Plunging Into A Post-Apocalyptic Nightmare (The Mogambo Guru)

Richard Daughty, the angriest guy in economics -- World News Trust

Sept. 9, 2009 -- TAMPA BAY, Fla. -- If you want to know what kind of monetary morons we have in charge of the Federal Reserve, then you have come to the right place, because a record of sorts was set last week, in that the loathsome, disastrous Federal Reserve bought up, in the last 12 short months, $1.011 trillion in U.S. government securities! Yikes!

And remember; this is the Federal Reserve! This is a lousy private bank operating irresponsibly, at the behest of the Congress, and whose shadowy owners include, to one degree or another, foreigners and foreign central banks that are operating by the grace of their own governments which are just as corrupt and desperate as our own, but it was the Fed that created enough money to buy a trillion dollar's worth of U.S. government bonds for itself! A trillion!

It's called "monetizing the debt," which Ben Bernanke said, in response to a direct question about it recently, that the Fed would "never" do!  "Never" has now been re-defined to mean "continually?" Hahaha! Too much!

As an astute observer, you figure this must be pretty bad, gauging by the way I make a Very Loud Mogambo Fuss (VLMF) about it and droplets of spittle are flying from my flapping lips at supersonic speed as a throbbing vein is bulging out on my forehead.

And since a lot of this money was spent to buy government debt, how big was the federal budget deficit? You will be sorry you asked, and if you want to know the actual size of the actual federal deficit for the actual last year because you are pretty sure that the government is lying to you about the real size of their deficit-spending, then you have also come to the right place, because Treasury Public Debt is, as of last Friday, $11.797 trillion, whereas 12 lousy months ago it was $9.667 trillion, meaning that even if you are not sober enough to get this damned calculator to work or see those tiny little numbers, you can do the subtraction in your head!

The actual, in-your-face federal deficit was $2.130 trillion in the last 12 months! The deficit-spending by Congress is a whopping 15.2 percent of GDP, for crying out loud!

And if you are collecting unemployment, then you will be interested to know that the federal contribution to your check could have been painlessly almost doubled, as, according to Wikipedia, the 2009 federal budget had $360 billion for "Unemployment/Welfare/Other," while the budget also had another $260 billion that could be used to help you out, but had to be spent for "Interest on National Debt."

In short, if the damned government did not borrow and spend us into the poorhouse, causing your unemployment and impoverishment, the government would have had another $260 billion to help you and the other unemployed instead of only being able to budget $350 billion!

And this brings up the interesting point that since the national debt is $11,790 billion and this "interest on the national debt" is $260 billion, this means that the government is paying an average of 2.2 percent interest! Wow!

And remember that this $2.130 trillion increase in the national debt is just the deficit in Congressional spending, which doesn't even include the $2.6 trillion in the budget that was "paid for" by offsetting revenues!

So, being the cantankerous sort that I am, suspecting treachery at every turn and disaster at the hands of the corrupt, the ignorant and the stupid that we lovingly call "Congress", let me note that the morons of Congress have spent $2.6 trillion plus $2.1 trillion equals $4.7 trillion, which they spent in a $14 trillion economy!  The government is spending the equivalent of 34 percent of GDP!  Gaaahh!

And it is going to get worse and worse because the Fed is doing the more and more of the same thing that created the economic problem in the first place!  Gaaahhh! We're freaking doomed!

But this time, instead of over-reacting, I sigh in relief -- aaaaaahhhhhh!  -- as I remember the last 4,500 years of history when governments acted monetarily and fiscally irresponsible, and how owners of gold, silver and energy did very, very well, which is the whole point of this investing stuff!

And the fact that it is so easy makes you say "Whee!"

***

As one more bit of proof that the education system of the United States is a dysfunctional piece of liberal crap, how else to explain the fact the far-leftist moron Michael Moore actually got funding, which assumes an interested audience, for his latest movie, titled "Capitalism: A Love Story," which, according to Reuters, "launches an all out attack on the capitalist system, arguing that it benefits the rich and condemns millions to poverty." Hahaha!

