Keynesian Quackery
By: Richard Daughty, The Mogambo Guru - I get a real laugh ("Hahaha!") out of the emergency stimulus program of just giving away $150 billion dollars in $800 increments to various citizens, who total, I assume, 18,750,000 people at 800 clams apiece. Hahaha! Free money! We have now reached the point where the economy is so screwed up from the Federal Reserve's neo-Keynesian econometric stupidities that they are reduced to urging the Congress to give money away to keep the economy from imploding because they can't find people to loan money to at interest rates that are less than the rate of inflation? Hahaha! We're doomed!
And now, when every measure of inflation everywhere is higher than even profligate, lying bankers will admit is above their "comfort level" because they have flooded the economy with so much money for so long, the Federal Reserve is again advocating that more money and more debt flood into the economy by reducing the Fed Funds rate, in an emergency move, by a whopping 0.75% (18%!), taking the rate down to 3.5%! Wow!
Bob Wood of Kaizen Managed Assets opines that, "The amazing thing is that not a day goes by that either my local newspaper or the FT isn't filled with stories about rapidly rising consumer prices. The last thing any central bank should be doing is trying to inflate an economy already burdened by rapidly rising prices. And that is exactly what they want to do now! If this is not madness, nothing else is."
In case you were wondering, $150 billion is actually chump change. Hell, the federal deficit alone is over $600 a year! So $150 billion merely matches 3-month's worth of federal borrowing due to their overspending! Hahaha!
And the federal budget is about $3.4 trillion a year, resulting in federal spending (when actual deficits from "supplemental appropriations" are included) of more than $4 trillion a year! For crying out loud, total GDP, which is the total of all the goods and services created (and consumed) by the United States in an entire year, is only about $14 trillion!
And if that is not enough to make you gag up blood, when unfunded liabilities are accrued and added, the federal deficit alone, according to the GAO, was $4.5 trillion last year! The actual deficit was bigger than the budget itself! Yow!
Then we come to the startling realization that federal government spending is about $8 trillion, more than half of GDP! And when you add in the states and local governments also borrowing and spending, borrowing and spending, borrowing and spending, too, you are suddenly talking about 75% of GDP being government spending!
And now some piddly $150 billion is going to make a big difference in preventing the overdue bust at the end of the biggest boom the world has ever seen? Hahahaha! Stop! I'm laughing so hard my stomach hurts! Hahahaha! Stop! Stop! Hahahaha!
Wiping my snotty nose with one hand, with the other hand I turn to Mike Whitney, writing at InformationClearingHouse.info, who writes, "The Bush 'Stimulus Package' is the biggest and most obscene hyper-inflationary swindle ever perpetrated on the American people. It's a $100 billion, taxpayer-funded bailout that is being slapped together at breakneck-speed to forestall a collapse in consumer spending, an exodus of foreign capital, and a painful slide into recession."
Naturally, you immediately think of gold at a time like this, and how you don't have enough, and how you wish, wish, wish you had picked up a few more ounces. But if you did not, then you were not alone, as Rick Ackerman of Rick's Picks newsletter had been skeptical of gold, too, but started his latest column with the headline "Zealous Deflationist Sheds Gold Doubts." He writes, "Gold at $10,000 an ounce? Gurus and hard-money advocates have been predicting it for decades, ever since currencies began to seriously decouple from bullion in the 1930s. I've been skeptical of such forecasts myself, mainly because my deflationist imagination has always envisioned a world in which public and private bankruptcy had become pervasive. With credit unavailable, cash in extremely limited supply, and asset values wiped out by forced liquidations, who, I asked, would supply the bidding power to push bullion quotes into the stratosphere?"
Now, I figure, he knows the ugly truth; governments will create and spend as much money as they can, and there is the money he was looking for. And for proof of that, and all we have to do is look at the Bush "stimulus plan" to give away free money, or look at Zimbabwe to see how it can be done, as that godforsaken country has by now printed so much money and created so much price inflation that they were forced to now issue a $200,000 bill, worth about $4 or so. (Well, it must be a lot less by now, since it has been a few days since the news of the new money came out; price inflation in Zimbabwe is running at about 50,000% a year).
Perhaps because of this stimulus plan thing, or perhaps because of the Zimbabwe thing, or because of something else, like maybe how the CIA was controlling his brain with some kind of neural neutralizer ray gun or something and now their budget has been cut and the agents are reassigned to the "war on terror" or something, but whatever it was, Mr. Ackerman now says, "But that doesn't mean an ounce of gold cannot get bid up in the meantime to $10,000, however fleetingly, before the fiat money that is still accepted in exchange for gold has been exposed as a fraud."
