Pizza to The People!
Richard Daughty
...the angriest guy in economics
The Mogambo
Guru
Archives
Jun 7, 2005
- It was a week of extraordinary
excess (WOEE) everywhere you looked in the shadowy world of modern
money. At least, that is the way that it looks to me, as I nervously
peer out of the periscope of the heavily-fortified Mogambo Bunker,
cowering in abject overpowering fear, and predictably crying
and whining about how I want my mommy to come and make everything
okay again.
First off, the Federal Reserve
has apparently started down the dismal path to economic hell
of Ultimate Money Debasement (UMD), namely the last-ditch desperation
move classically known as direct monetizing of debt. They have
now sunk so low that they are now engaging in the worst behavior
that a central bank can engage in, namely creating money to buy
government debt, which is commonly known as "monetizing"
the debt. It's not much this week, $2.4 billion, but it is a
lot all of a sudden.
In effect, the Federal Reserve
(which is, I hasten to point out, a private bank) creates money--
poof! --for itself and buys government debt with the money. It's
that simple! Magically, money has appeared out of nowhere! The
total, aggregate debt load has not, unfortunately, changed, but
the total amount of money sloshing around is greater!
If you keep a close eye on
your finances, you realize that you do not have more money. Likewise,
I do not have more money. So if YOU do not have more money (I
point to you) and I do not have more money (I point to myself)
then (audience shouts in unison) "Then who the hell DOES
have more money?"
The answer is, of course, that
the BANKS have more money! I know what you are thinking. "Wow!
What a racket, huh?" This brings us to today's timeless
gem from the Mogambo's Famous Treasure Trove of Valuable Lessons
In Life (MFTTOVLIL), and this lesson is that when you get a chance
to make a wish, maybe by wishing upon a star, or blowing out
the candles on your birthday cake, or rubbing a magic lamp and
a genie pops out or something, you should wish to own a country's
central bank. You can create money out of thin air, anytime you
want, and buy anything you want with it! Cool!
But, and notice how my voice
cracks pitifully as I pour out my despair, so much money has
already been created, so achingly much money, so damnably impossible
much money, has been created and borrowed. Reluctantly, I rise
up from my chair and stagger over and look out the window, and
I cry out in horror as I note that MORE money and credit are
STILL being created right now, every minute of every day, all
around the freaking world! And a lot of that the money is being
used to buy some of everything, sometimes a LOT of everything,
including stocks and bonds and houses and government, which drives
prices up. And when a bond goes up in price, then that automatically
means that the imputed yield goes down. Thus, interest rates
are low! It's as simple as that!
And so long-term rates, which
are most affected by market forces, have gone down, but short
rates, which are more affected by Fed actions, stayed up. The
difference in interest rates between the short and long terms
narrows, and thus the yield curve flattens.
Now, if long-term interest
rates keep falling and falling, and eventually fall below the
interest rate on short-term debt, you get the famous inverted
yield curve. That means you have achieved the absurd condition
where you are getting paid less money for loaning your money
for a longer term, and at higher risk! Hahahaha!
Of course, Alan Greenspan thinks
that this is not necessarily bad, according to Reuters, which
reported that the Federal Reserve chairman said that an inverted
yield curve was not necessarily an indicator of a recession these
days. He admitted that it USED to mean exactly that, back before
the Federal Reserve got into Permanent Liquidity Mode (PLM),
when he said, according to Reuters, "It's ... certainly
the case that history suggests that it's usually, or has been,
an indicator -- a forward indicator -- of softening economic
activity." See? He actually admits that an inverted yield
curve always has been an indicator of what he calls "softening
economic activity!"
He then he went on to say that
"I suspect, however, that we have changed the structure
of flow of funds and relationships amongst the various interest-rate
tranches by maturity such that I'm not sure what such a configuration,
should it occur, would mean."
