"Up to now, the price inflation was the 'fun' kind, as it went into stocks, bonds, housing...Now inflation is showing up in the "not fun" category, namely food and stuff you have to buy just to stay alive."

My fingers shake uncontrollably as I type, and my left eye is twitching from the stress, but I heroically soldier on, valiantly trying to keep my rising panic under control, mostly by "accidentally" mixing up my medications to go heavy on the ones that seem to turn my brain to kind of a tranquil goo, especially when taken with tasty alcoholic beverages. Which is dangerous as hell and really stupid, I know, but it is the only thing that seems to work, given the extreme economic circumstances in which we inextricably find ourselves.

My mounting anxiety is not, as is usually the case, because Total Fed Credit was up or down, although it was up a little last week, rising $2.2 billion. And always on the lookout for something to get snotty and hysterical about, I will happily note that this was less than half as much as the $4.7 billion in U.S. government and agency debt that foreign central banks bought up and conveniently stored at the Fed, also last week.

No, what I am in a panic about is that from the Financial Times we read the terrible news that "Retail food prices are heading for their biggest annual increase in as much as 30 years, raising fears that the world faces an unprecedented period of food price inflation. Few countries have not felt the impact of food price rises. In the US, prices have risen by 6.7 per cent, seasonally adjusted, since the beginning of this year, compared to 2.1 per cent for all of 2006, according to the Bureau of Labor Statistics."

As much as I am horrified by this news, the silver lining in this dark, dark cloud is that now I can be not only sarcastic and cruel, but I can also prove my bellicose point with a mathematic precision out to three decimal places, just like the U.S. government does now!

So, prepare yourselves to be absolutely chilled - yet thrilled! - at the resonant-yet-piercingly-shrill tonal quality OF my voice combined with the utter conviction and hostility IN my voice as I indignantly bellow, "In one lousy year, inflation in food went from an annual rate of 2.1 percent to 6.7 percent? Is that what you are telling me? Huh? Is it? Because if that is what you are telling me, then that means that inflation in food prices is up more than 300.000% from a year ago! We're freaking doomed! And now I laugh the tragic laugh of the damned! 'Hahahaha!'"

The Financial Times did not officially respond to my chilling (but mathematically precise) outburst, but with famed British stiff-upper-lip stoicism merely continued, "If prices keep rising at these levels for the rest of the year, it would be the biggest annual increase since 1980."

If you are like me, you are scratching your little pointed head and wondering why, why, why does the date 1980 dimly ring a little bell in your mind? You think and think, but you can't conjure up a reason why 1980 seems hauntingly familiar, and you have an uneasy feeling that won't go away, nagging, nagging, nagging at you, gnawing at your very soul, and you can hear those voices in your head getting louder and louder, demanding "Burn it all! Destroy everything!" but you don't want to! "Not again!" you cry aloud in your anguish. "Not again!"

Or maybe you were thinking that 1980 was just about the time that you, well, you know, did what you did, blush blush blush. But you would be wrong. That was 1981! Hahaha! Gotcha!

Okay, I apologize for making fun of you by bringing up that 1981 thing even though I know you are very, very touchy about it, but the real answer is that 1980 is just about the year that Paul Volcker, as chairman of the Federal Reserve, had to grab the economy by the windpipe with both hands and choke 14% inflation, as measured by the CPI, out of the economy, and he did this by fiercely raising interest rates ultimately into the middle teens! And beyond!

And why was inflation raging at 14%, requiring such drastic Federal Reserve action? Because since 1965 the idiotic American government was fighting a war (in Vietnam) and wars on social ills ("poverty" and "race discrimination") at the same sorry time. And we have been doing essentially the same thing ever since, only more so and more so as time has gone by.

And the government fought all these wars like they still fight wars today; by borrowing money, and printing money, and spending, spending, spending money, and giving oodles and oodles of money to damned near everybody, glorying in the biggest explosion of government spending since FDR, and never paying any of the borrowed money back.

And it was all accomplished thanks to the creepy, traitorous Federal Reserve creating all the money, credit and debt to buy all this government debt, thus providing inflation in the money supply, and the economy boomed from all this new spending.

It actually sounds kind of nice until you instinctively realize that there must be a huge and terrible price to be paid for such behavior, as what government would NOT want to spend as much money as it wanted and cause a fabulous boom in the economy? So why don't they always do it?

And the unfortunate answer is that the price to be paid is Very, Very, Very Bad (VVVB), as you must pay for the inflation in the money supply with inflation in the prices of goods, which soon get so high that people won't pay the price. And when people won't pay the price of production, then producers stop producing, fire all the employees, declare bankruptcy, loot the employee pension plan and disappear into the dark night to start life afresh someplace far away, with a new name, a new car, magically fifteen years younger, and with a lot of money in a big, fat suitcase.