Well, to be fair, it is not capitalism that condemns millions to poverty, but instead the poor are doomed by the destruction of the purchasing power of the little bit of money that they get and things cost too much for the poor to afford them, and which is deliberately caused by a government so stupid (audience shouts out "How stupid, Wonderful And Wise Mogambo (WAWM)?") that it deficit-spends money on the poor to alleviate their poverty by allowing the Federal Reserve to produce large, persistent expansions in the money supply with which to buy up the government debt, an expansion of the money supply which erodes the purchasing power of the money, so that the little bit of money owned by the poor doesn't buy as much!

If the education system of the USA and Canada (Mr. Moore is said to be a Canadian) were not so egregiously bad, he would know that fact, and everybody would know that fact, and so when he went to some producers and said he wanted them to finance a new documentary about how capitalism is evil and (I assume) communism is good, they would have laughed in his face and said "Hahahaha! Where did you get such a stupid idea? Are you some kind of moron?"

Or, alternatively,  he could have saved a lot of time and just come to me and asked me and I could have told him "Hahahaha! Where did you get such a stupid idea? Are you some kind of moron?"

Unfortunately, he did not learn anything from all of that, and actually has the movie concluding that, unbelievably, that "Capitalism is an evil, and you cannot regulate evil. You have to eliminate it and replace it with something that is good for all people and that something is democracy." Hahahahahaha!

The use of the extra-long "Hahahahahaha!" is my clever way of indicating that this is where a Junior Mogambo Ranger (JMR) who has achieved even a glimmer of True Mogambo Enlightenment (TME) starts laughing in Sublime Mogambo Scorn (SMS)! Hahahahahaha! Just like that! SMS!  Hahahahaha!

I thought I was calmed down and was reaching for a bottle of something alcoholic so as to deaden the pain of my stomach hurting from so much laughing when I starting laughing all over again when my eyes again fell across the idea that democracy replaces capitalism! Hahahahahaha! I never heard anything so stupid! Hahahahaha!

The first thing that comes to mind, of course, is "Did democracy finance his stupid documentary, or some capitalist?" Hahahaha!

Beyond that, the mind reels! While we are at it, why not replace the production of expensive gasoline not with democracy, but with a super-majority voting system? And we could heat our houses with gang rule! And we can replace expensive food with some dictatorship! Wow! There's no end of what you can do if you are willing to be ridiculous! Hahaha!

The dismal fact is, in case you were wondering, that capitalism in free enterprise is the only hope that the poor have, if not by sheer dint of theoretical argument that creating jobs is vastly superior to government handouts, then by the complete lack of any successful enrichment of the poor by any other method, mostly because they involve the government creating more and more money which destroys the purchasing power of the little bit of money that the poor had.

But since we Americans have decided, with a stupidity that absolutely staggers the imagination, to prove, once again, that exact same, sad, sorry lesson repeated and repeated over 4,500 years of history, then investing becomes easy when another lesson from that same 4,500 years of history is to own gold!

In fact, it becomes so easy that you can't help but giggle "Whee!"

***

In another episode where the comics page eerily mirrors real life, a recent Garfield cartoon has Garfield confronting a resident rat who has been taking cheese, but leaving IOUs, from the "cheese drawer" of the refrigerator. Garfield threateningly says to the rat "Stop with the IOUs" and the rat calmly holds up his hand in protest and says, with a look of utter sincerity on his face, "No, no… I'm good for it"!

Perhaps it is my Refined Mogambo Sense Of Humor (RMSOH), or perhaps it is my equally-refined Mogambo Sense Of Scorn (MSOS), but either way, using a diseased, lying, filthy, corrupt, thieving rat as a metaphor for Congress is the funny-because-it's-true part! Hahaha!

I remember it because I was reading the comic strip before I fell asleep on the couch, snoring and snorting and having a wonderful time while taking a well-deserved nap after spending the busy morning writing hate mail to the Federal Reserve ("Dear Morons, I hate your guts because you are the weenies who have so little intelligence that you let the foul Alan Greenspan, chairman of the Federal Reserve 1987-2006, create So Damned Much Money (SDMM) and with So Damned Little Oversight (SDLO) that it allowed massive, MASSIVE  bubbles in debt that produced bubbles in stocks, bubbles in bonds, bubbles in houses, bubbles in consumer spending, bubbles in derivatives, and huge, backbreaking bubbles in size and cost of government, and now we're freaking doomed! Sincerely, Anonymous in Florida and fed up with you clowns!").

