Email from Junior Mogambo Ranger (JMR)

September 13, 2012

Mogambo Guru

 

I was immediately intrigued with a particular email I recently received when I noticed that it was, for a pleasant change of pace, not venom-spewing hate mail or a death threat, like, for example, this other one from this morning. 

It reads "Dear Stupid Mogambo Idiot (SMI), I think you should just shut up your stupid loud mouth, like your wonderful wife tells you.  And help out around the house sometimes, too, but you never do because you are just an irritating, lazy old man who spends his time complaining about the stupid Federal Reserve creating so much excess money that We're Freaking Doomed (WFD) to be destroyed by inflation in consumer prices, like I care about any of that monetary crap when I am up to here in laundry."

The writer, obviously a blubbering nutcase, continued "If I was your wife, what I would really want is for you to take the garbage out and wash the damned car, and maybe stop being such a distant, ineffective father and an annoying, worthless husband who only did one good thing in his whole life, which was to buy gold, silver and oil because the evil Federal Reserve was creating so much money, and the prices of gold, silver and oil zoomed just like you said they would, and they will surely continue to rise, just like you said they will, but which has nothing to do with your being such a lousy father and crappy husband.  (Signed) Anonymous Person."

You can see the kind of abuse I get from total strangers, which is, now that you mention it, highly reminiscent of the crap I take around here, too.

Instead, I am happy to say that the better email was from Junior Mogambo Ranger (JMR) Burt L., who sent some interesting news. 

Beginning with the standard salutation of groveling subservience "Magnificent Mogambo Master", he went on to write "I went to the Enterprise Florida web site and found the attached 2009 through 2011 chart of (primarily gold) exports to Switzerland," which he dutifully included so that I could see for myself.

Sure enough, the Florida-Origin Exports to Switzerland show that "Gold (Incl Plat Plated), Unwr, Semifr Or Powder" increased from $42.2 million in 2010, to $201.6 million in 2011, almost a five-fold increase in one year! One state to one country! And little ones, at that!

Now, $201.6 million in exports, of what appears to be gold, is certainly a lot of money, and it is just about enough to get me the through the weekend, anyway. I laugh at my own joke "Hahahaha!"

Perhaps you noticed that I am laughing through my tears, as, in fact, in no year did anyone ever give me $201.6 million, while almost every year nobody gave me anything but a hard time and/or a Royal Screw Job (RSJ), which is kind of like an ordinary "hard time," but with an additional punishment that you pay out lots of dollars, that you don't believe you needed to pay, but there is nothing that you can do about it, and nothing that you can prove.

All you can do is go down there, storming in, blabbering incoherently in an indignant rage and yell at the manager "Well, you gave me a Royal Screw Job (RSJ) that time! But the joke's on you! Hahaha!  All those dollars you choked out of me are losing purchasing power with each tick of the clock -- tick, tock, tick, tock! -- because the horrible Federal Reserve keeps creating so much excess money and credit, which dilutes each one of those dollars! Hahahaha! Chump!

"And," continuing in hysterical outrage, "the only satisfaction that I get from this whole disagreeable episode is the knowledge that you are obviously too stupid to understand the need to buy gold, silver and oil when the money supply is being so terrifyingly expanded by the foul Federal Reserve like this, and so you won't buy any, and you will end up broke and busted-out like all the other losers. Loser! Then I shall laugh at YOU! Hahahaha!"

As you can probably tell, after getting another Royal Screw Job (RSJ) in what seems to be a long line of RSJs, I could use $201.6 million right about now, but, unfortunately, we are not talking about me.

And we are not even talking about the $201.6 million in Florida gold exports to Switzerland, but we have moved on, and are now talking about the category of "Waste & Scrap of Prec Metal Or Other Cont Prec Mtl" which was #1 on the list of exports out of Florida to Switzerland.

I am not exactly sure what "Waste & Scrap of Prec Metal Or Other Cont Prec Mtl" is, but I figure it seems to be the "We Buy Gold" people registering a staggering $6,811 million ($6.811 billion!) in precious metals-related exports to Switzerland, which alone represent almost all the Florida 2011 exports to that country, which totaled $7,291.0 million ($7.291 billion).

And this $7,291.0 million in "2011 total Florida exports to Switzerland" was up massively from a paltry $5,011.6 million in 2010, and up more than double from the $3,244.0 million total exports in 2009, two years previous! Wow! What is going on here?

This chart from eFlorida.com is full of interesting stuff, like about silver, exports of which increased to $10 million in 2011, up from (according to the chart) literally zero dollars in 2010. 

This is all pretty amazing, as JMR Burt realizes, too, and says "Amazing, since Florida has no gold or silver mines."

"Well," I was tempted to say, "If you think THAT is amazing, then what do you make of exports of  'Silver (Incl Prec Plated), Unwr, Semimfr Or Powder' increasing from literally zero in 2010 to $10 million in 2011, yet which is, according to this report, an increase of an odd 45,494.4%?  You would think going from zero to 10 million would be an infinite increase, wouldn't you?  Not 45,494.4%!  Pretty odd, huh? Huh? Pretty odd, wouldn't you say?"

And this is not the only odd thing!  To prove such a provocative statement, listen as I say "Oddly enough, silver exports from Florida to Switzerland in 2009 show a dash ('-') instead of a zero! Oddly enough, a dash! What is a dash supposed to mean, except as some secret, coded message, probably from a sinister, secret government agency watching your every move, or maybe spies at the corrupt commodity exchanges are communicating with alien space creatures from beyond the solar system?"

And the next two biggest percentage-increases in Florida exports to Switzerland are chump change, being "Lifting, handling, Loading & Unload Machines" (although only $800,000 in 2011, but up an odd 1,755.5% from the zero exports in 2010) and "Screws, Bolts, Nuts, Washers Etc, Iron Or Steel" ($1.1 million in 2011, up 505.9% from 2010 and zero in 2009, which is pretty odd, too).