And while inflation may seem to be very good for The Mogambo until the law finally catches up with me and we start extradition proceedings, it is much, much worse for the economy, as it all falls apart in spectacular fashion when it is food that is registering big increases in prices, as people do not have the option of not buying food; they have to pay the prices to keep from starving to death, but they can't. And so there are food riots and the ugliness of frantic desperation.

And everywhere lots and lots of anger, and even more anger as people rise up and demand that I stop saying, "I told you so, you morons! This is what happens when you ignore your own Constitution and elect a damned Congress that let the damned bankers have the authority to issue as much fiat money and create as much fractional-reserve bank debt as they want! Hahaha! We deserve the tragedy that is going to befall us because we are so impossibly stupid and gullible!"

Up to now, the price inflation was the "fun" kind, as it went into stocks, bonds, housing, and more and bigger government programs giving research money, grant money, stipend money, program money, entitlement money, block transfer money, bribe money, and more money, money, money to more and more people.

The real, underlying tragedy is that the economy mutated from one that makes goods and services that people want to buy, into one that produces goods and services that the government buys.

Now inflation is showing up in the "not fun" category, namely foodand stuff you have to buy just to stay alive.

And it is not just us Americans who are suffering the pain of allowing central banks to create so much money, as the Financial Times went on to report that "The UK's consumer price index showed annual food price inflation of 6 per cent in April. Food price inflation is lower in the eurozone at 2.5 per cent but still rising more quickly than overall prices. In China, food costs are increasing more than twice as quickly as other kinds of prices, up 7.1 per cent last month compared to a year earlier. And in India, annual food price inflation has reached its highest levels since the late 1990s, climbing above 10 per cent year-on-year."

My brain is swimming from all the numbers and the awful implications of so much inflation in the price of food, and I was so off-balance that I was floored when they went on, "US research firm Bernstein estimates that its Food Commodities index, which tracks a dozen agricultural raw materials used by food companies including wheat, barley, milk, cocoa and edible oils, will show cost inflation of 21 per cent this year - the biggest increase since the index started almost a decade ago."

Twenty-one percent increase in prices! Now you know why I am crazy with fear!

For one reason or another, I have never actually read the name of the stupid little economic model that the Federal Reserve uses to decide on monetary policy. But thanks to a column by John Dizard in the Financial Times, titled "Gold Tells a Sad Story of Asset Deflation in the Future", now I know! It is called the Dynamic Stochastic General Equilibrium model.

I leap to my feet! I cry out, "Did you say Dynamic Stochastic General Equilibrium? This of course brings to mind the Ambrose Bierce definition of' 'inventor', which I now paraphrase as the definition of 'Federal Reserve Economist', to wit, 'A person who makes an ingenious arrangement of wheels, levels and springs, and calls it economics.' Hahahaha!"

Instantly I notice that Mr. Dizard is not impressed with my clever literary witticism, probably because it is just a crude, misshapen and witless theft of somebody else's stuff. Unfortunately, this is the best I can do, as I am obviously mentally handicapped. Yet, when I try to get a Handicapped Parking sticker for my car, the little snot clerk tells me that "complete lack of wit or cleverness in verbal or written expression" is NOT an "official" handicap, according to him and his stupid little "rules and regulations" crap!

And for the record, Vicious Mogambo Verbal Attack Syndrome (VMVAS) isn't an officially recognized category of handicap, either, but apparently it is some kind of criminal offense involving gruff policemen and handcuffs. See the kind of nonsensical, aggravating crap I have to put up with every damned day of my life?

Mr. Dizard, appalled at both my laziness and a shocking propensity for plagiarism and fraud, is suddenly rendered speechless, which gives us a chance to do a little research.

So, while waiting for him to regain his senses, let's look at this in detail. Hauling out the big Mogambo Microscope Of Intense Scrutiny (MMOIS), we first examine the word "Dynamic." I figure that this word was specifically chosen because it sounds more professional than "Super-Duper", and it can also be interpreted to mean "We have no idea what we are doing, so instead of always keeping the model just the way it is, we will keep dynamically adjusting our precious little equations and fiddling around with the model to try to keep it from being so wrong all the damned time, making us look like such a bunch of chumps and clowns, which hurts like hell, because we now realize we ARE a bunch of chumps and clowns to believe this silly Dynamic Stochastic General Equilibrium crap!"

Next, we have the word "Stochastic." Looking this up, it means (according to The MIT Dictionary of Modern Economics), "Subject to random variation. (See Disturbance Term)." Hahahaha! This is the part that really cracks me up!

