The Iron Laws of Economics (ILOE)

February 21, 2013

Mogambo Guru

 

I am getting progressively more scared, angry and paranoid, but mostly more scared and angry with "paranoid" holding steady, and am thinking dark, dark thoughts.

Perhaps this is why I was so intrigued by a blurb by Harry Shultz, dated July 9, 2012, sent to me by Junior Mogambo Ranger (JMR) Phil S.  The entire email summed it all up for me, as it chillingly read "The entire world has become a singular, massive banana republic, with investors frozen in the headlights, earnestly searching for investments in an ‘impossible’ atmosphere. Banks are no longer banks (& cannot be trusted – to quote Martin Wolf at the FT), where rating agencies & governments are dimly viewed, where pensions are short of funds, where fraud is not the exception anymore, and where most market trends only last a few hours. Heaven help us."

Heaven help us, indeed!

Notice that Harry, being a classy guy, doesn't mention the actual problem, which is that the Federal Reserve and the other smug, dirtball, lowlife, moronic neo-Keynesian econometric halfwitted central banks around the world have created far, far, far too, too, too much money, decade after decade, all of which was grossly mal-invested in the private sector due to the false signals of consumers borrowing to bring future consumption to the here and now, and the false signals of the moronic federal government looking at all the resultant flood of tax revenues as a constant stream upon which they can borrow.

There are, of course, those of you who object to what I say, which you do because you are morons and/or economic illiterates, and there are those who also object because I call him Harry, instead of "Mr. Shultz," as in "How can a little nobody, lowlife, pipsqueak writer of Stupid Mogambo Crap (SMC), like you, that nobody reads, and those that do feel soiled and debased by the experience, possibly consider yourself on first-name par with someone of Mr. Shultz's caliber?

To these people I say, of course, screw you, because the fact is, Mr. or Ms. Smarty-Pants, I called him up to personally ask him if he would let me call him Harry! How do you like them apples?

 

I even told the receptionist when she answered "Hey! Tell Harry Shultz that The Magnificent Mogambo (TMM) is on the line, and wants to ask him an important question, and maybe get a little inside information so I can make a little fast cash since I'll have him on the line, and how come I got an email, from somebody he probably doesn't even know, and excerpted from something he wrote last freaking year, that did NOT contain the Very Important Information (VII) that if an investor is not buying gold, silver and oil right now, then they are some kind of idiot?"

 

Well, I don't know what happened, maybe their phone systems is new or something, but I was mysteriously disconnected every time I called. 

 

Fortunately, the clarion call to say that very "buy gold, silver and oil" thing was kind of provided by the illustrious Eric Sprott, who told King World News that "the massive plunge in gold scrap recycling may be removing as much as a staggering 850 tons of gold from world supplies each year."

 

Yikes! We're running out of scrap gold! No more storefronts and pawn shops blaring "We Buy Gold!"? And it's because most of the scrap gold is, after all these years of them buying gold, apparently gone? 

 

So, quickly donning my Mogambo Super Investor (MSI) hat, I say, rubbing my chin thoughtfully, "Let's see here: a 'staggering' 850-ton supply of gold is no longer flowing into the market, while demand for gold is growing exponentially! Hmmm!"

 

Instantly, my mind goes "Ding ding ding!", which is the sound of a brand-new Fabulous Mogambo Idea (FMI) coming down the wire! The first part of the FMI is "Buy gold! Right now!"

 

The second part is where, if you don't want to buy gold, or if you have already quit reading this Stupid Mogambo Crap (SMC) a long time ago, probably after the first few sentences or syllables, you will look deep, deep into my eyes, you are getting sleepy, sleepy, sleepy and want to do my bidding, bidding, bidding, which is to go tell that guy that I want both of you to loan me a lot of money, which I will repay at 20% interest, even knowing beforehand that you will never see your money again, or that laughable 20% interest, because this is just another blatant stupid Mogambo scam that never seems to work out for me because you Earthlings are not quite as stupid as is commonly rumored in the cosmos.

 

I mean, you Earth people actually believe that you can have zero inflation with an expanding fiat currency, despite the fact that it has never happened before!  Hahaha! Can't you see why intelligent beings from other planets come to look at you in their UFOs, but never want to hear anything you say? Can't you see that say nothing to us, either, because we are obviously too, too stupid to understand?

 

I mean, the Austrian School of economics has been right there, at Mises.org, the whole time, and yet impossibly stupid, preposterous Keynesian crap prevails around the world! Hahaha! Prevailing in spite of its complete failure! Hahahaha!

