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Mogambo Guru on Keynesians
The Daily Reckoning PRESENTS: Inflation (1-10-2005). We have to whisper when we say the word, for fear that the Mogambo may spin out of control, and rally an angry mob equipped with flaming torches and pitchforks, and head off to Washington...though, that may not be such a bad thing..
LAUGHING TO KEEP FROM CRYING
by The Mogambo Guru
Richard Benson of Specialty Finance Group has added back the hedonic deflators into the "official" Consumer Price Index, and figures that the actual rate of inflation is 6%, not the 3.5% that is advertised. I figure it is at LEAST that, but then I habitually take the alarmist perspective about everything. To show you that The Mogambo has a civilized side, I will, as a courtesy to Mr. Benson, try and keep from going absolutely ballistic about a 6% inflation rate, because the advertised 3.5% inflation rate is plenty unacceptable enough. To that end, I will place my own hands around my own throat, like this, and choke myself, like this, until I almost pass out, and then the lack of blood to my brain will make me forget about the 3.5% infl, ifla, iflana, ummm, 3.5%, ummm, things are fading, fading, I am starting to black out, yes, I am slipping from consciousness, my brain is slowly dying, and suddenly Keynesian economics and the idiot theories of the Federal Reserve starts to make sense to me and, and, and (fade to black).
While The Mogambo is passed out on the floor like that, my assistant will take a Magic Marker and write the word "idiot" on his forehead because that will be a big laugh when he wakes up and starts walking around, because if there is one thing that people love to do it is to laugh at The Mogambo and steal his lunch. While he is finishing up with that Magic Market, the rest of us will pay a visit to the DailyReckoning.com website, who have a few words to say about this dollar thing, although like a bunch of teacher's pet showoffs they say it with class and erudition and wit, and rub it in the face of The Mogambo, who is none of those things. The write, "U.S. policy makers, analysts, and the chattering classes seemed to think that the dollar could fall - thus helping to eliminate the need for the $2 billion daily fix, and making U.S. business more profitable - without any nasty repercussions. They thought they could disprove one of Newton's Laws - they expected an action with no reaction. But here at The Daily Reckoning, we have faith in the eternal and essential truths: There would be no silver lining without a dark and ominous cloud attached to it."
And this brings up that Famous Eternal Truth Of The Mogambo (FETOTM), namely that all things are connected to all things, and that is why Chaos Theory is a fact, and thus silver linings are connected to dark clouds, and dark clouds are connected to the sky-bone, and the sky-bone is connected to the tree-bone, and the tree-bone is connected to the ground-bone, and the ground-bone is connected to everything else, and everything else is connected to The Mogambo, and connected to you, too, and likewise everything is connected to everything you love in this world, and that is why the coming fall in the dollar is going to make you go berserk, and you will doubtlessly then go online to order a Mogambo Flaming Torch, a Mogambo Pitchfork, maybe a Mogambo Baseball Bat With Wicked Imbedded Nails In It, and a copy of The Mogambo's new bestseller book, Currency Destruction and Resultant Inflation: Angry Drunken Mobs And What They Can Do About It.
Also on The Daily Reckoning site, and in keeping with this whole dollar debasement thing, they asked Doug Casey, "How high will the price of gold go?" If you had asked The Mogambo that question, I would have replied, "Well, before I can tell you how high gold will go, I have to know how low with the dollar will go. You tell me that, and I'll tell you how high gold will go, you moron! What a stupid question! I can't believe you asked me such a stupid question! What are you, some kind of mental defective? Is that why you are asking me a moronic question like that? Are you some kind of pathetic, stupid, brain-damaged retard?" Which, now that I read it, probably explains why nobody asks me questions anymore, which is probably, you know, a good thing, now that I think about it.
Mr. Casey's reply was much more refined, which explains why he is a famous and respected guy and I am just an angry and lonely man whose only wish is to live long enough to get my revenge on all of you nasty bastards. He replied, "There are many ways of determining what it 'should' be worth, based on fundamentals. The U.S. Government owns a reported 261.6 million ounces of gold. If they were to back all the dollars represented by M-1 with gold, based on an M-1 of $1.31 trillion, it would require $5,000 gold." Suddenly, my head snapped to attention! $5,000 an ounce for gold? Yow! I am starting to LOVE this Casey guy!
He ignores me as I am dancing in the aisles, and I am singing, "We're rich! We're rich! Whoopee!" in that ridiculous falsetto voice I have when I get really excited, and he goes on to say, "If we use M-3, which is $9.04 trillion, it would be $34,570 gold." Now I am REALLY dancing up a storm here! $34,570 per ounce for gold!
"Just to cover this year's foreign trade deficit of $600 billion would require $2,294 gold," he says. One lousy year's trade deficit! I have to laugh to keep from crying, although I end up doing both, and it must have looked pretty weird, because Mr. Casey actually turned away from me in disgust. He addressed the rest of the crowd and concluded his remarks about the trade deficit with, "And that's not the accumulated deficit, or those that may be run in the future." So it just keeps getting better and better! Finally, and I am all out of breath with excitement, he says, "If gold were simply to return to its 1980 high, it would be close to $2,000 in today's dollars - and the situation is much more serious now that it was in 1980."
It should be worth $2,000 today? If the telephone were ringing right now, it would probably be you, calling me up, and asking, "Hey! Mogambo! Did you know you were an idiot?" and I would say, "Yes," and then you would want to know, "Why isn't gold selling for $2,000 today?" And that, my little grasshopper, is the big question that GATA wants answered, because it looks like the whole thing is being manipulated, and if there is one sure-fire lesson about manipulations, they never last. And that means that, one day, gold WILL rise to its true value. And then we will see how accurate Mr. Casey is! If we can stop dancing for joy, that is.
And speaking of gold and its manipulated market, the guy who writes the LeMetropole.com site is just as bitter about this manipulation of the gold market as I. He writes, "Gold has become unwatchable for me. Constantly witnessing the blatant manipulation all day long is just not worth it these days. All I do is get angry at what is transpiring and furious at the dimwits in the mainstream gold world who always fail to whisper a peep about the obvious. Thus, I have taken to stepping away from viewing the market action not long after the opening." Me too! And although I am as angry as any, my real reason is that an episode of Bewitched is on another channel.
The Mogambo Guru
for The Daily Reckoning
Editor's Note: 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.
The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications. If you're inclined to read more, you'll find the whole Mogambo here: