Friday, April 10, 2015

Finances: crunching the numbers.

With shorts, ETFs and derivatives, the financial world and its state can be distorted. But, sooner or later, the price is to be paid for the criminal activity of the manipulators. Take the example of the manipulation of the Swiss Frank. The Swiss National Bank had pegged the value of the Frank as 1.2 Euros and kept buying Euros and Dollars to keep it that way. Then in January, the Bank could no longer sustain the illusion and gave up. So, what happened? When the dust settled, the SNB had lost $50B, 60% of its capital and 8% of the Swiss GDP. There is a reason why countries had forbidden their national banks to speculate.

That's not all. As of now there are 180M Swiss Frank's worth of 10 year bonds with a negative yield. Ten year's worth of investment has gone up in smoke.

Since the abandoning of the Gold Standard, there has been a 2000% increase in the money supply and the inflation. People are living on borrowed money.

The US is not the only country struggling with low productivity and deficit spending. The UK has a deficit of 5.9% and its debt had gone from 64% to 93% of the GDP.

Because people and institutions can not earn income on safe investments in bonds, they are steered into stocks creating bubbles. The NASDAQ had a P/E of 150 in 2000 and then lost 80% of its value in the following crash. Stocks are now overvalued and heading for a crash. Yet, the Central and Bouillon banks conspire to keep the price of silver below the cost of mining it. The same with gold.

India and China bought up the equivalent of 100% of the gold mined in Q1 and their interest has not slackened. The manipulation of gold and silver prices not only hurts these miners, but also other commodities. These crimes will also be costly.

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