For 25 years, the Fed has kept inflation at an average of 3.2 per cent a year - that should be applauded’! Hahaha! You will go a Long, Long Time (LLT) long time before you hear something so ridiculous! Hahahaha! Applauded! Hahahaha!
A few of the more sensitive detectors in the Mogambo Economic Alarm System (MEAS) were registering conditions up near the Red Zone. There was, however, no real activity in Total Fed Credit, which was down by another $1.4 billion last week, which isn’t much, especially when compared to the usual $10 billion a month that the Federal Reserve has been creating since, I am sorry to say, 1997.

On the other hand, the system components that monitor the Federal Reserve’s own stash of government bonds was loudly going “gong, gong, gong!”, as U.S. Government Securities Owned Outright went down another $22.3 billion last week, taking the Fed’s total down to $502 billion, which is itself down $220 billion from a year ago.

Quickly summarizing, in just a few weeks, a third of the Fed’s entire stash of government debt, accumulated bit by bit since the Fed was first authorized by a few Congressional conspirators on Christmas Eve, 1913, has been used up by the Fed trying to paper over its own horrific mistakes! Yikes! Ron Paul was right; we have to abolish the Federal Reserve!

Apparently, everybody is cheered that the new official, government-determined and government-sanctioned inflation is 3.9%, which makes me laugh to think that anybody in their right mind would believe that, and then which makes me howl in anger because the damned Federal Reserve and a willing co-conspirator Congress (except Ron Paul) allowed this to happen by allowing the banks to create so much excess money and credit, so astonishingly much excess money and credit, so stupidly and criminally irresponsibly much excess money and credit, for so many months, so many years and so many decades, which doesn’t even mention the fact that throughout all the rest of human history, 3% inflation was considered to be the cut-off between “High” and “Emergency! Emergency!”, but which is actually ignored today!

This brings up a laughable “letter to the editor” of the Financial Times from David Nowakowski of Atlas Management, who wrote, “For 25 years, the Fed has kept inflation at an average of 3.2 per cent a year - that should be applauded”! Hahaha! You will go a Long, Long Time (LLT) long time before you hear something so ridiculous! Hahahaha! Applauded! Hahahaha!

But even 3.2 percent sounds good right now, as even food and energy, and everything else we have to buy, are increasing at rates of inflation that are multiples of the “official rate”, which means that the horrifying 3.9% inflation is, unbelievably, the residual inflation after the government ignores the things that went up a lot in price, and then lies about the rest! Hahahaha!

My laugh is nervous and dry, and for a little comic relief we go to this week’s Barron’s and look in their “Indexes’ P/Es & Yields” table to see that the price-to-earnings ratio for the Dow Jones Industrial Average is now up to 87.07! This is, incredibly, up from last week’s P/E ratio of 85.97! Hahahaha!

And while that is funny enough, get a load of this; the dividends paid by the DJIA companies to their stockholders was $317.88, while earnings were only $149.16! Hahahaha!

Naturally, my stupid kids come running into the room with that very fact in hand, and they want to know why it is that the 30 companies in the Dow Jones Industrial Average can pay out three times as much as they earn, and yet I can’t let them have a tiny fraction of what I make with which to buy decent food, or shoes that are not held together with duct tape. My eyes narrowing, I pointedly ask them, “And who pays for the duct tape?” and they have to admit that I do. Naturally, I think this closes the whole point of discussion, and so I provide the denouement by saying, “So shut the hell up and go to hell!”, but they, of course, don’t.

So I ignore them, and since I am already in the “Indexes’ P/Es & Yields”, I take a look at the S&P500, and see that the P/E ratio there is 22.89, which is up from last week’s P/E of 20.89, even though earnings dropped to $62.28 from last week’s $66.28, which are both down from last year’s earnings of $83.39! Hahahaha!

This S&P 500 thing is oddly at odds, as oddly odd as that sounds, oddly oddly oddly, when we read, also in Barron’s, that Alan Skrainka of investment firm Edward Jones says that buying the stocks in the S&P500 index “is inexpensive”, as it is selling at (he says) a P/E of 14 times earnings, which is “based on a rolling 12-month estimate for the period ending next April”.

At first, I was struck by the metric “a rolling 12-month estimate for the period ending next April”. Initially, I wondered, like you, “What in the freaking hell is a ‘rolling 12-month estimate’, and how can I use it to advantage?”

That is why I am sitting in this bar, excitedly planning my next crucial move, but being distracted by the irritating bartender yelling at me to pay up, even though I keep explaining to this moron that when I said “Drinks on the house!”, I did NOT mean that I am “the house”, and I thought he was just being a nice guy for letting us drink free all afternoon.

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