And oddly enough, Florida exports to Switzerland of "Citrus Fruit, Fresh Or Dried" was only $1.1 million, despite citrus products being The Thing for which Florida is supposedly known.

As a guy who is naturally paranoid and sees conspiracies everywhere, I am instantly on the nervous alert at these odd, and thus scary, goings-on.   I find myself constantly re-evaluating my situation in terms of the nearest exit and where to take cover in the event of a full-scale, all-out, guns blazing, urban-warfare, us-versus-them, dog-eat-dog shoot-out, if it comes to that, and it probably will, if any of those dark, Hollywood post-apocalyptic movies or invasions of space monsters are even REMOTELY true.

Fortunately, one thing I know --for a fact! -- to be true, and not odd, is that gold, silver and oil stocks are the place to be when the government is doing such massive deficit-spending and allowing the Federal Reserve to create so incredibly, impossibly, catastrophically much money and credit.

And, in light of that, for a last bit of "oddly enough" incidents, it is odd that very few people are buying gold, silver and oil at these absolute bargain prices, here at the beginning of the inflationary horror that awaits us.

But for those who do, however, it is "Whee! This investing stuff is easy! And not the least bit odd!"

 

Mogambo Nontraditional Policies (MNP)

September 6, 2012

Mogambo Guru

 

I was startled to read Reading Ben Bernanke's remarks, made at Jackson Hole, about using "nontraditional policies" at the Federal Reserve.   Nontraditional policies, indeed!

By "nontraditional policies" he no doubt means his current policies of 1) the inflationary horror of monetizing of debt by the simple expedient of simply creating the money to buy new government debt, and 2) the bizarre idea to purposely create inflation in consumer prices.

Apparently, Mr. Bernanke is unaware that both of these sublime idiocies have been consistently denounced as moronic and suicidal for thousands of years (usually after they have failed miserably), and exist nowhere in the economic literature except as bad examples of traditional economic policy.

He actually made this alarming admission in public, in front of witnesses, hundreds of them, in fact, while addressing the annual conclave of economic halfwits, lunatics, liars, hangers-on, goers-along, and mainstream media nitwits at Jackson Hole, Wyoming, all of which I rudely refer to as "The A-Holes at the J-Hole."

Suddenly, I realized that I may have been too harsh in condemning him and his moronic colleagues for this obvious insanity. I can use this!

Instantly energized, I nimbly hopped into the Mogambo-Mobile, started 'er up, screeched out of the driveway and, engine roaring, careened down the street with the radio blaring and a big ol' smile on my face, happily rolling through pesky traditional stop signs and blithely exceeding posted (and thus traditional) speed limits, which are so tragically traditional and thus at odds with the new "nontraditional policy."

I was soon at the grocery store, parking in an oh-so-handy Handicapped-Only parking space as further nontraditional policy, and then having a heated conversation with the store manager, where I was breathlessly telling him all about the new Mogambo Nontraditional Policies (MNP) now in effect.

I asked him, with mock earnestness, "Didn't you get the memo about nontraditional policies?" 

He replied, with a hint of exasperation in his voice, "What memo? You don't even work here! You're just that crazy old man who is always coming in here and upsetting the customers by telling them that We're Freaking Doomed (WFD) because of the inflation and ruination caused by the satanic Federal Reserve creating, and which is still creating, so much excess money and credit so as to fund the growing, bankrupting stupidities of a constantly enlarging, suffocating Marxist and thoroughly fascist government, over the last half-century, and the teeming hordes of government-dependent people that has now grown to over half the population."

Wow! I was surprised and delighted at this unexpected knowledge about things economic!  He must have listened to me, all these years, while spying on me with the security cameras! I was so proud of him that I excitedly and happily blurted out "Yeah! THAT memo!"

Then he says, obviously getting irritated and growing tired of dealing with me, sneeringly asked "What?"

I looked him straight in the eye, and as if speaking to some stupid Earthling child, earnestly said "Mogambo Nontraditional Policies (MNP) is what!  If you are looking for a definition of Mogambo Nontraditional Policies (MNP), it's just like the 'nontraditional policies' of the Federal Reserve!  

"Thus, MNP are also arbitrary actions of an especially nonsensical, stupid, or suicidal nature that are bizarrely contrary to every bit of experience, evidence and theory of the last 4,500 years, enacted entirely at my insane whim, so as to desperately try to reverse the horrible effects of my disastrous mishandling of traditional policies, but now with a new policy of pursuing A Huge Guaranteed Failure (AHGF), thus hopefully benefiting from two wrongs making a right!"

Again he said, with even greater exasperation in his voice, "What?"

By this time, he is looking at me with a really dumbfounded blank look on his stupid face.  So I impatiently, but gently, said "Enough theory, moron! In practice, henceforth MNP will include, but not be limited to, me marching in here like I own the place, taking all the groceries I want, any time I want, even if I have to call you at home in the middle of the night to make you come down here and open the store up especially for me.

"And a further huge, stinking load of Mogambo Nontraditional Policies (MNP) is that I do not have to pay for anything.  Everything is free to me.  You will make it up on increased volume."

At this, he is suddenly laughing at me, saying "You're trying that old joke in real life? What are you, some kind of crazy person?"

Naturally, I said "I'm The Mogambo Guru! You tell ME! Hahaha!"

Well, we both had a good laugh at that, him thinking that I was just trying to be funny, but could not be funny, like the time I tried to look handsome and could not, and like the time I tried to be intelligent and could not, and the time I tried to be romantic but could not, and the time I tried to raise an unstoppable army of undead brain-eating fiends to invade Washington, D.C., kill them all, and install me on a throne where I would be Omnipotent Emperor Mogambo (OEM), taking complete dictatorial control, putting the US dollar back on a strict gold standard and a banking system with no fractional banking.

