I can hear the family gathered outside, banging on the walls of the Mogambo Bunker Of Paranoid Hysteria (MBOPH), demanding that I unlock the door, come outside immediately, stop acting like a crazy person, and at least pick up the empty pizza boxes that I threw out into the yard, because the neighbors are complaining, and it looks so tacky, and blah blah blah.
Well, the neighbors may be complaining to each other about a few colorful cardboard boxes festively strewn randomly about, decorating the yard, but it is never to my face. No! Instead, I see the little cowards peeking out through their curtains, watching me, spying on me as I bravely secure the perimeter against invasions by rogue government agents, invisible helicopters and/or extraterrestrial creatures, all of whom have sinister purposes, which they would know if they ever read the news, knew the facts, or ever saw a science-fiction movie featuring “visitors” from outer space.
However, if I go marching over there and bang on their front doors, loudly demanding to know “Hey! What in the hell are YOU looking at? Huh? Why is this whole little nest of rats here always spying on me?” they always act real surprised and innocent, stammering as they deny it, the lying little creeps.
I see the little cowards peeking out…spying on me as I bravely secure the perimeter…
And if I ask a simple follow-up question, to expose their treacherous perfidy, like “So what in the hell do you want to learn about me, you stinking lowlife piece of Earthling garbage who is too stupid to buy gold, silver and oil when the entire historical corpus of human economic activity dictates that you do exactly That Very Thing (TVT) when the money supply is being increased So Freaking Much (SFM), So Freaking Fast (SFF) and for So Freaking Long (SFL), and who will end up broken and destroyed, starving in some stagnant, stinking gutter, ruined by the horrific aftermath of insane Keynesian economic theory and an evil cabal of the foul Keynesian-addled Federal Reserve and a low-IQ Congress intent on destroying America with it, so that the grotesquely gargantuan system of governments can send cash and benefits to literally half the population, as Absolutely Freaking Insane (AFI) as that must sound, even to a complete idiot like you?”, they always say, again, “We didn’t see anything! We’re sorry! Just don’t hurt me! Please don’t hurt me!”
And there is no reason for me to come out of the MBOPH in the first place. Inside here, it is safe and snug, with gold, silver and oil stocks on one side, cable TV on the other, tasty, salty snacks in one hand and a locked-and-loaded Uzi in the other, and my big fat butt settled into a comfy recliner chair.
While outside in the cold, cruel world, the G-7 is again meeting and discussing things economic, almost assuredly about the European Central Bank preparing to dump monstrously huge amounts cash and credit, in an filthy orgy of yet more Quantitative Easing idiocy, into the Eurozone. This will be a flood of money into the economy and the world over a period of years, desperately trying to cause inflation in the prices of the stock, bond, housing, and debt markets (“preventing deflation!”) in the short run, but certainly causing gigantic, ruinous price inflation in food and energy later, because price inflation always follows money supply inflation. It’s the law, people!
And it will certainly be no fun “out there,” outside the bunker with stupid people who are indignant and upset about a few lousy empty pizza boxes littering the landscape, when they should be terrified about widespread discontent, and massive food shortages and price increases, and rioting in the streets, and the world turning into a dark, murderous, post-Apocalyptic nightmare full of desperate, starving zombies selling their kidneys to get enough cash for a great cellphone plan and a new tattoo.
Another of the horrors that prevents me from facing the outside world I got from Rande Spiegelman, of Schwab Center for Financial Research, from whom we learn that, as seemingly part of some sneaky, sinister plan to destroy the USA by always doing the Exact Wrong Thing (EWT), there is yet another big ol’ brand-new tax!
The economy is collapsing, unemployment is rampant, prices are increasing, and yet we have a new tax on top of the other tax increases! Insane! Insane fiscal policy!
But this this not about how the insanity of tax policy matches exactly the insanity of Congress, but about this new “surtax on unearned income” on (for now) higher-income taxpayers, which Mr. Spiegelman handily encapsulates as “The Affordable Care Act will add a surtax of 3.8% on net investment income,” which is chillingly demonstrated by the tax maximums, which are, to wit, “With the new surtax, long-term capital gains and qualified dividends can be taxed at a top rate of 23.8% (20% + 3.8%), while non-qualified dividends interest and rental income can be taxed at a top ordinary rate of 43.4% (39.6% + 3.8%).”
That’s a 19% tax hike on the former, and a 10% tax hike on the latter! Yikes! Gigantic tax increases across a wide swath of the economy! What can you do except say “We’re Freaking Doomed (WFD)!” and laugh the horrible laugh of the damned and the doomed, a mirthless “Hahahaha!”, echoing doomed, doomed, doomed down dark tunnels to the dungeons of hell?
And the news just gets worse, as John Williams, of ShadowStats.com, calculates that unemployment, as measured in the REAL world, is holding at a heart-stopping 23.2%. Yikes!
Yet, somehow, Consumer Installment Debt just rose $27 billion to a massive $3.175 trillion in April, hitting another new, all-time record, which is scary enough, but which only partly explains why the monthly trade deficit was up a hefty $47 billion, while we had a deficit in the merchandise trade balance of $65.8 billion in April! This is all terrible news!
And it is not just me that sees it, apparently, as John Rubino of DollarCollapse.com has more bad news, in that “buying on margin,” which is a measure of speculative optimism about stocks, “hit a record in January, turned down in February, and is now falling hard.”
Not only that, but “interest rates are plunging,” indicating a fall in the demand for money, and “market breadth is contracting,” where, numerically, more stocks are falling than rising.
Probably noticing the look of horror on my face from the onslaught of this torrent of bad news, he stops, and sums up “The world’s governments are actively trying to inflate asset bubbles to make the average person feel rich enough to start spending again.”
Well, I have never felt rich, and I have a family that spends more than enough for everybody, so this doesn’t mean much to me. But, I can make it seem like we both agree with me that the stock market, the bond market, the housing market, the general debt market and the could go up from here as the result of increased government spending another tsunami of deficit-financed money flowing into the economy.
To prove it, I quote him as saying “One could make the case that the financial markets are responding rationally to the prospect of trillions of new dollars looking for a home in stocks and bonds (and high-end real estate and fine art and the other preferred assets of the 1%).”
My feeling smug that somebody agreed with me was a nice change of pace, but I was soon paranoid and scared again when he wrote, “What we’re witnessing, in short, is a truly fascinating attempt by the world’s major governments to suspend the laws that have, thus far in human history, governed economics.”
Laws! Laws of economics! It is just as I, The Great Mogambo (TGM), whose loud mouth and unlimited arrogance have always declared! To wit: Buy gold and silver (and oil stocks) with a special zeal when the government is actively abetting the Federal Reserve’s long-standing massive over-production of fiat currency and credit to finance suffocating fiscal monstrosities, because there are, indeed, as previously postulated, natural laws of economics! Laws!
Perhaps, in a flight of fancy, I could even philosophically and metaphysically surmise that these laws of economics were produced in the original Big Bang when the universe, and everything else in the universe, was created! How awesome! A truly closed system!
Anyway, one of these laws is that gold, silver and energy get very valuable during the collapse of a stupid economic system, like the current fad of laughable Keynesian economics, which actually proposes to replace consumer spending (that has stalled under the weight of too much debt caused by the evil Federal Reserve creating so much excess currency and credit so that the consumer COULD be buried alive under debt) with massive government deficit-spending, thus racking up staggeringly more Treasury debt that the consumer must pay, either in higher taxes or higher price inflation, and usually both! It’s beyond outrageous!
So, if you are like me and have already stopped reading this stupid essay long ago, and have gone off to see if you got any interesting email or casually surf some adult-content sites, we will both tragically miss this Timeless Law Of Economics Since The Big Bang (TLOESTBB), which is: Buy gold, silver and oil in a fiat-currency economy. You can’t lose! It’s the law of the universe!
So, almost breathless at the cosmic revelation, I breathlessly ask, “What else can I say?”
And how else could I say it, except with a gleeful giggle of irrepressible joy (“’Tee hee hee!’ he giggled gleefully in his joy, which was irrepressible”), and a loud, triumphant, rhyming roar of “Whee!”, followed by the everlasting truism “This investing stuff is easy!”?
Ed. Note: No matter how insane things get, there will always be a way to protect yourself. The Mighty Mogambo relies on gold, silver and oil. But there are more ways than that to safeguard your wealth. Sign up for the FREE Daily Reckoning email edition for your chance to discover a variety of real, actionable profit opportunities.
As I gather from the family’s incessant whining for me to give them more of my dollars, which is growing louder and more rudely hostile by the day, inflation in the prices of things is hitting them pretty hard. You know: The same old story.
I pride myself that I am always a loving husband and father, thoughtful enough to kindly address their financial concerns with my usual careful consideration and advice, like explaining to them “Shut up!”, whereupon — get this! — they go all hysterical on me!
