Excess Dollars for Burgers and Falafels
By: Richard Daughty, The Mogambo Guru
I slept right through it, as there were no alarms raising a ruckus in the Impregnable Mogambo Steel-Reinforced Fortress (IMSRF), even as Total Fed Credit expanded $1.4 billion last week, taking the total to $866 billion. It wasn't much, as money-and-credit-creating calumny at the Federal Reserve usually goes, but a few warning bells rang when the banks gorged on $55 billion in repos last Thursday! Wow! $55 billion! In one day!
After this most surprising repo thing, I almost overlooked the fact that that Currency in Circulation, which is actual money in the form of bills and coins, jumped by $5.2 billion last week, too.
There may be lots of reasons for such a large infusion of cash, which works out to about $50 for everybody that has a damned job in the whole country. But I knew something fishy was up because when I ask these people to loan me a lousy $10, which I helpfully point out leaves them with $40, which is probably about four times as much as I am asking for, they say they don't have any money at all! Even when I leap upon them and turn their pockets out to see if they are lying to me, they're not! They don't have the money on them!
So I conclude that the government is using the cash for their payoffs, bribes and corruptions, probably for some more of that filthy Iraq-Afghanistan-Iran-Pakistan-North Korea corrupt crap and God-knows what other Congress or CIA outrages are being pulled.
But whether or not the money is spent for a burger here on the streets of the USA, or spent for a falafel in the hot sands of a barren desert, the global glut of dollars is expanded by another $5.2 billion nonetheless, bloating the money supply by the little bit more and driving down the value of all the existing dollars, like the ones in your wallet, so when you go to the store to buy something, like a tasty falafel, and you take out your wallet to pay, you will notice that the prices of the stuff you are buying has really gone up, and the pathetically few dollars that you have in your wallet are suddenly inadequate to the task of buying anything! And you're hungry, damn it!
And the worst news is that it is going to get worse, as John Williams' of shadowstats.com reports, "The Bureau of Labor Statistics (BLS) reported the seasonally-adjusted CPI-U" in October was a reading 3.5% inflation in prices, but Mr. Williams figures that "Adjusted to pre-Clinton (1990) methodology, annual inflation was about 6.9%, up from 6.1% in September, while the SGS-Alternate Consumer Inflation Measure (1980 methodology) showed October's annual inflation at roughly 11.1%." Eleven freaking percent inflation!
I am trying to calm myself, forcing myself to think analytically, and I realize that this makes sense, because rising prices always follow rises in the money supply, and from the very same John Williams we learn that according to his calculations, the annualized growth of M3 (the broadest measure of the money supply) is roaring along at 15.2% in October, "the highest level since August 1971 (closing of the gold window), up from 14.7% in September and 13.9% in August." I gulp in horror.
Taking up an Uzi in my trembling hand, I am suddenly brave and bold enough to bellow, "What in the hell is going on here? Inflation in prices is freaking roaring all around us, and yet there is no panic? This is the stuff of nightmares!"
And if you are thinking that you are about to lose your freaking mind at the prospect of inflation at a terrifying 11%, then you will wonder what to do. In fact, many people ask, "What Would The Mogambo Do (WWTMD)?", especially those people who are so frightened at what is happening with the economy that they are pooping in their pants.
If this describes you, your question will be answered by merely looking on page one of the Mogambo Big Book Of Economics Stuff (MBBOES), and you will be enlightened by the suggestion to contemplate gold.
Once properly fixated on gold, then your thinking will be crystal-clear and your future will be filled with glory and wealth, because even using the government's own pathetic, tortured-into-lies October 2007 CPI statistic to inflation-adjust (devalue) actual dollars, gold would have to sell for $2,283 per troy ounce, right now, to merely equal gold's old high price in January, 1980, when things were a hell of a lot better than they are now.
Even more delicious, based on those terrifying October 2007 SGS-Alternate CPI dollars, Mr. Williams uses this same "inflation measured the classical way" to inflation-adjust those dollars to calculate that the peak gold price of $850 per ounce, hit in January 1980, would now be $6,030 per troy ounce today!
So I jump up and excitedly yell, "And that $6,030 an ounce is based on conditions right now! And by the time gold advances from a measly $800 an ounce to $6,000, economic conditions will be much, much worse, and you will be writing something like 'For gold to reach its 1980 high of $850 per ounce, gold would have to sell for $37,250 per ounce today'. And then that will be based on the economic conditions that day, too, and things will be much worse when gold nears $35,000 an ounce, and then you will be writing 'For gold to reach its 1980 high of $850 per ounce, gold will have to sell for $245,385 an ounce today'!"
With remarkable self-control at my rude interruption, Mr. Williams motions to the security guards and casually remarks, "The suggestion is that the price of gold still faces some catch-up." And man, oh man, that is going to be sweet!
