Tuesday, February 5, 2008

The Homeopathic Money System

You might well ask what on earth does homeopathy have to do with the monetary system. Though it is tongue in cheek, there is something that is very similar as I will show and which caught my attention as I read an article of yet another financial institution that was collapsing. But first it might be appropriate to define what homeopathy is.

Though homeopathy comes from the two Greek words which means similar suffering, it is not this aspect that is of interest, but rather the idea behind homeopathy, which rests on the premise of treating sick persons with extremely diluted agents that - in undiluted doses - are deemed to produce similar symptoms in a healthy individual.

The banking system long time ago caught on to the benefit of diluting substances and the enormous profits that could be made by diluting the real value of money. They created the fractional reserve system, whereby they only have to have 10% of the deposited money in safe keeping at any one time. This means that they can lend out the 90% of the money and charge interest on it. But it doesn't stop there as bank A can lend the 90% to bank B, who can lend out 90% of 90% or 81% of the original amount and so on and so on until there is hardly anything left of the original. This is all good in times when confidence in the system is high(apart from the fact that it is still stealing as the bank earns money from money it doesn't have), but a sudden jolt to the system causing people to go to the bank to withdraw their savings all at once can quickly cause previously financial giants to collapse. (This little animation video explains it well and in simple terms.)

A couple of weeks ago one could read in the Guardian:
UK: Panic selling shuts £2bn fund

One of Britain's biggest property funds was forced to shut its doors to withdrawals yesterday after the slump in commercial prices triggered panic selling by small investors.

The move prompted fears of a Northern Rock-style run on billions of pounds invested in once high-flying funds which many savers have seen as a safe haven for their pensions.

Scottish Equitable said yesterday that 129,000 small investors in its £2bn property fund will not be able to access their money for up to a year, although payments relating to regular income already being paid, retirements and death claims will not be affected.

It said the fund, invested in London office blocks and shopping centres across Britain, no longer had sufficient cash reserves to meet demands from investors wanting to withdraw their money. Its "buffer fund" was down to 1% of its total assets, instead of the usual 10-15%.

Yes, the "buffer fund had only 1% in it instead of the required amount of 10%, as it is so tempting for the sharks in the more aggressive investment funds to increase the risks as the profit and the glory is so tantalizing. On top of it the fund managers themselves don't actually risk anything as recent obscene bonus payments have demonstrated:
Wall St execs collect $US33b bonuses

The Wall Street gurus who presided over the subprime mortgage crisis currently shredding global sharemarkets have awarded themselves bonuses totalling $US33.2 billion ($38 billion).

For anyone who have followed the news the above example is not an isolated incident. It is the standard practice of doing banking and high finance and goes to show that no checks and balances were put in place after the Enron collapse. The psychopathic minded people employed in Enron just moved elsewhere in the monetary system, that attracts such people. Predators who like to be where the action is and where psychopathic qualities such as high risk taking and impulsiveness, comes to the fore especially when said individuals operate without conscience and thus feel nothing for the victims if it all turns ugly. This is not to say that all the leading people in the finance sector are psychopaths, but as Hare and Babiak show in their book "Snakes in suits", the lure of glory, power and prestige which is abundant in this area attracts a disproportionate number of them.

Just the other day a French person with money in the French bank Society Generale told me that she felt assured as she believed that her money in the bank was backed by gold. But no, that is not so and hasn't been for a long time. The last gold standard collapsed in the 1971, when Nixon stopped the ability to convert dollars to gold.

In recent times there has been a greater and greater demand for gold, but what do the bankers do when the demand is greater than actual gold available and when the wish is to keep gold prices down? Well, they create ETF (Exchanged Traded Funds) gold. This means that instead of getting physical gold in your hand, you get a piece of paper saying that you have that much gold in the "bank". It is virtual gold and you will only realise that when crunch time comes and everybody goes with their pieces of paper to demand it be exchanged for real physical gold. That is when the scam will be exposed, but by then it will be too late.

Richard Greene explains it in this article:

The gold and silver ETFs were created by such financial giants as JP Morgan and Barclay's Bank that also serve as custodians and sub-custodians. These are the very firms that have been involved in the process of short selling gold and silver in huge quantities. That they would be involved in creating the ETFs had to be considered as most unlikely unless they had nefarious purposes.

What I mean by that is that when the gold and silver ETFs first came out the investment demand for gold and silver was just in the initial phases of taking off. The bullion banks and financial powers that have been involved in suppressing the prices of gold and silver needed an outlet to satisfy this additional demand for gold and silver when there was clearly no actual gold and silver to fulfill this additional demand.

Most do not like to recognize that the business model of the US is fast approaching what could be called Fascism, particularly since that word is immediately associated with World War II Italy and all the ugliness of the Axis powers. However, when one looks at the definition of what fascism is, it becomes clear that many of our Government's decisions benefit the large corporations more than the people the government is supposed to be serving. In return, these corporations return all their support in both monetary contributions and affirmations of policy through such means as the media which is largely controlled by the same money powers. Look no further for evidence in some of the examples that have arisen with the outbreak of the unconstitutionally un-declared war on Iraq. Instead of the military providing services by use of its own personnel for things such as laundry and meals, big corporation's line up for their part of the money pile. A perfect example is Halliburton which handles laundry for the soldiers at an outrageous fee of $99 per bundle, and this in a country where such a service would be a tiny fraction of such a fee.

Based on the surrounding circumstances you would have to be naïve if you believe that the gold and silver ETFs were created so that investors would have an easy way to get exposure to gold and silver without the burdens of taking delivery and finding a secure and safe location to store it.

The system of homeopathy of treating people for diseases works well, but when this system of dilution is carried over to the financial system it is a recipe for disaster. The virtual world of money is in the process of meeting reality, and it ain't looking good!

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