Okay, I admit that breakfast time is a bad time for me to put up with this crap, having just gotten up, still groggy and dumbfounded, stumbling into the kitchen in shock, having just been updated on what economic terrors have transpired around the world during the night – a night where I tossed and turned fitfully, suffering the horrors of vivid nightmares about slavering, snarling, ravenous wolves eating my legs off as I try to crawl away, screaming in pain, and screaming, too, in my outrage at noticing that the wolves are NOT eating anybody in my family, even though THEY are the cause of me getting my legs eaten off by wolves!
Lying on the bloody ground, agonizing in mortal pain, I see them off in the distance, lazing and lounging on a beautiful veranda, gleeful and blissfully amused amid tables laden with shiny, new piles of goods and services, and they are all drinking champagne, laughing as the bankers are pulling dollar bills out of their butts! Fat guys pulling dollars out of their butts! Brrrr! Nightmare!
Now, you don’t have to be a gloating, court-appointed big-shot blowhard psychiatrist with a huge syringe telling me to “calm down” and how I will “feel better very soon,” or be a Junior Mogambo Ranger (JMR) who is educated enough in economics, to be horrified that an inflation in the money supply leads to inflation in prices which leads to economic misery and catastrophe, to accurately interpret that terrifying dream.
Obviously, the wolves are inflation in prices, fat guys doing despicable magic tricks are bankers, and the coming economic calamity of ruinous inflation in prices paid by your gluttonous family in their unquenchable zeal for consuming far beyond their means by taking this filthy money is guaranteed to painfully eat you alive, taking off a chunk of you at a time, thanks to the disgusting, evil Federal Reserve having created So Freaking Much (SFM) currency and credit in the banks over the years. More than a decade! Almost a half century, in fact!
But relax. This is not about my family hating my guts or calling me a stingy and hateful old man, or me calling them blood-sucking leeches and zombie parasites, or about breakfast time being just one of the uglier recurring episodes that is the living hell of The Tragic Mogambo (TTM).
Instead, stepping out from the horrors of nightmares into the horrors of reality, from the Consumer Metric Institute we get the chilling report that inflation in prices over the past year, as calculated by the Billion Prices Project was 3.91%! Yikes!
If that was not bad enough, the economy itself is still heading down, handily explaining why jobs are disappearing, as the report goes on that “Under-reported inflation will result in overly optimistic growth data, and if the BEA’s numbers were corrected for inflation using the BLS CPI-U the economy would be reported to be contracting at a -0.38% annualized rate. And if we were to use the BPP data to adjust for inflation the first quarter’s contraction rate would have been a staggering -2.50%.” Yikes!
Imagine an electric bill three times higher than the one you pay now!
And if we use the non-hedonic inflation measures, as painstakingly calculated by John Williams of Shadowstats.com for which we owe a debt of gratitude, price inflation is really, really, REALLY running around 8 or 9 percent, meaning that real GDP, when deflated by the actual price inflation, is collapsing at 7% or more!
David Stockman at DavidStockmansContraCorner.com must be thinking along the same lines as me, which is, to wit, “We’re freaking doomed! Soaring food and energy prices are going to eat us alive like the aforementioned slavering wolves!” because he writes that electricity prices have gone up with “a compound growth rate of 4.5% over a decade.”
Now, I learned that nobody, as they say, “understands the exponential function” like “4.5% compounded over ten years”, so I helpfully fill that educational need with something more concrete, more graspable, more understandable, more Mogambo-like, as in, “Doing the math, you are paying 50% more dollars for electricity, which is a vital commodity on which you rely more and more, every day of your stupid life! And it is going to get worse from here! So how do you like the results of constant, simmering inflation, you stupid lowlife who would not listen to The Mogambo telling you to vote out of office the spendthrift halfwits in Congress who are deficit-spending us to hell by allowing the evil Federal Reserve to create so horribly much excess cash and credit that it causes such inflationary misery that, as previously posited, we’re freaking doomed?”
Again, perhaps thinking along the same lines, namely that the evil Federal Reserve is the cause of all of our problems, Mr. Stockman says, “So starting off with a 100-year perspective on electrical power prices, the rise of Keynesian central banking after August 1971 has been associated with persistent inflation, not deflation”, at least as far as electricity prices go, to which I will append the pithy, “and as far as all prices have gone, too!”
I mean, look around you! Or listen to my family complaining and begging me for money! Things simply cost a lot more than they used to!
As, for example, how much have the aforementioned electricity price increased since 1971? 300% higher prices! Trebling! Imagine an electric bill three times higher than the one you pay now!
Of course, there are those who argue, “But incomes were lower then, too, so it evens out, and anyway, you are a stupid idiot who doesn’t know anything, so shut up, Stupid Mogambo Moron (SMM).”
Stung by such rudeness and disturbing disregard for the poor and the annuitant, I am at a loss for words at being berated with something so completely stupid, when, as if by magic, Mr. Stockman must have heard of my problem! The good news is that he decided to comment on it, too, explaining everything, whereas the bad news is that he is starving me of the attention that I so desperately crave, as I probably would have thought of a clever reply eventually, and then I would look like a hero for a change.
And he even manages to upstage me in the process, by calculating, “For those who think this kind of ‘moderate’ inflation is a salutary thing, consider what a dollar saved today would be worth after a thirty year working life time under that 3.5% inflation regime. Answer: 35 cents.”
So, I rub my eyes in disbelief, my voice trembling, benumbed by the shock that, thinking ahead to retirement, I need to save three whole dollars of buying power today to have one lousy dollar of buying power in the future? Over 30 years this comes to requiring 3.73% a year on my investment, just to break even in terms of buying power! Yikes! To achieve a lousy standstill!
And this is BEFORE fees, taxes and expenses! Gaaahhh! We’re freaking doomed!
Ignoring me, he goes on and on, each statistic stabbing like a red-hot dagger in my heart. He writes, “retail gasoline prices are up by an almost equally inflationary 6.0% over the past nine years,” that rents have risen at a 3% compound rate, and the cost of the utilities of water, sewer and trash collection are up 4.5% a year, compounded, over that decade, too!
As if out of nowhere, here comes Greg Guenthner at Agora’s Rude Awakening newsletter writing about inflation in prices, too, reporting that “cocoa is up 34% since June” on “scorching” demand from China.
Then he offers up this prophetic couplet: “Say what you will about China’s economy, but its taste for chocolate is on the rise. Prices are following suit.”
I say, both personally and as the Brilliant Loudmouth Mogambo (BLM) who disdains all who contradict me in any way, dismissing them with an upturned eyebrow and a sneer on my lips, that a third of the world’s population which is, as yet, relatively unburdened with personal debt problems and can easily go massively into debt to buy things, has a lot of potential!
And Mr. Guenthner’s comment that “prices are following suit” is especially chilling when increasing Chinese demand and a lower exchange-rate dollar will combine to make things much, much, MUCH more expensive for us “home folks” (you and me!) that like chocolate. Well, more crave than like, I suppose, but that is not the point and you know it.
The point is that now we can’t afford chocolate, either. Great. Just freaking great.
And to make things worse, he finds that “beef prices are up 16% year over year,” which will send up the price of hamburgers again and again. I repeat: Great. Just freaking great.
If even you did NOT listen to my sage advice all these years to buy gold and silver, nor to wisely vote out of office the leftist losers who actually think that the government is supposed to help everybody, and who thus allowed the evil Federal Reserve to create so much excess cash and credit that made such outlandish budget deficits even possible, much less promoting the astounding bubbles in stocks, bonds, houses, tuition loans and personal debt, it is still not too late to save, in the vernacular, your Sweet Financial Butt (SFB) from the horrors of inflation in prices that is not only surely coming, but is actually here.
Anyway, all you gotta do is invest your money in gold and silver! It’s so breathtakingly simple! This dynamite investment philosophy has worked like a charm for the last few thousand years, despite the frantic efforts of all the bankrupted governments along the way, and it will work this time, too, for the simple reason that there are still no other “ultimate safe alternatives” in the world!
So, hahahaha! What else can one do but laugh at the staggering simplicity of exchanging fiat dollars for actual gold and silver, which are guaranteed by all of history to make you wealthy when you can buy it this cheap during extreme monetary conditions like this? Whee! This investing stuff is easy!
Ed. Note: There is no stopping inflation. It’s like a massive bulldozer, intent on destroying the purchasing power of any “currency” that isn’t gold or silver. But there are ways to maintain a steady stream of profits even in the face of this destructive economic force. That’s why The Daily Reckoning email edition, where this essay was originally featured, offers readers several chances to discover real, actionable profit opportunities in every single issue. Sign up for FREE, right here, and never miss another great chance to safeguard and grow your wealth in any kind of market.
I am always stung by criticism, like how I am lazy (usually phrased as “stinking lazy”) because I don’t particularly like work in general, and how I have actually grown hostile to work in particular as it pertains to, you know, ME doing it.
Okay, I admit that I could have been a better person in many, many ways, and that I’ve grown increasingly weird and paranoid since 1987, which was the “date which will live infamy” when the evil demon from hell, known as Alan Greenspan, was chairman of the Federal Reserve and started this insane inflation in the money supply.
