Americans Must be Saved

Richard Daughty
The Mogambo Guru
Jun 5, 2003
The Daily Reckoning

"...Nowadays, things are not so elegant. Today, it is us greasy, proletariat sweat-hogs who are now also the owners of the businesses, by the simple expedient of owning their stocks and entrusting our entire retirements to these same stocks always rising, rising, rising in value. So who is to lose if businesses go under nowadays? Everybody. Now you understand the urgency of the White House, the Congress, the whole rest of the government including the Federal Reserve, foreign central banks, foreign politicians and governments, and the whole rest of everybody on the whole planet, all who care so deeply, so passionately, so devoutly that we Americans Must Be Saved. And we must be saved, we can be saved, and we will be saved, by printing money!..."

Starting off with a gander at the Federal Reserve, which is akin to "getting the ugly part over with," we note that, all furrowed brows and lips drawn into a sneer, Greenspan and his jackass buddies increased total credit by another, let me check the figure again here as the number is so irritating that it refuses to stay in my brain, $8.7 billion last week. The Treasury responded to some increased demand for cash money, probably by the Iraq thing or the Afghanistan thing, or the Palestinian/Israeli thing, or any of the other long list of global things that the Bush administration loves to meddle in, by issuing another $3.7 billion in cold, hard cash, and then, I assume, just giving it to them.

The big news to me, and here I caution you to put on your seatbelt and a helmet, and what is noted in my medical records as a "precipitating event," was now that the limit on the official federal debt has been increased by Congress, the Treasury is now out buying back all those bonds it stuffed into the children's piggy banks, namely all the accounts that had any money in them. Furiously adding and subtracting, the federal debt has immediately ballooned to, and I will take this one last opportunity to caution you about using that seatbelt and helmet, $6.546 trillion, up $86 billion in six short weeks! Eighty-six freaking billions of dollars in six stinking weeks!

Well, actually I am not really sure if that is the number or not. [Editor's note: Spookily enough, as at Tue Jun 3 it is $6.567 Trillion click]. My incessant screaming in fear and outrage has apparently appalled the entire town with sheer volume, and teams of medical professionals and bad-tempered SWAT teams were hastily assembled determined to see what in the hell happened. Their immediate reaction, when they saw my head spinning around like Linda Blair in the Exorcist, was to administer large amounts of tranquilizers, the kind specifically developed to anesthetize a Tyrannosaurus Rex in case one is ever re-assembled from shards of DNA. The SWAT team, incessantly fingering hair-triggers on their machineguns, graciously offered to put me out of my misery, and although everyone, including me, agreed that it would probably be for the best for everyone if they did so, decided at the last moment that the paperwork and investigative repercussions would be too much trouble.

For this week's exciting episode of the Mogambo Walk Down Literature Lane, we thank Philip Spicer, a real nice guy who apparently has more money than he knows what to do with, since he reached down into his own pocketbook and sent me a copy of the book/pamphlet entitled "Fiat Money Inflation in France," and since there are no graphs or artwork or pictures or illustrations or anything that I can color in with my crayons, he knows that I will probably not read it and will just throw it on the pile of books that I ain't read either, because THEY ain't got no pictures neither.

But he was wrong. I did read it, and I am glad I did, as I was desperately searching for something about which to write, and I did not want to resort to more long-winded stories about how the government is out to get me, and how when I was your age everybody and everything was better than today, or simply begging for people to send me money in the vain hope that somebody would actually send me a few bucks so that I could get the professional help that I so desperately need, or maybe some snazzy new mag wheels for the car.

Anyway, a guy named Andrew Dickson White was a real smart guy who was born a long time ago in 1832, got a good education, established Cornell University, and died in 1918. In between birth and death he wrote a lot of things, since he had a lot of time on his hands because sex, drugs, rock and roll and downloading pornography off the Internet were not invented yet, and one of the things he wrote was "Fiat Money Inflation in France."

Now this is an interesting little book, although it is referred to as a "short essay," and at 120 pages it is an obvious indicator that they used to be a lot more long-winded in those olden days. So interesting, in fact, that the foreword is by Henry Hazlitt himself, and who writes that White's essay is relevant because "...the course of inflation everywhere - economically, psychologically, politically, and morally - does in fact follow the same pattern."

I will now provide my executive-summary version, provided to you here and at no extra cost to you because I know how busy and important you are, is that the French stormed the Bastille on July 14, 1789, and then they began to issue more and more money, and by 1797 all the money became worthless because prices had climbed so high, thanks to the massive over-issuance of currency, and the whole country spent the whole time turning into a bigger and bigger hell-hole, until Napoleon rose to power and turned Europe into a killing field, and then the French resorted to merely being rude to people who spoke English, and they have been like that ever since.