Making up for lost time, perhaps, you can almost hear new-found enthusiasm in his voice when he says, "Take it from a deflationist who once scoffed at the notion of $10,000 gold: This rally is the real deal, and the $1,000 supposed 'barrier' is looking more and more to me like a launching pad."
Then, my Acute Mogambo Senses (AMS) detected a voice tremor, suggesting that maybe his mind was rebelling against the sheer intellectual corruption and desperation of the coming "tax rebate" giveaway, and it shocked him back into the gold camp. Well, this is my interpretation of why he hints, "Deflation might eventually knock gold back down to earth, so that bullion will have 'merely' retained its purchasing power in spades, but there is a lot of inflating to be attempted (futilely) by the central banks before that is likely to occur."
Then I knew I was right about it being the stimulus program that has unnerved him when he went on to say, "the chicken-in-every-pot that the U.S. government is about to offer Americans via a tax rebate is so puny and belated a 'solution' as to be laughable. Even if such Keynesian quackery could work, and even if the government were to enact a big enough giveaway to thwart deflation for perhaps a year or two - say, by offering every household a new Chevy Tahoe or a kitchen-remodel - it would only put us that much deeper in debt, since Congress would be spending money created from thin air rather than raised through taxes."
I love it! "Keynesian quackery"! Hahaha! The perfect phrase! I leap to my feet and shout "Bravo! Well said, young sir! Bravo!"
Well, Mr. Ackerman may have changed his mind about gold, but he has not changed it about giving me the slightest opportunity to run my Stupid Mogambo Mouth (SMM) about how wonderful gold is, and how "preserving wealth" is exactly what gold does, when all around it, things are losing their measure of "wealth", and I get more and more worked up until I am demanding that you immediately get up off of your dead, fat butt and go out and buy some gold right now. And silver, too!
To prevent this, he immediately goes on to say, "If you think the stimulus measures being promoted by the government will help restore the U.S. economy to health, then by all means, sell your gold assets and buy shares in Chrysler. For our part, we will reiterate our belief that gold has been, and will continue to be - at least for the foreseeable future -- the no-brainer investment of our lifetime."
No-brainer investment! That's the kind of thing I need, as I have no smarts of my own! Then I hear Ted Butler saying the same thing about silver, and I am confused, and I want to buy some of each. And a pizza. A big one.
And now, when every measure of inflation everywhere is higher than even profligate, lying bankers will admit is above their "comfort level" because they have flooded the economy with so much money for so long, the Federal Reserve is again advocating that more money and more debt flood into the economy by reducing the Fed Funds rate, in an emergency move, by a whopping 0.75% (18%!), taking the rate down to 3.5%! Wow!
Bob Wood of Kaizen Managed Assets opines that, "The amazing thing is that not a day goes by that either my local newspaper or the FT isn't filled with stories about rapidly rising consumer prices. The last thing any central bank should be doing is trying to inflate an economy already burdened by rapidly rising prices. And that is exactly what they want to do now! If this is not madness, nothing else is."
In case you were wondering, $150 billion is actually chump change. Hell, the federal deficit alone is over $600 a year! So $150 billion merely matches 3-month's worth of federal borrowing due to their overspending! Hahaha!
And the federal budget is about $3.4 trillion a year, resulting in federal spending (when actual deficits from "supplemental appropriations" are included) of more than $4 trillion a year! For crying out loud, total GDP, which is the total of all the goods and services created (and consumed) by the United States in an entire year, is only about $14 trillion!
And if that is not enough to make you gag up blood, when unfunded liabilities are accrued and added, the federal deficit alone, according to the GAO, was $4.5 trillion last year! The actual deficit was bigger than the budget itself! Yow!
Then we come to the startling realization that federal government spending is about $8 trillion, more than half of GDP! And when you add in the states and local governments also borrowing and spending, borrowing and spending, borrowing and spending, too, you are suddenly talking about 75% of GDP being government spending!
And now some piddly $150 billion is going to make a big difference in preventing the overdue bust at the end of the biggest boom the world has ever seen? Hahahaha! Stop! I'm laughing so hard my stomach hurts! Hahahaha! Stop! Stop! Hahahaha!
Wiping my snotty nose with one hand, with the other hand I turn to Mike Whitney, writing at InformationClearingHouse.info, who writes, "The Bush 'Stimulus Package' is the biggest and most obscene hyper-inflationary swindle ever perpetrated on the American people. It's a $100 billion, taxpayer-funded bailout that is being slapped together at breakneck-speed to forestall a collapse in consumer spending, an exodus of foreign capital, and a painful slide into recession."