As a result, my relationships with both my career and my family have deteriorated, as both of them are always hounding me, wanting me to “at least show up and do my damned job”, perform my “family responsibilities” and act like a real “father” instead of a frightened, paranoid old man who is terrified of inflation in the money supply because it results in ruinous inflation in prices, and yadda, yadda, yadda we’re freaking doomed.
WHAT could we have been thinking to have screwed things up this badly?
The sorry fact is that I am so freaking terrified that all I can POSSIBLY care about is my own personal survival, saving myself from the horrific collapse of the economy, the banks, assets and the buying power of the dollar, everyone and everything all ruined by the price inflation caused by the murderous inflation of the money supply, caused by the evil Federal Reserve creating the excess currency and credit to cause massive inflation in the prices of now-too-big-to-pop bubbles in stocks, bonds, houses, personal debt, college debt, and, most outrageously, to fund unbelievable, suicidal, massive, trillion-dollars-plus-per-year federal government deficit-spending! Unbelievable!
Naturally paralyzed with understandable fear, you can surely understand how I am left with a shuddering, paranoid hysteria and a seething hatred born of betrayal, seemingly immune to butthead bosses yelling, “Shut up about gold, silver and oil and do some work around here!” and pitiful entreaties to “Just say you love us! Please, daddy! Please love us!”
Fortunately, after frantically double-locking the doors, setting security systems to “Maximum Lethal Response,” and settling into a comfortable, quiet, armed-to-the-teeth paranoia in the closet under the stairs, one finds that one has a lot of time to leisurely eat microwave burritos, drink beer, and to think about things. Things like, “What in the hell is that smell?” (It was my socks).
Flush with success in handling that mystery, I turned my attention to the next burning question, which is, “How can we have been so, so, So Freaking Stupid (SFS) as to ignore the glories of the Austrian School of economics, based on capitalism, free enterprise and a stable money supply, and instead destroy ourselves with the suicidal Keynesian stupidity of crushing debts everywhere and a behemoth federal government deficit-spending a constantly-expanding money supply?”
I mean, WHAT could we have been thinking to have screwed things up this badly?
Well, in that regard, Junior Mogambo Ranger (JMR) Phil S. has sent me several articles over the last few weeks about the horrifying cornucopia of hormones and chemicals that are in our water, the food we eat, and the air we breathe, which is not to mention the vast invasion of foreign species of plants and animals all over the place, which is certainly something else to worry about besides the economic Armageddon bearing down on us.
Then there is the recent discovery that, almost unbelievably, behavior is inherited in one’s DNA! Astounding! This means that if you are a lazy, bad parent, a sub-standard husband, or a worthless, dim-witted employee, then my kids will be, too! Oops! Too bad for them!
And now we have the new science of epigenics, which is “genetic control by factors other than an individual’s DNA sequence,” like the aforementioned pollutants and a million other things actually altering your DNA, which will thus alter your behavior in unpredictable ways! Yikes! This thing is compounding!
Now, as you obviously observe from the horrified look on my petrified face, I am more despondent and crazed with fear than (gulp!) ever! Ever! And much, much more paranoid, too!
But this genetics stuff not only explains the bizarre behavior I see all around me, but it handily explains why the majority of people are not rushing out, stampeding in a frantic, frightened frenzy, to buy gold and silver. It’s because their DNA is so damaged that they are now too stupid!
But, then again, it takes a Special Kind Of Stupid (SKOS) to, firstly, realize that nothing in economics has changed for thousands of years. There has always been money, debt, interest, taxes and government regulation. Nothing new.
And when one easily discovers that bankruptcy and economic ruin occur every time in history where the money supply was vastly expanded, then a Special Kind Of Stupid (SKOS) becomes a tangible thing with every new dollar created by the evil Federal Reserve.
I hear your pleas. “Oh, woe is us!” you say. “Help us, Wonderful And Wise Mogambo (WAWM), whose incandescent intelligence and powerful economic mojo illuminate this entire sector of the galaxy! So tell us, exalted sublime master and aforementioned WAWM, in a karma, yin-yang, mumbo-jumbo, universe-in-balance kind of way, there must be a Special Kind Of Brilliant (SKOB) to even things out, surely!”
To begin with, to paraphrase Leslie Nielsen in the movie Airplane!, “Stop calling me Shirley!”
And as for an SKOB, rejoice in that I, again with the egomaniacal WAWM thing introduced in the previous paragraph, do hereby answer your prayers!
As history CLEARLY shows, those people that are buying gold, silver and oil right now will be the Special Kind Of Brilliant (SKOB) people riding the inevitable bubbles in gold and silver up, up, up to their inevitable tops, as a brilliant and perfectly logical way to amass a relative fortune.
When will the market top for gold and silver happen? Easy! After everything else has finished turning to crap!
So simple. So elegant. So, “Whee! This investing stuff is easy!”
Well, maybe not so pleasant, but, you gotta admit, easy!
Ed. Note: With every rant about inflation, money printing and the money supply, the Mogambo grows ever stronger, waiting impatiently for the day when he can break free and destroy the damnable Federal Reserve he so vehemently detests. But until that day comes, you can keep current with his vaguely coherent ramblings by signing up for the FREE Daily Reckoning email edition, right here.
The kids are suddenly big experts on “income inequality” since it has become the issue du jour lately, and are loudly whining and wondering why I have money to spend while they do not, which they consider completely unfair.
As usual, they were not impressed with a loving father (me) taking some of his precious time to kindly explain that, around HERE anyway, it’s because I went to school, got a job, spend less than I make, and save the rest by not indulging the random, selfish whims of a bunch of free-loading, lowlife, teenage morons.
Since Treasury bonds are considered so “safe,”… you ought to be able to pick the bonds up for a few bucks…
They were even LESS impressed when I told them that the national problem of inequality of income is because the evil Federal Reserve created (and still creates!) so much excess cash and credit, which naturally ended up in the hands of those able to amass it by continually borrowing money from the banks and buying a flood of government bonds, which dictates that the rich get all their money back, plus interest.
This was greeted with the usual teenage groaning and moaning, which I succinctly paraphrase as, “Oh, no! Not that Same Old Mogambo Crap (SOMC) about the Federal Reserve, and how it is evil for creating too much cash and credit so that it ends up creating price inflation, like the inflation in the wealth of rich people, and inflation in the price of food and energy, and the inflation in the misery of poor people, and blah blah blah until we are sick of it, so shut up, you horrible, stingy old man! We hate your guts so much that we can’t even begin to tell you how much we hate you!”
Obviously, they wanted more than a simple explanation. But what can I say?
Immediately recognizing an opportunity, I instantly developed the famous Mogambo Big Bucks Method (MBBM), a treasured, time-honored manual on how you, too, can become one of the rich One Percent elites, and have most of all wealth in the world.
Essentially, the only difficult part is the first step, which is to first acquire a lot of cash. Enough to impress the bank. About a million dollars ought to do it. Since Treasury bonds are considered so “safe,” and the banks are so desperate to loan money, you ought to be able to pick the bonds up for a few bucks, paying some absurdly low interest rate.
Then, next week and every week for, apparently, forever, the deficit-spending government will need to sell more oceans of bonds to both get more dollars to spend, and to pay you the interest they owe you on your bonds.
So you, ever the clever One Percenter that you are, next week and every week after that, borrow a few more million dollars from the bank, thoughtfully created by the Federal Reserve, using the spare change in your pocket to put down, and buy the new bonds. Now you have more bonds, both of them paying you interest!
And all along the way, you and your corrupt banking buddies and financial huckster friends dream up all kinds of complicated derivatives deals to leverage that pile of bonds, everybody borrowing more and more money from the banks, over and over again, swapping back and forth, leverage upon leverage, paying yourselves huge commissions and fees at each step, while the inevitable monstrous losses are dumped on the taxpayers, via the banks, necessitating huge bank bailouts and guaranteeing the evil Federal Reserve will create more cash and more credit to pump it all back up again.
Thus, by the inescapable mathematics of exponential growth you will, in theory, one day own all the money in the world!
Of course, the hard part is getting that initial $1 million so that I can use the famous Mogambo Big Bucks Method (MBBM) to be rich, rich, rich and have all the money in the world.
Firstly, I have to budget very carefully and cut expenses for silly extravagances, like having snazzy sports cars, polo ponies and children, as I have had to patiently and gently explain to them countless times (“What part of NO don’t you understand, ya morons?”)
So I’m standing there in the checkout line at the grocery store, and I am already in a bad mood because my favorite cookies were NOT included in the “buy one, get one free” sale category, while, seemingly all around me, I see crappy cookies that I wouldn’t eat if you freaking GAVE them to me for free, are!
I am reduced to this sad, sorry state of penny-pinching parsimony because of inflation in prices, as the really good cookies are running almost 50 cents apiece these days. And for a guy who can easily sit down and eat half a bag of cookies in a disgusting display of graceless, grunting piggishness before he even gets up to get something to drink before returning, drink in hand, to resume eating most, and sometimes all, of the entire last half of the bag, this adds up to a lot of money these days.
