Monday, September 9, 2019

A Changing

People were beginning to ask ... 22 years ago ... how can 50% of total annual worldwide gold production be traded every single day? How can more than 14 times the entire above ground stock of tradeable gold change hands every year?

We know the answer to these questions today - derivatives. But we are only beginning to recognize the impact of these answers. It is one thing to fractionalize fiat money for the purposes of lending. But what are the implications of massive financial positions (14+ times global annual GDP) in key global markets like foreign exchange, interest rate, equity and commodity?

These annals are filled with reminders of these implications. These position holders completely eliminate supply side economics (still effective in the 1980's with Paul Craig Roberts under Reagan). Underlying physical assets increasingly represent a diminishing fraction of their hypothetical value - hypothecated values as real in currency terms as if the underlying physical asset in said amount exists in the "here and now". The impact on controlling prices in key markets is substantial. Forget about sound banking 10:1 ratios - those are a barbarous relic. As always recognized in these annals, we now have a chart whereby we can visualize how oil price is controlled just like gold:

But it all really started with gold, since to hyper-fractionalize gold freed the currencies to be hyperinflated to derivative levels (1.7 quadrillion notional?) without having the true price of gold realised. If it was known that a real ounce of gold is worth 10 (or 100) paper ounces, gold would trade at 10 times (or 100 times) it's current price. Such a world would destroy the credibility of our currencies, and the currencies themselves with it. So we continually choose functioning currencies over the unknown impact of a systemic crash. And here we are today.

We hear more and more about not just a "fake gold market" but increasingly an entire "fake world" of prices, markets, statistics, polls, elections, behaviors. Yes, there is indeed a global societal harm in unrestrained financialization as the dominant (and growing) component to developed market economic growth and GDP, as we transfer the derivative wealth effect of hypothecation to every aspect of life on earth.

Our world is truly a derivative matrix, powered by the unlimited wealth creation capability of our fiat-currency-derivative system, dominated today by the dollar system, and enabled by the hyper-hypothecation of gold.

To have a "free market" in gold, the paper gold market must die, and for that to happen, either the currencies must come under great stress from loss of confidence (then loss of function) or we can simply agree to abolish the entire derivative system and make it punishable by death to fractionalize good delivery gold. The effect would be the same - we would be transforming from a debt based to an equity based system. Do not reference past gold standards, as a free market in gold has never truly been in effect during their reign.

Which is more likely: currency destruction or humans miraculously and simultaneously abandoning their human nature?

The signs of the more likely outcome are growing in the thoughts of both little people and Wealth Giants alike. Thoughts of value are changing. And our times, they too are a-changing. They always do, they always will ... and in the end, time proves all.

Thursday, August 22, 2019

The Flower of Time

As new and believable data begins to bubble up from the hard to reach places where truth can still be occasionally found ... the statistics are remarkable.
According to the Bank of Russia data, in the first quarter of 2019, export earnings in US dollars formed 61.7% of the total amount. In comparison, in the analogous period of 2017, they constituted nearly 70%. Especially noticeable is the change in trade with the EU, where the dollar share in exports – for the first time ever – fell below one half. In the first quarter of 2019, 46% of exports from Russia to the EU were sold in dollars and 42% in euros. A year ago, this correlation was 53 and 33% respectively.
Of course, there is likely a notion to decry this data as "fake news" ... and that Roacheforque is a Putin puppet, or worse - an ISIS sympathiser. But I do think that the balance of evidence in other news supports the behavior of the dollar system's operational "measures".

Strong dollar policy has inverted, but supporting (weaker) dollar USAGE is as critical to obedient dollar vassalage as ever. Just ask Deutsche Bank, or Volkswagen. The former was subservient to Baffin, which irked the FED/ESF/UST/NYT quadfecta of Dollar Imperialism to no end, and the VW fines were a warning against further sedition.

We all know the reactions to Russia, China and Iran's impudence. Whenever the Euro is used in major trade settlement, especially for energy and systemic technology, the dogs of war are unleashed. Economic war is especially favored due to the advantages of USD stability, exchange rate pair dominance and depth of dollar correspondent accounts.

