MOGAMBO GURU: Hard Times Are Coming For Us All

[Tace]

Richard Daughty, the angriest guy in economics

October 5, 2005 -- I am, as hard as that is to believe, getting freaked out more and more. The Federal Reserve didn't increase total credit by much, but they did continue accelerating down the Road To Economic Hell (RTEH) by buying, outright, $2.4 billion of debt last week. In short, the government borrows by issuing debt, and the Federal Reserve creates the money to buy the debt! Bingo! Not only creating more money and credit, the damn thing that got us to this point, but to fund the activities of the government! Gaaahhhh!

The bigger news in this filthy area of the economic world, for me, is that Foreign Holdings of US debt deposited at the Fed went up by a whopping $7.6 billion last week. Whew!

But the biggest, scariest thing of all was that nominal incomes dropped. And when you adjust nominal incomes by the reduction in buying power from all the inflation around here, then it is no wonder that inflation-adjusted incomes dropped so much, too. But I wail like a wounded banshee (ooOOooOOoo!) when I realize that the government's piddly little chain-weighted, hedonically-adjusted statistical adjustment to incomes for inflation is around two stupid little percent. At that, I laugh this big booming Mogambo Laugh (BBML)! Hahahaha!

I am here to tell you, with the courage found only in a guy fully clad in body armor and sporting a machinegun in one hand and a flamethrower in the other, inflation is a LOT higher than two or three percent. Horribly higher. Like somewhere in the range of six to nine percent, at least. And so when you adjust incomes for the REAL rate of interest, then the drop in real, inflation-adjusted incomes is getting to be pretty significant!

more

http://worldnewstrust.org/modules/AMS/article.php?storyid=1140

[burythehatchet]

1. I can't form an opinion on the entire thesis but

prices are going up significantly. How could they not, everything you buy needs to be transported. End of Suburbia.

[sendero]

4. I can..

... and I've been actively working around what I believe is coming for a couple years now.

There WILL be a monetary crisis in the USA within the next few years. I really believe that, and the signs are everywhere.

The energy crisis is merely an accellerant, we have been on this road for a time, a critical turning point was reached when the Moron In Chief was elected, and now it is all but inevitable.

[Deja Q]

6. And no president since Carter did a damn thing to turn things around.

reagan called A.E. programs "obsolete" (I wish that fucker would still be alive and as coherent in 1980, along with his idiot populace, right now)

Dunno what poppy did.

Clinton's biggest thing, to my knowledge, was eliminating the 55mph federal speed limit, put into place in 1973 to CURB gasoline use; your average automobile combustion engine peaks performance at 35mph and and after that point it takes more gas to get to and maintain a specific speed. The last I read, 65mph takes a sustained 15% MORE fuel than 55mph. (and given the cops' desire to fill out more speeding tickets than ever, I will not speed anywhere and I've noticed the increase of cop cars AND helicopters (and a radar detector can't see those things) - the angry can shoot me with their guns for all I care. )

Junior's actions are clear. He's almost as deranged as reagan, though to say "don't drive when you don't need to" has gotten Americans to make trips coming home from work and not going out any other time. Unfortunately, that's going to hurt the economy too. But that's how reagan created the stage we're performing on...

[sendero]

9. HT.

... I don't think the energy situation is more than a few percent of the cause of the pickle we are in.

Spending, and hence debt, at every level Federal, State, Local and Personal, is out of control.

Bush** has added 2 trillion to our deficit. We were already paying someing like 175 of the ENTIRE FEDERAL BUDGET on debt service, the interest on bonds already outstanding.

That is going no where but up. Imagine if you were spending 20% of your income on CREDIT CARD INTEREST. Just the interest. And piling on new charges every day.

It is unsustainable. I don't pretend to understand exactly what the end game will look like. Some say deflation, some say hyper-inflation, some say that the Fed can manage it.

I say you cannot print money forever without debasing your currency.

--- All of that said, yes - America has been on an energy binge and we should have been on a diet. Our energy dependence is going to make this oh so much worse.

[lectrobyte]

16. That's a good point. I hadn't realized the home equity levels were

as low as they are, as that article points out, along with high levels of debt. So everyone has basically maxed out the credit cards, from your neighbor to your government.

[Taxloss]

7. How soon? What would be the trigger?

It seems declining US consumer confidence reduces the incentive for Far Eastern economies to hold on to their plunging dollars.

[TallahasseeGrannie]

2. Plant a garden if you can.

I'm serious. We need more self-sufficiency. I know that isn't possible for folks in urban areas, although community gardens exist. We need to be able to carry on when the inevitable happens.