I was just in that delicious part of my nap where I usually begin dreaming of wonderful things that might have been, had I only been prescient enough to say "Marry you? What? Are you freaking crazy or something?" or "Have some kids? What? Are you freaking crazy or something?", but still buying lots of gold, silver and oil with which to get Fabulously, Fabulously Rich (FFR) so that I could tell lots and lots of other beautiful women "Marry you? What? Are you freaking crazy or something?"

Let's just say that fantastical things were getting dreamed up pretty good, if you catch my drift, when the kids come running in with a copy of Barron's in their hands, yelling "Wake up, daddy! Wake up! You can raise our allowances even if your income is down! There's a way to do it! Wake up!"

I was lazily rubbing the sleep from my eyes and carefully watching to see if any of them came close enough that I could reach out and smack them for so rudely waking me up, which I feel empowered to do because that is what my wife did to me for doing the same thing just the other day.

I mean, there I was, early in the morning before the sun was even up, nervously looking at our finances and coming to the only conclusion I could; "The kids have got to go!" Before I knew what I was doing, I went running into their rooms, honking an air horn and anxiously yelling "Get up! Fire! Get up and get out of the house! Emergency! Get out! Get out of the house!", whereupon they all went rushing outside in their pajamas and I locked all the doors so they couldn't get back in.

It was, I admit, probably my most pathetic, desperate attempt to clutch at the only straw I had left, a move that led to the aforesaid incident of my wife hitting me, and the police watching her do it, yet doing nothing about it, and the kids wailing "We're so traumatized! He's a horrible person who doesn’t give us enough money in our allowances! Boo hoo hoo!"

But they were right about the S&P 500 "paying more while making less"!  The companies in the S&P 500 have been paying out $21.45 in dividends, which is whole multiples of the $7.90 that they have been actually earning, probably explaining why the index sells at a price so high (over $1,000), that the price-to-earnings ratio is 128! Hahaha! Unbelievable! Hahaha!

So, the kids rightfully pointed out, the companies in the S&P 500 are paying more than they are making, and so there must be a way for me to pay them more than I make, too, and the only reason that I don't give them more money to offset their rising costs is that I am stingy and hateful, which is true but not breaking any new ground, just as it is also true that buying these stocks at the price of the index would take an investor 128 years of getting everything the companies earn just to break even!   Hahahaha!

It gets weirder when you realize that the companies would go broke long before that, because they are always paying out more than they make!

So I look at them and say "And what kind of Stupid Moron Crap (SMC) is that?"

It was heartbreaking to see the disappointment in their eyes and hear it in their tender, young voices as they were telling me how monstrously cruel I am and how much they hate me, but I am still buying gold, silver and oil with every dime I can manage to keep out of the greedy, grubby hands of the kids, wife, family members and bill collectors, and soon they will understand why, and, if they are good, like not ever again waking me up from a nap, grow fabulously wealthy, insanely wealthy, preposterously wealthy along with me and all the other people who are buying gold, silver and oil as a defense against unbelievable government deficit-spending and monstrous amounts of money creation by the Federal Reserve, which is so ridiculously easy that you hear yourself saying "Whee!"

***

I really got a laugh out of the report from Bloomberg that the Democratic Party of Japan, known in the parlance as DP, won an historic victory in the recent elections, coming to power for the first time in decades with "a pledge to support households battered by two decades of economic stagnation," whatever that is supposed to mean, but which is, upon even casual inspection, Standard Political Crapola (SPC).

The interesting part is that the new prime minister, a guy named Hatoyama, said "he’ll avoid more bond sales, so new spending will depend on his success in shrinking the bureaucracy and public works programs,” which is so laughably, ludicrously impossible, especially in such a corrupt, lopsided economy that it makes me, a stupid American who really doesn't know what in the hell he is talking about, who lives thousands of miles away, in another country and hemisphere, turn up his nose at the sheer stink coming from that idea! Phew!

Of course, this valuable piece of Righteous Mogambo Scorn (RMS) is because it is obviously, obviously too, too late for that.

It is too late, just like it is too late here in the USA, and just like it is too late almost everywhere else, too, where years and years of increasing government spending and control means that government IS the economy, and shrinking the size of government obviously shrinks the economy! Hahahaha! Oops!

