“The individual is handicapped by coming face to face with a conspiracy so monstrous they cannot believe it exists. The American mind simply has not come to the realization of the evil which has been introduced into our midst.”
—
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—
Of all the science fiction films ever made, Nigel Kneale’s ‘Quatermass’ trilogy stands wholly apart. Derived from his earlier, and highly successful, BBC television screenplays, each one is a masterpiece of quiet, intelligent, grown-up filmmaking – even if their subject matter is commonly associated with the youth market. In 1955’s ‘The Quatermass Xperiment’ (its studio, Hammer, making no secret of the film’s classification) an experimental rocket ship crashes back to Earth, but only one of its three original pilots can be found.. In 1957’s ‘Quatermass II’, mysterious capsules fall onto southern England. Could they be connected with a highly secretive research facility apparently developing new foodstuffs ? In 1967’s ‘Quatermass and the Pit’ – by which time the films had discovered colour – a mysterious object is discovered beneath a London tube station, which starts to affect the behaviour of all those who come into contact with it. All three films deal, albeit in markedly different ways, with humanity interacting with alien life. As Kneale himself put it, in ‘Quatermass I’ we go to them; in ‘Quatermass II’ they come to us; in ‘Quatermass III’ it transpires that they have been here all along.
All three films stand the test of time, even if some of their special effects now seem, understandably, a little dated. But the one that stands out for this correspondent as the most haunting is the second. ‘Quatermass II’ – renamed ‘Enemy from Space’ for the US market – is a classic example of moody 1950s’ paranoia. Quatermass is doggedly pursuing his experiments as head of the British Rocket Group. He has also proposed a project of artificial domes to make the moon habitable (Kneale was always ahead of his time). After the arrival of waves of what look like miniature missiles onto the Home Counties (the trilogy is suffused with imagery of and associations with the Second World War), Quatermass is shocked to discover an identical, full-scale copy of his proposed lunar structures near a small new town called Winnerden Flats. The precise purpose of this construction is being kept top secret. It transpires that many in senior government positions have been advancing the project, under the influence of an alien power from space. The Earth itself is in danger.
There is one sequence in particular that still retains the power to shock. A lone regional MP, Broadhead (Andrew Bridgen anybody ? – Ed.), finally gets permission to visit the site of the project (actually filmed on location at a Shell Oil refinery in Essex). He manages to evade the official tour group, only to be next seen staggering down from one of the domes, horribly and fatally burned by some poison from inside the structure..
After the fact, Nigel Kneale confessed to the conspiracy theory symbolism:
“Poor old Quatermass rumbles what’s going on and he’s the one who has got to do some dirty work in showing it. When he tries, all the creatures, the Whitehall lot, had already been infected, and it is very difficult to talk sensibly to anybody in political power because they’ve all gone under. That seemed to me to be a more interesting thing to write than just creatures plopping down from outer space and that’s it.. At the time, after the war, there was a consciousness that there were dark forces around..”
[Emphasis ours.]
Why do we get drawn to conspiracy theories in film ? Perhaps because they’re merely preparation (sometimes in the guise of ‘predictive programming’) for real life.
The scariest conspiracies are the ones that happen to be real. In the manner of the classics, like the ‘Quatermass’ films or the comparably chilling ‘Invasion of the Body Snatchers’, the protagonist is never believed, at least until the final reel, and sometimes not even then.
The following conspiracy does happen to be real, and it is one that affects all of us.
G. Edward Griffin, in his book ‘The Creature from Jekyll Island’, explains how the US Federal Reserve, for example, was conceived. We single out the Fed because, as the central bank of what is currently, despite the best efforts of the Biden crime family, the largest economy in the world, it is by definition the most important central bank in the world.
On a cold November night in 1910, a handful of financiers boarded a private railway car in conditions of extreme secrecy at the New Jersey railway station. The passengers included the Republican whip in the Senate and a business associate of the banker J.P. Morgan; the Assistant Secretary of the US Treasury; the president of the National City Bank of New York, the most powerful bank of the time; a senior partner of the J.P. Morgan bank; the head of J.P. Morgan’s Bankers Trust Company; and a representative of the Rothschild banking dynasty in England and France. Of the six passengers, in other words, five of them were representatives of private banks.
Those financiers would go on to meet in secret at a remote location owned by J.P. Morgan and several of his business associates, where visitors would gather in the winter to hunt wild ducks. The name of this remote retreat: Jekyll Island.
This group met in order to tackle five pressing issues:
- How to reverse the growing influence of small commercial banking rivals and concentrate financial power amongst themselves.
- How to allow the money supply to expand so that they could retake control of the industrial loan market.
