, which is difficult to say five times quickly, which only proves the point.

For instance, I started sensing strange vibrations in what people were saying, such as Paul Krugman, Janet Yellen and others, as concerns monetary policy.

And when I call them up to demand an explanation, and maybe helpfully explain how they are mere Earthling idiots who don’t know squat about economics, they won’t take my calls!

I mean, I clearly tell the receptionist that I am the Fabulous Mogambo Genius (FMG) on the line here, and I am calling to explain to them how their whole idiotic Keynesian idea of Quantitative Easing has been a big, fat, flatulent bust, and I want to find out what they are going to propose to do next, as concerns monetary policy, and it better NOT be any more of that stupid Quantitative Easing crap, as I am prepared to clearly and loudly detail how they must be the biggest idiots in the whole world to actually believe that the profound inflationary and bankrupting stupidity of vastly increasing the money-supply (and thus vastly increasing debt), and then committing that same incredible, suicidal folly over the long-term, could possibly, highly-improbably, one chance-in-a-million, one chance-in-a-zillion years, work!

But, alas, I never get through to anyone. Ever! Even after I CLEARLY explained to the receptionist who I am and exactly why I, the Fabulous Mogambo Genius (FMG), am calling, so as to hopefully speed things along.

Even parsing their oily remarks through a Junior Mogambo Ranger Secret Decoder Ring (JMRSDR) yielded, alas, nothing.

Thus, I am left exhausted and confused, with an increased sense of dread, as actually befits the situation, but knowing little else about what’s ahead, monetary-wise.

Nonetheless, I instinctively knew something BIG was up, as my furrowed brow, exaggerated startle-reflex, and a frenzy of buying gold, silver, and defensive armaments so colorfully indicated.

And, thinking about it, with your heart pounding, covered in a cold, clammy sweat, you suddenly realize that, alarmingly, the only thing it COULD be is a new, colossal attempt by the Federal Reserve and the government to somehow, some miraculous way, some fabulous way, some glorious deus ex machina way, please, please, please let this new version of massive Quantitative Easing work, even though 2,500 years of global economic history, a sad tale of one dirtball government after another bankrupting itself, with or without creating paper money in its death throes, proves that it can’t, and it won’t.

Of course, since I am the aforementioned Fabulous Mogambo Genius (FMG) of story and song, I always knew that the ultimate fate of grotesquely expanding the money supply to expand the size of government was to inexorably have to, in one fashion or another, relive the infamous “bread and circuses” policies of ancient Rome, the government desperately placating the teeming, impoverished masses, suffering as they are from rising prices, a large, oppressive government and abysmal living conditions, by giving them food and entertainment, which is a disastrous policy that always leads to Bad Bad Things (BBT).

So, was I more paranoid and cynical than usual, or was something actually, you know, up.

But what?

Who knew that it would be brought to my attention by Zerohedge, with the chilling title “It Begins”? When I saw it, I thought I heard banshees wailing, and ravenous wolves howling in the distance, growing frightfully closer. Ever closer.

“It Begins”, I am sorry to say, is not the title of a terrific new horror movie, a grand and glorious gore-fest of bloody, gun-happy shoot-‘em-up action, fiery explosions, high-speed car chases and hordes of mutant zombies who mostly look like beautiful lingerie models, only less clothed.

Instead, “It Begins” refers, even more horribly and tragically, to an article in Foreign Affairs magazine, written by Mark Blyth and Eric Lonergan, of the Council on Foreign Relations, which is spooky enough.

Unbelievably, the essence is “Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People.” Yikes!

To save you the trouble of rubbing your eyes in complete disbelief, it goes on that “Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly.”

Giving cash away! It’s bread and circuses, alright, in spades! “Here’s some money to buy your own food and circus!” Wow!

The authors, who are so wrong about so many important things in the article, are nonetheless absolutely right when they say “In the short term, such cash transfers could jump-start the economy”!!!

The three concluding exclamation points were added by me, as a clever and clearly dramatic emphasis, to make sure that you completely understood that millions of consumers suddenly spending lots of new, free cash will certainly make the economy go!! Wow! What a boom it would cause!

The most laughable part is when they said that giving people cash “wouldn’t cause damaging inflation, and few doubt that they would work. The only real question is why no government has tried them.” Hahahaha!

I told you they were wrong about some things, and here are three at once, because, firstly, it certainly WOULD cause inflation, however you define “damaging.”