And, I am sorry to say, it is not going to get any better, either, as from Bloomberg.com we get the distressing news that, “World food prices rose 2.6 percent in February, the biggest jump in 19 months, as prices for cooking oils, grains, dairy and sugar all rose, the United Nations’ Food & Agriculture Organization said.”
I thought at first that this was measuring price inflation from February to February, namely one year’s worth of price inflation. It was not. It was for the one month! One Freaking Month (OFM)!
This horrific news, for those of us who are not lunatic Keynesian economists or otherwise mentally ill, about inflation in consumer prices is Very Bad News (VBN), leading, as it usually does, to more creation of cash and credit by the Federal Reserve and thus to Even Worse News (EWN), before proceeding to more and more cash and credit and to worse and worse news, on and on, spiraling, spiraling, spiraling out of control, before reaching what Ludwig von Mises called “the final collapse.”
I, of course, would also call it The Final Collapse (TFC) if I could, but then I’d have to listen to everybody pointing out how I stole it from Mises because I am so stupid, and how I have never had an original thought of my own, and how everybody (including kids, see above) hates me.
So I call it, instead, The Big Mogambo Financial Supernova (TBMFS), where prices of food and energy explode outward in some huge freaking fireball, killing everything, while simultaneously debt, credit, asset prices and wealth collapse into a “black hole”, disappearing forever into a vast nameless void, which is, of course, the famous Mogambo Scary Vast Void (MSVV).
This inflation in prices should cause an absolute outrage in an educated citizenry, with the evening news full of scenes of hurt, vengeful people rising, replete with flaming torches and pitchforks, to coalesce into an angry, incoherent mob storming the evil Federal Reserve that created all the cash and credit that produced the inflation in prices that is killing them, the treacherous Congress for allowing it (and causing most of it by deficit-spending!), and the damnable Supreme Court which infamously knuckled under to the damnable Franklin Delano Roosevelt and treacherously ruled that money did NOT have to be “only of gold and silver” like the Constitution of the United States literally requires, thus allowing a suicidal, expanding fiat-money supply, which caused all of these problems in the first damned place!
And while the evening newscasts contain no shocking videos of such vast social upheavals and mass rioting, and the newspaper contains only sporadic reports (“Local Lunatic Creates Disturbance”, with the subhead “Says Federal Reserve Has Doomed Us All”), it’s just a matter of time, which is growing shorter and shorter.
And it is likewise only a matter of time, which is likewise growing shorter and shorter, before gold and silver soar in price, as history shows they have always done at the ends of long periods of expanding money-supply idiocy.
It’s THAT time. It’s ALWAYS happened. What could be more obvious than buying gold and silver?
In short, it’s the right time, it’s always happened, and it’s obvious. Perhaps, knowing that, you’ll join with me in happily exclaiming, “Whee! This investing stuff is easy!”
P.S. It’s a wonder more people aren’t on board with The Big Mogambo Financial Supernova (TBMFS). Because if there’s one thing I know for certain, it’s that all of this insane money and credit – created (out of thin air) by all of the damnable central banks around the world – will have a horrible, disastrous effect on all of the people who didn’t heed my Great Mobambo Warning (GMW), which can be found in a few far-reaching corners of the Internet, namely The Daily Reckoning, which provides readers with the information they so desperately need to combat this whole inflationary insanity in the first place. Best to sign up for free, right here, before things get out of hand.
My poor back was aching from playing golf, I was bored with TV, and, in desperation for something to do other than taking an interest in the kids, doing some desperately-needed chores around the house, or even faking the slightest interest in ANY of that crap, I was casually looking at, you know, economic stuff.
As usual, I was registering the usual shock and awe (we’re freaking doomed!) at such continuing monetary and fiscal insanity, such as Total Fed Credit increasing another hefty $35.4 billion last week, with the Fed itself buying up $36.9 billion in US government securities, committing yet another blatant, brazen fraud in a long series of Quantitative Easing frauds to monetize government debt to the tune of, according to these new figures, an annualized $1.84 trillion a freaking year, for which the Federal Reserve creates $1.820 trillion out of thin freaking air! In case you missed it at the beginning of this paragraph, we’re freaking doomed!
Interestingly, comically segueing from “freaked out” to “interestingly,” Currency in Circulation, namely dollar bills and coins, went up $ 9.6 billion last week, which is $31 in cash for every man, woman and child in America. In one week!
In fact, in looking at the figures, Currency in Circulation is up $72.5 billion in the last year, which is enough NEW cash floating around for EACH of the abovementioned men, women and children in the country to get $234!
Personally being a man, woman or child in America, imagine my disgruntlement and dismay when I impatiently waited until my wife finally went into the kitchen, and then sneaked a look into her purse so that I could claim MY personal $234. I figured maybe I could sneak out to go have a few refreshing brewskis and, you know, maybe see who and what’s new in the marvelous, magical world of pole-dancing, only to find her purse empty!
And so I casually and politely asked her about it (“Hey! You in the kitchen! Where’s my damned 234 dollars?”), emphasizing how she had better cough it up because I had plans for that cash, and I mean BIG plans, but she insisted SHE didn’t have hers, either! I’m investigating.
Meanwhile, swerving back, tires squealing, to the topic at hand, the Monetary Base itself just jumped up $82 billion to $3.839 trillion from $3.757 trillion and (according to Barron’s) is up an astounding $2.841 trillion in the last year!
So, hey! You! You wanna talk about inflation in the money supply that always leads to inflation in consumer prices? No? You say you’ve heard it all from me so many, many times before, and you are so damned bored with hearing about it that you are deliberately NOT reading this?
Well, if you are out blithely gallivanting around, instead of reading this Mogambo Dire Warning (MDW) because of your petty, spiteful nature, then OK! Fine with me!
The cruel part of me is glad — GLAD, do you hear me? — that you are not going to let me tell you, for the thousandth time, how you should be buying gold, silver and oil right now, which you still wouldn’t do, which means you are going to lose out on fabulous capital gains when their prices explode, thanks to the monetary idiocy of the evil Federal Reserve and the other dirtbag central banks around the world creating so much excess cash and credit.
As a result, you will spend the rest of your life in pitiful poverty, mired in misery, eating weed salads and bug burgers to survive, perhaps watching me drive by in my big, shiny new car, stereo blasting, fancy hubcaps glinting in the sunlight. Perhaps, too, you will hear me laugh at you, “Hahaha! Now who’s too busy to read a MDW? Hahaha!”
And since you are still ignoring me, you won’t hear the chilling news that the evil government cabal that calls itself the G-20 is proposing to “stimulus spend” $2 trillion in the next year, or that the Obama 2015 federal budget proposal is an astounding $3.9 trillion! Yikes!
Sadly, the Butt Ugly Truth (TBUT) is that this monetary and fiscal insanity is to desperately try and save the banks for a little while longer, as the banks have lent out, and borrowed for themselves with which to speculate, all the depositors’ money, dozens of times over.
So, sadly, all your money in a bank is, actually, gone, according to the accounting ledgers at the banks, and the only way to get it back is if all those borrowers who borrowed money paid back the money they borrowed, which they can’t do, because they don’t have the money to pay back the money.
But not paying back the money they borrowed is paradoxically a good thing, because everybody selling assets to raise cash to pay off debt is what makes the money supply go down, asset prices go down, things collapse, bankruptcy all around, and everybody is grumpy at being devastated.
And probably a LOT sooner than expected, too, since so many assets are leveraged so unbelievably highly that any significant move downward in prices would quickly overwhelm all the investor’s capital, immediately bankrupting the deal and handing their creditors a big loss, who are, ultimately, the banks, which causes a fall in the money supply. Yikes again!
Perhaps fortunately, in light of the above, not only are consumers NOT paying back the money they owe, but they are borrowing more! Consumer Installment Debt was up almost $20 billion in December, rising to $3.106 trillion, which seems staggering because of it being up almost $327 billion (almost 12 percent!) in the past year, or, perhaps more meaningfully, $3,114 more debt for every one of America’s 105 million credit-card holders, and coming, as it does, at a terrible time when interest rates are rising, prices are rising, but incomes are falling.
It is usually at this point where I find that you WERE actually reading this Mogambo Dire Warning (MDW), you wily devil, betraying yourself with your pent-up verbal assault at me to “Shut the hell up, Mogambo! Just shut up, shut up, shut up!”, which I deftly party and riposte with the powerful, “If you are NOT buying gold, silver and oil with everything you have, then you are making a huge, huge, HUGE mistake!”
And then, in keeping with the sudden fencing theme, I end the refrain “thrusting home” like Cyrano de Bergerac, saying with all the deadly contempt and venom I can muster, “Moron!”
Beyond that powerful closing scene, starring me as Cyrano, the handsome and brave master swordsman and lyrical wordsmith, there is nothing to add: You know what to do and why you must do it.
