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Investing and Philosophy: understanding the three stages of truth

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By Phil  Osophy

5.15.2010

http://wp.me/pOhuI-gH

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” – Arthur Schopenhauer

A short essay which equates secular market timing to the three stages of truth

“Investing” has to do with the psychology of human beings. Understanding the three stages of truth can help enormously in understanding the financial markets, or anything else for that matter.

This essay uses the term “investing”, very loosely because it’s meaning has become muddled.  Todays 24 hour global on line financial markets much more accurately depict a legalized on line gaming environment. If there was any truth in advertising, qualified participants (people who have money qualify) could click on buy, sell, on line poker, horse races or craps. There is no reason they shouldn’t all be on the same screen.

Baby boomers now beginning to think of retiring grew up watching Mutual of Omaha’s Wild kingdom and were sold on the idea that their mutual funds would provide for it by nice people with expensive desks. The idea was that if you “invested for the long term”, your real wealth would compound. Merrill Lynch was bullish on America. They never said if they were bullish on themselves.  It is now obvious that this was all a con job, but the idea is disputed. Similarly, the idea that the global financial markets have devolved into a legalized gaming casino is past the stage of denial, and now the obvious truth is being met with a lot of opposition, mostly by all the interests vested in it. So these are two examples where we are currently on the second phase of truth.

Back to the point…

The fields of advertising and public relations have grown more potent, omnipotent and omnipresent. Everyone in the world, market participant or not,  is subject to a 24 hour PR cycle. Markets are linked globally and trading on ninety something percent leverage amplify the “news”(PR). The markets routinely have exaggerated daily movements of several percentage points as market participants try to estimate relative values by buying and selling at the speed of light and up to 99 percent leverage. The whole thing is driven by perception, belief and confidence…and it’s amplified by a debt based fiat currency system.

using the three stages of truth for practical purposes…

The first stage of truth is always met with denial. Human psychology…”the crowd”, collectively never want to acknowledge what is right under their nose. The crowd is always herd like. George Orwell wrote “to see what is in front of one’s nose needs a constant struggle”.  To do that requires independent thinking. In order to operate in the first stage of truth, by definition this expresses an opinion that is counter to the collective opinion.

George Soros wrote, “markets influence events they anticipate”. That is certainly true, until it isn’t. In other words, the real estate bubble, in the second stage of truth, was still influencing the event (higher prices) they were anticipating. By the time the third stage of truth came along, the market was collapsing. So the market participants collectively had to go from anticipating higher prices, to anticipating lower prices, and that happened because of the third stage of truth, which was only achieved by the market beginning to collapse. The actual root cause of this particular collapse (rising interest rates and unpayable debts), are what finally tipped this unsustainable bubble from the second to the third stage of truth.

Some would argue it all comes down to the math, and ultimately you would expect math to dictate events, but because of the three stages of truth, the math can take a back seat for long periods in the interim.  For example, the debt and future obligations of the US government (as well as many other governments today running fiat currencies) are far too large to ever be repaid except in greatly inflated dollars. So this item is currently in the second stage of truth. In spite of the fact that this debt is an order of magnitude too large to be repaid, and despite the fact that this is staring everyone in the face, the value of the currency has yet to collapse against real things because the truth is being violently opposed.  So despite the fact it is obvious that this debt cannot be repaid, people with vested interests in it will defend it’s legitimacy here in the second stage of truth.

When Bernie Madoff’s NASDAQ was peaking out around 10 years ago, it was supposed to go on forever. This new dot com era changed the whole game. “It was different this time”. It always is in the first stage of truth. Then there was the real estate bubble where anyone with a pulse could get a zero down loan because it was obvious that real estate prices would go up forever and would never go down. Supposedly intelligent people at the time would come on TV and say that. So these are both examples of things that were all right under everyone’s nose. First the truths were met with denial and ridicule, then in the second stage of truth met with opposition. In other words, when the real estate market began to collapse, that idea was met with extreme skepticism. Following that, in the third stage of truth after the collapse, it is now obvious to everyone that it was an unsustainable bubble.

A key point is that only hindsight offers the actual truth and even then is subject to historical revision.  So that’s the problem with any trading system. At the first stage, is the truth being met with denial because it’s either the truth or is the hypothesis simply wrong. Things that are wrong will also be met with denial because they were not the truth.