And, contrary to the laughable conclusion of the authors, nobody doubts that it would work! Nobody! Lots and lots of new money continually pouring into an economy would NOT make a boom? Hahahaha!

And the reason that no government has tried it is because it is Stupid Writ Large (SWL), as in “No government that tried giving away money to the population lasted long enough to write it down.”

The authors thought they were so smart to anticipate the Disagreeable Mogambo Naysayer (DMN) loudly objecting, “Because terrifying inflation is guaranteed to ensue, you morons, and poor people would be more and more poor and starved, and they will all get testy about their kids crying from hunger, and they can’t stay warm in the winter, or get out of the rain, and everything goes downhill pretty fast when people are rioting in the streets, and pretty soon you can’t get a good pizza anywhere within miles.”

Instead of wincing and slinking away in shame at my cruel scorn, they write, hilariously, “Other critics warn that such helicopter drops could cause inflation. The transfers, however, would be a flexible tool. Central bankers could ramp them up whenever they saw fit and raise interest rates to offset any inflationary effects.” Hahahahahahaha!

Central bankers could give away more and more cash “whenever they saw fit,” and yet there will be some glorious time when the Fed sees “fit” to stop giving away money and thus cause an economic slowdown, risking asset-price deflation that is leveraged a 100-to-1? Hahahaha! As Monty Python would say, “Pull the other one!”

And raising interest rates to somehow sterilize a tsunami of cash? I care about interest rates when I am receiving more and more cash and price inflation is roaring? Hahaha! I’m busting a gut here!

But jocularity and complete stupidity aside, somebody must be expecting some new income, as Chuck Butler of Everbank reports that “July Consumer Credit (read debt) grew by $26 billion, and June’s number was revised upward to $18.8 billion from $17.2 billion. But, $26 billion!”

He, as well as I, characterizes it as “off the charts folks, as if 2008 never happened! What the heck is going on around here? Doesn’t anyone ever learn lessons?”

Dave Gonigam, editor of The 5 Min. Forecast, parses it down to, “Of that total, $5.4 billion came in credit cards — a surge previously unseen during the anemic ‘economic recovery’ these last five years.”

“Of the remaining $20.6 billion, most of that was in auto loans, very little in student loans.”

So do these people suddenly have jobs, explaining their spending spree? No. In fact, even fewer people have jobs.

And if you want some bad news on the employment front besides the usual upsetting stories about high unemployment and how jobs are disappearing faster than a pizza at a Super Bowl party, the booklet titled “Pocket World in Figures,” from The Economist magazine, has a table titled “Largest Manufacturing Output” which puts the United States at the top of the list, at $1,771 billion.

This puts us a measly $14 billion ahead of China, which is bad enough, but when you look at the next chart down the page, under “Largest Services Output”, the United States is again number one, at $10,574 billion, while the second place is held by Japan at a measly $3,904 billion, and China at a distant $3,172 billion.

In short, five times as many U.S. workers are providing services as are employed manufacturing something. Probably has something to do with explaining our $40 billion-per-month trade deficit! Hahaha!

But lamenting the gaping trade deficit aside, it is this terrifying kind of weird, economy-distorting “services” thing, and the bizarre thing about giving money away to people, that will almost certainly lead to new fiscal policy accommodating them both, since behavior that was once considered idiotic, suicidal desperation, is now the only way out. Probably connected with a new war, if history is any guide.

And when the government starts doling out all that luscious cash, and calling it our patriotic duty to spend all this new cash, it’s party time! Par-tay!

And if this “give money directly to people” thing plays out even vaguely as proposed, then you will happily have some time left to accumulate lots of gold and silver during the Big Monetary Party (BMP) that will surely follow, and you will have some time to think and idly daydream of what their prices will be at the calamitously inflationary end of the aforementioned Big Monetary Party (BMP), when everything else is ashes and heartache. Astronomic!

Whee! This investing stuff is easy!

Regards,

The Mogambo Guru
for The Daily Reckoning

P.S. I say, “Whee! This investing stuff is easy!” as a way to grab your attention because unless you’re investing in gold, silver and oil — in the face of so much monetary insanity from the damnable Federal Reserve — you might wrongly assume that “Boo! This investing stuff is hard!” which of course it’s not… Of course, you would have already known that if you’d been a subscriber to the FREE Daily Reckoning email edition. So before you make any further rash decisions with your money, you’d best sign up for FREE, right here, and learn how you can start discovering real, actionable ways to grow your wealth in any kind of market.

The post How to Buy Your Own “Bread and Circuses” appeared first on Daily Reckoning.