You are going to be surprised
that I agree with him 100%. He is exactly right. Interest rates
are no longer the result of a tug-of-war between borrowers and
savers. There are no savers anymore. Savings have been replaced
by instant liquidity, as part of the Federal Reserve's new Permanent
Liquidity Mode (PLM) philosophy and practice. What the Federal
Reserve has done is to produce more "liquidity" all
the time, which gets borrowed by someone like you, although not
as good-looking as you, and the borrower (you) uses the money
to play the spread between different pieces of debt, in effect
borrowing money short-term at low rates, and lending the money
long-term at higher rates. You then pocket the difference! What
a racket, huh?
And when it comes time to make
a payment on that first loan, you merely saunter into a bank,
and borrow some more just-created "liquidity"! You
then use this second, bigger loan of instant liquidity to do
the interest-rate spread thing TWICE more; once to pay the interest
on the first loan, and the other one to provide some more pocket
money for yourself! Sweet!
And this can, theoretically,
go on, and on, and on, forever. So therefore the actual interest
rates are immaterial! The only important thing is that there
is a difference between short-term interest rates and long term
interest rates! That's it!
The only difficult thing is
that it takes massive amounts of leverage to make it worthwhile
when the yield curve is flat. Borrowing a million dollars at
4% to buy a bond that pays 4.0001%, resulting in a cash-flow
of a measly $100 a year, is hardly worth the trouble. But let
me leverage up, maybe putting up only $10 as my part of this
deal, and suddenly I have made ten times my initial investment!
I only put up ten stinking bucks and made a hundred! All it takes
is a bank that is willing to do it.
That, sadly, is how it is nowadays.
And to everyone who thinks that this can work out in the long
run, I say, "Look at my face to see my contempt for you,
and hear my mocking ridicule echo in your ears as I say hahahahaha!"
because, and you might want to write this down because it seems
to be some big secret or something, eventually the money gets
to be SO huge that it starts going into those things OTHER than
stocks, bonds, houses, and government, and they start showing
up as price inflation, and everybody gets all crazy, and it gets
worse and worse, and people are screaming bloody murder, and
the nightly news is full of people rioting because prices are
so high, and there is The Mogambo in the middle of it, screaming
louder than anybody, "Pizza to the people! Pizza to the
people!"
Or perhaps you would rather
listen to Eric Fry, of the Rude Awakening column, who writes,
"For starters, throughout the ages, bond yields and commodity
prices have tended to move up and down together not at
every single moment, but over long sweeps of time. Over the last
few years, however, bond yields have strayed from commodity prices
like an unfaithful spouse. But we expect this philanderer to
return home fairly soon, in which case, bond yields would rise."
Which means bond prices would fall, handing a lot of people some
hefty losses, losses so big that not even Superman could lift
it.
Stephen Roach, on the same
subject, writes
"Real interest rates -- both short and long -- are still
far too low for sustainable growth in the global economy and
for stable conditions in world financial markets. Yet central
banks -- especially America's -- have been reluctant to lead
the charge in normalizing the rate structure. The best we have
gotten from the Fed is a policy rate that has gone from negative
to zero in real terms over the past year. I continue to believe
this is ultimately a recipe for disaster."
Nevertheless, he reluctantly
acknowledges that "At some point over the next year, I wouldn't
be shocked to see yields on 10-year governments test 3.50% in
the US, 2.50% in Europe, and 1% in Japan."
Whew! After all that, and notice
how I am drained and winded from the ordeal, to make matters
even worse, the Treasury printed up and issued more actual dollars.
How much? I will wait until you are seated. Comfy? Okay, they
printed up, last week, another $6 billion in actual cash! Where
in the hell is $6 billion in cash going all of a sudden? I have
no idea, personally, but I am sure that it is due to government
corruption, and it also adds to the overall money supply, which
will, once again, cause just that little bit more inflation down
the road. It just never stops.
- And as another interesting
piece of trivia, foreign central banks bought up and stashed
at the Fed another $15.5 billion last week. Last week! This is
a huge chunk of buying in one gulp, maybe the biggest single-week
purchase in the history of foreigners buying US debt.
- On the web site FromTheWilderness.com
we read "It is easy to cast Dr Greenspan as the befuddled
'Mr. Magoo' leading America to economic and financial ruin. However,
such a denigration of this man's abilities is entirely misleading
and dangerously erroneous. The Fed has some of the finest financial
and economic brains on the planet." Personally, I say "Huh?"
