'We the People' Who Prefer Deflation
by The Mogambo Guru
Buchanan, writing at AmConMag.com,
We Kill the Fed? which is such a good idea that I herewith
volunteer to forthwith do the job as soon as my embarrassingly huge
salary and benefit package is finalized.
My plan is
to immediately fire them all, blackballing them so that none of
them ever again work, or volunteer at any business connected, even
remotely, with economics or monetary policy, whereupon I would then
burn the Federal Reserve place to the ground, letting the burned-out
ashes remain there forever as a fabulous-yet-graphic reminder to
future Americans as to what the hell will happen when you ignore
your own Constitutions requirement that money be gold, and
then compound your laughable folly by letting an evil institution
like the Federal Reserve create too much money and credit out of
a fiat currency, which causes inflation in prices, and especially
for the horrifying purpose of allowing the federal government to
constantly deficit-spend and grow, which causes flammable distortions
in the economy as it is naturally skewed toward selling what government
is paying for.
sacred Place of Burned-Out Ashes idea is a perfect metaphor
for the results of having a fiat currency, especially in the hands
of a central bank that has no scruples or real understanding of
economics, and as such, I was going to nominate myself for several
major awards, one of them being a Nobel Prize Humanitarian Award
(which I understand comes with a huge wad of cash as part of the
prize, which would come in real handy right now, I gotta tell ya!)
for, Doing the most to help mankind by ridding the world of
the horrors stemming from fiat currencies and the moronic bastards
that abuse this worthless paper money to their own, irretrievably
Time Magazine to award me the cover as Man of the Year,
and maybe a guest spot on The Daily Show with Jon Stewart, where
my plan is to ask him how much gold he has, and when he admits he
doesnt have any, then Ill loudly expose him for being
a moron, too! Hahaha! Ill be famous!
And then, when
the producers of the show stand transfixed in surprise at this unexpected
turn of events, I will leap atop the table and declare, America
demands that you fire this Jon Stewart guy and hire me, The Mogambo,
to do his job, at an even bigger salary and benefit package than
he had, since I seem to be the only freaking guy around here who
knows what in the hell is going on!
But this is
not another Dream Of The Mogambo (DOTM) that never seems to work
out, my spirit crushed and destroyed like the buying power of a
fiat currency under the hobnail boot of a spendthrift, moronic,
socialist Congress and an insane Federal Reserve which has completely
failed in its Congressionally chartered mandate to provide price
stability, as the dollar has lost 97% of its buying power
since the Fed took over in 1913! Nice going, dorks!
And now we
have the damned chairman of the Federal Reserve, Ben Bernanke, consistently
advocating a bizarre inflation target of 2%, whereby
he will use monetary policy to get a minimum rise in prices of at
least 2% a year! Insane! This isnt price stability! This is
All of this
Fed-supplied inflation in the money supply will guaranteed!
cause more inflation in prices, which is perversely just
what the Fed and Congress want.
I say perversely
because inflation is the one thing that we, the people, do NOT want.
We, the people, like the idea of a deflation where prices go down,
or at least no inflation in prices!
But this dreaded
deflation in prices means capital losses for the Fed, Congress and
their rich friends, capital gains losses for them and their rich
friends, and losses of tax revenue to the government, which is also
mostly run by them and their rich friends for the benefit of themselves
and their rich friends.
on the other hand, means higher prices, higher capital gains and
higher tax revenues for them and their friends, all at the expense
of someone else: the taxpayer/consumer, which is, at last count,
you and me. What a scam!
The big problem,
of course, is that everything already has an inflated price, as
Mark Faber of GloomBoomDoom.com
writes, What Mr. Greenspan and Mr. Bernanke have achieved
is historically quite unique. They have managed to create a bubble
in everything, everywhere in the world: in real estate, equities,
commodities, art, worthless collectibles; even bond prices continued
to rise as interest rates fell due to loose monetary policy
which is not to even mention the humongous size of government itself,
and the cost of compliance with all the regulations of the government,
all of which show up in the higher prices that people have to pay,
which is one of my Particular Mogambo Peeves (PMP).
On the other
hand, I should cheer up, as Mr. Buchanan has given me the idea to
finally listen to the voices in my head that say, Youre
fine! You dont need medications! Stop taking them and then
burn! Burn everything!
seems to be, I guess, that I should apply their burn everything!
suggestion to the Fed, a mission made more imperative when he notes
that in the period around 1930 (the start of the Great Depression),
prices had risen so high (thanks to the Federal Reserve creating
the excess money and credit that produced the Roaring Twenties)
that, now that the boom was ending with record amounts of debt,
prices were simply returning to where they belonged in a free
market, the first step in any cure.
He says that
FDR, on the other hand, mistook the consequences of the Depression
falling prices for the cause of the depression. Terrified
of the bogeyman that causes Ben Bernanke sleepless nights
deflation, falling prices FDR ordered crops destroyed, pigs
slaughtered, and business cartels to cut production and fix prices.
This was, admittedly,
bad news for a lot of people back then, but that was more than 70
years ago, and now they are mostly all dead, and none of them left
you so much as a dime in their will. So to hell with them!
to us in general and me in particular, I
gather that we may soon envy how easy they had it during the Great
Depression, as Obama is repeating the failed policies of Hoover
and FDR, by refusing to let prices fall which he does by intervention
to prop up housing prices and Bernanke with his gushers of money
which are all being used badly, as the staggering mountains of bailout
money going to bankrupt banks and businesses are creating
a new bubble that will burst even more spectacularly.
Then without a note of sarcasm or hint of irony, he hints at the
expensive futility of it all with the brilliant summary: Now
the money supply is again expanding, to rescue us from a crisis
created by the previous expansion.
I note with
satisfaction that, as I recall, the last monetary expansion
of Alan Greenspan (which has now been completely eclipsed by Bernanke
in cahoots with the Treasury Department) saw gold rise from a low
of about $260 an ounce to over $1,000.
With a little
childishly linear extrapolation, a little history, a little Austrian
school of economics, and an awesome abundance of Sheer Mogambo Arrogance
(SMA), I gotta tell ya, if you aint buying gold, then you
are betting everything you have, or are going to have, on something
succeeding that has never succeeded, no matter how many people tried
to make it succeed, in all of history.
guys owning gold have won every long-term bet against fiat currencies
in all of history! 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 Barrons, The
Daily Reckoning, and other fine publications.
© 2009 Daily Reckoning