Situations That Cannot Last
Richard Daughty
The Daily
Reckoning
...the angriest guy in economics
The Mogambo
Guru
Archives
December 16, 2004
- The end-of-year monetary
and fiscal madness is taking me by surprise again, as every year
I think that it would be too embarrassing for the Federal Reserve
to have to admit their failure, and thus be "forced"
to act so irresponsibly. Now they have to, once again, resort
to such shameless and irresponsible behavior, as they have been
bigger failures this year than last.
Remember, we are, and have been for a long, long time, in a bizarre
era of government people thinking they can "manage"
the economy and everything IN the damned economy. The Congress,
the Federal Reserve, and the local governments have all been
busy, busy little beavers, either authorizing the legality of
the latest scheme, or providing the financing for those schemes,
and everybody eating the profits of those schemes, to the cost
of impoverishing the citizens, either by taxing them directly,
or by devaluing the currency (which shows up as price inflation),
which leads to wage increases by government employees, who are
now allowed to collectively bargain, and so the guys on the other
side of the bargaining table is another group of government employees,
so you know how those negotiations work out!
Sure enough, around here, the latest "bare-knuckles"
labor contract negotiations with the police unions resulted in
three-year police officer's salary increases of 4% this year,
5.5% next year, and 5.5% the third year! Unfortunately, wage
increases for the ordinary taxpayers have been much, much lower
than that. So the net result is an impoverishment in the taxpaying
citizenry, and a higher-paid police force.
It's not that they probably don't deserve the money, because
I have seen the TV show "Cops" enough to know that
dealing with the low-IQ, horse's-ass, gutter-dwelling idiot segment
of the American population is NOT something I want to do, and
if you wanted the cowardly Mogambo to do the police's job you
would have to pay me a HELL of a lot more than some stinking
$45,000 or so (the newspaper article only mentioned the starting
salaries of about $36,000, and of course did not mention the
rest of the wage scale, which is obviously significantly higher).
But as for economics, it is bad, bad policy, and will have an
effect on the economy, and it will almost certainly not be good,
as I have never, ever read where it is a good thing to be increasing
the salaries of government employees when the general population
is not seeing their wages and salaries going up, although the
latest statistic is that aggregate wages and salaries are going
up by 2.6%. But when you strip out the wage and salary increases
being granted to government employees (one out of every seven
workers), this means that the rest of us are not seeing squat,
as far as fatter paychecks is concerned. Government employees
making more money than the rest of the taxpayers is one of those
Situations That Cannot Last (STCL).
In a related vein, nonfarm payrolls are still down from where
they were in 2002, but government payrolls have gone up 2.4%
in that time. So government grew in size, and everybody else
shrank. This is another of those famous Situations That Cannot
Last (STCL).
Even Kurt Richebächer is taking a look at this crap, and
says "We come to the worst part of the poor U.S. employment
performance: the dismal growth of aggregate wage and salary income.
Wage rates have continued to rise, but taking job losses, shorter
working hours, a considerable shift from high-paying manufacturing
jobs into low-paying temp work in services and rising inflation
rates into account, overall wage and salary income in real terms
remains below its December 2000 level."
But the whole point is that the stinking Federal Reserve is still
pulling out all the stops, and is creating money at a suicidal
clip. Doug Noland, who has a particular fetish about this, as
do I, and I therefore thank Mr. Noland for having it, because
that means that there are now at least TWO of us out here who
are mesmerized by it, "Bank Credit has expanded $517.1 billion
during the first 48 weeks of the year, or 8.9% annualized."
- The results of the recent G-7 or G-8 or G-20, or whatever they
are calling it these days, is becoming clear. They ate well,
they had a few parties, told a few jokes, and decided to continue
their present moronic course, the same one that got us into all
this trouble, and those kindly foreigners will continue subsidizing
us through the Christmas season at least. But it subsidizes them
and their filthy inflationist agenda, too, as they create money
via their own central banks to buy the dollars to buy the US
debt. And true to their word, foreign custody holdings at the
Fed expanded by $6.6 billion, which is not a new record in terms
of one week, but it IS a new record, in terms of total, globulistic,
gigantic globs of US debt that they are saddling their citizens
with.
