MOGAMBO GURU: "Run For Your Lives. It's Inflation!"

[Tace]

Richard Daughty, the angriest guy in economics -- World News Trust

snip

If you listen carefully to the soundtrack, you will notice that it sounds like kettledrums and werewolves howling. Or maybe werewolves playing kettledrums while howling. I dunno. But either way, that frightful music means, if you have ever been to the movies, that something horrible is getting ready to happen. And sure enough, you can dimly see, rising slowly out of the murky depths, a hideous monster rising up. Suddenly, someone shouts, "Run for your lives! It's inflation, and it is going to eat the living guts out of our spending power and our standards of living!" Actually, in the movie, it turned out to be this scaly creature that lived in this lagoon, called the Black Lagoon, see, which the people manage to kill at the end, which explains why the rest of the audience laughed at me and shouted as I bolted for the door in my panic, "Good riddance, creep!"

But it's the same idea, only in real life the creature IS inflation, and it wins in the end, and the people are all killed. And eaten. And their kids. And everybody else, too, for years and years and years. Ugh.

more

http://worldnewstrust.org/modules/AMS/article.php?storyid=3034

[MADem]

1. Spend less than you make is good advice! n/t

[Deja Q]

8. What happens when you can't make enough?

Why won't the repukes hand out free suicide kits? That isn't compassion, to allow what is happening which in turn allows everyone else to slowly rot.

[MADem]

10. That's a challenge, especially if you've "downsized" as much as you can

Then it's take that second or third job (IF anyone is hiring!) and sell off the family silver (IF you have family silver to sell)!

But asking the GOP to hand out ANYTHING free, be it sugar or suicide kits, now that's a dream. They want you to pull yourself up by your OWN bootstraps...or hang yourself with them!

[enki23]

12. inflation scares creditors far more than debtors

.

[MADem]

13. Good point! n.t.

[Nederland]

2. Richard Daughty

...is a gold bug. People pushing investment in gold ALWAYS preach doom and gloom. There is nothing new or interesting here.

[the other one]

3. Attack the messenger.

Why do I see this more and more around here?

[Nederland]

4. Fair enough

You want a real criticism of this piece? Here you go. Consider this section of the article:

<snip>

So I am laughing in loud Mogambo scorn (LMS) at not only bond market bozos who are still buying bonds even as the prices fall and keep falling, but also the complete clods who are buying stocks at the same time, even as central banks are tightening, even as the Congress is spending outrageous amounts of borrowed money, even as the dollar is falling, but also (and I have to rub my eyes in disbelief) even when crude oil is nearing $70 a barrel! What kind of complete idiots are these jerks? I'll tell you who; idiot Americans who keep plowing their money into mutual funds and retirement plans loaded with non-gold equities and bonds, thinking that portfolio managers are some kind of magical wizards who will produce gains when nobody else can.

I mean, these bond market chumps are standing around, scratching their thick heads, and muttering, "Huh? What? Huh? What happened?" as these bond-buying morons are losing money, and yet are still intent on locking their money up for up to 30 years by buying long bonds so that they can get tiny, less-than-inflation yields! What kind of stupidity is THAT? And when yields continue to rise and rise (and they will, as all central banks are starting to react to the inflation that is rising in their countries as a result of all of this creating of excess money and credit), they will get exactly what they deserve for their stupidity; huge freaking losses. The bad news is that this, as I keep yelling about, is YOUR money that they are managing, and all the bond portfolio managers will get for their laughable incompetence are huge salaries and outlandish bonuses. But they can't hold back the tides, and millions of people are going to get whacked for it. It's like Mother Nature said; "It's not smart to be so childishly trusting!"

<snip>

Notice how in the first paragraph he talks down "retirement plans loaded with non-gold equities and bonds". Then in the next paragraph he rails on and on about how poorly the bond market is doing and how these bond managers are crooks for pushing shit. All well and good, given that it's true, but what about the part about "non-gold equities"? Odd that he never covers the second half of his earlier statement, isn't it? Could that be because the stock market has been going through the roof these past 5 months? Or perhaps it's because he knows that gold (after taking into account storage costs and transaction fees) is a really, really lousy investment historically when compared to the stock market? I mean, please, look at gold prices for the last 20 years:




Not exactly anything to be proud of, eh? Especially compared to the stock market:

http://www.economagic.com/em-cgi/charter.exe/sp/sp01+1985+2006+0+0+0+290+545++0


Gold is a metal, nothing more. Gold bugs will never get that.