But that advantage is derived from the circularity of long term usage, which is now reversing at a rate (in both the quote, and further in the article from the first link above) that cannot be ignored. The well worn adage about systemic change "happening slowly at first, then all at once" is beginning to take shape. We still may have a few more years and a few new tangles to unravel, but the key here is:
Instead of 'greenbacks', the central bank has actively purchased yuan, euros and gold, whose inventory has already surpassed 2000 tons.
As made to be known, central banks on the whole have purchased a record amount of gold in recent months (and probably quite a bit more than is being reported) apparently with dollars. Since the stability of the currency system hinges on the dollar as the cleanest (most stable) in a somewhat musty laundry basket of currencies desperately, but inconspicuously dirty-floating to ZERO, the only holding which doesn't need another self-referential bail-out is gold. Buying it with dollars as they rise does seem to be the final act in the lead up to a new "accord".

See the systemic signs? See what the BIS is supporting? See what its member banks are abandoning?
There is no stopping the hand of time.

Thursday, July 18, 2019

The Truly Entitled

We hear a lot about MMT lately, and I will assume that readers understand the concept well enough that it doesn't need to be explained in detail here. But there are certain worrisome ideas about MMT that are being propagandized into the broader mainstream consciousness. One such idea is that it is a political tool of left leaning Socialist progressives. The other is that it's purely theoretical and never yet been "unleashed" - only talked about in heated debates between left and right wing political factions.

Neither of these ideas could be further from the truth.

But first ... let's acknowledge the core concept of these three words: "Modern Monetary Theory". It can be summed up with another three words: "Debt Doesn't Matter". Yes, my friends, you can read volumes about MMT and in the end, what is distilled from all the academic argument and theory involved is that debt doesn't matter (in terms of currency hyperinflation). And the lesson of 2008 lends credence to this view.

Now, the way in which MMT is demonized by the conservative right is to claim that our US political system has been infiltrated by un-American Marxist welfare state-ists who want to rob the middle class's hard earned dollars and give them away to illegal immigrants who will watch free Netflix in their underwear all day, then screw all night to make babies for more free meal tickets. Hold that thought for now, because this idea does bother some people - just not the ones (or for the reasons) you may think.

But the trick here is that our progressive welfare state doesn't actually take the middle class's earned money and hand it over as entitlements. It just prints up all this free money, making the earned money worthless. Most everyone gets this narrative - it's played to death. But again, the lesson of 2008 keeps chipping away at this notion of "making the middle class's earned money worthless" - because here we are 11 years later and it "kinda hasn't". It just pisses earners off to see the same money they earn given away (if only they realized who it's really given to, and how much).

Hopefully, we can begin to understand the truth of these matters. MMT has been in practice for decades (long before 2008). But ... it's not the little people who are the recipients of this free money. It's the generational wealth dynasties and preferred shareholders of the systemic banks who are the benefactors. Listen to Jim Rickards from about the 16:00 mark below:

Yes, the FED could issue 4 trillion in unsterilized dollars to bail out the derivative banking system without creating hyperinflation, so why not issue another 4 trillion to accomplish the Green New Deal? Why not? Because it is the confidence of the ruling class that matters, not the confidence of the little people.

You see, this system in which the ruling class is on "systemic welfare" and the working class is left with dollars that are "harder to earn and keep" ... this is the system which the ruling class supports. Change MMT to place the needy on welfare and leave the rich to create nothing less than real, socially responsible, material wealth (instead of fraud - backed by bailouts) and the system will be sacrificed in another Great Depression. The rich can endure the transition to a new system which again places them on welfare (at the expense of working classes).

The families illustrated this stalemate to the world in 2008. Does no one remember this? The system was to be sacrificed if the debts of ruling class systemic banks were not salvaged. And it was not 4 trillion, it was 23 trillion on the books (and more off).

This my friends is MMT. It is no theory, and again, it has been in practice for decades. And it is never used for the purpose of shoring up income equality, it is used EXCLUSIVELY to increase income INEQUALITY. So in effect, MMT will NEVER be anything more than a theory for its "left leaning Socialist progressive" proponents. Rather, it is a practical tool for the ruling classes to increase wealth and power at the expense of the working class tax base.

As such, MMT and Corporatism go hand in hand, as they have for generations in one form or another. And hopefully, with this better appreciation of MMT, the little people can truly understand who is entitled, and what it means to be.