- How to consolidate the modest reserves of the country’s banks into one large reserve and standardise each bank’s loan-to-deposit ratios, thus protecting themselves from the possibility of bank runs.
- How to shift any ultimate losses incurred by the banks onto taxpayers.
- How to convince the US government that the scheme was established to protect the public – as opposed to protecting the interests of a private banking cartel.
Perhaps most cynically of all, to address this fifth problem, the group decided to adopt the structure of a central bank and, furthermore, ditch the use of the word bank altogether, in favour of a coinage that would evoke the image of the federal government instead. Three years later, after the passing of the resultant bill in Congress on 23 December, 1913 (i.e. in a thinly attended meeting, rushed through just before Christmas), the US Federal Reserve was born.
“The Federal Reserve System,” it today proudly tells us, “is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.”
Few could deny the latter point. Rather than maintain a narrow focus on managing the money supply, the Fed is now figuratively all over the shop, its fingerprints evident everywhere across the economy. The market commentator and author James Grant is no slouch when it comes to describing what the Fed is, and does, in robust manner:
“The Fed insists on saving us from ‘everyday low prices’ – they call it deflation. I submit that in a world of technological wonder, prices ought to be weakening: it costs less to buy things because it costs less to make them. This benign tendency the Fed resists at every turn. It wants the price level (as it defines it) to rise by two percent a year, plus or minus. In so doing, it creates redundant credit that finds its way into other things. These excess dollars do mischief. On Wall Street we call this mischief a bull market and we’re generally all in favour of it.
“The Fed, in substance if not in name, is [still] engaged in a massive experiment in price control. (They don’t call it that.) But they fix the Fed Funds rate, they manipulate the yield curve… they talk up the stock market. They have their fingers and their thumbs on the scale of finance. To change the metaphor, we all live to a degree in a valuation ‘hall of mirrors’. Who knows what value is when the Fed fixes the determining interest rate at zero? So I said ‘experiment in price control’ but there is no real suspense about how price control turns out. It turns out, invariably, badly.”
The second stage of the ‘stealth takeover’ of the US economy (and thereafter the world economy) by its banks took place in the form of the so-called ‘Nixon shock’ of 1971, when the then US President announced a series of emergency economic measures, the most significant of which was the cancellation of the convertibility of the US dollar into gold.
The US administration at the time was groaning under the twin costs of a ‘guns and butter’ policy – the economic burden both of fighting the war in Vietnam as well as underwriting the costs of a growing welfare state. Since the currency regime of the time allowed foreign governments to convert their dollar holdings into gold, the US gold hoard was under siege.
By severing the last links between the dollar and gold, the US government could print money to its heart’s content, backed by.. well, backed by nothing more than the “full faith and credit of the US government”. This statement is essentially meaningless, but to be pragmatic about it, you could say that the dollar is backed de facto by the tax-raising power of the US government. This is clearly a power that needs to be used sparingly lest, in harvesting the golden eggs, you kill the golden goose itself.
More ominously, the Nixon shock ushered in an environment where shortfalls in government spending could be bridged by the issuance of government debt.
As central bankers know only too well, our debt-based monetary system has a fatal flaw. As debts are created through loan origination, additional obligations arise in the form of interest payments. As a result, there can never be enough money to service debt obligations unless the stock of debt is continually expanded. When the costs of interest payments exceed growth in debt, marginal debtors can no longer afford to maintain their debt payments, and must begin liquidating.
The system reaches its terminal point when new debt creation fails to match existing interest charges. As soon as that point is reached, defaults will spiral through the system. Which is why the world’s central banks are doing everything in their power to keep the debt creation bandwagon on the road.
Why is this process destined to fail? Because nothing can expand forever. Money and debt have been growing at exponential rates, but they cannot do so indefinitely. The system can only hold together with perpetual economic growth. The last five decades of debt accumulation are not the steps toward some form of equilibrium, but rather the calm before the storm; progress toward huge disequilibrium. A lot of what we think of as wealth is going to vanish. Claims upon it are too numerous, and future growth will almost inevitably disappoint. Our recent take on the unsustainability of the global debt predicament can be heard here.
The third stage of the ‘stealth takeover’ of the system by the banks can be linked to any number of events in the aftermath of the Nixon Shock when it became clear that the financial system could not be relied on to regulate itself. In the early 1980s, for example, US banks went on a lending spree in Latin America, apparently determined to test the validity of the statement by Citibank’s Walter Wriston that “countries don’t go out of business”. Soon afterwards, 27 of them did. The losses were gargantuan. Nassim Taleb points out the incredible statistic that during the Latin American debt crisis, US banks lost as much money as they had made in their entire history up until that point.