Alan Greenspan and the other Federal Reserve knot heads are not
brilliant. They are merely clever, in that they managed to prove
something that is not true, exactly as Aristotle, Ptolemy and
many brilliant others all "proved" that the earth is
the center of the universe, and that the earth is flat. And let's
not forget all the brilliant doctors, who determined the exact
number of leeches that it takes to cure a fever. And how about
those guys who determined the exact number of angels that can
dance on the head of a pin? They were all clever, but none of
them were brilliant.
If Alan Greenspan and the rest
of those Federal Reserve morons WERE brilliant, they would have
immediately seen that the whole Keynesian, econometric idiocy
that they so ruthlessly champion is a real piece of ugly stupidity,
and that Mises and that whole Austrian crowd are exactly right.
As proof, the Austrians have proved, time and time again, that
Keynes was wrong, and yet, the idiot Keynesians have never disproved
a single idea of the Austrian Business Cycle Theory, which brings
into question whether they are even clever or not! And beyond
that, the economy is proceeding along exactly as Mises and the
Austrian-school economists have confidently predicted, whereas
the Federal Reserve has been so wrong, for so long, that they
have had to resort to constant, drastic, over-the-top measures!
Can it be any plainer than that? Sheesh!
But as long as people are taking
on debt, the question becomes "How much debt can an economy
take on?" The answer is usually something glib, maybe something
on the order of "Obviously not forever, there is a limit
how far into debt you can get." But is this actually true?
Perhaps there IS no limit to how much debt can be shouldered!
And so when the economy is faltering, a central bank can just
create money and credit like it is gushing out of a fire hose!
The crowd cheers! And thus the brave Federal Reserve struts around,
preening like they are hotshot heroes, courageously extinguishing
the destructive fires of stagnations, and deflations, and recessions,
and depressions, and all the other unimaginable suffering that
always accompanies the collapse of an economy, which collapses
because too much freaking money and too much freaking credit
were created during a previous boom. Can it always, always, always
pull this amazing trick off?
My standard answer is, "Hahahahaha!"
If it could happen, then everybody would have always been doing
it. And when they did try this silly crap, it always ended in
disaster, and THAT is why intelligent countries do NOT try it,
and actually take steps to make sure that nobody tries it. Until
now. Until Alan Greenspan.
Putting on my famous Mogambo
professor propeller beanie (a black mortarboard, with propeller
and tassel. Snazzy!) I explain that this means that there will
be inflation in prices. And sure enough, we have massive, roaring
inflation in four things. 1) stocks 2) bonds 3) houses and 4)
government. The prices of food and energy and all that basket
of stuff in the Consumer Price Index are not being impacted too
much. Although it should include, besides the staples of pizza
and beer, also other wildly popular things, like illegal drugs
and prostitution.
But you can't just call them
up and ask the Consumer Price Index people and ask them about
this serious omission. OhhHHhhh, nooOOOooo! For one thing, the
receptionist doesn't know how to even route my call, although
my question is a simple one about the substitution effect. Namely,
if one item increases in price or utility, to what degree will
the savvy consumer substitute a cheaper item? For example, if
steak increases in price but chicken does not, then you will,
according to the theory, buy more chicken and less steak. She
wants to know "What about the substitution effect do you
wish to know, sir?" So I tell her "I want to know the
calculus of the substitution effect if a fruit or a vegetable
is used as a sexual aid. Namely, do you add an amount for the
increased utility to the price of the said fruit (Exhibit A)
or vegetable (Exhibit B), or is it a subtraction from the price
of other similar sexual aids, except that that they have batteries
and go buzzzzzzz?" Well, she starts stammering and gets
all huffy, and while she is screaming for her supervisor, there
was a knock at the door, and it was the guy with the pizza. I
instinctively knew I had to make a choice: either to stay on
the line , or answer the door and take a short flight to what
I call Mogambo's Heavenly Pizza Place (MHPP) where you eat delicious
pizza, and all the other members of your family are stuffing
pizza into their faces so fast that nobody is running their fat
yaps or screaming death threats at me, and the sudden silence
is wonderful.