By definition, the application of this idea requires you have to have the ability, conviction, confidence and correctness to see the truth when that truth is the subject of denial and ridicule. It it is not the subject of ridicule, then either it is not the truth or it is already in the second stage of truth.

Famed investor Jim Rogers was once quoted as saying “buy value sell hysteria”. This is another example of the stages of truth. Value occurs in the first stage of truth. When Gold was trading below $300, people buying gold and gold derivatives were the subject of ridicule from the herd. Hysteria occurs during the second stage of truth. The stage where it’s obvious that this cannot continue forever, and despite that, it is continuing, and being defended against criticism. When the hysteria peaks, when the hypocrisy of the defenders becomes too great then the hysteria ends, the bubble bursts, and the third stage of truth is achieved. The short seller would of course, also like to sell in the transition phase between the second and third stages of truth.

Summarizing this idea, financial markets are legalized casinos with credit up to 99 percent of the purchase price and available on demand. Psychology and herd behavior drive the markets. They operate on belief and confidence or lack thereof…. according to the three stages of truth. Market relationships are purely a product of perception, belief, and confidence. Those all follow the three stages of truth. The efficient market theory is wrong and only still used by ivory tower academics, not successful market participants.

Using the three stages of truth for practical purposes, ideally a position would be initiated in the first stage of truth and held through the second stage when it is being met by opposition. Then, the position is terminated or reversed at the transition to third stage of truth, when it is obvious to everyone what the truth is.

Notes:

I write to you from a disgraced profession « Real-World Economics Review Blog
[filed under: failed financial system, John Maynard Keynes, Fraud, flat earth Economics professors]
The following is the text of  James Galbraith‘s written statement to members of the Senate Judiciary Committee delivered a few days ago.
I write to you from a disgraced profession. Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis. Concepts including “rational expectations,” “market discipline,” and the “efficient markets hypothesis” led economists to argue that speculation would stabilize prices, that sellers would act to protect their reputations, that caveat emptor could be relied on, and that widespread fraud therefore could not occur. Not all economists believed this – but most did.
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knife edge economics

February 28, 2010 40 comments

by: Keynesius Fraudius
2.27.2010
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This essay proposes a set of assumptions to explain a set of empirical observations related to past, present, and future broad market behavior. There is no attempt to integrate geopolitical events such as war. The theory is called knife edge economics. It was first published privately to EarthBlog News subscribers in the spring of 2009 and disseminated publicly in late December 2009 via in an introspective look at the future of America. This essay offers an elaboration from that point.

knife edge economics

assumptions:

A collapse occurred in 2008 due to an ever increasing amount of debt which became too large to finance.

The FED is never going to tell the truth. Neither is the Treasury. Neither is the Banking system.

As short term interest rates were raised, the housing market collapsed, ending a multi decade long sting of FED induced serial bubbles which all required ever more debt.

The last bubble, the real estate bubble, was by far the largest bubble. The last remaining bubble is the unpayable debt still called a currency (the US dollar).

The collapse of the real estate bubble caused massive insolvency in the banking system, the government and the population. This set off a chain reaction of derivative failures with losses dwarfing available capital. This required public bailouts and state control of public corporations.

The collapse has already occurred, and all that can be done at this point is to alter the look and feel of the collapse, and affect real wealth and capital allocation as the collapse continues.

The entire global financial system at this point resembles a balloon. As new debt is created in the US, the capital is deployed overseas causing the balloon to expand and all asset prices to rise and the US dollar to fall because US banks are buying foreign assets and selling dollars. As the balloon deflates, capital returns to the US causing a rise in the US dollar and a deflation of all asset prices. The idea that capital returns to America seeking safety is an MSM red herring.

If the FED did not have a printing press available, the entire global financial system would have already completely collapsed amid massive insolvency into a deflationary depression and total system failure.

Since the FED does have a printing press, we have printed more money and increased the already unpayable debt so as to attempt to regain solvency of member banks and affiliated institutions.

Stability is achieved by ensuring low volatility. Low volatility is ensured by active short term market management.

If the volatility as measured by the VIX is low, the knife edge is wide. If the volatility is high, the knife edge narrows.

As the knife edge narrows (as volatility increases), the risk of falling off on one side or another increases.

The two sides of the knife edge are a: a hyperinflationary depression  b: a deflationary collapse

If the knife edge thins and collapse occurs, which side of the knife will be determined by how much money is printed (debt is increased).

If the knife edge remains wide (if the volatility remains low) , the collapse can be made to look like an extended period of economic and social decay lasting as long as one or two decades, ending at a point that resembles a collapse, but arriving there without a dislocation.