Naturally, you immediately think of gold at a time like this, and how you don't have enough, and how you wish, wish, wish you had picked up a few more ounces. But if you did not, then you were not alone, as Rick Ackerman of Rick's Picks newsletter had been skeptical of gold, too, but started his latest column with the headline "Zealous Deflationist Sheds Gold Doubts." He writes, "Gold at $10,000 an ounce? Gurus and hard-money advocates have been predicting it for decades, ever since currencies began to seriously decouple from bullion in the 1930s. I've been skeptical of such forecasts myself, mainly because my deflationist imagination has always envisioned a world in which public and private bankruptcy had become pervasive. With credit unavailable, cash in extremely limited supply, and asset values wiped out by forced liquidations, who, I asked, would supply the bidding power to push bullion quotes into the stratosphere?"
Now, I figure, he knows the ugly truth; governments will create and spend as much money as they can, and there is the money he was looking for. And for proof of that, and all we have to do is look at the Bush "stimulus plan" to give away free money, or look at Zimbabwe to see how it can be done, as that godforsaken country has by now printed so much money and created so much price inflation that they were forced to now issue a $200,000 bill, worth about $4 or so. (Well, it must be a lot less by now, since it has been a few days since the news of the new money came out; price inflation in Zimbabwe is running at about 50,000% a year).
Perhaps because of this stimulus plan thing, or perhaps because of the Zimbabwe thing, or because of something else, like maybe how the CIA was controlling his brain with some kind of neural neutralizer ray gun or something and now their budget has been cut and the agents are reassigned to the "war on terror" or something, but whatever it was, Mr. Ackerman now says, "But that doesn't mean an ounce of gold cannot get bid up in the meantime to $10,000, however fleetingly, before the fiat money that is still accepted in exchange for gold has been exposed as a fraud."
Making up for lost time, perhaps, you can almost hear new-found enthusiasm in his voice when he says, "Take it from a deflationist who once scoffed at the notion of $10,000 gold: This rally is the real deal, and the $1,000 supposed 'barrier' is looking more and more to me like a launching pad."
Then, my Acute Mogambo Senses (AMS) detected a voice tremor, suggesting that maybe his mind was rebelling against the sheer intellectual corruption and desperation of the coming "tax rebate" giveaway, and it shocked him back into the gold camp. Well, this is my interpretation of why he hints, "Deflation might eventually knock gold back down to earth, so that bullion will have 'merely' retained its purchasing power in spades, but there is a lot of inflating to be attempted (futilely) by the central banks before that is likely to occur."
Then I knew I was right about it being the stimulus program that has unnerved him when he went on to say, "the chicken-in-every-pot that the U.S. government is about to offer Americans via a tax rebate is so puny and belated a 'solution' as to be laughable. Even if such Keynesian quackery could work, and even if the government were to enact a big enough giveaway to thwart deflation for perhaps a year or two - say, by offering every household a new Chevy Tahoe or a kitchen-remodel - it would only put us that much deeper in debt, since Congress would be spending money created from thin air rather than raised through taxes."
I love it! "Keynesian quackery"! Hahaha! The perfect phrase! I leap to my feet and shout "Bravo! Well said, young sir! Bravo!"
Well, Mr. Ackerman may have changed his mind about gold, but he has not changed it about giving me the slightest opportunity to run my Stupid Mogambo Mouth (SMM) about how wonderful gold is, and how "preserving wealth" is exactly what gold does, when all around it, things are losing their measure of "wealth", and I get more and more worked up until I am demanding that you immediately get up off of your dead, fat butt and go out and buy some gold right now. And silver, too!
To prevent this, he immediately goes on to say, "If you think the stimulus measures being promoted by the government will help restore the U.S. economy to health, then by all means, sell your gold assets and buy shares in Chrysler. For our part, we will reiterate our belief that gold has been, and will continue to be - at least for the foreseeable future -- the no-brainer investment of our lifetime."
No-brainer investment! That's the kind of thing I need, as I have no smarts of my own! Then I hear Ted Butler saying the same thing about silver, and I am confused, and I want to buy some of each. And a pizza. A big one.
1 comment:
Lord William Rees-Mogg suggested paraphrasing "to hang on to gold until the confidence in the dollar is restored. Then sell it"......that could be a LONG time with any of the current Presidential candidates, with the exception of Ron Paul. Gary North says that only barter will be useful in a collapse but that gold will be good in the run up to pay off debts ... And be good in the aftermath of a collapse to have capital to make good investments. Terribly interesting times in the very worst sense!
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