…I wistfully remember the good old days of blissful naiveté about economics, which is before I found out about the Austrian school of economics, which led me to completely comprehend the unbelievable Keynesian econometric insanity — insanity, I tells ya! — of excessively expanding a fiat currency, especially over an extended time.
The comments above & below are edited ([ ]) and abridged (…) excerpts from the original article written by Richard Daughty (MogamboGuru.com)
I also remember suddenly realizing, with a blood-curdling shriek of transcendental horror, how this — yes, this! – “excess money” thing is going to destroy everything, engendering the famous-yet-pithy phrase “We’re Freaking Doomed (WFD)”.
…I know this WFD thing for a fact – for a fact! – because big, long-term increases in the money supply has always destroyed every other dirtbag, low-IQ nation in history that ever, ever, EVER tried, or even allowed, such (how shall I delicately phrase this, perhaps with a gratuitous-yet-stupid alliterative twist?) simply stupendously staggering stupidity.
I mean, today we have complete access to the entire corpus of data and historical facts about economics stretching back to the Garden of Eden when a snake loaned Eve an apple, and we have Mises.org happily dispensing, for free, the eternal wisdom of the Austrian school of economics, and yet we let lowlife Keynesians dictate a monetary policy of constant expansion and outright monetizing of government debt, despite knowing all of this? “Are you freaking kidding me?” Then we use the newly-created credit to actually buy government debt (monetizing debt)? “Are you freaking kidding me?”
Now there are an increasing number of anecdotal rumors of central banks creating the money to actually buy equities and commercial debt to keep stock markets up? What the #*! &%? At the risk of repeating myself, again I ask, but with a more strident, hysterical undertone of soul-searing trauma to my prolonged, pitiful wail of dismay, “Are you freaking kidding me?”
The good news?…I think back to my mortal terror and complete overreaction to even the teensiest, weensiest increases in the money supply, because it eventually causes inflation in consumer prices, which is always, always Bad Bad News…
I did not comprehend the sheer, incomprehensible, awesome power of a unfettered fiat currency created literally without any limit whatsoever, especially so with a willing government to encourage it, or even pass legislation that mandates it, and a central bank not only fiendishly creating the excess cash and credit, but using it to buy assets to create scarcity, and thus higher prices!!!!!…
With such unfettered torrents of cash and credit cascading into the economy vis the evil Federal Reserve creating it willy-nilly and using it to buy stuff, it is but child’s play for them to elevate prices in the housing market, the bond market, the stock market, the incomprehensibly huge derivatives markets, and any other market you can name.
All it takes is more cash – inflation by any other name – and, of course, it would:
- again bail out the damned banks, which are theoretically on the hook for all that crushing debt, and simultaneously giving banks the opportunity to loan MORE money to those wishing to cash in on the inflationary bonanza.
- and it would bail out all those pension funds that are woefully underfunded as their assets soar in value
- and, of course, let’s not forget the economic expediency of people spending more money, which is as simple as the government passing legislation to hand out cash to taxpayers and businesses, probably as tax rebates and tax credits. Whee! Free money everywhere!
How else to explain, thanks to the evil Federal Reserve (and the other central banks of the world) creating so damned much cash and credit over the last three decades (or more precisely, since the horrid Alan Greenspan started this suicidal crap around 1987) the economic horror-show is that:
- the stock market (P/E>23),
- the bond market (yield < zero),
- the housing market (>4 x the average income),
- the student-loan market (over a trillion dollars),
- the car-financing market (over a trillion dollars),
- the trade deficit of over a half a trillion dollars per year,
- the sheer, absolute festering tonnage of an estimated, eye-popping $170 trillion in public and private debt extant in the United States and the world, when the entire GDP of The Whole Freaking World is a paltry third of that size?
- the pervasive corruption of government and business, such as (thanks to the work of GATA) the now-proven suppression of gold prices by systemic fraud, effected through a collusion of commercial banks, the central banks and the IMF, and yet nobody from the government has shut it down and thrown them all into some stinking jail? Unbelievably, such blatant, proven fraud and corruption is still allowed to go on and on, despite actual admissions of guilt and documentary evidence!
The mind literally reels! Never, never, ever, ever, EVER (or NEVER if you prefer) before in history has an economy tolerated such a twisted, bastardized economy, let alone prospered from it.
Thus, I sadly come to the only conclusion possible: Economics is dead. The central banks are officially the font from which literally all economic blessings will now flow, including determining supply and demand (and thus prices) for equities and assets.
The good news is, if you’re new around here,
- that investing in equities should again be a no-brainer for quite a while yet! Always buy, since that is what the Federal Reserve will do and
- that gold and silver, and probably oil, will theoretically prosper much more, especially when the resultant terrifying inflation in consumer prices finally wipes everybody out, from a real, inflation-adjusted analysis, even as nominal (dollar-denominated) wealth increases by leaps and bounds.
Eventually, though, assets will go to zero value, except gold, as has been the case for all previous episodes of long-term gross mismanagement of monetary policy.
And the legions of poor people? Bad news there. With no assets,
- they will not prosper from the market-levitating magic of the evil Federal Reserve, but
- they will pay continually higher and higher prices for everything they need and then
- they, tired of suffering drab, dreary lives of ever-costlier privation…will rise up in an angry mob, dominating the nightly news with videos of brandishing pitchforks and flaming torches, with screaming hordes demanding… that the USA return to a gold-standard money, or even gold-as-money as already required in the Constitution of The United States.
At least they should, and they surely would, if
- they had an inkling of what is happening to them, which they obviously don’t, because if they did, we would not be in this mess to start with and, if they did know,
- they would be buying gold and silver, just as those who DO have an inkling of what is happening to them are doing, because, obviously in light of this and all of what history clearly shows, “Whee! This investing stuff is easy!”