Thus, the economy would always be fine, everything would be fine because the money would always be fine, and the poor would fine as they enjoy zero percent inflation in prices, and indeed they would probably pay only gently falling prices, thus receiving the fabled "more for less," along with rising quality as a result of dog-eat-dog producers and suppliers competing for a limited supply of consumer money in a Darwinian marketplace where the best survive and the worst are weeded out.

Verily, children would happily laugh and sing in their play, and puppies would wag their cute little tails all day, which I think rhymes this particular time, so you know it must be true, don't you?

Anyway, Bernanke told his colleagues, "I hate puppies, and I hate Darwin, and I hate The Mogambo for exposing me as the desperate, panicked, know-nothing little twit that I am!"

Okay, I admit that he did not say that, but he might as well have, as he actually DID say "it is also true that nontraditional policies are relatively more difficult to apply, at least given the present state of our knowledge."

Hahaha! This proves what a complete doofus he is!  Hahaha!  Applying nontraditional policies is the easiest thing in the world, dude! Nothing is as easy as effortlessly creating unlimited amounts of money out of thin air to buy unlimited amounts of new government debt!  Stupid and insanely suicidal, of course, but also very, very easy!

Well, it doesn't take a Junior Mogambo Ranger Decoder Ring (JMRDR) to figure out that this laughable comment of his proves that he is just making up this stupid crap out of his lunatic, neo-Keynesian econometric head. 

Following that, one can only shake one's head and truly wonder about Bernanke's mental state when he lets slip that he is completely ignorant of the effects of his disastrous "nontraditional policies" when he says "Estimates of the effects of nontraditional policies on economic activity and inflation are uncertain," which makes me laugh even more, laughing even as my Mighty Mogambo Heart (MMH) is breaking about the future of the dollar and America.

Well, memo to Ben Bernanke: The disastrous effects of creating too much money and credit are VERY well known, you dolt! And they have been very, VERY well known for thousands of years!  

Apparently Bernanke was stung by my rude remarks, and, realizing that they are true and that he really IS a lunatic neo-Keynesian econometric lowlife loser, tries to weasel around and give himself an out ("It wasn't my fault!") by lamely warning that "the use of nontraditional policies involves costs beyond those generally associated with more-standard policies."  Higher costs? No foolin'?  Hahahaha!

So he is creating (along with the European Central Bank and the International Monetary Fund (both run by socialists!) massive amounts of money so as to monetize massive amounts of government debt, thereby doing something that has failed every time it has been tried in all of history by whole economies collapsing as their money was devalued to worthlessness? Hahahaha again!           

Of course, this pales in comparison to terrifying reality of his actually, unbelievably, tragically, horribly, and nontraditionally using monetary policy to "target inflation" to be at least more than 2%, and with rumors of his wanting 5% price inflation, instead of the traditionally-desired zero percent (or less!) price inflation. Yikes! We're Freaking Doomed (WFD)!

And why is he doing this?  As Tyler Durden of zerohedge.com writes about Ben Bernanke and Alan Greenspan, they are "directly responsible for a crisis, which over the course of 30 years of 'great moderation' pulled over $30 trillion in future demand to the present (benefiting almost exclusively the banker class), and which will guarantee pain and suffering for generations of Joe Sixpacks."

Although Mr. Durden does not mention it because he is too polite, I will say that those selfsame Joe Sixpacks will suffer for generations because they consistently bought sixpacks of beer instead of consistently buying gold, silver and oil with that little bit of chump change.

Perhaps you will find it instructional that if they HAD bought gold, silver and oil instead of beer all these years, they are already able to buy beer by the case. By the truckload! By the trainload! And soon, thanks to their prices exploding thanks to the evil Federal Reserve continually creating So Freaking Much Money (SFMM), they will able to buy their own freaking brewery, for crying out loud!  Dozens of them!

That's when they would really, really, REALLY realize the full implications of "Whee! This investing stuff is easy!"

The Mogambo Speaketh!

August 30, 2012

Mogambo Guru

 

I noticed that I don't laugh as much as I used to, but I curse a lot more.  I figure it's because things economic are so serious and insistently suicidal lately.  

I still laugh at funny jokes, however, like the classic "Knock knock. Who's there? Mogambo Guru.  Mogambo Guru who? That's what everybody says!"   Hahahaha!

Well, I am embarrassed to see that you are not laughing at what, I admit, is kind of an "inside joke", referring, as it does, to the fact that I am so unknown, despite having delivered the best investment advice (which is to buy gold, silver and oil) for the last 20 Years In A Row (YIAR), and I remain unknown despite being the most paranoid, angry, cynical, suspicious, trigger-happy, gold-bug, Democrat-hating and completely wonderful guy that I (or anyone else) have ever known.

And to tell you the truth, I am not sure the joke is actually funny at all, but I really get a kick out of the stupid looks on people's faces when I tell them that stupid joke.

Then, after waiting for them to ask "Who is this Mogambo Guru, obviously a fellow of intelligence, education and wit, of whom you speak?"  I take a deep, sweeping bow as I proudly say "I am The Mogambo Guru!"

Then I raise my head to give them a raised-eyebrow look, like I am waiting for them to finally -- finally! -- recognize who I am, and realize that they should know me, and love me, and stop calling me "annoying pinhead", because I am famous or something.

