By The Mogambo Guru

The Money Morning newsletter bills itself as “Essential investment news & insight from MoneyWeek.com” which makes me suspicious right away because of all the times I have been lied to over the years by people telling me that something is “essential”, which it seldom is, and it usually turns out to be a code word for, “It’s gonna cost ya, buddy!”

Like today, for example, when I am told that it is “essential” that I curtail my frenzied buying of gold, silver and oil this month so that one of the whining kids can go to the doctor (or dentist, I forget which) for some real or imagined discomfort, ache, pain, open wound, bloody discharge, festering sore, oozing abscess or gangrenous limb, like I am made out of money or something.

Normally, I would explain, with the patience of a saint, for the thousandth time, how the Federal Reserve is creating waaaaAAAAAaaaay too much money and credit so that the federal government can borrow and spend waaaaAAAAaaaay too much money, which is this selfsame “waaaaAAAAAaaaay too much money and credit” created by the Federal Reserve in the first place, which is a kind of strange circular logic, I admit, but which I think only serves to prove the bizarre, incestuous nature of the whole thing, but without any bodily fluids being exchanged.

And I told them, “If you don’t think so, just wait until the inflation in food and energy prices really gets here, good and hard, and when you look at the horrors this will create, you can tell me again how you don’t believe that inflation in the money supply leads to inflation in prices when all this new money enters into the marketplace, like a flood, adding massive amounts of money to the bidding for goods and services, which makes prices rise”, but they just kept whining, “No, daddy! I need to go to the doctor now, not when inflation is raging so that the cost will be higher and you will not want to pay those higher prices! So you want to send me now, when prices are lower!”

So you can see that there are two sides to every story; on the one hand this whole incident with crybaby kids and their whining, and complaining, and blacking out, and getting blood all over everything, and on the other hand there are “essentials” in the world, as in “essential insights”, which, in the case of Money Morning, is apparently true, as we note with surprise that David Stevenson writes in the newsletter that, in the United States, “Prices of commercial property – real estate – are down by 43% overall since the October 2007 top, says Moody’s Investors Service. Retail rents have plunged by a third from the peak. For offices, rents are down 40% and vacancy rates are as high as 18%.”

Now, most people, like me, and maybe like you, too, look at that paragraph and say, “Whew! That seems like a lot of numbers, which are already confusing by their very presence, which explains why I don’t understand!”

Being the peach of a guy that I am, I am going to show you – free! – the essential information in there, which is: If you own commercial property, you are screwed, and if you do not own commercial property, then it is getting cheaper and cheaper.

In the meantime, just keep buying gold, silver and oil stocks, not because I say so, which I do, and you should, too, but because we have no other choice, because if we did, I am sure that I would have read about, or heard about, someone buying it to successfully protect themselves against governmental stupidity at least one (pause) freaking (pause) time (pause) in the last 4,500 years of the economic history of the Whole Freaking World (WFW), especially since the whole thing seems to be about economic stupidities that flow from continual, ever-worsening government fiscal malfeasance, just like we have all over the world today and all over the world in all of the rest of history, but, in a word, I ain’t.

And, so, investing doesn’t get easier than that! Whee!

The Mogambo Guru
for The Daily Reckoning

Gold, Silver and Oil: Buying the Essentials in Tough Markets originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

By The Mogambo Guru

I was laid out on the couch, which I remember distinctly because my wife was yelling, “If you’re going lay down on the couch instead of doing something around the house to help me out, at least take your damned shoes off!” and I was using the remote to idly flip through the channels on TV, hoping to catch something in the vein of happy mindlessness, maybe something in the Gilligan’s Island-Bewitched genre, so that I did not have to keep track of a complicated plot and/or a bewildering cast of multi-faceted characters.

I needed this kind of mental break to take my mind off of, for one thing, the sheer horror of today’s economic situation and how we are So Freaking Doomed (SFD).

Finally, I happened to catch a moment on CNBC just where Larry Kudlow was correctly making fun of Greece for saying that it will raise taxes and cut spending in an effort to get its ludicrous deficits and preposterous budget under control, and he had a deliciously snotty, supercilious, sarcastic attitude (the True Mogambo Way!) towards the idea of raising taxes and reducing spending as an economic stimulus of some kind! Hahaha!

I was with him all the way, too! And I had a few choice things that I wanted to say to Greece, too! Most of my complaints about Greece are about how Greek salads always seem to come with a damned oil and vinegar dressing that is terrible until you add some sugar, then it’s pretty good, so why in the hell don’t they add sugar to start with, the lazy bastards? God knows they had the money!

And then to add sour ripe olives to the mix – which is more of the same, only worse! – makes me want to jump to my feet and shout, “What is the matter with Greeks that they would they would do such a terrible thing to an otherwise delicious salad?”

So with Mr. Kudlow on the case to make sure that Greece gets its act together, I am sure that their deficit problem will soon be resolved, and this salad dressing thing will soon be a thing of the past, too, which may be part of the reason why I thought he was really good for about, oh, three seconds, which is about as long as the average period of time that I usually agree with Mr. Kudlow, or my wife, or my kids, or my boss, about anything.

The aforementioned three seconds during which I agreed with Mr. Kudlow is because he said something scornful in a rapier-like rebuttal, something like “Raising taxes and cutting spending is not the answer!” which is true.

But it is only true because there IS no answer! To even ridiculously assume that someone can come up with a plan to dissolve consumers’ debt and simultaneously pay off their creditors – the fabled “win-win” situation! – is ludicrous! Hahaha! Beyond ludicrous! Hahaha!

Mr. Kudlow and his little panel of “experts”, however, ignore my scornful laughter and the way that Icky Mogambo Spittle (IMS) shot from my lips, and implied that there really is a solution to this problem out there, somewhere, anywhere, maybe over here, maybe over here, which would marvelously, and magically, enable debtors to get rid of their debts without paying anybody anything, and creditors to get all their money back without being paid anything by anybody! Hahahaha!

But I understand that it’s Mr. Kudlow’s job to take positions on monetary, fiscal and economic policy that are the opposite of mine, because my job is to stay away from the majority, and his job is to get people to join the majority.

My position is so antagonistic because in these three cases, “the majority is always wrong.”

The majority is wrong in encouraging monetary insanity by always yammering for more and more monstrous Federal Reserve money-creation to buy the fiscal insanity of Congress’s avalanche of new government debt to fund Obama’s spendthrift imbecilities, which will cause inflation in prices, which is The One Big Freaking Thing (TOBFT) that you don’t ever, ever, ever want to have, which means that you can never, never, never allow excessive amounts of money to be created in the first place.

The majority is wrong on economics because they still, laughably, believe in the proverbial “free lunch”, a childish fiction where somebody gets something and nobody has to pay for it, and the majority are willing to bankrupt themselves, and destroy their own country, by letting Congress try to provide a free lunch to anyone and everyone who walks up with a hand out or a sad story.

And the biggest reason to go against the majority is in investing, because it’s less than a zero-sum game, and thus the majority must lose money and be bled dry by a ghoulish financial services industry (that is so large that it makes up 70% of all profits made in the country, and thus pays most of the taxes, which are actually paid by the “investors”) so that a minority of people (hopefully, me!) can make money despite being bled dry by the financial services industry and despite paying taxes on the gains. “Investing for the long term!” Hahahaha! I snort with derision! Snort!

So you can see why my natural anti-establishment makes me pound the table for gold and silver simply because the majority ignores them!

Okay, the real reason is that today’s dire economic condition, due to a staggeringly incompetent government and incompetent citizenry, has been played out thousands of times in the last 4,500 years, and in each case, the only thing that saved anyone’s butt was gold and silver.

There are those, of course, who say, “That explains why you are buying gold and silver, but it does not explain why you are always screaming at people to invest in oil, as well as in gold and silver.”

