The REAL Reason Everything Costs So Much

"So where is that other $49 billion, if they borrowed it but did not add it to reserves? Who the hell knows? Gaaahh! My head is spinning! I cannot even understand this new corrupt crap anymore!"

by The Mogambo Guru

Since it is inflation that makes me insane with fear, it is only natural to note that the government's new Gross Domestic Product Deflator (which is used to adjust sales prices for inflation) came out, and even with all the lying, fraud and overt corruption, the best they can do is admit that price inflation is 2.6%, which is up from last month! Hahaha! We are freaking doomed!

And although I am remiss is saying so, the Conference Board came out with their new Leading, Coincident and Lagging Indicators. The Leading Indicator (which is profits and the economy down the road, about a year or o from now) was actually up by the slimmest of margins, taking it to 102.0 from 101.9, indicating that the future ain't so hot.

The Coincident Indicator, which is just what it says, was also up by that selfsame minimally slim 0.1 margin, taking that indicator to 107.1 from 107.0. So things ain't so hot right now, either.

The action that makes me want to scream in fear, of course, is the Lagging Indicator, which I define as burdens and inflation. This indicator was up 0.3, which is three times as much as the others, continuing an unbroken stream of indications of higher and higher inflation, taking it to 111.6 from 111.3.

This is exactly as one would expect if we look in the banks themselves, where we note that Total Reserves still stands at the same ridiculous $42 billion it has been for a freaking decade. On the surface, then, it looks like nothing has changed; money is literally being created from nothing.

Then you get to the revelation of Non-Borrowed Reserves in the banks, and you are thunderstruck to see that it is a negative $91 billion! Hahaha! Which is actually an improvement over last week's negative $98 billion!

So, flipping it around, their Borrowed Reserves is $91 billion, while total reserves is only $42 billion. So where is that other $49 billion, if they borrowed it but did not add it to reserves? Who the hell knows? Gaaahh! My head is spinning! I cannot even understand this new corrupt crap anymore!

And for this week's installment of the Sheer Weird From Around The Solar System (SWFATSS), Barron's reports that the earnings of the Dow Jones Industrial Average collapsed to $185.64 from $226.02, and yet (and here is where it gets weirder than hell), the DJIA actually ROSE! And it rose so high that the price-to-earnings ratio soared to an astonishing 70.34! Hahahaha!

Don't see the humor in that? Another way of looking at this is that you are paying a price for the stock that it so high (audience shouts out, " How high, oh, Glorious And Handsome Mogambo (GAHM)?") that it equals everything the damned companies in the index will make for the next 70.83 years!

I look at the faces of the other people in the checkout line at the grocery store after I tell them this amazing, astonishing fact, and I see looks of puzzlement, which looks like complete befuddlement to the untrained eye, but without the drooling, which I should have expected, since I had just finished giving them a Long And Loud Mogambo Harangue (LALMH) about how, "The reason that everything costs so much is that you are all a bunch of morons, which I can prove because you voted to elect morons who let the Federal Reserve create so much excess money and credit, so damned much excess money and credit, so impossibly and irresponsibly much excess money and credit, so bizarrely and insanely much excess money and credit, which is called monetary inflation, which always shows up as price inflation as all this new money bids up the existing stockpile of things for sale, which in the last few decades had been manifested as staggering inflation in the prices of stocks, bonds, houses and especially in the size and cost of government, which all you halfwits mindlessly applauded because some conniving hucksters told you that the government is supposed to 'help' people, and Wall Street hustlers told you that they found a way to give everybody a free lunch by having you give them all your money to 'invest' for you to fund your retirement, and you low-I.Q. boneheads just lapped it up, but now that inflation is at last getting around to food and energy, you are all a bunch of whining idiots who are getting what they so richly deserve. Hahahaha!"

Again, the other shoppers did not give voice to their happy approval and thankfulness for my kind instruction, and the same blank look on their faces told me to try again, and make it as personal as I could. So I said, "The price of the DJIA index is so high that if all the 30 companies in the index sent you all of their income, every dime, every dollar, every day for the next 70.34 years, you would only then break even! What kind of an idiot would buy the Dow Jones at such a ridiculous price?"

I never did get a chance to follow up with them or bask in their gratitude, as by that time the cashier had finished ringing up my groceries, which came to a total that was a hell of a lot more than I ever remembered paying for such a little bit of grub, but when I complained to her, she just started screeching at me, "Go away! I hate you! Just go away!" over and over, like I don't get enough of that insulting crap at home or something.

But maybe she knows, and the other shoppers know, that their precious little retirement plans are just full of that stuff. But mine's not. I feel better.

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The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications. Click here to visit the Mogambo archive page.

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