NIRP VS GOLD PT III – THE DEATH KNELL OF FIAT CURRENCY
by Andrew Hoffman, Miles Franklin
The Miles Franklin Blog’s unwavering aimis to speak economic TRUTH, no matter how painful it is. And whilst part of said truth relates to reality versus lies in economic reporting, equally important – and perhaps, more so – is demonstrating how rigged financial markets – coupled with Wall Street, Washington, and MSM propaganda – are utilized to whitewash truth’s perception. To wit, since the age of “financial engineering” commenced at the turn of the century, London and New York bankers have led “TPTB’s” effort to commandeer markets with technology, in partnership with the politicians bought and paid for with illicitly gained profits. To that end, Central banks are simply a part of the mechanism; if you will, a “triumvirate” of “TBTF” banks, Central banks, and politicians – in financial terms, the equivalent of the father, the son, and the Holy Ghost. Only in this case, the antithesis of the compassion and charity of the latter, in lieu of greed, avarice, and wanton destruction. And no, there is no “grand plan” to take over the world; as in a complex system with billions of people and thousands of moving parts, “Occam’s Razor” tells us those in power simply want to keep in – and those that don’t, to possess it. Human beings aren’t that smart, and human nature hasn’t changed since the times of Adam and Eve.
Sorry to sound so “biblical,” but what we are witnessing today cannot be described any more accurately, in terms of the cumulative damage a handful of sociopaths have wrought on billions of lives – both today, and in the future; as once the historic fiat Ponzi scheme they have erected once and for all implodes, it will be generations before “normalcy” returns. Will such generations be characterized by war, plague, and famine? Or simply, “hard times” for the majority – and unprecedented industrial overcapacity, caused by decades of money printing and predatory financing schemes? I don’t know, but clearly said scheme is in its death throes – which is why market manipulation and propaganda have reached epic levels, across every imaginable medium. This is why we advise to prepare for the worst, and hope for the best. Which is exactly what the world has been doing – in buying gold and silver in record amounts in 2013 and 2014, and starting 2015 on pace to shatter such records.
The first month of 2015 has been characterized by exactly what we have predicted all along; i.e., the tell-tale signs that history’s largest Ponzi scheme is collapsing. Imploding commodity prices, sovereign bond yields, and currencies; the weakest global economy of our lifetimes; surging Precious Metal prices; and maniacal monetary debasement schemes, under the misguided belief that weakening currencies will yield economic prosperity. Of course, all such lunacy ensures is explosive debt expansion, relentless inflation, and historic wealth disparity – in the latter case, as only the bankers receiving such funds benefit from them. Frankly, even I’ve been surprised at how rapidly things have unraveled – as exemplified by the Baltic Dry Index plunging another 3% yesterday to a 29-year low, within just 6% of its all-time low. And as I edit at 10 AM EST, January factory orders just followed December’s 0.7% decline with a 3.4% plunge, well below expectations of just a 2.2% decline.
Much attention has been given to gold’s resurgence, particularly in foreign currencies given the dollar’s terrifying, fear-driven explosion. Not as much as it should, of course; and let’s not forget that every penny of gold’s gains has been maniacally contested by the Cartel, which literally is on the offensive 24/6, from the moment trading opens Sunday night to the very last print Friday afternoon. And even during the weekend, it is constantly in action, making sure that propaganda and misinformation regarding gold’s demand, utility, and outlook are obfuscated.
Just look at this past week, for instance. Amidst historic political and economic headwinds – starting with the “surprise” Syriza election victory; to horrific global economic data, corporate earnings, and geopolitical tensions – every attempt by Precious Metals to surge has been capped, via the same tired algorithms as always – and then some. Heck, here at Miles Franklin we literally can’t source Platinum right now, as the market has gotten so tight. And yet, care of the relentless PM suppression that no doubt includes platinum as well, the price has actually declined! And this, as commodity prices have, cumulatively, had a mild “dead count bounce.” As for gold and silver, aside from the 84th “Sunday Night Sentiment” attack in the past 85 weeks, and unrelenting raids at the usual times, we have watched price gains continually capped at the usual 1.0% level; and of course, the strict enforcement of “Cartel Rule #2″ – i.e., “all great PM days shalt be followed by horrible ones.” Be it “signals” from the manipulation of mining shares; “magical” price plunges right ahead of COMEX option expiration; or otherwise, NEVER have physical PM supply and demand fundamentals been this dislocated from the fraud perpetrated by Cartel algorithms in paper “markets.” To that end, yesterday’s maniacal determination to reverse Friday’s gains could not have been more blatant; that is, until this morning’s travesty; as I kid you not, not a single market – from stocks, to bonds, commodities, or the dollar – materially budged from the time gold was “Cartel Heralded” at “2:15 AM” through the brutal paper raid at the COMEX open.
Comically, yesterday’s own late day “Cartel Herald” capping – coincidentally, just as the “Dow Jones Propaganda Average” plunged to the “PPT ultimate limit down level” of minus 1.0%, and gold was on the verge of turning positive – was supposedly due to the Greek Finance Minister softening his negotiating stance, in proposing not an outright write-down of Greek debt, but a “financial engineering” alternative that would essentially achieve the same means through accounting chicanery. The fact that such comments were unsubstantiated; and the proposal a non-starter in the first place (as the supposed “debt swaps” would still be viewed as a default event by rating agencies; were conveniently ignored by the MSM, as the entire aim of this rumor was to provide cover for the PPT to “rescue” the Dow – which lo and behold, after all is said in done, rose in perfect “dead ringer” fashion – replete with 10:00 AM EST bottom – at exactly minus 1.0% – and patented late day “hail mary” rally.