Well, since you asked, I say invest in oil because it has the most energy per cubic centimeter, and now that it is used in practically everything everywhere, nobody in the industrialized world can live without lots and lots of it, with guaranteed continual rising demand, but it is being rapidly depleted. Rising demand and falling supply? Who could ask for more in an investment?

As for those who go on to say, “Well, that is pretty convincing, alright, but it doesn’t explain why you are such a hateful, disrespectful, little creep”, I admit that, no, it doesn’t.

The Mogambo Guru
for The Daily Reckoning

Bet Against the Majority. Buy Gold. originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

By Jim Willie CB, Golden Jackass

Subscribe: Hat Trick Letter

To be sure, almost without debate, all the financial world has turned to crisis mode. One can safely describe the norm to be crisis proliferation. This theme will clearly continue for the full year in progress. The signs are everywhere. The evidence is compelling. The criticism of remedy is replete with denials. The USGovt officials grow more desperate with each passing week. The Dubai and Greek debt woes seemed to have opened Pandora’s Box. Review a scattering of distress signals, sit back and tell yourself that all is under control. It is only if you live in a Fantasy Land. Since September 2008, the fantasy has blossomed in full bloom. The list of distress signals is certain to grow, not reduce. Never in my lifetime have so many loud signals simultaneously been flashing. Forgive me if a few dozen other distress signals were overlooked or omitted.

For simplicity, and to make a point, ignore all events in Europe concerning sovereign debt. My theme all along is that not only has no remedy come for the USEconomy and US Banks and USGovt financial structure, but no remedy is even attempted. The name of the game is to create gigantic cash flows that the syndicate grabs from to its strategic position, as fraud continues with no semblance of prosecution. They control the USDept Treasury and the USCongress and the US Financial regulators. True movement toward remedy would liquidate Wall Street and much of the syndicate edifices that serve as fronts for the USGovt control tower. Details for the following stories and developments are covered in the March issue of the Hat Trick Letter, complete with analysis. Meanwhile, back at the gold mine, the gold price has remained in an unusual extremely tight range. Its pattern resembles a coiled spring. A breakout seems obvious, but timing is not. Upward is my forecast as the first quarter of 2010 ends.

GLOBAL EARTHQUAKES

The series of earthquakes in recent weeks is unprecedented. Typically, seismic events are uncorrelated across the globe. The string has prompted many questions, even from scientists. They might do well to take a close examination of some nifty powerful weapons sported by the USMilitary. Do a Google search on the HAARP and sit back for an exposure stun. Even little Costa Rica endured a 5.7 earthquake last week, which shook my building. Try to explain this lovely photo over Norway in December as naturally occurring. Explanations offered are laughable.

FANNIE MAE PUSHBACK FAULTY LOANS

Fannie Mae & Freddie Mac have begun a concerted effort to push back fraudulent loans to major banks that originated them. They reek of impropriety. Their faulty underwriting and approval process extends from lax confirmation of income, phony appraisals, and duplicate property titles. The Big Four banks have already begun to absorb losses, adapting their business structures. True to form and pattern, Fannie Mae logged another staggering quarterly loss over $10 billion. The Black Hole continues to suck in large chunks of capital. For every $1 loss in the open is another $10 loss from credit derivatives out of view.

FDIC & NEXT BIG BANK FAILURE WAVE

Several hundreds of US banks remain vulnerable. Their reserves are not prepared to defend against the next waves of commercial mortgage losses, after the residential Option ARMortgages have also begun in earnest out of first gear. Another cool $1 trillion in bank losses could occur this year and next, along with at least 300 bank failures just this year. The FDIC is again in deficit for insured bank deposits.

FDIC APPEALS FOR PUBLIC DONATIONS

In a bizarre demonstration, a public charade, the Federal Deposit Insurance Corp appealed to the United States population for donations. Why not? A decade ago they began the feature on IRS tax returns to donate money to pay down the national debt. A person has to be an utter complete moron to donate, since it only goes to the syndicate channels. The FDIC is as broke as it is desperate.

BIG BANK BONUSES CONTINUE

Showing no conscience, no remorse, and no class, the big bank executives continue their galling awards for outsized bonuses. They must feel entitled. They have avoided all charges for fraud and securities violations, thus must feel deserving of massive awards. One year after the US banking industry croaked and died, the executives are lining up for huge bonuses, even after many banks are wards of the state. The reality is that the state is a captive of the banks. They seized the USGovt finance ministry fair & square, and deserve their booty.

CITIGROUP DELAYS WITHDRAWALS

Invoking an old USFed regulation still on the books, Citigroup declared that withdrawals from many types of accounts must wait seven days to receive funds. Since highly liquid accounts are not required to maintain reserves requirements, banks are granted a 7-day leeway in the current regulatory framework. They have not used the legally available window until now. Some speculate that a Bank Holiday comes, an event the big banks might exploit by refusing depositors their money. Mass bankruptcies could follow, then bank system restructuring, but with depositors left out in the cold.

NO MARK TO MARKET FOR COMMERCIAL LOANS

In April 2009, the Financial Accounting Standards Board blessed and the USCongress approved into law the policy of permitting big banks to value their own worthless and badly impaired assets. That started the Zombie Bank era, whereby insolvent banks pretended to function, but with stock shares trading avidly. Last week, USFed Chairman Bernanke cast aside Mark-to-Market once again, so that heavy commercial loan losses could be ignored. They will instead be marked according to cash flow and income streams, thus ignoring the heavy collateral losses. Property market prices will not be factored in. Ironically, banks will suffer constipation, since they will not refinance the same loans involved. Loan to value on loans will be too excessive.

SIZE OF BIG BANKS GROWS, SO DOES FRAUD

In the last 10 to 20 years, the proportion of banking system assets coming from the biggest US banks has grown many multiples. So has their influence on the USGovt control of the purse. The argument for the USGovt suffering a coup at the hands of the big bankers is easy to make. In my view, their growth in size, influence, and control serves as a primary example of the Fascist Business Model. Its trademark is endless war, endless bond fraud, and public consternation as the bitter fruit.

USTREASURY AUCTIONS HIT 100% INDIRECT BIDS

In recent months, the USTreasury has been saddled with the responsibility of securitizing the USGovt deficits. The debt is packaged in bonds and sold at auctions. Some auctions were close to failures. Primary bond deals are choking on inventory, obligated to buy, often almost the only buyers. The hidden degree of official monetization is astonishing. Subtract the central bank purchases and the institutional purchases from the issuance, and basic arithmetic arrives at roughly 50% Printing Pre$$ purchase in hidden fashion, half the bonds monetized. In late February an official auction showed 100% Indirect Bids, which means central banks took the entire heap of junk bonds sold by the USGovt at nearly 0%. The bubble continues, but with much strain.

QUANTITATIVE EASING TO END… REALLY??

The $1.3 trillion in QE purchases of USTreasurys and USAgency Bonds is scheduled to come to an end this month. Threats of a stern pullback are heard from the monetary easing that brought not only powerful QE but also near 0% free money to the Elite. The USFed talks tough for an agency that is badly insolvent, as in busted broke. Sure, they can print money but the asset offsets the debit. Their balance sheet is loaded to the gills, like 50%, with wrecked mortgage bonds. If they are marked down even 5% to 10%, the USFed is insolvent. Reality would dictate a 30% to 40% writedown. Anyone who believes the QE is over is a fool, and probably thought the subprime mortgages were contained. The same people who made such errors are still in charge. Besides, the 2010 election season is months away, and that means apply oil to the Printing Pre$$, revving up, and pouring out tainted money.

