When prices are set by companies that can profit by manipulating or rigging them, we’re screwed. This “harvesting” of our money in ever-more-creative and hard-to-detect ways is not just stealing by reaching a hand into our pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever is in our pocket worth less. This is corruption at the molecular level of the economy – Space Age stealing – and it’s only just coming into view.
Rolling Stone’s Matt Taibbi has once again put the world’s major hard news organizations to shame by describing, in comprehensible terms, the pervasive corruption at the heart of the financial system. Below are his concluding paragraphs from a much larger article that everyone with money at risk in a bank, brokerage account or business should read in its entirety.
After scandals involving libor and, perhaps, ISDAfix, the question that should have everyone freaked out is this: What other markets out there carry the same potential for manipulation? The answer to that question is far from reassuring, because the potential is almost everywhere.
From…gas to swaps to interest rates, prices all over the world are dependent upon little private cabals of cigar-chomping insiders we’re forced to trust….That includes the markets for gold (where prices are set by five banks in a Libor-ish teleconferencing process that, ironically, was created in part by N M Rothschild & Sons) and silver (whose price is set by just three banks), as well as benchmark rates in numerous other commodities – jet fuel, diesel, electric power, coal, you name it.
The problem in each of these markets is the same: We all have to rely upon the honesty of companies like Barclays (already caught and fined $453 million for rigging Libor) or JPMorgan Chase (paid a $228 million settlement for rigging municipal-bond auctions) or UBS (fined a collective $1.66 billion for both muni-bond rigging and Libor manipulation) to faithfully report the real prices of things like interest rates, swaps, currencies and commodities.
All of these benchmarks based on voluntary reporting are now being looked at by regulators around the world, and God knows what they’ll find….When prices are set by companies that can profit by manipulating them, we’re ….ed.
…The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It’s not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever’s in your pocket worth less.
This is corruption at the molecular level of the economy, Space Age stealing – and it’s only just coming into view.
Some thoughts: Knowing what we now know about the big banks, the idea that precious metals are not manipulated is absurd — which explains, if an explanation is needed — why the paper and physical markets are diverging. Paper gold is at the mercy of the manipulators, while physical gold is immune to them – and is in fact a threat to them. An ETF like GLD is emphatically not the same thing as a gold eagle in hand.
With the political and judicial systems now wholly-owned subsidiaries of the big banks, and not being able to trust dollars or euros or yen, buying physical gold and silver and storing it outside the financial system…. might be an individual’s last effective weapon against an emerging meta-government “run by and for the people” as profiled in Taibbi’s article….
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Competitive devaluation [the race to debase] or “Currency War” is more of a process than an event. Nations take turn to debase, back and forth, until the purchasing power of their currencies approaches zero. The map below monitors the progress of debasement as it unfold; country by country, currency by currency.
By its obvious and concerted attack on gold and silver, the U.S. government could not give any clearer warning that trouble is approaching. The values of the dollar and of financial assets denominated in dollars are in doubt. For Americans, financial and economic Armageddon might be close at hand….
Technically the U.S. left the gold standard in 1971 but, in reality, we abandoned it in 1913 with the creation of the Fed…setting the stage for the collapse of the dollar. [Given that this is] the 100th anniversary of the creation of the Federal Reserve, it seems only fitting that we should present a brief history of the U.S. dollar debasement since then.
In order to generate phony economic growth and to “pay” our country’s debts in the most dishonest manner possible, the Federal Reserve is 100% committed to the destruction of the dollar. Anyone with wealth in the U.S. dollar should be concerned that economic leadership is firmly in the hands of irresponsible bureaucrats who are committed to an ivory tower version of reality that bears no resemblance to the world as it really is. By upping the ante once again in its gamble to revive the lethargic economy through monetary action, the Federal Reserve’s Open Market Committee is now compelling the rest of us to buy into a game that we may not be able to afford.