To those who prefer the long version, and I can only feel pity for you, inflation comes from the idea, both back then and right freaking now, according to the jackasses at the Fed, in the Congress, on Wall Street and every damn where you turn, that monetary inflation was a good thing, and that prosperity can be assured if there is enough money circulating. The reason this may seem slightly unfamiliar to you is that, today, the idea is presented not as "inflation is a good thing" but as "preventing deflation is a good thing." In the olden days they didn't say it so expressly either, and the idea was explained as "increasing the circulating medium." You say to-may-to, and I say to-mah-to.

To quote Henry, "The broad pattern of all inflations, historical and modern, is the same. The first result is commonly the 'recovery' that the inflationists, like others, are seeking. It is not until later that its disappointing and poisonous effects become apparent."

And what are these poisonous effects? I thought you'd never ask! And the reason I am so delighted that you did ask is that I do not have to rack my little pea-brain to come up with something neither original, cogent or thoughtful, even assuming that I could do such a thing even if I wanted to, and there is a growing body of evidence that I can't, and like the lazy bastard I am I will merely quote Henry extensively, yet again. "This is because the kind of production stimulated by inflation even at the beginning is an unbalanced production (owing to the money illusions that inflation creates) and because inflation finally encourages merely malinvestment, thriftlessness, speculation, and gambling at the expense of production itself."

Well, let's take a look a the USA, shall we? We have been in the throes of monetary inflation by the damnable Federal Reserve for decades, so let's take a look, and see if we can find any evidence of these things. Do we have, umm, looking at the list, malinvestment? Yep, and in spades! There is excess capacity everywhere, and a huge, strangling system of government, too, which is mal-investment write large! Do we have thriftlessness? Yep! The savings rate is roughly, checking the dipstick which is showing we are much more than a quart low, effectively zero. Do we have speculation? Yep! Guys are right this minute buying stocks that have P/E ratios at multiples that are seen only at market tops and in the wet-dreams of brokers and issuing corporations on the idea that they will be able to flip those stocks to some other sucker and make a fortune in the process! Well, then, how about gambling? Do we have gambling? Yep, as you can hardly walk down any street in the nation and not bump into a lottery machine or some pathetic guy stumbling out of a casino with his pockets turned inside-out and empty.

White writes that even back in the eighteenth century, "They knew too well...the difficulties and dangers of a currency not well based and controlled. They had then learned how easy it is to issue it; how difficult it is to check its over issue; how seductively it leads to the absorption of the means of the workingmen and men of small fortunes; how heavily it falls on all those living on fixed incomes, salaries or wages; how securely it creates on the ruins of the prosperity of all men of meager means a class a debauched speculators, the most injurious class that a nation can harbor; how it stimulates overproduction at first and leaves every industry flaccid afterwards; how it breaks down thrift and develops political and social immorality."

Now, being the big-hearted and truly wonderful person you are, you are obviously horrified that such things could happen on your watch. Especially that part about being flaccid afterward, an attention-grabbing word that I think he used on purpose because flaccid and wasted is usually what happens after you get the royal screw-job. And if there is one thing in economics that can legitimately be called The Royal Screw-Job, it is inflation.

In one of the tiresome paragraphs above, I don't know which one, and I don't want to go back and look because I am as tired of reading this scary stuff as you are, I'm sure, we were looking for evidence of malinvestment, thriftlessness, speculation, and gambling. And we found them. Now, let's you and me, since we seem to have a lot of time on our hands, see if we can find examples of these other things that White mentions, too.

First off do we find ..."how easy it is to issue it; how difficult it is to check its over issue"? Well, my curious little grasshopper, let's take a look at the monetary base, and debt growth, all of which came from credit growth, and for that we look to the Fed. With the greatest of ease we can find an almost infinite number of statistics, and they all say that, yes, it appears that it IS easy to issue, because they keep issuing exponentially more and more of it every damn day, and I have yet to read in any newspaper how the employees of the Fed are complaining about how difficult their jobs are. Thus, we conclude that it is also not only "difficult to check its over issue" but it appears to be impossible!