US JOBLESS RATE PASSES 21%

Finally in the last few months, the broader U.6 unemployment rate that counts discouraged workers has been thrust into the news. It is actually mentioned in financial press news stories. The gimmick of considering a cast aside worker to be a dead man nonentity is coming to an end. Such workers who cannot find a job, who have exhausted jobless insurance benefits, who just subsist or function as dependents, these people are humans drifting through the USEconomy. They are receiving more attention, even as the U.6 rate of unemployment hit 21.6% recently. It is still rising. Its level challenges that of the Great Depression.

TAX REVENUE REMAINS DEPRESSED

The USGovt stat-rats can doctor many statistics easily, with hedonic lifts from technological advances, from seasonal adjustments that seem to be changed to suit their needs on a monthly basis, from estimates that are routinely revised downward heavily, from reliance upon outmoded devices like the Birth-Death Model, from removal of ‘One Off’ events at their whim. Some of the statistics most difficult to fudge, doctor, and corrupt are basic tax receipts for state sales tax and federal income tax. They are both down, the federal down very strongly. No sign of recovery is evident in either tax series.

BREAKDOWN OF A-D-S BUSINESS INDEX

The Aruoba-Diebold-Scotti business conditions index is designed to track real business conditions at high frequency. Its underlying economic indicators include weekly initial jobless claims, monthly payroll employment, industrial production, personal income, manufacturing & trade sales, and quarterly real GDP. They blend high and low frequency information with stock and flow data. The ADS index has broken down in the last several weeks, signaling a Double Dip recession, or actually a continuation of the current USEconomic recession that never came to an end.

BANKRUPTCIES & FORECLOSURES RUN AMOK

The pace of personal and corporate bankruptcies is not improving. The pace of home foreclosures is not improving either. The claimed USEconomic recovery is shatterd by the continued consumer bankruptcy filings, which surged 14% in February compared with a year ago, according to the American Bankruptcy Institute. The ongoing woes at the Govt Sponsored Enterprises is an open book available for public view. Fannie showed a 5.38% delinquency rate on mortgages in December, while Freddie just passed the 4.0% threshold in January. Both GSE delinquency rates continue to rise rapidly each month.

HOUSING PRICES RESUME DECLINE

After the USGovt prop from a widely applied first buyer tax credit, and after some key state moratorium lifted rules on foreclosures, the housing sales are sliding downward. The consequent impact on housing prices is clear. They are heading back down over and above the seasonality. The USEconomy was built atop a housing bubble and mortage finance bubble from 2003 to 2007. The scourge of a housing bust and mortgage debacle still plays havoc on the national economy. Beware of what is built on shifting sands.

ONE QUARTER OF US HOMES UNDERWATER

First American reported that 11.3 million homeowners were underwater as of the end of 2009, an amount equal to 24% of all homes with mortgages. In a parallel to the sclerotic US banks, the largest of which uniformly cannot lend since they are insolvent, too many US households cannot spend and invest since they are also insolvent. The proportion of underwater homes, not submerged below sea level, but instead struggling with a loan balance in excess of the home value, is actually growing. The Zombie banks are circled by Zombie households.

HOME BUILDERS SITTING ON CDO BONDS

Orleans Builders has gone bust in the NorthEast. Their balance sheet should strike fear in the hearts of the investment community. Fully 20% of their entire debt was tied to Collateralized Debt Obligations. Questions have arisen whether such CDO toxic debt is laced throughout the major builders. Even questions whether deadly CDO toxin is laced throughout corporate debt structures generally. The commercial paper (supply chain debt securities) continues to evaporate. Perhaps CDO acid will compound the damaged debt structures for a larger swath of corporate America than expected.

TIPPING POINT OF INFLATION OR DEFLATION

Many naive economists, including Benny Bernanke, incorrectly assess the picture concerning price inflation. Ben has missed badly on every conceivable forecast of importance. Since he serves capably as the gatekeeper for the US financial syndicate in control of the countless liquidity facilities and their ample cash flow, he does receive key awards. The prices from the cost structure to the USEconomy are rising. The prices from the asset bases in the financial markets are falling. The mixture of both offers up evidence in aggregate of price stability, when actually the hurricane worsens from clashing low and high pressure zones. Look for rising costs and falling assets to worsen, still showing an aggregate zero. A tipping point comes soon that will lead either to broadly rapid falling prices or to broadly rapid rising prices. My money is ALWAYS on the rising price scenario after the initial shock waves of crisis come. TheUS bankers and USGovt finance ministers ALWAYS choose to put the pedal to the metal and print money in accelerated fashion, whenever in doubt. The Deflation Knuckleheads have been silent for almost a full year. They will not have their day in the sun. Herr Weimar will, as in a Weimar storm of hyper-inflation.

ASSURED CALIFORNIA & LOS ANGELES COLLAPSE

Seven big US states are in unresolvable distress, which consist of over 30% of the USpopulation. The key state to watch is California, the nation’s largest, the trend setter, since it operates in a fishbowl for all to see. The state faces a difficult decision to default or to issue another round of IOU coupons. This time, the many institutions and businesses might be ordered by law to accept the coupons as cash. A collapse of not only California, but its major city in Los Angeles are lined up assured in the near future. Municipal bonds in the Golden State and nationwide are at great risk of defaults, sure to arrive like night follows day.

FRETTING OVER CHINA USTBOND SALES

A big tizzy came after China was revealed to have sold $40 to $50 billion in USTreasury Bonds in a recent reported month. Their actual sales are difficult to pin down, since they play crafty games in using such USTBonds as collateral in large asset purchases. They are traveling troubadors crossing the globe, using USTBonds in acquisitions of strategic commodity assets. For over three years, Japan halted its USTBond purchases. Now China is going into reverse with outright sales on a net basis. If Asian buyers fail to buy, the USGovt will be isolated for recognized monetization of its debt. In fact, evidence mounts and discovery has already occurred.

CHINA NULLIFIES DEBT GUARANTEES

In a move difficult to fully comprehend, the Chinese Govt from its Beijing offices has decided not to support regional and city debt. Their provincial and local governments are on their own. Some kind of debt ripple event might be in the offing. Some sort of surprise Yuan currency devaluation might be in the offing. Some type of commodity stockpile partial drawdown sales might be in the offing. Some scheme of scheduled bankruptcies might be in the offing. Clearly, some significant major disruption cometh.

GOLD SITS ON A COILED SPRING

The gold price has an eerie sense of stabilty about it, a false stability in my view. Absolutely nothing has changed in the global pursuit of ruinous monetary inflation, as all Western currencies are fatally damaged. The monetary growth is at full throttle. Estimates for USGovt deficits are periodically being revised upward. The USDollar continues to benefit from the structurally damaged alternative pseudo-reserve in the Euro currency. Look for short covering to blast a hole in the FOREX market soon, as the Euro will begin to race higher when either kind of resolution comes. If Greece is expelled as in my forecast, the Euro will look trim, especially upon instant expectation of expulsion quickly of Italy and Spain. If Greece is rescued, then a new wave of profligate bond rescue will indeed occur. But the cloak of uncertainty will work to lift the defective Euro currency and lead to a short cover rally. Either way, the USDollar will resume its decline, the tail on the Euro dog. Mentioned before, my best sources indicate without any equivocation that German leaders will talk of solidarity, say all the right things, but offer no aid to Greece as it suffers the desired default and removal from the European Monetary Union that shares Euro currency usage. The end to German sponsored welfare has been planned and sealed.

The technical chart of the Gold price shows a core pennant pattern that begs to escape the clutches of its tightening boundaries above and below. Stability is evident, but in a queer fashion, as nothing is stable globally, and everything financial is in crisis mode. That is hardly the framework to encase a stable Gold price. The long-term trend is up, seen in the still rising 200-day moving average. The 50-day MA offered support in late February. A stealth rally in Gold is my forecast. Reaction to broad fresh new economic weakness in both the United States and Europe will trigger a second formal round of Quantitative Easing, the euphemism for grotesque monetary inflation and organized ruin of currencies. When the Gold price moves beyond the upper pennant barrier, it might move quickly.

THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.

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Jim Willie CB, editor of the “HAT TRICK LETTER”

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Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com . For personal questions about subscriptions, contact him at JimWillieCB@aol.com

By The Mogambo Guru

The pills that I thought were tranquilizers turned out to be vitamins, and although I am on the verge of some kind of mental breakdown because of the mix-up, I feel great!

Turning to the old tried and true, I soon learned that I had started too late, and I was not nearly drunk enough to have properly anesthetized my nerves when I chanced to read Agora Financial’s 5- Minute Forecast report that “The CBO’s latest numbers reveal that President Obama’s proposed fiscal 2011 budget would add $9.7 trillion to the national debt over the next 10 years.”

My hands shook and my guts churned at the horrific prospect of adding $9.7 trillion to the money supply, which means (I gulp in horror at the prospect) inflation in pieces like you never saw! Yikes!

I mean, (my voice rising in pitch and volume) the entire GDP of the USA is about $14 trillion, and the government wants to increase, over ten years, government spending by 70% of everything that this country currently makes!

Apparently eager to change the subject since I seem to be getting worked up about this and could, possibly, probably, almost certainly, damned near guaranteed, erupt into some loud Mogambo Hysterical Tirade (MHT) and make a shambles of everything, The 5 says, “Further, the CBO projects the national debt will be 90% of GDP by the end of this decade”, which I guess they thought would calm me down or something, but it didn’t, which was bad enough to cause me to have chest pains accompanied by loud howls of pain and outrage in another tiresome Screaming Mogambo Fit (SMF), but then went on to make it all worse by saying that debt will equal 90% of GDP, which is “higher than the 83.4% recorded at the end of fiscal 2009 last fall.”

Suddenly, there was an uproar as I jumped to my feet and shouted “What kind of bizarre crap is that? The national debt is already $12.5 trillion in a $14 trillion economy, and somehow you add $9.7 trillion to $12.5 trillion to get 90% of the economy which means that …that…that…”

Well, I knew what I meant to say, but did not have a calculator handy, and the security guards had me by the arms and were hustling me out of the room pretty quick.

I later found out that what I meant to say, but did not have the figures handy, is that this means that the CBO thinks that, unbelievably, in ten short years, a staggering $22 trillion of national debt will be 90% of the economy, which means that the CBO thinks that the economy in ten years will be, I gulp to report, $24 trillion, which is a whopping 71% higher than today! I am stunned!

What can one say but, “We are freaking doomed!”

Perhaps hearing my plaintive voice with its unmistakable undertone of angry paranoia and wanting me to calm down, The 5 says, “We’re 100% certain this comment will elicit the customary response: ‘Look at Japan, its debt is 170% of GDP…and it’s been running massive deficits for years!’”

I think to myself, “Okay, they just take time to raise the blade of the guillotine higher and higher, but the end result will be the same, and if anyone thinks that Japan proves otherwise, then I laugh the Mogambo Laugh Of Scorn (MLOS) at them and turn around to wave my buttocks in their faces in a final fillip of disrespect!”

The 5, in what I imagine is said with a deliciously snotty tone, says, “To which we can only sigh and respond: ‘Exactly.’”

Well, I can do more than that, because I am, after all, The Loudmouth Mogambo (TLM)! And I say that if all prices doubled, today, GDP (which measures spending) would instantly double, too! Hahahaha! Everything costs twice as much, but the economy looks like it boomed! Hahahaha! Welcome to Inflationary Hell!

I often marvel that it’s a good thing that the poor are usually ignorant or stupid, because if they could, or would, comprehend how this huge explosion of money is going to make prices rise and make them enormously poorer and more miserable, worse and worse, and probably for the rest of their lives, they would go freaking berserk.

As for the middle class, they are supposed to be smart and educated enough to know this stuff, but they don’t, and so they don’t understand the sheer enormity of how much poorer and miserable they will be for decades to come, either, and they will suffer, too.

Then there are those of us who are buying gold, silver and oil to protect ourselves against the ruinous, crushing, cataclysmic inflation in prices that this inflation in the money supply, and debt, will cause, because then, for us, it all becomes idle dilettantism and pleasure, which is, once you boil it down, the whole point of investing, isn’t it?

And could anything be easier? Whee! This investing stuff is easy!

The Mogambo Guru
for The Daily Reckoning

CBO Budget Projections and the Horrors of Inflation originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

By The Mogambo Guru

People think that Addison Wiggin is just another talented, intelligent, pretty face who secretly thrills to hear people say things like, “You’re a lot better looking than The Mogambo! And younger and smarter, too!” but he is much, much more than that.

His story starts off that “The FDIC is even more broke than it was three months ago” to which most people rudely say, “Welcome to the club! Waddya think, we got some kind of picnic at the beach going on out here in the real world while you pretty-face hotshots talk about who is smarter and about some idiot named Mogambo who must be an idiot because otherwise he would not have such a stupid name!”

Mr. Wiggin goes on undaunted, perhaps buoyed by the knowledge that no matter what happens, he’ll still be better looking than The Mogambo. And smarter, too. And younger.

Maybe that’s why he did not seem to be registering horror at the news of the bankruptcy of the FDIC, and, as if to underscore my suspicions, you can almost hear the confidence in his voice as he explains, “The fund the FDIC uses to ‘insure’ your bank account went $20.9 billion in the red during the fourth quarter of 2009. That’s more than twice the deficit reported when the fund first entered negative territory in the previous quarter.”

Naturally, if these were the old days when the money supply was more-or-less constant, this would cause panic: “Our bank deposits are uninsured! Yikes! The Mogambo said we’d be wiped out and here it is, and he said to buy gold, silver and oil, and we didn’t, and now look at us! Oh, woe!”

But nowadays? Relax! We have a fiat currency that the Federal Reserve can, literally, create at will, at a stroke, all the money necessary to make sure that every Last Freaking Dollar (LFD) dollar in your account is fully protected against actual nominal loss; you had an electronic or paper buck, you will still have and electronic or paper buck!

Unfortunately (and you can tell there is a “catch” by the way the soundtrack suddenly turns gloomy and there seems to be the sound of somebody, in the distance, throwing up into a toilet) this huge, sustained increase in the money supply guarantees – guarantees! – that you will lose buying power in every one of your precious dollars, so you are kind of screwed, either way, when you stop and think about it, by Federal Reserve policies.

My Sensitive Mogambo Nose (SMN) detects (sniff, sniff, sniff!) detects panic. So, desperate for money, I look to prey on the superstitious, and suggest that maybe you should just send all of your “tainted” money to me so that my hoodlum friends and I can have a big ol’ party, where we will raise our glasses in a long series of toasts to you, to your health, and to your good luck because – hey! – attracting the attention of deities, paranormal powers, transcendental influences and cosmic forces could, conceivably, work!

Mr. Wiggin is not enthusiastic about my latest rip-off scam, which I suggest only because I am out of ideas and I am desperate for money. He suggests a perfectly legal and good way to get some money, which is, “As long as banks can continue to borrow from the Fed at 0.25% and park it in 10-year Treasuries for nearly 3.7% (and leverage it up, of course), we don’t see this changing”!

He’s right, of course, but before you rush out to start a bank and get your piece of this Federal Reserve stupidity, perhaps you should consider something along the lines of buying gold, silver and oil in some kind of wild, paranoid, knee-jerk reflex as a small, small part of a whole constellation of symptoms known collectively as Screaming Fear Of Outrage (SFOO) of the inflation that will be caused by such massive increases in the money supply, now additionally caused by the needs of the FDIC, but he goes on that it will get worse than that, as, “On top of that, the FDIC’s list of ‘problem banks’ grew during the fourth quarter from 552 to 702” he says! Yikes!