Truthfully, the Cyrano de Bergerac reference is a bit of spontaneous whimsy that I just threw in, I don’t know why. Perhaps we’ll never know why. Or even care why.
But we know why to buy gold, silver and oil, and that’s the important thing. And the fact that it is spectacularly easy, too, only makes it more and more blindingly obvious that, “Whee! This investing stuff is easy!”
Ed. Note: The Mogambo’s sage wisdom has been a fixture in The Daily Reckoning for several years. And after a brief hiatus, he is back to his old tricks. To make sure you’re clue in to his most recent musings, sign up for The Daily Reckoning, for FREE, right here.
I remember, because it is seared into my memory, every detail of the day when I watched, in total disbelief and screaming outrage, as Janet Yellen testified in front of Congress. She is, of course, the new head honcho at the evil Federal Reserve, taking over after the spectacular failure of her predecessor, the laughably benighted Ben Bernanke, and she said, frying precious neurons of my already-depleted brain (“zzzt!”) the words, “Inflation remains below our longer-term objective,” which, as it turns out, she means 2 percent inflation in prices!!
If you do not understand the significance of the double exclamation points, then you are NOT a Junior Mogambo Ranger (JMR), and thus you are ignorant of the Austrian school of economics, and also thus you do not know that 2 percent inflation is something terrible, as the historical cutoff for inflation has always been 3 percent.
Above 3 percent inflation rate, calamity awaits, which kind of rhymes, so you know it must be true, in case the entire historical record of the world is not enough to convince you that anybody deliberately pursuing the pernicious poison of price inflation is either evil or a moron, and being driven by the absolute desperation resulting from behaving like monetary idiots for the last half-century is no excuse.
Of course, Janet Yellen has long been a proponent of inflation-targeting, and that is one of the reasons why I am so dismissive of her bizarre, mutant intelligence, which seems to be centered around spewing that whole Keynesian “stimulus spending” load of crapola, even though Keynes has been discredited so many times, for so long, that it seems impossible that anyone would still be a Keynesian economist.
So, why is she like that? Being that the Winter Olympics are being held right now, perhaps that is why I thought of “stimulus spewing” as an Olympic sport, which brings up the question “How is stimulus spewing scored, and what are the rules of stimulus spewing?”
…higher costs are not being offset with increases in income, as “median income has only risen 1% each year…”
The question seems stupid, and it is, but, then again, why not? Merely have Olympic stimulus spewing scored by how much price inflation per 4-year Olympic cycle that the monetary inflation causes!
Alas, Janet Yellen’s apparent quest for an Olympic gold medal STILL doesn’t explain why she is so deliberately, so shamelessly, so horrifically evil that she is willing to punish poor people and the middle class with higher and higher prices, year after year after year! Evil, I tells ya!
Laughably, and perhaps ironically (although I am not sure what “ironically” means anymore, if I ever did), she actually said this “I want inflation because I hate you and your nasty children” venom almost literally at the same time as she was proudly reiterating the “missions” of the Federal Reserve, the first of which is, of course, “price stability,” and is obviously defined as “when inflation in prices is zero.”
Now, you may not know it, but you are talking to a guy who happens to know for a fact — a fact! — that stability means “zero change,” and I know it for a fact — a fact! In fact, the same fact!– because of a very embarrassing Quarterly Employee Review one time where my supervisor wrote that while my attendance and attitude had “Deteriorated markedly,” she also noted that “Job performance, such as it is, is stable,” which meant, as I subsequently learned in the course of the evaluation, was, “No change. You’re still the worst employee I have.”
Leaving aside, for the moment, the crippling damage done to my fragile ego by such a hasty judgment by some boss whom I rarely even saw because I was usually goofing off somewhere else every time she came looking for me, probably to whine about some deadline I missed, or some stupid report I forgot about writing, or about some lowlife, deranged, lying piece of crap client complaining about something I did, or did not, do, but note that — ergo! — and for the record, “stability = zero change”!
Ms. Yellen, seeking 2 percent inflation, is saying that she does not understand this concept, but compensates by hating your guts and your entire family. And if you watched any of her testimony, you could tell by the nervous way she acted that, if she could, she would gladly come over to your house and kill you and your whole family, including puppies and kittens and baby bunnies, and steal your house and assets outright, instead of having to go through the hassle of defending a disastrous monetary policy, although the Federal Reserve has been such a disastrous failure for the last half-century that (pausing for breath) We’re Freaking Doomed (WFD) no matter WHAT she does.
Instead, she is going to make sure that all your assets (including all your cash, your retirement plan, your house and all your investments), which are denominated in dollars, LOSE at least 2 percent of their buying power Every Freaking Year (EFY).
Inflation in prices is already so high that the minimum wage is being increased again out of “necessity,”, which will make the problem worse: Paying higher wages means the employers are going to raise prices to restore their profit margins, or replace workers with technology and robots, or both.
So, at the end of the day, a few employees get more money, a few employees lose their jobs, but everybody pays higher prices.
And it is not only insane monetary inflation that is causing price inflation, but the old supply/demand dynamic is being upset mightily, too!
Michael Snyder at theecohomiccollapseblog.com asks, “Did you know that the U.S. state that produces the most vegetables is going through the worst drought it has ever experienced, and that the size of the total U.S. cattle herd is now the smallest that it has been since 1951?” Ever! Worst ever! Going back to the late 19th century!
And there is a lot of evidence, such as in tree rings, that California has been extraordinarily wet for most of the 20th century, and that, statistically at least, it is possible that the California drought could continue for another 200 years! What is THAT going to do to prices? Hahaha! I’m surprised you asked!
Already, CBSNews.com, reports that “While the government says prices are up 6.4 percent since 2011,” which is where I insert that the government is a lying, cheating, manipulating piece of low-IQ crap and we can’t believe anything they say. Having said that and feeling better for it, we continue where we left off, with “chicken is up 18.4 percent, ground beef is up 16.8 percent and bacon has skyrocketed up 22.8 percent,” which jibes pretty well with shadowstat.com calculating that inflation in prices is, and has been, running about 8 or 9 percent.
As reported by breitbart.com, higher costs are not being offset with increases in income, as “median income has only risen 1% each year, while the cost of college tuition has climbed 6% to 8% every year for at least forty years.” Forty years!
And remember Olympic stimulus spewing, the new sport so memorably introduced above? Well, another way to score stimulus spewing is the results of price inflation (particularly vis a vis stagnating incomes) causing the number of adults under the age of 35 that live at home, with his or her parents, instead of being out living on their own, throwing wild parties lasting the whole weekend until I finally puke and crash on their sofa.
It’s now 29 percent, so they say. Almost one in three!
In other depressing news, rising prices reduces disposable income, and part of the effect is that it now takes as long for car dealers to sell a new car as it took in 2009, which was the year after 2008, which is when bubbly things went so badly from decades of Federal Reserve mismanagement that the Federal Reserve completely lost its mind and began quantitative easing on the scale of trillions of dollars per year, on the insane Keynesian theory that two wrongs (creating the original debt and the increase in the money supply to keep it afloat) make a right.
And homebuilding permits and applications have collapsed.
And total debt (government and private) are all at new record highs.
And the idiocy of Obamacare continues destroying a sixth of GDP.
In summary, if ever there was a Sign From The Mogambo (SFTM) to buy gold, silver and oil, the red-lining of my Mogambo Fear And Paranoid Meter (MFAPM) could very well be it. If everything collapses tomorrow, or even this year, then we’ll know for sure. Otherwise it’s a reliable leading indicator.
So, obviously, with iron-clad, indisputable proof like this, you should be buying gold, silver and oil stocks in some desperate, clutching-at-straws, frightened, feral frenzy, a path so clearly indicated by the reference to the infallible MFAPM in the very preceding paragraph.
And with that kind of proximity to the best advice you ever got, you can hardly say that you forgot, which kind of rhymes too, again proving it’s all so, so true!
Whee! And again I say “Whee!” And yet thrice do I say “Whee!” as in “Whee! This investing stuff is easy!”
Ed. Note: With every appearance The Mogambo Guru makes in the pages of The Daily Reckoning, in addition to his inimitable style, he stresses the importance of knowing what to do as government stupidity threatens to destroy your financial stability – not to mention the financial stability of the entire US economy. And since he refuses to keep quiet – no matter how much people tell him to “pipe down” - The Daily Reckoning will continue to feature him, in hopes that someone will hear his Mighty Mogambo Message (MMM) and use it as a sign to protect themselves from the economic collapse that threatens us all. Sign up for the FREE Daily Reckoning email edition, to read the Mogambo’s warnings before almost anyone else.
As the scene opens, lights swirl in the eerie black background, crazily careening in a whirling kaleidoscope of disjointed light and dark. In the distance, sirens dimly wail. My face half-hidden in the gloom, I am mindlessly wiping the gleaming barrel of what appears to be a machinegun when I dully look up into the camera lens.