The Latin American debt crisis was followed in short order by the Savings and Loan crisis, in which misguided deregulation sparked a wave of malinvestments by Savings and Loan companies (the US equivalent of British building societies). One in three Savings and Loan associations failed. The $160 billion cost of the crisis was, of course, largely borne by the US taxpayer.
1998 saw a dress rehearsal for the Global Financial Crisis of 2007 – ? The debt default by Russia after the Asian Financial Crisis of 1997/8 triggered the collapse of the hedge fund Long Term Capital Management. The banks, of course, had – inevitably – lent heavily to LTCM, so they needed bailing out, too. The Fed’s intervention in the LTCM bailout was, in the words of the financial analyst Rawdon Adams,
“..a rejection of the idea that a global capital market valued in the trillions of dollars is well positioned to absorb crises, demonstrate swift powers of recovery, and rapidly reinstitute order from chaos.”
Early 2000 brought us the dotcom bust. In the (mistaken) idea that the fate of the real economy was at stake, the Fed slashed interest rates. This led, in turn, to the property bubble that metastasised in the form of the 2007 subprime crisis, and which required eye-watering amounts of public money to restore some semblance of stability to the banking system, both in the US and internationally.
Jim Bianco of Bianco Research has put the US bailout figures into context. He concluded that the extent of the post-Lehman US bank bailout to date is currently bigger than all of the following US government expenditures combined:
- The Marshall Plan. Cost: $12.7 billion. Inflation-adjusted cost: $115.3 billion.
- The Lousiana Purchase. Cost: $15 million. Inflation-adjusted cost: $217 billion.
- Race to the moon. Cost: $36.4 billion. Inflation-adjusted cost: $237 billion.
- Savings and Loan crisis. Cost: $153 billion. Inflation-adjusted cost: $256 billion.
- Korean War. Cost: $54 billion. Inflation-adjusted cost: $454 billion.
- The New Deal. Cost: $32 billion (est.). Inflation-adjusted cost: $500 billion (est.)
- Invasion of Iraq. Cost: $551 billion. Inflation-adjusted cost: $597 billion.
- Vietnam War. Cost: $111 billion. Inflation-adjusted cost: $698 billion.
- NASA. Cost: $416.7 billion. Inflation-adjusted cost: $851.2 billion.
That aggregate total of $3.9 trillion is $686 billion less than the cost of the credit crisis in the US. And as fund manager and commentator Barry Ritholtz points out, the only event that comes close to the cost of the most recent (that is to say, pre-Covid) financial crisis is World War II, with the inflation-adjusted cost borne by the United States summing to some $3.6 trillion. Financial information provider Bloomberg reported that the US taxpayer, post crisis, was on the hook for a total of $7.76 trillion of liabilities, which equates to $24,000 for every man, woman and child in the country. And then we had the costs of the ‘pandemic’..
On the topic of confected global frauds against humanity, ‘Capitalist Exploits’ (@capitalistexp on Twitter / X) has posted the following thread:
“If you knew you were sitting at the helm of a collapse in fin mkts, which would bring social unrest and likely displace your position of power what would you have done?
“This was the problem facing the elites in fall of 2019. Recall the repo crisis? The emergency debt crisis, which was the result of problems papered over since 08.
“Desperate attempts to save the system were enacted (Fed funding repo mkts to tune of 10-20B p/d). It was so desperate that even treasuries were being rejected as collateral.
“We hedgies, analysts, fin mkt guys/gals all knew the system was going to collapse. So did the elites. Collapse threatened them.
“The scam that cannot be named was the veil for ushering in “The great reset”. An ability to crush small biz and destroy the middle class (who represent the greatest threat to totalitarian rule), print trillions of dollars, give it to themselves while controlling the collapse.
“Collapse is necessary for them to enable and justify a techno feudal system – “build back better”. A system where all assets are owned by those at the helm of the destruction – “You’ll own nothing and be happy”. Classic Hegelian dialectic.
“Obvious at this point to all but the truly brainwashed or desperately naive is that there was no medical emergency. Only a mass MSM manufactured crisis, coupled with censorship never before seen (necessary to enable the transfer of wealth to elites..now done).
“Groundwork was carefully laid for biomedical security state (passport systems, psychological NLP, much greater amt of work moved to online/digital). This is where the next manufactured crisis is to come. Corralling all those in digital system into something “safe and secure”.
“A digital ID. To be tied in with CBDC’s, controlling spend (programmable money), “social credit/ESG” and vax passports. – Controlled spend, – Controlled movement/travel. See 15 min cities. – Controlled health – if you don’t comply with measures you’ll be cut off from payments.