So, to the Japanese, I say "Hahaha! Yong foo wagga magga wasso moolah kamikaze!" which I think is correct Japanese for "Hahaha! Too late for that, dumb Jap chumps!  Now you are going to pay a huge penalty for being such morons with your fiat money, and then especially involving the idiot Americans and their fiat money!"

Junior Mogambo Rangers (JMRs) around the world instantly saw that the phrase "dumb Jap chumps" is very difficult to say five times quickly, and if you don't think so, then say this: Dumb Jap chumps, dumb Jap chumps, dumb Jap chumps, dumb Jap chumps, dumb Jap chumps!  Hahaha! I thought so!

Anyway, crude and rude xenophobic insults and senseless bigotry aside, an example of this is, of course, is that, here in America, the birthplace of sheer stupidity in central banking (by which I mean the disastrous Federal Reserve), our economic performance as a result of the same kind of constant stimulus is that non-farm payrolls have been falling and are now about back to where they were in 2000, meaning absolutely zero (non-farm payroll) growth for nine years!

A lot more people seeking the same number of jobs is pretty bad, especially when the number of people is still rising while the number of jobs is actually still falling! Yikes!

Meanwhile, however, the government has spent its time growing bigger and bigger, like a huge, cancerous, oozing lump that is growing on your neck and already people are being repulsed by both the sight and the smell of it, and now there are 6 percent more people on "government payrolls" than there were in 2001, which is only the tip of the iceberg.

And, as if to add insult to injury, they all make more money than you! Hahaha! For the first time in history, the average pay of a government employee is higher than the average wage of non-government employees! And when you add in their generous benefit packages, they make a lot more, and they are not going to take it kindly that you want them to suffer losses in pay and employment like us average morons out here.

So that is One More Big Reason (OMBR) why the government will keep borrowing more and more and spending more and more, which is why the Federal Reserve must create more and more money and credit, which expands the money supply more and more, which makes prices go up more and more, sometimes in bubbles, which must, and always do, bust back to their intrinsic value.

And such government and banking insanity as we are seeing today is the OBR -- perhaps THE One Big Reason (TOBR) -- why you must buy gold, silver and oil, apart from it being, you know, so easy that you squeal with girlish delight "Whee! This investing stuff is easy!"

***

I always get a kick out of people, like the author of this week's Buttonwood column in the Economist magazine, who say that tax revenues to government are suffering because they spent all the inflated tax revenues they got all these years, and now the revenues are gone, gone, gone but all the programs and government-paid employment remains! Hahaha! Another downside of acting like idiots.

The revenues, of course, came from the stock market bubble and the bond market bubble and the housing bubble and the consumer spending bubbles, instead of "storing up surpluses in the fat years so as to cushion their finances in the lean ones" which makes me laugh a big ol' Mogambo Laugh of Scorn (MLOS) -- hahaha! -- at the idea of a government "storing up tax surpluses," like money is corn or something! Hahaha!

You can tell he doesn't want to get into an argument with me, and says that "governments were sorely tempted to spend their inflated revenues," which makes me laugh, too, at the sheer simplistic childishness of the remark because I can't think of any government or entity of any kind, anywhere in space and time, in any sector of the universe, which was never "tempted" to spend extra money on something!

Even the idea of it makes me laugh in a cruel and sardonic way that could only come from the Cruel And Sardonic Mogambo (CASM), who has been known to enjoy this very "extra money" phenomenon when he "accidentally" lets it slip at dinner that a whole handful of change fell out of my pocket in my car, just to watch them scramble and fight each other for a chance to feel around the driver's seat, fighting each other off, pulling them away and taking their place, escalating the violence, driven to acts of aggression by their greed and the mere suggestion of "extra money"!

That's when I yell out "Hey, kids! Since you are bent over like that and your face is down there, how does the seat smell where I sit on my Fat Mogambo Butt (FMB)? Is it as sweet as I think it is? Hahahaha!", proving that some things are just naturally funny!

If you, too, think that the government can stash away excess tax revenues, then please wait until I have stopped laughing and then tell me how, and where, but mostly how, they could do such a thing, and I will make you famous! The government can "save up" a trillion or so dollars?  Hahaha!

