September 17, 2014
By:
The Mogambo Guru
For several weeks, the tragic soul of The Mogambo has been troubled by
subtle undertones in The Force, inexplicably using an old Star Wars
metaphor, which brings up the interesting question as to how a Jedi
light-saber would fare against a couple of belt-fed .50 caliber
machineguns at point-blank range.
Other than pondering those kinds of deeply philosophical questions, it was
the old “It’s quiet. Too quiet” kind of thing, where you are always
nervously looking over your shoulder, and seeing enemies lurking in every
shadow, every nerve on the razor’s edge. Trigger fingers twitching, too,
which is difficult to say five times quickly, which only proves the point.
For instance, I started sensing strange vibrations in what people were
saying, such as Paul Krugman, Janet Yellen and others, as concerns
monetary policy.
And when I call them up to demand an explanation, and maybe helpfully
explain how they are mere Earthling idiots who don’t know squat about
economics, they won’t take my calls!
I mean, I clearly tell the receptionist that I am the Fabulous Mogambo
Genius (FMG) on the line here, and I am calling to explain to them how
their whole idiotic Keynesian idea of Quantitative Easing has been a big,
fat, flatulent bust, and I want to find out what they are going to propose
to do next, as concerns monetary policy, and it better NOT be any more of
that stupid Quantitative Easing crap, as I am prepared to clearly and
loudly detail how they must be the biggest idiots in the whole world to
actually believe that the profound inflationary and bankrupting stupidity
of vastly increasing the money-supply (and thus vastly increasing debt),
and then committing that same incredible, suicidal folly over the
long-term, could possibly, highly-improbably, one chance-in-a-million, one
chance-in-a-zillion years, work!
But, alas, I never get through to anyone. Ever!
Even after I CLEARLY explained to
the receptionist who I am and exactly why I, the Fabulous Mogambo Genius
(FMG), am calling, so as to hopefully speed things along.
Even parsing their oily remarks through a Junior Mogambo Ranger Secret
Decoder Ring (JMRSDR) yielded, alas, nothing.
Thus, I am left exhausted and confused, with an increased sense of dread,
as actually befits the situation, but knowing little else about what’s
ahead, monetary-wise.
Nonetheless, I instinctively knew something BIG was up, as my furrowed
brow, exaggerated startle-reflex, and a frenzy of buying gold, silver, and
defensive armaments so colorfully indicated.
And, thinking about it, with your heart pounding, covered in a cold,
clammy sweat, you suddenly realize that, alarmingly, the only thing it
COULD be is a new, colossal attempt by the Federal Reserve and the
government to somehow, some miraculous way, some fabulous way, some
glorious deus ex machina way, please, please, please let this new version
of massive Quantitative Easing work, even though 2,500 years of global
economic history, a sad tale of one dirtball government after another
bankrupting itself, with or without creating paper money in its death
throes, proves that it can’t, and it won’t.
Of course, since I am the aforementioned Fabulous Mogambo Genius (FMG) of
story and song, I always knew that the ultimate fate of grotesquely
expanding the money supply to expand the size of government was to
inexorably have to, in one fashion or another, relive the infamous “bread
and circuses” policies of ancient Rome, the government desperately
placating the teeming, impoverished masses, suffering as they are from
rising prices, a large, oppressive government and abysmal living
conditions, by giving them food and entertainment, which is a disastrous
policy that always leads to Bad Bad Things (BBT).
So, was I more paranoid and cynical than usual, or was something actually,
you know, up. But what?
Who knew that it would be brought to my attention by Zerohedge.com, with
the chilling title “It Begins”?
When I saw it, I thought I heard banshees wailing, and ravenous
wolves howling in the distance, growing frightfully closer. Ever closer.
“It Begins”, I am sorry to say, is not the title of a terrific new horror
movie, a grand and glorious gore-fest of bloody, gun-happy shoot-‘em-up
action, fiery explosions, high-speed car chases and hordes of mutant
zombies who mostly look like beautiful lingerie models, only less clothed.
Instead, “It Begins” refers, even more horribly and tragically, to an
article in Foreign Affairs magazine, written by Mark Blyth and Eric
Lonergan, of the Council on Foreign Relations, which is spooky enough.
Unbelievably, the essence is “Print Less but Transfer More: Why Central
Banks Should Give Money Directly to the People.” Yikes!
To save you the trouble of rubbing your eyes in complete disbelief, it
goes on that “Rather than trying to spur private-sector spending through
asset purchases or interest-rate changes,
central banks, such as the Fed, should hand consumers cash directly.”
Giving cash away! It’s bread and circuses, alright, in spades!
“Here’s some money to buy your own
food and circus!” Wow!
