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Thread: weekend commentary - the Mogambo's on a roll ...

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    Banned Melonie's Avatar
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    Default weekend commentary - the Mogambo's on a roll ...

    (snip)"And the unholy Fed is absolutely going bananas with accommodating the repo market. There were $24 billion in repos just last Thursday alone! And, for good measure, the Fed printed up another $5.3 billion in actual cash last week, enough for every man, woman and child in America to get $18 in cash.

    And why are they doing this? Jim Willie CB of GoldenJackass.com explains, "The US Fed must get with the program and realize that they cannot fight inflation when that precisely is their reason for being. My disrespectful title for the US Fed Chairman is the Secretary of Inflation. Cutting off price inflation is tantamount to cutting off the foundation legs of the US Economy, namely the housing sector on the tangible side and the stock market on the financial side. Constant, even accelerating, credit supply is essential in order to maintain flat growth within the US Economy."

    I fall to my knees, and in my finest cinematic moment, dramatically raise one arm heavenward, and cry out with a voice dripping with anguish and outrage, saying "This is the depths to which the Federal Reserve has sunk!"

    - The Lipper Mutual Fund Performance Index for the first half of the year came out, and gold lead the pack by a long shot. Their 10-fund index was up 27%, and the World Equity Funds Index showed that the 54 gold-oriented funds were up 25% for the last six months, too.

    By contrast, when Lipper considers all 12,675 equity funds, the average return was less than 4%. Hahahaha! Official "trust me" government-reported inflation alone is running more than that! And real, old-school-way-of-measuring-inflation is running at least to 9%, being as conservative as I can.

    So that means that the average mutual fund holder made 4%, on which a capital gains and income taxes are levied. But even assuming that the mutual fund holder pays no tax at all, he or she is still losing at least 5% a year in spending power! Losing! Losing 5% a year! Which is the optimistic scenario!

    You can bet that this interesting statistic is showing up on the screens of all kinds of fund managers, and the screens of all kinds of people who are looking, with an increasing feeling of unease, at their pathetic quarterly statements.

    And with the G-7 (or G-8 or whatever they call themselves these days), of which we are a member, continuously agreeing to work together to make the dollar go down in value, that means that domestically-produced commodities will be cheaper on the world market. That will pressure higher-priced foreign competitors to lower their prices in response, but it will also, unfortunately, give domestic producers the leeway to dramatically raise their prices. And they will."(snip)

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    God/dess Deogol's Avatar
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    Default Re: weekend commentary - the Mogambo's on a roll ...

    It should be entertaining to see how The Fed, who's policies are built for a non-global economy and a creditor nation, has to deal with the global economy in what has become a debtor nation.

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    Banned Melonie's Avatar
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    Default Re: weekend commentary - the Mogambo's on a roll ...

    ^^^ 'entertaining' isn't exactly the word that first popped into my mind LOL !



    ^ ... the rising cost of convincing foreigners to keep lending Americans our own money back !


    Also, IMHO the same US-centric myopia which affects the Fed also affects the vast majority of Americans ... i.e. they actually think that they are better off if their money market account is returning 4% interest instead of 1% , while totally disregarding the fact that this year's dollars have lost 9% in purchasing power vs last year's dollars. With a somewhat more worldly view, they would connect the dots and realize that Weimar Germany was full of barkrupt billionaires who were unable to buy a loaf of bread with a wheelbarrow full of DeutscheMarks !
    Last edited by Melonie; 07-15-2006 at 09:27 AM.

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