42 Years of Fractional Reserve Alchemy

https://www.tfmetalsreport.com/blog/8075/42-years-fractional-reserve-alchemy

LIBOR-gate vs. Gold-gate

The LIBOR scandal rocked the financial world--as it should--as the rigging of interest rates in London was exposed.  Multiple lawsuits have ensued, since the manipulation of credit affects everyone, from institutional clients forced to pay higher prices for less yield, to homeowners forced to borrow at higher rates (because of more regulations and banks paying fines), to citizens forced to pay higher food costs due to artificially low interest rates and debased national currencies.  In other words, exposure of LIBOR-gate was a big deal, but the average person remained apathetic.  Instead, the complacent masses are more interested in the electoral theater, too myopic to anticipate the imminent destruction of their purchasing power (and standard of living).

But the recent unfolding fractional gold accounting scandal will ultimately lead to different reactions by the masses.  The symptoms of fraudulent gold accounting aren't as esoteric as a few bankers behaving badly.  After all, the fixed-income market is for professionals, right?  And by now, most people understand bankers are mere crooks in suits.  This was news 5 years ago, but now, it's the status quo.

However, the re-hypothecation--and the disappearance of central bank gold will have entirely different outcomes.  The smart money (the "conspiracy theorists") have already bought in.  As more evidence seeps out that the emperors (central bankers from the US and Europe) have no gold, the Big Money hedge funds and emerging market central bankers from the East will catch on and pour into physical gold.  Actually, the Russian and Chinese central banks have already done this, dis-hoarding US Treasuries and hoarding gold.  The gig is up, and the USDollar Ponzi scheme is about to meet its end game.

This in turn, will catalyze a soaring price of gold which will catch the attention of even the most disinterested public, much like soaring gas prices are on the minds of every driver.  It will make news headlines on Main Street.  And that will only fuel the fires of a gold mania.  But not at $2,000 an ounce.  Try $3,000.

Andrew Maguire - LBMA Shorts Will be Forced to Take Losses

Read this article on fractional paper gold trading vs. the physical bullion market. 

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/6_Andrew_Maguire_-_LBMA_Shorts_Will_be_Forced_to_Take_Losses.html

Rant

I've been immersed in these games the government and banks play, so I incorrectly assumed everyone believes what I believe about Wall Street, our government, central banks, fiscal and sovereign debt problems, Iceland, Dubai, Greece, etc.

The problem is this: most people don't have a clue about basic economics and financial models, even people much smarter than me, including the experts. Have they been that influenced by the media and teachings? Why do they cling to a Keynesian school of thought which clearly has failed? Why do they believe the only way to fix a huge debt problem is to add more debt, induced by a few privileged men? Why do they continue to believe the economic equivalent of a flat earth?

I've managed to piss off Ivy Leaguers, industry experts, financial insiders--you name it--for being the messenger. I've talked to economists, historians, and academicians from top schools and they believe the system is sound--that outlying events spoiled it for all of us, they reckon. They don't see the systemic breakdown in our fiat, fractional reserve financial systems--or how leverage has created huge pools of toxic derivatives, vulnerable to manipulation. Our financial system is a gigantic, rigged casino. Our profligacy has turned unfunded entitlements like pension funds, social security and healthcare programs into giant Ponzi schemes.

My friends in the real estate and equities markets have shunned me. What are they running away from--me? I'm one data point, unable to move my old dishwasher, much less markets. I haven't been a popular member of the cocktail circuit or at family dinners. And I thought to myself: why are these very bright people so unaware of what has been so coherent to me? I've ranted endlessly the basic economic laws of supply and demand for a certain asset class. Why are educated, bright, authoritative, and influential people missing out on something so luminous? I leave these questions to ponder, unsure of the correct answers. And I exit hoping I am completely wrong in my conclusions.