Provided as a courtesy of Agora Publishing and DailyReckoning.com
-- Scholars and scientists have long debated if the famed Anger Of The Mogambo (AOTM) was so powerful that if my puny Earthling brain literally exploded from the outrage of this monstrous monetary insanity committed by the Federal Reserve, would my pounding, pounding heart make my headless body run around seeking some spooky, malevolent revenge?
Now we know the answer: No. Apparently, tests indicate that I just act that way because I am so peculiar and hateful, and therefore, they all concluded, the use of the straightjacket was, indeed, indicated.
And the reason that we know this fascinating fact is simple; last week my brain did not explode, although, in that same mind-blowing week (in a blatant burst of blasphemous, bloated banking excess), Total Fed Credit exploded by another $6.8 billion, another $8 billion of actual cash was released, the banks increased their books of Loans and Leases by $34 billion, foreign central banks plowed another $10 billion into their accounts at the Fed, and, to top it off, the Fed itself bought up $2 billion in government securities! Enough money was created to allow Total Commercial Paper to jump by $23.7 billion! All in one week! My God! This is insane! This is freaking insane!
As you would expect, this all prompted another Mogambo Regrettable Incident (RMI) in response to such horrific monetary terrorism. My preliminary legal defense strategy is that my brain must have, you know, blanked out at the shock, as video surveillance tapes clearly show that although I cannot squirm or contort my body enough to escape the suffocating confines of a modern straightjacket, I can still kick, squirm, spit, scream, crap, pee, puke and swear so much (and so loud) about this suicidal monetary lunacy that, at the end there, I end up totally, totally exhausted and totally, totally disgusting.
The reason for my outrage is, of course, the inflation in prices that must result from all this monetary inflation. It is now a fact, as George Ure at UrbanSurvival.com writes (citing NowandFutures.com and John Williams at ShadowStats.com), that inflation in M3 (the broadest definition of "money supply") is actually running at 11.5%!
After that dreadful news sunk in, the rest of the day is a blank. But at just about the same time that the tranquilizer dart was wearing off and I awoke to find found myself alone, in a straightjacket, in a padded room, the mail arrived! Whee! In amongst the usual hate mail and "Last Notice!" letters from angry creditors threatening to sue me unless I pay back at least some of the money I owe them ("Hahaha! Fat chance, suckers!"), was my new 1040 tax booklet with the tax forms for filing my 2006 personal return.
Forced to turn the pages with my nose and rudely (and crudely) getting gelatinous, gleaming snot all over everything (as a sort of a performance-art editorial comment), I am immediately wondering why this year's 1040 booklet has no helpful page of "What's New This Year." I soon surmise that it is because they don't want you to notice the rampaging communism that is eating the guts out of America, as administered by the Uniform Tax Code.
For example, I am always astonished at the wealth of deductions available, and this year several new ones have appeared on the front of the 1040 tax form where you list deductions from gross income. "Archer MSA deduction" and "Jury duty pay you gave to your employer" are new deductions.
Surprisingly, gone is the deduction for "Educator expenses", which I assume is because teachers were abusing the hell out of the deduction, which I further assume is because they have no shame anymore, as evidenced by their willingness to indoctrinate our children with socialist group-think and that whole "all you need is love and a government program dispensing money" idiocy.
And what in the hell is a deduction called "Domestic production activities deduction", anyway? If I take my wife to an expensive-yet-charming hotel to get her pregnant, I can write it off as a tax deduction or something? Wow! Why haven't I heard of this before?
And mind you, these are only the deductions! The really big, lucrative action is found in tax credits, which are the most luscious of the tax plums! A tax credit is an actual deduction from the taxes you pay, whereas a mere tax deduction is just a lousy deduction from income.
To illustrate, a $1,000 tax deduction on an income of $5,000 is worth (at a tax rate of 35% on the remaining $4,000 taxable income) $350. You still have to pay the 35% tax on the remaining $4,000 of income. Total tax due: $1,400.
Now, compare that to a big ol' tax credit of a $1,000, which is sooOOOoo much better! First, you figure your tax due (35% of $5,000), which comes to $1,750, which sounds bad. But wait! Now you deduct the $1,000 tax credit from that! Total tax due: only $750! No wonder tax credits are so freaking popular, eh?