- Consumer installment debt jumped again, and is now on track
to break the $2.1 trillion mark next month. In December 2001,
it was about $1.6 trillion. A decade ago it was a mere $900 billion.
The Fed's Flow of Funds report showed, according to the Wall
Street Journal, that "U.S. household debt grew at an annual
rate of 9.1% in the third quarter, up from 8.5% in the second
quarter." Going into deeper debt at a rate that equals 9.1%
of total debt, accumulated over decades! It just doesn't get
weirder than that!
- I saw Abby Joseph Cohen on TV, and I am sure that I
got a few more demerits on Santa's "Naughty or Nice"
list from the terrible things I said about her, although she
was on TV, but you could tell by the look on her face that she
knew The Mogambo was out here bad-mouthing her. She says that
the 30% drop in the dollar makes our stocks and bonds more attractive,
since foreigners with nice, strong currencies can buy them for
a lower price, in terms of their own currencies! What a selling
point! "Crud for sale! Crud for sale! Hey! Buddy! Come over
here! Buy this bucket of crud for a dollar! It was two dollars
last week, so it is a real bargain today!"
On the one hand, she is exactly right. Our stocks and bonds ARE
cheaper at this exact moment, if they buy dollars with their
own money with which to buy the stocks and bonds. But you let
the dollar drop some more, and suddenly you have people calling
Ms. Cohen on the phone and calling her lots of very rude names,
sort of like the caustic comments that The Mogambo sends winging
her way every time I happen to see her running her fat mouth.
But she is right, in that at this exact, instantaneous moment,
they are indeed cheaper to new buyers.
But on the other hand, guys who were ALREADY sitting on US assets
have watched in horror as the value of their holdings has dropped
by 30% just on currency translations alone! So how anxious are
they to pick up MORE assets denominated in dollars? And do these
two groups of people know each other?
Now you know as well as any American who has been privileged
to get an American education in an American school, all foreigners
are a dumb bunch of dirty, smelly people who aren't very smart
and don't speak English, and who do everything comically wrong,
and then we brave Americans have to go and save them. So maybe
Ms. Cohen is right: maybe they WILL ignore their losses, and
ignore the certainty of a declining dollar, and they will continue
to act like idiots, and buy more US assets! Hey! It could happen!
- Reader Robert M. liked my new national holiday, Mogambo Day.
He writes, "I think I could catch the spirit of a Mogambo
Day! We could drink & drive, shoot guns, buy precious metals
at a discount, etc." Now you're talking! Originally, I was
thinking along the lines of a combination of my birthday, Father's
Day, a little Christmas good cheer thrown in, maybe a dash of
Thanksgiving for the gluttony, etc. But Robert may be on to something
here! Especially that part about buying precious metals at a
discount. "The gift that keeps on giving!
Speaking of buying precious metals at a discount, I got a press
release from the American Liberty Dollar people, and they are
announcing that the "slot" is set to double. In short,
up to now they have been issuing the one-ounce, .999 silver $10
Liberty Dollars, and storekeepers and retailers have been, so
they say, happily accepting them when people use them to buy
things. But now that silver is getting to be so expensive, thanks
to the debasement of our legal tender by the jerks mismanaging
our government, they obviously cannot continue issuing a full
ounce silver, umm "medallion" (they really hate it
when you use the word "coin," as I found out when
1) they told me so when I used the word in casual conversation
and 2) that same night somebody knocked over my garbage cans.
Coincidence? Perhaps. But I wonder) and denominating the it as
"Ten Dollars." So, they have to raise the face value
to some higher number. Thus, the press release: They are on the
cusp of issuing the same one-ounce of silver as the $20 Liberty
Dollar.
Holders of old $10-base money can now turn in one dollar for,
and hold onto your hats because mine flew up in the air when
I read this, two dollars. But imagine that! Money in your pocket
that actually goes UP in value, instead of having paper dollars
in your pocket that continually go DOWN in value! Last night
you went to bed with $10 of buying power, and this morning you
wake up with $20! Ahhh! The glories of real, hard money!