Saturday, July 6, 2019


There are many facets to a complex idea. The core ideology of these annals, for example, is that our chosen money system is at the root of our moral decay. And furthermore, a free market in gold will do much to cure this ailment. But these are far from "mainstream consciousness" ideas. Indeed these thoughts are discouraged by the operators of our chosen money system. And even this statement is subject to the conditioned response: "check against social correctness".

Alas, to organize the many proofs of argument which support Roacheforque's core ideology would be endlessly tedious. But occasionally, a new proof, or a new branch of one, inspires a new post, and so on. One such branch was revealed through a recent Quora dialogue concerning Ripple's use of XRP.

As I was digesting the implications of the discussion, my thoughts wandered into a new direction. With cryptocurrencies, what are market participants actually investing in? This is not a simple question, so let it sink in a bit. And then consider ... what is the meaning of "investing" in this context.

These thoughts above are merely a different approach toward the popular notion that the traditional definition of "investing" has come under some degree of scrutiny lately. From Google:
gerund or present participle: investing
  1. 1.
    expend money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture.

    "the company is to invest $12 million in its new manufacturing site"

When we put money into "financial schemes" is this the activity of investing or speculation? Look up the word "speculate" and you will find their definitions almost completely synonymous.

There once was a distinction between "investing" and "speculating", when fiat dollars were restrained by gold. And then things changed.

It may seem quite a leap to associate the change in our financial markets, and their activities - indeed the very definition of what market participants are actually doing in the markets - to a change in the nature of our money. But this is because ... as our paradigms shift, our definitions change with them.

When the world's global reserve asset is truly FIAT in nature, the financial markets are now the issuer's CASINO. The owners issue the betting chips, unleashing a paradigm-changing event in the nature of the marketplace.

We all have no doubt heard the many references to our global "casino economy" or "casino markets", but have we truly examined how they got to be this way? It is the fiat betting chips we call "dollars" that enable our casino mentality, our "inveculation". Before the 1970's, a free marketplace existed, as regulated by the somewhat democratic participation of world-wide market participants. I say "democratic" as in more "balanced", since no single player had the supreme advantage of being able to issue and dispense unlimited units of exchange at will (without those units soon finding their way back into bidding for the issuer's gold reserves).

But since the advent of the fiat dollar derivative, the marketplace is a feudal empire run by the issuers of the betting chips, and their proxies. The casino owner can never be broken when they can issue as many chips as it takes to completely manage any market (if the trade is important enough). There is no whale that can outmaneuver a casino that can issue unlimited wagering units at will, whereby the units remain valid throughout the play.

And this has in essence gradually moved our definition of "investing" to one of "speculation", as our market paradigm has gradually shifted. We no longer invest in a fundamental market place, we speculate on the machinations of the Casino chip managers. There is really no difference between the two activities other than the inclusion of the word "risk" in the definition of speculation. As if "investing" in today's "market" does not entail risk? Ask Bill Gross.

So now, back to the discussion that inspired this proof of concept. What actually are we investing in? ... or speculating in? ... when we participate in the cryptocurrency trade?

Why, betting chips of course.
The implications of this?
Time will tell, as the world decides ...

Wednesday, June 26, 2019

Empire of Illusion

No, this is not a formal review of Chris Hedges, but rather an affirmation of what Roacheforque has previously expressed ... possibly to the point of tedium through these annals.

Whether we call it an Empire of Illusion, a Fake World, Idiocracy or 1984, these concepts all generally imply the same understanding.
Hedges describes the polarities of the two societies he says we are now living in: One side is based in reality and able to separate illusion from truth; the other side is rooted in fantasy. The latter, Hedges says, is the growing majority. 
Roacheforque mostly agrees with this. We have indeed gravitated toward a reality that is shaped by information that is created to alter our perceptions - using a socio-economic value system based upon these perceptions.

In effect ... we have invested our world ... massively ... in a complex set of possible outcomes ... involving what we ourselves judge as the most important future events to take place in the material world. We refer to this complex set of possible outcomes as "financial derivatives". And the massive investment we have made amounts to over one quadrillion units of account, denominated in the world's most used and accepted measure of pure value. We need only to understand the implications. Are they elemental? Socially defining? Culturally essential? Spiritually enlightening? Reality defining?

Or instead do we consider these dollar units of value relatively unimportant to our existence - really just a minor afterthought as we go about our lives? Is it the case that money seldom occupies our thoughts ... or is it in fact the bane of our existence - driving us, consuming us?

