The End of Markets, Part III – Jeff Nielson
The End of Markets, Part III – Jeff Nielson – Sprott Money
We no longer have markets, not in the sense of international exchanges for human commerce. What we have, instead, is a 24/7 computerized price-rigging operation – which has hijacked all of our market infrastructure.
The entity responsible for this enormous systemic crime is very familiar to regular readers: the One Bank . Part II of this series ended with a pledge to provide readers with evidence. Not evidence of (mere) manipulation. Such evidence exists in abundance, and a considerable amount of evidence was presented in the first two installments of the serial manipulation of the silver market.
The evidence to be presented here is evidence that we no longer have markets, at all. The proof for this assertion will come with several complimentary pieces of evidence.
1) Massive, serial manipulation of markets
2) A single Invisible Hand is controlling the manipulation
3) Examples of impossible trends in our pseudo-markets
4) A pattern of impossible behavior in our pseudo-markets
The outline above is a composite proof, with the objective to establish that we now have a computerized price-rigging operation in place of what used to be markets. To complete such a proof requires satisfying the conditions necessary to engage in such an endemic price-rigging operation.
It must be established that such manipulation is widespread, constant, and orchestrated by a single entity. This basic proof will be supported with overwhelming empirical evidence: impossible results which could not occur if we still had markets, and impossible behavior which could not occur if we still had markets.
Parts I and II detailed the extreme, long term manipulation of the silver market. A significant percentage of readers will find such an argument plausible, especially given the massive volumes of evidence to support such manipulation.
However, present the same readers with the assertion that all markets are manipulated, and (no matter the strength of the evidence) such a proof will be a hard sell. The human mind rebels at the concept of criminality, control, and sheer evil on such a scale.
The starting point in convincing such readers is to show them the evidence of widespread market manipulation, a subject which has received almost no academic scrutiny. Fortunately, research is finally beginning on this subject, motivated by the market abomination called “HFT trading”.
Part II introduced readers to these automated trading algorithms: the newest tool for financial crime in the One Bank’s arsenal. The obvious manipulative potential of these trading algorithms was noted. Specifically, it was noted that if any entity controlled the data being fed into these algorithms then it would/could control the results: the prices in our pseudo-markets.
Part II explained how the One Bank does control such data. It instructs our puppet governments to construct falsified economic statistics. Then the Corporate media oligopoly (which is one of the One Bank’s tentacles) provides a consistent, uniform stream of propaganda to “interpret” these falsified statistics.
Part III of this series will now complete the proof: showing how the One Bank’s control of all data is being used to control the prices generated in our pseudo-markets. “The Truth is out there.”
In March of 2015; a Zero Hedge article pointed to some of this Truth – an actual study into this criminalized “HFT trading”. The evidence was stunning and overwhelming.
“We find that quote stuffing is pervasive with several hundred events occurring each trading day and that quote stuffing impacts over 74% of US listed equities during our sample period.”
…stocks randomly grouped into the same channel have an abnormal correlation of message flow
The United States Securities and Exchange Commission levied its largest ever fine against a stock exchange for giving “information about certain order types to only some members, including certain high-frequency trading firms that provided input about how the orders would operate .”[emphasis mine]
The first point to note about the study quoted above is that it was not looking for evidence that all of our markets were controlled by a single Invisible Hand. It was simply looking for evidence of a negative impact from “HFT trading” (automated trading algorithms).
The fact that they discovered market manipulation on a such massive scale surprised the researchers. When they found that “quote stuffing impacts over 74% of US listed equities”, this was only one category of algorithm manipulation.
The findings here are not that only 74% of U.S. equities are computer-manipulated. The findings are that at least 74% of U.S. equities are manipulated in this manner. The conclusion was that this one form of algorithm manipulation was already being used to manipulate 74% of all equities.
Note (above) how these servile stock exchanges are accomplices in the One Bank’s serial manipulation. Of equal importance is that the banking crime syndicate doesn’t care about all U.S. equities.
The One Bank is only concerned with controlling/manipulating publicly listed companies which are directly or indirectly of interest to its operations. Even if it controlled ‘only’ 74% of all equities, this is more than enough to satisfy its criminal agenda.
The evidence that all of this computerized price-rigging is controlled by a single Invisible Hand (the One Bank) has an empirical and logical component. The empirical component comes from the names listed in the Swiss research which concluded that the One Bank controls 40% of the global economy.
