The urgency for owning a financial put against the stupidity of central planners and politicians grows by the minute.
We continue to witness a multifaceted array of failure heaped upon failure while repeating history on a dramatic scale.
One of the great new wonders of the modern world is the credibility given to high profile economists.
Obviously, they have no skin in the game, as their predictive misses have the curious effect of giving them even more credibility.
The fact is that they have been caught wrong-footed with their constant predictions of an “imminent” economic surge justified by the tiny segment who nominally benefits from the various and ongoing monetary interventions.
Of course, for most Americans, a depression rages on.
The consensus is that the fall in global trade and decline in retail sales (despite the surge in utility usage and rise of Obamacare) is all about the weather or the election.
The monetary overlords have learned that the key to effective behavioral finance is to inject as many political hot buttons as necessary, ensuring that the real issues remain fully ensconced in the irrational.
Long forgotten is the fact that assets underlying oceans of financial assets can never be marked to market or real value.
The housing market has mushroomed yet again into another bubble and worldwide equity valuations surged to all time highs alongside massive unemployment, margin leverage, and a sinking Baltic dry index.
In the latest desperation to fuel the credit Ponzi in order to make room for a new source of REPO collateral, the incredible shrinking bond buying experiment is being forced into sequestration. Negative interest rates have arrived and appear here to stay.
Keeping the cost of money low further distorts as the flow of misallocated capital continues across sectors such as housing and oil.
And if that doesn’t work, there is always the war option.
Not only does war benefit the military industrial complex, but it also provides room for more bond buying and, hence, a cover for continued low interest rates.
Tyler Durden, of ZeroHedge summarizes it best:
“But they are finally stirring.
The fun part will be when economists finally do get their suddenly much desired war (just as they did with World War II, and World War I before it, the catalyst for the creation of the Fed of course), just as they got their much demanded trillions in monetary stimulus.
Recall that according to Krugman the Fed has failed to stimulate the economy because it simply wasn’t enough.
Apparently, having the Fed hold 35% of all 10 year equivalents, injecting nearly $3 trillion in reserves into the stock market, and creating a credit bubble that makes the 2007 debt bubble pale by comparison was not enough. One needs more!
And so it will be with war. Because the first war will be blamed for having been too small; it is time for a bigger war. Then an even bigger war and so on, until the most worthless human beings in existence – economists of course – get their Armageddon, resulting in the death of billions. Perhaps only then will the much desired GDP explosion finally arrive?”
Considering all of that, the curious case of silver prices should not surprise anyone.
Observable supply of investment-grade silver is less than a billion ounces.
Relative to the sheer amount of paper derivatives, this creates the potential for an imminent and massive move at any moment.
Silver prices, like every other financial assets are manipulated – only more so and more overtly. This has been the case for decades and merely follows a lineage that began in earnest when the Hunts attempted to accumulate a concentrated long position in the late 1970’s.
Silver and the extent that the paper tail of derivatives wags the physical dog is perfect mirror image of the desperation.
Whether it is new treatments of socialism, or the slow political turning toward the justification of war, we seem hell bent on repeating the mistakes of our fathers.
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