[converted_democrat]

5. Aren't you the person that tried to argue that because the unemployment

rates are at 5% (and it's really more like 12%) that everything is hunky dory? How are you in a position to tell one what is new or interesting?

[Nederland]

6. I am in a position

...as a very successful investor. I believe that the facts show that investing the the stock market and real estate has always been a much better decision than investing in gold. But hey, do what you like. Go out and buy a shit load of gold. Hope it works out better for you than it has the past 20 years.

[converted_democrat]

7. I'm sorry, but I don't believe you.. You couldn't even grasp simple

stats in that earlier thread.. Get me straight, I'm not advocating buying gold, but inflation is about to become a real issue, and anyone denying that has there head up their butt..

[Nederland]

9. Let's make a deal

You say that "inflation is about to become a real issue".

Like all good empiricists, let's test this statement. First of all, we need to clarify what you mean by this, then we both make predictions, then we see who is right. For clarification sake, you need to specify what you mean by "about" and what you mean by "real issue". Does "about" mean 1 year, 5 years, or ten years? Does "real issue" mean 8%, 12%, or 20%? Put some hard numbers out, I'll do the same, and then we'll see. Fair enough?

Oh, and no hiding behind statistics. We use standard CPI numbers, deal?

[Nederland]

14. *crickets*

I guess the idea making verifiable predictions scared you off...

[MADem]

11. Well, if he happens to like that, fine, but he is way late out of the gate

Look at the price of gold. What goes up must come down, and if it doesn't, hell, the shit is gonna hit the fan anyway. Gold ran up the ladder bigtime around 1980.

I'm a fan of buy low, sell high. I don't know if now is the time to be "thinking" about buying gold. If you bought it when the price was lower, now's the time to be thinking about when you will want to sell it.

And of course, EVERYONE has an opinion, and this is just the investment topic du jour:

The U.S. dollar rose against most other major currencies in European trading on Wednesday. Gold retreated after topping the $600 an ounce mark earlier in the week.
http://www.forbes.com/entrepreneurs/feeds/ap/2006/04/12/ap2666360.html

LONDON (Reuters) - Gold has tremendous scope to attract more investment that could push prices past a 1980 peak of $850/oz in the next couple of years, due to economic and geopolitical uncertainty, consultancy GFMS said on Wednesday...Spot gold surged to a 25-year high of $604 an ounce on Tuesday before retreating. It has gained more than 40 percent in the past 12 months, including a 16 percent rise this year.
http://today.reuters.co.uk/Funds/FundsArticle.aspx?type=fundsNews&storyID=2006-04-12T120733Z_01_NOA243539_RTRUKOC_0_GOLD-INVESTMENT.xml

WASHINGTON (MarketWatch) - The 38% surge in gold prices in the past eight months is a sure sign that the Federal Reserve has let inflation get out of control, some economists and strategists say.
But others argue that gold bears little relation to consumer prices, and that the surge in gold prices nothing to worry about, certainly compared with the jump in oil prices.
The two camps have divergent views about what causes inflation. On one side are those who argue that central banks have created too much money that isn't backed by something solid, like gold.
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B4A9C2D91%2DC1A9%2D4E18%2D9BBF%2D704D049F2D97%7D&siteid=google

Wall Street's three-day rally ran off the track today as investors were spooked by the high prices of gold and oil and the fear that higher inflation is ahead.

Gold prices topped $600 an ounce for the first time in 25 years in the New York metals markets where the prices of silver, zinc and copper also have reached record highs.
So-called "gold bugs" who preach the benefits of buying gold say investors are stocking up on the metal because they see inflation ahead. They argue that even if inflation is rampant, gold will hold its value...
http://www.washingtonpost.com/wp-dyn/content/article/2006/04/06/AR2006040601473.html