Well, it doesn't take a scholar
in the Mogambo Scout Handbook (MSH) to know my decision and how
I reached it. And to make sure that the pizza was not poisoned,
I made him eat a piece, and it was real hot, and he burned his
mouth, and he starts hollering and getting all fussy like it
is MY fault or something! I mean, I just took a load of that
kind of crap on the phone, and now I gotta take another heaping
helping of it from the pizza delivery guy? I mean, I can't win
here!
Anyway, after lunch I called
back later and this time I asked a different question, and this
time I politely ask, in that charming way that I have that even
has a name of its own, The Mogambo Charming Way Of Being Charming
(TMCWOBC), "Concerning the substitution effect in pet ownership.
If you have sex with your dog, what is the calculus of the substitution
effect vis a vis money spent on hookers? And if I get mugged
on the street, and I get even meaner and unpleasant and unhappy
than I am, how is that reflected in the Consumer Price Index?"
I ask these things not because
I am a childish little pervert (even though I am), but because
you are going to see more and more of these kinds of things,
as desperate people start resorting to desperate measures.
- Speaking of the prices of
things, Paul Kasriel of Northern Trust now
weighs in with his timely observations about the prices of
things. "A basket of consumer goods that cost $100 to buy
in 1921 cost over $1000 to buy in 2004. The slope of CPI steepened
dramatically starting in the second half of the 1960s. That's
when our guns and butter fiscal policies started. The U.S. abandoned
convertibility of the dollar into gold in August 1971. It is
interesting, and I don't think coincidental, that the highest
10-year compound annual rate of growth in the CPI, 8.7%, occurred
in the 10 years following the severing of the U.S. dollar - gold
link.
"The CPI marches inexorably
higher and higher," he writes, "meaning that it takes
more and more dollars to buy the CPI basket of goods and services.
Does it take more and more ounces of gold to buy the CPI basket?
No. In 2004, it took 2.58 ounces of gold to buy the CPI basket
- about the same as it took in 1997, 1976 and 1973. It also took
about the same number of ounces of gold to buy the CPI basket
in 2004 as it did in 1942. The CPI in 2004 was 1059 percent higher
than it was in 1942!"
And it is not just the CPI
basket that has been protected by gold. From the Liberty Dollar
people we get an email that asks, "So I wondered what the
actual statistics were of gold vs. interest from a bank saving
account." They asked Jim Davidson of The Indomitus Report
for his opinion, who replied, "Gold has out-performed traditional
bank savings accounts available in the USA by 844% since 1999.
In other words, $1000 invested in gold on 21 May 1999 would have
appreciated in value by 53.15% by 22 May 2005 whereas the same
amount placed in a passbook savings account would have grown
by just 6.3% assuming monthly compound interest. Over the past
five years, gold has been more than eight times better for the
average American than interest from a Federal Reserve bank. "
So what is the upshot of all
of this? Mr. Kasriel goes on to explain "Despite establishment
assertions that the dollar is 'sound,' investors should prepare
for further declines in the value of the dollar and plan their
investments accordingly. History shows that no government, after
going on a fiat monetary system, ever reverses course until its
paper currency is destroyed. There is no reason to believe this
time will be any different."
And since there is, as he says,
no reason to believe that this time will be any different, where
was money made all the OTHER times in history when paper, fiat
currencies destroyed themselves? But since you are the clever
grasshopper that has transcended into my chi, you saw that I
was going to use this as a perfect segue into a recommendation
to own gold. I am proud of you, young one!
Another guy who is not enamored
of fiat currency is Bill Haynes, whose
essay, "Abandoned Gold Standard Guarantees Inflation",
appears on on LewRockwell.com. "In the 34 years before Nixon
closed the gold window," he writes, "the money supply
in the U.S. grew less than two fold. In the 34 years after Nixon's
action, the money supply expanded 13 fold. The Fed's massive
inflation of the 1990s resulted in the greatest advance in stock
market history. Continued inflation is now pushing housing prices
to record levels. Automobiles now cost more than houses did only
thirty years ago."