Next let's see if we can find examples of how inflation "leads to the absorption of the means of the workingmen." For that, we simply note that there are now tax credits, especially the Earned Income Tax Credit, for those who work full-time but are STILL so poor that they are living in stark poverty! And why are they living in stark poverty? Because, obviously, inflation has raised prices so high compared to wages, you dummy! Jeez, pay attention will you? Prices are now so high that somebody who works full time cannot escape living in poverty, a poverty so dire that the government is taking tax revenues to give to that poor, pathetic person as a salary supplement to keep them from starving to death in the street! And there is also a freaking tax credit for people to pay for baby-sitters, so that they can afford to even go to work, to earn the damn EITC! Therefore, I would definitely say that inflation "leads to the absorption of the means of the workingmen." And for the same reason, the exact same damned reason, "how heavily it falls on all those living on fixed incomes, salaries or wages."

Well, how about "it creates on the ruins of the prosperity of all men of meager means a class a debauched speculators"? Raise your hand if you are buying the SP500 at the current P/E of 35. Raise you hand if you are loaning your money at yields that are the lowest in more than forty years, and on the idea that yields will keep going lower and lower. Raise your hand if you are buying houses at these outrageously high prices on the idea that you can sell it in the future and make a handsome profit.

Now look at your hand. If it is holding a candy bar, you are fat. If you are holding somebody else's hand, you are in love. But if it is up in the air, you are a speculator, and thus you are the guy that White, who was a professor, who founded a University, who is a real smart guy, thinks is the worst person in the world. Nyah nyah nyah!

Proceeding along, we take a gander at how inflation "stimulates overproduction at first and leaves every industry flaccid afterwards." Well, look around you! Not only did we have overproduction, but we had the attendant over-consumption, too, which you would expect from Say's Law. At least in eighteenth century France, they had pent-up demand, since apparently all the common people had was filth to eat and rags to dress in, but, on the bright side, they had plenty of both. Do you, or anybody you know, have a garage or spare room or rental storage unit or attic or cellar that is not filled to bursting with stuff? So we had over-production in the proverbial spades, over-consumption in those same spades, and we are having flaccid industry now, and that is why the Fed is doing what it is doing. And why France did what it did.

Getting to the end of the list of the horrors of inflation, we take a look a the last two, "how it breaks down thrift," which is reflected in the savings rate of Americans, and "political and social immorality."

I know that you are thinking to yourself, "Uh-oh! There is the perfect opening for a shot at the Democrats because they are an entire political party devoted exclusively to political and social immorality," but I am not going to do that, just to be perverse. You are already thinking that I was going to give them an insult, and you recognize that they so richly deserve one, but now you have done that for me, and thus my mission here on this planet is completed.

But I will leave it to you, as your homework assignment, to write a two-hundred word essay about the political and social immorality you see all around you. And remember, as usual I will award massive amounts of extra credit if you can find any example that is NOT characteristic of the Democrat or Republican parties, because it would demonstrate a depth and breadth of knowledge on the level of "savant."

Some of these quotes of White seem to be, eerily, written today, instead of the early nineteenth century. To wit, "For at the great metropolitan centers grew a luxurious, speculative stock-gambling body, which, like a malignant tumor, absorbed into itself the strength of the nation and sent out its cancerous fibers to the remotest hamlets." I think the term "luxurious" is apropos when applied to the NYSE, given that Dick Grasso, the titular head of the corrupt NYSE, gets paid at least $10 million a year to merely prance around looking ridiculous and officious.

But getting back to the point, I note that, sure enough, as somebody who lives in a remote hamlet, there is no person or thing anywhere around here that is not intimately connected to the stock market and its "speculative stock-gambling body," usually by virtue of having IRA's and 401(k)'s.

And what of the future? Well, White maintains that the only thing preventing the mass starvation of laborers in France was that they were drafted into the military and sent off to be killed in wars. So, extrapolating, perhaps we have starvation and getting killed in wars to look forward to. How special.

And the French in those days, showing how some ideas are so universally bad that they cannot be killed, also called for higher taxes on the rich. And then finally they hit upon the idea that there was actually no need for taxes at all! The government could simply print up as much money as it wished to pay for whatever it wished! And here I am reminded of the massive amounts of debt that is being issued by our government, and the massive amounts of money that the Fed is creating to buy that massive amount of debt, even as we speak.

So what can you do? Again, as remorselessly as ever, I quote extensively, that towards the end of the relentless expansion of money that "...the paper money was almost exclusively in the hands of the working classes, employees and men of small means. Financiers and men of large means were shrewd enough to put as much of their property as possible into objects of permanent value." Hmmm. Objects of permanent value. What could that possibly mean?

