BEHIND THE SCENES

9 comments

Posted on 24th May 2013 by Administrator in Economy |Politics |Social Issues

, ,

If you think the oligarchs running the show are going to tell you in advance when they are going to pull the plug and fuck you over again, you haven’t been paying attention. All of the turmoil in the gold and silver markets is a cover for their plan to reset the worldwide currency scheme. The wild gyrations in the Japanese bond, stock and currency markets are a warning that things are going to blow. Bernanke and his minions are desparately trying to hold things together until they are ready with their reset plans. The clueless dupes on the beach are amazed that the tides have receded. They are venturing out onto the sand where the ocean formerly flowed looking for trinkets and bobbles. They should be running for higher ground, but the TV and government officials tell them not to worry.

It will happen suddenly. Are you ready? Do you have cash on hand? Do you have food and water on hand? Do you have physical gold and silver on hand? Do you have a gun in hand? That is a tsunami wave in the distance and it’s coming fast. 

Monetary Rapture: The Incredible Disappearing Gold Inventories – Ocean Receding

Gold is flowing from weaker hands to stronger hands, from speculators to central banks and wealthy investors, the multitudes in China and India, and in general from West to East.Nick Laird of Sharelynx.com does some incredible work tracking and charting almost every aspect of the gold and silver markets. His site is well worth visiting.

I have included some comments from Nick below that touch on some factors that had not yet occurred to me.

Total Ounces In Warehouse Including Both Registered and Eligible

Here is the summation of quite a few repositories/Trusts/ETFs/Funds that list their inventory levels.  

Here is a comment on this from Nick:

Since Dec 31st
Gold holdings have fallen 17.5 %

Yet;
Silver holdings have risen 2.7%
Platinum holdings have risen 0.1%
Palladium holdings have risen 8.2%

I believe that there’s a transfer of gold holdings from the publicly visible sector to the private sector where the numbers cannot be followed. Gold holders are taking possession of physical by removing physical from public places, eg. Comex, and selling them from visible accounts, eg. ETFs.

I do believe that there is a lot more to this than meets the eye and that we’re seeing the initial transition stages that in a year or two’s time we will look back & say ‘Aha!’ Gold is flowing not just from West to East but also from public to private places, and this I think is solely related to Cyprus and the future implications of a financial meltdown.

I think we’re on the verge of the music stopping and a rush to safety.

All we need do is sit back and watch what happens to these public stocks when gold starts rising again. My bet would be that public stocks will continue to dwindle as more people feel unsafe about where their gold is held.”

I tend to agree.  I also think that a fear of the ‘rehypothecation’ of gold, especially in light of the seizure of assets held even with allocated receipts in the failure of MF Global, is driving people to take more care about where they keep their wealth.

As Nick points out, the biggest drawdowns are in gold itself. Ted Butler has recently speculated that some of the bullion banks may be taking inventory on the cheap as GLD disgorges inventory. So something is happening with gold that is not happening in the same way with the other precious metals.

And I am sure that by now you know that I am persuaded that big changes are coming to long standing global currency arrangements.

My first take was that on the whole this remarkable inventory drawdown in public repositories in the West resembles the receding of the ocean after an earthquake. I don’t think the bankers realize the signals that they sent to the markets with the manner in which they handled Cyprus. And MF Global and the entire financial crisis for that matter. These things take time to build, and then it seems that suddenly people begin to act.

We will have to wait and see what comes next, and, as Nick points out, what the inventory levels do when the price of gold starts rising again.

Posted by Jesse

QUOTE OF THE DAY

0 comments

Posted on 19th May 2013 by Administrator in Economy |Politics |Social Issues

“A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.

And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious, organized hypocrisy.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.”

Jesse

THE FED IS NOT PRINTING MONEY

13 comments

Posted on 17th May 2013 by Administrator in Economy |Politics |Social Issues

, ,

Jesse is on a roll this week. His contempt for the Fed and the toadies that use propaganda and lies to protect their interests is palpable. 

As a Reminder, the Fed Is NOT Printing Money

“So that the question is: Would there be any advantage, at this particular stage, in going back to the gold standard? And the answer is: I don’t think so, because we’re acting as though we were there.

 So I think central banking, I believe, has learned the dangers of fiat money, and I think, as a consequence of that, we’ve behaved as though there are, indeed, real reserves underneath the system.”

 Alan Greenspan, 20 July 2005

 

Yes that’s right.  The Fed is NOT printing money.