Their aim is laudable, even noble, and I am sure that the Founding
Fathers would be proud of them, as they want nothing more than
to get the USA back on real silver money, and thus save our country
from the guarantee of economic ruination that comes from having
something as preposterous as fiat currency, especially when coupled
with a fractional reserve banking system. And they are doing
it, as they say, "one dollar at a time."
I will not take you down the long, long list of reasons why this
would be a very, very good thing, as all you have to do is get
up and walk over to your window and see the result of NOT having
money that is, as the Constitution requires, made "only
of silver and gold" and when you get back from looking out
of the window at the huge, suffocating, bankrupting economic
problems that we have, you will have page after page after page
of very good reasons why this would be a good thing. And then
perhaps you will also get an inkling of why America became the
world's economic powerhouse, up from nothing, when our money
WAS made of silver and gold.
And if this was not enough, you can buy the new $20 Liberty Dollars
at a discount! At a big premium to the silver content, to be
sure, but you spend them as twenty dollars of buying power, and
are not investment in silver. Ergo, you get a discount on everything
you buy with them, every time you spend one! It costs twelve
or so bucks for one of these $20 Liberty dollars, and then you
get to use them like a $20-dollar bill? I know what you are thinking,
because my little brain was spinning, too, and since my brain
is so much smaller than YOUR big powerhouse brain, you can imagine
how adversely I was affected. So, in my incredulity, I actually
talked with Bernard NotHaus, who is one of the founding big shots
at LibertyDollar.org, and he was real nice to my face and all,
but I can only imagine the nasty things he is saying about me
behind my back. But we seem to have confirmed that however screwed
up my medications are, and although my words are slurred, I seem
to mumble incessantly, and I am simultaneously listening to strange
voices in my head, I haven't screwed up the basics of the deal
too much.
But this demonstrates the power of silver (commodity) money;
it has a tendency to get stronger, whereas paper money always
gets weaker and weaker, just like now.
Along the same lines, Bob Hoye of Institutional Advisors, in
an essay entitled "Princely Finance and Taxation",
writes, "Fortunately, history indicates that the public
will eventually figure out that no matter how beguiling the claims
about currency management and taxation are, the gambit has been
mainly to confiscate private savings. They will then demand the
return of sound money and accountable government."
And he is exactly right, although they usually "demand the
return of sound money and accountable government" only AFTER
the whole shebang goes ker-flooey and there has been a lot of
hollering and screaming and whining and threatening, and the
government has done shameless, crazy and confiscatory things,
and everybody is angry and bankrupted and scared and there are
enemies knocking down the gates.
- Speaking of precious metals, Richard Russell, of Dow Theory
Letter fame, writes, "I get e-mails every day asking 'How
much gold should I own?' The government's propaganda has been
going on so long that they've got innocent people content to
sit with fiat dollars, but afraid to own 'too much' gold. Nobody
sends me e-mails asking 'How many dollars should I own?'"
Hahahaha!
But we listen to Richard Russell for more than witty anecdotes
that make us laugh. Knowing this, he goes on to give us a little
of that Dow Theory, and writes "I've been saying that there
won't be any trouble until the bonds tell us there is. So saying,
let's look at an updated chart of the bellwether 10-year T-note.
Here we see a chart of the perfect two-headed 'head-and-shoulders
top.' And if you are at all hip to elementary technical analysis,
then you are acutely aware that there are usually significant
ramifications to a "head-and-shoulders" top, which
is why the call it a "top."
- "The Porsche Syndrome" is an essay by Randy Buss
of Der Invest Informant. "I call it the Porsche Syndrome.
Where one who is intent on killing himself (The Fed) decides
to at least 'go out in style' and takes the 911 turbo up to 10,000
rpm into a brick wall - that certainly seems to be the US' fiscal
model."
The clever wags at Daily Reckoning have such a literary way of
saying things, and in commenting on Alan Greenspan and the Fed,
they write, "And who can blame Mr. Greenspan? Did not he
do the smart thing, too? He got a chance to play a role that
the world wanted him to play - a central banker so shrewd he
could make sure everyone got something for nothing... an economist
so savvy he could come up with a short term lending rate better
than the one that buyers and sellers of credit would choose on
their own. The world wanted to be deceived; Mr. Greenspan gave
it a great performance. Hocus-pocus, mumbo-jumbo, folderol and
voodoo - the Fed chief used every technique known to modern economics
and ancient legerdemain!"