The research names “names”. Goldman Sachs, JPMorgan, Bank of America, Morgan Stanley, Citigroup, Deutsche Bank, Barclays, Credit Suisse, UBS, Merrill Lynch, Bear Stearns, and Lehman Brothers are among the Big Banks listed as being tentacles of this enormous, financial crime syndicate.
Three-quarters of the One Bank’s 144 corporate fronts are financial entities. Between them, these Big Bank tentacles control the vast majority of all of the world’s “HFT trading” (not to mention the vast majority of conventional trading as well).
The One Bank has both the financial resources and the practical means to be the single Invisible Hand which is orchestrating this computerized price-rigging operation. The logical argument which accompanies this empirical evidence is simple: if this massive volume of computerized price-rigging was notcoordinated, then much of the price-rigging would cancel each other out.
There are two implications here. There would be much less profit potential if much of this price-rigging was canceling-out. Secondly, it is highly unlikely the researchers would have discovered overwhelming evidence of this price-rigging if it was not coordinated by one Invisible Hand.
If much of the price-rigging was self-canceling, this would have created vast amounts of electronic ‘noise’, which would tend to drown-out the evidence of large-scale manipulation. It is statistically impossible to have found clear evidence of such widespread manipulation (74% of all equities) unless one entity was responsible for most – or all – of this financial crime.
The serial manipulation of our markets is proven. The existence of a single Invisible Hand is beyond doubt. All that is left is to present the fruits of its crimes: the impossible trends and impossible behavior we now see in what used to be markets. Regular readers have seen this evidence in the past, spread across multiple commentaries.
The United States currently has a stock market bubble and a bond market bubble. This is impossible – absolutely. The stock market and the bond market are counter-cyclical: these two markets move in opposite directions.
A U.S. stock market and a U.S. bond market could never be at bubble levels simultaneously. But the U.S. has a stock bubble and it has a bond bubble – simultaneously. Ergo, the U.S. no longer has a stock market or a bond market, just a permanent price-rigging operation in place of both.
Note that while both of these bubbles are impossible together they are equally impossible separately. U.S. bonds exist in much greater supply than at any time in history. With the U.S.’s insane debt level ($20+ trillion), the risk associated with these bonds has never been greater. In fundamental terms, U.S. bonds have never been worth less.
Yet the price on these junk-bonds is at an all-time high while the interest paid to borrowers (to compensate them for risk) is at an all-time low. Impossible.
The U.S. economy is in a Greater Depression . Permanent unemployment is at an all-time high. The retail sector in this consumer economy is currently experiencing more major bankruptcies than at any time in the last nine years. If the U.S. still had a stock market, valuations would be depressed as well – reflecting the bleak economic conditions.
Instead, U.S. stock prices are at insane valuations: roughly 75% higher than historical norms as reflected by corporate earnings. U.S. indices are all perched at all-time record highs. Such an impossible disconnect between valuations and reality could not exist if the U.S. still had a stock market. Ergo the U.S. no longer has a stock market, just a price-rigging operation.
It’s not just the actual prices which are impossible in our pseudo-markets. The price movement we see each day/week/month/year is equally impossible.
Why is it difficult to convince readers that “all our markets are manipulated”? Because real markets diverge. Manipulating all markets would be an activity much more difficult than herding cats. Impossible.
But what do we see each day? Within the various sectors, we see all entities marching up and down in near-perfect lock-step. Everything goes up one day. Everything goes down the next.
Real markets can’t do this. On most days, most of the publicly listed companies on any stock exchange will do their own thing. The internal fundamentals of these companies dominate their pricing, on a day-to-day, week-to-week, and month-to-month basis. Only occasionally will general economic news be so overwhelming that it will drown out these fundamentals – and cause everything to go up or down together.
What do we see in our pretend markets? Almost every day, it’s everything up together or everything down together. Only on the quietest of days do we ever actually see any ‘drifting’ – i.e. companies actually moving in accordance with their internal fundamentals.
This is precisely the opposite of what we would see if we still had markets. Nothing can be its own opposite. We don’t have markets.
Manipulating the lesser “markets” across the Western world would require only a fraction of the criminal might that is required to exert such control over the former markets of the United States. With respect to markets outside the Western sphere of influence, presumably the One Bank’s control is less-than-absolute. Thus outside the Western world, some form of “markets” still exist.
Inside the Western world, there are no markets. There is only the One Bank’s endemic, orchestrated price-rigging.
What would it take to restore markets to the Western world?
Answer: what would it take to put an end to the One Bank?