At this point, allow me to tell you a little story. No, not the usual story about how I was born in a log cabin, came to this stupid, backward little planet as a baby accompanying my folks on a little interstellar vacation, and how our flying saucer crashed in Roswell, New Mexico in 1947. No, this is another story, a sad story of a misspent mid-life crisis where I spent many, many hours writing a computer program to try and discover some precise strategy for playing blackjack to exploit some tiny little statistical edge that would produce a winning hand 50.001% of the time over the long-term.

My laudable goal was to stop working for bosses who hated my guts, which I thought would be real nice a change in my pathetic life, but instead make a luxurious living by sitting on my fat butt, playing blackjack in a classy casino and loudly complaining if I don't get comped for everything.

The point is that I am thus very, very, VERY familiar with the results of "stochastics" and random variation, and it was driven home to me, time and time again, that while the chance of getting hit with a 1-in-10,000 shot is indeed remote in the short run, over the long-term there is also the 1-in-10,001 shot to contend with, not to mention the 1-in-100,000 shot and the 1-in-1,000,000 shot, and all the other statistically-improbable shots, which are all combined to guarantee with a statistically-reliable precision to eventually occur in your little "long-term" time-frame! And they sure as hell do!

In case you are wondering, the results over weeks and weeks looked like the worst losing streak was 13 losses in a row. Using a double-up-catch-up betting scheme (if I lose one unit, bet two units. If I lose that, bet four units. If I lose that, bet eight units, etc.), you can thus (statistically-proved!) make a theoretical profit over the long term if the casino lets you make a bet at the end of that long losing streak that is 8,000 times the size of your original bet, if you could talk someone into doing it, which you won't.

The bad news is that, out of millions and millions of hands of blackjack, one day, in one round of hands, one lonely time the losing streak went to 14 losses in a row. I'm wiped out! So this outlying, random result is truly the Omen of Doom of stochastic systems based on pure randomness, and it is where I achieved True Mogambo Enlightenment (TME) about statistics, and I gave up trying to beat it.

But we are not talking about how everybody hates me and even "probability theory" is out to get me, but about the economic model the Fed uses. So far, I have found fault with every word of the theory's name. And now we come to the word "General", which is obviously used as another "filler" between the words Stochastic and Equilibrium, and it means nothing in itself.

Without it, though, the two words Stochastic and Equilibrium would be next to each other in the title, resulting in the concept of "Stochastic Equilibrium", which is so ludicrous that the mere juxtaposition of the two words would instantly reveal the utter stupidity of it all.

And finally we get to "Equilibrium", which is so soothing and which has such a calming, reassuring sound to it, as it implies that everything will eventually settle down and be perfect again. I will not get into the disquieting fact that there is a still-running theoretical argument as to whether economic equilibrium even exists or not, but move on to noting that the Federal Reserve now states, by fiat, that equilibrium DOES exist, as their precious little economic model has constructed a system that is forcing equilibrium to occur by virtue of having equals signs (=) running through the whole thing!

Mr. Dizard is too smart to let himself get drawn into the thankless, bottomless quagmire of arguing with me (which infuriates me to ceaselessly counter-attack) or even agreeing with me (which encourages me to continue ceaselessly and monotonously), and merely says, "The central banks believe that their guide, the Dynamic Stochastic General Equilibrium model, is giving them the right signals. The problem that central banks have is that at the turning points in the economy, when correct judgment on their part is most important, the data their models depend on is at its most unreliable."

Suddenly I am cheering him, shouting, "Bravo! Well said! But the data is there, dude! They are just ignoring it and changing it! If they used real, unadjusted data, their model would also say that inflation in prices is everywhere, and that 'We're freaking doomed!'"

I don't think he heard me, though, as he had his hands over his ears and he was muttering to himself, "Make that damned Mogambo shut up! Shut up! Shut up!" as he ran out the side door to the parking lot. But I know he realizes it, too! And so do you, too, I'm betting!

The AdenForecast.com takes a look at China and is impressed at "the ongoing, extraordinary growth in China. China is not slowing down. The economy grew at an 11.1% pace in the first quarter, its trade surplus about doubled and its foreign exchange reserves surged to a record $1.2 trillion."

Since I have heard this "bullish China story" a lot in the last few years, and am actually watching it happen in front of my very eyes, it was old news, and I immediately got bored and was idly daydreaming about what I would do with reserves of $1.2 trillion and, you know, what kind of car I would buy.

So I was only half listening and half mentally taking a new red Ferrari screaming around a sweeping turn, delighting a crowd of hot babes with my fabulous controlled 4-wheel slide. Abruptly, I was snapped out of my reverie and back to reality when they said, "China is the biggest consumer of copper, nickel, lead, zinc, tin and aluminum." I jumped to rapt attention! That squirty little Chinese economy, with a GDP that is about a tenth of the USA, is the biggest consumer of these industrial metals? Wow!