“Payments being UBI. Dependancy is being established now. Post dependancy comes UBI. Soon as you’re reliant on UBI you’re a slave to the entire structure.
“If you wish to know who is behind what is the greatest organised crime syndicate ever seen and behind what is a global war where citizens are both victim and weapon begin by looking at “The 2030 Agenda for Sustainable Development”.
“Numbers don’t lie and we are already in a genocide. (excess mortality post “safe and effective”) Don’t @ me; do your own analysis. Welcome to WWIII. It’s already here…but not in the way any of us ever envisaged.
“What now? Well, it must be stopped. Start local. The time for fearing ridicule is long past. Be brave, speak the truth. Understand an entire bag of “emergencies” are in the wings. We must be awake to these and shut them down immediately..before we’re all enslaved. – End.”
Sufficiently sobering for you ? For more on these topics and others, we recommend the book ‘180 degrees: unlearn the lies you’ve been taught to believe’, by Feargus O’Connor Greenwood. Our interview with the author here. And another recent interview with Lawrence ‘Fix the money, fix the world’ Lepard here.
But back to the banking system. We can see that the recent history of the so-called free market in Anglo-Saxon finance (the fate of British banks is not so very different from those of their rivals across the pond) is really a history of increasingly large crises, followed by increasingly intrusive and costly intervention. The most costly intervention of all, of course, has been through the mechanism of QE, which has managed to distort the price of just about every financial asset on the planet – to the extent that there are no safe havens any more, just gradations of things that are variously more or less risky along a continuum of threat.
To all of which, again, the logical response must be Cui Bono ? Who benefits ?
Not taxpayers, who bear the inevitable burden of bailouts for errant banks in perpetuity.
Not average workers, who bear the malign, inflationary impact of QE upon property prices, goods and services
Not even savers and investors, if deposit rates are kept artificially suppressed while asset prices are sent to untenably high levels by means of the very same QE.
Who benefits ? How about a banking system whose senior players would be forced onto the dole queue in anything approximating to a free and fair market ?
The next logical response, we think, should be: so what do we invest in, to help us escape from this farce ?
And we think there are three crucial categories of investment or asset that are, effectively, antidotes to the conspiracy in plain sight being effected by ‘the Establishment’ that perpetuates a commitment to fiat currency and fractional reserve banking wholly dependent on an unsustainable constant expansion of credit.
One of these is the systematic trend-following fund: a trading vehicle that isn’t limited by benchmark or indexation simply to track a given equity or bond index, but which allows its managers and their algorithms sufficient latitude to track rising (or falling) price trends across equity indices, interest rates, currencies and commodities – and to profitably exploit the most dramatic trends it encounters.
One of them is ‘value’ equities, focused on the efforts of honest entrepreneurs, and their businesses, to create value by means of free enterprise. Cheap, high quality, profitable businesses, in other words, with little or no attendant debt.
And one of them is the finest form of money that we have in our fallen world, a form of money that cannot, unlike dollars, pounds and euros, simply be printed on demand. A form of money that has held its purchasing power across thousands of years, during which period all unbacked paper currencies have deteriorated to their inherent ultimate value of zero. That form of money is, of course, gold – and the likes of its lower cost monetary rival, silver. It is also a form of money that will come into its own during the next phase of the financial perma-crisis, which may turn out to be yet more severe than the previous iterations we have all experienced – because the economic and fiscal capacity of western governments to engage with yet more banking bailouts, if required, is, how can we put it, “challenged”.
Those lines from Nigel Kneale himself still resonate:
“When he [Quatermass] tries [to reveal the conspiracy], all the creatures, the Whitehall lot, had already been infected, and it is very difficult to talk sensibly to anybody in political power because they’ve all gone under.”
Remind you of anything in particular ? The government and its willingness to nullify its obligations to the electorate in favour of the banking lobby, or perhaps Big Pharma interests, instead ?
It’s not even as if there is much denial about the status quo in financial services on the part of those media who should be holding the banking industry to account. As The Economist acknowledged in a recent Bagehot column (Walter Bagehot being a Victorian financial writer and author of ‘Lombard Street: a description of the Money Market’ which is a classic text on banking):
“Bankers have similar double standards [with relation to ‘open’ and ‘closed’ politics]. Critics rightly point out that they are arch-globalists when the market is on the up, but then turn to national governments when it crashes. But the problem runs deeper. Like other industries, finance is rigged from the inside by firms that invest in lobbyists and hire ex-politicians who still wield influence.”
[Emphasis ours.]