A long, haunting howl of dismay escapes my lips, perhaps not unlike the sound of ravenous, starving wolves howling, “oooOOOOOOooooooooh!” as they close in on your bloody trail as you crawl along, dressed in rags, wounded, bleeding, in the snow, at night, in the mountains, in a snow storm, with freezing sleet, and you realize that you can’t buy them off with your paper fiat money, but with a flash of True Mogambo Enlightenment (TME) that has come tragically too late, you realize that with the heft of a kilogram of gold in your hand, you can beat the living hell out of anything that comes near you that is metaphorically wolf-like in economic nature, or, with literal wolves, something spewing out .45 caliber bullets in a semi-auto fashion, putting us one more leg-up (as if we needed it!) on wolves of the literal kind, with politicians being of the metaphorical kind of ravenous wolves, thus mixing up literal with figurative, back and forth, up and down until you are in a panic, all confused and bewildered, wondering what’s real and what’s not, and your first instinct is to just start blasting, blasting, blasting until your trigger finger is bloody and cramped, and you manage to clear out a “Mogambo Dead Zone Of Safety (MDZOS)” all around you.

And you probably would have, too, if you had not remembered that you bought a lot of gold, silver and oil just to take care of situations like this! And it’s working perfectly! Ahhh!

But this thing about the “FDIC’s list of ‘problem banks’ grew during the fourth quarter from 552 to 702” is, as I notice with alarm, not only a number that is a huge (almost) 50% higher in just one quarter, a statistic which sets my Sensitive Mogambo Senses (SMS) tingling, as with two data points, a desperate-yet-handsome man like myself can quickly, and easily, discern some kind of Trend Of The Ugly Kind (TOTUK), to which I am particularly alert ever since I noticed that the entire freaking course of human history in the world, a world you call Earth, is the sad, stupid story of one stupid country after another borrowing money and getting into debt that they can’t repay, which is always resolved with inflation in prices, a bankruptcy of assets, and a ruinous war with somebody as we attempt to shift the cost of victim-hood from ourselves to foreigners so that there is, indeed, a free lunch for us.

Mr. Wiggin is not impressed with my penetrating analysis, which is in line with what everyone else agrees is pretty stupid and not worth reading or even admitting that they had even read, even in part, but I notice that he immediately takes up on my idea of “trend” that just I mentioned, and – surprise! – he finds, “Hmmm, let’s see. The number grew 27% in just one quarter. At this pace, every bank in the country will be on the problem list by the fourth quarter of 2012.”

An involuntary “Yikes!” escapes my lips. That’s a trend!

I, as are most normal people who understand how this “economics thing” works, am horrified by all of this, and the only saving graces were that I had gold, I had silver, I had oil, and I had enough firepower – within reach! – to provide calming relief to an otherwise paranoid, screaming, hysterical man, such as myself, pumping adrenaline from every pore in his primal outrage at the sheer terror that is being created by the Federal Reserve.

For some reason, I can actually feel your scorn, as you deride what you think is just another paranoid gold-bug gun nut Loonie-Tunes weirdo since the Federal Reserve can just create all the money and credit that the FDIC needs, so why don’t I, as I asked my kids, just shut up?

With that, I thought it was all over, until he went on, “Another tidbit from the FDIC’s report: Bank lending last year dropped at the biggest clip since 1942”, which was the year after we entered World War II, which seems important, but was a long time ago, and we don’t get to watch watching terrific war footage with things blowing up and – blam blam blam blam! – guns are firing! Things are on fire! It’s all exciting as hell!

Instead, we will note, much more soberly, that this is today we are talking about, not some ancient yesterday, and Americans are not the “good guys” bravely freeing Europe by destroying it all so that our industrial advantages are completely spared, but are, instead, the biggest bunch of feel-good, hyper-leftist morons that the world has ever seen where, despite a national emphasis on education, ample historical evidence, and the Constitution of the United States requiring that money be only of gold and silver, the citizens have allowed a pure fiat money and every kind of slimy flimflammery that such unbridled money supply would allow, which was, as you would guess, anything you could imagine.

The bad news is actually beyond that of mere bank lending being down, since nobody (except governments) wants to borrow money, since nobody has the money to buy anything anybody makes, so why invest money to make something that nobody will buy. The worse news is that bank lending is how money is created.

Money is, by definition, being destroyed, so that there is less money around with which to pay debts.

You know, without me telling you, that all this ain’t good! And these are the times when you are glad that you are safely invested in gold, silver and oil, and the only thing you have to worry about is, for instance, the usual stuff of keeping an eye out for party-killing suspicious strangers who may know your wife or boss, checking for suspicious pods growing near where you sleep, and protecting yourself against vampires, werewolves, and other blood-suckers, which leads us back to politicians deficit-spending, which leads us back to the Federal Reserve creating more money, which leads us back to buying gold, silver and oil in fearful response, which leads me back to, “Whee! This investing stuff is easy!”

The Mogambo Guru
for The Daily Reckoning

Using Gold to Fend of the FDIC and Its “Problem Banks” originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

By The Mogambo Guru

I was recently reminded of the old argument about Say’s Law, and that reminded me that it was Keynes who twisted Say’s theories around to create the ridiculous argument that supply created its own demand, which I say is a load of crap, which pretty much sums up a lot of what Keynes did, probably because he was an egotistical idiot-savant who erroneously thought that he could put economics and human behavior in terms of absolutes that you could turn into equations, a particular, arrogant stupidity that has, nonetheless, fascinated generations of economists since then, all of whom childishly delight in equations and computers, whether it means anything or not, which it doesn’t, which I can actually prove – prove! – with an entire storage area full (the “supply”) of ashtrays made out of dried dog crap, which nobody wanted to buy (the “demand”), proving that supply does NOT create its own demand.

Instead, it is actually true that demand created its own supply, like the “supply” of new “neighbors” at the storage place are demanding (“demand”) that I get that stinking, festering fecal mess out of there or they are going to sue me or something, to which I said “Great! I’ll pay you off with some of these ashtrays, which will make wonderful gifts for your friends and family!”

I bring this up not, as is often rumored, as a last minute appeal to you, the American consumer, to buy a bunch of these dog-poo ashtrays with their “keepsake quality”, and take them off my, literally, stinking hands, but to show you that one of the reasons why the economy is doing badly is that the latest unemployment numbers are Bad News Aplenty (BNA), as people do not buy as much stuff (demand) when they don’t make as much as much money, and the people who make stuff (supply) are then laid off, proving, once again, that supply follows demand.

And, since we are talking about it, people are not buying as much stuff, which I cleverly conclude from the fact that consumer installment debt has been going down since September 2008 as the American consumer is gradually, slowly, ever so slowly, almost glacially, paying down some of their super-sized, staggering $2.5 trillion in consumer installment debt.

How much? Consumers have, in a year and a half, paid down a measly $135 billion! Hahaha!

At this rate, one wonders, at 20% interest on the unpaid balance, how many freaking lifetimes will it take just for consumers to pay off their $2.5 trillion in existing debt, which doesn’t even count the debt they are going to incur in the future, just trying to buy the basics, as the inflation in prices from the insane inflation in the money supply makes things so costly that they get to the choice of debt or starvation, and even then, most people will buy food instead of gold, silver and oil.

Hoping to gently motivate them, and to provide the apparently necessary motivation delivered in a non-threatening, person-centric, positive way, I say, “Hey! You could stand to lose a few pounds there, chubby! Stop eating for a couple of days and use the ‘found’ money to buy yourself some gold, silver and oil, you moron!” but even then, they always act upset, like I said something wrong! See the kind of stupid crap I have to put up with around here all the damned time?