Of course, there were always rays of hope shining somewhere. "From time to time there was a revival of hope caused by an apparent revival of business; but this arrival of business was at last seen to be caused more and more by the desire of far-seeing and cunning men of affairs to exchange paper money for objects of permanent value." Again with that damned mysterious "objects of permanent value."

The French ended up their inflationary period with Napoleon. The Germans ended up theirs with Hitler. Sorta makes you wonder who we will end up with, doesn't it?

Frank Giustra, big-shot financier and bon-vivant, in an essay called "The Good, The Bad, The Ugly, Part II," seems to delight in saying the same things I have been saying, only he manages to do it with much more wit, education, intelligence and style. Fortunately for me, I make up for my profound literary deficiencies with sheer lunacy, which means I will be prescribed more anti-psychotic drugs, and when I have been properly sedated into a fugue state then it's all mox nix to me, which I demonstrate with a catatonic blank look on my face and mindlessly occupying my time by drooling and making funny noises with an old whoopee cushion, so I obvious don't give a rat's patootie what you think.       

And since you don't believe me about what the future holds, let me quote what Mr. Giustra says. "Unfortunately, it seems most Americans are impervious to the current economic trend, foolishly ignoring 2,500 years of monetary history. A history which is littered with lessons about the consequences of virtually every monetary and financial phenomenon we are witnessing today. Excess debt and consumption brought down every major power in history."          

There is some talk about how Asian countries, who filled their vaults with dollars and dollar-denominated assets so that we could continue to have the wherewithal to keep buying their stuff, are considering moving some of that hoard of depreciating-assets into, umm, gold. Is this the fabled "object of permanent value"? Well, shut my mouth! I thought all Asians were born stupid and spent their whole lives eating fish heads with rice and living stupid. Well, the fact that they are still sitting on such a monstrous load of depreciating dollars proves that they aren't the smartest dudes in the world, but at least they are smarter than we Americans. And I say that after turning my head and noticing that the stock market is, again, up, and is, again, completely contrary to what intelligent, educated people would be doing.

The morons continue to buy stocks at the highest relative prices in the history of the stock market, as measured by the P/E ratio, which is well above 35 again. 35! And let's not forget that earnings are falling for real companies, i.e. those that are not currently engaged in the fraud of pro-forma announcements and the rest of that whole stinking mess.

And judging by the continual fall in business activity, particularly the fall in durable goods orders, and a fall in income and a fall in spending, no matter how stupid the buyers of equities look today, you can rest assured that they will look even more stupid tomorrow.

One of the newsy items was that Paul O'Neill, erstwhile Treasury Secretary until the Bush people decided that trustworthy and candid people have no place in government, has done a study on how much our "safety net" guarantees wills cost. The British newspaper Financial Times broke the story, since almost everybody in the USA is a graduate of the American educational system, and therefore there is nobody in the mass media of the USA that has two functioning brain cells to rub together, and therefore there are few who can do such a thing. Thanks, Brits!

Two guys whose names are Smetters and Gokhale were asked to compute, and I quote from someplace I can't remember where, "how does the present value of all future revenues stack up against present value of all the future expenditures?" The answer is a nice, cool negative $44 trillion. And that is just today's amount. They figure that if things percolate along as they are, then by 2008, five years from now, it rises to $54 trillion. This figure, as astronomical as it seems to us mere mortals, is nearly double today's global GDP.

The Financial Times said, "The study's analysis of future deficits dwarfs previous estimates of the financial challenge facing Washington." Didja get that part about how it dwarfs previous estimates? "It is roughly equivalent to 10 times the publicly held national debt, four years of US economic output or more than 94 per cent of all US household assets." And I like that "financial challenge" thing. But then, everything is some kind of bizarre "challenge" these days, as if good old American pluck and can-do attitude can forever win the day, always snatching victory from the jaws of defeat. As an aside, I say, "Good luck, doofus!"

Not to worry, though. The government and the Fed figure that they will merely print up as much money as is needed, as they have proved they are willing to do so, that they are able to do so, that they want to do so, and that they will do so. Just like the French of the eighteenth century, and look how well it worked for them. The bad news is that one day very soon $44 trillion, which seems so impossibly large today, will probably be roughly the price of an ice cream cone, as the dollar will be worth so little.  