Not the surly security guards escorting me out of the door, as that was not sweet at all, but the part about gold being $6,000 an ounce when it catches up to fundamentals! And then on from there! Whee!
After this most surprising repo thing, I almost overlooked the fact that that Currency in Circulation, which is actual money in the form of bills and coins, jumped by $5.2 billion last week, too.
There may be lots of reasons for such a large infusion of cash, which works out to about $50 for everybody that has a damned job in the whole country. But I knew something fishy was up because when I ask these people to loan me a lousy $10, which I helpfully point out leaves them with $40, which is probably about four times as much as I am asking for, they say they don't have any money at all! Even when I leap upon them and turn their pockets out to see if they are lying to me, they're not! They don't have the money on them!
So I conclude that the government is using the cash for their payoffs, bribes and corruptions, probably for some more of that filthy Iraq-Afghanistan-Iran-Pakistan-North Korea corrupt crap and God-knows what other Congress or CIA outrages are being pulled.
But whether or not the money is spent for a burger here on the streets of the USA, or spent for a falafel in the hot sands of a barren desert, the global glut of dollars is expanded by another $5.2 billion nonetheless, bloating the money supply by the little bit more and driving down the value of all the existing dollars, like the ones in your wallet, so when you go to the store to buy something, like a tasty falafel, and you take out your wallet to pay, you will notice that the prices of the stuff you are buying has really gone up, and the pathetically few dollars that you have in your wallet are suddenly inadequate to the task of buying anything! And you're hungry, damn it!
And the worst news is that it is going to get worse, as John Williams' of shadowstats.com reports, "The Bureau of Labor Statistics (BLS) reported the seasonally-adjusted CPI-U" in October was a reading 3.5% inflation in prices, but Mr. Williams figures that "Adjusted to pre-Clinton (1990) methodology, annual inflation was about 6.9%, up from 6.1% in September, while the SGS-Alternate Consumer Inflation Measure (1980 methodology) showed October's annual inflation at roughly 11.1%." Eleven freaking percent inflation!
I am trying to calm myself, forcing myself to think analytically, and I realize that this makes sense, because rising prices always follow rises in the money supply, and from the very same John Williams we learn that according to his calculations, the annualized growth of M3 (the broadest measure of the money supply) is roaring along at 15.2% in October, "the highest level since August 1971 (closing of the gold window), up from 14.7% in September and 13.9% in August." I gulp in horror.
Taking up an Uzi in my trembling hand, I am suddenly brave and bold enough to bellow, "What in the hell is going on here? Inflation in prices is freaking roaring all around us, and yet there is no panic? This is the stuff of nightmares!"
And if you are thinking that you are about to lose your freaking mind at the prospect of inflation at a terrifying 11%, then you will wonder what to do. In fact, many people ask, "What Would The Mogambo Do (WWTMD)?", especially those people who are so frightened at what is happening with the economy that they are pooping in their pants.
If this describes you, your question will be answered by merely looking on page one of the Mogambo Big Book Of Economics Stuff (MBBOES), and you will be enlightened by the suggestion to contemplate gold.
Once properly fixated on gold, then your thinking will be crystal-clear and your future will be filled with glory and wealth, because even using the government's own pathetic, tortured-into-lies October 2007 CPI statistic to inflation-adjust (devalue) actual dollars, gold would have to sell for $2,283 per troy ounce, right now, to merely equal gold's old high price in January, 1980, when things were a hell of a lot better than they are now.
Even more delicious, based on those terrifying October 2007 SGS-Alternate CPI dollars, Mr. Williams uses this same "inflation measured the classical way" to inflation-adjust those dollars to calculate that the peak gold price of $850 per ounce, hit in January 1980, would now be $6,030 per troy ounce today!
So I jump up and excitedly yell, "And that $6,030 an ounce is based on conditions right now! And by the time gold advances from a measly $800 an ounce to $6,000, economic conditions will be much, much worse, and you will be writing something like 'For gold to reach its 1980 high of $850 per ounce, gold would have to sell for $37,250 per ounce today'. And then that will be based on the economic conditions that day, too, and things will be much worse when gold nears $35,000 an ounce, and then you will be writing 'For gold to reach its 1980 high of $850 per ounce, gold will have to sell for $245,385 an ounce today'!"
With remarkable self-control at my rude interruption, Mr. Williams motions to the security guards and casually remarks, "The suggestion is that the price of gold still faces some catch-up." And man, oh man, that is going to be sweet!
Not the surly security guards escorting me out of the door, as that was not sweet at all, but the part about gold being $6,000 an ounce when it catches up to fundamentals! And then on from there! Whee!
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