[Skidmore]

14. Absolutely. Excellent advice.

Just put my veggie garden to bed for the year. Before I did, I got 10 lbs of onions, a bunch of ender tomatoes, some elusive carrots and another two gallons of green beens. Then I found 3 melons which had straggled off into the weeds. A little hard work has me a veggie drawer half full of carrots (keep for quite a while). A freezer half full of green beans, peas, chopped onions, chopped peppers, zucchini (sliced, chopped, and grated), strawberries, blackberries, and raspberries. I harvested and dried dill, parsley, oregano, sorrel, garlic chives. Packaged them in little tupperware bowles. If I wanted to sell the dill alone, given the prices I last saw at the store, I could easily make a couple of hundred dollars. It only took a space two feet square to pruduce this quantity. This will greatly reduce our grocery bills this winter.

Buy a couple of these if your space is limited.

http://www.cleanairgardening.com/totuupdotofl.html

Tomatoes are expensive and this will cut down on that expense. Plant in pots on your landing or patio or put up a shelf set in a sunny place in the kitchen. My brother keeps a lima bean plant that produces year round in his apartment. We tease him because that thing is taking over.


If you eat meat, find a farmer who will sell to you directly and who is careful about his stock. I go to our local Fareway for chickens. They have fresh free range chicken, not the broth injected kind. We bought a quarter of a cow and it cost us $.80/lb with an addition $.40/lb for processing at a small local butcher shop. $1.20/lb for all cuts, including choice and enough hamburger to take care of our entire summer grilling needs. We will get through the winter on this. Pretty soon we'll purchase pork under a similar arrangement. I'm going to lay in a stock of sugar for Christmas baking needs now, because I read somewhere that the sugar crop in LA was destroyed and sugar prices will go up soon--so will everything manufactured using sugar. Will also put back flower and bake my own bread this winter. Don't do that in the summer. Will make lots of soups and stews and casseroles this winter so that we can stretch meat and veggies.

I buy cleaning stuff at the Dollar General store--off brand usually, for cleaning the bathroom. Dish soap and liquid hand soap I buy by the gallon at Costco and refill recycled pumps I got from purchasing a store brand several years ago (they are not in a landfill and still working great). This week I'll stock up on shampoos and toothpaste and deodorant at a sale. We buy TP in bulk and not the most expensive, perfumed, quilted brand either (that clogs the plumbing after a while and leads to plumbing bills). Don't use paper towels much anymore--bought several large bundles of cleaning cloths on sale, take out 4 or five to use for a while and wash them occasionally. Use cold water to wash my cloths and hang dry as much as possible. Use dryer for heavy stuff in the winter. Don't use liquid fabric softener anymore, but bought large boxes of fabric softener sheets at Costco. You only need one half a sheet to dry an average load. With that in mind I can dry 800 loads.

Shouldn't have to buy that for months. Basically, grocery shopping will be mostly for perishables--eggs, milk products, and fruits.

[Taxloss]

3. These columns are always good reading.

He may be a frothing libertarian, but that doesn't mean he can't turn a good sentence.

[sendero]

5. Even a comatose Libertarian..

... is right sometimes :)

[Tyler Durden]

8. Thank you. I always find it horrifying when my worst fears are repeated.

...and confirmed.

This guy used to post on a board I ran touting civil discourse between liberals and conservatives before I realized we can barely occupy the same dimension let alone the same planet or a simple chat board. I think. I could be wrong. I frequently am.

If the flu don't get ya, the stock market will. WEEEEEEEEEEEEEEE!

[Tace]

12. Yeah, I Haven't Turned On The Chatboard At WNT Yet...

because I'm afraid what might happen. I'm open to articles from conservatives, liberals, progressives... just not corporatists.

BTW, talk about worst fears, I'm heading over to the Petrocollapse Conference in NYC today. I get to hear from such cheery folks as Mike Ruppert. : )

http://www.petrocollapse.org/index.html

[Theres-a]

17. Please post later on that

[tedoll78]

10. This squirrel is getting ready for a long, hard winter.

I hope you're all preparing as well..

[Amonester]

13. Hope it doesn't 'morph' in a nu-klu-R one - eom

[ProfessorGAC]

11. He's Absolutely Correct About Inflation

The real inflation rate is nearly 50% relative higher than reported by Comemrce or Treasury. The direct cost of energy to the consumer is not included in that value and should be.

I'm not quite as alarmed about the debt numbers in the short term as he is, but the long term effects (and long term means a couple of years, not 10) of continuing to run massive deficits will create a drag on consumption as well as have a depressive effect on revenue and profitability in the private sector. (Want evidence? Look at the period 1988 - 1991.)

So, i'm with him on concern, just in differing degrees for slightly differing reasons.
The Professor

[Oggy]

15. Thanks again

I will be very happy if you keep up your weekly MOGAMBO GURU post :-)

[Tace]

18. It's My Pleasure

Cheers

[txaslftist]

19. Someone must have pissed off an Ancient Chinaman...

...cause we're living in "interesting times".

[0007]

20. ....ya don't need a weather man to know which way the wind is blowing