The Invisible Experiment With Money And Gold
Guest post by Gold Silver Worlds.
Michael MacDonald and Christopher Whitestone did a superb Q&A with GoldSilverWorlds. In their book “The Silver Bomb” (available on Amazon.com), they wrote about their views on the world and the markets. They have summarized it and enriched with recent facts and figures.
The markets are completely bought and paid for, corrupt, and manipulated … “a farce”. We are in a corruption bubble, the largest corruption bubble the world has ever seen in modern history and perhaps in all history. This is the first time that the world has been united within instant communication, instant information, instant deposit or receipt of funds into any bank account or financial institution. Michael says: “I believe that we are already a one world order. I actually think we are already there, electronically certainly. I also think that a lot of the debates, wars and conflicts are manufactured, very similar to the presidential debates which are also manufactured. I believe we live in a one-world system, which financially is already completely manipulated.”
We don’t live in a free market. We haven’t lived in a free market for decades, if not since 1913. We have the most powerful agency in the world, the Federal Reserve, setting the interest rates and the value of the world’s reserve currency. Everything that stems from that is built upon deceit and fraud. This doesn’t bode well for the entire financial system as a whole and right now, we are seeing the ramifications of that deceit.
We are in the lengthening of this financial market topping. A lot of things are happening that point to any one of several large enough dominos falling over which is going to have a splash and pullover effect. Within three years we are going to see this farce imploding. Michael thinks that we will have something completely different and unrecognizable to what we currently have.
Experiments, today’s market distortions, the credit bubble
Christopher Whitestone is convinced that we have arrived at a unique point in human history where all of a sudden, natural market discovery, price discovery and all of the natural factors that determine market behavior are no longer part of the equation. Now we have this completely artificial system, where the expectations of further stimulus action on the part of the central banks is what has become this grotesque mockery of market expectation.
Markets naturally tend to look towards the future effect of present conditions and try to anticipate them, which is why we have had such an increase in the demand and therefore value of precious metals (and why it has been a consistent gainer during times of market instability, especially in the past ten years). This has been a completely different situation, especially now since the beginning of the all-in bailout package, where we have insolvent governments and huge private sector banks being propped up to the very last tax dollar or euro. It is a “race to the bottom,” in particular for the US dollar, the euro and the yen. All three of these governments have thrown in the towel completely,and they are not even masking the stimulus injection in some other way, or calling it anything new. It is a fully open admission of this latest 40 billion dollar a month of bond buying,and of mortgage backed securities buying from banks… forever. There is no end of it in sight. The promise is that if it doesn’t work, it will simply continue longer. It’s like a fire where the firefighters say that they are going to throw gasoline into the fire until it goes out … if it doesn’t go out, they promise to throw as much gasoline as is needed to put it out. That’s how to compare what’s happening today: borrowing to cover debt.
We have been told that the markets are correcting, that we are going through a natural deleveraging, through a period of dropdown of debt. That’s not the case. If you look at what has happened, all this easy money has been irresistible and we’ve got an increase in debt in every quarter. The numbers we came across lately showed that the consumer credit in the US for example has gone up by 6.2% in the second quarter of this year, which is the highest pace in 5 years. Known financial credit has grown by 5%, the highest pace in nearly 4 years. The same accounts for the US household debt, which is up the highest since 4 years. Of course, the US treasury debt has increased 110% in the last 4 years. So, there hasn’t been any dropdown, there has been no deleveraging. It’s a myth. What we are seeing is an explosion, but an invisible one or an unadmitted one, of credit. It’s an enduring credit bubble.
Regarding money printing, those who claim that it’s going to generate activity in the economy and it will not be inflationary because it will somehow be magically absorbed by new products/ business / markets, are completely illogical. To suggest that the trillions of euros, dollars, and yens are not going to rob the basic value of each denominated piece of currency that is already out there, is like saying that lighting a match next to a pen of gas is not dangerous.
This is the world which we find ourselves in, where the definitions of things are completely destroyed. We have now this debt-based system which is already a perversion of the concept of money: money is created when debt has incurred and not the other way around. Today we have a negative currency, a debt-based currency. That’s the opposite of a positive currency which we once had. Money in existence was obtained through trade with equivalent goods or services and could also be advanced in the form of a loan. Now, debt is created when a loan is made, and that’s how money comes into being.
We are in uncharted waters in many ways. The Federal Reserve is trying to stimulate the unemployment, which is one of their dual mandates. At the same time, they are pouring money into the economy as fast as possible, hoping for an inflationary productive cycle. That’s a path to disaster. It’s an artificial fix. It’s a short-term “kick the can down the road fix”.
The role of politicians
Today’s politicians are people who seem to have the capacity to disconnect themselves from reality and logical outcome. Otherwise, they would not be able to perform in the completely artificial constraints of office, which have nothing to do with executive management. If there is a doubt or question about this, then one only has to do a study of what happens if a private citizen takes the kind of funding to sway their business practices or opinion as political candidates take on a regular basis. They would be considered to have received bribes and would be charged with bribery. But in the political system, that we currently have, unreported billions of dollars in the name of free speech are pumped through corporate coffers into political candidates. It’s bought and paid for.
A unique money experiment
We are right now at a point that has never been faced before. It’s been echoed in the words of Dallas Federal Reserve President Richard Fisher who was in real opposition to this latest QE plan, but has found himself alone in the inflationary camp during the last FOMC board meeting.
We are right now in a global economic unfamiliar territory, namely into deep experimental mode. The US dollar has become the first world reserve currency to maintain that status even after ending its precious metals backing, as we have pointed out in the book “The Silver Bomb”. This is a slow motion death like a branch cut off from the tree; it remains green for a long time and may remain supple and pliant for a long time, but begins first slowly and then ultimately unmistakably to die, because it has been cut off. That’s exactly what’s happened to the US dollar and all currencies which are deeply tied to it.
In a nutshell, the past doesn’t equal the future because we haven’t been here before. Charts and graphs can be thrown out of the window because we are in a manipulated economy. We believe that the price of gold and silver will explode once the currency war really takes off and people understand what’s happening.