by Richard Daughty: Why
Some Think a Gold Standard Wouldn't Work
I have been
grudgingly getting to work every day and on-time since, unfortunately,
it looks like my incompetence, stupidity and sheer lazy worthlessness
is going to produce another losing quarter, and the rumor is that
the Board of Directors is looking for heads to roll.
me to suggest to my boss that instead of firing me, the company
should bail out the business segment that is losing money (mine)
by loaning money to it, which everyone knows will never be paid
back, so that the consolidated company books could show a huge tax-deductible
loss by virtue of loss reserves on the eventual default, and my
little division could also help the bottom line by booking a tax-deductible
interest expense on the loan that we never pay back!
explained how the important benefit would be, of course, that I
could continue to be my happy – although incompetent, stupid
and lazy – self, there would be bonuses for the executive staff,
and the company would benefit when everyone would look at me and
say to themselves, “Wow! The company must be doing very well
if they can afford to hire a half-witted clown!” which will
create a kind of “wealth effect”! Money will start flowing!
I explained to her, breathless with my hopeful optimism, “It’s
Or, I said,
triumphantly playing my ace of trumps, the accountants could find
a way to “lose” all the money and save enough in evading
taxes to offset the whole deal!
Well, I could
tell by the look on her face that she was not very keen on the idea
to, as she put it, “dare to come into my office and suggest
that we commit fraud and evade taxes so that we all land in prison
and die in disgrace” but I calmly explained that the Federal
Reserve apparently can’t account for $9 trillion in their own
off-balance sheet transactions, and nobody is under arrest, or going
to jail, or being investigated, or anything! $9 trillion! In an
economy that has a GDP of $14 trillion!
I went on, “our piddly fraud would be but a triviality compared
to $9 trillion, which is a Huge Freaking Amount (HFA) of money,
in that it is a whopping 65% of GDP and (coincidentally) 65% of
the national debt, and is 4.8 times larger than the entire monetary
base of the Whole Freaking Country (WFC)!”
She was visibly
choking on her outrage, which I suspected was because she thought
I was making this up as part of another Mogambo Scheme Of Desperation
(MSOD) to save my worthless butt from the firing squad.
So, to allay
her suspicions, I told her that I got this information from Money
News, which reported that when “Rep. Alan Grayson (D-Orlando)
asked Inspector General Elizabeth Coleman of the Federal Reserve
some very basic questions about where the trillions of dollars that
have come from the Fed’s expanded balance sheet, the IG didn’t
“nobody at the Fed seems to have any idea what the losses on
its $2 trillion portfolio really are,” which probably explains
why Rep. Grayson said, “I am shocked to find out that nobody
at the Federal Reserve is keeping track of anything.”
commenting on this interesting news item, said, “During the
questioning of Coleman, Grayson asks her over and over if there
is a formal accounting available for the trillions in off-book balance
sheet activity for the Fed” until she finally “all-but-admits
that she actually has no authority even to examine the Fed’s
off-balance sheet activities.”
This is where
I got all excited at the possibilities, and said, “So all we
have to do is to deny anybody the authority to look at a secret
set of books!”
my stupid boss nixed my Terrific Mogambo Plan (TMP), and now I am
desperate enough, and scared enough, about losing my stupid job
that I show up, on-time, every stupid day to do my stupid job, whereupon
I have rediscovered that I hate working and all that effort and
striving to be at least minimally competent, which means I have
to spend a lot of my Valuable Mogambo Time (VMT) actually handling
stupid problems instead of, like previously, ignoring them until
they somehow solve themselves or just mysteriously go away.
The worst part,
of course, is that I have to be around my stupid co-workers, who
stupidly do not buy gold, silver and oil when the horrid Federal
Reserve is creating so much money, and even when I tell them that
they are stupid for not buying them, they still don’t buy them!
I suppose, the same “common people” who went another $2
billion deeper in installment debt last month, taking that source
of indebtedness back up to $2,411 billion, which is a cool $24,110
for every private-sector worker in the Whole Freaking Country (WFC),
which is an important statistic since only private-sector workers
can make a profit with which to pay the taxes which supports half
the economy already!
the money was used for “personal consumption expenditures,”
which increased $17.3 billion, or 0.2%, according to the Bureau
of Economic Analysis, which also reports that “Personal income
decreased $16.8 billion, or 0.1 percent, and disposable personal
income (DPI) decreased $20.3 billion, or 0.2 percent, in September.”
less money, even as things cost more! Yikes!
And as for
the terror of inflation and especially the ruinous, runaway inflation
that will result from the Federal Reserve creating so much money,
the new Gross Domestic Product Deflator is understandably up, hitting
2.3%, which is up from last month’s 1.9%.
some inflammatory and meaningless statistics in a pathetic attempt
at attention-getting, I breathlessly declare that this is a gigantic
21% increase in the growth of inflation! Which it is! Check it yourself,
moron, if you don’t believe me!
And with the
evil Ben Bernanke purposely misusing the Federal Reserve to “target”
2% inflation in prices by creating – out of thin air –
whole multiples of that in new money as a percentage of the money
supply, the Fabulous Mogambo Advice (FMA) to buy gold, silver and
oil as protection against such inflationary horrors rings clearer
and louder, although it can be argued that the ringing of inflationary
horror can ring louder, but not necessarily clearer.
And as for
easy, it hasn’t gotten any easier, either, because it is already
so easy to buy gold and silver (“Here’s my money, gimme
my metal!”) that those who buy them justifiably say, “Whee!
This investing stuff is easy!”
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.