It is ‘retiring Treasuries’ and ’issuing Reserves.’
And everyone knows that Reserves are benign, if not almost meaningless accounting entities.
Banks just like to collect them.  Like Pokémon cards.
So implies the AngryBear amongst others.
And Mark Dow shows that there is zero correlation between the Fed printing money and the money supply.  And so ‘deal with it.’  Hey rube, you obviously don’t understand the difference between ‘liquidity’ and ‘credit.’
I thought it was cute that the study went back to 1986, long before the Fed had to resort to  Quantitative Easing, and expanding its Balance Sheet as they are doing today.
And they are doing it on a continuing basis, and not as an unusual action with regard to secular and isolated liquidity problems.  Unless you want to count chronic insolvency as a liquidity problem.
And the Fed purchases of Treasury debt at non-market prices is just dandy as long as it passes through the hot little hands of the likes of a friendly bank like JPM, who take their vig and then some.
And this chart shown below, printed courtesy of the St. Louis Fed, is just an illusion, so don’t look at it.  Seriously.  Don’t look at it. Knowledge is bad.  As a reminder, there are two scales on that chart, and the Adjusted Monetary Base uses the lesser scale.
As a reminder:

“In economics, the monetary base (also base money, money base, high-powered money, reserve money), is defined as the sum of currency circulating in the public and commercial banks‘ reserves with the central bank.”

Hey, the Monetary Base includes reserves that the Banks are keeping safe at the central bank.  And the monetary base is the foundation for that leveraged expansion of debt money that is characteristic of a fractional reserve banking system.   What’s up with that.  Does the Fed need to get out the liquid paper and correct that?

Here is a link to ‘Money Supply: A Primer.”

I recall that not long ago, Alan Blinder suggested that the Fed might alter the interest it pays on Reserves in order to stimulate more lending.  But he is just being a party pooper and doesn’t understand banking. Or the difference between liquidity and credit.

“The nation’s biggest banks have been nursed by the Federal Reserve way too long, former Federal Reserve Vice Chairman Alan S. Blinder said Thursday as he kicked off the tour for his new book, After The Music Stopped: The Financial Crisis, The Response and the Work Ahead.

The Federal Reserve, says Blinder, should stop paying interest to banks for their overnight deposits and should move to charge them for parking money. He says if the Fed set negative interest rates for overnight deposits – in effect charging a fee – banks would have to figure out better ways to make money and one obvious alternative would be to lend more to customers.”

Yes I understand these are not ‘excess’ reserves which is an ‘accounting designation’ created by the Fed.  It is the Fed that sets the level of reserve requirements, or the lack thereof, in its role of banking regulator.   And it has quite a bit to say about the quality of their collateral that be used as reserves.  Such as cash, aka liquidity to those ascending masters of finance.  And as I recall they used to set margin requirements on the equity markets.  But perhaps they no longer do that.

But this statement by Blinder somewhat ‘blows a big hole’ in the arguments of those who occasionally come out and lecture us that when the Fed ‘creates money’ (or liquidity if you prefer) and buys Treasury and Agency Debt from the Banks at non-market rates, it is not really creating money.  It is a benignly useless action.  It simply gives the banks ‘cheap liquidity’ that they can choose to use as they wish.  I wish they would buy some useless paper from me at non-market rates.  I accept all major forms of payment.

The Banks sit on this liquidity, and use it to prop up their zombie Balance Sheets.  I don’t think the virtual dollar sequentially numbered and marked.  So they may also use it to pay themselves bonuses. Or maybe leverage it to gamble in the markets with Other People’s Money.  Oh I forgot, Dodd-Frank changed that  Except for ‘hedging.’

The Fed is engaged in simple acts of charity for the poor and unwashed Bankers of Wall Street.  Uh huh.

Normally the Fed does not have to print money.  The Federal Reserve Banks do that for them under their charters with the consent and oversight of the Fed.  But when the real economy, as typified in the recent collapse and the continuing plunge of the velocity of money indicators, the Fed picks up the ball and prints money for the benefit of the economy.  They use this to ‘lower interest rates’ except in a liquidity trap wherein that is like pushing a rope.

I think what some of these helpful pundits are trying to say is that the Fed is not ‘printing money’ so that it is becoming an inflationary problem.  They are giving that ‘money’ to the Banks, and they hold it for safekeeping.  And for their gambling stash. And for credit cards and food stamp distributions and other fee generating activities.  And for loans to pay dividends, and fund share buybacks, and the occasional industrial activity.

That they are NOT getting that money to the real economy is another matter perhaps.  And among other things it involves the payments on excess reserves that they are paying to the Banks to sit on that money.  And the gaming of the financial markets to which they turn a blind eye.  And the enormous abuses in the financial system which have still not been reformed.
Click on the subject link ‘Excess Reserves’ below for more on these Tales from the Vienna Woods (the play, not the waltz) from our financial sophisticates, and sophists, who like to argue what the meaning of is, is.

Or just start by clicking here.

Posted by Jesse

JOHNSTOWN FLOOD, ROBBER BARONS, & THE UNLEARNED LESSONS OF HISTORY

12 comments

Posted on 16th May 2013 by Administrator in Economy |Politics |Social Issues

, , , ,

Jesse with an excellent historical stroll down memory lane revealing the evil nature of the financial elite and the epic flood they are now unleashing upon the people of this country with their manipulations of the financial system and rampant corruption practiced by the wealthiest men in this country. Will they escape without impunity again?

The History of the Johnstown Flood

  

The history of the Johnstown Flood of 1889, at that time the worst natural disaster in the US as measured by loss of life, is little understood these days, but quite fascinating.

