Volatility Rising As Instability Of Fiat Money System Grows.

“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” — Henry Ford

“Whoever controls the volume of money in any country is absolute master of all industry and commerce.” — James A. Garfield, President of the United States

Once the Fiat Money system is understood everything else seems to fall into place. It soon becomes clear how economics and politics have successively yielded to the requirements of this power system ever since it morphed out of the old Bretton Woods system at the end of the 1960s and early 1970s.

Other monetary systems may not be perfect. No system ever is. However, once you fully understand the Fiat Money system, it is hard to imagine how any other system could be worse. The article below does a great job of describing Fiat Money imperatives.

http://charleshughsmith.blogspot.com/2015/01/2015-everything-can-be-fixed-by.html

There are, however, limits to everything. In order to perpetuate the system a considerable degree of disguise is necessary. No one outside the system, which is almost everyone, would willingly allow themselves to be subjected to this if they understood it. That is why an enormous effort is made on spreading disinformation.

However, as the system self-perpetuates and grows exponentially, the debt, money printing, corruption and general economic destruction become harder to hide. Ever greater efforts are needed to keep the system in place and the disguise is harder to mask.

Here is a list of problems that perpetuation of the system is now confronting:

1. The message is failing. CNBC viewership is collapsing. The editing and relentless narrative have become unattractive to viewers. http://www.zerohedge.com/news/2015-01-01/cnbc-2014-was-worst-year-ever.

2. The economy is failing. World growth is collapsing, http://www.zerohedge.com/news/2014-12-29/2015-world-gdp-expectations-just-collapsed, and credit card debt shows underlying weakness in the US economy, http://www.zerohedge.com/news/2015-01-08/credit-card-debt-tumbles-most-1-year-us-households-resume-deleveraging

3. Interest rates can’t rise even after 6 years of zero interest rates. This is according to Federal Reserve voting member Evans, who said on Wednesday that “raising rates would be a catastrophehttp://www.zerohedge.com/news/2015-01-07/feds-evans-catastrophe-comment-sparks-us-japan-stock-surge-china-purge

4. The printing can no longer stop. Central Banks have been printing since 2008 and are projected to continue indefinitely.

5. Market manipulation can no longer stop. It is clear that the Federal Reserve is still intervening even after the latest QE program stopped in October. This can be seen from both the chart above and the details of Federal Reserve buying over the last few months described in this link,   This last article shows that the fed’s balance sheet has expanded on each occasion as the market has risen.

Any policy that works has an endpoint when the prescription has worked. However, zero interest rates, central bank printing, and market interventions just seem to go on for ever. This is why the Federal Reserve interest rate forecasts are always too high. They have to claim that policy is working which will lead to higher interest rates in a few months time. However, after 6 years this is wearing thin, and Federal Reserve voting member Evans admits that even now interest rates rising would be a “catastrophe”!

The last article also shows clearly how the 6 month moving average of volatility has begun to rise. In the past this has been an early warning signal for equities. The reason for this is that the fiat system is getting much more difficult to keep on track. The failures are mounting and the misleading narrative is becoming more obvious. This is the friction that becomes inevitable as the fiat money system collides with reality, which at some point it must. It always has.

This entry was posted in Market Notes. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *