20 February 2019

Stocks and Precious Metals Charts - Minutiae - Force and Fraud

"Monetary conditions exert an enormous influence on stock prices. Indeed, the monetary climate - primarily the trend in interest rates and Federal Reserve policy - is the dominant factor in determining the stock market's major direction."

Martin Zweig

“Sometimes people hold a core belief that is very strong. When they are presented with evidence that works against that belief, the new evidence cannot be accepted. It would create a feeling that is extremely uncomfortable, called cognitive dissonance. And because it is so important to protect the core belief, they will rationalize, ignore and even deny anything that doesn't fit in with the core belief.”

Frantz Fanon

"The real collapse of our currency began when it became evident that certain industrial circles were more powerful than the government."

Adam Fergusson, When Money Dies: The Nightmare of the Weimar Collapse

"A credibility trap is when the regulatory, political and/or informational functions of a society have been so thoroughly compromised by a corrupting influence and a fraud that they cannot address the situation without implicating, at least incidentally, a broad swath of their own power structure.  The broader status quo has at least tolerated the corruption and the fraud, if not having profited directly from it, and most likely continues to do so.

And so a failed policy and a fraud can become almost self-sustaining long after it is seen to have failed, and even become counterproductive, because admitting failure is not an option for those in power, and those who which to maintain their access to it."

Unsustainable social or economic arrangements, such as an officially mispriced valuation of a market, a commodity, or even a currency for example, are backed by force and fraud. And as the fraud loses its power over time, force must increase, until there is an end in genuine reform, or eventual self-destruction.

People who have become complacent, and even a bit arrogant in their theoretical myopia, forget the need for confidence, and the interplay between full faith in a process and the acquiescence of people to common values.

It can be useful to witness a currency die first hand in order for the true nature of a monetary system to be fully understood.  Such a systemic failure strips the commonly held but essentially arbitrary assumptions about official valuations bare.  It exposes the fraud behind the force, and the force that sustains the fraud.

The FOMC minutes indicated a consensus that the unwinding of the Fed's Balance Sheet will be halted by the end of this year.

Stocks drew some encouragement from this, as contrasted with the decline and gloom with which they went into the release of the minutes.

Gold and silver gave up their gains for the most part, and the Dollar moved back to unchanged.

Physical gold has flowed out of the Comex licensed warehouses quite handily since China has returned for business.

Have a pleasant evening.