Then this Buttonwood guy said "As countries try to eliminate the shortfall, it is tempting to hope that they will do so purely by cutting waste in public spending," which is another concept that I don't understand, because whether the spending is wasteful or not, spending is spending and income is income.

And so it is not so much the waste as it is the Sheer Freaking Size (SFS) of government spending that makes me crazy with fear and outrage that such a thing is allowed to happen just because some cowardly Supreme Court weenies ruled in 1933, and upheld at every challenge since then by every subsequent cowardly, traitorous Supreme Court, that the dollar did not have to be gold, as literally required in the Constitution, but could be made of paper and electronic digits backing up IOUs and just about any silly crap the government wanted, and now we are going to pay the price for being such idiots as to let that happen.

Of course, he did not get into this kind of pessimism, where I figure people are this close (hold up thumb and forefinger almost touching to indicate "almost") to digging up and eating the dead, the FDA has to establish new dietary guidelines on recommended maximum daily intake of formaldehyde and embalming fluid, and where necrophiliacs are alarmed and pushing for "protected minority" status and all those attendant luscious government benefits.

However, and perhaps thankfully, he does not go quite that far, but ominously adds that, in all honesty, cutting government spending is going to be hard because "they won't (and probably can't). So they will find other things to tax." Yikes!

I say "Yikes" because if there is one thing you can say about a tax, it makes prices go up for the final consumer by at least 100% of the tax, which is inflation in consumer prices, which is The One Freaking Thing (TOFT) that you DON'T want! TOFT!

But we got it anyway, and in a recent study by Florida International University Center for Labor Research and Studies, they found that the cost of living, in Florida, is up 25 percent in six years!  Unforgivable!

But you will be surprised (as in the top of your head blowing off and you begin to bellow, like The Mogambo, "We're freaking doomed!") to know that this compounds out to what sounds like a piddly 3.8 percent inflation a year, but which obviously isn't piddly, or I would not get so upset, and then people (like me) would not start yelling in fear and panic, and there would not be a big commotion, and things would not be said, like "Buy gold, silver and oil right now because your government is acting like monetary and fiscal idiots, or else you are an idiot and you are as stupid as you look!", and then you try to, you know, calm the guy down by complimenting him by telling him that his wife has a nice butt and I have the hots for his teenage daughter, and then he gets all upset about THAT for some reason, and then threats are made and blah blah blah. You know; the same old thing.

But this is not a question of ancient animosities originally involving, as far as anyone remembers, a barbeque grill, or even the continued heated argument about the definition of "warning shot," but that 3.8 percent annual inflation is a horrible, terrible thing, as it compounds to a 25% increase in prices in 6 short years, is which is just about what the horrible Ben Bernanke (with his "targeted inflation" crackpot idea) actually wants: To inflate away the burden of debt by, astonishingly, everyone going farther into debt so as to increase demand to make prices rise! Gaaahhhh!

I know that you, because you are a Junior Mogambo Ranger (JMR), have a brain that hurts in trying to comprehend the economic enormity of what the Federal Reserve, with the blasphemous blessing of Congress, is doing, and what Ben Bernanke proposes to do which is to purposely cause inflation in prices of about 3.8 percent, and your fevered brain that recoils in horror at such an idea is cooled only by knowing that you own gold, silver and oil, and so whatever happens, you are going to be OK, and will make money on these chumps.  Maybe, and probably, a lot of money without doing any thinking whatsoever, which is why I say "Whee! This investing stuff is easy!"

***

In case you were wondering, there is no way to stop spending a debt-based currency once you start, which handily explains why Doug Noland, in his Credit Bubble Bulletin, asks "what about an exit strategy? Well, I see a 'No Exit' sign. These distortions have been going on for too many years and become too systemic. Indeed, government interventions are at the core of systemic fragilities that ensure Washington will continue to meddle."

And that explains why Bloomberg reports that "Economic policy makers are signaling they plan to leave emergency stimulus in place even as the global economy pulls out of recession, delivering what Credit Suisse Group AG and Bank of America Corp. call a 'sweet spot' for financial markets."

Well, being a guy who almost never turns down a chance to be scornful and gratuitously rude in response to ridiculous things being said by people who are supposed to know better than to sound so abysmally stupid, let me interpret that for you.