The most terrifying conspiracy is the one that everybody already knows about, but just refuses to act upon. We seem, today, to be trapped in some form of global neo-Communist palace coup.
And the tide can still turn. Although an illiberal regime can sometimes outlive the unlucky, no Communist economic system can ever truly last, because it will always ultimately collapse under the weight of its own lies, its literal and moral insolvency, and its overwhelming internal contradictions. In 1989, for example, the Berlin Wall fell – without a shot being fired.
Bastiat pointed out that the state was “that great fiction by which everyone tries to live at the expense of everyone else”. We may yet be living through the death throes of the big state. The dinosaur is dead – it just doesn’t know it yet.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you, too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio -with no obligation at all:
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Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks.
“The individual is handicapped by coming face to face with a conspiracy so monstrous they cannot believe it exists. The American mind simply has not come to the realization of the evil which has been introduced into our midst.”
—
Get your Free
financial review
—
Of all the science fiction films ever made, Nigel Kneale’s ‘Quatermass’ trilogy stands wholly apart. Derived from his earlier, and highly successful, BBC television screenplays, each one is a masterpiece of quiet, intelligent, grown-up filmmaking – even if their subject matter is commonly associated with the youth market. In 1955’s ‘The Quatermass Xperiment’ (its studio, Hammer, making no secret of the film’s classification) an experimental rocket ship crashes back to Earth, but only one of its three original pilots can be found.. In 1957’s ‘Quatermass II’, mysterious capsules fall onto southern England. Could they be connected with a highly secretive research facility apparently developing new foodstuffs ? In 1967’s ‘Quatermass and the Pit’ – by which time the films had discovered colour – a mysterious object is discovered beneath a London tube station, which starts to affect the behaviour of all those who come into contact with it. All three films deal, albeit in markedly different ways, with humanity interacting with alien life. As Kneale himself put it, in ‘Quatermass I’ we go to them; in ‘Quatermass II’ they come to us; in ‘Quatermass III’ it transpires that they have been here all along.
All three films stand the test of time, even if some of their special effects now seem, understandably, a little dated. But the one that stands out for this correspondent as the most haunting is the second. ‘Quatermass II’ – renamed ‘Enemy from Space’ for the US market – is a classic example of moody 1950s’ paranoia. Quatermass is doggedly pursuing his experiments as head of the British Rocket Group. He has also proposed a project of artificial domes to make the moon habitable (Kneale was always ahead of his time). After the arrival of waves of what look like miniature missiles onto the Home Counties (the trilogy is suffused with imagery of and associations with the Second World War), Quatermass is shocked to discover an identical, full-scale copy of his proposed lunar structures near a small new town called Winnerden Flats. The precise purpose of this construction is being kept top secret. It transpires that many in senior government positions have been advancing the project, under the influence of an alien power from space. The Earth itself is in danger.
There is one sequence in particular that still retains the power to shock. A lone regional MP, Broadhead (Andrew Bridgen anybody ? – Ed.), finally gets permission to visit the site of the project (actually filmed on location at a Shell Oil refinery in Essex). He manages to evade the official tour group, only to be next seen staggering down from one of the domes, horribly and fatally burned by some poison from inside the structure..
After the fact, Nigel Kneale confessed to the conspiracy theory symbolism:
“Poor old Quatermass rumbles what’s going on and he’s the one who has got to do some dirty work in showing it. When he tries, all the creatures, the Whitehall lot, had already been infected, and it is very difficult to talk sensibly to anybody in political power because they’ve all gone under. That seemed to me to be a more interesting thing to write than just creatures plopping down from outer space and that’s it.. At the time, after the war, there was a consciousness that there were dark forces around..”
[Emphasis ours.]
Why do we get drawn to conspiracy theories in film ? Perhaps because they’re merely preparation (sometimes in the guise of ‘predictive programming’) for real life.
The scariest conspiracies are the ones that happen to be real. In the manner of the classics, like the ‘Quatermass’ films or the comparably chilling ‘Invasion of the Body Snatchers’, the protagonist is never believed, at least until the final reel, and sometimes not even then.
The following conspiracy does happen to be real, and it is one that affects all of us.
G. Edward Griffin, in his book ‘The Creature from Jekyll Island’, explains how the US Federal Reserve, for example, was conceived. We single out the Fed because, as the central bank of what is currently, despite the best efforts of the Biden crime family, the largest economy in the world, it is by definition the most important central bank in the world.