Sure enough, we awoke this morning to not only news of yet another surprise rate cut – this time by the Bank of Australia; but what do you know, a complete refutation of such rumor by the Greek Finance Minister himself? Not to mention, Angela Merkel saying Greek debt negotiations will “drag on for months” – and as I edit at 10 AM EST, one of Germany’s top legislators calling the aforementioned Greek proposal “half-baked”. In other words, not a shred of truth in yesterday’s rumors; just as the dozens of unsubstantiated “bin Laden dead” and “IMF gold sale” rumors in 2002-06, which “coincidentally” emerged whenever gold prices threatened to rapidly rise. Not that bin Laden dying or the IMF selling gold should have any impact on gold prices – or for that matter, an accounting gimmick to put off Greece’s day of reckoning.
To that end, the eventual IMF gold sale – assuming it was actually physical gold, as opposed to a double-counted IMF book entry – to India in November 2009, at $1,040/oz – served as a springboard for gold’s nearly doubling in less than two years. And as for bin Laden’s May 2011 “death” – gold was $1,500/oz at the time; and despite the notorious “Sunday Night Paper Silver Massacre” orchestrated under the “cover” of such event, just four months later gold hit $1,920/oz, whilst even silver hung tough at $42/oz. In other words, NEVER believe such rumors; and even more so, NEVER believe what Wall Street and the MSM tell you of how markets “should” respond to them.
OK, now that that tiresome, but extremely valuable information is out of the way, let’s get to the equally important topic at hand – of how negative interest rates are no less than the “seventh sign” in regards to the imminent collapse of history’s largest fiat Ponzi scheme. I first warned of this in July 2012′s “NIRP vs. Gold, Pt. I” – in response to European sovereign yields first demonstrating this cancerous symptom. “Coincidentally,” just two days later Draghi made his infamous “whatever it takes” speech, buying less than a year’s time before European negative rates re-appeared, as the European unemployment rate hit an all-time high. It was then, in May 2013, when I penned “NIRP vs. Gold, Pt. II“; and yet again, rates “coincidentally” rebounded – whilst gold was smashed – as the historic economic data and market manipulation scheme that commenced in an April 2013 “closed door meeting” between Obama and the TBTF bank CEOs was hatched.
Well, here we are in February 2015, and not only has the ECB launched one of the most insane QE policies in history, but sovereign rates the world round are in freefall, with yields in nations like Switzerland and Germany more negative than ever. In fact, since Switzerland’s earth shattering admission of defeat last month, it has reduced interest rates further into negative territory to debauch the Franc; and rumor has it, they are instituting a new “peg” at 1.05-1.10/Euro. Worse yet, the Danish Central bank has now reduced its already negative rate three times in the past two weeks to protect its own Euro peg, as the “final currency war” literally explodes before our eyes.
Per this article, an astounding 16% of all global government bonds now have negative yields – and who knows what percent of bank accounts, now that Central bank ZIRP – and in some cases, NIRP – policies have eliminated the concept of interest; let alone, the swarm of new fees that push zero yielding accounts into negative territory. To wit, I just calculated the year-end interest earned on my wife and I’s cash accounts; which as noted countless times, are not in “banks,” but non-marginable brokerage accounts at Charles Schwab. Excluding fees, we earned interest at a rate of 0.00002%; but after fees, paid Schwab to hold our money.
In the case of sovereign bonds, global “big money” will continue to buy them no matter how low the yield; knowing “QE to Infinity” will bail them out at any price – no matter how overvalued the bond, or how weak its fundamentals. As for bank accounts, however; particularly in highly insolvent or unstable nations – like the PIIGS, for example – why would people continue to hold significant balances, particularly when Cyprus style bailouts have become a global “template?” Let alone, when hyper-inflationary monetary policy is no longer the exception, but the norm. And of course, now that the “barbarous relics” gold and silver actually yield more than negatively yielding accounts and securities -with 5,000 years of inflation protecting history on their side – why wouldn’t people trade their dying scrip for real money?
Of course, per what I noted about record 2013, 2014, and early 2015 demand, they most certainly are; and undoubtedly, will continue to do so as the global economy – and historic fiat Ponzi scheme underlying it – collapses further; perhaps, far more rapidly than most can imagine. In a nutshell, negative interest rates signify the terminal phase of a fiat Ponzi scheme better than any other indicator; as unquestionably, there is no way to escape such a monstrous financial black hole. In fact, again as I edit at 10 AM EST, German 10-year Bund yields, at 0.31%, just plunged below those of Abenomics-infested Japanese 10-year JGBs; as these benchmark securities – two of the world’s most liquid – “lead” the global monetary system into NIRP oblivion. Unquestionably, the currency wars and “QE to Infinity” that spawned this epic financial deformation will only accelerate as the fiat Ponzi scheme comes to its spectacular, perhaps imminent conclusion. And thus, how anyone is not at least partially protecting their assets with real money is beyond us – particularly at historically suppressed prices, well below the cost of production!