By "sweet spot", they mean a spot where Ben Bernanke and the other central bankers produce excess money and credit by pulling it right out of their nasty butts, and as for how "sweet" it is, look around you! Doesn't it resemble a world going down the (in keeping with the "butt" theme) toilet? How sweet is that? Hahaha!

And now, although I groan aloud at the idea and my disgusting way with metaphors that seem to center around excretory functions lately, the central banks are promising more of the same, only much more of the same, and probably much, MUCH more of the same, but the same, nonetheless, only, like I said, much, much more, like in "so freaking much money that the whole financial landscape is changed into something weird where the laws of economics don't even work anymore," which was hitherto thought impossible but which is, obviously, not.

This confusing, disorienting "weirdness" is why I was happy to get an email from Junior Mogambo Ranger (JMR) David R., as it came just in time to indicate that, yes, things are weird! Thanks!

And, as a bonus, I see that I could use the email as a handy rebuttal to, as far as I could tell, everybody's opinion that the only people who read my stupid Mogambo Guru newsletter are mental defectives and weirdo crackpots, with assorted gold bugs and gun nuts, and creepy guys who like looking at long-legged women dressed in short skirts and high heels.

Anyway, you can sense his high-powered intelligence when he asks "Will this current experiment in fiscal insanity require a few hundreds of quadrillions MORE violations of the (economic) Rule Of Law before it all collapses into an economic black swan singularity? Is this where Hawking meets Von Mises??", which he closed with the rare "double question mark" as punctuation.

I was especially appreciative of this choice of punctuation, as it says "Not only am I a smart guy who reads, or has read, Mogambo Guru newsletters either once or perhaps as many as many, many times and fully enjoyed them all, each more than the last, perhaps because the newsletter deserves to win a Pulitzer Prize or some other distinguished award that has a large cash component, but I also have an IQ so high that I can utilize various punctuation options in clever and highly emphatic ways, as befits my high intelligence, which you would not ordinarily know about me because people know that I read the Mogambo Guru newsletter, and those people are, (so I hear) mental defectives and weirdo crackpots, which I am not."

I mention this only because Trichet, the head of the European Central Bank, said that he was willing to continually and always create more and more money, and that “it would be premature to declare the crisis over", and decided that the European Central Bank should hold its benchmark rate at a record low of a measly 1 percent, which may have been what caused Bloomberg to decide to add the cryptic "to keep handing as much cash as banks want for up to year at that rate"!

And on this side of the Atlantic, it get weird that Bloomberg reported Fed Bank of Dallas President Richard Fisher saying “We are likely to see a prolonged period of sluggish economic performance," which is odd, because I don't remember the mission of the Federal Reserve, a private bank owned by who-knows-who, being to achieve "prolonged periods of sluggish economic performance."

The Fed was, as I recall, charged with maintaining a "stable currency," which they have manifestly failed to do, seeing that the dollar has lost 96 percent of its value since 1913, which is now officially "enough of all of it that it can be considered to be all," a lesson that in "rounding off" that I learned after I took a lousy $20 from my wife's purse when she wasn't looking, and when I came back, there she was, bad mood and all, holding her stupid purse like I needed some kind of audio-visual materials to refresh my memory or something. So, to keep it from being a total loss, I gave her what I had left; 80 cents.

"But," I explained, "you got back 80 cents, which is 4 percent of $20, which is the same loss that the Federal Reserve has given us in the purchasing power of the dollar, but you don't make a big fuss with the Federal Reserve! You won't even sign the hate mail that I write for you to send to them, with your signature and your fingerprints on the paper, wherein you protest their glaring incompetence and their neo-Keynesian econometric stupidities!"

Well, let me tell you that I never, ever heard the end of the story about that damned $20. Never! But I noticed, and constantly protest, that nothing is ever, ever said of the 80 cents I gave her back. Nothing!

And why is that? Because it proves that, as far as she is concerned, I have "lost all" of the money, which she demonstrated by throwing the handful of change right at my head from point-blank range. One of the quarters hit my forehead with a "thunk!" where it left a red mark and a little lump, and when I cried out in my pain and mortal anguish, she laughed and said "Good!", which shows you the kind of crap that I put up with around here all the time.

