The Mogambo Guru

11/07/07 - GDP Math Problems

11/08/07 - More Generous Inflation Protection

11/09/07 - Spending More and Getting Less Drunk

11/12/07 - Criminally Irresponsible Deficit Spending

11/13/07 - Cash and the Commodity Craze

Total Fed Credit was up last week by $3.8 billion, which seems like a lot of money to us proletariat working trash, but it is mere chump change to the American banking system, which can literally compound that money to infinity at their whim, thanks to the magic of insane levels of fractional-reserve banking and zero required reserves against new deposits or loans. In short, the banks are corrupt scum, just like always, and that is why history shows that all financial crises are always caused by the banks.

The biggest hubbub was when the GDP came in at 3.9% growth, thanks to a reported 0.8% inflation! Hahaha! I am laughing so hard that something came flying out of my nose, which I assume was a UFO of some kind, but the office is apparently filled with "experts" who can tell, at a glance, the difference between a booger and a tiny, mucus-covered flying saucer.

So people ask me, "Hey, Mogambo! If you're so smart that flying saucers come out of your nose, how is 0.8% inflation even freaking possible, you Worthless Halfwit Moron (WHM)?" Naturally, I immediately wonder who the real moron is around here, as asking a question of a moron like me seems so, ummm, moronic.

But the simple, Occam's Razor-like answer is that it is made possible by the government lying their corrupt heads off, and how this means that we ought to rise up in an angry, drunken, mindless mob and storm Washington, D.C. in protest, and drag these liars and corrupt trash all out into the street and kick their lying, nasty butts out of town, down the road, and into a swamp where they would live the rest of their stinking lives eating bugs and getting eaten by bugs, which, even then, is too good for them.

Rex Nutting of the Economic Report explains that there is no reason for Vicious Mogambo Vengeance (VMV), but that in pure Orwellian bizarro gibberish, "Inflation was low because oil prices surged", which he says can be explained by noting that "In GDP math, sometimes one plus one equals zero."

At first, I thought that he was insulting me by expecting me to believe such stupidity - that price inflation would fall because oil went up in price, but he holds up the actual news article from MarketWatch.com, which confirms that "As odd as it sounds, the government reported that inflation was at a four-decade low in the third quarter, primarily because import oil prices rose so much."

And sure enough, there is the actual sentence, "If you don't understand that, welcome to the confusing world of national income accounting, where up sometimes is down, and where sometimes one plus one can equal zero."

I am suddenly very scared and very confused, and Mr. Nutting sees me reflexively reaching under my jacket for one of the pistols I have tucked in there just for emergencies like this, and quickly assures me that there is no reason for taking any extreme action or discharging any weapons, but that it is all so easily explainable by Shelley Smith, who's in charge of figuring the price index for the government's Bureau of Economic Analysis, who said sometimes the mechanical formula produces some "quirky, nonintuititive relationships."

"Most of the time," it is explained, "the government's formula doesn't produce any weird numbers, because the mathematical quirks all cancel each other out. But in the just concluded third quarter, it did produce quirky numbers that don't accurately reflect reality, even though they are correct from an accounting point of view."

And from that "accounting point of view", the way it works is that prices of imported goods rose at a 10.3% annual pace in the quarter, but that import prices are subtracted from GDP, and thus somehow subtracted 1.3 percentage points from inflation, even though the prices of imports went up! Hahaha!

The big hubbub around here, however, was when the Mogambo Interstellar Daily News Report (MIDNR) aired the AP news story that Senator Barak Obama, one of the "front-runners" in the race to run for President as a Democrat, is quoted as saying to 5 year-old Hadassah Jones that he is a filthy, stinking, commie-bastard, lowlife moron, which is the only possible interpretation of his own words, namely, "We've got to make sure that people who have more money help the people who have less money."

If the MIDNR radio signal was not jammed everywhere on this planet by the CIA, you would have been able to hear the Blistering Mogambo Editorial Comment (BMEC) that if Democrats and/or the people who elected this nitwit did not immediately rise up and demand that this loathsome commie resign from Congress immediately (because communists are expressly forbidden to run for elected office), then they were all corrupt commies, too, because it is certainly NOT the business of government to "make sure that people who have more money help the people who have less money", but to make sure that people are given a fair shake by hewing strictly to the Constitution, and not being made poor in the first place by the damned stinking Federal Reserve allowing the banks to create excess money and credit, and thus creating the inflation in prices that make the poor poor!