Anyway, their only hope is that everything survives a massive inflation, so that $135 billion dollars is, in terms of buying power, less than a week’s average minimum wage or something like that! Hahaha! Problem solved! Hahahaha!

In case you were curious, I put a lot of it down to the unholy combination of moronic do-gooders trying to save my life and greedy governments trying to drain my blood, as they, all over the place, raised cigarette taxes by several dollars per pack, so that the quarter of adults (54 million) who smoke a theoretical carton a week, have $40, $50, $60 sometimes more than $70 a week less money to spend on everything else, which comes to, at an average of $6 per pack, $3.24 billion per week, or a tidy $168 billion a year in lost spending power!

In short, tobacco addicts stopped buying other things so as to afford one thing that has become so expensive.

If they were smart, smokers would be spending their money on gold, silver and oil, waiting a little while until their prices soar as the government deficit-spends the massive, monstrous amounts of money that the Federal Reserve creates, and THEN taking up smoking when they could easily afford cigarettes at any price, the higher price for insurance, and the needed medical treatments, also at any price!

It’s enough to make you say, “Whee! This investing stuff is easy!”

The Mogambo Guru
for The Daily Reckoning

Consumer Debt and the Supply-Demand Dynamic originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

By The Mogambo Guru

Adrian Douglas of MarketForceAnalysis.com took a look at a summary of the goings-on at the Comex, and says, “the data reveals a very shocking trend. That is that the registered (dealer) inventory is being drawn down at a phenomenal rate. In silver the inventory has dropped by 24% in 6 months while in gold it has dropped an eye-popping 41% in 6 months!”

Already my eyes are glazing over at the sudden overload of information, most of which I know nothing about, but know that I should, and feel uneasy that I don’t, and guilty that I don’t even want to because it involves work and initiative, or, in this case, listening to the equivalent of, “blah blah blah silver and gold are going to go to the moon not only because the Fabulous Mogambo has thus foretold it, and the Austrian school of economics has explained it, but that blah blah blah at the Comex warehouses” and then I end up getting most of it wrong anyway and I look like an idiot.

So, already reeling in confusion, I was thus rendered almost comatose when he relentlessly went on, “The withdrawal to deposit ratio for registered silver is 14:1 and in gold it is 5:1” and which, again, is meaningless to me because I am, as I already admitted, ignorant and lazy, which is a crushing handicap, now that we are talking about it, that should enable you to qualify for a Handicapped Parking sticker for your damned car so that you can get some of those terrific Handicapped-Only parking spots, right up front, wherever you go, but the application for which can be rejected by a snotty clerk, out of hand, on her personal say-so, although she volunteered that my “abrasive, demanding, incoherent and repellent personality is a real handicap, too, but there is no sticker for that, either.”

As I fell asleep, eager to again escape reality and responsibility, I began dreaming of some snappy comebacks I could have said to the Handicapped Sticker lady, like, “Well, I assume that there is a Handicapped Sticker for anyone who is mentally handicapped, and I can tell by looking at your stupid Department of Motor Vehicles face that you are not buying gold, silver and oil to protect yourself against the government’s massive deficit-spending and the Federal Reserve’s creation of all the new money and credit that will be necessary to soak it up, which is really stupid of you! Hahahaha!”

I really like it when the dream gets to the stage where some hot young honeys make their appearance, stage left or stage right, it makes no difference to me, but we never got there because apparently the sound of my snoring made Mr. Douglas aware that he is talking “over the head” of the biggest dullard in the crowd, which violates the politically-correct stance on “inclusion” and “diversity” of persons such as me.

So, quickly remedying the situation, he explains that this means that “If this rate of drawdown continues, the registered inventory of silver will be exhausted in 18.8 months and in just 8.5 months for gold!”

And before there is any mistake made by the casual reader, that concluding exclamation point in the previous sentence was his, not mine, although it was totally unnecessary, as I was already freaked out at the implications!

Thus, I was ready to race home and frantically root around in my wife’s purse for some extra money, so that I could buy some more gold and silver, when I was transfixed to the spot when he went on that he estimates, “as much as 50,000 tonnes of gold has been sold that does not exist. That is equivalent to all the gold reserves in the world that are yet to be mined, or put another way, 25 years of gold production.”

I was ready to edit his remarks to put an exclamation point at the end, as it certainly deserves one, but before I could do it, he followed up with, “That is the grand-daddy of all short positions!”, which had an exclamation point, and so I let it go at that, and saved myself a lot of work that will – I guarantee! – show up in the narrative section of my Productivity Report, which is coming due pretty soon, and which is always pretty disagreeable.

But I will get through this new assault by “higher-ups in the executive food chain” with Classic Mogambo Equanimity (CME), as I always do, and I would probably have gone completely Mogambo Freaking Nuts (MFN) a hundred times before this if I hadn’t always remembered, sometimes at the last minute, that I own gold, silver and oil, whereas these gold-less, silver-less and oil-less bozos are questioning my ability (“I think you are too stupid!”), my competence (“You seem to have no idea what you are doing!”) or my sanity (“I think you are insane!”), while never even mentioning my numerous off-setting good qualities, such as my twinkling blue eyes or the fact that none of my employees or former customers have a Restraining Order on me that is still in force.

If you are even half as smart as I think you are, then you get the obvious message, which is to buy gold, silver and oil.

Some of you, on the other hand, also got the more subtle message that a long list of miscellaneous people are all going to be very, very upset and angry at the horrifying inflation in prices that is inescapably coming, due to this massive expansion of the money supply by the Federal Reserve to pay for the unbelievable tons of money Congress is deficit-spending, and you had better take your gold, silver and oil into a bunker of some sort and arm yourself to the teeth because it is going to get Very, Very Ugly (VVU), and you will want the options of buying your way out or shooting your way out.

On the other hand, if you do not buy gold, silver and oil, then, as they say, “the angels will weep for you.”

I, personally, will laugh at you. It will sound sort of like this: “Hahahaha! Moron!”

The Mogambo Guru
for The Daily Reckoning

Gold and Silver Supply: Get Some While You Can originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

By The Mogambo Guru

Okay, I will admit that we had a little accidental gunfire around here recently, but nobody was hurt, and all that really happened is that I wasted a lot of very expensive ammunition and scared the hell out of a lot of people, including myself, a commotion which instantly activated my Amazing Mogambo Reflexes (AMR), making me drop the delicious Hostess Cupcake that I was noisily eating and take cover on the floor, falling, as I did, on top of the aforesaid cupcake, smashing it all over myself, and all over the floor, which made it taste terrible after that.

But the surprising gunfire was not my fault, as I had just read that the Federal Reserve is being as dangerously incompetent as ever by continuing to massively increase the money supply (which is so horrible because it causes inflation in prices) so that they can buy up (monetize) at least a part of the massive, monstrous, mega-moolah Treasury debt issuance that will be necessary to fund the unbelievable sum of, as I understand it, $1.9 trillion in government deficit-spending in the upcoming One Freaking Year (OFY) as a result of the massive spending of the terrible, awful, worse-than-I-had-feared, demon-from-hell Obama administration, plus trillions more for the needs of the private sector, and a trillion or so in Congressional “supplemental appropriations” throughout the year as Congress periodically, almost ritually in a Satanic kind of way, “discovers” that their original estimate of their borrowing needs was inadequate, and – surprise! – that these slimy, lying bastards need LOTS and lots more money!

