The degree and level of propaganda now flowing from the Establishment and the Establishment-controlled mainstream media is on par with that of the old Soviet Politburo or German Third Reich. In fact, I’d confidently propose that this point is incontestable.
With modern technology and regulations which have made Fed operations and accountability tragically opaque, I have zero doubt that the Fed and the Government have managed to turn the stock market into another propaganda tool. Studies have shown that, over the short term, the direction of the stock market and consumer sentiment measures are highly correlated.
Thus, pushing the stock market a lot higher is a mechanism that can be used to influence the public’s sentiment and willingness to spend. This is critical after an election in which the political party controlling Capitol Hill changes and – more important – during the holiday shopping season.
Without question the U.S. economy is beginning to quickly crumble. If you “peel away” the manipulative techniques applied to the economic reporting it reveals that every segment of the economy is now contracting. Even the factory orders report for October released yesterday – which showed a 2.7% gain over September – is still down 2.3% YTD vs the same YTD period in 2015. Strip away the transportation component and it’s down 2.7%.
With interest rates on the long end up over 100 basis points in a very short period of time, the Fed’s balance sheet has taken a big hit. It currently owns over $4 trillion in Treasuries and mortgage securities. Assuming an average duration of 10 years on its holdings, the market value of the Fed’s balance sheet has dropped 8.4%, or approximately $320 billion. As of this past Thursday, the Fed’s balance sheet showed $46 billion in book equity. If the Fed were forced to mark-to-market its fixed income holdings, the Fed’s net worth would be significantly negative – close to $300 billion negative. Think about that: the only thing backing the value of the U.S. dollar right now is the U.S. military and a Central Bank with a massive negative net worth. – excerpt from IRD’s latest Short Seller’s Journal
Market intervention in this manner is an attempt to convince the public that the economic system is healthy and will be even healthier in the future. As such it’s another subtle propaganda tool – a perception management device. If the Fed were step away from the market, the stock market would rapidly re-price to reflect the true underlying economic reality. In short, stocks would crash and concomitantly gold and silver would soar.
The Fed injected billions into the system in late 1999 ahead of Greenspan’s Y2k scare. It led to the biggest stock market blow-off top of all-time.The current market is quite similar, only the economic and financial fundamentals underlying both the public and private sectors of the system are far worse than they were in 1999.
The ONLY thing that can explain the move in the stock market since around 2:00 a.m. EST after the election is massive Fed stimulus in some form – either direct cash injections done in a format that won’t show up on the Fed’s balance sheet or a massive spike up in the availability of short term credit lines made available to banks and extended to hedge funds. There is no other explanation.
Today for example, the stock market is spiking higher AND bond prices are higher/yields lower. This makes absolutely no sense and can only be explained by official intervention of some sort.
Gold and silver will “sniff” this out and at some point I expect to see gold begin to move a lot higher and the dollar sell-off precipitously. I also expect that the Chinese are going to send their response to Trump’s inimical overtures on Twitter by accelerating their sale of U.S. Treasuries.
lf the same GAAP accounting standards used in 1999 to measure corporate earnings – the standards having been relaxed more almost every year since 2000 to enable companies to report higher GAAP earnings – were applied to today’s earnings numbers, we would see that the current stock market is by far the most overvalued in history.
This will not end well.
Jesus christ. you still do not get it Dave. You have decent itellect but you have a religion of gold/silver. Pull your head out of your ass. Yes, this last 11 years is a train wreck. Gold ad silver peaked in 2011.
You have not put two and two together yet. We have LEADERSHIP now. In the executive branch. We have not had a great leader in a generation. Not just a leader or the typical Alpha Male, but a super Alpha. Trump will be way bigger than Reagan, and not just in the rearview mirrow like Reagan was (he was not great until years later). Trump will be bigger immediately, and the stock market reflects that. The unleashing of the US economy and people like me to participate will make this country economically huge again. His leadership is doing that, as we speak.