To the people, it will feel more of less the same. The experience will be high unemployment and a much lower standard of living due to unaffordability or lack of money.

The final outcome is either default or devaluation via inflating the debt away, or changing to a new devalued currency.

The FED, the Treasury and member banks along with Central Banks and affiliated institutions overseas are all working in concert using active management techniques of all kinds as a means to achieve policy objectives.

The primary policy objective is market stability.

The rate of quantitative easing (money printing) determines long term interest rates. Long term interest rates determine whether the FED is in control, or out of control.

The policy is to print enough money to keep long term interest rates low, so the real estate market and banking system can avoid continued collapse and regain solvency.

Artificially suppressing long term interest rate has the effect of depressing the US dollar which has the effect of boosting US share prices and commodity prices.

Using knife edge economics as a predictive tool, the ten year note and the VIX are leading indicators regarding collapse or decay. If the ten year yield remains low, then the FED would be assumed to be in control and the dollar would be free to slowly depreciate. The knife edge as measured by the VIX would remain wide, the FED would have more room to maneuver and commodity, stock and other real asset prices would be expected to move higher.

Another way to look at this would be that policy effect on asset prices is only a reflection of a depreciating dollar against all assets. In other words, assets like stocks may be going up, but only insofar as to reflect the decline in the worth of the dollar, which may or may not be well indicated by the US dollar index. The dollar would depreciate in this way possibly for a decade or more until the unpayable debt was inflated away.

If however there was to be a surge in the 10 yr rate, this would indicate a loss of FED control and would argue for much lower stock and commodity prices, along with a risk of a repeat of October 2008.

The FED solution for a market based surge in the 10 yr interest rate and a volatility increase would be to accelerate QE.  If printing money does not reduce the interest rate then knife edge economics would argue the FED is losing control and would risk hyperinflation to regain it with the alternative being insolvency and absolute system failure as was almost experienced in 2008.

Generally speaking, knife edge economics would explain current FED policy as endeavoring to promote stability through any active or passive means necessary. Keep the 10 yr yield low. Manage equity prices for stability and within bands. Allow the dollar to depreciate for an extended period of time, causing asset prices to slowly inflate to regain solvency within the system.

Editors note: EarthBlog News does not provide financial advice.  We are proposing an analytic structure to explain market behavior.

the “long term investing” con – an overview

February 21, 2010 8 comments

By Antecedent Insider
2.21.2010
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con (kn) Slang
tr.v. conned, con·ning, cons
To swindle (a victim) by first winning his or her confidence; dupe.
n.-A swindle.
adj.-Of, relating to, or involving a swindle or fraud: a con artist; a con job.

With relentless enthusiasm, the corporate media extol the virtues of  “long term investing” in Wall Street products which range from a simple savings account to impossible to understand concoctions  that exploded like financial derivative death stars going supernova in 2008. The public is told in print, on TV and on the radio by various “experts” whose credentials all came from within the industry, “if you save your money and passively invest it for the long term,  if you don’t engage in market timing and make regular contributions, you will be rewarded”.

This wisdom is coming from a multi-billion dollar industry where everyone has something in common. None of them make any money unless you invest in their warez. Wall Street and all it’s offshoots have something else in common. They are all parasitic in nature. They don’t make anything, they all rely on money flowing into the system in one way, or another. From a financial publication, to a tv network, to a worldwide lobby of pundits, advisors, consultants, and various other parasites, they all either just skim off the top or take a fee directly.

This essay will challenge the claim of long term investing in Wall Streets myriad of products as a “sure thing” as a patently false, even fraudulent statement…. a con perpetrated by people and institutions that require a continued inflow of  money to support their existence.

We will examine the last 97 years, the modern period from when the Federal Reserve Corporation took command of issuing the money on behalf of the US Government.

From 1913 until 2010, the US dollar has lost approximately 95 percent of it’s purchasing power. This is equivalent to a 3% annual return, after taxes. In other words, over this very long term, an investor had to earn 3% after taxes just to break even in terms of maintaining purchasing power. In easy to understand terms, if you could afford to buy a loaf of bread in 1913 and invested the bread money on Wall Street until 2010 earning 3% per annum after taxes, you would still be able to buy a loaf of bread today. Your wealth would not have increased at all, it would have remained constant.

So the investor had to earn an average annualized return over the last 97 years of greater than 3% after taxes, to actually increase their net wealth in terms of purchasing power. We will use that as our baseline. If you could earn 3% after taxes (4.2% before taxes using a 30% tax rate), then you broke even.

Now that we have a baseline standard, lets define “long term”.  Over the very long term the only guarantee that can be made is that you’ll be dead.  So lets define an “investing lifetime” to mean long term. If you start your career out in your 20’s and retire in your 60’s, that’s a period of 40 years and would be the most generous period.

For practical purposes, people are often operating on a 20 year time line from when they start “investing seriously” meaning that they have accumulated any significant savings to invest. With those assumptions, a reasonable time frame to consider the idea of “long term investing” is 20 to 40 years.

So the question now becomes,  can an investor over a period of 20 to 40 years reliably earn a positive return of greater than 4.2% through  “long term” investing? This is the point where people will start to play with statistics.  The entire industry of wall street will play with the statistics so as to conclude that long term investing is the answer, because they require your money to feed the industry. We are going to take an independent look at that claim.

The researched conclusion is stated in advance, and then backed up by a few examples. The conclusion is as follows. There are periods of time, often long periods of time, as much as 20 years or so where blindly investing in stocks, bonds or some combination thereof would have produced positive returns of greater than the baseline 4.2 percent required to maintain your purchasing power. These are the periods often used for “fun with statistics” that end up in glossy brochures.

On the other hand, there have been periods of up to 60 years out of the last 97 where investing in stocks, bonds or some combination thereof was a money losing idea.

The position this overview will take is that since there have been periods of an “investing lifetime” which have produced extremely negative returns, the idea of “long term investing” is essentially a crapshoot.  Since NO ONE has perfect knowledge about the future, your long term investing success will be totally dependent on the luck of the draw…when you were born, at what point you begin your investing, and what happened in the world during the course of your investing lifetime.

THEREFORE, people who blindly accept the tired old “long term investing” canard coming from brick buildings, expensive mahogany desks and Ferrigamo shoes are likely to be disappointed with their results. Not unlike gamblers funding the opulence of  Las Vegas, those brick buildings, expensive furniture and the Ferrigamo shoes on Wall Street were all paid for with savings.

Lets start out by looking at some long time periods.

If you were unlucky enough to have been fully invested in 1929, it took until 1954, 25 years later,  for the market to regain it’s former levels. Long term investing over this reasonable investment lifetime of 25 years was a losing idea.

Again if you were unlucky enough to be fully invested in 1966, you had to wait 18 years, until 1984 for the market to return to it’s former levels. This of course ignores the 4.2% pre tax return necessary just to maintain your purchasing power.

There was a 57 year period from 1929-1986 where a “long term” investment in the index earned but 1.7 percent per annum. Even considering dividends and dollar cost averaging, there would have been long periods within this “greater than an investment lifetime” period where real returns would have been strongly negative.

In Japan, The Nikkei 225 index peaked around 40,000 in late 1989, and here today in 2010,  20 years later, it stands around 10,000…a loss of around 75% for holding for a period of 20 years. Combined with the increase in the cost to live because of inflation, this represents very close to a total loss for a “long term Japanese investor”.

Thousands of well meaning Chinese retirees were sold Lehman Brothers structured notes that were “guaranteed”. In 2008  those investors experienced a total loss of their retirement savings. US investors who had substantial portions of their retirement savings in Lehman Brothers stock, was confiscated. Then there’s Enron, and Bear Stearns, Fannie Mae, and the list goes on, and on and on. None of these were fly by night NASDAQ names. These were supposedly “blue chip” stalwart investments worthy of your lifes savings. Nothing could have been further from the truth. Many “investors” in these issues didn’t have the pleasure of calculating a return, because they lost their principal.

For decades, the “blue chip” companies were touted as safe, reliable ways for investors to save and accumulate wealth. Taking General Motors as another one of those “blue chip” investments, there is no doubt that General Motors made a lot of  automobiles and a lot of money over the course of it’s existence…and those profits all went to whom? If an investor had dollar cost averaged into these shares for an entire investment lifetime, or for that matter, if  regular contributions were made every month for the entire 97 year period we are considering, any way you slice it, they lost nearly all of their money. Forget about a rate of return on the money, these unfortunate investors didn’t even get a return OF their money.  Over the course of the same time period, there were a lot of GM executives and Wall Streeters who got wealthy off of GM. The point here being that even if you or your “investment advisor” are lucky enough to pick the a profitable “blue chip” company for the “long term”, there is no guarantee whatsoever that as a shareholder or bond holder of that company you will be rewarded. To the contrary, there is a risk that you could save and “invest”, only to lose your hard earned savings.

