MR. MAGOO TAKES HIS VIAGRA
Doug McIntosh
The dirty little secret of the dollar collapse now in progress is interest rates. If the Roman Caesar NERO fiddled while Rome burned, perhaps Mr. Magoo, our clownish FED HEAD, gleefully splashes away in his bathtub while the United States economy sinks. For sure, this farce called the USA economy can't, repeat can't, tolerate any rise in interest rates above 10% without systemic failure. Mr. Magoo, splashing away while the dollar collapses, will soon be disturbed in his bathing revelry; yes, Mr. Magoo is going to have get up from his water paradise and face the economic music. Mr. Magoo really should have bailed out when he had the chance. Such arrogance and pride in a banker is rare, but not unknown. Add the economic misjudgments, fiscal stupidity and incompetence Mr. Magoo has repeatedly shown during his terror, I mean tenure, as FED HEAD and you have what is now upon the USA. Yes Virginia, the Federal Reserve Note is writhing around in its death agony.
When you get a certain age like I have, you start to get spam for drugs intended to raise certain parts of your anatomy. I actually read one of the advertisements in a moment of comic relief and found a counter indication that said if it was still working after four hours to seek medical help. Like, DUH. Pity Mr. Magoo in his bathtub fortress. Happily splashing away in Imperial splendor as the economic house burns down around him. Is that the sound of a dollar crash he hears faintly in the distance? Perhaps the howl of the mob seeking his banking head to use as a hood ornament? Could it be
Mr. Magoo is getting nervous over at Imperial Central Bank land? Perhaps there is something left of the gold bug he used to be in the empty space between his ears? Don't know about that one. The man sold out so long ago to the NWO Satan won't acknowledge his frantic calls, much less answer them. The wages of sin is not death, it is to be held up to public ridicule and then fed into the brush chopper while the mob cheers. Poor Mr. Magoo, at the helm when the good ship Lollipop sinks in a sea of artificial sweeteners.
One of the things going on globally at the moment is the failure of the full faith and credit of the USA motto. The world has crossed the economic Rubicon regarding the fiat Federal Reserve Note. Neither Russia, Red China or Europe has to invade us. The USA must import 2.6 billion dollars daily in order to support the economic fantasy Mr. Magoo has created. And how do we do that? What we used to do was scam the rest the world, or bully them, or entice them with rigged stock market prices, or bond or real estate prices. That era is over. It is time for the fire sale to begin. The USA will not be conquered so much as bought out in a hostile takeover. After our currency goes down 50 to 75%, we will be gobbled up like Pac Man.
Of course, the political reality of that will have profound effects on daily life in the USA as well as any Imperial Pretensions we have. The only question in my mind is whether our pathetic and grossly incompetent FED HEAD Mr. Magoo will make a fight of it through interest rates. I am of the
opinion he will have to at least dance a few dances. So, what I am saying is we will in 2005 enter into a period of explosive interest rate rises. Few remember Mr. Magoo sharply dropped interest rates over a several month period way back when. I am saying he will have to do the reverse of face the instant collapse of Imperial America. I predict interest rates will be heading towards the 10% mark in 2005. I see no reason, no economic reason for them to stop there either. I see no economic reason, given the harsh realities of our double deficits in trade and budget for interest rates to level off before the 20% mark. The economic reality demands interest rates in the 20 to 30% range merely to protect the US fiat Federal Reserve Note from total collapse. And you should understand one thing about the USA. As we saw in the NBA brawl this is a country capable of tremendous random violence over trivia. Imagine what the situation will be in a systemic economic collapse and you get my drift.
For those of you who think my rate predictions are too high, I would remind you we had 22% in the early 1980's. The social anarchy will be much worse now, with tens of millions of illegal criminals, a permanent underclass of useless people and a culture in decay. Accept that or not as you will, I make no apology for writing it. Mr. Magoo will have to start raising interest rates to deal with the dollar collapse. And when he does what little that is left of the US productive capacity will simply implode.
Usually, when a currency collapses, like in Argentina, producers get a break and exports soar. This usual economic result has no application to the USA of today. For starters, the USA has already exported virtually its entire manufacturing base. We are an importing and distribution economy. We make nothing of any economic significance anymore in the domestic USA. If manufacturing or production were measured on a medical screen, they would be about as close to a flatline as you could get without actually being a flatline. Second, Red China, India and Asia have such low costs there is
nothing, repeat nothing the USA, or Europe for that matter, can do to match it. If the US fiat dollar fell to zero it would still not be competitive with Red China. The sole economic reality of this century is Red China can produce anything cheaper than anywhere else in the world. Period. And when that reality sinks in, sinks into the psyche of a USA with 20% interest rates, 20% unemployment and food riots at Safeway, people and their attitudes will change. It is inevitable the USA and Red China go to war in my view. The Red Chinese clearly understand this. The war will begin when Mr. Magoo collapses the USA economy, just like Volcker destroyed US manufacturing in 1980. After he is done, Mr. Magoo can say with the Roman: "They created a desolation and called it peace." Mr. Magoo will have created an economic desolation and called it a recession.
I see no way for policy makers to avoid sharp interest rate increases. If they allow the fiat dollar to fall much further it will begin to impact daily life in the USA. If the fiat dollar goes down much further, the USA military will be directly impacted. For me, there is a direct link between the economic and political aspects of the United States. The foreigners certainly seem to think so. In case you haven't noticed, it is Europe, Russia and Red China, along with a few fleas like Cuba and Venezuela, who are jumping on the fiat dollar. The fiat dollar is being taken down like in one of those nature movies where a lion pride jumps on a Zebra and pulls it to the ground. It is the economic version of a gang assault.
Mr. Magoo is being mugged. The fiat dollar is being mugged. As Mr. Magoo is being mugged he is reaching for his can of interest rate mace, or pepper spray. When he sprays it, which is all he can really do, the effect will be the same as sharp increases in the interest rates. There will be tears in the eyes, lung irritation, wailing and a great knashing of the teeth. This will all be to no avail.
I'm afraid the economic reasons for the USA fiat Federal Reserve Note to drop like a rock into the ocean depths are overwhelming. It has only been a political con game, bullying and threats which have kept it afloat this long. Do I hear a chant of "I'm falling, I'm falling" in my ears? Mr. Magoo will have to reach out for the only lever he has left now. Interest rates.
Mr. Magoo can splash away while the dollar goes down, or he can "defend" it. The only bullet in his rusty musket is interest rates. Given the debt soaked populace, corporations; governments, when he does so Mr. Magoo will light a match in a sealed room full of gasoline vapors. Mr. Magoo is going to try and inflate his way out of the heavy debt loads. He will fail. Be prepared.
Doug McIntosh
1 June 2005
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