As an Account Manager and Trading Instructor, there is a theme I see that keeps recurring. I hear this from my clients and students over and over, "things are so bad how can I be safe buying". I hear "we are going to have hyper inflation" or "it is all going to collapse into a deflationary abyss. In other words, they lose their bearings in a sea of information. My answer is always the same, we must trust our algorithmic models. Markets will fluctuate, what you read or listen to is illusion. When one group has all the money, the rules of the game have changed.
The battle rages as to whether China's raising reserve requirements and the Greece mess are market negative or not. I have been in this business my whole life and what has served me best is knowing markets fluctuate, yes the most obvious fact is where the money is made. Example, the news has not changed, Europe is hitting a wall, Greece is a minor kink in a much bigger problem. China is still tightening, nothing is different but the markets are not crashing, they are rallying. Why?
Status Quo
The banks don't want a deflationary collapse and they don't want hyper inflation, they want steady inflation to let them create and lend the money needed to pay interest on the money that is already owed them. They don't want anyone getting out of debt due to hyper inflation making their anchor of debt worthless. Nor do they want all the assets backing their loans losing most of their value.
The Trap Is Closed
Right now it appears that they want their victims falling behind on payments and finding it more difficult to extricate themselves. That way they can jack up their interest rates and assess penalties, locking the world into a morass of debt, which is impossible to pay back. Is it a coincidence that they changed the bankruptcy laws just before the crack up, I don't think so. Credit card interest rates on people falling behind on their payments is criminal, loan sharks charge less, there is no way allowing those crooks to financially rape the people that can least afford it is helping the economy, only the banks. How do they get by the loan sharking laws?
They are sitting on a trillion dollars (see graph below) which they refuse to lend, even to very secure credit risks, why is that? To me, it is obvious what has happened. What did we just go through? That's right a debt bubble. Now, slow grow caused because they are refusing to lend, is allowing debt per capita to increase as the economy shrinks. More debt not less. To me the intentions are very clear and it has been the plan all along. It is a set up and the taxpayer is there to make sure the plan works. They were lending forty plus dollars against only one dollar which they held in reserve. They created the rest out of thin air. They knew long ago that they had to find a way around the fact that a recession would wipe out all their reserves and render them technically bankrupt. Enter the perfect patsy, the taxpayer. Look at the chart below again. Remember, this debt is for something that did not exist until they created it.
These people are not fools, they have some of the sharpest minds in the world. They control the ones who we think run the government. They knew everything would blow up. The plan worked like clock work. The banks are flush again. Goldman just made five billion dollars in 3 months, where did that money come from? Trading profits. They took that money from the pension funds just like they did a year ago at the bottom, now the pension funds are in distress. The tax payer's pensions are in peril but the banks are safe. This is a screw job, plain and simple and nobody is going to do anything about it.
Nasty, Venal People
These are not nice people. They don't care who is homeless, they don't care who is unemployed or loses their business. Most obvious, they don't give a damn what happens to the United States, or any country. Their lament of "oh dear, we are just a bunch of dumb fools that need help" does not wash with me. I have looked into those cold, calculating, uncaring eyes enough times to know. Debt bubbles and crashes are how financial indentured servitude is created, plain and simple.
Here's the thing. The markets are manipulated. Always have been and always will be. Don't worry about the "flation" debate, it is only an illusion on a cave wall. The "ation" part is right but we should think fluctu"ation". Sounds like crazy talk right?
It is not, please read on.
Conspiracy?
On June 4th 1963 John Kennedy signed executive order 11110 giving the U.S. Treasury the power to issue money and by doing so he was undermining the bankers. A few months later he was dead. Then Bobby was dead. The order is still on the books but no president since has gone near it.
In 1979 the Hunt Brothers tried to corner the silver market, the silver market was small and they had the billions to do it. At first the bankers helped them, lent them money, pretended to have their back but as the price rose close to an ounce, they began selling silver short through intermediaries. Then when the banks were loaded they had the govt raise the margin in the futures market on the Hunts and every other speculator to 100%. When the Hunts went begging to them for help they call their loans, wiped them out and crashed the silver price.
Since then nobody has tried to corner anything.
Flash forward to a few years ago. A young inexperience trader named Hunter working for a company named Amaranth tries to pick a bottom in the natural gas market. Prices were very low and the supply demand situation was very favorable to higher prices. Amaranth's broker and bank was J.P. Morgan. Hunter was using the futures market and did not have an understanding of how a large contango could be used against him as it had been done a hundred times before in many futures markets. As he bought the futures, Morgan was selling to him. Each contract would expire on it's lows, them Amaranth would have to roll over into the next contract at much higher prices, then that contract would expire on it's low as well. Each time that happened Hunter would have to sell his position at a large loss and Morgan would cover their short. Then it would start over in the next contract. It was a trap, the only way Amaranth could recoup their losses was to be in when prices rallied. They never had a chance against Morgan. Hunter lost seven billion dollars to Morgan that way. Once they were wiped out, the gas price reversed higher. Still today, most don't understand what I call a contango strangle.
Those are a few of examples of how they work, there are many more. Think about this, oil was supposed to go to 0 it fell to . The dollar was supposed to collapse it is rallying. The stock market was supposed to have a deflationary collapse, it had a 100% rally. Silver, the inflation hedge, is not much higher than it was four years ago.
The housing and collateralized debt scam was the bankers biggest con yet but it was based on the same principles as the fore mentioned ones. These are not the stupid morons they claim to be but perfect financial predators. They have us chained in a cave looking at the images and illusions they want us to see on the cave wall.
Please read this excerpt from Plato's The Republic, it explains the images on a cave wall I allude to. https://webspace.ship.edu/cgboer/platoscave.html
We worry about inflation or deflation. Higher taxes, government deficits etc. All illusions, anything so we don't see them in the light and realize the real truth, that these bankers are our masters. They want deficits and higher taxes. They do not want a weak dollar or runaway 'flation in either direction. They are in total control, they have huge reserves which they can expand exponentially. The world thinks the bankers will save it, at the very time they have been enslaving it in debt with no way out. The bankers will get their pound of flesh and the masses will dance to their tune.
The bankers hide in plain sight, we look but we don't see. It is the same in the markets.
Embracing fluctuations (change) is a path to financial enlightenment, while locking yourself into a straight jacket of investment credos and dogmas is not.
Expect steady inflation and take advantage of stretches against it. The silver chart above shows how we have been doing it and are still doing it. When silver reaches the old high again we will put another 40% in the vault.
Remember, you can stick your head in the sand if you choose but volatility and fluctuations will come for you, whether your eyes are closed or not.