If they at least fake some insincere reply, perhaps something along the lines of at least smiling kindly to the crazy old man calling himself Mogambo Guru standing in line at the supermarket, then I will gently say to them "Yes, I am The Mogambo Guru! Live, and in person!  Yes, The Mogambo, sent to Earth from a planet far, far away to tirelessly yammer, yammer, yammer his big, fat mouth to Earthlings such as yourself about the Gospel Of The Mogambo (GOTM), which specifically dictates the buying of gold, silver and oil when the money supply is being increased rapidly, and to build elaborate underground fortresses as a defense against the raging and looting by hordes of desperate, zombie-like leftist morons who think that 'There is such a thing as a free lunch if the government borrows and spends enough money to fund enough government programs,' and who are thus deservedly bankrupted and destroyed by inflation in prices, suffering mightily in the general destruction of the whole stinking, stupid, bloated, cancerously mal-invested economy, based, as it is, on massive government deficit-spending to force American will down the throats of  the rest of the world, and to require universal equality of outcomes, per the completely-discredited Marxist idiocy by leftist morons who believe such ridiculous commie crap, and all financed by the foul Federal Reserve blithely creating the outrageously huge amounts money and credit out of, literally, thin air."

Usually at this point, for reasons that I don't fully understand, they are not in the mood for conversation, being too busy gathering up their children and herding their precious tots around behind them, like protective barnyard chickens, their pleading eyes searching wildly for somebody to protect them or (with a little gratuitous disrespect) maybe score a nice, juicy worm to eat.

Being distracted like they are, this is when I cleverly add the caveats that always surface sooner or later. "And yes," I say to them, "I have noticed that the Gospel Of The Mogambo (GOTM) is a direct rip-off of my vague-yet-superficial understanding of the Austrian School of Economics, which I do purely in my quest for higher efficiency and efficacy, and which has nothing to do with my not being very bright and hence cannot come up with anything even vaguely original of my own, even though I have tried and failed so many times that I don't even like to think about it anymore, and I am certainly not going to admit to it to some dumb-ass like you in the check-out line at some damned grocery store!"

By this time, someone is usually crying and bleating "Please don't hurt me or my kids, mister!" and the cashier, who has usually completely misunderstood the whole situation, is repeatedly pressing some stupid "panic button" to summon the manager, or somebody has called 9-1-1, or something. It's always something.

The point is that I know, by experience, that my time to help these people is growing short. 

So I quickly finish up by adding "And the indelible lesson of history is to buy gold, silver and oil, today, and every day, as much as you can, and for as long as you can when so much money and credit is being created! And then you, too, will happily say 'Whee! This investing stuff is easy!', as all else around you is going to hell!"

But if they are NOT -- at least! -- polite to me, then I simply tell them "Go to hell, moron!  You are obviously too stupid to understand the importance of buying gold, silver and oil when your own stupid government is allowing the evil Federal Reserve to create so insanely much money that We're Freaking Doomed (WFD) to be destroyed by inflation in prices and total bankruptcy when interest rates rise! Go to hell! To hell with thee, I say, and thy Fruit Loops, too!  HELL!"

You have probably noticed two distinctly different references to hell. The reason for that is, of course, simplicity itself: Once the inflationary depression caused by all this new money being created by central banks really starts hitting, it will be truly hellish for everybody who does not own gold, silver and oil.

For those who do own them, however, life will be much, much more pleasant.  So much so, in fact, that they will be known to periodically smile enigmatically and softly say, for no particular reason, "Whee!"

Ultra-Famous Mogambo (UFM

August 17 2012   Mogambo Guru

 

 

Because I really am, personally, the Ultra-Famous Mogambo (UFM) who thinks he's famous, who thinks he knows everything about everything economic, and is quite arrogant about it in an unpleasant, sneering way, people think they can ask me questions about things I know nothing about, yet get a correct answer. Weird.

 

Sometimes, though, they luck out by asking me a question where I, for some unknown reason, actually know the answer!

 

Like, just this morning at breakfast, when my wife asked me "Okay, UFM who thinks he's so hot, do you know that you are supposed to eat with your damned mouth closed so it doesn't disgust the other people around you?", and I correctly answered "Yes."

 

I am suddenly and proudly hitting one-for-one when my son immediately asked me the question "And did you know that, besides eating like a pig with your mouth open, you are insane about how the Federal Reserve and the other central banks of the world are creating so much excess money that it will destroy the world with inflation and ruination, just like it has destroyed every other currency and economy in the history of the world that had a government so abysmally stupid that it actually allows the Federal Reserve to do this kind of suicidal crap?"

 

I gotta tell ya, I was impressed!  Astonished!  So, I said to him "Yes and yes! Very, very good, my darling son!"  His face beamed in self-satisfaction.  I was the proud father at last!

 

Of course, the cynical, suspicious part of me wanted to ask him "Did you just extemporize that because you really understand it, or did you memorize it so as to impress me for some nefarious reason, you sneaky little bastard?"

 

On the other hand, I get questions that I can't answer, such as those about technical analysis, and I admit that I am no longer a trader, zooming in and out of investment positions, long or short, to make a profit. 

 

Now showing so little interest in it, and handicapped by being naturally stupid, I am, admittedly, not up-to-speed on any of these newfangled analyses, using calculus on obscure derived equations and running in a computer language that I do not understand.

 

Or even recognize what in the hell they are talking about, for that matter! Hahaha!

 

My current blah attitude towards charting the markets is because I discovered that it is virtually impossible to consistently make money, or make any money at all, trading any market, especially using just yesterday's price and volume data, as per the usual technical analysis. 

 

It was a memorable lesson that I learned The Hard Way (THW), which seems to be the only way I ever learn anything, usually with painful, deep emotional scars, a seething, angry bitterness, an unhealthy fixation on revenge with muttering under my breath, and (in this case) tax-loss carry-forwards.

 

The revelation (to me, anyway) was made obvious when, one day, I suddenly said "Hey! Where did all my money go?" and realized, in a moment of transcendent enlightenment, that traders, like me, have no chance. Alas.

 

The market-makers, and the exchanges themselves, are allowed to make a guaranteed profit (with government assistance, if need be!).  Governments make "profits" with taxes and fees. A lot of middlemen make a profit just passing things along.

 

And the buy-and-hold investors make a profit when they are on the right side of a long trend, although they, too, will be, alas, wiped out in The Long Run (TLR) by the inflation in consumer prices and the deflation in asset prices caused by such insanity in expanding the money supply.