Staring directly into the camera, my narrowed, bloodshot eyes darting from side to side like the frightened little rat that I am, I feverishly say in a hoarse whisper “The Federal Reserve is monetizing the debt! We’re Freaking Doomed (WFD)!”
This is, as is implied in the hysterical fear in my eyes, only the tip of the whole seamy iceberg, as the slimy government has reached new depths of depravity by admitting to actively engaging in manipulating the stock market, the bond market, the housing market, the student loan market, and now the gold and silver markets. Everything. “Supporting” them, as they say, but all financed by the evil Federal Reserve creating mountains of currency and credit to pay for it.
“Buy gold, silver and oil, and if you don’t, it will prove that you are some kind of moron…”
Perhaps this horrible, nightmarish knowledge of widespread official fraud and corruption is causing the look of pained anguish on my face, like that irritated look I get when I stub my pitching wedge, the ball flubs a few inches, or drops into (“plop”) a sand trap, or, worse, zips screaming across the green, as if to mock me, BEFORE heading straight into the sand trap on the OTHER side of the damned green, whereupon I wince at its stinging taunts, shouting, “Shut up! Shut up! Shut up, damn you! I’ll get you for this, you stupid ball!”
Or perhaps my suppressed screaming outrage is causing the bulging of those selfsame narrowed-yet-bloodshot eyes, like when my little one-foot putt, for a double bogey, lips out of the cup, or the way that my fists are clenched in rage like when some laughing lowlife on the adjoining fairway yells out to me, “Hey, moron! You stink! Take some golf lessons! You need ’em!”
Perhaps it is all of these things, or even and/or other worrisome worries, like, oh, I dunno, maybe worrying that your wife is putting poison in your food, and even though she denies it and readily agrees to your demand of switching plates every forkful, you can see her surreptitiously watching your every move, her devious little mind mulling over dark plans to get around your clever ploy to foul her fiendish plot.
Or perhaps the worst part is people coming up to me and saying, “Hey! Aren’t you that Loudmouth Mogambo Moron (LMM) who has been yelling at me to buy gold and silver all this time, and when I didn’t, you yelled at me and told me what a moron I am?”
Proudly I puff out my chest and say, “Yep! That’s me!”
Then I have to listen to them curse at me, and laugh at me, their scorn palpable, since gold and silver have been such terrible investments for the past couple of years thanks to the government manipulation, while stocks and bonds have gone up in price thanks to government manipulation.
So, as I never tired of saying, woe is me.
I suffer the torment of being Absolutely Freaking Correct (AFC) in that history has shown that gold and silver are the premier investments when governments are acting so fiscally and/or monetarily bizarre. And now the American central bank has created so insanely much currency and credit that everything and everyone is staggeringly debt-besotted to the unbelievable tune of over 400 percent — perhaps as high as 700 percent! — of GDP!
Yet the prices of gold and silver have declined to essentially the cost of production, thanks to the new-found fact of government-approved and government-perpetrated interventions and manipulations, so that random Earthling chumps feel justified in coming up to me and sticking their stupid little faces in my stupid little face and dare — dare! — to criticize me for the losses in their gold holdings, when they should be down (down!) be on their knees (knees!) thanking me (thanking!) for dispensing (dispensing!) Immortal Mogambo Advice (IMA) like “Buy gold, silver and oil, and if you don’t, it will prove that you are some kind of moron, and probably a Keynesian moron, which is the worst kind of moron!”
And speaking of lowlife Keynesian morons, I introduce Janet Yellen, the new chairman of the Federal Reserve, one of the laughably worst of the Keynesian morons, and to whom I have always been, and continue to be, very rude in that way that can only be described as Classic Mogambo Contempt (CMC).
Perhaps Dan Cofall of the eponymous Cofall Letter nailed her the best when he caught her saying that the Federal Reserve “…isn’t just about fighting inflation or monitoring the financial system. It’s about trying to help ordinary households get back on their feet and about creating a labor market where people can feel secure and work and get ahead.”
What?!? The use of the interrobang as punctuation lets you know, right off the bat, that both Junior Mogambo Ranger (JMR) Dan and I were, and remain, completely apoplectic at the absolute preposterousness of the Fed “creating a labor market,” much less one “where people can feel secure and work and get ahead.” How in the hell does a bank DO a thing like that? The Congress has been trying, and failing, to do that for a hundred years! Hahaha!
The only good news in the avalanche of bad news is that gold is, so some say, selling at the cost of production, which is a good news/bad news kind of thing.
It’s bad news for someone holding gold as the price goes down, but good news for those buying it.
The really good news that comes from this is that this can’t keep up for long in the face of relentless, massive Chinese buying, and I’m betting on the apparent historical imperative for people to accumulate gold and silver in tough times. And so people who buy gold and silver right now are going to capitalize — big-time — on the government’s shameless corruption! It’s just a matter of time Whee!
And one of these reapers of financial bonanza will be a guy calling himself Chuck Norris, whose tagline was resplendent with a photo of Chuck Norris, responding to an article at zerohedge.com, who writes, “I’m not that mad gold has been artificially suppressed. It allowed me to accumulate it at better prices. I hope it stays low longer, actually. I’m just gonna buy more!!”
Of course there are those who dispute whether or not this is THE Chuck Norris, he of “Walker, Texas Ranger,” since the REAL Chuck Norris is so superhuman that he can actually karate-kick ingots of lead so hard that they turn INTO gold.
So why would he even bother with accumulating actual gold like us mere mortals, except to show that he’s smart enough to know about the Austrian school of economics and, indeed, the economic history of the world, as well as being a handsome and rich actor, and one helluva rompin’, stompin’, butt-kicking Junior Mogambo Ranger (JMR) kind of guy?
To settle the dispute, we examine Mr. Norris’ punctuation choice, which clearly shows the use of two –count ‘em, two! — exclamation points, which is a secret code whereby all Junior Mogambo Rangers (JMRs) instantly know “this is something important.”
Think about it. And it is.
Think. About. It.
Ed. Note: No matter how insane things get, there will always be a way to protect yourself. The Mighty Mogambo relies on gold, silver and oil. But there are more ways than that to safeguard your wealth. Sign up for the FREE Daily Reckoning email edition for all the info.
I was more dyspeptic than usual that morning at breakfast, the latest disappointment being my latest and greatest Fabulous Mogambo Plan (FMP) to make a few bucks that popped (“boing!”) into my head as I woke up, namely hooking up generators to the kids’ bicycles and let them merrily pedal away all day in the garage, generating electricity, so that I could sell the excess power to the local grid and make a few bucks, or at least reduce my electric bill somewhat.
Alas, my enthusiasm was soon dampened by remembering the laws of physics, which is not to mention those pesky “child labor” laws that have been the Achilles heel of many a former FMP.
And perhaps it was that same kind of sloppy inattention to detail and not “thinking things through” that explains, to some degree, how I had, in my last Mogambo Guru newsletter, declared that the price of bonds had halved, which is NOT true, because interest rates had doubled, which IS true, as pointed out by Junior Mogambo Ranger (JMR) Dick P., whom I mention because he is the only one who did not use the words “half-wit, lowlife moron” anywhere in his email informing me of, ahem, my error.
…one day this whole insane, unbelievable Debt Out The Wazoo (DOTW) idiocy will fall apart, as it must…
So please ignore that part of that newsletter, but the point was how Completely Freaked Out (CFO) I am by the doubling — doubling! — of interest rates, and accentuated by my lingering paranoid hostility about the recent court case where it was revealed that the government has, by virtue of the Exchange Stabilization Fund, the absolute authority to secretly manipulate any and all markets, including the gold and silver markets, which were the issue at hand, thus committing a legalized fraud on a massive scale. Unbelievable! I still find it absolutely unbelievable that the federal government can now commit any crime, as long as they pass a law saying that it is not illegal when the government commits it!
You rudely laugh at me because I am childishly hiding behind the couch, have a sour scowl on my face, a loaded pistol in each hand and pockets jammed full of gold and silver, but I mean, how paranoid do you have to BE to be justifiably afraid of a rogue government that has given itself the legal authority to monitor your every move, has given itself the legal authority to kill anybody at any time without due process, the legal authority to manipulate every market, and a compliant Federal Reserve to continuously create massive amounts of new currency and credit (actually monetizing the debt!) to finance the government’s unbelievable orgies of welfare-state deficit-spending and accrual of insane amounts of future liabilities?
Gaaahhh! I mean, for a guy barely holding by his broken and bloody fingernails onto the last, tattered remnants of his twisted version of reality, how big a bunker, how big a stash of gold and silver, how many guns, and how many frozen burritos in how many freezers does one need to survive such shocking un-American, un-Constitutional corruption and its guaranteed economic collapse?
Perhaps that’s why, in between nervously checking the security locks on the door of the Mogambo Bunker Of True Paranoia (MBOTP) and eating yummy microwave pizza rolls, I spend a lot of time hatching sinister plots in my mind where I will rally my fellow Americans to rise up in outrage, throw the government bums out, put America back on the gold standard, thus to be hailed by future generations as the greatest American patriot of all time, where happy people will name their children after me (“Your son is named Fabulous Patriot Mogambo? So is mine!”).