 

You can see that Eric King, whom I suspect is an Earthling who IS intelligent enough to disbelieve such nonsense and does not appreciate being lumped in with the idiots comprising the vast majority of people who DO believe it, does not see the humor in that, and, ignoring me, goes on that KingWorldNews.com got the report where 'The secondary market, which is scrap, business is down almost 50% year over year, and the previous year was already a down year.  The only supply now is coming from the miners.  This applies to both gold and silver."

 

Eerily echoing what I wrote before, probably in one of the preceding paragraphs, about how you should be buying gold, silver and oil with a frenzied abandon because of the profound supply/demand imbalance, he goes on "Gold and silver bar and coin demand is very strong and the supply has essentially dried up.'"

 

"Hmmm!" I said to myself, adjusting the tinfoil on my Mogambo Super Investor (MSI) hat, "850 tons is half the scrap gold, which means that there is STILL another 850 tons of scrap gold added per year, which adds up to 1,700 tons per year, and yet BullionValut.com says that 'Gold is being mined at about 2,600 tonnes a year,' which means that scrap gold adds 1,700 tons, which is waaaAAAaaay  more than half of what is actually mined, to total supply?"

 

All of a sudden, I am frothing at the mouth in my zeal for gold!  Let me remind you, in case you are not similarly frothing, that one of the Iron Laws Of Economics (ILOE) is that changes in the price is what equilibrates supply with demand, thus changing price, changing price, changing price, until supply equals demand.

 

So, ipso facto, the price of gold has to gloriously rise, rise, rise until it chokes off a Huge Freaking Demand (HFD) for gold, enough so that a monstrous, ravenous demand equals a pitifully small -- and falling! -- supply of gold! It’s the law!

 

Thus, I scream, screech and shout, scurrying about, "Huzzah! Huzzah!" and "Buy gold! Buy! Buy! Buy!"

I mean, sure-fire, can't-miss investing doesn't get any more obvious than this! Which is why savvy Junior Mogambo Rangers (JMRs), around the world and across the cosmos, confidently buy gold, silver and oil, knowing that "Whee! This investing stuff is easy!"

Poetry with a Punch

February 8, 2013

 

Mogambo Guru

 

                                    Poetry with a punch you can use

 

 

I am seriously considering changing careers.

 

I have, to my dismay, discovered that being a paranoid, angry, cynical, Austrian School economist and all-around lunatic raving gold-bug whack-o slacker, who is absolutely sure that We're Freaking Doomed (WFD), is an occupation that does not have that certain glorious glamour and commanding cache to elicit the fawning adoration of hot chicks ("Take me, Hot Mogambo Poet (HMP)! Bend me over something and let 'er rip!") that would certainly brighten up my admittedly bleak days expecting, as you learned earlier in this paragraph, doom.

 

So I am thinking of becoming a famous and influential poet.  To establish my impressive credentials, here, for your pleasure, is my first poem:

 

Roses are red,

Violets are blue,

Gold and silver are such screaming bargains because the evil, foul Federal Reserve is creating So Freaking Much (SFM) currency and credit in some nightmarish flood of insane monetary inflation that if you aren't buying them,

Then something is very, very wrong with you.

 

Well, I am sure that you, like poetry lovers everywhere, instantly recognize this as the absolutely best poem ever written in English, as it is the only poem that tells you how to get stinking rich by doing nothing except, as the poem makes abundantly clear, buying gold and silver to capitalize on the suicidal idiocy of the Federal Reserve creating so much currency and credit to fund the insane deficit-spending of the corrupt Congress that must, by mathematical necessity, bankrupt the whole country and cause ruinous inflation in prices, which is more precisely defined by us professional economists as The Big Crapola (TBC).

 

Other poems are but clever and/or melodious trifles, toying with your emotions.

 

But here, from the Mighty Pen Of The Mogambo (MPOTM), comes a powerful poem of such sublime rhyme, meter of a strange sort and, if you look hard enough and really use your imagination, actual alliteration, brilliantly combined with a sure-fire Path To Extreme Riches (PTER), as guaranteed by 2,500 years of history

 

Now, please notice that I used the word "currency" instead of "money."  I did this for two important, but completely different, reasons.

 

One reason is, by virtue of my newly-found chick-magnet status of being the Best Poet Who Ever Lived (BPWEL), "currency" is poetically alliterative with "creating" and "credit" which is a literary technique us big-time poets use all the time.