The Bush administration, who figure that a drop in the bucket is better than no drop in the bucket, announced with great fanfare that they are signing a $350 billion tax cut, spread over ten years, at the end of which the taxes will be raised again, so that means $35 billion a year in tax cuts for us proletariat bozos out here working at our boring little jobs. Big deal. The $350 billion also includes $20 billion to the states this year to bail them out a little bit, so the impact on your tax bill is less than is advertised. The fact that the profligate, spend-o-holic states themselves are hiking taxes and fees and costs, and will more than absorb the entire $35 billion, is a little-discussed fact. Tough noogies, I suppose.

To indicate that he has learned to speak in mindless government happy-talk, Bush said "This legislation is a major step forward in our economic agenda, yet other steps are also needed. We must hold federal spending to a responsible level." Okay, so far so good, right? Makes you want to leap to your feet and shout "Huzzah! Hooray!"

But that turned out to be only a set-up for the punch to the gut, as he proceeded to say, "Our budget for this year calls for discretionary spending to rise only 4 percent, or as much as the average household income will go up this year."

Man! Am I out of the loop or what? Four percent increase in household income? Where have I been that I have not heard of this? All I read about is how the average household income is being slashed by 100%, as everyone is losing their job, except for government workers.

By now, the persistent, simmering inflation that the loathsome Federal Reserve and decades of despicable Congresses has foisted on the USA now has reached the point where half the freaking people in the whole damn country pay no taxes at all, and the damnable government is actually sending them checks, in a huge welfare/redistribution scheme that would have had Stalin and whole cadres of Communists turning handsprings with joy. It did not work for the USSR, it did not work for eighteenth century France, it did not work anywhere it has ever been tried, and it will not work for us, either.

There was an amusing juxtaposition in the headlines on the Prudent Bear website last Thursday. One said "Economists keep saying the sun will come out tomorrow," and the one right under it read, "Factory orders slip, keep recovery in doubt."

Normally I would use that as a springboard to heap disrespect and scorn on the vast majority of dim-bulbs who call themselves "economists," but I am sure that by now you have figured that out for yourselves.

Just when you thought the whole deflation thing could not get more ludicrous, and with one foot on the window ledge as you prepared to jump out of a window just to escape the constant disgust at the asinine state of contemporary economics, along comes Llewellyn H. Rockewell, Jr, with a breath of fresh air, in essay entitled "The Blessings of Deflation" that he posted on the Mises.org website. Which is appropriate, since he is the president of that laudable organization.

He writes, "Thus we see that there is no radical disconnect between the interest of consumers (who always want lower prices) and overall economic health. What's good for consumers is good for everyone. You can only marvel at the many economists and commentators who try to convince the public that deflation is a very scary thing."

Well, he says "marvel at," and I say "Throw rotten fruit, obscenities and dog excrement at," but the common ground is that we both think that there are many economists who need something directed at them. Giving them books and history lessons obviously had no effect.

Going all the way back to the Great Depression, where prices fell and everybody was able to get the things they needed to stay alive without going through the necessary precursor of first eating their own children and stray animals, he notes that "Thus can we see that the widely approved prescription to prevent deflation, namely inflation, is the worst possible path. But this is precisely what the Fed has endorsed as a matter of policy."

Commenting on the sad state of economics-brainpower that we have at our national disposal, he laments that "It is hardly surprising that the central planners managing our lives would adopt the exact policy that will make us so much worse off." If it had been me, I would have used the exquisite phrase "Stupid people making stupid decisions equals misery."

And, going a step further, he allows that, "Sadly, I doubt we will see any deflation." I am with Mr. Rockwell here, as the Federal Reserve and the mouth-breathers who listen to those half-wits are actively doing everything that they can think of to finish killing the dollar and to make prices soar to hyper-inflationary levels. Oops, I mean "Make prices soar to anti-deflationary levels," which shows that I am a guy who can get with the new jargon as well as the next guy. I mean, the next dude. I mean, the next gnarly dude.

In the same vein, Gerard Jackson, who is the Economics Editor of Brooke's News, writes, "Money markets will remain in equilibrium (at least within a narrow band) so long as relative money supplies are kept more or less in check. But continual monetary injections will destabilise exchange rates. This is why the kind of exchange rate mayhem from which we have suffered was absent during the gold standard, that 'barbaric relic', as Keynes chose to mischievously call it. And this is why speculation becomes more active: markets begin to anticipate declines in purchasing power. Regardless of... sneering reference to speculators, it is not they who are at fault but the central banks."

