Monday, October 18, 2010

On the Edge with J.S. Kim & The Golden Gift

Max Keiser and John Kim discuss The Fed, income tax, the Gold Standard and much more.....

Link to the Golden Gift book mentioned in the third video.

One-time what?

By The Mogambo Guru

My stomach was hurting, so I decided to take a little time off and soothe the old midsection with a few medicinal brews and a dose of pizza. My stomach hurt because I had just read the stupidest economic essay, which was, unbelievably, penned by another lackluster university professor, and surprisingly printed by The Financial Times newspaper.

The guy's name is Michael Woodford, of Columbia University, and whose execrable and totally idiotic piece is titled "Bernanke Needs Inflation for QE2 to Sail".

He writes, unbelievably, "The Fed should allow a one-time only inflation increase, with a plan to control it when the economy recovers." Hahahaha!

Hahahaha! Why am I laughing so hard that I am doubled over and actually gagging up pieces of stomach lining? Why? I don't know where to start! Hahaha!

Wiping the tears of laughter from my eyes, let's just begin where he began: "The Fed should allow a one-time only inflation increase"! Hahaha! It is so ridiculous to think that the Fed can produce a "one-time" inflation, when the fact is that the Fed has already engineered 50 years of constant inflation, sometimes simmering and occasionally roaring inflation! A "one-time" inflation! Hahahaha!

I can hardly breathe from all this laughing, but He-Man Mogambo (HMM) gathers his strength and with a Herculean effort manages to control the laughing spasm that I know is coming when this dimwit says that the Fed can stoke inflation and then come up with "a plan to control it when the economy recovers"!!! Hahahahahahahahaha!

That last, long laugh is where I really lost it! A plan to "control inflation"! Hahahahahahaha!

Maybe he gets the idea for this stupidity from Allan Meltzer, a professor at Carnegie Mellon University and a "visiting scholar" at the American Enterprise Institute, and who is regularly invited to attend Federal Reserve functions because he seems to kiss their butts a lot, and as such you don't expect much, which is just what you get.

He does admit, to his credit, that inflation is the problem, and says that inflation is "another reason the Fed should give up this nonsense about more stimulus."

If he had stopped there, I would've changed Mr Meltzer's category on the famous Mogambo Enemies List (MEL) from "Them" to "Us (probationary)".

Instead, he says, apparently anxious to show he has no idea what he is talking about and is ignorant of economics in general and the Austrian school of economics in particular, that instead of more stimulus, the Fed should "offer a credible, long term program to prevent the next inflation". Hahaha! Another plan!

Hahaha! A "credible program!" Hahaha! It makes you want to scream out, "And just what in the hell would be a credible program to get out of a monstrous monetary inflation that has been raging exponentially for almost 50 years, which produced the economic disaster of constant, simmering inflation and the suicidal growth of a giant, bloated, twisted and disgusting government-centric economy supporting half the population and a bizarre economy based on the continual financing of grubby, childish, insatiable final consumption, so that all debt in the USA now totals somewhere around $60 trillion (with the federal government having accrued liabilities of at least five times as much), and where the entire freaking GDP is only $13.5 trillion? Exactly what in the hell is a ‘credible program' to reverse that kind of horrible, end-stage metastasized cancer? Hahahaha!"

In case you were wondering, as apparently Bigshot Economic Blowhards (MEB) wonder, the only "credible program" in an economy that relies exclusively on creating more and more money out of more and more debt, with which people buy more and more things and the government gives more and more money to more and more people, is different after these kinds of things have gone on too long (two weeks max), like this one that has gone on for Fifty Freaking Years (FFY)!

If you stopped in the first few weeks of money creation and deficit-spending, you could just stop spending to let the Federal Reserve stop creating money. But now, after half a century, the only "credible program" available is to suffer a complete economic collapse, sort of like the collapse of critical thinking by neo-Keynesian econometric economists who got us into this mess by actually believing their own "consumption function" stupidities and then, to our ultimate regret, relying on them.