On a cold November night in 1910, a handful of financiers boarded a private railway car in conditions of extreme secrecy at the New Jersey railway station. The passengers included the Republican whip in the Senate and a business associate of the banker J.P. Morgan; the Assistant Secretary of the US Treasury; the president of the National City Bank of New York, the most powerful bank of the time; a senior partner of the J.P. Morgan bank; the head of J.P. Morgan’s Bankers Trust Company; and a representative of the Rothschild banking dynasty in England and France. Of the six passengers, in other words, five of them were representatives of private banks.
Those financiers would go on to meet in secret at a remote location owned by J.P. Morgan and several of his business associates, where visitors would gather in the winter to hunt wild ducks. The name of this remote retreat: Jekyll Island.
This group met in order to tackle five pressing issues:
Perhaps most cynically of all, to address this fifth problem, the group decided to adopt the structure of a central bank and, furthermore, ditch the use of the word bank altogether, in favour of a coinage that would evoke the image of the federal government instead. Three years later, after the passing of the resultant bill in Congress on 23 December, 1913 (i.e. in a thinly attended meeting, rushed through just before Christmas), the US Federal Reserve was born.
“The Federal Reserve System,” it today proudly tells us, “is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.”
Few could deny the latter point. Rather than maintain a narrow focus on managing the money supply, the Fed is now figuratively all over the shop, its fingerprints evident everywhere across the economy. The market commentator and author James Grant is no slouch when it comes to describing what the Fed is, and does, in robust manner:
“The Fed insists on saving us from ‘everyday low prices’ – they call it deflation. I submit that in a world of technological wonder, prices ought to be weakening: it costs less to buy things because it costs less to make them. This benign tendency the Fed resists at every turn. It wants the price level (as it defines it) to rise by two percent a year, plus or minus. In so doing, it creates redundant credit that finds its way into other things. These excess dollars do mischief. On Wall Street we call this mischief a bull market and we’re generally all in favour of it.
“The Fed, in substance if not in name, is [still] engaged in a massive experiment in price control. (They don’t call it that.) But they fix the Fed Funds rate, they manipulate the yield curve… they talk up the stock market. They have their fingers and their thumbs on the scale of finance. To change the metaphor, we all live to a degree in a valuation ‘hall of mirrors’. Who knows what value is when the Fed fixes the determining interest rate at zero? So I said ‘experiment in price control’ but there is no real suspense about how price control turns out. It turns out, invariably, badly.”
The second stage of the ‘stealth takeover’ of the US economy (and thereafter the world economy) by its banks took place in the form of the so-called ‘Nixon shock’ of 1971, when the then US President announced a series of emergency economic measures, the most significant of which was the cancellation of the convertibility of the US dollar into gold.
The US administration at the time was groaning under the twin costs of a ‘guns and butter’ policy – the economic burden both of fighting the war in Vietnam as well as underwriting the costs of a growing welfare state. Since the currency regime of the time allowed foreign governments to convert their dollar holdings into gold, the US gold hoard was under siege.
By severing the last links between the dollar and gold, the US government could print money to its heart’s content, backed by.. well, backed by nothing more than the “full faith and credit of the US government”. This statement is essentially meaningless, but to be pragmatic about it, you could say that the dollar is backed de facto by the tax-raising power of the US government. This is clearly a power that needs to be used sparingly lest, in harvesting the golden eggs, you kill the golden goose itself.
More ominously, the Nixon shock ushered in an environment where shortfalls in government spending could be bridged by the issuance of government debt.
As central bankers know only too well, our debt-based monetary system has a fatal flaw. As debts are created through loan origination, additional obligations arise in the form of interest payments. As a result, there can never be enough money to service debt obligations unless the stock of debt is continually expanded. When the costs of interest payments exceed growth in debt, marginal debtors can no longer afford to maintain their debt payments, and must begin liquidating.
The system reaches its terminal point when new debt creation fails to match existing interest charges. As soon as that point is reached, defaults will spiral through the system. Which is why the world’s central banks are doing everything in their power to keep the debt creation bandwagon on the road.
Why is this process destined to fail? Because nothing can expand forever. Money and debt have been growing at exponential rates, but they cannot do so indefinitely. The system can only hold together with perpetual economic growth. The last five decades of debt accumulation are not the steps toward some form of equilibrium, but rather the calm before the storm; progress toward huge disequilibrium. A lot of what we think of as wealth is going to vanish. Claims upon it are too numerous, and future growth will almost inevitably disappoint. Our recent take on the unsustainability of the global debt predicament can be heard here.