And things did not improve when I was informed by my wife that our gold-oriented IRAs had been essentially halved over the past year, after suffering a similar fate the year before.
My normal reaction to being blamed for anything is to put my fingers in my ears and scream “Shut up! Shut up! Shut up!” until she shuts up about it, but this time I patiently explained to her that, despite the clear evidence presented by the heroic Gold Anti-Trust Action committee and Ted Butler all those years, I just could not bring myself to really believe such creepy, corrupt government manipulation of markets could last so long.
And so we, as a family, paid the price for my underestimating how corrupt a government can be.
The usual family reaction to my failure was, as usual, gleefully yelling ,“You’re still a moron!” and “I hate you!”, phrases which have thankfully lost their sting over the years.
To my credit, instead of getting into the ritual screaming match ensuing after I cleverly retort “No, YOU’RE the morons!” and “I hate you, too!”, this time I graciously tried to turn it into a “teaching moment” for the wife and the kids when I went on to explain that this was a clear example of how Dollar-Cost Averaging (buying a set dollar-amount of an investment per month) is the best investment philosophy, especially so when all this time the government was manipulating the gold and silver markets down, see, so we would have been buying more and more gold and silver at cheaper and cheaper prices!
“And,” I said, “we all know that one day this whole insane, unbelievable Debt Out The Wazoo (DOTW) idiocy will fall apart, as it must, for if it was actually possible to keep such a corrupt, debt-besotted fiat currency system viable over the long term, another example of it would exist in history, and it doesn’t. Not one!”
I didn’t tell the kids this part, but one other thing history shows is that gold and silver are The Place To Be (TPTB) when this happens, whereupon we, as a nuclear family of carbon-units, would be on our way to a wonderful life of Happy Times On Easy Street (HTOES), where we hire teams of control-freak nannies to watch the kids and keep them out of our hair until they are eighteen, when we can kick them out and hire expensive lawyers and bodyguards in case they tried to get back! HTOES! Hahaha!
So, it would seem to be enough to own gold and silver at times like these, capitalizing on a collapsing dollar suffering from a malignant, government-centric economy gorging on a multiplying money supply, thanks to the evil Federal Reserve creating the currency and credit and the idiot-savant Keynesian economists who erroneously think they can justify it all.
But with the East buying and hoarding gold by the hundreds of tons a year, with a reported 115 ounces of “paper gold” sold short for each ounce of physical gold, with the price of gold manipulated down, down, down to the rising cost of production, and with similar if not worse statistics for silver (which is in actual shortage, and the supply-deficit being temporarily filled with scrap), what else can one do except to buy gold and silver?
And when one does what one must do as regards buying gold and silver, what else can one say except to throw up one’s hands in excited jubilation and exultation, exclaiming, “Whee! This investing stuff is easy!”?
Ed. Note: After a brief hiatus, The Mogambo Guru has once again returned to the virtual pages of The Daily Reckoning to rail against the evils of the Federal Reserve and the ballooning debt obligations of the U.S. government. To make sure you hear it first, we suggest you sign up for the FREE Daily Reckoning email edition, right here.
Unfortunately, angry dimwits like me don’t make a lot of money with which to invest and be successful, all because the world is conspiring against us, everybody hates us, and we have crappy jobs. This does not mean that we are not also out to make a quick mega-fortune without working, so as to immediately retire to a long, glorious life of gluttonous-yet-overindulgent eccentricity.
So the task of learning to invest wisely the little money we make seems monumentally difficult. Stocks? Bonds? Cash? Who? What? Huh?
Admittedly, the seemingly Herculean task of understanding economics is made slightly more palatable by knowing that reading one book, namely Hazlitt’s Economics in One Lesson, is pretty much sufficient, or going to one fabulous free website, namely Mises.org where one learns the glories of the Austrian theory of economics, is plenty sufficient, too.
In a shameless plug, reading Economica Mogambo is an alternative, too. Although a lot less refined but a whole lot less coherent, Economica Mogambo contains mostly the same economic information, in one form or another, but cleverly and obscurely disguised as random gibberish and Stupid Mogambo Crap (SMC).
The stock market, the bond market and the housing markets are manipulated by the government, and it’s no secret.
Fortunately, why try at all? Elementary arithmetic shows conclusively that it is impossible for even a slim majority of investors to make a profit over the long term, and so with our luck we know we are screwed.
As for the impossibility of it all, I mean, where is the money going to come from if everybody gets back more than they invested? How could such a thing even be remotely possible?
In short, investing long-term is a known, provable loser for all but the financial services industry, the taxing government and a pathetically small minority of lucky investors.
In fact, I’m surprised that anyone invests money in stocks and bonds at all: Long-term inflation in prices is always higher than the long-term returns of any stock, bond or housing market, meaning that investors in these markets ALL had losses in real (inflation-adjusted) dollar terms.
So, we invest for the long term to make a loss in buying power? Huh? So I’m supposed to stop watching Gilligan’s Island on TV and instead read a book to get THOSE dismal results?
Perhaps this is why you are uneasy. Worried. Nerves on edge, vexed by the growing fear that you will spend your life in poverty and misery because you are trapped in a weird Limbo Of Stupidity (LOS) as concerns matters financial, as evidenced by never making enough money to start with, idiotically spending too much, and saving too little, and/or getting married and having kids, which makes EVERYTHING exponentially worse.
Perhaps to try and drown this dawning dread is why you drink too much liquor. Or maybe why your paranoia makes you pack so much raw firepower, but you are unwilling to give up either one despite knowing that armed drunks usually fare very badly on the 6 o’clock news, especially one with a belt-fed .30 caliber machinegun with a hair trigger and a laser-scope that really isn’t that useful when that baby starts kicking and bucking, making a hell of a racket, spewing out sheets of hot lead, shell cases raining down like hail, and you are yelling, “Yeehaw! I told you damned kids to get off my damned lawn!”
“But,” you tearfully ask, lips quivering, “what are the alternatives to stocks, bonds and real estate? You never hear of any! Tell us, Mighty Manly Mogambo (MMM)! What can I, personally, do to save my Big Fat Financial Butt (BFFB)?”
Worrying ABOUT your big butt is a lot better than worrying about how BIG your butt is, and so I know you are scared enough to be absolutely thrilled and delighted to know that (“May I have the envelope, please?”) gold, silver and oil are the top three on the Top Three Top-Rated Investments (TTTRI), as officially declared by the prestigious top-three investment-ratings firm, The Mogambo Institute of Top Three Investment Ratings (TMIOTTIR), a time-honored and completely honest and reliable financial-rating firm that I just made up, right here, on the spot, for some reason probably related to how I am Completely Freaked Out (CFO) about the whole situation, or as some pathetic plea for attention and respect that I don’t deserve and thus cannot get without making up outrageous lies like that.
But regardless of whether I am entirely rational or if the Mogambo Institute is just the start of another scam that will end badly with recriminations all around, the reality is that gold, silver and oil are Gigantic Freaking Bargains (GFBs), now that the horrid Federal Reserve is in its seventh years of pumping out more than a trillion new dollars a year, and central banks around the world are doing the same sad, silly, stupid, suicidal thing!
They are GFBs as the federal government is deficit-spending more than a trillion dollars a year, and has been for a decade!
Gold, silver and oil are GFBs now that the P/E of the Dow is at a pricey 20!
Now that the Total Outstanding Consumer Debt is higher than ever — higher than ever! — at $3.076 trillion!
Now that the selfsame Total Outstanding Consumer Debt is increasing at 7.1 percent, growing at the fastest pace in over five years!
Now that the national debt is beyond $17 trillion!
And especially now that so many, many, many gazillions of dollars in valuation have been lost in bonds, since bond prices fell 50% when the interest rate on the 10-year T-bill doubled from 1.5 percent (on 7/12/12) to 3 percent (on 12/26/13)! Poof! Half your investment is gone!
And, also “poof!” just like that, so too have the values of other bonds around the world similarly dived as interest rates have risen.
Breathless, I pause at the total horror of unfolding tragic economic events, my pulse racing, and my rat-like, beady, bloodshot eyes darting from side to side, seeing enemies and dangers everywhere.
I mean, normally, from just a casual reading of classical economics, one would have expected that the world would have fallen apart and collapsed in flames, people burning the evil Federal Reserve to the ground for causing all our problems by creating too much currency and credit, mobs rioting in the streets, reports of pizza and beer shortages fueling the growing social unrest, mayors and governors promising “quick action” on the beer and pizza shortages, and gold and silver soaring in price, but which are, individually and collectively, not.
Inquiring minds, as they say, want to know why.
The reason is simplicity itself: Now that all of everyone’s wealth is tied up in stocks, bonds and real estate, the government has a very keen vested interest in keeping these markets up, and their prices always rising.