I can see by rereading that paragraph that I was so wrapped up in heaping Massive Mogambo Scorn (MMS) on the arrogant, radical-Left Obama, on every sniveling Democrat in the place, most of the Republicans, and on the despicable, guilty-as-charged, incompetent Federal Reserve that I never actually got around to telling you how much money and credit the Fed created last week, which was the original point I was going to make for some reason other than decrying such irresponsible expansions of the money supply that will guarantee horrific, economy-destroying, dollar-destroying, soul-destroying inflation in prices, but I forgot what I was planning to say about it, to tell you the truth, but with or without it, the increase in Fed Credit last week was another $5.2 billion, which (although terrifying), is less than his usual increase, and at $5.2 billion, is merely twice the usual weekly rate of money and credit creation by the monster Alan Greenspan, former chairman of the Federal Reserve, who – single-handedly! – created all the economic mess of the world by merely creating $10 billion-or-so per month of new Federal Reserve money and credit!

Now, Fed chairman Ben Bernanke, a clueless academic, still stubbornly hews to that same, tired, insipid-yet-stupid neo-Keynesian econometric theory that has now been shown to be not only wrong, wrong, wrong, but also stupidly and catastrophically wrong, which doesn’t say anything at all about the morons, like Ben Bernanke and Alan Blinder, who are themselves mere representative examples of the neo-Keynesian econometric bozos rampant in the world today, all of whom believe in such imbecilities as their precious economic theories in the face of, literally, overwhelming evidence to the contrary! It is absurd on its face! Ya gotta laugh! Hahahaha!

Interestingly, a crucial part of the stupid Keynesian nonsense holds that the government can, by virtue of borrowing the money, replace any perceived lost “consumer demand”, in any economic downturn, by merely borrowing and spending money, even if borrowing and spending money was the cause of the original downturn, and that there are no repercussions that cannot be solved by more borrowing and spending, and that inflation in prices has nothing to do with the money supply but with irrational exuberance! Which doesn’t even make any sense! Hahahah! It doesn’t even freaking make sense!!

Sharp-eyed Junior Mogambo Rangers (JMRs) will recognize the two exclamation points as indicators of something, usually the preceding sentence (as in this case), as being very important, as, now that I notice, it is, in this case, in that it is Beyond Freaking Crazy (BFC)!!!

Horrors! The punctuation using the rare triple exclamation point! You can tell I am on a roll here! I suggest you go to someplace safe in your house where your enemies would have to attempt a painful frontal assault against you, and as you wait, you think to yourself, “Obviously, this is extremely important! As indeed it is, now that I think about it after it has been drawn to my attention, thanks to the Magnificent Mogambo (MM), because you do not get anything except total, unmitigated disaster from inept management by people who cannot be controlled and who are Beyond Freaking Crazy (BFC)!”

I am very proud of you for thinking this, as it shows that it has all become clear: The preponderance of people on this planet, and in our universities, and in our media, and in our governments, and in our central banks are BFC lunatics if they think that borrowing (racking up debt) and spending money will “cure” the bust of the boom produced by borrowing (racking up debt) and spending the money! Hahahaha!

I immediately think of the joke, “Doctor! I’ve been gorging myself, but I never lose any weight!” but it doesn’t seem to fit the conversation, somehow, and it doesn’t really seem to have anything to do with anything I was talking about, which makes me think that maybe my subconscious is telling me that I SHOULD have been talking about it, which doesn’t make any sense, either, because I don’t think anyone needs advice on how to gorge themselves, and in fact, people seem quite disgusted when I do it, although it makes their kids laugh, meaning that the kids like me better than they like their own parents, which is a small victory for me and, although small, is a victory.

So I say to the kids, who just showed how much they love me, “Hey, kids! Tell your parents that they are idiots unless they buy gold, silver and oil right now, because unless they do, they are going to be poor when excessive government deficit-spending and excessive Federal Reserve over-creation of money and credit make prices soar as the buying power of the dollar falls, which means that you will be poor, and you tell them how you don’t want to be poor, and how you have been thinking about, in an idle sort of economic self-defense way, the many, many advantages of being too young to be charged with a capital crime should they fail to acquire the aforesaid gold, silver and oil!”

This is where the parents turned around and gave me this “dirty look”, which I interpreted to mean, “I surrender, under protest, to your magnificent, powerful presentation of the case for gold, silver and oil, enhanced by the paranoid notion that my own children are threatening to kill me in some bizarre extortion racket involving gold, silver and oil that you have planted in my head, which I realize is all for my own good because I now see that only an idiot would not buy gold, silver and oil when the government and the banks are acting so despicably! Thank you, handsome stranger!”

The name’s Mogambo, ma’am. It’s my job.

The Mogambo Guru
for The Daily Reckoning

Borrow and Spend Economics to Pay for Borrowing and Spending originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

By The Mogambo Guru

I am a guy who thinks that such huge explosions in money supplies around the world and the explosions in government deficit-spending around the world will lead to catastrophic explosions in inflation in prices, probably around the world.

I am also a guy who thinks that inflation in prices is the Thing Most Feared (TMF) in the whole world in terms of total sheer misery and suffering, judging by the entire last 4,500 years of history, except for, maybe, the plague.

Naturally, for one so dyspeptic and predisposed to paranoia because the people in charge are apparently overpaid, corrupt morons, I am visibly shaken at the news from Bloomberg that “The consumer-price index increased 0.2 percent for a fifth straight month, led by higher fuel costs, Labor Department figures showed today in Washington.” Yikes!

Inflation never stops! Even in a recession/depression like we have now! It’s terrifying!

Anyway, since insane levels of massive governmental deficit-spending of fiat money created by central banks is a world-wide phenomenon, there will be a massive inflation in consumer prices as a result of all of this unbelievably much new money being poured into the economy via governmental deficit-spending, and already the government is forced to report 2.6% inflation.

This is actually down from last month’s 2.7% inflation, and so immediately I get angry emails from people saying, “Dear Mogambo Stupid Head (MSH), You say that inflation is raging because of all the money that the Federal Reserve is creating, so how do you explain Bloomberg reporting ‘Excluding energy and food, the so-called core index unexpectedly fell 0.1 percent, reflecting a drop in new-car prices, clothing and shelter’? You can’t explain it because you are stupid and you are wrong and everybody hates you! Sincerely, Anonymous Reader.”

Well, as nice as it is to hear from my sister like that, it is doubly enjoyable this time because she is so wrong that I rate her as one who “has her own head up her own nasty butt” and I can hardly wait until Thanksgiving when everybody will be around the table and I can remind her of that ugly fact, getting back at her for what she said about me last year, by reminding her that she is so stupid (audience shouts out, “How stupid, Marvelous Manly Mogambo (MMM)?”) that she forgot to read farther into the article to learn that costs are being held down because “Even with higher production and material costs, US companies are reluctant to pass on the expenses to consumers”, which includes Wal-Mart, “the world’s largest retailer”, which “reported fourth-quarter sales that trailed its projection after cutting grocery and electronic prices” which, in a nutshell, explains why I am now screaming, “Inflation is here, you morons! It’s being temporarily absorbed by businesses and their stockholders making less money, and sometimes taking losses!”

That ought to shut her up pretty good, I figure, and if not, then I’ll scream at her until she confesses that she did not consider that the government now uses Hedonic Measurements of inflation, such as how that the turkey she is jamming into her pie-hole used to start getting stale and dried-out after a week or so in the refrigerator. But now, perhaps with the addition of small amounts of preservatives as part of a secret government experiment involving adding tiny little bits of nuclear waste during processing to produce enough radioactivity to kill all organisms that touch it, the leftover turkey will be just as tender and delicious a year from now as it is today!

Maybe even glowing, so you can make a sandwich in the dark!

This increased shelf life of the cooked turkey obviously increases the value of the turkey tremendously, and it also helps to deplete the nation’s nagging problem of its stockpile of dangerous, clumsy and expensive-to-store nuclear waste, producing a double benefit! Double!