- From Bloomberg we also learn
that some people never, ever learn, as evidenced by the blurb
that "New Jersey's pension, with a shortfall estimated at
$25 billion or more by state officials, plans to put money into
investments such as real estate and hedge funds under rules approved
yesterday by the retirement fund's board." - As an illustration
of the absurdity of central banking, one need look no further
than the Bank of Korea's governor Park Seung in a speech hosted
by his boss, the Bank of Korea. He put his gigantic brain to
the task, and after a lot of grunting and groaning from the effort,
called for more socialism, which he characterized as some wonderful
global, coordinated, concerted action to correct the US trade
and fiscal deficits, which he says are "symptomatic of imbalances
in the international economy." Well, duh!
He goes on to say, 'There are
limits in resolving trade imbalances through foreign exchange
rate adjustment alone. In this light, we should broaden international
cooperation for structural restructuring among nations."
Huh? Structural restructuring? Did he really say "structural
restructuring?" What in the hell is THAT? Now, for those
of you who are familiar with The Mogambo, either personally or
by having looked through voluminous case files and court records,
knows I am not the brightest star shining in the intellectual
firmament, although I pretend to be, in haughty defiance of all
the accumulated evidence to the contrary.
But I am sensing, deep down
in that part of the brain stem that is concerned with self-preservation,
that when one really looks at "structural restructuring"
what he means is Schumpeter's "creative destruction."
In this case, they create, we get destroyed.
- The Organization for Economic
Cooperation and Development (OECD) is warning that the U.S. current
account deficit will hit $900 billion or 6.7 percent of U.S.
gross domestic product in 2006. This is a new world record for
a country that has not imploded on itself by this time. The trade
deficit is now over $700 billion a year. Stay tuned.
Stephen Roach of Morgan Stanley
doesn't want to wait, and says "What worries me the most
in this regard is the coming US current account adjustment. History
is devoid of examples where external adjustments are not accompanied
by falling currencies and rising real interest rates. The logic
of portfolio diversification suggested the day of reckoning was
likely to come sooner rather than later."
- A reader of Rick Ackerman
writes
to suggest a good future career option for the legions of
new real estate agents. "The future" he writes, "(is)
in foreclosures, not the origination business."
- It is apparently part of
come weird mental illness that compels me to criticize Alan Greenspan
at every opportunity, and here I am doing it again. Recently
he made a comment that only the last people to buy a house at
these high prices would get hurt in a downturn in real estate.
Nobody laughed at him. That shows you what a boob he is, and
what boobs his audiences are. For one thing, the boom in real
estate has caused the assessed value of my house to rise right
along with it, and now my taxes are much higher. So I am getting
hurt right now.
Further, the people who are
now paying most of their incomes on these houses are not enjoying
the consumption of other things. So, unless their satisfaction
with their bigger house is also bigger, thus getting more satisfaction
in return for the higher price, then they are suffering a fall
in their standard of living. So they are getting hurt, too.
And rents will probably rise,
so everybody who rents gets hurt all along the way. So for Greenspan
to say that only the last buyers get hurt in a housing bubble
shows what a jackass jerkwad he really, really is.
- Paul Kasriel and and Asha
Bangalore of Northern Trust have noticed that the Chinese pay
no attention to The Mogambo, so they are taking up my cry. They write, "I
will add to the unsolicited advice - anchor the renminbi to gold.
The Chinese monetary authorities give stability as one rationalization
for pegging the renminbi to the U.S. dollar. But is the dollar
a stable anchor? Would anchoring a currency to gold provide longer-run
price stability? That is, would anchoring a currency to gold
preserve the purchasing power of that currency? The sum and substance
of all this is that anchoring the renminbi to the dollar is a
recipe for Chinese inflation. Anchoring the renminbi to gold
is a recipe for long-run price stability."