But he is a Democrat. And a member of Congress. And with those two strikes against him, I am sure that he is not even aware how loathsome and despicable he really, really is.

Around here, the governments are freezing open staff positions and trimming budgets, which are bad news for an economy that depends on government spending, like ours. And so it seems natural that we learn from Bloomberg.com that, "New York Mayor Michael Bloomberg ordered agency heads to freeze all city hiring and cut their budgets this year and next, anticipating less revenue as Wall Street profits drop and real estate sales slow."

The net effect is that "New York state faces a budget gap of $4.3 billion next year, up from $3.6 billion estimated three months ago, as Wall Street job cuts and losses reduce tax revenue, the Division of Budget said. The state normally collects about 20% of its revenue from taxes on Wall Street companies and employees." 20%! Wow! No wonder Wall Street sharpies are always sticking me with fees, expenses and commissions!

And this is not to mention that the Discover America advocacy campaign said, "Since September 11, 2001, the United States has experienced a 17 percent decline in overseas travel, costing America 94 billion dollars in lost visitor spending, nearly 200,000 jobs and 16 billion dollars in lost tax revenue."

So there are going to be Herculean efforts made to wring money out of stones and turnips, as we learn from Thomas Donlan in Barron's, who summarizes the new AMT tax bill of Charles Rangel. He notes that, "The Rangel bill's core gimmick is to raise taxes by more than $100 billion a year to replace a tax that most people aren't paying." And how much tax? The top rate will go from 35% to 44%!

Mr. Donlan shows his mathematical talents by offering that "You can call this a 25% increase in tax", because taxes went from 35% to 44%, but the other side of the coin was the "keep rate", or how much you keep of an extra dollar of income. A 35% tax rate, he calculates, leaves you with a 65% keep rate, but a 44% tax rate gives you a 56% keep rate, which he says works out to be a 14% decline in income from earning that one extra dollar of income! Yow!

Ron Paul, hopefully the next President of the United States because he is the only guy running for the office who comprehends economics and the actual meaning of the Constitution as written, summarizes it as "Thus, a new 4% surtax on incomes over $150,000 for singles and $200,000 for couples is proposed to 'pay for' the estimated lost revenue. This simultaneously raises $36 billion MORE than simply leaving the AMT alone, and creates a huge new marriage penalty tax."

And there is, of course, talk of future social security payments and benefits being subjected to "means testing", meaning that wealth will be redistributed to the "have nots" from the "haves". This is unavoidable, as there are many more "have nots" than "haves" who vote, and every day there are more and more of them because every day the Federal Reserve is allowed to create more money and credit, meaning that every day is another day that more and more people slip from being a "have" into being a "have not" because prices will rise faster than incomes. So wealthier Social Security retirees are going to get the "means test" screw job.

And it is not just loathsome Americans doing this crap, either, as Business.timesonline.co.uk reports that the British government "is proposing to remove some of the inflation-proofing of final-salary pension schemes."

How much "removing" of the effects of price inflation? Less than you think, because it wasn't much before: "Employers will only be obliged to revalue pension entitlements of former employees by up to 2.5 per cent a year if the new plans come in", which is supposed to be better, because "Under the current rules, they have to adjust for inflation of up to 5 per cent." Hahaha! 5% lousy percent! Hahahaha!

So, let me see if I have this straight: If inflation is running 5%, or 10%, or 50%, or 300%, or 3,000%, and a loaf of bread costs a thousand British pounds, the pensions of retirees can only be increased by a maximum of 2.5% a year? Hahaha! And which is worse than before, since payments could still only go up 5%, no matter how high inflation got? Hahahaha! Welcome to the real world of "we're from the government and we're here to help you", chumps!

The article does not mention how I was yelling out, "What a bunch of thieving government scumbag wankers!", although they did say (as if it had to be said at all) that "The aim is to make defined benefit schemes cheaper to run", which I guess that it does, seeing that a bunch of old retired people are getting royally screwed out of the extra money they need just to achieve financial "stand still", since you don't have to pay them the extra money they need to offset the inflation in prices that the stinking government and central bank create every freaking day of their lives! Hahaha! "Cheaper to run!" Hahahaha!

But current retirees can relax, as "The lower inflation-proofing would only apply to future entitlements. Past entitlement would continue to enjoy the more generous inflation protection." Hahaha! "More generous"!