 

Then, there, standing alone and frightened, abandoned out in the cold wilderness, feeling helpless and angry at being lied to, manipulated and cheated, are the only people left to pay all of these people. The traders.  Me. Maybe you.

 

I realized that since investing is, in the macro sense, a zero-sum game, traders' nominal losses will exactly equal the nominal gains made by all those other people, and the profits made by many more people, too, when considering all the people I did not even count, such as, oh, I dunno, back-office people. Consultants. Advisors. Banks. Crooks. The usual opportunists who swarm wherever money is located. You know; other people.  Lots of them.

 

But sometimes the enticement to trade seems too much to resist. The bond market, for instance! 

 

Bonds, thanks to all the money being pumped out by the Federal Reserve et al, are now priced at astronomical price levels to produce yields that are at ludicrous, laughable, historical lows! It's just So Freaking Obvious (SFO) that THIS ain't a-gonna last!

 

I can see that you are suspicious of my analysis, so I will postpone asking you for $5,000,000 in start-up money, in cash, in small unmarked, non-sequential bills, to, you know, kind of "get the ball rolling", and instead provide you with an illuminating example of why I am entranced by the idea of shorting bonds.

 

Suppose that interest rates are 6%. The theoretical market price for a $1,000 bond paying 6% is therefore $1,000.

 

So what is the theoretical price of a $1,000 bond with a 6% coupon when interest rates are 0.1%, which is close to zero (the result of massive, monstrous monetary inflation running at an astronomical 9% of GDP while actual, non-manipulated consumer-price inflation is running at over 10%, which is the very, VERY weird and scary situation today, meaning that bonds are ridiculously mis-priced)?  

 

The bond is worth, almost unbelievably, $60,000. Big difference, huh?

 

So what is the theoretical price for that same $1,000 bond yielding 6% when interest rates are at 10%?  A paltry $600.

 

With my usual aplomb and Supreme Mogambo Arrogance (SMA), I am 100% certain that I am perfectly, absolutely correct that price inflation will soar because of all of this over-creation of money and credit by the damnable banks.

 

I am likewise 100% certain, with quarts of SMA oozing from every pore of my body, that interest rates will soar, too, and thus the prices of the bonds will collapse as their yields are forced higher to make them more attractive to reluctant bond buyers who will be horrified to see roaring price inflation everywhere.

 

If bonds behave classically, as they usually do (until now) and things go exactly to plan, as they usually don't, traders should now sell-short a bond, getting the whopping $60,000, paying out that meager $60 per year interest payment, and then a year later, when interest rates have soared to 10% -- and probably more! --  like they should, acting in response to the horrible monetary and price inflations all around him or her, the trader would close the short position by buying the bond for $600, making gross nominal profit of $59,400, less expenses. Nice work!

 

On the other hand, this entails a lot of risk, which I hate because I am a gutless little coward who remembers, with each precious dollar laid out, how I had to earn each and every dollar of that money by slaving as a lowly lickspittle piece of employee crap whose bosses were all morons for not recognizing my obvious genius, and (judging by my annual employee evaluations) for expecting too much of me in the first place, morons.

 

At least things got better when I got to be a lowly lickspittle piece of self-employed crap, where things were a lot better because I was never again suffered daily stress because of threats to fire me just because of being barely qualified, my obvious incompetence or my lazy, worthless attitude, which I think comes from my natural stupidity.

 

And the risk with bonds is very, very real, too, as the Federal Reserve has repeatedly demonstrated the power, and they repeatedly demonstrated the odious inclination, to keep pounding interest rates down and down by creating more and more money and credit, regardless of the inflation in consumer prices it caused!

 

In the movie, if there is one, this is where the camera cuts to a close-up of my face as I, McCauley Culkin-like, slap my own cheek in disbelief, my mouth and eyes open wide and my eyebrows rise in terrible surprise, and I say "Un-freaking-believable!" or "We're Freaking Doomed (WFD)!", I haven't decided which.

 

And actually, unbelievably, despicably and tragically, the Federal Reserve, under the dysfunctional thrall of the satanic Ben Bernanke, is trying, for the first time in history, to literally create inflation in prices to achieve some "target "rate of price inflation of more than 2% a year!  Gaaahhhh!

 

No wonder I say "Un-freaking-believable!" or "We're Freaking Doomed (WFD)!", I haven't decided which!

 

And where does the money go? To buy the flood of new Treasury bonds, of course! And so bond prices go up and up, simply by the Federal Reserve creating a LOT of new money which the despicable and treacherous Obama administration desperately needs for its suicidal deficit-spending madness), driving bond prices up and the yield down.

 

In which case a short-seller of a bond would get financially slaughtered as each halving of the interest rate, under the deluge of a flood of money, doubles the market price of the shorted bond. Yikes!

 

And there is no telling (as in thick, choking smoke is blinding you, everything is burning in a searing fire, and people are running around in flames, screaming into your disoriented ears) what will happen if the Federal Reserve, as is rumored, actually achieves negative interest rates! Wow!

 

So, assuming that you are, like me, a Gutless Cringing Coward (GCC), you prefer investments that succeed over the long-term, like gold and silver, as evidenced by 4,500 years (or more!) of history, instead of investments that have always failed, which is mostly everything else over the long-haul, but especially things such as government promises of real, inflation-adjusted repayment of a loan ( a BIG loser!), and partial ownership of, or be owed money by, some dumb-ass, highly-indebted mis-managed company totally dependent upon dumb-ass, highly-indebted people who have no jobs and are underwater on their mortgages watching food and energy prices continually going up and up, faster and faster, all to finance a huge excess of inflated final demand for goods and/or services.

 

If you are a GCC who also is, like me, just in it for the money and you are looking for Big Beautiful Real Profits (BBRP) without doing any work, doing any thinking or taking any risk, then I suggest that you merely get into your car, take a drive to some place that sells gold and silver, and buy some of each.