Their reasoning is solid: That they figure that people losing most of everything they have would put a real damper on spending, while rising unadjusted asset values make them feel wealthier and, so the theory goes, spend more.
And they have the idiotic assurances of Keynesian knotheads that that will happen.
And with a $455 billion trade deficit, and lot of foreigner exporters want it, too.
And guess what? It probably will! And for longer than you think!
Let’s get real: The stock market, the bond market and the housing markets are manipulated by the government, and it’s no secret.
And nobody in their right mind remotely believes the government’s statistics on inflation, or employment, or anything else anymore.
However, what WAS a secret is the news that ALL things are now legally manipulated by the government! In the chilling words of Chris Powell, in an essay at King World News about a court case against manipulating corporate entities being thrown out, “By federal law, the Gold Exchange Act of 1934 specifically authorizes the US government to rig not only the gold market, but to rig any (financial) market surreptitiously through the Exchange Stabilization Fund. If the CFTC has discovered that market rigging is taking place because of US government policy, then according to law there is nothing to be done about it.”
Yikes! Rigging every market in the USA is now officially, as determined by an official federal judge in an actual case, to be perfectly legal because the federal government passed laws to make it legal!!!!
Keen-eyed Junior Mogambo Rangers (JMRs) quickly turn their attention to my use of four exclamation points as punctuation, which roughly translate as, “This is so bad that I think my heart has stopped beating, and I am pretty sure I piddled in my pants I’m so scared!”
An argument about style can be made that it should have been FIVE exclamation points to punctuate a sentence revealing a scam so horrifying, so un-American, so un-Constitutional, so sleazy and so slimy, so foully fraudulent and so criminally insane that it is guaranteed to destroy everything it touches because it touches everything.
But I took one exclamation point away because of the comforting protection of holding gold and silver, which by a happy coincidence are extremely cheap right now because gold and silver are the very things that the government is trying to suppress by keeping their prices artificially low!
And, of course, there is the inner peace and serenity of having enough lethal firepower to light up the sky for miles around.
Gold. Silver. Oil. Just put your little bit of money into three simple things. So simple.
So simple, and so guaranteed by 2,500 years of history, that one feels moved to say, as intelligent people often do, and so should you, too, “Whee! This investing stuff is easy!”
Ed. Note: This essay was featured in the Saturday edition of The Daily Reckoning. If you’re just reading it now, you already two days behind. Don’t let that happen again. Sign up for The Daily Reckoning, for FREE, right here, and make sure you get the full story before anyone else.
Snug and safe inside the silent and comforting Mogambo Big Boy Bunker (MBBB), I have a lot of spare time each day to work myself into a state of paranoid hysteria by thinking about the economic mess we are in.
Being a cynic of the first order (everything is corrupt and nothing can be done) and sensing imminent doom (We’re Freaking Doomed (WFD)!), it is not surprising to me that the evil Federal Reserve owns more than $3.5 trillion in Treasury debt, which is about 21 percent of ALL the nation’s $17 trillion debt.
As totally bizarre and horrifying as this “monetizing the debt” crap is, the damage has already been done.
Namely, the damage caused by all the newly created currency and credit, used to buy all the Treasury debt in the first place, has already long since flooded into the economy via government borrowing and spending the new money, inflating the money supply and causing horrifying inflation in prices.
Ergo, the national craze to increase the minimum wage.
Nevertheless, one cannot help but notice the way my handsomely rugged face is suddenly contorted into a fit of rage, or the way my manly biceps and bulging forearms flex in anger, or the way the blood vessels are popping in my brawny, muscular neck, or the way I am shamelessly lying through my teeth about all three of these things, to know that this is something important.
2,500 years of Earth history has shown that buying gold and silver bullion at a time like this is the only — only! — winning move.
And it is! The sheer existence of the debt on the books of the Federal Reserve is just the crucial “paper trail” of the treasonous crime of “monetizing the debt,” a sorry scheme which has — all the way through history! — shown to be not only ultimately catastrophic, but also, given the fact that this fact is well known, in fact, to everybody for more than a century, Completely Freaking Stupid (CFS). CFS!
So this evidence will come in real handy as glaring Exhibit A when the whole enchilada of the corrupt American government-centric economy, financed by a ridiculous Federal Reserve rapidly expanding a fiat currency, using outrageous degrees of fractional banking, falls completely apart in a blizzard of price increases impacting the things you need to live, like food, water and energy, but also terrifying price decreases in things you don’t, like stocks, bonds, vacation houses, retirement plans and labor.
Whereupon I, the brave and heroic Mogambo The Outraged (MTO), will be thrilled to be called to the witness stand, frantically elbowing my way through the frenzied, maddened crowds thirsting for blood and seeking revenge on the people who caused their misery, to happily and loudly testify against the monstrous Ben Bernanke, on trial for his treachery for this monetizing the debt thing, and verily will I thunder at him!
But I will thunder mostly at the horrid, satanic butthead Alan Greenspan, who is solely responsible for our economic mess, and I will thunder long and loud at him as The Great Monetary Satan (TGMS), over the repeated objections of the defense attorney, the judge, and even Randy, the avuncular bailiff, who will be struggling to drag me, kicking and screaming, off of the witness stand to stop me from bellowing ever-louder about the demonic Alan Greenspan (“Off with his head! Off with his head!”), the judge repeatedly banging his gavel, bang, bang, bang, and sternly saying, “Order! Order in the court!” Bang, bang, bang! Wow! What a scene!
But, as you are probably aware, that is then. This is now. Fortunately, the People Of The World (POTW) can already find this kind of evidentiary loudmouthed firebrand condemnation of the horrid Alan Greenspan and Ben Bernanke in that fine and fabulous book of Cosmically Timeless Mogambo Monetary And Investment Wisdom (CTMMAIW), the Economica Mogambo, available at Amazon.com, which makes a fine present to anyone who has ever wondered aloud about a general unease, a feeling of being freaking doomed, and who might want to know that he or she was right: We ARE freaking doomed!
And it is a wonderful book to find out who is responsible, but who cannot wait for the trials of Greenspan and Bernanke to officially find out: The wonderful book, Economica Mogambo, tells them who, how and why, and (best of all!) what to do about this catastrophe to capitalize on it.
To wit: The lesson of the last few thousands of years of government and money is to buy gold and silver when the government is acting suicidal and stupid, such as the current fad of allowing massive deficit-spending of newly-created fiat currency and credit.
The problem is debt. Chris Martensen, writing at Mises.org, notes that Total Credit Market Debt is now about $57 trillion. And what is the Total Credit Market Debt? He graciously defines it as “Total Credit Market Debt (TCMD) is a measure of all the various forms of debt in the U.S. That includes corporate, state, federal, and household borrowing. So student loans are in there, as are auto loans, mortgages, and municipal and federal debt. It’s pretty much everything debt-related. What it does not include, though, are any unfunded obligations, entitlements, or other types of liabilities. So the Social Security shortfalls are not in there, nor are the underfunded pensions at the state or corporate levels. TCMD is just debt, plain and simple.”
What he does NOT say is that total GDP is about $15 trillion, which means that collectively we owe almost four times as much as we make, in A Whole Freaking Year (WFY), as a whole freaking country! Unbelievable!
The problem is demonstrated by example. If you make $100 a year and you owe $100 at 5 percent interest, your interest payment is 5 percent of your income. Simple.
But if you make $100 and owe $400 at 5 percent, your interest payment is $20, or 20 percent (a fifth!), of your income!
And since preposterously-low interest rates are being held down by the manipulations of the evil Federal Reserve, when interest rates double, as they surely will, your interest payments will consume 40 percent of your income. And when they double again, as they surely will, they will consume 80 percent of your income! Just the interest payments!
Now, if your income (GDP) is $15 trillion and you owe $57 trillion at 5 percent interest, your interest payments alone consume almost 20 percent of your income. And what will happen when interest rates zoom because of all the inflation in prices caused by all of this creation of new currency and credit by the evil Federal Reserve? Yikes!
This, in case you are following my drift here, is Beyond Freaking Insane (BFI).
Luckily, we know what to do: 2,500 years of Earth history has shown that buying gold and silver bullion at a time like this is the only — only! — winning move. All others are losers. All!
And that is why I say, without fear of contradiction except from those stupid Earthling people who have not read their own economic history, and those who, as yet, refuse to recognize my Cosmic Mogambo Genius (CMG), even though Economica Mogambo is right there for sale at Amazon, and who still scoff (“Screw you, ya moron!”) at my helpful suggestion that they call me “Master” and grovel at my feet in whimpering supplication, “Whee! This investing stuff is easy!”
Ed. Note: For years, the Mogambo offered his timeless monetary and investment wisdom exclusively in The Daily Reckoning. And though his appearances have become less frequent, he has returned to The Daily Reckoning in full force, offering up his unique brand of commentary on everything from US debt to intergalactic politics. Don’t miss another Great Mogambo Missive (GMM). Sign up for The Daily Reckoning, for FREE, right here.