I was trying unsuccessfully to digest both that surprising news and a foot-long chilidog with greasy fries ("Make it a combo!") I had for lunch when they followed that up with "Copper imports alone were up 123% in the first quarter compared to a year ago." Doubling? More than doubling in a year?!?

If you are like most people, you immediately noticed the odd mixture of punctuation in that last sentence, namely two question marks and one exclamation point. For those of you who do not have a Mogambo Dictionary And Punctuation Code (MDAPC) or are just too damned lazy to get up and look it up, it means, "To indicate surprise and alarm, as in the phrase 'What in the freaking hell is going on here?'"

There was an alternate definition of, "Indicating the state of not trusting your eyes, ears, tongue, nose, or nipples because the facts as stated are so unbelievable, and you finally decide that people are lying to you, which they probably are, because they are all a bunch of lying scumbags who are out to get you."

Well, the Aden Forecast (like everybody else) has a long history of ignoring The Mogambo, and true to form, they go on, "And as long as China's growth stays on track, we'll continue to see ongoing rises in commodity prices in the years ahead."

Well, if you see the Aden sisters, tell them that The Mogambo says that China's growth rate don't really mean squat around here, because the prices of imported commodities will become very cheap (and inflation in commodities will fall) to the Chinese when the yuan rises in buying power, and commodities will become very expensive to us as our dollar falls in buying power.

As usual, nobody is impressed with my clever economic analysis, and thus miss the point across about the horror of a falling dollar. Just in time, and as a living example of a falling currency causing higher-priced imports, I proudly present Jack Crooks, the Currency Director of The Sovereign Society, who writes, "Kuwait cried 'uncle' and officially dropped its peg to the U.S. dollar. That means their currency, the dinar, is no longer solely controlled by the U.S. dollar's performance."

If you are like me, you were instantly quizzical at the connection between Kuwait, a tiny little country that nobody can even find on a map, for crying out loud, and the American dollar. So you looked up after taking a big ol' bite from a delicious double-grande burrito supremo and, too impatient to chew and swallow the food in your mouth before saying anything, blurted out "A wa en uh how aa aa nee?" meaning, of course, "What in the hell does that mean?" memorably punctuated by pieces of burrito ingredients flying out of my mouth and getting all over the floor and everything, making a big mess. I act like I am going to clean it up, but I don't, and I just kind of smear things around a little bit with my foot.

Pretending not to notice my appalling lack of couth or the chunks of salsa stuck in my mustache and down the front of my shirt, he politely explains, "They dropped the U.S. dollar peg because they couldn't afford to anchor their currency to the falling dollar anymore. It was costing them too much. Kuwait's cost of imports soared, as the dinar was being dragged lower by the sinking greenback, thus triggering a big surge in domestic inflation."

"Eh uh e!" I cry with another mouthful of burrito, meaning "There it is!" That's the problem! Inflation in consumer prices! Kuwait is taking drastic action in response to the terrifying inflation in consumer prices, and the terrifying growing grumpiness of the populace, caused by having a falling currency because it is pegged to a falling currency!

And the US dollar is destined to fall even more now that President Bush is going to sign another "supplemental spending" bill of another $100 billion or so, give or take a few jillion dollars, which is supposed to be enough to last only until (get this!) September! Talk about your Keynesian stimulus spending! Wow!

Now, notice that foreigners are so conceited that they do not even care about our stupid deficit spending problem or how any of this is going to affect me personally, but only about their own stupid problems, which Mr. Crooks proves by quoting Sheikh Salem Abdul-Aziz al-Sabah as saying, "The massive decline in the dollar's exchange rate against main currencies...has contributed to the increase in local inflation rates and this step is part of the central bank's efforts to curb inflationary pressure."

In short, "Kuwait, along with the other oil exporters, is earning huge U.S. dollar surpluses from the crude it ships to oil-thirsty America. So Kuwait must issue a huge amount of dinars to maintain its currency peg. This is why Kuwait's domestic money supply growth is running at a whopping 19% a year. That's rocket fuel for inflation. It's no wonder why the Sheikh is concerned."

And you can bet that a lot of other people who have a currency pegged to the dollar are also concerned, and they are looking at Kuwait and wondering if there is lesson in there for them, too.

And there is. An ugly one. For us. Ugh.

**** Mogambo sez: Let yourself indulge in a wild, giggling buying spree of gold, silver and oil! The government is doing everything it can to disguise, denigrate and deny the inflation that is raging all around us, and part of that effort is working behind the scenes with "interested others" to keep these three things down in price because it looks so bad otherwise.

And the older you get, the more you savor the sweet victory of making a lot of money on the stupidity of government (now including the Federal Reserve) and stupidity of the overwhelming majority of the laughably incompetent or cowardly PhDs infesting the nation's major universities, especially Princeton, none of whom ever see anything wrong with Fed policy. Hahaha! How delicious a revenge!