 

Then, do the same thing next week. Then the week after that.  Over and over, week after week.

 

So what could be (by virtue of 4,500 years of history) more obvious? And what (by virtue of taking a pleasant drive with the radio playing and honking the horn at pretty girls) could be so easy? 

 

And so what can one say except "Whee! This investing stuff is easy! And obvious! Whee again!"?

 

The Only True Economic Theory (OTET),

  I know now, with the huge benefit of hindsight and a lot time spent with drunken friends explaining it all to me, how all my problems are somebody else's fault. 

I know that they are just being kind, of course, as there were a lot of the places where I personally went wrong along the worrisome, winding way of my worthless, wasted life, none of which, unfortunately, explains my bizarre use of such gratuitous alliteration that even I am embarrassed about it. Sorry.

Anyway, I thus see crystal-clear that if I had made even one correct decision anywhere along the way, then today I would be rich, handsome, popular, happy, loving, respected and trusting, instead of, well, you know, this.

Of course, there are the obvious benefits of being a paranoid, cynical, hateful old man following the Austrian school of economics.

Thus educated in The Only True Economic Theory (OTET),  I am looking forward to being happily and embarrassingly wealthy, at least in a relative sense, when gold and silver shoot to the moon in price and everything else turns into (as they say in Spanish ) El Crapola.

This is as it must be because the horrid Federal Reserve, the incompetent European Central Bank, and the corrupt International Monetary Fund are creating so much money, so impossibly-much money, so horribly much money that burning inflation in consumer prices must necessarily result.

I can see the skeptical look on your face, questioning my statement that "burning inflation in consumer prices must result" from so much money-creation. 

So, before you say "Are you sure?", or "I think that is debatable, Mr. Mogambo", or "You filthy, lying, pig bastard!", let me explain that it is because -- and this is the Very Telling Point (VTP) of the whole thing! -- prices have always risen when the money supply was expanded! Always! Over thousands of years!

I bring this up, not just because the current, fashionable-yet-stupid, new-age, neo-Keynesian econometric monetary inflation crap ("Central banks gone wild!") scares the hell out of me, and scares all educated people, too, but because of a little blurb in an article in Bloomberg Businessweek magazine.

The article is about Ben Bernanke, a guy for whom I grudgingly put aside my disdain for him and his stupid brand of economics so as to act professionally in my role as Big Chief Editor Mogambo (BCEM), I have conservatively and professionally classified him as a raving neo-Keynesian econometric academic nitwit, and who is disastrously the current chairman of the evil Federal Reserve.  

About his policies, Peter Coy writes "Take this little quiz to see how much you know about Bernanke's monetary policy derring-do. Have the central bank's asset purchases since August 2008 increased banks' lendable reserves by a) 25 percent, b) 50 percent, or c) 100 percent?"

He could probably tell by the way my eyes glazed over that I did not know the exact figure, and never even thought about it, to tell you the truth. 

Thankfully Mr. Coy did not immediately launch into the usual taunting I usually get, mostly along the lines of "So, The Great Mogambo (TGM), for once in his arrogant, overbearing life, doesn't know the answer to a simple question?"

If I don't take action to stop them right there, the average person will continue "Is this TGM, the snotty guy who thinks he knows everything about everything, especially how the horrid Federal Reserve creating so unbelievably much excess money and credit over the last 25 years has destroyed the economy, is still destroying the country by, and by extension the world, with horrendous inflation in prices, monstrous un-payable debts, an economy riddled with cancerous, ruinous mal-investment and an adversarial regulatory government?"

About this time, I have found that the best way to end this rude line of questioning is to graciously interrupt by saying "Shut up!", then saying it over and over until they, you know, shut up.

Then I gently answer their probing questions with "Yes, it's me, TGM, the blowhard who is constantly shouting how one would have to be an idiot NOT to buy gold, silver and oil when faced with such an economic calamity, and thus I call you 'moron', as I am sure that you have not bought them, else you would not address me in such a rude manner instead of falling to your knees to worship me, loudly singing my praises, including about how handsome I am and how wonderfully my darling blue eyes twinkle with a kind of inner light, and thanking, thanking, thanking me repeatedly for the wisdom of True Mogambo Enlightenment (TME) that I have given you!"

Mr. Coy obviously does not want to get dragged into that whole weird scene, and so instead of him saying "You tell 'em, Mogambo!", he goes immediately on to write, surprisingly with not an exclamation point in sight, "It's a trick question. The correct answer is d) 80,000 percent, from less than $2 billion before the financial crisis to around $1.5 trillion now."

80,000 percent! Yikes! Alas, economies will be destroyed, currencies will be destroyed and everyone will suffer! Notice all the exclamation points!!

At that rate, that's when relatives and miscellaneous people will come wandering in, staggering as if in a daze, over to my house, carefully standing outside the clearly demarcated fire-control zone perimeter around the Mogambo Ultimate Dual-Mode Offensive And Defensive Bunker (MUDMOADB), where they are tearfully shouting out to me that they want to "borrow" some money that I know, that they know, that we all know, they can never pay back.

They will finally ask the question "Do you enjoy seeing us suffer?"

Well, wondering what I think about people getting what they deserve is a good question!

And here's a good question for them! "Why do you cluster in a small group like that, out in the open, where a short burst could take you all out at once, instead of taking cover and dispersing yourselves around me in a pincer-movement flanking maneuver, which shows at least a minimum of competence?"

Another good question for them is "Why do you want to borrow money from me when you could just cash in some of your own gold, silver and oil stocks that you have accumulated over the years, like to told you to do all through those selfsame years?"

They will have an answer for that, though:  They will say they "forgot" to buy gold, silver and oil! Hahaha! They forgot!

It's like they think I never heard them talking about me behind my back, saying things like "Mogambo is a stupid-head gold bug!" and "Why is he always ragging on the Federal Reserve?" and "Does he always smell like that?"

