The buzz yesterday was all about the book by Michael Lewis, Flash Boys: A Wall Street revolt. I first heard the headline on 60 minutes “The Markets are rigged” and my blood started pumping. I thought to myself, wow, they’re finally telling the truth? What has happened for them to finally do a story like this? Then came the letdown. The story was about HFT’s (high frequency traders) that front run orders and chip off a penny or two on every trade…YAWN!
A penny or two on every trade? Who cares? Did you trade your brains out last year and do 100 trades? Then you got “ripped off” for $1…maybe $2. Did you do 1,000 trades? Well then, you got stiffed for $10-20 or the equivalent of 1 pound of good quality beef. Yes I agree, this “penny or two” on so many trades does add up to some serious money and should be outlawed. I ask you, is this big deal…in light of the fact that the global financial system “almost” melted down because of fraud yet no one went to jail? NO ONE! Heck, Jon Corzine commingled client funds, his firm went belly up and his clients were initially stiffed…and charges were not even filed…ever.
All of the above is for “appearance sake.” What do I mean by this? Have you ever watched a magician fiddle around with stuff only to “miraculously” turn up a flower or whatever? It’s “magic” right? It is, unless you watch the other inconspicuous hand doing the “real magic.” News like this is merely adding another lion to watch or another round of wine to drink for the spectators being entertained at games in the Roman coliseum. When the media reports on “this or that rig,” it is being done for your distraction.
My point is this, LIBOR is rigged, treasury and muni auctions are rigged, the London fix is rigged, the HFT’s rig the stock market…blah blah. All of these miss the point entirely. What exactly do you think the reason is for the Fed to have undergone “QE” in the first place? To “save us?” To “save” the economy? No, money has been “printed” out of pure necessity in order to prolong the “games.” The heart of their game is the currency and the banking system; this is the real reason behind QE.
In order to understand what exactly “the game” is, you must stand back so that you see the entire forest and only a very few individual trees. “The game” is all about getting the population to work for something that is not real (this way they don’t really get paid). Yes I know, there will be those out there who will ask, “What are you talking about? I go to work, get paid dollars and spend my paycheck on food, clothing, housing, cars, vacations…etc.” Yes you do…but what if it were all a “game?” What if the game actually does have an ending and those “running” the game wanted to prolong it to continue their own “entertainment” and benefit? I’ll get back to this in a minute.
In order to keep the game going, nearly everything financial has had to be rigged in price so that the spectators noticed very little “change.” What would be the result of interest rates going to 20%…or even 50%? What if the Dow Jones dropped 90% (it has happened before) and was trading under 2,000? Or what if it cost $5,000 per month to heat or cool your house? Or $20,000 per month to buy only the most basic of foods per month for your family? What I am saying is that in order to keep the games going and the “peasants” from revolting … everything … EVERYTHING has had to be rigged!
I don’t want to spend a lot of time on this but how do think this has been done? Simple, through the use of derivatives. Derivatives have been used to “price” everything from interest rates, FOREX rates, stocks, bonds, commodities and yes even (especially) gold and silver. With as little (or less) than $1, $100 worth of “asset” can be bought or sold. The best part for the “riggers” is that even this “$1” doesn’t have to be “earned,” no, it can be printed and “given away” by the Fed for almost no interest and zero “sweat.” You say, “No, this is America, this could never happen”…I say, please, wake up! Where do think all of the “money” came from to “save the system” in the first place? Where did it go? It came from thin air and “went” into the “PRICING” of assets. The “correct” pricing I might add so that the peasants don’t revolt!
Let me finish by giving you a little “history” of the game. We used to use gold and silver as money. Then in 1913 the Federal Reserve was created yet money was still gold and notes (dollars) were backed by and exchangeable into gold upon demand until 1933. Then all of the gold was ordered to be turned in but dollars were still “backed” by gold until 1971. Nixon defaulted on the gold standard and foreigners could no longer exchange dollars for gold…because we were running out of it. Then along came derivatives futures and options that were theoretically exchangeable into metal but more importantly could be used to “push prices around” with little or no money down. These derivatives could be sold (to push the price down) yet didn’t have to have ANY metal standing behind them. Effectively the price of gold (and silver) could be “made” without using any gold or silver.
Do you see the how and why of the above? The Federal Reserve was created so that “dollars” could be easily created, and they were which culminated in the first “bubble” leading into 1929. Then, since the gold was “running low” in the ’30’s, FDR called in the citizen’s gold. We “won” some gold in WWII which lasted until 1971. We may have also “won” a little more gold in the ’80’s when “Yamashita’s gold” was uncovered. Since then, the supply situation has gotten more and more critical each year, month and day which is why derivatives have been used to create the illusion of supply. This has been “the game” which became critical at points along the way but was continually prolonged by “rabbits” being pulled out of hats each time.
If you understand the above then you understand that it has all been a game of “power”…and retaining that power. The illusion was twofold, first there needed to be an illusion that all was right and all was well so that the peasants would continue playing the game. Secondly, there had to be an illusion of who had the gold because with gold…came power. This brings us to where we are today. We have been selling our gold eastward for years and the gold is running out. This is clear without using a calculator or even a pencil and napkin. The east has been accumulating more gold than the world has been producing for quite some time…the excess gold has come from western vaults to prolong the game.
Yes it is all rigged. Should you worry about some pigs that steal a penny or two on every stock trade? No, you shouldn’t as I said before, take a step back and look at the forest and see only a very few individual trees. They are the dollar tree, the interest rate tree and a few others which include the gold tree. If you understand these you will then understand the entire forest. The “game” will end as I’ve said before many times similar to a game of musical chairs, the only difference to this real game and the child’s game is that this will be for all the marbles and everything that you’ve worked your entire life and saved for.