And tax credits are growing, as Congress has responded to the raging inflation that they allowed the Federal Reserve to cause, by trying to protect some groups of people from inflation's ravages (never you or me, I note sarcastically) by giving them money.
Thus, we have things like a tax credit for having children under the "child and dependent care expenses" (Form 2441), a tax credit for being "elderly" or "disabled" (Schedule R), tax credits for going to school in "education credits" (Form 8863), yet another " Child Tax credit" (Form 8901), and "Retirement savings contributions credit" (Form 8880).
This last piece of commie-trash tax legislation is that if you are low-income, and if you put some money into a retirement savings account, then the government will give you some, or most, or all, of the money back in the form of a tax credit! Hahaha! Literally giving people a free, pre-funded retirement account! Which is invested in stocks, which will, marginally, manipulate the stock market up! Hahaha! This is the deplorable, dimwitted depths to which the deplorable, dimwitted Congress has now plunged the United States.
What seems to be new this year is a tax credit for (I assume) upgrading your home's energy efficiency with "Residential energy credits" (Form 5695). Surprisingly, the credit for "Adoption expenses" (Form 8839) is now gone.
And if you want a real laugh, then do like I did, and turn to the Earned Income Credit (EIC) tax tables, where you can note with amusement that there are actually columns in the table showing the actual tax credit payable to taxpayers with NO children! Even though you are required to have a "qualifying child" to get EIC in the first place! Hahaha!
But the absolute best is always Line 55, where you deduct from your tax bill mysterious "Other credits", for which you can subtract, I assume, big ol' chunks of money from your tax bill if you submit some mysterious Form 3800, Form 8801, or some other "fill-in-the-blank" Form number, for which no information is ever available in the booklet. I am not sure if this is really Kafka-esque, or just weird, but it makes me suspicious as hell.
So, I can only wonder at the abysmal corruption that must also run rampant through the entire 3.5 zillion pages of the tax code, as this is just the obvious stuff that is right out there in the open, for crying out loud!
But the point is that all that tax credit stuff is a pathetic Congressional attempt to try and alleviate the suffering caused by inflation, which is caused by them wanting to spend so much money that they allowed the Federal Reserve to create the money they needed, which is a really, really stupid and economically-suicidal idea, which was easily prevented by the Constitution requiring that money be silver and gold.
And since inflation can only get worse if you keep making it worse, it gets worse. Ergo, more tax deductions, and more tax credits, for more people. And a few more for business reasons, too, to make the economy zoom a little!
I feel compelled, because that is the nasty way I am, to add that this Constitutional requirement that money be only gold and silver was suddenly, out of nowhere, disallowed by a despicable Supreme Court, which allowed that arch-villain, FDR, a Democrat, to doom us all. And every Supreme Court since then has upheld every assault against this traitorous decision.
In case you haven't guessed, I have never made it any secret that I despise the Supreme Court, in that they are the arrogant idiots that, to this day, persist in saying that the Constitution does not say that our money has to be silver and gold, as it clearly does, which we can prove because we know WHY such a requirement was put in there in the first place; to prevent the inflation that we now have, so that it wouldn't kill the economy and the country, which it now has: The economic movement you are seeing is only the death-throes of a cancerous, bloated, dysfunctional and idiotic economy.
So, the Supreme Court killed America. It's as simple as that.
Now, no less than John Roberts, the Chief Justice of the Supreme Court himself, is "issuing a report ", whining that prices have risen so much that the salaries of federal judges have fallen "further and further behind the cost of living", and that "The time is ripe for our nation's judges to receive a substantial salary increase"! What arrogance! What stupidity! He wants our taxes to go up to give these halfwit judges more money! Hahaha!
Having grown tired of yelling out of the window "Screw 'em all" about the Supreme Court and the federal judges, and "Screw you, too!" in response to the neighbors who insist on ordering me to shut up, shut up, shut up, for God's sake shut the hell up, I now reveal the new plank in the Mogambo 2008 Presidential Campaign Platform (M2008PCP): Federal judges may never have their salaries or benefits increased, and thus they are sentenced to live with the results of their own execrable, staggering incompetence in disregarding the Constitutional requirement that money be only of silver and gold, and then allowing the excessive expansion of fiat money and insane degrees of fractional-reserve banking by ruling against the plaintiffs in lawsuits that have come before them! And now they want more money! Hahahaha! Like I said, "Screw 'em!"
