Written by Jeff Nielson Tuesday, 03 September 2013 11:44
Actions have consequences. In the market for any physical good (i.e. a commodity), though the laws of supply and demand can be warped, and their corrective dynamics delayed – through brute-force manipulation – they can never be permanently resisted.
For this reason, the Banksters themselves know they are fighting a losing battle with respect to the price-suppression of gold (and silver). They can delay the rise in their prices to fair market value (even to the point of keeping them permanently undervalued), but they cannot eliminate the relentless upward pressure which, one way or another, must result in higher prices.
An important part of permanently keeping prices below any rational valuation is to keep market participants ignorant of the actual fundamentals which are producing this upward pressure. In the jargon of the mainstream propaganda machine; this is known as Controlling The Message. If you cannot prevent market participants from forming the view that “bullion prices should be higher”; ensure that this belief is based upon the wrong reasons.
With respect to precious metals (and nearly every class of “hard asset” except real estate); these assets are ridiculously undervalued for one absolutely predominant reason: the insane over-printing (and relentless currency-dilution) of our fiat paper currencies. The simple fact that all assets are priced/denominated in this paper is, alone, strongly suggestive that this will be the dominant variable in market pricing for any asset.
What elevates this money-printing from merely one of the drivers of precious metals markets to the absolute driver of bullion prices – and the prices of all hard assets – is the sheer magnitude of this money-printing insanity. At the risk of boring regular readers; nothing communicates this point like a picture:
A vertical line. U.S. money-printing going straight up, which in the realm of mathematics can only be expressed one way: infinite money-printing (i.e. infinite currency-dilution). “Infinity” as a multiplier, renders all other variables mathematically irrelevant. The money-printing is going straight up, so hard asset prices should be going straight up with it. All other analysis is mere distraction.
This point was illustrated in a recent commentary, Three Reasons Why The USD Is Already Worthless. There is not merely a single basis for asserting the U.S. dollar is worthless, today. Rather, there are three separate, concrete, fundamental reasons for concluding that the USD should already be priced at zero/near-zero. Naturally infinite money-printing is (and must be) the strongest of those three bases.
Written by Jeff Nielson Wednesday, 28 August 2013 10:54
Four hundred years of economic theory (and economic History) tell us that oligopolies (in any form) are totally parasitic behemoths, which should never be allowed to exist in any legitimate economy. Thus as the (only) Messenger broadcasting the need to whittle-down the corporate monstrosities in the financial sector back within the realm of sanity, my messages have previously been framed in such basic, theoretical terms.
Incidentally, these arguments have observed that (contrary to Corporate Media mythology) these gigantic financial institutions are not even efficient. They have long since passed any economies-of-scale where “bigger is better.” Instead, these Big Banks now exhibit all of the characteristics of clumsiness, inertia, and general inefficiency which all of the Small Government zealots point to – in insisting that “Big Government” needs to be shrunk.
“Smashing the Big Banks” does not have to be justified on mere grounds of morality or economic theory alone. It can also be successfully argued that these behemoths need to be scaled-down on grounds of pure economic efficiency. Thus even if all these Big Banks weren’t (in reality) mere cogs of a single Banking Monopoly; there are multiple, sound arguments for dismantling these parasitic predators – and zero arguments justifying their continued existence.
Indeed, Bloomberg itself now reports that “breaking up JPMorgan” would currently produce an instant profit of 30% -- on the asset-value of the components alone – and then its increased profitability as it (once again) operated as a collection of (separate) more-efficient pieces would kick-in:
…JPMorgan Chase and Co. (JPM), the biggest U.S. bank by assets, would be worth 30 percent more if broken into its four business segments.
Of course why stop there? Those “four business segments” were each already too big themselves. Why not smash JPM into ten or twelve roughly equal parts – and make this profit/efficiency orgy even greater? The fact that any/all initiatives to splinter these Big Banks produces (cumulative) immediate reductions in overall systemic risk is just icing on the cake.
In writing previously that “too big to fail = too big to exist”; my arguments were always framed in terms of the insanity of creating a financial system which is nothing but a permanently ticking time-bomb. Additionally, the entire mantra of “too big to fail” is nothing but a (very) thin veil for financial extortion:
“Give us all your money, or we’ll blow up the economy.”
Clearly in a world which places “profit” ahead of morality and sanity, my smash-the-Big-Banks initiative would generate much greater traction if framed in more appealing terms: a chance for everyone to make (a lot of) money. The alternative paradigms facing us are an illustration of stark simplicity:
1) Continue with our “too big to fail” model, where these financial behemoths are so bloated and inefficient that the only way they can even manage to stay alive is through endless/infinite infusions of Corporate Welfare from our governments (and now us) – which (as a mathematical certainty) is guaranteed to “kill the Host” (i.e. our economies);
2) Break up these Big Banks into (much) smaller, (much) more efficient pieces. Then they will no longer require their $trillions per year in Corporate Welfare – because the competent entities will be profitable, while the incompetent entities will be allowed to wither-and-die, cut off from their too-big-to-fail teat.
That’s called “capitalism”, and once upon a time we practiced something remotely resembling it in our economies: free markets; competition. What a concept!