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Inflation targeting for idiots

Oct 16, 2008

Inflation targeting for idiots
By The Mogambo Guru

I have always feared and loathed Jean-Claude Trichet, the socialist/communist moron put in charge of the European Central Bank, mostly because I think he has always been a socialist/communist moron, and he spends most of his time both 1) Avoiding me so that I won't get in his face and remind him of his complete failure, and 2) Proving me more and more right about him all the time.

First off, this mental midget is actually using the central bank to "target inflation", which means to actually cause inflation to be "close to, but not more than, 2%"! Gaaah!

Purposely causing inflation! This is insane! This is beyond insane! This is the work of the anti-Christ! The purpose of a central bank

is to prevent inflation, and to make sure that inflation is always, always, always zero!

Now, get this; his failure as a central banker has now produced a horrific annual inflation of 3.6% in the euro zone, almost double his stupid "inflation target" of 2%, and yet this execrable halfwit is now making noise to lower interest rates! Lower interest rates! He wants to lower interest rates!

I can't believe my ears! He wants to lower interest rates at the same time the Fed is furiously pumping over US$600 billion into the banks of Europe, providing a big boost to the money supply? And don't increases in the money supply lead to increases in consumer prices - which are already at a terrifying 3.6%?

Of course, this brings up shame of the also-execrable Frederic Mishkin, whose ridiculous theories of economics got us into the mess we are in while he was a governor of the Federal Reserve, which brings up the shame of Columbia University, which has subsequently hired this guy to teach economics at their Graduate School of Business! Hahaha! I mean, how embarrassing for Columbia University students and alumni! Hahaha!

In particular, I laugh at Mr Miskin's stupidity because he is a fan of "inflation targeting", and in a laughable article he wrote for the Financial Times incredibly titled "Do Not Abandon Inflation Targets", he actually asks, "Is inflation targeting an idea that worked well in the past, but cannot cope with the stress of the present environment?" Hahahaha!

Who in the hell said that inflation targeting "worked well in the past"? When the hell was this? What kind of an idiot can say something as preposterous as this, when all one has to do is get up off of one's fat butt, walk over to any window, and look out upon the economic landscape and see nothing but flames and destruction as far as the eye can see as a result of the inflation that we have?

Again, a long, mournful cry of impending doom escapes my lips, and apparently he took that as a sign of confusion, so he explains, "Inflation targeting establishes a transparent and credible commitment to a specific numerical inflation objective that provides a firm anchor for long-run inflation expectations, thereby directly contributing to the objective of low and stable inflation." Hahahaha!

Stealing the buying power of the currency by 2% a year is so outrageous that, naturally, I figured that this was too good to be wasted on former Federal Reserve trash, and now Columbia University trash, and so I excitedly went back to the office to work out my fantastic new presentation to my boss to make this work for me, too!

All night long I worked, worked, worked, and the next morning I was ready.

As soon as she gets to her office, I call her up on the phone and say, "I need to see you right away, boss lady!" and she replies, "How did you get my private number?" and I say, "That is not important, but is crucial that I see you right away!"

So, now cautious, she asks, "Is this going to be about giving you more money, more benefits, more time off, a bigger office, a company car, taking incriminating evidence out of your personnel file, paying off witnesses or blackmailers, buying you lunch or giving you money with which to buy your stupid lunch?" I say, "No! Not this time! It's my new business plan I have been working on all night long, modeled after the policies of the Federal Reserve, now being taught to graduate students at Columbia University!"

So, she says, "Okay. I'll give you two minutes of my time". So I go up to her office and her snotty little receptionist keeps me waiting for just long enough so that I could remember how much I hate her guts for always making me wait. Then she languidly hits the intercom button and says, "He's here" in a flat monotone, which - to deliciously quote George Hamilton as Zorro in Zorro, the Gay Blade - is as dull as her wit.

So I go into my boss's office and I proceed to wow her with my new plan, which I call The Mishkin Plan (TMP), and I start off by reminding her that this new TMP is not to be confused with The Mogambo Plan (also TMP), which is the plan whereby I would make more profit for the company if I was paid more money, given more benefits, more time off, a bigger office, a company car and an expense account which would pay for, among other things, lunch and pesky blackmailers.

Anyway, I say, "Here's my new plan, boss, and I know you are going to love it! The plan, which I call The Mishkin Plan (TMP), is that I will now actually try and lose money! But (and this is the good part) at a constant 2% rate! Why? So that there will be a firm long-term anchor to the losses I generate, thanks to my obvious incompetence, natural stupidity and generally poor work ethic, thereby contributing to an objective of low and stable losses!"

The shocked look on her face told me that she was having a heart attack, but after being rebuffed at trying to save her life by helpfully jamming some nitroglycerine pills and aspirin down her throat as she is yelling "Get off of me, you idiot!", I now see that she was not in cardiac distress, but merely severely shocked.

She was still in the "angry stage" of shock for a long time, too, and she would not accept my apology, and she says, "You had your knee on my throat, you moron!" and I am explaining that I was just trying to hold her still, as she was putting up quite a fight while I was trying to open her mouth by jamming a letter opener between her clenched teeth so that I could give her the pills to save her damned life!

Well, she was obviously hysterical, but I was soon back to pitching TMP, even as two security guards came bursting into the room, grabbing me and dragging me out of her office. As I am being hauled out the door, I am yelling, "What about TMP? Shall I plan to lose 2% a year?" and she is yelling, "NO! NO!"

And so I say, "What do I tell Frederic Mishkin?", and she is yelling at me "Tell him he's an idiot, too!"

And so, covering all the bases, I quickly say, "How about the other TMP that had the big raise in salary and all that other stuff? Can we just go with that?"

Well, she never did say, but I can tell by the way she slammed the door that she is thinking it over.

In the meantime, inflation targeting means that you ought to be buying gold and silver, not with "every breath you take" like Sting suggests, but with every spare dime you can get your hands on, like the Big Mogambo Moron (BMB) suggests!

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.

(Republished with permission from The Daily Reckoning. Copyright 2008, The Daily Reckoning.)