Okay, then we get to the crux of the whole thing. They conclude
"But what will we really get from Mr. Greenspan's sparkling
performance? Something for nothing? Or nothing for something?
We are on the edge of our chairs."
Fabulous! I love that underlying sarcasm! "Will we get something
for nothing?" they ask, all wide-eyed innocence. Hahahaha!
What humor! "Will we get something for nothing?" Hahaha!
Stop! Stop! I am laughing so hard my sides hurt! Hahaha! Please
stop!
And that crack about being on the edge of their chairs is so
deliciously rude, so disrespectful, so perfect, that I wish I
had thought of it myself and as soon as nobody is looking, I
am going to say that I DID think of it!
- John Snow must need money badly, and to tell you truth I was
not aware that the position of U.S. Secretary of the Treasury
paid that much. He wanted a job that literally nobody else wanted,
and because of the insurmountable problems, people who were approached
about taking the position actually ran away in fear. Then, suddenly,
when it becomes clear that nobody would take the job, he gets
an offer from the White House to stay on the job. If not for
the money, why did he accept a job that has such a guarantee
of failure?
- "A Specter Is Haunting Liberalism" is an interesting
essay by Joe Sobran. "How did the government manage to grow
out of control this way?" he asks. "Simple, really.
It has successfully claimed the final authority to interpret
the Constitution. Everyone seems to have forgotten Jefferson's
warning that if the Federal Government is allowed to decide the
extent of its own powers, there is no reason to have a written
constitution at all. That government will just take what it pleases,
insisting that all its power grabs are licit."
And the culprits are, of course, the boneheads of the Supreme
Court, who ruled, time after time in case after case, that the
federal government could do all these things, and Mr. Sobran
actually points out a few of the infamous Leftist weird-o's who
stunk up the Supreme Court, such as buttheads like Earl Warren,
William Brennan, and Thurgood Marshall.
Thus is the same Supreme Court system of corrupt, gutless cowards
who let FDR put us on the path of the destruction of our economy,
by making money of something OTHER than the required silver and
gold, as freaking required by the Constitution. This is the same
corruption of the Supreme Court that admitted that Affirmative
Action was un-Constitutional and therefore illegal, but that
they were going to allow it anyway. These are the same imbeciles
who found that since a lot of states passed laws prohibiting
the execution of retarded murderers, they now see a new Constitutional
right of the retarded to murder without danger of being executed.
But these are the same butthead hypocrites who are now deciding
that even though a terminally ill woman can only find relief
of her suffering through marijuana, the stupid federal Rockefeller-era
laws, in all their silly, hyperventilating "Reefer Madness"
hysteria, override any and all state laws that allow her to have
it, and therefore the Supreme Court will rule that she must not
just die, but die suffering. This is but to scratch the surface
of the continual corruption of the Supreme Court, a pox on all
their houses.
- David Morgan, of the Stone Investment Group, reports that the
"Chinese use about 1/70th the amount of silver per household
that is used by advanced economies." But you can bet the
Chinese will use more and more as we go merrily through the future,
as electrical devices requires its use. And, as if I had to tell
you, increased demand usually means higher prices.
He goes on to say, "Uranium's price has just begun its upward
trajectory to the $60 to $100 range and silver is going to see
much higher levels. Both metals have been under-explored and
under-produced for the past 20 years."
Bob Moriarty at 321gold.com is also looking at the future of
molybdenum. "The increase in moly prices is going to last
far longer than anyone now imagines," he says. "No
one has opened a primary moly mine in the last 28 years."
- Reader Jacques L. writes, "Since you are always harping
about inflation I thought the following fact would interest you:
In 1908 the Model T was priced at $850. In 1927 a much improved
model [electric headlights, electric starter, better tires etc.]
was priced at $325. That's how America is supposed to work."