The authors, who are so wrong about so many important things in the
article, are nonetheless absolutely right when they say “In the short
term, such cash transfers could jump-start the economy”!!!
The three concluding exclamation points were added by me, as a clever and
clearly dramatic emphasis, to make sure that you completely understood
that millions of consumers suddenly spending lots of new, free cash will
certainly make the economy go!! Wow! What a boom it would cause!
The most laughable part is when they said that giving people cash
“wouldn’t cause damaging inflation, and few doubt that they would work.
The only real question is why no government has tried them.” Hahahaha!
I told you they were wrong about some things, and here are three at once,
because, firstly, it certainly WOULD cause inflation, however you define
“damaging.”
And, contrary to the laughable conclusion of the authors, nobody doubts
that it would work! Nobody! Lots and lots of new money continually pouring
into an economy would NOT make a boom? Hahahaha!
And the reason that no government has tried it is because it is Stupid
Writ Large (SWL), as in “No government that tried giving away money to the
population lasted long enough to write it down.”
The authors thought they were so smart to anticipate the Disagreeable
Mogambo Naysayer (DMN) loudly objecting “Because terrifying inflation is
guaranteed to ensue, you morons, and poor people would be more and more
poor and starved, and they will all get testy about their kids crying from
hunger, and they can’t stay warm in the winter, or get out of the rain,
and everything goes downhill pretty fast when people are rioting in the
streets, and pretty soon you can’t get a good pizza anywhere within
miles.”
Instead of wincing and slinking away in shame at my cruel scorn, they
write, hilariously, “Other
critics warn that such helicopter drops could cause inflation.
The transfers, however, would be a flexible tool. Central bankers could
ramp them up whenever they saw fit and raise interest rates to offset any
inflationary effects.” Hahahahahahaha!
Central bankers could give away more and more cash “whenever they saw
fit,” and yet there will be some glorious time when the Fed sees “fit” to
stop giving away money and thus cause an economic slowdown, risking
asset-price deflation that is leveraged a 100-to-1? Hahahaha! As Monty
Python would say, “Pull the other one!”
And raising interest rates to somehow sterilize a tsunami of cash? I care
about interest rates when I am receiving more and more cash and price
inflation is roaring? Hahaha! I’m
busting a gut here!
But jocularity and complete stupidity aside, somebody must be expecting
some new income, as Chuck Butler of Everbank reports that “July Consumer
Credit (read debt) grew by $26 Billion, and June's number was revised
upward to $18.8 Billion from $17.2 Billion. But, $26 Billion!”
He, as well as I, characterizes it as “off the charts folks, as if 2008
never happened! What the heck is going on around here? Doesn't anyone ever
learn lessons?”
Dave Gonigam of the 5-Minute Forecast parses it down to “Of that total,
$5.4 billion came in credit cards -- a surge previously unseen during the
anemic ‘economic recovery’ these last five years.”
“Of the
remaining $20.6 billion, most of that was in auto loans, very little in
student loans.”
So do these people suddenly have jobs, explaining their spending spree?
No. In fact, ever fewer people have jobs.
And if you want some bad news on the employment front besides the usual
upsetting stories about high unemployment and how jobs are disappearing
faster than a pizza at a Super Bowl party, the booklet titled “Pocket
World in Figures,” from The Economist magazine, has a table titled
“Largest Manufacturing Output” which puts the United States at the top of
the list, at $1,771 billion.
This puts us a measly $14 billion ahead of China, which is bad enough, but
when you look at the next chart down the page, under “Largest Services
Output”, the United States is again number one, at $10,574 billion, while
the second place is held by Japan at a measly $3,904 billion, and China at
a distant $3,172 billion.
In short, five times as many U.S. workers are providing services as are
employed manufacturing something.
Probably has something to do with explaining our $40
billion-per-month trade deficit! Hahaha!
But lamenting the gaping trade deficit aside, it is this terrifying kind
of weird, economy-distorting “services” thing, and the bizarre thing about
giving money away to people, that will almost certainly lead to new fiscal
policy accommodating them both, since behavior that was once considered
idiotic, suicidal desperation, is now the only way out.
Probably connected with a new war, if history is any guide.
And when the government starts doling out all that luscious cash, and
calling it our patriotic duty to spend all this new cash, it’s party time!
Par-tay!
And if this “give money directly to people” thing plays out even vaguely
as proposed, then you will happily have some time left to accumulate lots
of gold and silver during the Big Monetary Party (BMP) that will surely
follow, and you will have some time to think and idly daydream of what
their prices will be at the calamitously inflationary end of the
aforementioned Big Monetary Party (BMP), when everything else is ashes and
heartache. Astronomic!
Whee! This investing stuff is easy!