 

The other reason is because, as Mike Maloney of goldsilver.com pleasantly pointed out to me, it is an important fact that I never thought about, namely fiat dollars are NOT "money."

 

This is a fascinating fact I learned when I casually stopped by his office and politely asked for him to loan me some money because I could use a few bucks since it was almost lunchtime and I was hungry, but if I went home to eat, my wife would ask me where I was all morning, and I'd say I was at the driving range like I always am, damn it, and then I'd get some static about what a low-life, lazy bastard I am.

 

And if I used my own money to eat lunch, then I wouldn't have enough left over to get another bucket of balls to hit at the driving range, to while away the afternoon so I wouldn't have to go home and hear what a low-life lazy bastard I am.

 

So you can see my dilemma.

 

I'll never forget what he said. First, he picked up the phone and said "Ask Security to send some people to my office, please."

 

Then he turned to me and, with a smile, said "Fiat dollars are not money. They are currency."

 

While we were waiting for the Security people get up to his office, I learned that he is quite the educator, and he pleasantly explained that while pieces of paper printed with pretty pictures can be used as a medium of exchange and as a unit of account, two important functions of money, they are not intrinsically valuable (another feature of real money), nor are they a store of value, which is one of THE really necessary things to be "money."

 

When he saw that I was soon pretty confused, as I usually get when learning new stuff, he finally sighed and said "I won't give you any money, but I will give you some currency. How much would it take to make you leave and never come back?"

 

I said "Two bucks!"  He said "Fine. Here's two currency dollars," and then I left, and I passed the Security guy in the hall ("Hello, Carl!"  "Go to hell, Mogambo.")

 

Thinking about it, I see that this "fiat dollars are not money because they are not a store of value" fact is made magnificently manifest by noting that at one time, when I was a kid, a dollar could buy a quite few yummy candy bars, each a delightful, delicious ambrosia of chocolate, caramel, nuts, sugar out the wazoo, artificial colors and various preservatives.

 

But today, with that same dollar, you can buy only one candy bar. If that!

 

So the lesson is: Fiat dollars are not a store of value.

 

This can be made abundantly clear of you think back, way back, to when you were a kid, and you were in bed at night, awake, silently seething with anger about something, and you made plans, lots of plans, dark, nefarious plans.

 

Perhaps one of them was "I am going to hang on to the next dollar I get, so that in the future when, one dark day of adulthood and I have had it up to freaking here with my whining wife, and my crazy, juvenile-delinquent kids, and some stupid butt-head boss who does not recognize my genius but who is instead always yelling at me about my getting to work 'on time', or not sleeping on the job. or ducking out early, or something, then I can take that dollar, go down to the store, and buy a handful of candy bars, eat them all at one time, cramming my mouth completely full, and get completely buzzed out of my mind on the sugar-high, blissfully forgetting my problems for a couple of hours. Yeah! That's what I'll do!"

 

And so, how did the plan work out? I'll tell you how. You have that one lousy dollar, to buy one lousy candy bar, and get one lousy, low-grade sugar-buzz for, what? A lousy half hour?

 

Anyway, I see I got off the subject by a long shot, when what I wanted you to know, in case you were pooh-poohing my terrific poem, is that it has apparently already had an effect, as we learn from a Bloomberg.com news item that China, perhaps inspired by my poem that gold is a store of value, is using their vast hoard of not-a-store-of-value fiat currencies to buy gold hand-over-fist, as implied by "gold imports from Hong Kong jumped by 94 per cent to 834.5 tonnes in 2012 with a monthly record of 114.4 tonnes in December."

 

According to numbersleuth.org, about 165,000 metric tons of gold have been mined in history.

 

This means that last year the Chinese bought one-half of one percent of all the gold mined in all of history, and judging by the exponential trajectory of their increasing imports of gold, it won’t be long until they have most of it!

Perhaps in that vein, as I don't know if the Chinese are involved in this, too, but Goldreport.com looked at the "delivery requests on the COMEX for the month of February, we see that they are reaching the astronomical amount of 43.26 tons of physical gold, or 1,391,000 ounces of gold to deliver."

To make sure we realize the significance of this, as I surely didn't, they go on that "since the ‘70s, it’s the first time that there is such a request for physical gold delivery from the COMEX."

It's as if everybody has suddenly heard and heeded the poet of the ages (me!), and are buying gold and silver at a feverish clip!

 I don't know if they are saying to themselves "Whee! This investing stuff is easy!" when they do, but they (as we poets would say) should, and could, and probably would if they knew they should!