Thursday, January 25, 2018

From Their Lips to Your World

Truly, we live in an era where a comment from one elite in the morning, followed by another elite in the afternoon, literally sets the value of our physical world reeling from up to down, nine to noon. Who would have imagined in the time before civilized man that the thoughts of a handful of cognitive beings could wield such power? Was it was always this way?

Long ago, one smart trader in a single room with one other trader and no outside interference, could talk down the value of the finest sword, and say it was not worth a quarter ounce of gold - citing other fine swords that have sold for less, even finer. And explaining that swords are falling in value anyway due to newer types of weapons. Yet in that room, you had a buyer representing a full 50% of market participants and a seller representing another 50%. To agree to a value of 1% less in that moment of barter would not be extreme at all.

Yet today, you have less than one thousandth of one percent of the market ... uttering a single comment ... and sending the price of gold, or oil, or the dollar, or plutonium up or down by 1% for as much as 99% of market buyers and sellers.

Does Mnuchin, or Trump, or Draghi really have the power to make every ounce of gold in the world lose 1% of its dollar value for an hour, or a day? Causing millions of dollars to be lost or gained in a matter of moments? Can less than .0001% of representatives in the marketplace - with no actual financial stake at risk - create big winners and big losers for a day, a week, or for life ... by uttering a few words?

Yes they can. That is the world we live in, and that is the fragility of value we accept in these times.

Intrinsically ... is the value of oil, or gold, or the dollar or plutonium really that fragile? For some people, it is not. For generational wealth, an ounce of gold is worth today what it was worth in the lifetime of Caesar. And no man among them or beneath them can talk it up or down on the whim of a single sentence from one day to the next.

Understand the power of today's ruling class, and how the value of everything the little people depend upon - their cars, their homes, their debts, their jobs, their money, their lives ... appreciate or devalue effortlessly, at a moments flick of the tongue.

From their lips to your world, the value of everything you own is as fragile as a single afternoon news bite from our billionaire POTUS - which could have been misquoted - then reversed an hour later. All because the "value concept" has been debased through the glorification of our "debt as wealth" system. As the fragility of debt begins to underscore the fragility of value, the system itself becomes more fragile.

In a world so fragile, is it any wonder that our economic, social and cultural compasses are wildly bipolar from day to day? It is an existence that many take for granted, failing even to notice that it should be as terrifying as life in a maze for a lab rat. Yet the rat takes little note of the electric shock when it drinks the nicotine or cocaine laced water. It simply accepts its condition and lives until it dies.

Such is the stability of the world in which the little people make their way ... a comment can be made, then another ... a few crumbs are spilled ... some buttons are pushed .. and the experiment comes to an end ... as the hand above both gives and takes - from the hand below.


  1. We have the Greenspan ‘wealth effect’, going on in high gear, mostly with respect to retirees. That in turn is going mostly straight into US stocks, which is making the only people with stock portfolios left (typically retirees, via 401’s and of course pensions), feel ‘wealthy’ to keep spending. This is the 3rd time now, since 1999, where that wealth effect is keeping things looking hunky dory. The rest of the population, not retired, but with stagnant wages, is spending and racking up debt to ‘keep’ up with those ‘rich’ boomers and retirees.
    If we, the boomers, really want to drain the swamp, we should ready to give up everything that the swamp gave us.

    1. We may not have a choice. As the primary dealers put up their charts about how CB asset reduction is going to crash the equity boom, the CBs quietly consider how much "less" they can do without doing "more". It is quite the drama yes? With actors playing suspenseful parts ... all to keep the system in balance. One big chain reaction derivative default could yank the plug, but the swamp is leaking, leaching and draining at its normal snail's pace.

    2. The Fed really hasn't reduced its balance sheet. MBS holdings have actually increased. B/S should have dropped by 50B so far.

    3. I would not be surprised if the FED (and other CBs) are only "talking" their BS down (note "balance sheet" and "bull shit" may indeed use the BS acronym interchangeably). In our fake world with fake money, fake news and fake technology, why break the trend with truth?

    4. The Fed can't do much other than "talking" it down, the only way the Fed can raise rates is BoJ, SNB and ECB keep on pumping trillions into the BS.

      None of these central banks can ever stop or slow down their pumping and printing. If they did, not only would stocks drop super hard and fast, but our interest rates would skyrocket literally over night.

      The Fed, could not raise rates fast enough but they could not do QE. You just simply can’t do QE and raise rates. Perhaps, I know I'm pushing the envelope, Trump actually knows what he's doing since minimum wages have gone up without government coercion. I hope he can get the juices flowing fast enough to raise rates, very slowly, without QE.

  2. The Fed could do asset purchases at higher rates. that's probably what it should have done back in 08. Maybe drop FFrate only to 2%.