Well, thanks to the inflation in prices that follows an inflation in the money supply, they will be standing at my door, their savings gone, or almost gone, after always paying higher and higher prices to maintain their standard of living as long as they could.

And they kept it up the whole time that prices were rising, their incomes not increasing (assuming they still had jobs!), taxes were rising, and returns on assets lagged, assuming they hadn't already fallen to their real-world, and drastically lower, value, wiping them out. 

Their few remaining paper dollars almost worthless in terms of buying power, reflected in the terrible inflation in prices, and they are hungry, and desperate, and they have nowhere else to turn, and blah blah blah.

Little do they know that, if they had read history, they should cheer up, as this is only the start of the fun part of currency debasement by over-issuance.  Hahahaha! 

Believe me, it gets much, MUCH worse from here! And for a long time, too!

I am sure you noticed how I bravely laugh in the face of such impending misery and deprivation, which I bravely do because prospering in such apocalyptic times is as easy as buying gold, silver and oil! 

And how can you NOT be carefree and bravely laugh when you are busily saying "Whee! This investing stuff is easy!"? Whee!

Hysterical Mogambo Analogy (HMA)

With all of the monetary and fiscal insanity running rampant in the world, you can be sure that I am, more than ever, 100% against almost everything and everybody, but especially annuities.

For those who are not familiar with annuities, it's a steady stream of regular payments from an insurance company paid to you, for as long as you live, which you purchase in advance by giving an insurance company a big wad of money now. When you die, they keep what's left.

My reason for steering clear of annuities and insurances is because, at the beginning of the Weimar inflation in Germany, 1921-1924, a 1,000 Deutschmark per year annuity was, so they say, a satisfactory retirement income.

At the end of the inflation, just a few years later, nobody in the whole country received an annuity check, but nobody even cared.  This is because the cost of the postage stamp, with which to send the 1,000-mark annuity check to the happy recipient, cost more than 100,000 marks by 1924!

Now THAT'S some inflation! The stamp cost 100 times more than the benefit itself!

So I have never given annuities any thought, other than to haughtily disdain them in this day and age of rampant money creation, and thus disdain them in this day and age of continual price inflation, which makes a mockery of annuities and fixed income streams of any kind.

I was reminded of them, however, by the essay "The staggering costs of Bernankeism" by Martin Hutchinson at his Bear's Lair column at PrudentBear.com.

He writes that "Baby boomers who are approaching their relatively late retirement at 67 with $500,000 no doubt feel they are in pretty good shape. They will awaken from their reverie when they discover that one typical insurance company quotes that amount as purchasing an annuity of only $2,966 per month ($2,755 for women) with no pension for the surviving spouse or guaranteed minimum payout period."

In short, it's a bare-bones annuity contract where, at age 67, you must live another 14 years to "break even" on the cost of the annuity.  Whenever you die, remember, the insurance company keeps whatever is left.

The problem is, according to the Hysterical Mogambo Analogy (HMA) between the USA of today compared to Weimar Germany 90 years ago, in a few years your monthly annuity check will still be $2,966 per month, as per the contract, but the price of a postage stamp will be around $3,559,200!

Actually, since I have obviously been drinking, I will drunkenly confide in you, my best buddy, my best bud, my BFF, my bestest budderoo in the whole world. So listen closely, ignoring my stinking breath because, just between you and me, see, I've been thinking that the current situation resembles not Weimar Germany, but ancient Rome, which is 10 times worse. Maybe 11 times worse! Or 12! Who knows how much worse it will be?

So remember to keep that "Germany or Rome?" thing under your hat, especially since it is clear that Mr. Hutchinson does not want to get drawn into a stupid-yet-pointless debate, and instead of rendering an opinion one way or the other, writes, with a delicious kind of dry, dark humor that seems so in keeping with the current situation, "Doubtless, most baby boomers faced with this shock will opt not to annuitize, hoping that between 67 and 74 or so, when their money runs out, they will graduate from feeling 15 years younger than their actual age to being dead, solving the problem." 

At this witty joke, I laughed!  And it felt good to laugh!  Laughing again after years and years of screaming in fear, screaming at family, screaming at neighbors and complete strangers about the painful inflation in consumer prices that follow, and that must always necessarily follow, from the huge increases in the money supply for the last quarter of a century by the damned Federal Reserve, and now into the foreseeable future, too.

And when they cried out "Begone, crazy man! Vex us no more with your silly theories!", I would reply "Crazy, am I? Is not the Entire Freaking Record (EFR) of history the same, sad, stupid story of one idiotic/corrupt government after another borrowing itself into bankrupting debt, and the currency debasement/inflationary horrors that always followed?"

In fact, the little inflation-calculator provided by the Bureau of Labor Statistics, which is the lowest, low-ball, government-massaged "Move along. Nothin' to see here" estimate of inflation found anywhere, still calculates that it takes $2.02 in 2012 to equal the buying power of $1 in 1987!

Prices have, at least, doubled in the last 25 years!

The salient point is that the buying power of anyone's monthly annuity begun in 1987 (when the average annual family income was $24,350) has, after 25 years, been cut almost exactly in half. Half!  Ugh! 

And if you think that was bad, consider the catastrophic price inflation coming at us from over the horizon, like a wave of ravenous wolves, that will surely follow the astounding increases in the money supply by the Federal Reserve, the ECB, and the IMF, which is to name only 3 central-bank scumbags doing that disastrous crap!

Arrgghh!  I am screaming in fear! And then, in mid-howl of outrage, I realized that I admired Mr. Hutchinson's sunny optimism of people hoping to die soon, because if a postage stamp goes from 44 cents to $3,559,200, then that now-adequate $2,966 monthly annuity payment will soon cease being anything of value.

