Government Employees: The Last Great Consumer Base
by Richard Daughty
Previously by Richard Daughty: US Economic Outlook: Indebted to Death
Things in the economy are getting more and more stressful, and the company's revenues are down, precipitating the rumor around here that there are going to be more cuts in staff, and the odds are pretty good that I will be one of those unceremoniously fired since, ever since they fired Carl, I am now the company's worst employee.
So, to ease the stress, I am cheerfully telling myself It could be worse! although I am not sure how it could get worse for a lazy, worthless, irritable old man like me, in a bad economy, with no jobs to be had, and no hope for a recommendation from my boss or anybody I ever met, except maybe Carl.
Finally, I decided that it would be worse if they had decided to literally kill me instead of just killing my career so that I ended up starving in the gutter, which is, according to co-worker trash who seem to delight in my tragedy, what I deserve.
This led to me thinking of the French guillotining the aristocracy during the French Revolution, and how it was payback for what was seen as deplorable corruption, staggering income disparity, and a murderous inflation in consumer prices caused by excessive creation of money (Let them eat cake!)
I am sure that you can see where I am heading with this, especially knowing how easily I can slide into a Mogambo Rant Of Outrage (MROO) about inflation in prices at the least provocation. So it should come as no surprise that I start out by merely asking, How are things that much different today?
With a loud MROO, as predicted in the previous paragraph, I stand atop my desk and angrily shout, I ask this because of such statistical evidence as, for examples, the monetary base being up a whopping 19% in the last 12 months, price inflation rising, the Gross Domestic Product Deflator going up to 1.8%, and the national debt rising by a staggering $1.6 trillion since One Freaking Year (OFY) ago! OFY! We're freaking doomed!
Under a sudden barrage of staplers and miscellaneous office supplies hurled by my hateful troglodyte officemates, I duck/take shelter/sit back down, whereupon I again think to myself, How are things that much different today? especially when I consider such anecdotal evidence as, for examples, the kind found in The Financial Times article titled US Consumers feel the strain which chronicled the unpleasant aspects of this recession-leading-to-collapse, mentioning the Conference Board's consumer confidence number being down again, and the Fed's beige book report showing no growth, rising unusual uncertainty, all combined with up close and personal stories of people not being able to afford things anymore.
But not all was doom and gloom, as there was also a 57-year-old risk manager who is secure enough to spend — even lavishly! Wow!
So, where does this guy work and do they have any openings for a guy like me? Well, it turns out he works for the government. Well, actually, for Freddy Mac, the government-controlled mortgage company that would have been bankrupt a thousand times over if not for Congress continually taking money from taxpayers (either in taxes or in more deficit-spending) to give to Freddy Mac to cover their losses, and thus to give to this risk manager who is spending lavishly and who has recently bought a hardtop convertible car for his wife, just returned from Las Vegas, and would soon be heading to Aruba in the Caribbean for a week.
And let's not forget the laughable John Kerry, long-time Senate Democrat (More taxes! More spending for more social justice!) loser from Massachusetts (which seems to have a history of electing losers) who bought a new $7 million yacht, but instead of paying Massachusetts taxes on the purchase, he snuck across the border to buy it in Rhode Island, saving $437,500 in taxes and avoiding paying an annual excise tax of $70,000.
And let's not forget that the average government employee makes a salary-and-benefit package that is 100% bigger than the average private-sector employee, meaning that the servants make twice as much as the taxpayers who employ them, which could explain why my property taxes have gone up 1,000% since 1980, even as all my other taxes and fees rose, too, to keep ahead of price inflation that has averaged more than a disastrous 3% for 30 years (even as calculated by the government's own admittedly-adjusted-lower inflation numbers!) and where necessities are now increasing in price at terrifying rates of more than 6%!
In a related vein, The Telegraph newspaper reports that Britain's eight million investors are each paying an average of 800 pounds a year in hidden charges, expenses and fees in their investment funds, which is either more or less than 800 when converted to American dollars, not that it makes any difference because the point is that it is a lot of money for something that could be handled competently and automatically with a computer and a spreadsheet program for practically nothing.
All of these dysfunctional, corrupt, and stupid things make me despondent, but most of all I am preoccupied that I could be soon, and should be soon, getting fired from my stupid job because both the economy's performance and my job performance are so bad.
In my case, my main problem seems to be that I am incompetent and lazy, and in the case of the economy, is because this is the beginning of the bust that always follows a monetary and/or fiscal boom, such as the boom in which we wallowed like gluttonous pigs since the early '80s, when Reagan's tax cuts and deficit-spending were augmented with tax-deferred retirement programs being created by Congress so that money flowed, more and more until it was like a torrent, into Wall Street, and which was mightily aided and abetted by the foul Alan Greenspan, who was the chairman of the Federal Reserve from 1987—2006, whose constant, irresponsible increases in bank credit, decade after decade, turned things into almost three decades of roaring booms in stocks, and booms in bonds, booms in real estate, booms in derivatives, booms in sizes of governments and booms in the number of people who totally depend on government-dispensed money and benefits, on and on until I scream, Agggghhhh! in fear and despair.
So you can see how someone like me can be depressed and snotty with his wife, and kids, and bosses, and co-workers, and neighbors, and people around me who do anything stupid, like when they are driving their cars and who deserve much, much more than a severe, obscenity-laced tongue-lashing from me, Mister Safe-Driving Judge And Jury, but not, alas, executioner. Yet.
The only thing that keeps me even halfway sane is knowing that, for the meantime at least, I can still buy gold, silver and oil at such cheap prices, even in the face of looming catastrophic inflation in prices that always follows such rampant inflation in the money supply! Bargains!
And it is that fact, and that alone, that makes me absolutely giddy with delight, instantly dispelling the suffocating gloom and despair, whereby I happily exclaim, despite the pandemic stench of ruination and fear all around me, Whee! This investing stuff is easy!
August 6, 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.
Copyright © 2010 Richard Daughty