Too Little, Too Late to Stop Creating Money

"So why am I so disconsolate that the Fed is not increasing money and credit, and so is not increasing the money supply and so is not increasing inflation in consumer prices? Shouldn't I be happy?…No, because it is too late to stop now!"

by The Mogambo Guru

The bartender looks at me and snarls, "You are unhappy when the Federal Reserve creates new money and credit, which increases the money supply, which increases consumer prices and aggregate debt, and that is why you say you drink and come in here to torment the waitresses with your stupid leer and crude innuendo. And now you are unhappy when the Fed DOESN'T increase money and credit, and that is why you are drinking?"

With the little bit of muscle control I had left, I lifted my head up off of the bar and opened one bleary, bloodshot eye to look at him. I decided that he looked stupid, and I was going to tell him so, but I found that my lips would not move as soon as I tried to say, "Go to hell, you ugly, stupid little troll!"

As my head suddenly collapsed back onto the bar with a thud, my eyes involuntarily opened and I got a good look at the bartender, who was a hell of a lot bigger than I thought! Whew! Even in my semi-conscious and hyper-aggressive alcoholic stupor, I knew that it was a good thing that my lips were paralyzed!

Actually, it was a good thing I was, umm, indisposed, as I did not have to then waste my Precious Mogambo Time (PMT) explaining to him that it is Too, Too Late (TTL) for this stupid country to act like responsible, intelligent people, and now our only options are to allow the Federal Reserve to continue to inflate the money supply with suicidal, reckless abandon and have Congress legislate more and more slimy tax schemes to continue "saving America" by enriching themselves and their friends by virtue of both the tax wheezes and the massive deficit spending that Congress will doubtlessly embark upon.

All of which means, to be perfectly blunt, lots of creation of money and credit and lots of inflation in prices, accompanied by lots of screaming, crying, wailing and gnashing of teeth as we adjust, painfully, to a drastically reduced lifestyle of less consumption, thanks to higher prices, higher and higher, more and more every day, with anguished complaining and whining the whole way. Well, that's what I plan to do about it, anyway.

In fact, you will be, too, as it is exactly like when Junior Mogambo Ranger (JMR) Joe McD reports, "My brother is a chemist for a worldwide company. He told me yesterday that Dow Chemical, one of his biggest suppliers, raised prices by 20% three months ago, and now just announced another 25% price hike."

Now, mostly because I am a big, whiny crybaby who scares easily, I am not going to calculate the annual inflation of a 20% hike in prices which was followed by another 25% hike three months later, but off the top of my head it is close to 200% a year! Yikes! I feel another wave of paralysis washing over my previous paralysis, and now I am having trouble breathing and my heart is pounding, pounding in my chest as if to explode. I ask myself sarcastically, "Hmmm! I wonder if crushing chest pains means anything?"

But paralyzed or not, the fact remains that Total Fed Credit actually went down by $5.5 billion last week, taking the Fed's total down a little bit, to $883 billion. TFC is still high and within the Fed's usual "another $10 billion per month" rut that they have been in for the last ten freaking years in a freaking row, and is $33 billion higher than this time last year, too.

So why am I so disconsolate that the Fed is not increasing money and credit, and so is not increasing the money supply and so is not increasing inflation in consumer prices? Shouldn't I be happy?

No, because it is too late to stop now! We are truly doomed, as so much debt has been created that it is impossible to pay it back. Not even close!

Of course, there are those who say that I am just a Loudmouthed Drunken Degenerate Idiot (LDDI), which is something I hear a lot, probably because it is true. But it is not true that "Your Cheatin' Heart" by Hank Williams is the only song I ever play on the jukebox.

My other favorite song is the one I wrote for the new movie I.O.U.S.A., but which was never used, and they never even returned any of my calls, either. It's called, "Let's get naked and really monkey-love nasty because it is the only thing we will have left after the Federal Reserve has finished destroying us by creating too much money and credit, aided and abetted by a corrupt, craven Congress that wanted to borrow and spend hundreds and hundreds of billions of dollars a year, every year, now amounting to a debt of over $9.5 trillion, spending us into a debtor's grave, and we racked up a trade deficit of $800 billion a year, too, do wah diddy diddy."

I thought that ending tag with the "too, do" would have sold it, but I guess not.

Anyway, even the worthless dregs of society like me can still be right, as I obviously am, if you care to look at this item from Ned Davis Research that I hold in my trembling hand, which shows that Total Credit Market Debt as a percentage of GDP is now a staggering 350%! The actual figures are $49.614 trillion in debt against a $14.6 trillion GDP! Yikes! We've already spent three-and-a-half times as much as we've made getting the boom this far. How in the hell can we get it to go farther when we owe 350% of our gross incomes! Gross!

To most people, including me, such numbers have no meaning beyond a numbing incomprehension, like when my wife says, "This is the third time in the last month that you came home late, stinking with the stench of whatever gutter in which you were wallowing", as I seem to remember her once saying, back in our younger days, that she would be "HAPPY if I came home stinking like a sewer only three times a month!", essentially "moving the goal posts" - which makes a cruel mockery of the whole number system, ya stupid old hag!

Of course, she denies making such a statement, and she has no interest in the number system, but that is not important now. The importance of Total Credit Market Debt as a percentage of GDP is that this is a NEW record of indebtedness, and the previous high was achieved at the end of the Roaring Twenties as the Federal Reserve acted like irresponsible morons then, too, and total credit market debt topped out at the then-whopping 260% of GDP around 1930! Now we are (gulp!) a third higher than that!

Parenthetically, this "260% of GDP" Great Depression record was matched in 2000, which provides one more possible reason why the despicable Alan Greenspan at the despicable Federal Reserve pounded interest rates into the toilet and created a bubble in money and credit that created the bubble in housing that is now dragging the USA into the toilet.

Note the repeated use of the word "toilet" and be instructed. Concentrate on the word "gold" and be enlightened.

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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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