Of course, this seeming abandonment of common sense is akin to astonishingly believing, like trusting, gullible children, all kinds of silly crap, like believing that it is possible for the population to finance comfortable retirements by investing in the stock market over the long term, or the bond market for the long term, or houses for almost any term, or any combination of the above! Hahaha! And this is not to even mention the tragedy of derivatives! Hahaha! Idiots!

And the silliness doesn't stop there! For example, Mr Meltzer laughably says, "The most important restriction on investment today is not tight monetary policy, but uncertainty about administration policy. Businesses cannot know what their taxes, health-care, energy and regulatory costs will be, so they cannot know what return to expect on any new investment."

Since I am already laughing, it is easy to laugh with Rude Mogambo Scorn (RMS) - Hahahaha! - because the "most important restriction on investment today" is certainly NOT "administration policy."

Instead, the "most important restriction" is identifying where customers are going to get the money to buy anything!

I mean, if lots of customers show up with cash in their greedy, grubby little hands, and these customers are begging to buy, who cares about taxes, health-care, energy and regulatory costs? Nobody! Simply charge a high enough price, that the customers are obviously willing to pay, to cover all expenses, make a huge profit, give the executive staff large bonuses, buy up competitors, and donate lots of money to the corrupt politicians to make sure that the stupid government doesn't make any new laws that might ruin the cozy racket!

So, if you see this Meltzer guy, you tell him that the Fab Fab Fabulous Mogambo (FFFM) says that "the most important restriction on investment spending" today is that all the customers are up to their freaking eyeballs in debt, staggering under the crushing weight of debt from two insane decades of the loathsome Alan Greenspan at the demonic Federal Reserve constantly creating more and more money to finance bubble economies in raw, naked consumption, insane speculative bubbles in stocks, bonds, houses, derivatives and the cancer-like growth of a treacherous, corrupt system of governments, from local to state to federal, as trillions and trillions of dollars were deficit-spent to add to the orgiastic deluge of tax revenues already pouring in, and then going right back out again as new spending, from the aforementioned bubble economies in stocks, bonds, houses and derivatives spawned by, at the root, the Federal Reserve creating the money necessary!

It's too insane to continue, and so I will just pick up some more gold, silver and oil so that I can make a lot of money on the laughable economic foolishness rampant in the world and the universities, which makes it all so easy that one can only happily say, "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.

The Incorrigibles

By Chan Akya, Asia Times Online:

Back in 1969, when the Internet was but an idea on someone's blackboard, the world's largest and most astounding cruise ship, the Queen Elizabeth 2, or QE2, was launched to great fanfare. Over the lifetime of the great ship, she (it is traditional to refer to ships in the female gender, a practice that is frowned on by feminists today) participated in the Falklands War, was considered the greatest cruise ship of all time (below, left), and finally was meant to be purchased by the United Arab Emirates-based Nakheel for use as a permanent hotel.

Instead, the ship now lies docked at the Port Rashid (below, right) with an uncertain future. What is clear is that being purchased by an over-leveraged and technically bankrupt company has spelt the end of the QE2, fated to be remembered in its current state at a rust bucket rather than for all her past glory.

On then to the new version of QE2, namely the second round of quantitative easing that is now being proposed (well, to be quite clear, it seems a dead certainty) to pull the United States, European and Japanese economies out of their apparently permanent downward spiral. Stop me if you have read this before - and perhaps on these same pages, but there is a dreadful sense of deja-vu about what is going on in the "real" world of economics these days.

Gold is getting past US$1,380, the Australian dollar is getting to be close to the US dollar in value as the commodity boom becomes entrenched. The rallying call behind all this isn't so much optimism as it is the sheer "academic" logic behind Ben Bernanke. The US Federal Reserve chairman famously studied the Japanese bubble and its aftermath since the late 1980s, and is "determined" not to repeat the mistakes made by the Bank of Japan. These "mistakes" were of course the central bank's attempts to thwart asset inflation whilst flying straight into a demographic on

Currency: The Weapon of Choice in Trade Wars in a World of Lower Demand

By Satyajit Das:

During the European debt crisis, in a matter of days, the dollar strengthened by around 10%. The weakness of the euro and resultant appreciation of the renminbi by more than 14% reduced Chinese exporters’ earnings and competitiveness. Some of the moves reversed equally quickly when markets stabilized. Volatility of currency exchange rates has increased markedly in recent months.