A group of about fifty wealthy ‘robber barons’ took over an old dam which had been used as a reservoir for a canal system,  and used it to create a lake resort for their private pleasure.  It served as a weekend retreat from the heat and noise of nearby Pittsburgh. 

Prior to selling the dam to them, the owner, a Congressman Reilly who had purchased the abandoned reservoir from the Commonwealth of Pennsylvania, removed the discharge pipes from the dam and sold them for scrap, thereby eliminating any emergency water relief measures, excepting the spillway.

They constructed buildings, and cottages, and formed the Southfork Fishing and Hunting Club.

They screened the spillway in order to preserve the fish with which they stocked the lake.  The screening tended to collect debris, and hamper the function of the spillway to relieve pressure on the dam caused by the occasional heavy rains.

Poorly maintained, the dam gave way, and wiped out the towns located down river. Having received no warning, many of the people who could have retreated to the nearby foothills were lost in the deluge.

The powerful members of the Club were never held to account because the law was interpreted to find no single member had been personally involved.

The Club itself was sold at auction to pay its mortgage to the banks.  The litigants received nothing.

It would have been even worse if the wealthy had bought insurance on the lives and property of the towns below, in order to further profit from the tragedy, and had cut telegraph wires and warning whistles to maximize the damage, loss of life, and their profit. 

And it would have been despicable if they had hired experts and newspapers to falsely lecture the public on the nature of dams, and how their concerns were misplaced and ridiculous. And if they had ‘captured’ the public officials and inspectors so that they would overlook and excuse the reckless disregard of the Club members for others.

I hope the lessons from this story from history are not lost on you.

When things don’t make sense, that is often because there is deception involved.  How can there be widespread destruction and crime, but no one is held accountable? 

It is easy to underestimate the brazenness with which wealthy and powerful people will game the system for their personal profit, and then to cover up their wrongdoing.   That is because most people themselves would not lie and cheat to profit from the misery of others.  They find such behavior to be almost inhuman.

It is natural perhaps to blame the victims. They should have known, one might say. And how often can one be fooled before being blamed for their misfortune as a fool?

But most people, when faced with the uncertainty of conflicting stories, tend to accept the one that is put forward by the mainstream media, and backed by very important people. 

This is especially true if it seems like something they might do. Who could believe in such deceit? But they forget that they themselves are not heartless sociopaths.  And they are not well-practiced, almost pathologically proficient, con men who will say and do almost anything for money, without a twinge of conscience. Surely they may bend the truth a little, but never about anything so great.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

 
Posted by Jesse

BERNANKE IS GOD

19 comments

Posted on 14th May 2013 by Administrator in Economy |Politics |Social Issues

,

Brad Delong makes Paul Krugman appear reasonable. He is another academic Keynesian toady who believes that central bankers can control financial markets, economies and world history. Some ideas are so blitheringly stupid that only an intellectual coould believe them. The arrogance and hubris of Bernanke, Krugman, Delong, Obama, Dimon and a cast of other evil doers will be their downfall. They believe they are smarter than markets. They believe they are smarter than everyone on the planet. They believe they have it all figured out. Until a speeding train comes out of nowhere and splatters them all over the track. As Jesse says, the result of their mad experiment will be memorable. History books will have chapters describing the idiocy of financial and political leaders at this point in human history.

Gold Daily and Silver Weekly Charts – Brad DeLong: ‘Bernanke Defines What the Market Is’

 

“For the greater good, I want to do what must be done.”

Dolores Umbridge

Brad DeLong, the Berkeley history of economics professor, said on Bloomberg TV today that Bernanke is ‘the whale that can’t be harpooned.‘   

And hedge funds missed an easy trade by not going along to get along by riding the rising markets.  Those that are fading Bernanke are going to be overwhelmed by his power.  So just follow the Fed’s guidance, obey, and get rich.

As Brad says, and I quote,  ‘Bernanke defines what the market is.’  

That is a fairly profound statement, containing certain judgements and assumptions, if one thinks about it.  So much for old fashioned concepts like price discovery. Wasn’t there some lesson in this most recent financial crisis about the mispricing of risk?

I cannot say I was entirely surprised, because Brad also derided the moral hazard objections to the TARP, when it was proposed by Hank Paulson on a single sheet of paper, as puritanical.

What would we call such an intellectual position, that the Fed has and should have the power to define the market and what it is?   

It is a big ironic that the omnipotent Fed doesn’t hesitate to claim cluelessness and non-involvement after something in the economy blows up, generally a bubble of their own making whether they admit it or not.

I don’t think Bernanke is a whale. I think he is the captain of the Titanic.  And I think that Brad aspires to a position on the bridge.

We all understand the theory of a modern money which can be created and distributed at will, whether it be by a central bank or the Treasury. And control of the world’s reserve currency is certainly what some might call an ‘exorbitant privilege’ of power. 

Bernanke and the Fed may be powerful.  But they do not control the whole world, at least not yet.  And so their power may have some boundaries.  And if those boundaries are transgressed, the result might be rather memorable.

I suppose we could turn to someone with a knowledge  of the history of economics for examples of that.  But perhaps not the history of economics professor from Berkeley.

JESSE
« Older Entries