Leaving aside the huge, yawning chasm between what I consider "generous" and what they call "generous" as regards protecting against the ravages of inflation in prices, I am just personally happy that I don't work there, as I am sure that because I am given all the crappy jobs around here, I would be given the crappy job of calling all the employees together in the cafeteria to explain it to them, and tell them a lot of hollow crap about how everything is fine as concerns their retirements, don't worry about a thing, and how they are such terrific employees, and how much we executives value their loyal service to the company blah blah blah, which they know is a lie because they know that I hate them all as much as they hate me. Maybe more. Who knows?

But perhaps I could get a little sweet, sweet revenge by also saying to them "By the way, you stupid employees are paying to give a bunch of retirees a better retirement by generously offsetting their inflation at a maximum 5 percent increase in their pensions, double what you will get, assuming that you even live long enough to retire, which you won't, because you will have to work until you drop dead at your brain-killing job, not just because the damnable central bank has created so much money and debt that now you are doomed to see all your savings and assets fall to worthless crap as inflation in prices soars to huge freaking multiples of your pathetic retirement income, but mostly because we are screwing you out of half of the maximum inflation adjustment in your stupid pension, and thus you will get poorer faster than the guys you are now supporting, as the inflation the central bank is creating literally eats you to death! Hahahaha! So you're all screwed! Hahaha! Now get your nasty butts back to work! Work! Work harder AND faster, you worthless proletariat factor-of-production scum! Hahaha! The central bank has forced you to work all of your life ! Arbeit macht frei! Work until you die, or feel my wrath!"

Hey! Now that I think about it like that, maybe I WOULD like to deliver the news to the employees! It could be fun! Hahaha!

John Stepek of MoneyWeek.com writes in his Money Morning column, "Just before I go - on the topic of gold, I constantly get emails (quite understandably) pointing out that gold is priced in dollars. If we're so bearish on the dollar, readers ask, then how can you recommend gold?"

If that had been me getting that email, I would have politely answered the writer, "Dear Idiot, You are a moron. But if you are so damned smart, then you tell ME what you think is a good alternative to gold, and let's see how your stupid idea compares to the entire freaking corpus of world economic history, and we'll see if there has ever, ever, EVER been a time when your ridiculous idea has paid off at the end of a long boom caused by monetary excess, especially with a fiat currency, and then let's look and see if there has been a time in the selfsame entire history of mankind that gold did NOT pay off! And pay off big! Now go to hell!"

And if you need more proof than that, then I am happy to say that I can help you out; come over here, stand out beyond the Mogambo Defensive Perimeter (MDP), keeping your hands out where I can see them, and I will be happy to come out there, grab you by the collar of your shirt, and slap your stupid little face - Whap! Whap! Whap! - until you get some smarts!

Mr. Stepek, perhaps being veddy, veddy British, is apparently not comfortable with performing such "public service" duties ("Giving something back to the community!") like I do, whereby I sacrifice my Precious Mogambo Time (PMT) to inform these people that they are stupid, a message delivered with a whack to the head to remember it by, and how they are not qualified to have an opinion about anything, especially about gold and economics, of which they know so little that Intelligent, Handsome And Witty People (IHAWP) like you and me naturally conclude that the writer is a professor of economics, like most of the professors of economics in most of the laughable universities in this country, but who has somehow finally discerned that they actually have no freaking idea what in the hell they are talking about, given the parlous state of the world's economy after listening to, and heeding, their stupid, stupid, beyond-stupid economic theories for all these long decades, made even more laughable when the Austrian Business Cycle Theory has been there since the beginning of the 20th century, and all they would have had to do was pick up a stupid book and read it!

And most university economists, like the execrable Ben Bernanke and the rest of his coterie of laughable Federal Reserve halfwits, can't be very smart, or they would have suspected something was wrong a long time ago, and if they wanted to Come Into The Economic Light (CITEL) and out of the idiotic, dank, fetid, neo-Keynesian econometric sewer in which they have found themselves, then I would have suggested that they read Henry Hazlitt's amazing little book, Economics in One Lesson, which is almost misleading, in that it contains everything you need to know about real economics, and why you should be out investing in gold right freaking now.

So, apparently the British gentleman, wimps out and says none of this, or even offers to slap any faces, but rather blandly replies, "The simple answer is, I expect gold to rise by more than the dollar falls, which has so far been the case. The yellow metal has risen 28% in dollar terms in the last year - but it's still climbed 18% in sterling terms, and is sitting at around £380 an ounce."