And ditto holding the salaries of Congresspersons forever constant, who would then be much, much, much more careful about what in the hell they are voting for, and spending, and what they allowed the Federal Reserve to do! Thus, the only way for them to achieve a higher standard of living for themselves, and all Americans, is to do their jobs right, and thus make the dollar stronger, thereby increasing the buying power of the dollar!
This, then, is my brilliant, brilliant stroke of genius that I proudly call The Mogambo Stricture (TMS) that I hope will propel me to the fame and fortune that I neither deserve nor expect, but which I crave so desperately because I am weird that way, and maybe I can make a few bucks, too, because God knows I sure could use it.
-- From Bloomberg.com we learn that Germans as a group are pretty snockered or stupid, as "Consumer confidence in Germany, Europe's largest economy, fell for a second month on concern increases in sales taxes and health-insurance costs will reduce household incomes."
If you see any Germans, you have my permission to scream at them "Hell, yes, it will reduce your incomes, you stupid Aryan bastards! What in the hell is the matter with you?"
Well, maybe I am just being testy with envy, as these Germans apparently get to sit around all day, eating huge, delicious sausages the size of your freaking arm, drinking delicious, high-octane beer by the liter, and who apparently don't have demon-from-hell wives screaming in their faces "You can't eat that, you pig!", and " You can't drink that, you moron!", and "Don't smoke that, you creep!", and "Stop abusing your expensive prescription medications, you stupid butthead!" and then they get to sit around in a dazed stupor, idly wondering about stupid things, like if paying higher taxes and costs will reduce their freaking incomes. Jeez! Gimme a break!
-- For a Christmas present, my wife gave the 17th edition of Barlett's Familiar Quotations, and I was delighted to see that Ludwig von Mises, the "Father of Austrian Economics", was included, and further surprised to find out that his middle name was Edler, which seems strange to me, and like most people, I don't like strange things because they scare me.
Well, in case you were wondering, there was nothing about how he got the middle name of Edler, but they do have four great quotes from him, including "Everybody thinks of economics whether he is aware of it or not. In joining a political party and in casting his ballot, the citizen implicitly takes a stand upon essential economic theories."
From that, I am sure that Keynes would not be a Democrat, as he says that "Marxian Socialism must always remain a portent to the historians of opinion- how a doctrine so illogical and so dull can have exercized so powerful and enduring an influence over the minds of men, and, through them, the events of history" which, I note with ill-disguised Mogambo contempt, we are, again, having to re-live, in all its ugliness, because we are so laughably stupid as a nation that we cannot learn by merely listening to Mr. Mises, attend to the towering example of all of the world's economic history, or even heed our own Constitution as clearly written.
But in talking about Keynes, as a happenstance, Philip S. sent an email titled "A Wise Insight" from President Gerald Ford, who said "A government big enough to give us everything we want is a government big enough to take from us everything we have."
Keynes himself pointed out how they accomplish this in his "Essay in Persuasion" when he wrote "By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens."
Mr. Keynes did not explain what he means by "an important part", but I, in my Irrepressible Mogambo Arrogance (IMA), am happy to officially explain that the "important part" that they take from you is the buying-power of your wealth, and you are left with the "unimportant part", which is the paper it was printed on.
And if you want to make a lead-pipe cinch bet, then bet that the government will take everything we have, as they must keep spending more and more, as once you start down that socialist/communist path, there is never a place to ever stop, or even slow down. And the way to do that is to buy gold and silver.
But beyond these interesting tidbits, I am now denouncing the entire 17th edition of Bartlett's because they did not include Mr. Mises' most telling quote, which is how there is no way to prevent the eventual collapse of a sick, twisted and bizarre boom-time economy created with excessive creation of money and credit , and your only choice is to either have it implode either voluntarily (by immediately stopping that horrifying, insane crap right freaking now and voluntarily suffering the pain you deserve, you morons), or involuntarily (when the system collapses after trying to keep things going by creating hugely more excessive amounts of money and credit, making things hugely worse and worse, thus making the eventual pain so exponentially much worse, too). Interesting choice!