On the one hand, he is absolutely right; That IS how America
is supposed to work, because that is the way entrepreneurship
and free-market competition, financed by the hand of capitalism,
increases the standards of living for everybody. It's Adam Smith's
Invisible Hand in all its glory.
On the other hand, he is wrong, in that I do not "harp."
I have never harped. Long, rambling harangues about inflation,
yes. But harping, no. Bellowing in outrage and fear about inflation,
yes. But harping, no. Screaming at WalMart clerks about inflation
until they call security personnel, yes, and even as they are
dragging me out of the place I continue to scream "Inflation
is going to eat your guts out and destroy your children, you
fools! Stop the Federal Reserve now, you stupid morons!"
which is pretty much a verbatim quote transcribed from the store's
video security tapes, as entered into evidence as "People's
Exhibit A."
But that is not the worst of it. Marc Faber writes "I should
remind our readers that rising commodity prices lead to geopolitical
tensions, and that when wars break out, commodity prices soar
vertically such as occurred during the Napoleonic Wars,
the American Civil War, and just following the First World War."
So inflation causes "geopolitical tensions" and then
those, in turn, cause wars, which causes more inflation? I jump
to my feet and run into the Mogambo Bunker, locking the door
behind me, because I do NOT like the direction that thing is
headed, and you wouldn't either when you remember what governments
do when in a war. It is not pretty, and they always say that
they feel bad afterward, but by then the damage is done. And
what is going to be done? They are going to take all your money
with taxes and fees, and if not your actual money, then they
will take purchasing power of your money. And that, paradoxically,
makes inflation worse.
So how bad is inflation? For a clue, we can read where Doug Noland,
of PrudentBear,com, reports that "during November, Producer
Prices have increased at a 5.3% rate so far this year. The PPI
has not posted a y-o-y increase above 5% since 1991. November
Import Prices were also up more than expected, with y-o-y prices
rising 9.5%."
This would normally launch me right into a long discussion about
precious metals, but you know me so well that you can probably
write the thing better than me. So while you finish up with a
nice paragraph or two about how precious metals are a MUST, I
will go down and use the little Mogambo room (LMR). Thanks!
So I come back, and everybody is yelling that I forgot to wash
my hands and pull my zipper up and how, since I was already down
there, would it hurt to throw on a little deodorant? But now
I find that you did not write anything, but instead merely cut-and-pasted
a nice quote from Kurt Richebächer.
"U.S. policymakers and economists are hailing the dollar's
fall as a boom for exports, employment and profits. They fail
to realize that the consumer borrowing and spending excesses
of the past few years have grossly depleted the economy of available
resources for sharply higher exports. A plummeting dollar does
nothing at all to offset the profound structural shortfall of
savings and capital formation. Rather, it fuels inflation."
Well, getting the job done while doing the least amount of work
possible is True The Mogambo Way (TTMW). And to pick such an
outstanding quote, too! I am so proud of you! Congratulations!
We're all proud of you!
And for a little flourish at the end, I see you included his
quote "The risks are frightening." Very nice touch
(VNT)!
- Speaking of precious metals, check out Gary North's latest
Reality Check. He writes, "The day of reckoning for America,
her deficits and her dollar, is surely on its way. Investors
who haven't yet bought gold as protection could be forgiven for
thinking they've missed their chance. But we may see gold make
the inevitable run up to $450 -- as early as next week
and then experience a serious correction and consolidation. For
a specific prediction in a free e-mail newsletter, this is as
good as it gets."
But for those of you who were upset by the recent swoon in precious
metals prices, and I got my share of you writing to me and complaining,
perhaps I could offer this timely bit by Todd Stein and Steven
McIntyre of the Texas Hedge Report. "Whether or not you
believe all or some of these conspiracy/rigging theories,"
they write, "we are here to tell you that this manipulation
(if it exists) may not a bad thing. We are tired of all the gold
& silver bugs complaining every time the metals suffer a
large correction. If you are a true long-term believer, then
be thankful that these forces are keeping the prices low for
all of us to buy physical metals. If you are a greedy paper trader
looking for a short term gain, then you will continue to be agitated
by the choppy behavior of the metals prices. Maybe this alleged
'scam' will continue to go on for many years, but sooner or later,
market forces will win out."
