The Financial Jigsaw – Issue No.3

My unpublished (100,000 word) book “The Financial Jigsaw”, is being serialised here weekly in 100 issues by Peter J Underwood, author

We discussed the Cyprus event last week: see here issue-no-2 so now we should think about the general condition of our economic world which so energised the banksters to commit acts of blatant robbery that, had it been individuals that perpetrated them, they would have been locked up for a very long time.

The Cyprus event finally shattered my naturally optimistic outlook and became the driving force for my book.

Insidiously, the consensus about how the world operates is based on things that constitute unreal cultural constructs, especially TV, where younger people are held hostage to a cognitive field of rapidly degenerating, show-biz artefacts which become ever more ridiculous until daily life seems little more than a continuous circus of implausible, made-up spectacle that disguises the covert raids on our wealth.

This is a time in history when it’s hard to take anything seriously, including our fate. There remains, however, an age-old relationship between reality and truth, and societies that allow them to become divorced run a risk of collapse. In my view this is exactly the predicament of the Western world in general and America in particular.

What is especially remarkable is that a nation like the USA, with fairly deep traditions of free thought and speech, with durable institutions for exercising them and a supposedly free press, should sleepwalk into a captivity of pervasive, systematic, institutionalized lying and fraud otherwise known as advertising, marketing, corporate propaganda or any other euphemism you care to choose.

The people of Nazi Germany and Stalinist Russia suffered under such regimes at gunpoint but in the USA of Bush and Obama and now Trump, the people have committed themselves to very similar circumstances, willingly, with gleeful disregard for the consequences, happy in their unknowing ignorance.

I suppose people need to know where all this is going, where it will end and what will happen. My book is not a prophecy, but I hope it will illuminate some dark patches nestled in the unseen corners of the financial universe and provide hope for the future as well as clues as to how we might manage in a world very different from that of my generation.

The word ‘recovery’ has been invoked by people managing the financial world following the crisis of 2008. Unfortunately, no such recovery is under way. It is an illusion perpetuated by the twin Federal Reserve policies of ‘quantitative easing’ (QE or printing money) and ‘financial repression’ (artificially low interest rates).

It is a combination of the central banks of the United States, ECB and many other countries issuing vast amounts of newly printed money at ultra-low interest rates (hardly any interest to pay on inter-bank loans) and creating excessive monetary inflation to reduce the burden of existing debt by shrinking the ‘dollar-value’ of the national debt.

The programme is a racket, a Ponzi scheme, and is a fundamentally dishonest policy in which are enlisted the ‘Too-Big-To-Fail’ (TBTF) global mega-banks. They play casino games as middlemen, purveying US Treasury bonds to the Fed for mammoth commissions and fees. They are also recipients of a bottomless cascade of near-zero interest loans that can be rolled into securities paying a bit more interest and therefore providing a steady stream of zero risk profit in what is known as the ‘carry trade’ and Re-purchase agreements (RePos).

Meanwhile, other kinds of games are being played by governments in general, from the simple misreporting of basic economic statistics to the misrepresentation of revenues and expenditures, and ‘known-to-be-false’ projections of future indexes – for example, inflation and unemployment.

The political and financial system in Western Europe and the America has degenerated from a solid rule of law to pervasive accounting fraud. The US Congress is not only deadlocked between two extreme positions but both major parties are wholly bought off by their sponsor-contributors, including the shadow army of lobbyists with no political stance other than ‘service-for-pay’ from the office-holders to whom they shovel endless money.

Business also joins in the game to stoke the recovery myth, like the ‘channel stuffing’ rampant in the car industry, in which new cars are jammed into the dealer lots (delivered on credit) beyond any reasonable expectation of actual sales, but are recorded as sales nonetheless; magic: car sales are up again this month! In 2011–12 another campaign was created to provide ‘sub-prime auto loans’ and ‘student loans’ on the same lines as dodgy mortgages, which had the banks in so much trouble a few years earlier, where massive student loans have come to eclipse even credit-card debt.

The presumed purpose of this obfuscation from the point of view of the Federal Reserve and the White House is to keep the financial system stable and afloat, and therefore to keep daily life ‘normal’. Unfortunately, it’s based on the unreal assumption that the financial norms of pre-2007/8 could be regained and be consistent with the reality of a post-crisis world.

Regrettably there is no consensus or counter-view to this wishful thinking anywhere within the boundaries of the political establishment. Nobody in power or in charge of anything can offer a vision of where our societies go from here, not even the feeble guidance from mainstream opinion-makers and political leaders that nothing else really matters so long as the stock markets keep going up.

I assume that any sane person reading this series is asking: how do we get out of this mess?

What I present here is to help the reader understand the defining trends; determine for yourself where to best position yourself financially to take advantage of these trends and start taking steps to do so now. Of all your current assets, none is more valuable than time. Don’t waste it waiting for direction from above. If that ever does arrive, it will be much too late to be of any use.

The story can be both tedious and complex because most people have little interest in how the global financial system works. As long as people have access to their normal day-to-day needs we generally have no desire to think about what is happening to the global financial system.

The Cyprus event is a wake-up-call to each and every one of us. It will affect you in unpredictable ways in the coming months and years, so now is the time to understand what is happening and what you can do now to protect yourself and your family.

I hope to make this series interesting as well as informative about how this crazy system of ours works, how it affects each one of us and what we can do in the near future to protect the wealth that we and our families have so carefully nurtured over our working lives.

To be continued next Saturday

Author: Austrian Peter

Peter J. Underwood is a retired international accountant and qualified humanistic counsellor living in Bruton, UK, with his wife, Yvonne. He pursued a career as an entrepreneur and business consultant, having founded several successful businesses in the UK and South Africa His latest Substack blog describes the African concept of Ubuntu - a system of localised community support using a gift economy model. View all posts by Austrian Peter