The third stage of the ‘stealth takeover’ of the system by the banks can be linked to any number of events in the aftermath of the Nixon Shock when it became clear that the financial system could not be relied on to regulate itself. In the early 1980s, for example, US banks went on a lending spree in Latin America, apparently determined to test the validity of the statement by Citibank’s Walter Wriston that “countries don’t go out of business”. Soon afterwards, 27 of them did. The losses were gargantuan. Nassim Taleb points out the incredible statistic that during the Latin American debt crisis, US banks lost as much money as they had made in their entire history up until that point.
The Latin American debt crisis was followed in short order by the Savings and Loan crisis, in which misguided deregulation sparked a wave of malinvestments by Savings and Loan companies (the US equivalent of British building societies). One in three Savings and Loan associations failed. The $160 billion cost of the crisis was, of course, largely borne by the US taxpayer.
1998 saw a dress rehearsal for the Global Financial Crisis of 2007 – ? The debt default by Russia after the Asian Financial Crisis of 1997/8 triggered the collapse of the hedge fund Long Term Capital Management. The banks, of course, had – inevitably – lent heavily to LTCM, so they needed bailing out, too. The Fed’s intervention in the LTCM bailout was, in the words of the financial analyst Rawdon Adams,
“..a rejection of the idea that a global capital market valued in the trillions of dollars is well positioned to absorb crises, demonstrate swift powers of recovery, and rapidly reinstitute order from chaos.”
Early 2000 brought us the dotcom bust. In the (mistaken) idea that the fate of the real economy was at stake, the Fed slashed interest rates. This led, in turn, to the property bubble that metastasised in the form of the 2007 subprime crisis, and which required eye-watering amounts of public money to restore some semblance of stability to the banking system, both in the US and internationally.
Jim Bianco of Bianco Research has put the US bailout figures into context. He concluded that the extent of the post-Lehman US bank bailout to date is currently bigger than all of the following US government expenditures combined:
That aggregate total of $3.9 trillion is $686 billion less than the cost of the credit crisis in the US. And as fund manager and commentator Barry Ritholtz points out, the only event that comes close to the cost of the most recent (that is to say, pre-Covid) financial crisis is World War II, with the inflation-adjusted cost borne by the United States summing to some $3.6 trillion. Financial information provider Bloomberg reported that the US taxpayer, post crisis, was on the hook for a total of $7.76 trillion of liabilities, which equates to $24,000 for every man, woman and child in the country. And then we had the costs of the ‘pandemic’..
On the topic of confected global frauds against humanity, ‘Capitalist Exploits’ (@capitalistexp on Twitter / X) has posted the following thread:
“If you knew you were sitting at the helm of a collapse in fin mkts, which would bring social unrest and likely displace your position of power what would you have done?
“This was the problem facing the elites in fall of 2019. Recall the repo crisis? The emergency debt crisis, which was the result of problems papered over since 08.
“Desperate attempts to save the system were enacted (Fed funding repo mkts to tune of 10-20B p/d). It was so desperate that even treasuries were being rejected as collateral.
“We hedgies, analysts, fin mkt guys/gals all knew the system was going to collapse. So did the elites. Collapse threatened them.
“The scam that cannot be named was the veil for ushering in “The great reset”. An ability to crush small biz and destroy the middle class (who represent the greatest threat to totalitarian rule), print trillions of dollars, give it to themselves while controlling the collapse.
“Collapse is necessary for them to enable and justify a techno feudal system – “build back better”. A system where all assets are owned by those at the helm of the destruction – “You’ll own nothing and be happy”. Classic Hegelian dialectic.
“Obvious at this point to all but the truly brainwashed or desperately naive is that there was no medical emergency. Only a mass MSM manufactured crisis, coupled with censorship never before seen (necessary to enable the transfer of wealth to elites..now done).
“Groundwork was carefully laid for biomedical security state (passport systems, psychological NLP, much greater amt of work moved to online/digital). This is where the next manufactured crisis is to come. Corralling all those in digital system into something “safe and secure”.
“A digital ID. To be tied in with CBDC’s, controlling spend (programmable money), “social credit/ESG” and vax passports. – Controlled spend, – Controlled movement/travel. See 15 min cities. – Controlled health – if you don’t comply with measures you’ll be cut off from payments.
“Payments being UBI. Dependancy is being established now. Post dependancy comes UBI. Soon as you’re reliant on UBI you’re a slave to the entire structure.
“If you wish to know who is behind what is the greatest organised crime syndicate ever seen and behind what is a global war where citizens are both victim and weapon begin by looking at “The 2030 Agenda for Sustainable Development”.
“Numbers don’t lie and we are already in a genocide. (excess mortality post “safe and effective”) Don’t @ me; do your own analysis. Welcome to WWIII. It’s already here…but not in the way any of us ever envisaged.