- Apparently I am not the only guy who is upset by the privatization
of Social Security thing, and for proof of that, I proudly present
Llewellyn Rockwell, Jr., president of Ludwig von Mises Institute,
who, in his essay entitled "Save or Else," said "The
movement to privatize Social Security (fully or partially) may
be the most ideologically duplicitous and fiscally irresponsible
I've seen in my lifetime.
"The money will continue to flow to older Americans but
not come from present revenue. It will come from new funds. And
where are these funds going to come from? Among those who favor
privatization, there are two camps: the left-wing suggests more
taxes and the right-wing suggests more debt.
"The proponents say it is worth running up this level of
debt because it will save money later. But you know what? In
the entire history of government finance and government programs,
I doubt that there is a single one that didn't claim to save
money in the long run. We have to 'invest' now in education in
order to save money later on x, y, and z. We must nationalize
the health care system now so that we can save money later that
will otherwise be spent on ballooning costs. We must go to war
now to prevent a worse war later.
"This is the staple rhetoric of all government programs
from time immemorial. When a robber comes to your door and says
he wants your television and stereo now so that he won't have
to take your car and kid next week, you might comply, but you
shouldn't believe he is doing you a favor." Hahaha! Bravo!
Well said!
He adds, "It is a disastrous decision to create an additional
forced savings program that is wholly unnecessary, and will bring
about vast distortions in the stock market." To that I add;
distortions, yes. But also higher stock prices for a while longer,
and that will forestall the imminent collapse of the stock market.
THAT is the whole freaking point of it. That this is just another
transparent and slimy little scam perpetuated by government and
their little playmates in the financial industry, necessitated
by hitching the economy of the USA to inflation in assets, goes
without saying.
Jay Taylor of MiningStocks.com newsletter has written on this
very topic in an essay entitled "Catch-up With Gold in 2005."
He writes, "Since the empire makes all the rules, it can
do, and is obviously doing, everything within its power to keep
the status quo alive and well. That's why, as Richard Russell
argues, the Fed will fight deflation tooth and nail because if/when
deflation gets the upper hand, the empire will suffer a serious
if not fatal decline, given our enormous indebtedness."
I will go even farther than that. I will say that this coordinated
action could possibly explain why it is that almost everybody
involved in the oversight of the last Presidential election was
so gung-ho on having balloting machines that had no paper trail,
so that the results could not be verified. Only a real first-class
bozo could possibly believe that the election could not be "fixed,"
and only a nation as full of morons as the United States would
roll over for such a thing without even a whimper. And if the
American people are so incredibly naïve and stupid as to
allow such a transparent fraud in something as simple as an election,
then pulling the wool over their eyes as far as economics is
concerned is going to be a breeze!
But there is a lot of money floating around already, and it takes
a lot of profits to pay all the interest on all that debt. CBS.MarketWatch.com
reports "Total U.S. debt increased at a 7.4 percent annual
rate to $23.6 trillion, as federal debt slowed to a 4.9 percent
growth rate. Debt owed by U.S. businesses increased at a 5.1
percent rate, the fastest in five quarters.
"Household mortgage debt increased at an 11.8 percent annual
rate to $7.3 trillion, which was offset by higher asset values."
Well, I got Big Mogambo News (BMN) for CBSMarketWatch, because
higher debt is not offset by anything, including higher asset
values, because the only way you can offset them is to sell the
damn house or the other assets, and then you got nothing all
the way around. No debt, no house, no nothing.
They don't listen to me, since they figure that they are a bunch
of big-time CBS hotshots and I am just the crazy guy on the curb
offering to clean their windshield for a quarter. So they continue
like I wasn't even here, "Household real estate was worth
$16.6 trillion, up more than 20 percent at an annual rate."
The only two things THAT mean are 1) people are paying higher
prices to buy a house, which is not a good thing for them, and
2) that everybody is paying bigger property tax bills on the
higher assessments, and paying higher taxes is never a good thing,
either. And if you think either of those things is good for an
economy, then you got rocks in your head (RIYH), as they say.