And before you get the idea that all American universities are as execrable as Princeton, Harvard, MIT, Berkeley and Columbia, to name just a few, JMR Bill C. writes, "If you want to read some honest economics, refer to the Department of Economics at Auburn University and the Mises Institute also in Auburn." Hey! That's right! There are some smart guys out there!

So, with few exceptions, then, the world is full of neo-Keynesian trash, although there are plenty enough people who comprehend the lessons of economic history, and thus gold has barreled above $820 an ounce, which is pretty impressive until you get to the research of Ian McAvity, who looked at the ratio of gold to oil since 1946, and asks, "Does $800 gold imply $55 oil, or does $96 oil imply $1,392 gold?"

That sounds like an unsolvable riddle to me, sort of like "Are you stupid because you are hateful, or are you hateful because you are stupid?" It's six of one and a half dozen of the other, I figure, but either way, gold is perfect for me because even stupid guys like me can buy it and prosper, because I think $96 oil implies $1,392 gold, if not more. A lot more!

And being rich won't save you from the ravages of inflation, either, as we learn from the book, Leaving South Carolina by Richard Pawley, which contains the gem of an observation, "Even the rich who are usually above such things will be affected", which dovetails perfectly with the interesting article from the Financial Times titled "Rich Suffer Higher Inflation, Study says." The essence is that, "According to the Stonehage Affluent London Living Index (Salli), rich London-based families experience an inflation rate almost twice as high as that measured by the consumer price index", and to prove it, the study notes that "Since 2002, prices measured by Salli have risen 13.79 per cent, compared with the CPI's 7.23 per cent", an example of which is the price of their wine, as "The price of a case of Lafite Rothschild 2000 has risen by more than a facto of three from 2002 to 2007, now standing at 9,250 (British pounds)." Hahaha!

So the rich really ARE different; they don't know how to get drunk cheaply!

Doug Noland of the Credit Bubble Bulletin at PrudentBear.com notes that some idiotic people are still borrowing like crazy, and that "Bank Credit has now posted a 14-week gain of $423bn (18.2% annualized)." Yikes! 18% a year growth!

Additionally, he quotes Gillian Tett in the Financial Times as reporting the horrendous news that, "Never mind the fact that the risky tranches of subprime-linked debt (the so-called BBB ABX series) have fallen 80 per cent since the start of the year; in a sense, such declines are only natural for risky assets in a credit storm."

Never mind an 80% loss? What the hell am I, made of stone, like my prostate gland? Apparently, she doesn't want to go there, and instead of poking at my poor old prostate with what I assume is a pointed stick with one hand and emptying my wallet with the other, like the doctor does, she says, "Instead, what is really alarming is that the assets which were supposed to be ultra-safe - namely AAA and AA rated tranches of debt - have collapsed in value by 20% and 50% odd respectively. This is dangerous, given that financial institutions of all stripes have been merrily leveraging up AAA and AA paper in recent years, precisely because it was supposed to be ultra-safe."

My God! I put up ten bucks to borrow a hundred with which to buy this debt, and now I am down by 50%? I have lost five times as much money as I put up! My God! My prostate involuntarily quivers in shock, proving that there is life in the old boy yet!

And it is worse than that, as those asset bets were made years ago, using dollars that had much more buying power, and now that buying power is gone, thanks to the loathsome Federal Reserve creating inflation in the money supply by creating excess money and credit, which debased the existing currency, and now things cost more dollars because each dollar buys less. So a 50% nominal loss is actually more like a 75% loss of buying power! I'm freaking doomed!

Bill Bonner of the DailyReckoning.com reports hears me yammering about inflation, and, as a result of long association, knows that once I get started complaining about inflation, I never shut up, and that means I will not go home and let anyone get any work done. So he comes in and cleverly says, "The Economist puts the rate of price inflation on 'all items' (otherwise known as consumer price inflation) at over 16% per year. But member banks can borrow money from the Fed for less than 5%. You can do the math later, dear reader."

Math? In a panic, I realize I have got to so something to stop this damned pop quiz in math! So I leap up and say, "Hey, Mr. Bonner! If you think that is weird, how about all the morons who are buying bonds, especially government bonds in the face of all of this inflation? These drooling halfwits have driven the price of bonds up so high, and thus have driven the imputed yields on them so low, that these 'investment professionals' are locking their money up, for up to five years, to earn less than 4%! Hahaha! And they are getting less on 10-year bonds than the 4.5% Fed Funds rate itself! It makes you want to laugh so hard that you pee in your pants"!