“What now? Well, it must be stopped. Start local. The time for fearing ridicule is long past. Be brave, speak the truth. Understand an entire bag of “emergencies” are in the wings. We must be awake to these and shut them down immediately..before we’re all enslaved. – End.”
Sufficiently sobering for you ? For more on these topics and others, we recommend the book ‘180 degrees: unlearn the lies you’ve been taught to believe’, by Feargus O’Connor Greenwood. Our interview with the author here. And another recent interview with Lawrence ‘Fix the money, fix the world’ Lepard here.
But back to the banking system. We can see that the recent history of the so-called free market in Anglo-Saxon finance (the fate of British banks is not so very different from those of their rivals across the pond) is really a history of increasingly large crises, followed by increasingly intrusive and costly intervention. The most costly intervention of all, of course, has been through the mechanism of QE, which has managed to distort the price of just about every financial asset on the planet – to the extent that there are no safe havens any more, just gradations of things that are variously more or less risky along a continuum of threat.
To all of which, again, the logical response must be Cui Bono ? Who benefits ?
Not taxpayers, who bear the inevitable burden of bailouts for errant banks in perpetuity.
Not average workers, who bear the malign, inflationary impact of QE upon property prices, goods and services
Not even savers and investors, if deposit rates are kept artificially suppressed while asset prices are sent to untenably high levels by means of the very same QE.
Who benefits ? How about a banking system whose senior players would be forced onto the dole queue in anything approximating to a free and fair market ?
The next logical response, we think, should be: so what do we invest in, to help us escape from this farce ?
And we think there are three crucial categories of investment or asset that are, effectively, antidotes to the conspiracy in plain sight being effected by ‘the Establishment’ that perpetuates a commitment to fiat currency and fractional reserve banking wholly dependent on an unsustainable constant expansion of credit.
One of these is the systematic trend-following fund: a trading vehicle that isn’t limited by benchmark or indexation simply to track a given equity or bond index, but which allows its managers and their algorithms sufficient latitude to track rising (or falling) price trends across equity indices, interest rates, currencies and commodities – and to profitably exploit the most dramatic trends it encounters.
One of them is ‘value’ equities, focused on the efforts of honest entrepreneurs, and their businesses, to create value by means of free enterprise. Cheap, high quality, profitable businesses, in other words, with little or no attendant debt.
And one of them is the finest form of money that we have in our fallen world, a form of money that cannot, unlike dollars, pounds and euros, simply be printed on demand. A form of money that has held its purchasing power across thousands of years, during which period all unbacked paper currencies have deteriorated to their inherent ultimate value of zero. That form of money is, of course, gold – and the likes of its lower cost monetary rival, silver. It is also a form of money that will come into its own during the next phase of the financial perma-crisis, which may turn out to be yet more severe than the previous iterations we have all experienced – because the economic and fiscal capacity of western governments to engage with yet more banking bailouts, if required, is, how can we put it, “challenged”.
Those lines from Nigel Kneale himself still resonate:
“When he [Quatermass] tries [to reveal the conspiracy], all the creatures, the Whitehall lot, had already been infected, and it is very difficult to talk sensibly to anybody in political power because they’ve all gone under.”
Remind you of anything in particular ? The government and its willingness to nullify its obligations to the electorate in favour of the banking lobby, or perhaps Big Pharma interests, instead ?
It’s not even as if there is much denial about the status quo in financial services on the part of those media who should be holding the banking industry to account. As The Economist acknowledged in a recent Bagehot column (Walter Bagehot being a Victorian financial writer and author of ‘Lombard Street: a description of the Money Market’ which is a classic text on banking):
“Bankers have similar double standards [with relation to ‘open’ and ‘closed’ politics]. Critics rightly point out that they are arch-globalists when the market is on the up, but then turn to national governments when it crashes. But the problem runs deeper. Like other industries, finance is rigged from the inside by firms that invest in lobbyists and hire ex-politicians who still wield influence.”
[Emphasis ours.]
The most terrifying conspiracy is the one that everybody already knows about, but just refuses to act upon. We seem, today, to be trapped in some form of global neo-Communist palace coup.
And the tide can still turn. Although an illiberal regime can sometimes outlive the unlucky, no Communist economic system can ever truly last, because it will always ultimately collapse under the weight of its own lies, its literal and moral insolvency, and its overwhelming internal contradictions. In 1989, for example, the Berlin Wall fell – without a shot being fired.
Bastiat pointed out that the state was “that great fiction by which everyone tries to live at the expense of everyone else”. We may yet be living through the death throes of the big state. The dinosaur is dead – it just doesn’t know it yet.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you, too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio -with no obligation at all:
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Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks.
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