But, to add to their infamy, Bartlett's did not have any quote by The Mogambo, including the most famous and true thing I ever said about economics, namely "We're freaking doomed!"
All of which proves, as I have always alleged, they're all trying to keep the brave, noble Mogambo down. I mean, my name is not that long, and the quote is quite short, so how much room could it take in their stupid book? And they couldn't find room for me in 1,430 freaking pages? Give me break!
But while they ignored me completely, I notice that they had plenty of room for quite a few quotes from John Maynard Keynes, and, as is usual with crackpots, he sounds so good (for the most part). And he perfectly describes the state of affairs in the USA back when he was writing, vis-à-vis politics and the economic havoc they cause. The quote is that ignorant politicians and hack economists are, for the most part, "Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back."
You can almost hear the contempt and sarcasm in his voice, echoing my own. Now, fast-forward to today. It is, unbelievably, even worse! Much worse! It is so bad (Audience shouts out "How bad, Mogambo?") that the chairman of the Federal Reserve himself IS a defunct academic scribbler! And the worst kind, too, as he was the head of the economics department of Princeton University, but nevertheless seems to have the insouciant opinion that the horrendous 18-year run of the disastrous, precedent-setting, unfettered monetary policies of the accursed Alan Greenspan is to be faulted only, I guess, in its restraint! Hahaha!
Like I said (and if you are from Bartlett's, please pay particular attention here) "We're freaking doomed (WFD)!"
-- The main reason why China does not really want a strong currency right now is analogous to the situation in Thailand, as MoneyMorning.com remarks "a strong currency carries its own problems - particularly when your economy still has a significant export sector."
If you are an American, then you are understandably clueless as to what the phrase "significant export sector" means, since we don't export much of anything anymore except weapons, things that can carry weapons, things that design weapons, things that can make, or be made into, weapons, and some of the best frozen pizza on the planet.
But MoneyMorning.com is apparently not interested in either blowing people to smithereens or tasty culinary delights (but what else is there?), but expertly continues to the point, which I had missed completely, which was that the importing nations (us Americans, for example) would experience higher and continually rising prices as the American dollar weakened against the foreign currency. They write "As Andrew Drummond says in The Times, 'successful exporting companies were already starting to lay off workers as prices exceeded what Western buyers were willing to pay. Even the country's rice market was in danger.'"
-- Being the end of the calendar year, Bill M, who bills himself as The Mellowest Guy in Economics, says " I suggest you award first prize in the Moggie Competition (Mogambo Guru Great Idiocy in Economics) to the Bank of Japan for its outstanding effort in debasing not only the yen, but the fiat currencies of all countries with electronic means of communication with Tokyo."
An excellent suggestion, Mr. Bill! My congratulations to the winners, and I proudly present it to them on behalf of all of us proletariat trash out here in the real world who will be ground up in the machinery of the government/central bank linkage, lubricating it with our blood, paying the agonizing inflationary price for such stupid monetary arrogance in order to pay for stupid collectivist extravagance!
Of course, the government drinking our blood brings us naturally to gold, and David F. particularly liked the essay by Gene Arensberg at ResourceInvestor.com, as he thought that it summed it up the bullish case for gold particularly well. I agree. It reads "A secular bullish perfect storm trend for precious metals continues. Rapidly escalating global investor demand, easier participation by investors via ETFs, conversion of Middle East petroleum dollars to gold, rising new demand from Asia, possible central bank buying partially offsetting central bank selling, conversion from dollars to gold by large U.S. dollar denominated foreign exchange reserves, declining gold production, increased political and NGO interference to bring new sources on line, rapidly escalating costs to produce, delays and shortages of equipment and manpower, previous two-decade bear-market-induced shortage of intellectual capital for miners, safe-haven buying to hedge strong, reckless, competitive dilution of under-backed fiat paper currencies, probably continued de-hedging and continued troubling global political and religious tensions are just some of the factors contributing to the long-term bullish winds now blowing."
He says this means that "In real terms, gold remains undervalued versus nearly all other commodities and strongly undervalued as measured by the world's fiat paper promises."
In short, one more reason to buy gold. Now. Today.
And, I hasten to add lest I be remiss, even more so for silver.