My helpful little "constructive interruption" did not quite have the effect that I was hoping for, which is that everyone would say, "You're right, Mogambo! You're a genius, Mogambo! Don't pee in your pants! Here's twenty bucks! Go buy yourself a nice pizza!"

Suddenly finding myself alone, I realized that I have heaped disrespect on bond buyers again, and I further realize that I have been doing it for so long that you think I would be as bored with it as everybody else is obviously bored with hearing me talk about it.

So I will take just a few precious moments of your time to say that if you are buying bonds, then you are stupid, and if you know anybody who is buying bonds, then they are stupid, too, and you can tell them that I said so, unless that person is a beautiful nymphomaniac college cheerleader, and then just call me up and give me her name and number, and I will take it from there, because if she is buying bonds, too, then I know that she is stupid enough to believe that I am a Hollywood talent scout and I can make her a star if she is "nice" to me.

I'm not sure that even Hollywood dumbbells know that the despicable Federal Reserve lowered the Fed Funds rate by another quarter point to guarantee crippling inflation in prices and the destruction of the economy in the long run so that the results of their heretofore egregious and suicidal monetary policies can be covered up in the short run, since the Federal Reserve is nothing if not corrupt in their slavish service to finance monstrous stock and bond market bubbles and scams, and criminally irresponsible Congressional deficit-spending.

Rick Ackerman of Rick's Picks is not that interested in my "talent scout" charade to take advantage of a nubile ingénue, but asks the pertinent questions, namely "Can the lowering of administered interest rates much affect an economy that currently requires upwards of $8 in new borrowing to create a mere single dollar's worth of growth? And more to the point, does the will to borrow that $8 still exist with home prices falling?"

One day the answer will obviously be "no", and the real question is "Is that 'one day' now?", unless we are talking about that nymphomaniac little cutie who wants to know if I can make her a movie star, in which case the answer is "yes". Oh, very, very much "yes."

Inflation in prices is becoming widespread, and Adrian Ash of bullionvault.com, writing at WhiskeyandGunpowder.com, notes that, "When unlimited money supply growth crashes into rising demand for limited-supply essentials - such as natural gas, copper, soybeans, and cocoa - the result is sure to be price inflation as violent as the monetary inflation that preceded it."

The use of the word "violent" is highly instructive, as the Guardian.co.uk reports of, "Food riots in West Bengal and Mexico. Empty shelves in Caracas. Warnings of hunger in Jamaica, Nepal, the Philippines and sub-Saharan Africa. Soaring prices for basic foods are beginning to lead to political instability, with governments being forced to step in to artificially control the cost of bread, maize, rice and dairy products."

Indeed, horrifying inflation in prices is everywhere, as inflation in prices is caused by central bank inflation in the money supply, and central bank inflation in money supplies is everywhere, too, with the result that "Record world prices for most staple foods have led to 18% food price inflation in China, 13% in Indonesia and Pakistan, and 10% or more in Latin America, Russia and India, according to the UN Food and Agricultural Organisation (FAO). Wheat has doubled in price, maize is nearly 50% higher than a year ago and rice is 20% more expensive, says the UN. Next week the FAO is expected to say that global food reserves are at their lowest in 25 years and that prices will remain high for years."

For years? Indeed, as "fears for even tighter conditions revolve around deepening climate change, which generates worsening floods and droughts, diminishing food supplies. If the price of oil rises further it will make fertilisers and transport more expensive, and at the same time make it more profitable to grow biofuel crops."

And from Breitbart.com we surmise that, like America, a war would be just the thing to distract their unhappy proletariat masses, as they report that "Iran's new central bank governor has warned the government of President Mahmoud Ahmadinejad over money supply growth, urging measures to prevent a further rise in inflation. At the end of May 2007, the central bank said money supply had grown by a colossal year-on-year rate of 39.4 percent. Iran's year-on-year inflation is currently 15.8 percent, according to the central bank."

And even increasing production is not much of an option, either, as "Supply will be further restricted if fish stocks continue to decline due to overfishing, and if soils become exhausted and erosion decreases the arable area."

The inflation rate in Spain jumped to 3.6%, and Bloomberg.com says, "Singapore's consumer prices rose 2.7 percent from a year earlier", that, "Australia's core inflation rate advanced 3.1 percent from a year earlier", and that "French annual inflation accelerated to 1.6 percent last month."

The November 2 issue of Business Week magazine says that the World Food Price Index has risen 19.8% between June 2006 and September 2007, and from Economist.com we read "The world's most vulnerable who spend 60% of their income on food have been priced out of the food market," which is the alarming warning from Josette Sheeran, head of the United Nations' World Food Programme (WFP).

