“And one of the sensitive Mogambo Economic Tremor Detectors (METD) shows that the apparent slowdown in Total Fed Credit for the past few months has now been revealed as a mirage, and Federal Reserve Credit has now ballooned another $6.1 billion…”The economic seismographs in the Fearsome Mogambo Bunker (FMB) are all frantic and erratic, their little recording pens scratching and scritching, clicking and clacking back and forth across the rolling paper.

One of them is detecting tremors from the change in the holdings of U.S. government debt by foreign central banks, as indicated by their accounts at the Fed. These guys bought up, last week alone, a mighty, mighty $22 billion’s worth!

If you are one of the people who write me and ask things like, “Do you realize you are an idiot?” (Answer: yes) and, “Why are interest rates so low that only a freaking idiot would be buying bonds that yielded less than the rate of inflation?”, then this, perhaps, is part of the answer you are looking for; foreign central banks are (for one) buying, buying, buying government bonds and increasing their ownership of your future tax dollars, and providing a lot of buying power to the bond markets, which makes bond prices go up and the yields go down, down, down.

For example, from Bloomberg.com we learn that the bond market is bad all over the place, and “Every industry group except energy and utilities posted negative returns this year. Bonds of finance companies lost 20 percent; media bonds, 10.2 percent; and real estate securities, 9.9 percent. High-yield, high-risk bonds are off to their worst start ever. Junk bonds have fallen an average 3.9 percent this year, losing about $35 billion, according to data from Merrill Lynch & Co. indexes.”

And one of the sensitive Mogambo Economic Tremor Detectors (METD) shows that the apparent slowdown in Total Fed Credit for the past few months has now been revealed as a mirage, and Federal Reserve Credit has now ballooned another $6.1 billion last week, handily taking the total to a new, all-time record of $876.6 billion.

Even more staggeringly, the Treasury Gross Public Debt expanded by over $150 billion in March! Hell, it was up $60 billion last week alone!

And not content to just destroy the currency, they are up even weirder stuff, and to show you the kind of weird things that you will see a lot of from now on, Jon Nadler at Kitco.com writes, “And now, for something completely different: The birth of the ‘BPT.’ The Bubble Protection Team. If anyone had (valid) doubts that the ‘Plunge Protection Team’ either existed at all, or was noticeable in certain markets, welcome to the new reality of a revamped Fed.”

He says that according to the New York Times, “The plan of Treasury Secretary Paulson to overhaul the financial system includes a crucial proposal: it would officially transform the Federal Reserve into a ‘market stability regulator’ rather than merely a banker’s bank. The Fed is no longer just a regulatory agency presiding over a narrow group of businesses called banks. Rather, its mission increasingly is to maintain macro confidence - confidence that the entire financial system is functioning well as part of the whole economy.”

Wow! The Fed deliberately created so much money and credit, for so long, totally distorting the economy of the United States and the world into a grotesque, twisted, cancerous monstrosity so that the entire financial system is choking to death on the poison of un-payable debt loads, and now this same Federal Reserve is going to get MORE powers to create MORE weird distortions and more inflation in the money supply and more inflation in consumer prices like food? Yow! We are freaking doomed!

The weird stuff at the Fed, the weird stuff at the Treasury, and the weird Bear Stearns fiasco becomes a little more suspicious, if that was even possible, after reading, “Wall Street’s Latest Illusion” in Barron’s. Andrew Bary explains, “some Wall Street titans have been able to book gains from the declining value of their own debt.”

If you are like me, you immediately stopped stuffing a yummy burrito into your mouth and intelligently asked, “Huh? Buh a baffa a uhki n aoo uh o eh? A ee nuh grah?” Junior Mogambo Rangers (JMRs) around the world, of course, immediately knew that I was saying “Huh? Book a profit on a decline in your own debt? What is this crap?”

Obviously repelled by the way I am spewing little bits of burrito and saliva all over everything while I speak, Mr. Bary explains, “When a company’s credit weakens and the yield on its debt rises relative to risk-free Treasuries, the debt becomes worth less to the holder. The financial company, which is the debt issuer, then takes a gain, because theoretically it could buy back its debt below face value.” Hahahaha!

So Bear Stearns, bankrupt as it is, would had to have booked a taxable profit on the collapse of their debt, on which taxes may be due? Hahaha! No wonder everybody wanted them to be bailed out!

And with free slop available to anybody who asks for it, from the AP we learn that the hogs are wallowing in the Fed slop, as they are borrowing like crazy from “the Federal Reserve’s unprecedented emergency lending program.”

The Federal Reserve admits that “that those firms averaged $38.1 billion in daily borrowing over the past week from the new lending program. That compared with $32.9 billion in the previous week and $13.4 billion in the first week the lending facility opened.”

Junior Mogambo Ranger (JMR) Paul H. noted that the Fed is going crazy in the Mortgage Backed Securities arena, too, and “Over $51 billion with over $24 billion in MBS alone for the past 2 days”, which he figures “Over a work week (5 days)” would come to “about $128 billion per week. That would make it somewhere in the neighborhood of $6,400 billion per year, if I am nice and give them a 2 week vacation! Yikes, that’s $6 trillion per year !!!”

JMR’s around the world note the use of three exclamation points, which seems just about right for such excesses!! Hell, I just used two of them to comment on his comment, which ought to show you how bad things are!

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Editor’s Note: 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.

The Mogambo Guru is quoted frequently in Barron’s, The Daily Reckoning and other fine publications. Click here to visit the Mogambo archive page.