Quantitative Easing, Counterfeiting, Deflation/Stagflation v Inflation/Hyperinflation, Dark Pools, Insider Trading
All neoclassical economists understand that there are two aspects of quantitative easing (QE) that must be activated in order for this extremely risky strategy to work.
The money supply must be increased via the printing of more cash by the central banks and the velocity of the movement of that money around the system must be accelerated to suitably rapid levels.
One of the primary reasons why the Recession is becoming the Depression is that this velocity isn't happening - banks haven't been lending enough, people haven't been spending enough.
It will take extreme governmental action globally to increase this velocity.
In particular, the elderly of the rich world (where the majority of the static savings reside) are going to be "encouraged" to consume, and at quantity.
But it is good to see that the Black Market is lockstep with the financial elite in our self-harming determination to restage the 1930's.
Lima in Peru is where the global centre for counterfeiting cash is currently based - these types of businesses tend to trade on the hoof.
Apparently, a multitude of currencies are being created and the police are said to have only scratched the surface of the operation.
A formula: Excessive printing of money + A determination to avoid stagflation/deflation = Increasing probability of hyperinflation.
Which, in its foreboding shadow, "encourages" us all to be turning our cash into more stable strategic assets asap.
One can increase the velocity via instilling this fear in people, the fear that paper and coins will lose what, after all, is an implied value based on trust in an abstract concept.
This is an extreme strategy for a system which is allegedly showing "green shoots of recovery"!
Just how brinksmanship can one get?
So, what should you turn your cash into?
Land, artwork, property, gold, strategic market plays in robust sectors and an increasing focus on self-sufficiency, security and sustainability would all be preferable to any misplaced faith in cash, government securities or the products available under the majority of financial market templates.
Better still, co-operative and social living projects might be energised with collective effort and input.
Unfortunately, the modern is repeating the past.
Even during the public exposure of an array of scapegoats - Madoff, Stanford, Goodwin etc - the foundations of the next phase of this cataclysmic system were being put in place.
Dark Pools have recently disappeared from the mainstream financial media, which is slightly strange given that these trading platforms are determining all of our tomorrows.
These markets are non-regulated.
These markets are private.
These markets allow huge levels of institutional insider trading away from prying eyes.
These markets are an edge in the market place for the global financial elite.
These markets represent the equivalent of the tickertape in the 1929 version of a Depression - a logistical inefficiency that allows considerable market advantage to an inner pool of operators. This competitive advantage is particularly marked in windows of great volatility where the system is standing on the edge of a unidirectional breakpoint.
Until recently, if an insider at a huge US corporation wished to trade in stock in her/his own company, submissions had to be made to the Commitment of Traders Report (COT) which detailed the market activities of those with access to privileged information.
Incidentally, you will find very little mainstream media reference to the COT either.
Now, no such regulation exists - it is by-passed by the Dark Pools.
This is taking the whole era of laissez-faire free market capitalism to new levels of inappropriateness.
The public acts of contrition are matched and offset by private displays of financial psychopathy and power - thanks for the bailouts, we needed some speculative trading capital.
Imagine that you are a chief executive of a major US company.
You have privileged information regarding the negative forthcoming quarterly results and you are aware that this information, when public, will have a negative impact on the company share price.
You decide that, in the interests of all insiders, the Dark Pools are the location in which to take advantage of this knowledge.
And the market makers in these subterranean environments are only too pleased to accommodate the insider trade - primary level inside information is a very valuable advantage.
The market makers will then trade this information around the private markets in yet another high stakes game of hyperpoker, trying to gain market power through the trading of the Depression.
Eventually, when all the elite have stuffed their portfolios full of locked in profit, this information reaches the formal exchanges and mere mortals are left scratching their heads as to why shares in our fictitious company have suddenly plummeted 25% despite their being no public information to warrant such a precipitous decline.
Even some of the banks that have become involved in Dark Pools recognise the dangers presented by non-regulation but they are forced, by the necessity of competition, to become involved in the charade.
We are in the territory of Behavioural Psychology here.
There is a marked campaign to increase mass confidence in the system despite very obvious contrarian Realities.
This "green shoots of recovery" nonsense is a case in point.
From a market analytical perspective, the recent rebound in the global financial markets is totally irrational (apart from those cashing in on short-sold positions).
There are no fundamentals that justify this bulge in the market, and the systemic and super-systemic risks are at all-time highs due to the impact of Financial Fractals.
More Irrational Protuberance than Irrational Exuberance.
Olivier Blanchard, chief economist at the IMF, uses both of his faces to describe this new systemic Reality.
A reduction in uncertainty and catastrophe in the markets may be achieved "... by removing tail risks, and the perception of tail risks."
This is very revealing as to the current status of the free market hyperreality.
There are considerable numbers of high level research and consultancy projects being undertaken worldwide trying to find ways to eliminate the impact of Black Swan events - statistically unlikely events that occur more frequently than they should, with devastating impacts on the financial system.
This is a fruitless search.
These "tail risks" cannot be eliminated in a free market system.
But it is the second part of Blanchard's statement that is key to the current mainstream media agenda.
The utilisation of media to alter "the perception of tail risks" is the chosen template with regard to both financial markets and climate change.
The words "fiddling", "Rome" and "burns" spring to mind...
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