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<b>AGING DOLLAR VS.YOUNG AMERO</b> by The Mogambo Guru

Written by Subject: Economy - Economics USA

The Daily Reckoning PRESENTS: The Amero is supposedly a proposed new common currency for (at least) Canada, the United States and Mexico that will replace our individual moneys, including the dollar, and morph us all seamlessly into one big, happy, multi-lingual, multi-cultural family with vast income and wealth disparities, which is funny enough in itself that rational people would even contemplate such preposterous stupidity...

by The Mogambo Guru

If you are one of those people who bizarrely think that The Stupid Mogambo
(TSM) has enough smarts or education to have an opinion about anything, I laugh at you in scorn, and I laugh at you again when you ask for my Idiotic Mogambo Opinion (IMO) about the euro, now that you are getting scared of the dollar, as you should be. Being kind and charitable, as in "just before Christmas I'm as good as I can be", let me politely tell you, for the record, "Don't Make Me Laugh, Jerkface! (DMMLJ)".

You may not know it, but this bizarre economic scheme of having one monetary policy and multiple fiscal policies is as popular around the Mogambo household as it is in Europe. The wife and kids have banded together into the Mogambo Union (MU), and their official position is that, since there are five of us, then all the money ought to be divided up equally, and everybody get a fifth of the money. My wife is siding with the kids in this idiocy because, I guess, she has formed some kind of "bond" with them over the last 15 years or something. Or she's just being hateful. Who knows? Who the hell cares?

But anyway, they are serious about this single monetary policy thing. And if you can contain your laughter for another second, you will realize that this is the exact same situation with the euro, and they are serious, too.

The only difference, what I call the "Crucial Mogambo Difference (CMD)", between the two systems is that in dealing with the Mogambo Union (MU), I control rogue members by bursting into their rooms and screaming like a banshee with a baseball bat, in order to knock some sense into their thick heads (which, fortunately so far, always miraculously occurs about halfway through my initial windup backswing), while in the European Union (EU), they don't. A crucial difference to be sure - although the stupidity is exactly the same.

Susan asks, "With the collapse of the dollar on the horizon and the 'Amero' lining up to take its place, how will this new currency affect our gold and silver?"

For one thing, the Amero is supposedly a proposed new common currency for (at least) Canada, the United States and Mexico that will replace our individual moneys, including the dollar, and morph us all seamlessly into one big, happy, multi-lingual, multi-cultural family with vast income and wealth disparities, which is funny enough in itself that rational people would even contemplate such preposterous stupidity.

But the economic mess that is engulfing us, precipitated by the dollar getting destroyed by the actions and inactions of the Federal Reserve and Congress for so many years, has to be resolved somehow! Why not the Amero?
And if not the Amero, my Darling Mogambo Cherub (DMC), then what?

And with a worthless dollar, soaring inflation and a grumpy electorate, what better solution than to (like most other countries in history have done in times of their own well-deserved economic crises caused exactly like ours) expropriate the resources and assets of some other countries, such as Canada and Mexico? Hahaha! America at its finest hour! We have evolved to the point where we Americans can now, literally, conquer other countries, and acquire their assets and resources to bail us out of the economic mess we created (which is the impetus for all wars), all without firing a shot! Or even threatening to! A miracle of modern politics and

As to whether or not it is true, there surely are people who desperately want it to be true because they are all lining themselves up to make a big profit from it somehow.

And for how it affects gold, it will have, at worst, no effect, as that is the beauty of gold; it is impervious to currencies and their depredations, and its buying-power value over the last 4,000 years is almost a constant, which is the whole point of how gold "preserves wealth"!

In the best-case scenario, gold (and silver, and all commodities) will soar like they always have in the inevitable bust at the end of long booms, which are always financed by the massively excessive creation of money and credit, via the historically timeless and brainless expedient of a fiat currency, a reckless banking system and a complicit, intellectually-corrupt government.

And with the absolute, 100% certainty of a bust happening again, just like it always has, without exception, in thousands of countries, to thousands of currencies, for several thousand years, gold will rise triumphant, just as gold has always risen triumphant! And that one fact, alone, explains why I am always strongly suggesting, in a very loud and irritating voice, for you to get silver and gold right (pause) freaking (pause) now, if not sooner.

And it is because of the disdain of the ridiculous dollar, which is actually spreading, as we gather from an email from Christian S., who was kind enough to send an English translation of a posting from, which is that, starting mid-2007, "Argentina and Brazil do not plan to use the U.S. dollar" for commercial exchange between themselves. They will use their own currencies, the Argentine peso and Brazilian real, and the article hinted that abolishment of the dollar to effect commercial exchanges between Argentina and Brazil could be next.

But, apparently, people are surprised that the debasement of the dollar has impacted coins, in that the metal in our pennies and nickels is worth more than the face value of the coins. So the government, instead of "doing the right thing" to permanently eliminate inflation by stopping its own cancerous growth and by preventing the Federal Reserve from constantly creating more money and credit, has instead simply made it illegal to melt or export quantities of coins!

It was from the New York Times that I got the news, in their article "Rising Metal Prices Prompt Ban on Melting and Export of Coins", that "The United States Mint, concerned that rising metal prices could lead to widespread recycling of pennies and nickels, has banned melting or exporting them. According to calculations by the Mint, the metal value of pennies, which are made of copper-coated zinc, is now more than one cent.
The metal value of 5-cent coins, made from a copper-nickel blend, is up to
7 cents. Adding in the costs of manufacturing means the Mint now spends
1.73 cents for every penny and 8.74 cents for every nickel it makes."

Hahaha! The penalty? Up to a $10,000 fine, and imprisonment of up to five years, or both!

Paul R. sardonically notes, "Notice that I am only allowed to carry $5 worth of coins out of the country, because they have real value. But I'm allowed to take $10,000 of their worthless dollars with me, because they have no real value." Hahaha! Exactly, Paul!

USAToday adds the news that the government has changed the composition of coins lots of times ("The penny," they report, "which was pure copper when it was introduced in 1793, was last changed in 1982") and always in response, of course, to rising metal prices, which is more solid evidence of inflation and, thus, more proof of complete government incompetence, and if we had any brains at all we would rise up in vicious outrage and descend upon Washington as an ugly, drunken, mindless mob, unleashing our righteous vengeance on Congress (except Rep. Ron Paul) and the Federal Reserve, and then maybe other central banks around the world would see the carnage on TV and, glued in rapt fascination to the lurid screens, they would say amongst themselves "Oh, my God! We had better stop doing that same monetary crap right now! Hey! Is that a bag of flaming dog poop he's throwing? Ewww!"

Well, to be honest, USAToday did not actually say that, but they might as well have (and in my opinion should have). But they did say that copper averaged about 75 cents a pound in 1982. And how is copper faring since then? From we learn "Copper prices are up more than 180 percent since mid-2003, selling for just more than $3 a pound." Almost tripled in three years? And yet there is no inflation? Hahahaha! This is insane!

Until next week,

The Mogambo Guru
for The Daily Reckoning

Mogambo sez: Gold and silver are doing well, as expected when the dollar falls, but oil going down like this is such a rich, juicy plum that I
gotta- I just gotta, I tells ya! -emphasize it as the Mogambo Investment-Sector Pick O' The Week (MI-SPOTW).

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.

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