[GJM] Fw: [globalnetnews-summary] A fear of falling Fed credit

[mary rose]

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Sent: Sunday, May 11, 2008 8:54 PM
Subject: [globalnetnews-summary] A fear of falling Fed credit


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> Increasing a country's money supply by raising debt is unwholesome,
> bizzare and utterly discredited, but that is how it works, which means
> that when total Fed credit stands still, as it has just done, that is
> worse than bizzare and incredibly unwholesome. The ramifications are
> terrifying. This is what is meant by "doomed". (May 8, '08)
>
>
> A fear of falling Fed credit
> By The Mogambo Guru
> http://www.atimes.com/atimes/Global_Economy/JE09Dj01.html
>
> I woke up in the famous Mogambo Fortress Of Paralyzing Fear (MFOPF) just
> before dawn, bathed in sweat after another restless night of nightmares
> about inflation. The nightmares come in two varieties, in case you were
> wondering. The first variety is that my wife, children, family members and
> creditors are all demanding that I give them more and more money, while
> social workers and judges are standing behind them, urging them on, and I
> am running and running, but I can't seem to get away. Over my shoulder I
> yell, "You'll never take me alive!" and they all yell back, "That suits us
> fine, you Stinking Mogambo Tightwad (SMT)! We just want your money!" and I
> scream and scream and scream at the prospect.
>
> The other variety of nightmare is that little microbes that look just
> like Alan Greenspan (former chairman of the Federal Reserve whose insane
> monetary policies have destroyed the dollar and the American economy and
> have condemned us, for One Big, BIG Thing (OBBT), to death by inflation in
> consumer prices, and God knows what all else, too, because there will be
> lots of "elses", all of them bad) are literally eating my internal organs,
> which causes an intense pain in my wallet, and I am running from doctor to
> doctor looking for a cure, but all the doctors look like Hillary Clinton
> shrilly demanding everything I own (probably because her bright idea is to
> come up with more and more unfunded mandates to force more and more
> healthcare providers to provide more and more healthcare to anyone who
> asks for it, whether they can pay or not, which they can't, or they don't,
> which is why they all turn to me to pay for everything, which is probably
> why I am having this nightmare all the damned time).
>
> But now awake, I brushed the sleep and tears from my swollen eyes and
> yelled into the intercom for somebody to please bring daddy a cup of
> coffee ("Or else!"), when I noticed that it was quiet. Too quiet. And
> anybody who has ever seen an old movie on TV knows that when things are
> quiet, too quiet, it means danger, mostly in the form of bullets or arrows
> suddenly flying your way, at which point you turn to your own bullets and
> arrows, and it's a hell of a tussle from then on.
>
> Sure enough, no sooner had I decided that I did not have enough bullets
> and arrows in prepared response to this sudden quietude than I discover
> the reason for the quiet; total Fed credit at the Federal Reserve was down
> by US$4 billion last week! And the total amount in this fount of
> miraculous credit is seemingly stuck at $864 billion, which is not only
> down for the freaking week, but is also down since last freaking YEAR at
> this time!
>
> My hands shook so much at this news that I dropped some bullets and
> arrows, which is usually a bad thing to happen. The reason for my being so
> startled was that this total Fed credit is the magical stuff from which
> loanable funds magically appear on the books of the banks, which is turned
> into money when somebody borrows it from the bank.
>
> That's how the money supply grows these days, which means that money
> literally comes from debt, as unwholesome and bizarre as that sounds, and
> as unwholesome and bizarre as that actually is. But this is not leading to
> one of my Predictable, Loud And Tiresome Mogambo Editorials (PLATME) about
> the absolute stupidity of the fake, fiat money that we use as currency, or
> the sheer preposterousness of allowing the banks to act so stupidly in
> creating so much money and debt, or about sheer insanity of disregarding
> the requirement, per the Constitution, that money be only of silver and
> gold so that money would not lose buying power due to over-issuance of
> money, mostly because that boat has sailed and now we are freaking doomed.
>
> Instead, this is about the terrifying ramifications of not doing it
> anymore, as seems to be the case, which is where we find out exactly what
> is meant by the word "doomed".
>
> In short, once you get started with an idiotic economic system like this,
> debt must never stop growing because everyone owes both the money AND
> interest, and that means that money must never stop growing, even if you
> are just paying the interest that is due this money that was borrowed!
>
> Therefore, your blood should run cold when you see that total Fed credit,
> the actual source of new dollar debt, is not growing. As I was
> contemplating how my blood got suddenly colder, I was taking a long pull
> from a bottle of really cheap tequila to try and calm my ragged nerves
> about this lack of additional credit thing.
>
> It didn't work. I just got sloppy drunk. And I dropped the bullets and
> arrows again, which, fortunately, stopped it from being quiet, too quiet.
> But I am still, obviously, nervous and drunk, and for good damned reasons,
> too. I think I'm going to puke, and for a lot of reasons, too.
>
> Richard Daughty is general partner and COO for Smith Consultant Group,
> serving the financial and medical communities, and the editor of The
> Mogambo Guru economic newsletter - an avocational exercise to heap
> disrespect on those who desperately deserve it.
>
>
>