To paraphrase Oscar Wilde, the US dollar has no enemies, but is intensely disliked by its friends, especially key investors like the Chinese. The euro is now the "drachmark" (a derisory combination of the former Greek drachma and German deutsche mark). Investors assumed the euro would be a new deutsche mark, supported by German commitment to fiscal and monetary rectitude avoiding Gallic and Mediterranean extravagance. Instead, investors have been left holding a currency underpinned by unexpected German extravagance and Gallic and Mediterranean rectitude.

Despite sclerotic growth, public debt approaching 200% of GDP, and a budget where borrowing is greater than tax revenues, the Japanese yen has risen to its highest level against the dollar in 15 years. China is even switching some of its currency reserves into Japanese government bonds with returns only apparent under powerful electron microscopes.

Fears about the value of any currency have seen a resurgent interest in gold. Traders are now reading their John Milton: "Time will run back and fetch the age of gold."

Among currencies, it's simply a race to the bottom. On September 27, 2010, the Brazilian Finance Minister Guido Mantega stated the obvious, speaking of an "international currency war" as governments around the globe compete to lower their exchange rates to boost competitiveness. In the words of English philosopher Thomas Hobbes, it's "war of every man against every man." on

Currency Debate Intensifies: Paper Vs. Gold

by Anthony Migchels


A most fundamental and crucial debate is now in full swing.

The two main protagonists are the Goldbugs and the Interest-Free Money community. The battle was ignited by Gary North who attacked Ellen Brown, calling her a 'Greenbacker'. Here's Ellen Brown's retort. Here's a high class framing of the debate by Eric Blair which was widely posted.

The Goldbugs and the Interest-Free Money people have been living in peaceful coexistence for many years. They have a common enemy: paper based fractional reserve banking. But now that the chances of the FED collapsing are becoming more real, the question what to do next arises.

Most people awakening to the Fractional Reserve hoax simply assume that the problem can be solved by Gold-based currency. After all: Gold cannot be printed.

But besides the system in use, there is also the question who is in control of it. We cannot solve our current problems without addressing both questions.

Even if your filters do not allow you to accept the 'International Bankers Rule the World' narrative, we can see clearly who is really in control from the trillions that Governments worldwide handed over to the Banking Fraternity.

It is clear that nobody else would have been able to coerce so many States to cough up such massive handouts.

We are all whining about the environment, all those poor hungry African people, our crumbling infrastructures. Not a dime can be found for these causes. Then the bankers start squeaking and all of the sudden a trillion is a mainstream concept.

The Goldbugs say that Government cannot be trusted with the control of the money supply because politicians will always finance their deficits with the printing press.

There is much truth in this, but please tell me: what Government has been in control of its own money the last century? In Europe privately owned Central Banks were the norm since the 17th century.

Most Central Banks in Europe were nationalized after WWII but nobody in his right mind can say that they have been under Government control. Although Central Banks will always print all the money politicians ask for, they do so in the form of interest-bearing debts, so it is quite clear who's boss.

We are facing the advent of World Currency, which, quoting Eric Blair "... is not conspiracy theory mumbo-jumbo anymore, but rather cold hard fact."

What is at stake here is this: are we going to cheer lead the advent of this World Currency because it is Gold Based and we are fed up with Fractional Reserve banking? Are we going to be the dumb little serfs they assume we are? Or are we going to get to the full picture and get it right this on

America's Currency Crisis is Now Underway

From the NIA:

According to minutes that were just released this week from the Federal Reserve's meeting on September 21st, the Federal Reserve is now trying to figure out ways to boost inflation expectations. The mainstream media is reporting that the Federal Reserve wants to publicly declare their intention to seek a higher inflation rate so that Americans are encouraged to spend more before their money is worth less. Unfortunately, what the mainstream media fails to realize is, not only will their money soon be worth less but it will literally become worthless.