Which is not only profoundly true, but is also the root cause of every damned economic problem you can name. Absent the stupidities of governments and their willing whores, the central banks, as exemplified by the Greenspan Fed, economic imbalances are inherently, eventually, self-correcting. This is the beauty of Adam Smith's "Invisible Hand." But once governments get involved, or, in the modern translation of government meddling, the central banks AND the government, that "invisible hand" is slowly amputated, and it is replaced with "the visible club" which is used by the central bank to try and beat a misbehaving economy into line, and also to bludgeon to death not only the currency but everything that is dependent on the currency, deals in currency, is valued in currency, or is within fifty feet of any currency.

At that point, it is no longer possible for economics to be self-correcting, but is permanently self-defeating. And, unfortunately for us, that point was passed many, many years ago.

Vox Day, in an article he wrote on January 27, which is highly meaningful to me since that is Mozart's birthday, entitled "The Raping of America," he sums up with what may be the most immortal paragraph of the generation. "It's hard to know exactly how the imperial dollar will die. It is possible that the gold-backed Islamic dinar may replace the dollar as the global trading standard or that China or the European Union may seize the moment to offer the world a stable replacement currency. What I do know is that no amount of economic stimulus, be it tax cuts, spending increases or interest-rate cuts, will allow America to avoid paying the piper for four years of spectacularly ill-timed malinvestment. The party is over. Prepare yourself."

The only dispute I have with Mr. Day is his calculation that we have had only four years of "spectacularly ill-timed mal-investment." Looking at my watch, I figure that it is close to almost fifty years, as it took that long to run up a deficit of the newly-discovered $44 trillion dollars of un-funded, un-thinking, un-economic, un-common sense, and ultimately un-payable commie-think idiocies.

And it is not over yet! Even as we are on the verge of national bankruptcy, thanks to the damned government constantly meddling in the economy and supplanting the vaunted American Way with a filthy commie-think, Monday's WSJ carried an article entitled "House Democrats Plan Summer Strategy." To prove that Democrats are the lowest life-form on the planet, as no other animal species actively pursues a course of suicidal stupidity, well, maybe the dinosaurs or the Dodo bird, I dunno, but let me quote the entire opening sentence: "House Democrats hope to rebound this summer by presenting what they consider the other side of President Bush's latest tax cuts: the 'lost opportunity' to invest the same billions of dollars on four priority areas - veteran's benefits, public schools, homeland security, and health care."

Note that none of these is an investment, even though they persist in calling them that. They are all just spending. More spending. Always more spending. Spending spending spending.

The veterans are being screwed by simple inflation, as we went over in one of the idiot paragraphs above.

And what kind of moron, other than a Democrat, could possibly believe that putting more money into public schools, after all these decades, and I am talking literally decades after decades, of putting more evermore money into government-controlled public schools and getting the most ignorant, unpolished, and abysmally stupid public school graduates in the whole freaking history of education, could POSSIBLY be called as "investment"? Putting a little competition into the damn schools, yes, but not putting more money into them.

Ditto Homeland Security as an "investment." It is certainly NOT an investment, unless you think that giving the government more and more secret-police powers and hiring more lackluster Americans, who cannot qualify for even the most meager real jobs, to spy on everybody in some bizarre Kafka-esque nightmare-by-government, is your idiot idea of "investment." Remember, that this is the exact same bunch of low-IQ weenies that, well, I was going to use one of the zillions of examples of them at the airports strip-searching neonate babies, but simultaneously eschewing watching angry young Arab men shouting "Jihad!" and carrying dynamite as "profiling," but I am sure that you have heard about that silly crap already.

And as for health care, the last item of the proffered list of things the jackass Democrats think are in need of "investment," you are not "investing" when all you are doing is helping people pay their hyperinflationary medical bills, which they cannot pay because the prices are too high, which are too high because Congress has been legislating new "investments" by giving ever-larger Medicare and Medicaid benefits, and mandating more benefits be covered, burgeoning aggregate demand, at the same time as they allowed the damned AMA cartel to restrict the supply. And then the unbelievably, supernaturally stupid Democrats want to do more of the same damn thing! And calling it an "investment!" My God! What the hell is going on? Who the hell ARE these dangerously deranged people?

To show that the Democrats do not have a monopoly on congenital idiocy, the Republicans have heroically stepped up to the plate to show that they are, to quote Adrianna Huffington, "...a gang of out-and-out fanatics. The defining trait of the fanatic...is the utter refusal to allow anything as piddling as evidence to get in the way of an unshakable belief." She refers to the lack of Weapons of Mass Destruction, which was the whole reason why we declared war on Iraq, that has turned out to be nothing more than lies, fanaticism and Wagging the Dog.