Does money bring happiness, comfort, the admiration of others, status, power, attraction of the opposite sex, the fulfillment of our desires? Or is it something that we seldom ever think about - just an unimportant item, not really essential, a passing occasional thought?

We decide the value of money, and it's importance to our fulfillment. And if we look around us, at each other and our activities ... what we do and think about money may in fact help us judge it's essence. Once we truly understand the role of these units of account in the civilised world, we may begin to have a better appreciation of the impact they have upon our reality - our material world.

Because the creators of these units can issue as many of them as is needed to shape our perceptions, using this massively invested derivative system which we call financialization.

Call it an Empire of Illusion, a Fake World or what have you. I contend that we live in a Derivative World, empowered by our emotional, intellectual, cultural - even our instinctual / biological / physical attachment to these units of account which define us, and which define the vast majority of  interactions and relationships in this world  ... with humans and their essential man-made systems.

We give that ultimate power to the creators of these units, to manage and manipulate our world ... to achieve their goals - not those of the greater good. That is the great flaw of our derivative world system.

Gold takes this power away from the creators and issuers of our fiat currencies. Gold has no self-serving interest, it has no quality which perpetuates wealth disparity by class or social contract. In the real world, an ounce of gold is worth the same in the hands of a third world nobody as a central banker. And no one can magically turn one ounce of real gold into two, or ten, or a thousand, with the ease of a keystroke.

Furthermore ... we have the power to decide "what is real".

And this, my friends, is the key. As we have given the issuers of US Dollars the power to control our reality, in essence to rule our lives, that power has been sorely abused. And you can clearly see that the nations of the world (and its peoples) who have been most abused by this power, are stacking sovereign gold. You read about it constantly, and you see charts that actually matter - as the contenders for power earn the gold through productive activity in the material world - not through malfeasance and mismanagement of fiat in the corrupt derivative world. Rehypothecation indeed!

More and more nations (and peoples) are getting behind this notion, understanding the power of  this derivative world, wielded for the sole benefit of its creators.

GOLD ends this Empire of Illusion, and the power of its creators - ushering in a more equitable system, rooted in the solid physical world which has always sustained us.

It is Roacheforque's burden to make this known - a solemn duty. Such are the obligations of the Flower of Understanding.

Thursday, June 20, 2019

Mind Flowers

As change is the essence of life, it is sometimes prudent to take stock of "where we are" and of course "where we are going".

Oil is still quite important, but not as much as in times past. The petrodollar is losing ground, but its criticality to the dollar system is likewise gradually becoming less essential. Natural gas continues to gain ground, and technology dominance is obviously growing rapidly, as our trade wars go digital. The promise of technological salvation: economically, ecologically and perhaps even culturally is growing stronger by the day.

And of course the global dollar system is integrated into, and evolving around, thoughts of capturing value, and profit, in the technetronic era. Interestingly, there is always an element of resistance to progress. But in a world where truly nothing is new under the sun, we continually reinvent an "old world order, repackaged for our modern times".

Fiat currency, whether digital or paper - and whether crypto based or legacy (central banking system) based - has existed conceptually for hundreds of years. And regardless of its form, its function has always been the same - an artificial proxy for material wealth that solves the problem of barter and "coincidence of wants".

Today's cryptocurrencies are mostly quoted in (and connected to - like everything else) dollars. Their promise of supplanting the current global banking system - in effect replacing modern fiat currencies created by the banks - is a tall order to be sure. We should ask: "Will the little peoples crypto money forever end the established central banking system's hold over the working classes ... along with the egregious wealth disparity between the 1% and the lesser classes"?

Whether a fiat currency is produced by the banking system, or by some spontaneous, anonymous "block chain" of secure transactions, the units of account are really quite the same in nature. It is only how they are issued which differs. Thus, it is not so much "who" or "how" a modern fiat currency is issued, but rather ... "what" is being produced.

The issuance of a currency does not produce food, land, shelter, technology, life saving drugs or industrial/technological marvels. It merely produces an accepted proxy for these things. Or more precisely, representations of the intentions of others  - to accept a digital or paper proxy for things which have ... wait for it ... real wealth.

