Tuesday, November 11, 2014

Our Paper Is NOT What It Seems

As mentioned so many times by A, FOA, FOFOA (and yours truly) the current international monetary and financial system requires TWO things - ZIRP and perpetual QE - to generate the illusion required to maintain the CONfidence that sustains a derivative, debt-based fiat system. These are core requirements. There are others that are more or less important, like a captive audience for example, but these two are essential.

As for ZIRP, the survival of the dollar system guarantees it, through the primacy of the interest rate derivative complex - a lengthy topic we have covered well enough to simply remind ourselves that interest rates "rising" will never "cause" the death of the dollar system. Rather, the dollar system must be dead already for rates to ever have a chance to rise.

It is the requirement of perpetual QE that deserves our attention. For it is the failure of debt that triggers the death of a fiat system, and it is the very same prevention of that failure - the salvation of debt at any cost - which paradoxically grows the debt to levels that can only end in failure.This is the cycle of destruction we call "quantitative easing" a system where (since we hold debt to be the primary wealth reserve asset) we simply and actually issue more debt to bail itself out - any idiot can understand the impossibility of such an oxymoron, and how it will end. And yet we choose to believe it can be sustained indefinitely.

Back in 1997, Another clearly articulated how systemic debt is "socialized" in the final years of a fiat system's timeline. Over the years, even before LTCM, the term "bailout" came into fashion, followed by the various iterations of the more socially palatable "QE".

Now we have entered a phase where the sustaining "head fake" of the infamous "taper" is revealed to be just another shell game between the Fed and its primary dealers. Can any of us truly be surprised by this? As we have said time and time again, QE will NEVER end until it collapses the foundation of the system.

But if our systemic "Narrators" can somehow convince the public that debt can contract (i.e. tapering) and yet the system will remain whole, this is a huge blow to the historic rationale of inevitable collapse - a confidence builder among those who want to believe in the recovery meme. The only thing left to produce are the charts - proof positive that markets, and economics in general, are manageable by the banks.

Even our most skeptical conspiracy theorists, who denounce 90% of the written word as "propaganda" are disheartened when the charts are trotted out. Most of us, when we skim the articles stacked eyebrows deep at Zero Hedge, read where the "fraudulent and manipulative actions" of our central planners create the intended market action - as evident in the movements of the DOW, the VIX, the USDX or any of our venerable "indicators".

We lament, as I often have myself, that "we are charting fraud". Yet we still believe that the fraud has the power to move markets, because our charts say so.

I will tell you now that just as there is "one set of laws for the haves, and another for the have nots", there are also two sets of every chart you hold sacrosanct as the final word on our economic reality. And they are diverging.

We have been charting fraud for some time now. But I say to you today, that as more and more of the "have nots" turn from acceptance to skepticism, from obedience to defiance, the time is hard upon us that a dovish Fed statement will NOT create a "risk on" attitude as our charts "confirm".

The time is already here that our record corporate buybacks and Fed purchases of stock will NOT spike the equity markets, as our charts "prove". But in their proving of it ... that is enough to make it so.

The time is already upon us that scams and fraud and managed expectations do not cause our macro economy to respond as our charts once said they did, and so the charts themselves are cooked to prove that fraud still sustains the system - all in a last ditch effort to sustain CONfidence in the resiliency of the system, and the handiwork of it's managers.

I caution you now - where the most credible, irrefutable charts and graphs have not yet been cooked, they will be. "Whatever it takes" policy demands it. Our paper. Our currencies. Our contracts. Our charts. They are not what they say they are.

When our most revered charts are shown to be cooked, as the expected actions they support fail, a wholesale destruction of confidence will sweep across the globe like an apocalyptic parting of clouds that allows the sunlight of truth to enlighten societies and economies alike.

We will finally understand why John Williams has so often cried wolf. He is a victim of his own insight, thinking that the world around him understands as well as he does how fraudulent the statistics we live by have become.

Yes John, if everyone understood as well as you do how fraud holds our entire derivative reality together, the collapse you have so often predicted would have come and gone years ago.

But the 99% do not understand that all charts are cooked, as you, and the 1% do. After all, the fraud of our derivative world creates the harsh reality that the little people believe in and are enslaved to, just as it creates the splendor that empowers its creators.

The awakening is just a matter of time. Thoughts are changing.

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