Regular readers know that I have very little tolerance for bankers talking out of both sides of their mouths. So when I saw yet another piece of blatant banker double-talk, I wasn’t about to let it pass without comment.
In “The Implication of Currency Dilution”, I explained the dynamics of the concept of dilution. When a bar waters-down its booze, the value of the liquor declines. When a lemonade stand waters-down its lemonade, the lemonade is worth less. When a company prints-up shares (i.e. “dilutes” its share structure) the value of the shares decreases. When we “dilute” our gold from more-pure 24 karat gold to less-pure 10 karat gold, the gold is worth less.
Indeed, in our entire realm of human commerce we are currently told that there is only one good which does not become worth less as it is diluted: the paper currencies of Western bankers. As I went on to explain in that prior commentary, as a tautology of logic the only good which does not (automatically) decline in value when it is diluted is a good which was already worthless before the dilution commenced.
Hence when some talking-head from Deutsche Bank muses that “QE 3 might do more harm than good for gold”; it directly and unambiguously implies that the bankers’ paper currencies are already worthless. Here it’s interesting to note the dramatically different tune these bankers are now singing from little more than 3 years ago.
When the bankers first proposed “QE”: deliberately conjuring vast amounts of our (paper) money out of thin air; it represented a form of monetary insanity never before attempted by our species in even its most extreme hours of financial desperation. Why had no other bankers ever before engaged in such appalling monetary recklessness?
For the answer to that, we need only remind ourselves of the primary reason the bankers gave us for their first batch of “QE”: they wanted to deliberately create inflation (i.e. destroy the value of our currencies) because they were “worried” that we might have a mild deflation in our economies. Why were these bankers universally terrified of even the mildest deflation taking hold in our economies? Because the $1.5 quadrillion (or so) in ultra-leveraged Ponzi-schemes being operated by this banking cabal would implode completely in any extended episode of deflation.
How could the bankers be sure that their QE would cause “inflation”, which means exactly the same thing as their paper currencies declining in value? Because none other than Benjamin Shalom Bernanke has based his entire career on the premise that printing currency must cause the value of that currency to go down in value.
Bernanke’s monetary premise (which earned him the Chairman’s job at the Federal Reserve) was simple, indeed utterly simplistic. He asserted that a central bank could always create inflation, ultimately by asserting the very same argument I made above: that by diluting our currencies (with extreme money-printing) that the value of those currencies must decline.
Yet here we are a mere 3 ½ years later, and now the same bankers are singing a precisely opposite song. Maybe printing more money won’t cause the value of these currencies to decline, but will cause them to increase instead? Thus what has clearly transpired in the time since “QE1” was launched and “QE3” is now being openly discussed is that the bankers themselves have proclaimed (by direct, logical implication) that their own paper currencies are now worthless.
The only other possible implication is that B.S. Bernanke was completely and absolutely wrong with his life’s work: that currency-dilution (for some totally unknown reason) does not cause a decline in value in the bankers’ paper. However, this conclusion is even more problematic than the first.
To begin with, if these elite Western bankers have suddenly “discovered” that currency-dilution does not cause the value of currencies to decline, then why hasn’t Bernanke been fired already? Obviously you can’t have the world’s most-important central bank being led by someone with a totally backwards understanding of the effects of currency-dilution…in an era of the most-extreme currency-dilution in history.
Beyond that, we have the bankers’ past rhetoric. They heartily congratulated each other for the “success” of QE1 in creating inflation. Are all these bankers amnesiacs? Are all these bankers simply liars?
The fact remains that throughout our entire financial history, and right up through 2009 it was an unquestioned premise of the West’s most senior, respected bankers that currency-dilution must always cause the value of a currency to decline. Now, somewhere in the past 2 ½ years (according to the bankers themselves) something has changed, and now diluting these paper currencies (supposedly) does not cause their value to automatically decline.
What has changed in that period of time? We entered a realm of permanent near-zero interest rates. In another prior commentary, I demonstrated (again through the use of logical tautology) how the currency of any/every economy with an official 0% interest rate must be worthless. In other words, when the bankers themselves now directly imply that their own paper currencies are worthless, they are absolutely correct.
The more interesting point is what could have caused these bankers to flip-flop in such a blatant manner, utterly refuting the most-cherished dogma of their own leader, B.S. Bernanke? The answer to that question is simple: the bankers want to print more money. They always want to print more money. As Jim Rogers himself recently observed regarding Mr. Bernanke, “He only knows one thing – and that’s what he’s going to do.”
The problem for these bankers as they hover over their printing presses with their itchy trigger-fingers is that this time they can’t present us with the excuse of “creating inflation” as a pretext for more money-printing. The global economy is still struggling to cope with all the inflation produced by their previous, extreme/reckless money-printing.
Inflation is already a double-digit plague in the global economy (at least for those of us who still eat food), despite the fraudulent/irrelevant “inflation” statistics foisted upon us by our dishonest governments. So how could the bankers ever justify more money-printing in a world already drowning in inflation, if that money-printing would/will cause even more inflation? Obviously they can’t.
So at the end of 2008 we had the bankers unanimously telling us that “QE must cause inflation”, and now in 2012 we have the same bankers telling us that their third round of QE might not cause any inflation at all. Readers have two (rational) choices as to how they choose to interpret this bankster flip-flopping.
They can choose to interpret this as the bankers (finally) acknowledging that the fraudulent paper currencies they are flogging are already totally worthless. Or, they can conclude that all these bankers are lying to us about the effects of more money-printing – because they simply don’t care about the horrific consequences which that inflation wreaks upon ordinary people (especially senior citizens).
Either way, we can make several definitive conclusions about the Western banking cabal, with our central banks at its heart. All these bankers are malevolent, dishonest, and utterly incompetent. They have relentlessly lied to us (and are doing so again today). They have taken all of our economies to the brink of total destruction (and past that point for Greece). And as they demonstrate with their latest lies; they have absolutely no consideration for the tremendous harm they continue to cause through their serial money-printing.
Precious metals remain our only haven from the lies and monetary depravity of these bankers. They are the only form of “money” which cannot be stolen or destroyed through the serial crimes of the worst financial criminals in the history of our species.