In this sense ... one must accept that cryptos, dollars, SDR, bonds, equities ... these are all fiat in nature, whether issued by an authority, or through transactional anonymous spontaneity, or through some other technologically virtuous process. The item itself, is a derivative representation of real wealth, qualitatively distinct from actual wealth.

And this is the realization that is upon us today, as real wealth begins to gain status - through the recognition of a distinct difference between wealth, and its derivative proxy. The material world of Gold begins to balance the derivative world of fiat, as thoughts of value change. These new thoughts grow, changing perceptions in the conceptual realm.

Or so the flower of understanding seems to tell us.

Sunday, May 12, 2019

Thought Correctness ....

In recent posts, you may have noticed there is no shortage of commentary regarding the Dollar System's activation of it's self-destruct sequence. Economic sanctions of many types, trade tariffs, dark money debasement and abandonment of international rule of law by the issuing "authority" do not bode well for continued world-wide acceptance and preference in the U$D.

The issuers seem confident that the stick can be used as effectively as the carrot. But one does not abandon the carrot when wielding heavy the stick. Instead one sweetens the rewards of loyalty among the systemically connected. Thus we see Dollar System banks (wherever they are domiciled) incentivizing the "correct" thinking in our global financial derivatives (thoughts of value) complex.

Perhaps this is why our US FED primary dealers have been shifting their derivative positions from interest rate based to FX based positions, to insure dollar exchange value more directly. No one is pointing to it, but just review the OCC reports between 2008 and 2018. Total derivatives have actually shrunk by a few trillion (as reported). But the shift away from Interest Rate and into FX forwards, swaps and exotics is quite remarkable.

As we know, our modern digital (and paper) currencies are mere "thoughts of value" which exist in the "conceptual realm" - a realm which transfers conceptual value in the financial plane to material value in the physical plane. As we have discussed many times before, our derivative world governs our material world (derivative tails wagging underlying asset dogs). But there is a balance between the two planes that must be maintained in order for both to co-exist.

As we have noted in prior posts, things such as "rule of law" and "depth of usage" help to govern that balance. Our currency denominated financial derivatives support the conceptual realm which governs our financial plane of existence. Oddly, it is a circular construct which controls the marketplace for the very currency values which transfer to the material world.

Financial derivatives reward correct thinking and punish incorrect thinking about thoughts of value, and this allows our money to function in the material world. The reward and punishment elements in this process are the very currencies which credibility the system ultimately serves to protect.

Incorrect thinking about the direction interest rates are headed over the next five years are punished by the loss of vast sums. Correct thinking brings equally rewarding gains. Incorrect thinking about the value of certain currencies is punished, just as correct thinking is rewarded by the loss or gain of, again, derivative currency units.

This crux of our derivative "thoughts of value" system can be summed up merely as "confidence".

Like faith, confidence is a human emotion which exists in that conceptual realm where fiat currencies "free" markets, and other conceptual derivatives exist. It is truly the one critical element that ties the financial plane to the physical plane. Without confidence in the ability of our markets, our currencies and our derivatives to function, they will not. Rule of law or depth of usage can increase confidence when applicable, but neither can save the currencies once true loss of confidence occurs. If a nation holding dollars believes those dollars will lose their function (thus their value) the currencies are doomed.

But of course you've been told this by your FED Chairman and your Treasury Secretary (and their systemic counterparts in other nations) several times before. Please understand the importance of this one true statement among the mountain of lies. The dollar system has effective ways to reward its believers, users and benefactors for having confidence in its almighty power. And it uses itself equally effectively to punish its doubters.

It will take a great financial calamity, I suspect, to escape this confidence game played by the dollar system. The alternative is a never ending parasitic relationship between issuer and user ... where the issuer plays the carrot against the stick quite effectively. It's called "kicking the can" in some circles. Expect a slow stagflation that inexorably shifts material wealth from the user (debtor) class to the issuer (lender) class. Much like the last 50 years or so.

Indeed the families prefer a world where the 1% have more wealth than the bottom 99% combined, and all is peachy. But in the material world, as we approach that tilting of the scales, the world is not so peachy as hoped, and confidence in that scheme also wanes.

You see, if the "correct" people lose confidence, all will follow.

One last thing. In a world where conceptual value is tied to material value by something more powerful than confidence, the sequence of events over the past half century that bring us to today would never have transpired. That something is gold. And the correct people know this.