But it is all academic anyway, as I figure that "most baby boomers" will not have $500,000 to pay for the annuity in the first place, as estimated by the fact that the average retirement accounts of working people over 50 is around $50,000, and by the additional fact that $500,000 is more than TWICE as much as the entire NET WORTH of most people in the Whole Freaking Country (WFC), especially now that their incomes have not increased, their taxes have increased, their retirement investment accounts have gone down and their houses have deteriorated in value, all dragging down their net worth, making it all worse and worse.

At this ugly point I am exhausted and drained, with barely the energy to thank the heavens that simply buying gold, silver and oil is so easy, and so seemingly guaranteed successful by 4,500 years of statistical proof.

With my last ounce of strength, I lift my head from the barroom floor, smile and weakly say "Whee!"

Moment Of Exquisite Mogambo Revenge (MOEMR)!

August 3, 2012 Mogambo Guru

I'm obviously the kind of guy who trusts no one, and for good reasons and for bad reasons. But reasons. Lots of them. Thousands of reasons!

Like those phone calls where I merrily answer "Hello?" and they, mysteriously, hang up. 

Or when I answer a phone call by saying, "Hello? Is this the idiot who called, and then hung up when I said 'hello'?", and then the caller says, "No! You're an idiot!"   THEN they hang up! Weird!

I mean, how do you make sense of ANY of that, except by first assuming that everybody is out to get you, then it all falls into place?

In fact, every time I turn around, there more corruption, more theft, and always someone else not to trust, which is, I am sorry to say, always "par for the course" at the end of long monetary booms, where a continual flood of new government money, year after year, enticed more and more greedy people to commit corruption upon corruption, deal after deal, decade after decade, until the misshapen economy evolved into a big, nasty spider's web of debt, lies, thefts, blackmail and worse.

I am sure that you will agree that this is truly an ugly part of expanding the money supply with fiat currency multiplied by insane levels of fractional banking, so that massive amounts of money can be created -- out of thin air!  -- by the banks for each dollar of new deposits, which, in this case, was the Federal Reserve creating the new dollar of new deposits in the first place.  Insane!

And that is, as they say, just for starters!  You can tell by the way my eyes are bugging out and my voice rises to a loud, shrill crescendo that it gets insanely worse with the damnable Federal Reserve actually monetizing government debt!  Creating money to buy government debt! Arrggghhh!

And then the acrid smell (sniff, sniff) of brain neurons frying and sizzling is One Sure Sign (OSS) that it gets unbelievably, incomprehensibly, mind-bogglingly, staggeringly, into-the-depths-of-hell worse when you realize that, over the decades, government deficit-spending has grown to actually BE the American economy! 

Thus, any miniscule, grudging growth in the bloated, cancerous, mal-invested, debt-besotted, government-centric economy must come as a result of massively more and more amounts of governmental deficit-spending, with everyone participating in it because they HAVE to, which is because they owe So Freaking Much (SFM) money.

As a case in point, I particularly remember a scene from the old Perry Mason television series, where, at the end of the episode, Perry has (as usual) completely shredded the guilty party's alibi, who is currently on the witness stand, where we find Denver Pyle confessing to the murder, saying that a complicated financial scheme had gone awry and his creditors were pressing for repayment, which he did not have.

He explains "I just needed a little more time!"

Then he leaned forward in the witness stand and explained that this -- this! -- was his justification for murder.  "I HAD to kill him!", he said. "Can't you see that?"

You can probably tell I am stupidly distrustful and paranoid by the odd assortment of things I remember from old TV shows, or maybe you can tell by the way I'm very nervous, almost rat-like, in the way my eyelids are narrowed to mere slits, my bloodshot eyes darting quickly back and forth, seeking out enemies and deadly traps, and seeing them everywhere. Mostly because they ARE everywhere! Look out behind you!

And it is that exact kind of unreasoning paranoid hysteria that explains why there is a large bulge under my jacket, obviously doing a poor job of concealing some kind of oversized pistol, rifle, bazooka, rocket-propelled grenade, machine gun, anti-aircraft cannon and/or flame thrower, depending on my mood and ability to remain standing under all that weight.

Since this is something you don't see everyday, then obviously, I am the only clear-thinking dude for miles around.

I think it started when I realized that neo-Keynesian econometrics was mostly a Huge Load Of Crap (HLOC), mostly as a result of finding and then studying the Austrian school of economics, with thanks to mises.org, which is the educational equivalent of taking the red pill and seeing the Matrix.

This revelation theoretically caused my brain to explode in outrage and fear, overwhelmed by panic, terrified at finding out that We're Freaking Doomed (WFD) because the Federal Reserve is an evil institution that created, and is still creating, so much excess money and credit that terrifying inflation in prices -- and economic collapse! -- must necessarily result.

All of this made me, as you would expect, bitter and angry, a condition not made any better by also being a guy who is absolutely sure, beyond any doubt whatsoever, that inflation in prices is going to rage out of control because of the monetary insanity of the Federal Reserve, the European Central Bank, the International Monetary Fund, et al, still conspiring to create unbelievable, shocking, disastrous amounts of new money, on top of the other mountains of new money and debt they have been creating for literally decades that have led to the economic disaster of the world today.

If you are one of those who laugh at those who are frantically buying gold, silver and oil to protect themselves from these certain perils, and hopefully even to prosper as all other suffer, then "Hahahaha!"

I have just cut-and-pasted that "Hahahaha!" laugh, and will carefully store it away until the day (coming soon to a theater near you!) when I am sure that you realize that those buying gold, silver and oil were Absolutely Freaking Right (AFR), and you were disastrously wrong.

And that is when I shall have my Moment Of Exquisite Mogambo Revenge (MOEMR)!  I shall bring this archived laugh out of storage, display it proudly, and thus I will be, literally, the one who laughs last, and thus the one who laughs best!

Whee!  I mean, Hahahaha! This investing stuff is as easy as fulfilling old sayings!