So there are several lessons here. One is that even a girl can throw a quarter hard enough to hurt the hell out of your forehead if she is standing close enough and is angry enough, and another lesson is to not spend the money you take from your wife's purse for a few days to see if she notices it missing, and if she does, then you can seize the purse, saying "Let me look in there!" and surreptitiously put the money back in the purse while rifling around in there so that you can "find" it and, holding it aloft, triumphantly say "Hey!"

The biggest lesson is that the Federal Reserve is still destroying the dollar by creating so many more dollars so that the government can borrow them and spend them, which means that you should be buying gold, silver and oil in a Freaking Mogambo Panic (FMP), using the dwindling purchasing power your dollars.

And if you don't, then you can take comfort in that you are in the majority of investors that must lose so that the minority of investors, who do, can make the money which makes it all so easy that you find yourself saying "Whee! This investing stuff is easy!"

***

It was very interested in the news MarketWatch.com that "Hong Kong is pulling all its physical gold holdings from depositories in London, transferring them to a high-security depository newly built at the city's airport," although it does not say why the depository was built at the airport, of all places, instead of being situated in a thick vault inside a mountain, out in the middle of nowhere so that you could see the enemy coming, and get a chance to try out some of that expensive firepower you have been itching to use without shooting up a lot of innocent bystanders and then the police, as they tend to do these days, like to employ all their people and new equipment, too, and so they shut the whole airport down for a week and so you missed your flight and you didn't make the sale/ meeting/ weekend with your boss and you end up getting fired and living on the street and that is when things started getting bad.

But apparently I am alone on this "don't build the damned thing at the airport" crusade, probably because my warning is too late and the gold depository is already built, and there may be other reasons why it would be a good idea to build it at the airport.

So why did they build it in the first place? Apparently, so it "would support Hong Kong's emergence as a Swiss-style trading hub for bullion and would lessen London's status as a key settlement-and-storage center," for whatever that's worth.

But getting with the action and being a "team player," the Hong Kong Monetary Authority, "which functions as the territory's unofficial central bank, will transfer its gold reserves stored in other vaults to the depository later this year."

And how much gold are we talking about?  "The monetary authority reported $63 million in physical gold reserves as of July 31, according to its International Reserves and Foreign Currency Liquidity statement," which doesn't seem like a lot, as I would have about that much gold -- personally!  -- if my wife had always worked two or three jobs (instead of one job and children, which eliminated the whole economic advantage of "putting the old lady to work"!) and if I had been extraordinarily lucky in investing the money. And if somebody rich had left me some money in their will. A lot of money.

Anyway, it's not all that much, although Martin Hennecke of Tyche Group Ltd. said that gold and the ability to securely store it could be "appealing to regional central banks unnerved after watching the global financial system teeter on verge of implosion last year", and that "Central banks are increasingly aware of the importance of having gold reserves at time of financial crisis and having it easily available at their own disposal."

Of course, this makes me laugh and say "Like who? You ever heard of the central bank gold agreement, where central banks are still, after all these years, selling gold into the markets in a controlled way?  Hahaha! Does that sound like 'central banks are increasingly aware of the importance of having gold reserves at time of financial crisis' to YOU? Hahahaha!"

Of course, he takes no notice of me, and may be talking about the results of marketing efforts that "will be launched to convince Asian central banks to transfer their gold reserves to the Hong Kong facility."

As we have just learned, one would be ill-advised to discount the effectiveness of modern marketing methods, which were able to create buyers for quadrillions of dollars' worth of derivatives with the pitch that by cutting up and reassembling risky debt, no matter how much the more the merrier, you can make risk disappear! Hahaha!

Or perhaps the attitude for gold has changed, like Ed Steer's Gold and Silver Daily newsletter quoting Dennis Gartman as saying  "we get the sense that something really quite ominous is upon us and that some news… and clearly not good news… is waiting out there on the market’s periphery that shall tend, on balance, to weigh heavily upon stock prices, shall weigh heavily upon government intervention efforts; shall weigh heavily upon the global capital market’s collective psychology."

The result is, he says, that "we have the sense that we are at an historic turning point for the gold market," and one of those things that indicates as much is that, as you would expect, gold is in demand as exemplified by: "The CEF [Central Fund of Canada] bullion vehicle closed at a 13.6 premium to NAV, a recently high level." Wow!