To her example I hasten to add the repulsive Republican fanaticism that tax cuts, in and of themselves, are an economic tonic that will cure everything. Try baking a cake with the same fanatical belief that all you need is flour, and then tell me how THAT turns out.

Scanning the perimeter of my lead-lined security bunker through the periscope, and with a nervous finger on the trigger I whisper darkly that something very big (pause for dramatic effect), very secret (pause for dramatic effect), and very (PFDE) ugly is going on. The air itself feels heavy (PFDE) and dank with (PFDE) paranoia.

There is also a lot of pausing for dramatic effect, I notice, and is my clever way of announcing that I have given up shooting for a Nobel Prize for my economics-savvy, and have, instead, decided to go for an Oscar instead. Henceforth, you should be alert to (PFDE) a bold new actor - namely me! - to splash suddenly onto the silver screen, bridging the chasm between the depths of despair to the heights of ecstasy!

I think my new emphasis on acting instead of economics has to do with the almost-Shakespearean tragedy of who has to get stuck holding the bag. In the olden days, greedy capitalist running-dog enemies of the proletariat owned the businesses. If the business did well, then the capitalist swine did well. If the business did badly, then the war-mongering capitalist oppressor did badly. But the brave working-class proletariat who sacrificed their lives being ground up in cogs of the foul machinery of capitalism took little notice, one way or the other. We might lose our jobs or our worthless lives, but we did not suffer additional loss if the business went under. Whereas if the business did well, then we class-struggling workers received nothing extra, but were less likely to worry so much about losing our jobs, so that was nice for a change.

Nowadays, things are not so elegant. Today, it is us greasy, proletariat sweat-hogs who are now also the owners of the businesses, as we have foolishly invested all our money and all our futures and all our hopes and dreams into ownership of businesses, by the simple expedient of owning their stocks and entrusting our entire retirements to these same stocks always rising, rising, rising in value.

So who is to lose if businesses go under nowadays? Everybody. Now you understand the urgency of the White House, the Congress, the whole rest of the government including the Federal Reserve, foreign central banks, foreign politicians and governments, and the whole rest of everybody on the whole planet, all who care so deeply, so passionately, so devoutly that we Americans Must Be Saved. And we must be saved, we can be saved, and we will be saved, by printing money!

If it were only that simple. I majestically step forward on one foot, draw my cloak about my manly, brawny shoulders, raise one posed, porcelain hand slowly skyward as if searching for something ephemeral, and say, in a voice that makes your heartstrings go "twanggggg!" I imploringly emote, "If only (and if you are in charge of awarding the Oscar for Best Actor, please note the uncommonly beautiful and hauntingly plaintive cry in my voice, you can almost hear my heart breaking) there was one stinking example in all of history where printing monstrously more money worked out for the best!" (I sink to my knees, sobbing pitifully). Rising heroically to my feet, I continue, "Yet, forsooth, and harken to my words young Horatio, in every example, to the polar contrary, as the east is to the west, it has always worked out (pause for another dramatic effect, and you will be happy to note that we are getting towards the end of this pausing crapola) for the worst!" (The stage goes dark as I slowly collapse to my knees, racked with more uncontrollable sobbing, boo hoo hoo). I assume you have now risen to your feet, enthusiastically clapping your hands and shouting "Bravo! A performance for the ages! Bravo! Maestro!"

Later, backstage, you join the crowd of joyous well-wishers, hangers-on, groupies, caterers, process-servers, bounty-hunters, panhandlers and paparazzi, and ask "And what IS that ghastly worst to which you so thrillingly referred?"

You will probably later write in your diary of how the room was suddenly hushed, as I rose to stand, towering over the awed assemblage, to demonstrate my incredible acting powers, and how I answered your question with a mere gesture, and you note with undisguised pleasure how skillfully, using only the flick of an eyebrow and a piercing gaze, I directed your attention to the surrounding steel-reinforced concrete bunker, the fire-control command center with a surplus of spare ammo, an enormous supply of yummy food and bottled water, twinkling gold bars stacked to the ceiling, and crates full of pornography and Oreo cookies, as man does not live by bread alone.

"Bravo! Maestro!" I bow deeply, basking in your adulation.

Gordon Rollins, who refers to himself as both glum and sour, wonders if I can reconcile the deflation/inflation paradoxes that abound. To tell the truth, he had a lot more to say than that, but he was so clever and witty that it makes me want to hate his guts for making me look so, well, un-clever and un-witty in comparison, which just goes to show you how un-clever and un-witty I really am, which, at this third occurrence has apparently degenerated into some weird literary device endemic to the mentally-ill that is, not surprisingly, both dull and stupid.