Like a dentist's drill, their words are starting to bore painfully
into my head. "Fed officials have said consumer debt levels
are not problematic because household net worth, especially in
housing, has also increased." This is the kind of laughable
idiocy that habitually spews from the Federal Reserve, banks,
stock and bond touts, and government.
- George Ure of UrbanSurvival.com is also taking at look at inflation,
and says, "Hard on the heels of the 1.7% gain in wholesale
prices in October, the whole price index is up another 1/2 of
one percent in November for a 2.2% two-month gain.
Another interesting thing that he has come across that may have
profound economic ramifications concerns "deep tremors under
the San Andreas. We keep wondering if the predicted double-quake
of the web bots has been fulfilled - yes it was - if you think
a couple of wimpy 6+ quakes were it, but somehow, the web bots
always get things right in a 60-90 day window - and if the window
is longer, it means the size of the event is that much bigger.
Gulp." This is the kind of stuff you don't find in your
family newspaper. And a major, major earthquake along the San
Andreas would be bad, bad news for us all.
- If you want a good look at the cancerous growth of debt in
this country, look no further than the latest Labor Department's
"Flow of Funds", which reports that "Domestic
nonfinancial debt rose at a seasonally adjusted annual rate of
7-1/2 percent in the third quarter of 2004, up a bit from the
7 percent pace posted in the previous quarter. The pickup in
debt growth reflected faster growth of nonfederal debt, which
was offset in large part by a substantial decline in the growth
of federal debt." Pardon the Mogambo interruption (TMI),
but I am here to tell you that the growth of federal debt is
one of those things that I look at constantly, and I am somewhat
of an expert on the level of federal debt, and as an expert witness
I will look you right in the eye and tell you, with 100% assurance,
that it has NOT declined at all, and so it has obviously NOT
declined by anything "substantial", the stupid opinions
of the stupid writer of this stupid Flow of Fund Report notwithstanding.
But continuing on, the report goes on to say "On a seasonally
adjusted basis, federal debt growth fell to an annual rate of
5 percent in the third quarter, less than half its pace earlier
this year." And here is another TMI interruption, because
it is only due to sheer arithmetic that the growth of federal
debt has apparently "slowed." If you owe a dollar and
borrow another dollar, your debt grows by 100%. But if you owe
$7.5 trillion, then even $70 billion is only 1%! And every year
the debt gets monstrously bigger and bigger, and even if the
government kept spending constant, the percentage will still
go down! As if by magic!
They finish up by saying "By contrast, nonfederal debt expanded
at an 8 percent annual rate in the third quarter, up from a 6-1/4
percent pace in the previous quarter. The acceleration in nonfederal
debt last quarter was broadly distributed across households,
nonfinancial businesses, and state and local governments."
- Bloomberg reports that "China's oil imports between January
and November rose 35 percent to 110.6 million metric tons from
a year earlier." And you thought that oil was going to go
down in price? Hahahaha!
- Having been once in the human services and my wife is still
involved in it, we know a lot of people who are working in the
field, and the story is getting grim as state revenues are getting
squeezed. This is part of the Big Economic Unraveling, and the
first victims are always at the bottom, and believe me when I
tell you that being profoundly, tragically mentally retarded
and physically handicapped means that you ARE the bottom.
As painful as the economic conditions of the retarded in Florida
are, you may be alarmed to know that the pain will start going
up the income ladder. I'm talking to you and about you. And me.
Ugh.
** The Mogambo Sez: As suspicious, distrustful and paranoid
as I am, I find it entirely appropriate that gold and silver
are being manipulated. It would be contrary to the way the financial
system is routinely gamed. Gold and silver have to go up as everything
else goes down and people start clamoring for the safety and
capital gains of precious metals, just like they always have
throughout all of history. So somebody is keeping the price low
until they and their little friends can all climb on board and
get themselves set to capitalize on it. All you gotta do is get
on board, too, and then sit back, pop the top on a fresh beer,
put your feet up, and watch the show while you get richer
and richer as gold climbs higher and higher. Call it "The
Good Life (TGL)"
 Dec 15, 2004
Richard Daughty
email: scgcjs@gte.net
Archives
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.
321gold Inc
|
