by Richard Daughty
The Daily Reckoning
I thought I had seen and heard it all after the ludicrous Ben Bernanke, asinine chairman of the Federal Reserve, announced that the official (and thus a lie!) 2% inflation in prices was too, too low, and he wanted higher inflation because, somehow, in some weird little fantasy world that only he and other neo-Keynesian econometric cyber-nerds can see, higher inflation is “consistent with the mandate of the Fed” to achieve stable prices (zero inflation)! Hahahaha!
This is so bizarre that I had a hard time dealing with it, as I have enough problems of my own in distinguishing reality from my own weird little mental world without this dimwit forcing his schizophrenia on me.
So I cleverly doubled up on some of my medications, which didn’t help much, although I finally did relax enough to unclench one fist.
Of course, the other mandate of the Fed came in the ’70s when Hubert Humphrey and other leftist weirdo morons changed the Fed’s charter to include a mission to, somehow, with magic perhaps but certainly with creating more and more money and driving interest rates down and down, always maximize employment. Maximize employment! How convenient an excuse for the Fed to create more money!
And speaking of maximizing, I thought I had, with this one statement by the chairman of the Federal Reserve to purposely create the horror of higher inflation, maximally achieved a state of complete loathing for the Federal Reserve.
With my newfound Maximum Mogambo Contempt (MMC) for Ben Bernanke and the Federal Reserve, you can imagine that I was not very surprised to see an essay with the title “Three Horrifying Facts About the US Debt Situation” by Graham Summers of gainspainscapital.com.
Initially, I was “ho-hum” mostly because I can, offhand, think of about a thousand horrifying facts about the US debt situation, and that is all without even touching upon the inflationary horror of the federal government deficit-spending untold trillions of dollars per year, year after year, increasing the national debt by borrowing an avalanche of money that the foul Federal Reserve magically creates out of thin air, and that the Federal Reserve will itself use, in an outrageous episode of historically treacherous monetary infamy known as “monetizing the debt,” to buy the trillions and trillions of T-bonds, a terrifying example of fiscal and monetary insanity that will, to wax poetic, reverberate through the ages.
You can tell by the way I ended that paragraph with a mere period instead of an exclamation point to denote horror and terror that I was pretty bored.
Well, I was, until he went on that, firstly, “The US Fed is now the second largest owner of US Treasuries” after just recently overtaking the stash of US bonds owned by Japan, “leaving China as the only country with greater ownership of US Debt.”
To his credit, he went on that the horror is that “we’re printing money to buy it. Setting aside the fact that this is abject lunacy, this policy is trashing our currency which has fallen 13% since June…as in four months ago. Want an explanation for why stocks, commodities, and gold are exploding higher?”
I raised my hand to make a comment about how, “We’re Freaking Doomed!” but before I could interrupt, he went on that, secondly, “There are only about $550 billion of Treasuries outstanding with a remaining maturity of greater than 10 years.”
Out of all this, he deduces the third point, which is that “The US will Default on its Debt.”
Apparently, he had a second thought about that “will default” thing, as he says, correctly, “either that or experience hyperinflation. There is simply no other option.”
I am happy to see that Mr. Summers still maintains some of that sunny optimism of youth, a quality that I completely lost years ago when the realization of the immense degree of stupidity and corruption in the world crushed my hopes, when he says that there are no other options except default or hyperinflation.
I say, ominously, which explains the scary and ominous soundtrack, that the other option is (pause for effect) “both.”
And speaking of “both” if ever there was a time when you should buy both gold and silver, this is it! And the fact that you can get them by merely plunking down depreciating Federal Reserve Notes in payment should make you giddy with delight, so that you giggle as you say, “Whee! This investing stuff is easy!”
October 26, 2010
Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron’s, The Daily Reckoning, and other fine publications.
Tuesday, October 26, 2010
Default or Hyperinflation: The US’s Only Two Options… Humor helps… | Project World Awareness
Posted by Elyssa D'Educrat at Tuesday, October 26, 2010