But as far as "surprising rates of inflation" go, the Economist magazine says that in Kazakhstan, "Bread prices have gone up by 30%. And the price of sugar, flour and sunflower oil doubled or even tripled within days recently."

And for other inflation news, orange juice is up 19% in the last 12 months, and corn up15%. And corn, I hear, is actually 40% more than it was four years ago! Wheat is up a whopping, eye-popping, traffic stopping, cow-flop plopping 61.7% since last year! Hell, the price of eggs is up a brain-scrambling 33.7% in the past 12 months! Milk is up 21% over the same period! How in the hell can there be no inflation?

And it is not just food, as Agora Publishing's 5 Minute Forecast reported that the Energy Department revealed that "The average retail price of electricity rose 9% last year - the biggest leap in 25 years. According to a report released yesterday, electricity prices rose the fastest rate since 1981, thanks largely to the lifting of retail price caps."

To make it worse, "This winter, the report estimates a 4% hike in electricity costs." Well, if winter is one of the four seasons, then winter is three months long, right? And so a 4% hike for one season means 12% for the whole year? Yow!

John Brown in his Financial Intelligence column at Newsmax.com understates the problem and says that inflation statistics are somewhat misleading, as "Just two major components of the consumer price index (CPI), housing and autos, comprise a massive 58 percent of the inflation index and are falling in effective, 'street' price. Meanwhile, the prices of regular household items - things one really consumes every day such as food (15 percent) and heating oil (0.3 percent) - are rising rapidly in price, yet they comprise a very small part of the index."

Well, rising prices for commodities is not news to everybody, as John Fearon, director of Oceanic in Sydney, says, "The thirst for some exposure to commodities markets is growing all the time."

And sure enough, Reuters reports that "An army of structured credit experts is studying products such as collateralized commodity obligations, or CCOs, tied to the performance of a portfolio of underlying commodities, such as precious metals or energy prices."

So what in the hell is a CCO? It is explained that "The issuer sells protection on the underlying commodity portfolio to the swap counterparty under what is known as a 'trigger swap agreement.' To fund its obligations under the swap, the issuer sells notes in the amount of the protection sold, according to Fitch [Ratings]. Proceeds from the notes then serve as collateral for the issuer's exposure under the swap until it matures. At maturity, the issuer liquidates the remaining asset and returns the proceeds to noteholders." Hahahaha!

Let me make sure I got this right: I create and sell some debt, and I use the money that I get from these idiot noteholders as collateral for the notes? Hahaha!

Look at me! I am suddenly in the trigger swap business! I get to charge you a fee to float a dollar's worth of bonds backed up by a dollar's worth of your own money? Hahaha! And there are investors who will voluntarily do this? Hahahaha! What a racket!

The article says that stupid people with too much money have not learned anything from the subprime mortgage mess, and "most likely the bulk of investors about to start buying CCOs have no idea quite what these products are, either. All they'll see, instead, is a steady stream of potential income. Provided, of course, that the CCOs pay out at maturity." Hahaha! Just like subprime!

But like all scams like this, it works like a charm in the early stages, and "In other words, bond managers and fixed-income traders whacked by the collapse of mortgage-backed debt can now put commodities into their portfolios - and just in time, too, for the runaway inflation about to hit thanks to monetary oversupply and heavily geared financial buying."

We never learn. I sigh. But we can make a lot of money on it, as this commodities bubble is in the early stages yet. But everybody else pays a huge, society-destroying price for such inflation. I sigh again. I weep. Ugh.

Mogambo sez: Those who sought gold and silver to protect themselves are also waxing rich as their prices zoom, zoom, zoom, which is caused by, almost literally, everyone in the whole freaking world trying to get away from the inflationary idiocies of their own governments creating so much excessive money and credit.

And petroleum, our oily chum? Up, too, just like you'd expect.

And next week, and next month, and next year when they are all up even more, it will be just like you'd expect, too, and then you'll be much wealthier, just like you'd expect, and then I will be calling, calling, calling you, day and night, asking to borrow money from you, just like you'd expect, too, but you didn't, which shows you don't think things all the way through, to your dismay.

But you will be wealthier, thanks to owning gold, silver and oil, which will take some of the sting out of it, and with all your new wealth you can pay to have my calls blocked, which will take the rest of the sting away, too.

Ahhh! Is there no end to the benefits of real assets?

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The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications.

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