Master of Illusion
At the end of this year, Ben S. Bernanke will retire as the greatest illusionist of all-time, bringing an end to the most brilliant career in the history of Magic. His astounding success must surely relegate all of the greats- Houdini, Copperfield, Harry Blackstone and the rest – to the status of also-rans, as none of them achieved anything close to what Ben has achieved. Blackstone, for example, was an innovator who created some of the most famous and widely copied performances in magic, including inventing the “sawing a woman in half” routine. Houdini was famed for accomplishing the impossible, escaping from death-defying situations that left audiences gasping. But no illusionist in history has successfully pulled-off a deception of the audacity and sheer scale that Ben Bernanke has. His trick has been so well performed, so brilliantly executed, that his entire worldwide audience is still largely unaware there was even a trick at all. After 2008, Ben made the entire world believe that the US dollar and the world’s largest financial system still existed. It has been the largest, most brazen, and certainly the most successful illusion in the history of magic.
Don’t believe me? Think this is mere hyperbole or exaggeration for effect? Well, let me ask you a simple question and see if you can answer- what percentage of your total net worth is your stack of precious metals? Can you reckon this in your head, at least roughly? Take a second, we’ll wait.
Now- did you immediately know, within a few cents, how much gold and silver are trading for and came up with a ballpark figure? Did you think about what your retirement account was worth the last time you checked, or did you make a quick calculation of how much equity you have in your home? Made a guess what your stocks are worth right now? Perhaps you added in your current checking or savings account value? Well guess what: if you did any of these things, then you've just been fooled by the greatest illusionist of all time. You weren’t aware that you were being fooled, but you were. Ben Bernanke made you believe in the factual reality of a whole host of things that aren’t really there.
Did you do the math for your stack vs. trading price today? Then you’ve been fooled- that spot price is a fiction based on heavily manipulated futures contracts and 100 to 1 leverage, so you don’t really know what your stack is actually worth. Did you estimate the price of your home? In what market? The one we have now where millions of houses are being held off the market by TBTF banks so they can mark to fantasy rather than mark to market and thus pretend to be solvent? You have no idea what your house is actually worth in a genuine market that isn’t being gamed. How about your retirement or trading account? Those stocks are artificially pumped and traded back and forth between machines, rendering that number on your screen a hopeful fiction... AND it is denominated in a unit of account that has to be artificially propped up by all sorts of machinations. Frankly, you have no idea what any of that stuff is actually worth, but for nearly every single item we’ve discussed, the reality is that it’s worth a whole lot less than you think. Oh, you might actually have the $137,728.47 that shows on your screen in your IRA account, but what is each of those dollars actually worth absent currency market interventions, gold and silver manipulation, and rigged Treasury bond auctions to prop up the value of those dollars? You have no friggin' clue. Neither do I, and neither does anyone else.
Take, for example, just one of the above mentioned interventions used to artificially prop-up the dollar- Treasury bonds. The bond market is of enormous importance in setting the price of the US dollar, indeed it could be argued that the true value of the dollar is largely set by the price/value of US Treasuries in the marketplace over time. But the reality is that today the bond "market" is artificially created from start to finish through a fictional process of financial alchemy. This is how it works: The Federal Reserve creates previously non-existent dollars out of thin air on a computer screen, and uses them to purchase US Treasury bonds. These bonds are a fictional promise from a completely bankrupt country to pay the holder of the bond in fake dollars (again created out of thin air) at some point in the future. These instruments are sold at pretend "auctions" where in reality, 80% of the "buyers" are actually the Federal Reserve itself.
Fantasy dollars created out of thin air and used to purchase fictional promises to pay from a bankrupt and spendthrift issuer and sold at pretend auctions. Did you get all that? Do you understand what a complete and utter sham every part of it is? Good. Now ponder this: The continuance of that ridiculous charade is what gives your paycheck its value- without it, your paycheck would be either worth less or possibly worthless. That elaborate sham is the only thing that gives value to the dollars shown in your retirement or checking account. Are you seeing what I am telling you now? The moment that this illusion dies is the moment that everything you think you own, earn, or have saved will be revalued lower… perhaps a great deal lower.
This is a major reason why I really cringe every time I read a poster saying something like “My stack is still underwater, I am just holding out until price recovers so I can get my money back”. Honestly, I can understand the sentiment and the tendency we all have to use spot price in dollars as a yardstick for measuring the success of our investments. I understand how irritating it is when your idiot brother-in-law brags about how his stock portfolio is up a hundred grand, then he needles you about how much gold and silver are down. But here’s the deal- do you realize how silly it is to use a completely manipulated, propped-up currency that is given its temporary “value” through sham treasury auctions, PM price suppression, and a host of other market interventions to try and measure the value of your investments? Do you realize that your idiot brother-in-law actually thinks he is 100k richer because stocks have (artificially) gone up? Do you think he is even aware that that figure is only derived from the Grand Illusion Ben has created? More to the point, do you think he will recognize this in time to get his faux value out before the illusion fails, or will he keep thinking he is rich right up until he suddenly realizes he is not? Yeah, I thought so.
This is the reality: There might be some numbers on a computer screen when you long-on, but you have no real idea how much you have actually saved for retirement. You have no idea how much money you have your checking account (or to put it more accurately, you have no idea how much the fantasy dollars shown on your screen will actually purchase when you may need them). You have no idea what your house is really worth, but it is probably far less than what you think- and the dollars you get for it will buy you far less than you think they will. You have no idea what your stocks are worth, because they are propped-up by fictional transactions between computers (80% of volume on the NYSE is HFT algos trading back and forth to each other- and the computers are run by zombie banks utterly beholden to the Fed for their continued existence). In fact, you don't really know how much you are being paid for getting up in the morning and going to your job every day. Is this sinking in yet?
I am saying that the US dollar, the financial system, and everything that derives its value from it, is a fantasy. The only thing keeping this bracing fact from affecting you in a very rude way is the maintenance of the illusion that Ben has created. Well, that and the fact that, for the moment, everyone either believes this illusion is real or pretends to believe it. It's all based on smoke and mirrors. There is nothing there. The banks that you think are holding your money are insolvent, so the digits that appear on your computer screen are a polite fiction. The stocks you think you own are in all probability worth considerably LESS than what they are trading for right now. The dollars you use to reckon the value of all of these things are worth far, far less than you think they are, and this illusion is only possible because of a process of fake Treasury bond auctions, precious metals market suppression, and massive interventions in the currency market. The reality for most people is that you are far poorer than you think you are.
I'll say it again: The moment this grand illusion dies- the moment that real valuations replace fictional valuations- is the moment that everything you think you own, earn, or have saved will be revalued many multiples lower. Or it may simply disappear in a puff of smoke. Unless you reckon what you own in ounces, acres, or tangible assets, you are fooling yourself. Or more accurately, you are buying-in to the grand illusion, spun by the greatest illusionist of all time.
Don't wait around worrying about the system collapsing. It has already collapsed. What you are really waiting on is the illusion that it hasn't to be revealed for what it is.