- Chris G. has an idea on how
to get legislators on the anti-inflation bandwagon. He writes
"We permitted our lawmakers to award themselves and others
of their ilk (bureaucrats and judges) pensions that are indexed
to inflation. This, of course, should never have been permitted,
because now they do not care about inflation. They have been
immunized. Remove the indexing, and I suspect we would see a
very different approach to their management of the economy. The
rest of us must not only suffer from the ravages of the disease
of inflation without access to their vaccine, but we have to
pay for their lousy #%@#*&^ indexed pensions with our disappearing
money! And even when they go on to prove themselves to be utterly
corrupt (as our federal government just has), we raise not a
whimper - when what is clearly called for are barricades, storming
the walls of parliament, and summary executions!" Then he
asks "How do you remain so calm?" Answer: silver, gold.
oil and large-caliber weapons.
- The U.S. Department of Labor
has issued its latest calculation of productivity, which is the
measure of output per hour of workers, for the first quarter
of 2005. They report that the revised seasonally adjusted annual
rates of productivity change in the first quarter were: 2.6 percent
in the business sector, 2.9 percent in the nonfarm business sector,
4.4% in manufacturing."
This is also a measure of is
how much businesses are able to get rid of employees, since the
ones that they don't fire are able to produce as much or more.
George Ure of UrbanSurvival perhaps says it best when he writes,
"Government statistics on productivity are a lot like the
government trying to figure out how fast a car is going by reporting
how many speedometers have been sold, how big the new speedometers
are, and similar nonsense. Remember, higher productivity can
mean fewer jobs, everything else being equal."
Doug Noland has also taken
a look at them, and says "More remarkable, however, were
the much larger revisions to the growth of hourly compensation
and unit labor costs Unit labor costs were revised to a 3.3%
rate in the first quarter from 2.2%... Moreover, when the revised
data are viewed over a longer time, the emergence of a worrisome
- and sudden - inflationary trend emerges. Through all of 2001,
unit labor costs only rose by 0.3%, in 2002 these costs fell
by 0.6%, while during 2003 they edged 0.1% lower In the third
quarter of last year, however, it moved into positive territory
with a 1.5% increase, a 3.0% rise in the fourth quarter and in
the first quarter, the rate was 4.3% above the level in the first
quarter of 2004." And if there is one thing that you can
say about rising labor costs, it is that they eventually show
up in higher wholesale prices, which will later show up as increases
in retail prices, which is where you and I come into the picture,
and which is the part of inflation that is so ugly.
- Speaking of jobs, the initial
claims for unemployment increased by 25,000 last week to 350,000,
according to the Labor Department. Oops!
But before you go crazy at
this huge increase in people losing their jobs, a Labor Department
wonk said "A part of the increase you are seeing is attributable
to temporary layoffs in the auto industry,'' and these layoffs
accounted for, according to him, "a significant portion''
of the rise in the number of filings. I am sure that the people
laid off from the auto industry feel a lot better knowing that!
But remember when the last
employment report showed a gain of 78,000 jobs? Well, that gain
was produced by assuming that there were 207,000 other jobs created.
Without them, the report would have showed that 129,000 jobs
were lost! Hahaha! Thank goodness for the birth/death model,
eh?
- Everyone seems to think that
France's rejection of the European Constitution means something
bad for the euro. Maybe. But what it means to me is that people
will have more money in their pockets to spend, now that they
don't have to pony up billions of euros, more and more every
year, to build the socialist structure and infrastructure to
house another huge trans-Europe layer of government, that is
going to want to spend more and more every year, sending money
to those who "need" it And now, since the European
Constitution is dead, they can keep their money. So the euro
should, under those circumstances, get stronger, right?
- Speaking of gold, the gold
lease rates are high. This usually indicates a coming rise in
gold. But the nominal rates are dropping from recent highs, which
usually augurs a coming drop in the price of gold. Who the hell
knows?
- For those who think that
real estate is the fast lane to riches, Bill Bonner of the DailyReckoning.com
is here to burst your bubble, no pun intended. "Prices of
American residential real estate, in real terms, are up 66% over
the last 114 years. But all the increases happened in just two
brief periods: right after WWII and since 1998. Other than those
two periods, the real price of housing was either flat or falling."
And there is even more. "The
big difference between the period following WWII and the present
era was that back then the U.S. economy was growing and healthy",
whereas. America had not only the biggest trade surpluses in
the world, but wages were going up." Do you STILL think
that houses will continue to go up in price? Hahahaha! What an
optimist!