If the Federal Reserve doesn't immediately raise interest rates dramatically, there is serious risk of the current "meltup" turning into hyperinflation before the end of 2012. The Federal Reserve's words can no longer control the present situation. They are saying they want inflation so that when massive inflation does arrive, it appears as though they still have control. With gold up 19% and silver up 38% since NIA's July 28th article "Gold and Silver Capitulation is Near" in which we said, "the big move to the upside (for gold and silver) is right around the corner", it is obvious that the Federal Reserve has completely lost control of inflation and a major currency crisis is already on

Inflation to Make All Americans Billionaires By 2020

From the National Inflation Association (NIA):

One of the Federal Reserve's original stated purposes was to manage the nation's money supply through monetary policy that provides for stable prices without inflation or deflation. Shocking just about the whole world except for NIA members, the Federal Reserve this past week shifted its purpose from being an inflation fighter to now being an inflation advocate. Charles Evans, President of the Federal Reserve Bank of Chicago, is now saying that inflation in the U.S. is too low and the Federal Reserve needs to publicly declare a new goal of having inflation that is much higher than its informal 2% target. William Dudley, President of the New York Federal Reserve, is calling current low levels of U.S. inflation "a problem" because "it means slower nominal income growth".

Dudley believes "slower nominal income growth" is unacceptable because it "means that less of the needed adjustment in household debt-to-income ratios will come from rising incomes. This puts more of the adjustment burden on paying down debt." In other words, he wants to monetize our debts by printing so much money that all Americans are earning enough income to pay back their debts. NIA fears that one of the unintended consequences of such a policy will be an insurmountable currency crisis; this will lead to a U.S. societal collapse with class warfare, millions of Americans starving to death, and a return to a barter based system that will last until we can come up with a new form of workable government based on sound money that is backed by gold and on

Silver-Reflections Of A Major Price Breakout

During the spring and summer of 2010, the price of silver was caught in a trading range of $17.00-19.50. But that all changed at the beginning of September. From a rally low of $17.50 last summer, the price has exploded to the $25 dollar area in barely two months. What happened?

From a fundamental perspective the Perma-bulls in silver have forever been describing the supply situation as one that cannot sustain demand and that a powerful rally to unprecedented heights would take place. To their credit and patience, the move may have finally started a few months ago.

Why were some speculators reluctant to buy before this breakout? Part of the problem was due to the clamor for a silver price rally mentioned for so long by the bulls but had never materialized. Indeed the coming of this day has been forewarned for a long time now, almost to the point of the "boy who cried wolf" story. The explanation was always how the silver price was being manipulated by a few big banks doing the work for the shorts in the market. Nothing ever changed and each claim would get brushed aside by the CFTC as they would do an "investigation" and report of no manipulation. But the story changed drastically last spring.

Looking back there were three key turning points over the past year that finally turned the tide on this market.

The first turning point for silver arrived near the beginning of the April time frame when news of whistle blower and trader Andrew Maguire hit the internet and even the paper press. This London metals trader warned an investigator for the U.S. Commodity Futures Trading Commission in advance about a gold and silver market manipulation to be undertaken by traders for JPMorgan Chase in February to bring forth lower prices.

This manipulation event ended up providing the lows of 2010.

The second turning point came when the CFTC did not address the Maguire information and the market dropped in February. But thanks to the work of GATA and Bill Murphy, Mr. Maguire's testimony was brought to a public forum during a CFTC review of position limits. This public testimony provided a floor on silver --- as the manipulators --- being very short the metal --- had to now be much more careful of their moves. THE COLUTION WAS OVER. The attack was coming from another source as well --- the shorts were heavily concentrated to four banks --- and GATA began to pressure the CFTC to address the position limits that these firms were taking. But it didn't matter. The cat was out of the bag on silver and those suppressing the price would need to change on