Fuck an A Dave, get off the Debbie Downer train. We have upside here. Muslims were on pace to destroy everything. The rule of law in the USA was at risk. Trump is the powerful leader that will allow western civilization to overcome muslims and liberal chaost to thrive, and prosper. But, most importantly for us, the people in the USA will KICK ASS economically!!! If you wish to be a skeptic, be my guest, you will be left in the dust. Get off your high horse that you traded bonds and all that shit.
And by the way, if you do the mental work on the so called Fed “balance sheet” you will understand that there is no “balance” needed in that “balance sheet”. IT DOES NOT MATTER. Now, if you think I am some rube, do the mental work on it. You are stuck on the old rules.
Get positive Dave, you will waste your life if you do not.
I too am in the Denver area. This traffic sucks.
I’d argue that Dave is on the ‘Roger Realistic’, rather than “Debbie Downer” train.
Funny thing is that commenters like “Sim”, and there are many of them, are apparently clueless about how gold has performed outside of a USD lens in recent years. Take a look an Venezuela, to use an obvious example. Did it peak in 2011?
Hell, it was recently near an all-time high in the UK!
Usually I can tell when someone is being serious or humorous.
It’s all a CONfidence game now, fake money injected into fake markets, it’s YOU who need to pull your head out of your ass. No one knows when it all crumbles, but better to be years early with PM insurance than a day late. The super wealthy will probably be OK unless killed by angry peasants.
Great post, but missing a line at the end which says “/end of sarc”.
F****ing Finance Minister of India, Arun Jaitley has posted a twitter message about how much gold a married woman, an unmarried woman, and a man (married or unmarried) are “ALLOWED” to possess. I kid you not.
To borrow from the ending of your blogpost:
This will not end well.
Who the F*** do people like Arun Jaitley & Narendra Modi think they’re dealing with? They’re doing the dirty work of IMF, World Bank & Bank of International Settlements. They’re instigating for a violent revolution in India. Just what the world needs at such a volatile point in time.
I’ve been looking for inspiration to write a song or story about this predicament we (the world as a whole) have fallen into. This, coupled with the so-called onslaught of FAKE NEWS. New York Times, BBC News, CNN, CNBC, Wall Street Journal….these are all the definitions of FAKE NEWS.
Actually, all the great songs & stories about this have already been written. George Orwell (Eric Blair) wrote Animal Farm & 1984 long time ago. Roger Waters wrote lyrics to an entire Magnum Opus “The Dark Side of the Moon”, with songs like Money & “Us & Them”. King Crimson wrote “21st Century Schizoid Man”, because their lyricist @ the time exactly knew where the world as a whole is headed in 21st century.
Despite all this, we have fallen into this predicament. The prophecies in all works quoted above are coming true. We had been given so many wise warnings. I can’t possibly believe what’s happening in India. There will be a similar executive order coming thru Donald Trump in the US. Carrying out dirty work for an executive order will be such an easy job in the US, compared to India. Hardly anybody owns physical gold in the US, unlike in India. It’ll be a piece of cake for IRS goons with machine guns barge into “marked” residences & steal.
Dave, you are right on the money. This hologram of a stock market rise is nothing but a tool to keep the sheeple in a transe. It is all manipulated till Trump gets in office. I am glad Trump got in, for if Hillary would have gotten the nod we would be at the doorstep of WWIII. But Mr. Trump will not be able to divert this locomotive from going over the cliff.
The US is bankrupt and insolvent. The bond markets all over the world are cracking. The dollar is vanishing as the reserve currency, and the petrol dollar has almost been buried.
We live in a world of illusion, as the Exchange Stabilization fund and the Plunge Protection Team keep this fake economy going a little while longer. But they are losing control, and sooner than later the markets will go to their logical end, which is zero. All fiat currencies will be ended, and a new global system backed by gold will enter.
There will be immeasurable hurt and a good portion of the world will not survive, but I believe the human race is here for a reason, and one must be spiritually prepared first and utmost, then prepare with food, water, guns, gold, and silver. One must ask for our Lord’s forgiveness and repent.
The human race is going to be judged by a higher entity. Humanity has successfully destroyed this sacred planet these last hundered years or so, and now is the time to pay up.
