Slavering Wolves Of Inflation
May 8, 2014
By:
The Mogambo Guru
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!
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!