Being the Mogambo, of course I have an answer, or will at least run my fat mouth for an extended period of time so that it appears that I have answered it, when indeed I have done no such thing, because I usually forget what I am talking about as soon as I start talking about it. Sort of how Greenspan does when HE is asked for an answer, and look at how well it has served him. In this particular case, however, an answer comes quickly to hand, and that answer is, alas, no.

It all depends on your time reference. In the short run, some things will go down in price. In the short run, some things will go up in price. This is the natural rhythmic ebb and flow of business as usual.

But in the long run, all things will, I am sorry to say, go up in price. This is the good news. The bad news is that the long run always starts right now. The worst news is that the annual price rises will soon start getting bigger and bigger and bigger in some weird exponential fashion.

This constant and increasing price-level is the Iron-Clad Rule of Money Over-Issuance. And this was the whole point of the preceding senseless and tiresome tirade above somewhere, which you probably still remember since it is so novel to see something presented in a bizarre format that resembles a poorly-done junior-high book report done by a kid who has taken waaayyyyy too many Ritalins, remember? The thing about Fiat Money in France? Which was pounded into the ground in paragraph after paragraph above, about how they issued too much money?

And, although Mr. Rollins did not ask, I also have the answer to The Question That Is Not Asked, namely, "What is this object of permanent value that I keep hearing so much about?"

It is gold, my dear beautiful one. And silver. And if it is not gold, and it is not silver, then tell me; what in the hell could it possibly be? To the nay-sayers who abound around us, ere they be allowed to disparage the cumulative thinking of eons of far-seeing and cunning men trying to protect their wealth, and then pass to spread more of their sorry sacrilege to yet others of our brethren, let them be posed this very question; "If not gold, then what? No other person in history has provided any answer other than gold, and yea verily, none was ever found. But you, a mighty wind, now claim to possess the elusive wisdom that all others have been too blind to see. So, let thy lips enlighten us!"

And now, perhaps, you can answer my question, namely, are you a man of foresight and wisdom who is putting his wealth into "objects of permanent value"? Or are you putting your wealth into objects of temporary value, like overpriced stocks and overpriced bonds and overpriced houses?

And if not you, and if not me, then who? Well, I hear, and don't let this get around, so keep this under your hat, see, that insiders are stepping up their selling of their own stocks.

And to show you why I have not completely given up on this Nobel Prize thing altogether, I will demonstrate my profound economic-savvy and casually remark, in a classic off-hand sort of way, sort of like me picking timeless and classic bon mots out of the air, my genius making it seem like merely picking luscious intellectual-cherries off of a nearby tree, that I figure that somebody must be buying gold, because the price keeps going up.

Now, far be it from me to put these two disparate items together and say that these insiders are buying gold. I have no idea, as typically big corporate-insiders are people with education and taste, so they naturally shun me like the plague, and I have documented proof that they have their snotty secretaries lie to me that they are not in the office whenever I call begging for money, or a job, or want to borrow something.

But I do know that if these insiders were men, or women, or trans-genders, or whatever permutations of man-woman-beast that modern surgical science has come up with lately, who were, as White put it, "far-seeing and cunning," then these are the very people who are, theoretically, putting their money into objects of permanent value.

Which I say again, in case you weren't listening for the last ten gazillion times in a row that I have said it, is gold. And which you will soon say is gold, too. Just as soon as you are finished wondering, as I have wondered, as all far-seeing and cunning men throughout all of time have always wondered, "If not gold, then what?"

The bad news is that I am playing golf tomorrow, and I have not even been to the driving range in months, maybe years for all I know. And even when I DO go to the range I usually have to spend the whole time fending off people who are sure that I am some sinister extra-terrestrial from another planet, as they cannot believe that someone even remotely human from any place on the face of the earth would be so completely, utterly clueless as to the basics, when even human newborn babies can immediately grasp the fundamentals better than me. Ugh.

--- Mogambo Sez: Destruction and Living Hell are, according to this map, just down the road apiece. I can't tell how far, since the scale of the map fluctuates.

And the fluctuation in the scale is caused by the Fed's money and credit-creation. Fed fluctuation. Or, perhaps, if permitted to coin a phrase in my childish attempt to be vaguely obscene, the Fed is flucting us, which sounds a lot closer to what they ARE doing to us.

Richard Daughty
Jun 4, 2003

Also from Daughty:
Modern Literary and Communication Theory and Practice Jun 3

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.