Global Players at the Financial Poker Table

From the movie “Rounders” regarding poker:

“If you can’t spot the sucker in the first half hour at the table, then you are the sucker.”  

Hypothetically speaking the players at the global poker table could be:

  • The Federal Reserve borrows dollars into existence to feed the never ending demands of the US government politicians and the financial community.
  • US Treasury Department creates the bills and bonds.
  • Goldman Sacks does God’s work.
  • JP Morgan works their skim in so many ways.
  • Huge derivative players such as Deutsche Bank, Glencore, JP Morgan, Citibank, and Barclays increase leverage and instability.
  • Regulators make certain the game continues with a profitable skim for the “Too-Big-To-Fail” banks.
  • Department of Justice has demonstrated that no banker shall be prosecuted, but minimal fines are acceptable.
  • Commercial Banks borrow dollars into existence, loan them at 10% to 24% for credit card debt, charge high fees and use leverage to increase profits. They expect that losses will be covered by taxpayers and the Fed.
  • Politicians and Lobbyists collect their share of the skim.
  • Average short-term gold and silver trader. Guess who is the sucker?

The status quo exists because it works well for the major players.  Their profits are large enough to cover fines, multiple payoffs, and houses in the Hamptons.  The majority of profits come, I suspect, from packaging and selling paper – stocks and bonds.  But it is important that gold and silver prices remain low since rallying gold prices indicate something is wrong on planet fiat and will create anxiety that the Fed and other central banks are abusing their printing currencies privilege.  Weak gold prices encourage a strong dollar and lower interest rates.

Also, “pump and dump” works well in the long run at repressing gold and silver prices.  Example:  Run prices sky high in 1979 and 1980 and then crash gold and silver, which were subsequently ignored by a generation of people.  The same occurred on a smaller scale with the 2009 – 2011 gold and silver rallies and their subsequent crash.

The Fed and Treasury can “print” trillions of currency units and commercial banks can borrow into existence trillions more, but ultimately gold and silver must be revalued much higher to compensate for the extraordinary printing and devaluation of fiat currencies.  See graph below from Hubert Moolman showing the ratio of gold prices to monetary base.

Next Five Years:  We expect that gold and silver will retain or substantially increase their purchasing power while paper “assets” will be revalued much lower.  The process has already started and will last several more years.

Interesting reading:

Bill Holter                        The Final Flush is at Hand

Hubert Moolman            Not Enough Gold

Dave Kranzler               Glencore could Trigger A Derivative Meltdown

Charles Hugh Smith      Here’s Why The Status Quo is Doomed

Clive Maund                   Junk Bond Market Threatened

The Following Make Sense to Me:

  1. Central bankers and politicians will, as always, abuse their “money printing” privileges.
  2. Consequently fiat currencies will be devalued, as they always have been throughout history.
  3. Current fiscal and monetary policies will create a “death spiral” of devaluing currencies – until external events force governments into structural changes.
  4. Once change is forced upon the politicians and western welfare countries, they will blame others for their self-created disasters.
  5. The skim taken by the financial and political elite will accelerate.
  6. If war is necessary to maintain the skim, then expect war. There are many possibilities.  President Obama at the UN:  “And I will never hesitate to protect my country or our allies – unilaterally and by force – when necessary.”
  7. The middle class will pay for the elite skim and wars via taxes, inflation and bail-ins.
  8. Gold and silver will be revalued far higher in dollars, euros, yen, and pounds.

 

Gary Christenson

The Deviant Investor

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