Today, investing in a 10 year government bond will earn about 3.5 percent. So, if you buy those bonds today and hold them to maturity for 10 years, the only thing you are guaranteed is loss of  purchasing power of at least 0.7 percent per annum for 10 years. If we enter a period of high inflation, the results will be much worse.

Citing examples of  “investment lifetimes” which yielded negative real returns or a partial or even total loss on the investment is limited only by the space available to write them down.

It’s a “stock pickers” market. How many times have we all heard that? Let us demystify that claim and expose one of Wall Street’s dirty little secrets. When the market goes up, 9 out of 10 stocks go up. When the market goes down, 9 out of 10 stocks go down.  Statistically speaking, if you own more than one or two stocks, it isn’t a stock pickers market, it’s 9 out of 10 stocks going up or down. If you do own only one or two stocks, lets hope they weren’t Bear Stearns and Enron.

This overview will conclude the entire Wall Street parade ignores everything outside of their realm. The idea is that Wall Street is the only place to “invest”. Nothing could be further from the truth. The truth is that they are good salesmen and they have entire TV Networks to promote their warez. Given the events of the past two years, it is questionable as to whether the term “investing” or “investment” should apply to Wall Street at all. It appears to operate more like a casino where the house always wins and the rules are changed on the fly for the benefit of the house. Interestingly, with gambling still illegal in most places, the Wall Street casino still opens for business 5 days a week thanks to a bailout from the citizens. We are all speculators now.

“There is only one side of the market and it is not the bull side or the bear side, but the right side.” – Jesse Livermore

You can fool some of the people all the time, and those are the ones you want to concentrate on.” – George W. Bush

“The nature of any human being, certainly anyone on Wall Street, is ‘the better deal you give the customer, the worse deal it is for you’. – Bernie Madoff

Dow Jones 100 yearsDJIA chart

why do the worlds central banks manipulate the price of gold?

February 14, 2010 5 comments

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By Big Brother
2.14.2010
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There is a social theory called reflexivity which refers to the circular relationship between cause and effect. A reflexive relationship is bidirectional where both the cause and the effect affect one another in a situation that renders both functions causes and effects.

The principle of reflexivity was first introduced by the sociologist William Thomas as the Thomas theorem, but more importantly it was later popularized and applied to the financial markets by George Soros.  Soros restated the social theory of reflexivity eloquently and simply, as follows:

markets influence events they anticipate” – George Soros

This theorem has become a basic tenet of modern central banking. The idea is that manipulation of the psychology of market participants affects the markets themselves. Therefore, if you artificially suppress the price of gold, you reduce inflationary expectations and reduce inflation itself…so the theory goes.

This same idea is applied to other markets as well. In 2010 the Federal Reserve is printing money…monetizing debt; selling debt and then buying it themselves. This has the effect of reducing long term interest rates to levels lower than they would otherwise be, leading market participants to believe that the currency is sound when it isn’t. “How can we be printing too much money if interest rates are low and the price of gold is not soaring?”. The answer is of course, they are manipulating both markets. When combined with government data showing a rate of inflation substantially lower than the real increase in the cost of living, this presents a plausible explanation to a casual observer.

You could further distill this entire idea down to lying in order to achieve a policy objective. The worlds central banks routinely manipulate markets, from the equity markets to the interest rate markets to the currency markets to the physical markets in order to influence investor psychology and achieve policy goals.

The US government is also complicit in the effort by distorting, manipulating and fudging important economic data. All of this is done under the guise of “free markets”, when the reality is that the worlds central banks are at this point engaged in a massive fraud, and endeavor to cover it up by covertly manipulating the markets using high leverage derivatives and what amounts to an infinite fiat bank account.

From the time when currencies were de linked from gold, central banks have enjoyed the freedom to print as much money as they wish, subject only to inflationary concerns (a loss of purchasing power). In other words, the freedom to print money is limited only by indicators and attitudes about inflation, which then feed inflation itself. The money has no actual value, it is redeemable only for more notes which can be printed in unlimited quantity subject only to inflationary concerns. In other words, in a perfect world, (according to the central banks) they would be unrestrained by any inflationary effects of unlimited money printing; they could simply print as much as they want. This is why manipulation of the gold market is critical to the con. If the price of gold were soaring at the same time they were trying to convince the markets that the currency was sound and inflation was low, that story line wouldn’t make any sense. How often have we all heard the commentary “gold is going down so there must not be any inflation?”