Thus, the government calculates that the new, extra benefits of having turkey available for consumption for more days of the year (which is not a problem for my sister since she seems to be eager to eat lots of food, and she’ll probably finish the turkey carcass off pretty quick!), and simultaneously achieving a profound social good of disposing of dangerous radioactive waste, means that the turkey can never go up in price! Only the rising price of the new benefits makes it LOOK like it, because it costs more dollars per pound! Hahaha!

I am sure that she will come back with some of her stupid blah blah blah, but no matter what she says before I interrupt her, I am going to tell her that, even worse, the Labor Department report went on to say that “The CPI is the broadest of the three monthly price gauges from the Labor Department because it includes goods and services”, which was put in there to make you yawn and skip over the part that said that prices “showed 1.4 percent gains in both the cost of imported goods and wholesale prices in January”! Wowser!

As I said, inflation is the only thing that makes sense when considering such unbelievable, incomprehensibly massive increases in government borrowing-and-spending, overshadowed only by the enormous increases of money created by the Federal Reserve, and which makes sense since every doofus is town is yammering about how “inflation is impossible” and how “deflation is the bigger problem” since deflation means that the over-indebted middle class, the over-leveraged rich, the bloated financial services industry and the socialist government would lose, while inflation would affect mostly the poor, which are always the ultimate victim.

My suggestion to the poor? Buy gold, silver and oil immediately, because they will all rise right along with inflation, and probably more. Probably a lot more!

And if you don’t think that “the poor” today, after a half century of one bleeding-heart Congress after another finding ways to give them money and benefits, cannot come up with twenty bucks a month to buy an ounce of silver, then you don’t know squat about “the poor” in America today.

My suggestion to everyone else? Surprise! It’s the same! That makes it easy to remember, as in, “Whee! This investing stuff is easy!”

Inflation: The Economic Factor that Never Stops originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

By The Mogambo Guru

I knew that something was amiss when I woke up and the house was quiet. Having the benefit of seeing a lot of movies where things were “too quiet”, I instantly knew that things being “too quiet!” meant that Indians were going to be attacking, or the Japanese attacking, or the Germans attacking, sometimes government goons rushing the place, or zombies, or the police. I dunno who, but you get the point.

Grabbing the bare necessities (a couple of pistols, a few Uzi submachine guns, a rocket-propelled grenade launcher and a lot of spare ammunition) I rolled off the bed onto the floor with the idea of scuttling into the closet to cringe in a defensive posture, bristling with weapons, making my enemies stop and think before killing me, giving me, I figure, a additional three more seconds to live!

Unfortunately, all those armaments were heavy, and it was pretty stupid of me to carry so much weight, now that I think about it, and I fell on the floor with a big clanking noise.

Still, nothing!

Then I saw why: it wasn’t attackers at all! The family had cleared out because my Mogambo Machine To Measure Magical Money (MMTMMM) was going nuts, banging and beeping, and clanging and cleeping, which is not even a real word, which only shows you how freaked out I still am when I instantly saw why: Federal Reserve Credit (the magical “money out of thin air” of story and song, which the gold standard would prevent), jumped a massive $31 billion last week – $31 billion in One Freaking Week (OFW)! – taking the total to a record $2.264 trillion.

The banks, for their part, can take this new credit that has appeared, as if by magic, on their books, and loan out Huge Freaking Multiples (HFM) of this $31 billion, according to the Fed’s preposterously-low required fractional-reserve ratio which is (and has been for almost two full decades) almost a zillion-to-one, which (multiplying a zillion times $31 billion) is slightly more than, as I understand it, a freaking gazillion.

Well, apparently, none of this reached the banks, as the Fed bought up, for itself in a disgusting orgy of monetization of government debt, in One Freaking Week (OFW), a massive $53.6 billion of “Securities bought outright”! The Fed created the money to buy government debt! Gaaaaagakkk!

That last word, properly pronounced with a guttural ending, was to indicate another in a series of Timeless Mogambo Truths (TMT), which, in this case, is don’t eat a burrito while you are reading Bad, Bad News (BBN) because you will gag and choke, mostly because it makes a big mess all over everything and the guy in the next cubicle starts whining, “Hey! Stop spitting on me!”, but also because transcripts of the people bugging your office will read it as “unintelligible, followed by gagging and choking”, which proves my point about eating burritos while reading BBN, although I am not sure if it works with, for example, tacos, so they are still OK as far as I am concerned.

In case you were wondering how much credit the Federal Reserve has made, so that it can use up some of it to buy, for itself in a loathsome fraud known as “monetizing the debt”, government debt, that particular horrific total comes to a record of $1.967 trillion, which is an astonishing $1.397 trillion higher than this time last year!!

As you would expect, the money supply is still rising, and the monetary base rose a whopping $56 billion in the last week, which is more than $560 for everybody in the Whole Freaking Country (WFC) that has a non-government job! In One Freaking Week (OFW)!

As Junior Mogambo Rangers (JMRs) know, perhaps intuitively or perhaps because I (as a proxy for the Austrian school of economics but who, if you call them up and ask them, say, “We never heard of this Mogambo person you speak of! Goodbye!”, but you can tell by their suspicious change of mood that they have) never seem to shut up about inflation being properly defined as an increase in the money supply and that inflation in consumer prices is a result of that, and here it is!

This increase in the money supply usually, firstly, has a stimulating effect or, in our case, prevention of the Big Freaking Bust (BFB) and economic devastation that we so richly deserve for a ridiculous, laughable half century of experimental socialist governmental deficit-spending and “putting every leveraged dollar to work!”, and the abysmal, total failure of the loathsome Federal Reserve to control the money supply so that the damned government couldn’t do crap like that without entering the money marketplace and bidding for the funds, like any other borrower, thus driving up interest rates, which made the economy slow down, which infuriated worker/voters, and the government would stop doing that fiscal incompetence immediately, or as soon as the next election rolled around, ignoring the possibly of a recall election in the interim, or even a general insurrection and revolution, perhaps ending with the people carrying me on their shoulders, a hero to rule the country as Emperor Mogambo (EM) who immediately installs a gold standard to protect the people’s money from inflation (which keeps from making the poor poorer because of the inevitable higher prices that the additional money causes), and, also as a treat for all my adult loyal subjects, dovetailing the arrival of 3-D TV with hearty encouragement to develop, at great speed, a brave, new world of 3-D pornography, leading America to a new golden age in many, many, many ways! I can hardly wait!

In the meantime, however, accumulate gold, silver and oil, especially using some kind of Dollar-Cost Averaging scheme, which has not been improved upon, either in its simplicity (you spend the same number of dollars per month, month after month) or its efficacy; it kicks butt over a long trend, as you are always buying more when they are cheap, and you buy less when they are more expensive.

Or, if you are like most people, you are an impatient, greedy little bastard who wants to make the biggest, most maximum profit possible, as soon as possible, by taking maximum risk that gold, silver and oil will never be cheaper than they are now, then you should rush out and buy as much gold, silver and oil as possible Right Freaking Now (RFN), exhausting every source of credit you can get your clutching, grasping little hands on, and then selling the kid’s stuff and buying more gold, silver and oil with that money, too!

Somewhere in between these extremes you will find yourself, my budding Junior Mogambo Ranger (JMR)! The effects of massive increases in the money supply (horrifying inflation) will lead you to True Mogambo Enlightenment (TME) about how economics really, really works, and in a blazing moment of incandescent, transcendent clarity, you will suddenly realize you have to buy gold, silver and oil, right away, because, “Whee! This investing stuff is easy!”

The Mogambo Guru
for The Daily Reckoning

True Fiscal Insanity: Creating Money to Buy Government Debt originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”