Well, maybe. Axel Merk, of
the Merk Hard Currency Fund, writes
that house prices may continue to climb as the Fed continues
its monetary extravagance. "We have long argued that the
U.S. economy is too leveraged to allow the Fed to aggressively
raise rates to curb the housing bubble and inflation that is
creeping through the supply chain. Any forceful action would
cause the housing bubble to collapse and throw the economy into
a severe recession. For now, it looks like the Fed opts for continued
growth rather than correcting imbalances. Inflation that has
been creeping up will be fostered and entrenched in more and
more sectors of the economy."
And that is my bet, too. The
Fed will not fight inflation. The Fed now wants to (and I still
can't believe that this is happening), foster inflation, which
they will translate, somehow, as growth.
Without even acknowledging
my addition to his comments, he continues "In the meantime,
the yield curve is flattening. On the one hand, we have a slowing
economy; on the other hand, we have an accommodating monetary
policy that has contributed to numerous capital misallocations
('bubbles' in modern parlance). As long as the Fed is artificially
boosting the economy, we are setting ourselves up for an ever
more severe adjustment process when it does happen."
- I see where General Motors
is planning to lay off 25,000 people over the next few years.
Again, the little worker-bees are paying for the gross stupidity
and mismanagement by the executives at GM, all of whom are obviously
making more than they are worth, which is zero. You can get this
kind of bad management by hiring The Mogambo as a big shot executive,
who is willing to work real cheap because I am stupid and incompetent.
So attention GM shareholders! If you want to have your debt downgraded
to junk, the shares of the company to lose value, the shuttering
of whole plants, ruining the lives of thousands of people, then
hire me to run GM! No wonder Kirk Kerkorian wants to buy the
company; if it is doing this well with management this bad, one
can only salivate at the prospect of what the company can do
with even marginally competent management!
- Mark Fadiman on FreeMarketNews.com
did a Google search to see how the popularity contest between
the horrible Keynes and the fabulous Mises shapes up. The news
is very, very good. He writes that "The score is Ludwig
Von Mises 357,000 and John Maynard Keynes 326,000." Perhaps
waxing enthusiastic and philosophical, he goes on to say "Ironically,
this historic intellectual shift is not being documented by an
increasingly paralyzed Big Media. But it is, perhaps, the first
and greatest story of the 21st century." Man,
that WOULD be good news!
- To show you another area
where inflation is running rampant, thanks to all of this creation
of money and credit by the Federal Reserve, a Bloomberg report
by Kerry Dooley Young reports that "About 1.3 million adults
in the U.S. lose their employer-sponsored health insurance with
each 10 percent average rise in premiums, according to a study
from the University of California, Berkeley. Companies have been
shifting a bigger portion of insurance costs to employees The
average employee contribution for a family insurance plan last
year rose to $3,156, or 32 percent of the total cost, from $1,670,
or 25 percent, in 2000." This means that the average employee
is now paying, $1,486 MORE per year, or, $123.83 per month MORE.
And even at that, it is it less than a third of the total cost!
Meaning that the annual health insurance bill is $10,800 per
employee! You want inflation? I'll SHOW you inflation!
And when they drop their health
insurance, then their healthcare costs which they can't possibly
pay, will be stuck onto the bills of everybody else, which will
make our price inflation in our premiums even worse, which makes
more people drop their coverage, and then their healthcare costs,
which they can't possibly pay, on and on and on.
Ugh.
***The Mogambo Sez: All the weird, dysfunctional things
that make me recommend buying gold are getting more and more
weird and dysfunctional.
Richard Daughty
email: RichardSmithGroup@verizon.net
Daughty
Archives
Provided as a courtesy of Agora Publishing and The
Daily Reckoning
Richard Daughty
is general partner and C.O.O. for Smith Consultant Group, serving
the financial and medical communities, and the writer/publisher
of the Mogambo Guru economic newsletter, an avocational exercise
the better to heap disrespect on those who desperately deserve
it. The Mogambo Guru is quoted frequently in Barron's, The
Daily Reckoning
and other fine publications.
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