So gold is in such demand that investors are willing to pay 13.6% premium over the gold holdings of CEF? Wow!

It's like I've been saying; buy gold, silver and oil because your government is acting irresponsibly with the money, and now people are finding out for themselves how good that advice is and how it is so easy that they probably gleefully shout "Whee!", although the only person I ever heard gleefully shouting was me.

***

Everybody knows that I can always be counted on to go ballistic about silver being such a Screaming Freaking Bargain (SFB) because of (according to the most recent Official Mogambo Count (OMC)) more than a dozen very good reasons, which is a lot of reasons, and that at $16-and-change per ounce, silver is loudly saying "Buy me! Buy me!", although obviously not in the literal sense, nor (perhaps less obviously) in the "voices in my head" sense, which shows I am responding to therapy and why everybody is so pleased with me.

One of the reasons for my bullishness and bullheadedness about silver is the large short position, which is the number of ounces already sold (opening the short position) but which have not been bought yet (closing out the position), which means these shorts are going to get clobbered if they have to cover their short position by buying silver at a higher price than they sold it.

So I was very interested when Ed Steer's Gold and Silver Daily reports says that the commodity futures market report shows that bullion banks' "silver net short position now stands at 213.6 million ounces... about a third of world silver mining production... all held by 'four or less' bullion banks."

He characterizes this as "grotesque beyond description", which I guess it is, since it is hard to even imagine such a thing, which implies that these "four or less" banks are so stupid that they would be short silver when the fundamentals are so compelling that my throat is bloody and raw from screaming "The fundamentals of silver are compelling!"

And this is even ignoring the headline "Gold & Silver Market Alert -- Buy before the Breakout!" from Julian Phillips at Goldforescaster.com, which reflects my sentiments exactly.

In gold, the situation is similar, in that Mr. Steer says that "The bullion banks' net short position now stands at 211,342 contracts... 21.1 million ounces. This is well over 25 percent of world gold production. This is also grotesque beyond description."

Suddenly I see an opportunity to hide my rising excitement and get a quick laugh! So I said "This means it is NOT 'beyond description' when it is perfectly described by silver, which is also 'grotesque beyond description' and which can be described as 'like gold'! Hahahaha!"

Well, I am laughing at my own joke and having a wonderful time when I looked around and noticed that nobody else appreciated my little joke about circular reasoning, which, upon reflection, I admit is pretty bad, and I am pretty embarrassed about it.

I don't know why I thought it was funny, except for maybe it's these new pills that are supposed to keep me from screaming my guts out in fear about the coming collapse of the dollar and the attendant horrific rise in consumer prices that destroys America and plunges us into a post-Apocalyptic nightmare. And, parenthetically, they work pretty well, too, except for the catatonia and the, you know, drooling.

Mr. Steer sees my embarrassment and starts talking about how many of the owners of futures contracts in gold and silver said "We want our metals!" much gold and silver was actually delivered at the last closeout in futures.

People with inquiring minds want to know, "How much gold and silver was delivered so that we can maybe see if the Mogambo Who Thinks He's So Hot (MWTHSH) is actually turning out to be right about gold and silver going so much higher in price because the despicable Federal Reserve is creating so much money and credit that inflation in consumer prices is guaranteed, which would be indicated by a rising price for silver!"

Well, it turn out that "The final totals for August are as follows... gold 5,728 contracts [572,800 ounces] and silver 91 contracts [455,000 ounces]", which doesn't seem like a lot, but what in the hell do I know?

So, I report these things without knowing what they mean because I am pretty stupid and I am just in it for the money, so all I can ever see is the obvious, especially when it is pointed out to me, which he apparently does when he says that "August was a big month for gold deliveries... but not for silver. September is a big month for silver deliveries... but not for gold."

I still don't know what it means, but a big buying of gold and silver every other month is plenty enough to keep their prices rising and demand growing, which is Another Good Reason (AGR) to buy gold and silver beyond the obvious AGR that they always soar in value and price when the government is acting so irresponsibly, or when the Federal Reserve is acting so irresponsibly, but especially when both of them are acting irresponsibly, like now!

It's enough to make you squeal with delight "Whee! This investing stuff is easy!"

Courtesy of The Daily Reckoning and Agora Financial