It is noteworthy that since the creation of the Federal Reserve in 1913, the US dollar has lost 95% of it’s value. So while in the short term manipulation of the markets may seem like a reasonable approach, the policies of market manipulation have clearly failed in the longer term.

The complicit corporate media are also involved in the fraud through advanced propaganda techniques which portray anyone who favors gold over notes to be somewhat unstable. The term “gold bug” is used with a carefully crafted negative connotation. FED shills who may be employed at prestigious universities are called out to dismiss the notion that the central banks could possibly not be telling the truth in spite of the fact that all of the established players have been caught lying over and over again. The current head of the US Treasury, supposedly a credible figure…a former head of the NY Federal Reserve, got caught cheating on his taxes which didn’t slow down his nomination for the position by the people’s representatives at all. He could have shown up to the hearings with a head in a basket and it wouldn’t have mattered. So this corporate media festival of lies attempts to portray criminals as godlike figures and maligns anyone who might not trust their “money” to be sound. The FED’s fiat money is debt. Fiat money is debt and the two terms are interchangeable.

I will leave you with this, which supports what I have said above.

Exclusive: The Bank Of England Engaged In Flagrant Gold Manipulation In The Interwar Period Via The New York Fed; Does History Repeat Itself?
by Tyler Durden
Zerohedge
02/13/2010
An article written by University of Tennessee professor John R Garrett, “Monetary Policy and Expectations: Market-Control Techniques and the Bank of England, 1925-1931”, which describes in exquisite detail the gold falsification measures undertaken by the Bank of England in the interwar period in order to impact interest rates in a favorable direction, performed with the full criminal complicity of the Federal Reserve Bank of New York, may mean paranoid “gold bugs” could soon be forever absolved of their “tin hat” wearing status as outright gold, and other data, manipulation by a major central bank is now proven beyond doubt. The implications regarding the possibility of comparable deceitful and treasonous acts by modern central bankers are staggering.
more at ZeroHedge

For extra credit, I have this.

TrimTabs and the Plunge Protection Team
Wednesday, January 06, 2010
We haven’t heard too much about the Plunge Protection Team lately, that is, until the folks at TrimTabs talked to the folks at Marketwatch yesterday and this report was filed: The unusual circumstances that led the U.S. market to rally powerfully in 2009 might be explained by secret government moves to buy stocks, according to Charles Biderman, the founder and chief executive of TrimTabs, a research firm that tracks liquidity flows in the market.
more

and finally we have Mr Alan Greenspan who by authoring this back in 1966 has clearly established himself today as the king of fraud.

Gold and Economic Freedom
by Alan Greenspan
1966
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.
more at 321gold

Edit: Add

“The last duty of a central banker is to tell the public the truth” – former US Federal Reserve Chairman Alan Blinder (PBS’s Nightly Business Report, 1994)

We looked into the abyss if the gold price rose further.  A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake.  Therefore at any price, at any cost, the central banks had to quell the gold price, manage it.  It was very difficult to get the gold price under control but we have now succeeded.  The U.S. Fed was very active in getting the gold price down.  So was the U.K.” – Eddie George, then Governor of the Bank of England and a director of the BIS

In Deception and Abuse at the Fed, Robert Auerbach, a former banking committee investigator, recounts major instances of Fed mismanagement and abuse of power that were exposed by Rep. Gonzalez, including:
* Blocking Congress and the public from holding powerful Fed officials accountable by falsely declaring–for 17 years–it had no transcripts of its meetings;
* Manipulating the stock and bond markets in 1994 under cover of a preemptive strike against inflation;
* Allowing 5.5 billion to be sent to Saddam Hussein from a small Atlanta branch of a foreign bank–the result of faulty bank examination practices by the Fed;
* Stonewalling Congressional investigations and misleading the Washington Post about the 6,300 found on the Watergate burglars.
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King World News Interviews Metals Trader Andrew Maguire
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A London trader walks the CFTC through a silver manipulation in advance
by cpowell
GATA
Thu, 2010-03-25
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BOMBSHELL – Whistle Blower Comes Forward With Solid Proof The Price Of Gold And Silver Is Being Manipulated By Major Financial Institutions
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