-- If you want to see British banking desperation leading to sheer banking stupidity, then you need go no further than FT.com, where you learn "Abbey, the UK's second-largest home loans provider, has raised the standard amount it will lend homebuyers to five times either their single or joint salaries, eclipsing the traditional borrowing levels of around three and a half times salary. In some cases Abbey will now lend couples five times each of their salaries without requiring confirmation of earnings." Hahaha! Madness!
The article goes on to say "Income multiples of four times or more are now becoming commonplace" and last week Bank of Ireland Mortgages and Bristol and West decided "to increase standard salary multiples from four to 4.5 times. Mortgage brokers say other lenders are set to follow suit for fear of being left behind."
As absolutely stupefying as that is, it gets more bizarre when it goes on to say "in some exceptional cases", this "equates to income multiples of up to seven times salary multiples." Banks are loaning up to seven times income, so that people can buy a grossly-overvalued asset! Seven times! Insane!
-- Paul Campos, writing at Rocky MountainNews.com, in an elegant essay, offers the dispiriting observation that "Of all the tragic aspects of this national disaster this is worst: The people who have been catastrophically wrong about everything are still in charge."
He's right. One more reason why we're freaking doomed!
-- If you need one more reason to buy silver now, and lots of it, on top of the dozens and dozens of other perfectly good reasons to buy silver now, Richard J. Greene, of Thunder Capital Management, writes "there have been more recent patents issued involving silver uses than all other metals combined."
-- I seldom get the chance to report anecdotal news since I never get to meet other people, since nobody likes me or will even talk to me, except in grudging response to direct cross-examination by my lawyer, but I have been getting a lot more emails lately about how getting money out of the banks is getting to be a problem.
For example, Roger S. Renken of the Northwest Territorial Mint writes of "An interesting new development. I have had 2 separate clients be limited in the amount of money they are allowed to wire transfer to $100k in one day."
From other people I hear that the same problem is appearing for people wanting a lot less than $100,000, too!
Naturally, people nervously seek me out, asking me what it all means, and of course I haven't the faintest idea because I am stupid, except that (like Dr. Egon Spengler explains in the movie "Ghost Busters" about what will happen if they turned off the electrical power to the containment device storing all those ghosts) I know, deadpan and looking right into your soul, "It would be bad."
But nobody wants to see my exquisite Harold Ramis impersonation, which even I admit is pretty bad. And so in desperation, I turn to Mr. Renken with a pleading, "Save me!" look in my eyes, and, to my great relief, he at least has a clue what it might mean! "When I look at the derivative exposure of Chase," he says, "I sense an unsettling connection."
He thinks it is all "scary." I think it is all "scary." We both think it is all "scary." Ugh.
****Mogambo sez: Since it is customary at the end of the calendar year to toot one's investing horn, The Mogambo Portfolio (TMP) is up there with big dogs, sporting a 24% gain, as being almost 100% in precious metals, precious metals mining stocks, precious metals-oriented mutual funds, precious metals ETFs, and a small percent in oil, paid off like freaking gangbusters again this year like it has for the last five years in a row.
Trained professionals and ordinary people, who know me for the complete idiot that I am, obviously realize that I just got lucky again. But other people, who do not know of my pathetic intellectual incapacity, are sometimes fatally curious to hear a Little Mogambo Investment Tip (LMIT) after learning of such seemingly stellar returns.
To those naïve, foolishly trusting people, The Mogambo smiles beatifically, and although the Mighty Mogambo Heart (MMH) is breaking at such pathetic financial desperation that you would feel a need to hear the stupid opinions of a certified bonehead like me, I say "I expect 2007 to show similarly hefty results, only more so."
I pause for dramatic effect, and then add "Maybe a LOT more so! And wouldn't that be nice for the people smart enough to have bought gold and silver at these low levels?"
They nod. I nod.
They smile. I smile.
They go home to buy gold and silver as a way of making a wise investment. I go to a cheap restaurant to buy a pizza as a way of having dinner while making a pig of myself.
Thus, everyone's happy, and we all live happily-ever-after because we all got rich, rich, rich, and had a wonderful, wonderful, wonderful time from then on.
Anyway, that's the way I got it figured, starting in 2007. Since you asked.