Mathematically there is no way out. There needs to be a reset, and it is coming very soon. Yes, you cannot dwell on the negative and let it consume your every moment. Accept the TRUTH, and visualize a better future, where there are no more wars and killing. Where humans learn to share the resources we have been given, and the most important factor, is Love and Compassion, for without it, humanity will not go on to learn of the knowledge and wisdom God had so wanted us to have.
Some are awakened to this, and are ready for a great change, one that is transpiring right now. It’s time to hop on the magical mystery bus and transform this reality to one of peace and harmony and balance.
I feel dumber for even having wasted valuable seconds of my life reading the first response.
Hate leaving so many comments on same blog post consecutively, but:
ALERT, ALERT regarding so-called “FAKE NEWS” propaganda effort.
Paul Craig Roberts posted that his website is target for being shutdown VERY SOON! It’s not a joke, this all seems like a coordinated effort.
Even Infowars/Alex Jones says the same thing about his site quoting few hours. I’m no big fan of Alex Jones/Infowars, especially after how he has wilted regarding true Pizzagate coverage, AND has been a water-carrying Donald Trump fanboy during entire election cycle. But he has also provided good service over long duration hosting people like Ron Paul, Gerland Celente, Paul Craig Roberts, Lew Rockwell & on & on & on.
I’m for 1st Amendment & Freedom of Speech. In spite & despite what I may not like about Alex Jones, I would be furious to see his site being shutdown like a Stalinist move. Even this blog could become target for shutdown, I had wondered aloud about this before.
In an amazing coincidence: Only few hours (or maybe minutes??) after posting my comment about 21st Century Schizoid Man above, tragic news that the incredible voice behind it Greg Lake had died was made public. Apparently he died yesterday, but the news hadn’t gone public about it, and I had absolutely no idea about it when I wrote it.
He was definitely NOT the creative lyricist genius behind those words, but was the timeless voice behind them, so very important all the same.
I recall posting portions of the lyrics here @ some time in the past. At this CRAZY moment in history, I would like to post the entire lyrics below & RIP Greg Lake.
21ST CENTURY SCHIZOID MAN
Cat’s foot iron claw
Neuro-surgeons scream for more
At paranoia’s poison door.
Twenty first century schizoid man.
Blood rack barbed wire
Polititians’ funeral pyre
Innocents raped with napalm fire
Twenty first century schizoid man.
Death seed blind man’s greed
Poets’ starving children bleed
Nothing he’s got he really needs
Twenty first century schizoid man.
Ladies and Gentlemen we are officially living in bizzaro world.
“The ($US) gold price” seems to be ‘busted’…stuck…it simply is the dog that doesn’t bark. Never moves. Today it hasn’t varied by more than $2…
This ridiculous and counterintuitive ‘Trumpflation’ meme is parroted and spouted EVERYWHERE. It seems unaninmously supported y the few large funds and market movers who ARE “the markets” these days. But the underlying trends that auger for deflation, zero-real-growth and lower asset prices remain solidly in place and one can only hope that one day the public will ‘get religion’ and learn that fiat paper is no way to save and that preserving purchasing power trumps this grubby, desperate search for overleveraged yield…
With returns still @+/-zero there is no ‘investment’ left; there is only speculation, betting…
This is an excerpt from Wall Street on Parade’s take on the ongoing PM manipulation civil suit:
“The scorching evidence produced in the case raises the question, why is the U.S. Justice Department sitting on its hands in this matter. Unlike civil cases brought by private plaintiffs, the Justice Department has the power to wire tap and issue subpoenas. Almost two years ago, Bloomberg News reported that the Justice Department “is investigating whether the world’s biggest banks manipulated prices of precious metals such as silver and gold as it pushes to wrap up probes into currency-rate rigging, according to people with knowledge of the matter.” The report said that 10 banks, including two of those named in this case, Barclays and Deutsche Bank, were being probed.”
The answer is easy. The DOJ represents the chief racketeer of this criminal operation – the Treasury Dept.