Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Loss of Dollar Purchasing Power, The True Fed Inflation Targeting Bullseye

Economics / Inflation Oct 29, 2010 - 03:39 AM GMT

By: Richard_Daughty

Economics

Best Financial Markets Analysis ArticleWhen it comes time to put the current crop of economic blowhards and lunatics on trial for the disaster their insanely-bad advice caused, this quote from Frederic Mishkin, former Fed governor and who is directly responsible for the mess we are in, may come in handy.


He says, in The Financial Times newspaper, that there is a lot of talk going around that "a numerical inflation target is under consideration inside America's central bank. And if there ever was a time to establish such a transparent and credible commitment to a specific target, it is now." Gaaahhhhh!

Is there any doubt as to why we are in the economic trouble we are in? This is one of the guys who was at the Federal Reserve who inflicted this on us! Gaaaahhhh!

I had hoped that the little screaming episodes at the end of the previous two paragraphs would be the end of such behavior, I would take a few pills, and/or chug down something alcoholic, and then I would be ready for WHY it is that "it is now," apparently a place unique in American history, that we must agree to accepting a deliberate 2% inflation in prices when the Whole Freaking Purpose (WFP) of the Federal Reserve, as even this ridiculous chump admits, is "price stability," which means "zero inflation" to everybody except these academic twerps who laughably slosh around in the fetid, stinking cesspool of their arrogant, neo-Keynesian econometric stupidity that has turned into a complete (pause for effect) and (pause) utter (pause) failure.

Surprisingly, even though I was prepared, he did not say why such a crazy thing as this is needed "now"! Instead, he just blithely went on that "The Fed has a dual mandate, to achieve price stability and maximum sustainable employment. But at the moment it is missing both objectives. Inflation is well below 2 per cent. A slugging economy means unemployment is likely only to decline slowly from its current level of about 10 per cent."

I can't believe that this Fed weenie is admitting that he is a failure! And then he goes on to imply that he never heard that inflation in prices was a matter of monetary policy, and instead says something as stupid as, "This combination of economic slack and low inflation raises the possibility that inflation expectations will drift downwards." Hahaha!

The federal government is deficit-spending almost $2 trillion a year, the Federal Reserve is going to create enough new money to "target" 2% inflation, and he thinks that "inflation expectations will drift downwards"? Hahahaha!

I have to admit that I quit reading right there, and I ran home to make plans to put this fabulous technique to my advantage! After some reflection and research, I figured that I needed a nice chunk of money to enable me to quit my stupid job, get out of this stupid town and get away from all these stupid people, and that $750,000 would suffice as a beginning target.

Firstly, I gathered up all the employees and told them, echoing Mr. Mishkin, "I am going to take 2% out of everyone's pay towards meeting a $750,000 target, and if ever there was a time for such a transparent and credible commitment to a specific target, it is now!"

Unfortunately, instead of bleating ineffectually like sheep, like I expected, they all started complaining and yelling in protest.

Deftly I deflect their anger by again taking the lead of Mr. Mishkin, and I say, "The amount that I already steal from you people is less than 2%! What did you think the "HBMC" deduction was on your stupid pay-stubs, you idiots? HBMC means "Happy Birthday Mogambo Contribution! Hahaha! And it is less - much less! - than 2% of your stupid checks! Now, it will be a Mishkin-approved 'transparent and credible' 2% on-the-nose! Now, aren't you happy, you stupid proletariat workers?"

I immediately realized that, for some reason, they aren't happy with any of this. So I told them, "Don't tell me your stupid problems, you ungrateful whiners and slackers! I'm only taking a lousy 2% of your stupid paychecks. Go tell Frederic Mishkin that you don't want him deliberately taking 2% out of your stupid paychecks, and then another 2% out of the buying power of every other dollar you own, you morons!"

As I stalked off the stage, I was met by my assistant who rushed up breathlessly to tell me that the news about my little embezzlement had flashed like wildfire through the company, up to my boss, to her boss, to the executive director and the whole accounting staff. Unsurprisingly, I was "summoned."

The meeting was a long one, and I kept trying to explain to these bozos that "The Federal Reserve creating more money creates inflation in prices, which is the One Freaking Thing (OFT) that you don't ever want to happen or, well, just look around you, morons!"

Finally, it boiled down to two main arguments. One disagreement was concerning who was the moron around here (another "them against me" plot), and the other argument pitting the theft of the employee's buying power by the outrage of inflation in prices deliberately caused by the Federal Reserve creating extra money, which is an outrage of monstrous proportions, against my piddly little misdeed of doing the same thing by just taking a little money out of their paychecks, which is just a little ordinary embezzlement.

At last, backed into a corner, I cried out in my best Shakespearian anguish, "Which, indeed, is the greater crime, whether to bid surcease to my suffering the slings and arrows of outrageous fortune by purloining a few paltry pence, or watch with fevered brow the ever-princely prices paid for a crust of bread by peasants as inflation cuts them down, inflation slicing through their real, after-inflation incomes like a razor-edged scythe mowing down a harvest of green wheat to rot in the fields, destroyed through the foul, hellish machinations of the Federal Reserve to continually increase prices, condemning all to a gnashing of teeth and to wail anew with each dawning in the east, where Juliet is the sun!"

The only good news is that I have been buying gold, silver and oil against a lot of potential calamities, this fiasco being one of them. Fortunately, the strategy has worked out again, just like buying gold and silver has always worked out when the government was borrowing and spending to the point of its bankruptcy, and always when a central bank like the foul Federal Reserve keeps creating excess amounts of new money.

The strategy to buy gold, silver and oil would have worked just as well for an invasion of space ships or large radioactive monsters rising from the depths of the sea, a universal utility that makes you giddy with delight and you say, "Whee! This investing stuff is easy!"

Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron’s, The Daily Reckoning, and other fine publications.

Copyright © 2010 Daily Reckoning

© 2010 Copyright The Daily Reckoning - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules