The national debt, more correctly known as Treasury Gross Public Debt, shot up
US$141 billion last week! Yikes! Don't multiply $141 billion by 52 weeks
because you will plotz at the answer, and we are so freaking doomed that I
cannot chug raw tequila fast enough to dull the rising feeling of doom or the
rising taste of vomit tinged with blood.
Sure enough, the monetary base exploded to 911.350 from 843.825 in one week!
Gaaahhh!
And as bad as this was, nothing could have prepared me for the news that Total
Fed Credit jumped by an unbelievable $203.6 billion last week! In one week!
$203 billion! In one lousy week!
This unbelievable, unprecedented, staggering $203.6 billion increase in credit
is in the Federal Reserve account that, in the
old days, used to run $10 billion a month, which was considered excessive, all
the way during the huge 11-year inflationary run of money and credit that began
in earnest in 1997, which produced all of the bubbles that are now bursting and
causing this economic mess.
Now, instead of a white-hot $10 billion a month, now it's 20 times as much,
$203 billion! And in one week! Gaaahhh! We're freaking doomed!
My voice trembles as I read aloud that now, for the first time ever, the Fed
has created over a trillion dollars' worth of new credit, $1,134,942,000,000.00
to be exact, in the banks, which comes to $3,783 for every man, woman and child
in America.
Hell, the one-week increase in Total Fed Credit alone is $2,030 for that
selfsame every man, woman and child in America, assuming that there were no new
Americans added to the census since the last paragraph!
And this stupefying rate of expansion is literally off the charts, as in the
entire history of TFC, it had grown to only $931.34 billion, reached last week,
and now, this week, it has increased $203.6 billion - a 22% increase! In One
Freaking Week (OFW)!
We are So Freaking Doomed (SFD) that I reflexively run and hide under the
stairs until I can reconnoiter the path to the Mogambo Bunker Of Last Refuge
(MBOLR), and if the coast is clear, dash to its musty safety and lock, lock,
lock myself in, perhaps then firing off a few rounds to let the neighbors and
miscellaneous passersby know that I am scared and I mean business. Maybe then I
can relax!
After awhile, as my jaw muscles unclench from the fear, I would be able to
explain that this TFC is the source of the fabled "money from thin air" of
story and song, which I had hoped would be best remembered by my Mournful
Mogambo Ballad (MMB) titled "Fiat Money from Thin Air".
Alas, the tune proved to be less popular than I had hoped ("I actually feel
soiled having just listened to it." - Chicago Sun), but which contained the
immortal lyrics, "Fiat money from thin air will create real debts from thin
air, which will accumulate and get bigger and bigger in a huge inflationary
boom caused by all of this new money and credit until it reaches its maximum
size, depending on various permutations of tax rates, regulatory zeal and
social custom, all of which get looser and looser and weirder and weirder as
time goes on, whereupon one day 'something happens' and the whole economy
collapses, including the currency, which will cause those flying monkeys from
The Wizard of Oz to appear from thin air, and some of them will swoop down and
bite chunks out of the heads off of you, your parents and your children, and
you will all die screaming unless you own gold, and if you don't own gold in
the face of such rampant inflationary corruption and actual carnivorous flying
monkeys, then you are stupid, stupid, stupid and you deserve to die!
Hahahaha!!"
I ruefully admit that my tune became somewhat less than a folk anthem, which I
credit to the fact that it is not actually "fiat money from thin air", as per
the lyrics, but is actually "credit-appearing-in-the-banks-from-thin-air",
which is, unfortunately, not as catchy a phrase, and so obviously the
discerning music-lovers did not buy my albums, like it's MY fault or something
that the truth is not catchy. The picky little snots!
Well, to be truthful, "credit-appearing-in-the-banks-from-thin-air" is much
more descriptive of just the beginnings of the actual process, which is that
this "credit-appearing-in-the-banks-from-thin-air" then literally becomes money
when someone agrees to go into debt to borrow it.
So, it is, now that I think about it, kind of a "money from thin air" kind of
thing after all! But would anybody buy my music now? No! Bastards!
But the fact is that my music being a flop is probably a good thing, as I
wouldn't be able to promote the music, go on tour or appear with Regis and
Kelly anyway, because every part of me is scared, and at my age the
unpredictability of various frightened glands and sphincters creates certain,
ummm, problems, which I thought Thomas Donlan in his Editorial Commentary
column in Barron's was alluding to when he wrote, "The danger is that they are
igniting a great inflation to stave off a great depression", to which I
nervously say, "Danger? Hahaha! Danger? Did he say 'danger'?"
Seeing that everyone has been stopped in their tracks and are looking at me, I
gladly continue, "The use of the term 'danger' suggests that there is actually
some hope, at least some slim, tiny chance that you will not die a horrible
death, but in fact, there is No Freaking Way In Hell (NFWIH) that they are NOT
'igniting a great inflation', because a great inflation in the money supply
ALWAYS begets a great inflation in consumer prices, which means that the
currency buys less and less, and so as each purchase of anything always takes
more and more pieces of money, people begin consuming fewer and fewer things,
causing their standard of living to fall, until one day they can only afford to
buy food, and then one day they can't even afford that, and people get
homicidal when they are starving, that is the thing that destroys economies and
countries."
All of which could have been prevented with a gold-standard money.
Happily, since the government did what it did, then those who bought gold as a
result will make out very well as gold soars in terms of a depreciating
currency, which is depreciating because of over-issuance! Whee! This investing
stuff is easy!
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2008, The Daily Reckoning.)
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Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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