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May 10, 2006

The Root Of All Evil
by Rob Kirby

Over the past several years, a great deal has been written about misdoings of the Federal Reserve in particular and Central Banks [the BIS] in general. Thousands of published articles have highlighted the manner in which these elitist organizations have seized control of global money creation, discarded the discipline of money backed by specie and foisted the now-imploding-fraud of un-backed fiat money on the world.

Untangling and laying bare this deception is an onerous task. It makes Enron look like child's play since the true picture of the worlds sorry state of monetary affairs is one that is/was never intended to be seen for what it truly is by its sponsors. One only need look as far as academia and the perversion known as economics to begin to get a handle on this fact.

Recent developments in the global financial landscape do much to suggest that the world's financial system was and is not all that it's cracked up to be [pun intended]. Thanks to the advent of free thought across the internet, the last few major pieces of this global financial jigsaw puzzle are finally coming into focus revealing the true picture; that Central Banking is - in fact - the root of all evil.

In retrospect, it would appear that this view was shared by the founding fathers of the United States of America. As noted Central Bank critic/gold expert James Turk reveals in his 2001 review of Crashmaker,

"Look at any modern schoolbook that publishes "The Constitution of the United States of America", and then go back to the original document signed by the Founding Fathers, which is actually titled "The Constitution for (sic) the United States of America". That one small word change found only in modern schoolbooks alters significantly the intent of the Founding Fathers.

Their intent is made clear if you think of the federal government in terms of the "united States" - or in other words, States, each of which is a sovereign power, that are united - as opposed to the "United States", a single sovereign power. The reality is that the Founding Fathers found the concept of a single sovereign power to be abhorrent. When they spoke of the loss of power within a State to a federal authority, they called it "consolidation" and they were dead-set against it.

That realization explains why the Founding Fathers went to great pains in the Constitution to delegate only 17 specific and enumerated powers to the federal government. They intended that the powers of the federal government would be few and limited. And so it was until the establishment of the Federal Reserve created the ruling elite. After all, who do you think is responsible for that one small word change in today's 'textbooks' if not the Establishment?" [RK emphasis]

The Promulgation of Ignorance: Veiled as Knowledge

It was the best of times and it was the worst of times; such an ambiguous analogy perfectly sums up not only the debt imbalances we face today but also the dismal science of economics as it is currently taught in academia. We truly live in a Keynesian and Monetarist centric world. Central planning [Marxism] is portrayed as menacing evil and the gold standard is forcefully cast as being as meaningful and relevant as a horse and buggy to modern transportation.

Central Banking as we know it today, on the other hand, is pitched or made to appear "sovereign" and a critical arm of government, a symbol of probity and the embodiment of all that's good. Central Banking is never portrayed as a private corporate concern, headquartered in Basel, Switzerland that possesses the global franchising rights to create/mint money "out of thin air". Today's economics students are not taught the meaning of the term "Mandrake Mechanism". Fractional-reserve banking is only ever shown in a positive light and Central Banks are always cast in an inflation fighting role much the same way Smokey the Bear is synonymous with fire prevention. There is certainly never a mention of the fact that inflation is the lifeblood - and in fact imperative to the very existence of a fiat money system. Heck, the academic who currently runs the Federal Reserve even has a nickname of 'helicopter [money drop] Ben'.

Despite this blatant monetary recklessness, the banking elite is still sheltered and abetted by a cooperative mainstream media - students soak it up - believing most if not all of it. No one should be surprised at any of this; people also used to believe the earth was flat. Haven't we come far?

Indeed, we've moved further and further away from a regime that formerly prided itself on a system of honest weights and measures by skewing or distorting the measuring sticks [CPI, PPI, GDP and Employment data] which is evidenced through the empirical manifestations we recognize as the "proxy" debasement of our fiat currency and ratcheting up in commodities prices as well as gold. The indexes and data gathered is not intended to confirm empirical events; it's all been 'reengineered' to ensure the ponzi scheme lasts as long as possible.

The thought process involved; I've written about this before. It's the mindset at the Fed and Treasury that might be best summed up by Robert Rubin as he reveals the motivation or drivers of crisis management in the interaction between himself, Lawrence Summers, the ESF [exchange stabilization fund], the IMF and presumably the Maestro at the Fed - during the Clinton administration. On pages 290 - 291 of his book, In An Uncertain World, referencing the Brazilian financial crisis of the late 1990s, Rubin outlines how very expensive "bad decisions" can buy time. Sometimes, he asserts, these bad decisions have a great deal of merit because they can,

"...Probably defer the impact of the collapse for six or eight months,
and that will more than justify the effort."

Well folks, bad decisions like the ones alluded to above create side effects known as imbalances. The resulting imbalances have served to trivialize effort, led to the outsourcing of jobs, rewarded malfeasance, promoted the misallocation of valuable finite resources and embellished disparities among the classes through the ravages of inflation.

The only thing the academic system still does, which it perhaps wishes it did not - it teaches you how to reason and think.

A First Peek Behind the Curtain

When one delves into it, they might be surprised to learn that Switzerland is the true epicenter of the global banking industry. Besides the famous Alps, the mere mention of the name "Switzerland" often evokes the imagery of clandestine faceless and nameless bank accounts, gold and silver bullion and above all - secrecy. Begs the question; are folks who are secretive trying to hide something?

Ah, the ability to keep a dirty little secret - perhaps the most valuable commodity/quality in the world. Perhaps this explains how Switzerland was able to remain neutral and "bank" both sides in the Second World War?

Hiding In Plain Sight

By virtue of blatant omissions, the field of economics in academia has become a cesspool of ignorance. One realizes this when they step into the dog-eat-dog world of the money changers in the institutional capital markets. Here, survival dictates that one quickly assimilates into the "framework" or they're "chewed up" and expelled. In this respect, the financial system has the unique ability to modify individual's behavior like Pavlov's Dogs with the potent mouth watering elixir of fiat [created from thin air] money. I know this, since for fifteen years or so, I barked and hunted with the best of them. Marriage, kids, a mortgage and the accompanying obligations, otherwise known as a full-boat, have a funny way of encouraging one to avoid rough seas and certainly makes one disinclined to rock-the-boat.

When one directly participates in the inner workings of the global foreign exchange market, the Eurodollar deposit market, interest rate derivatives as well as the global bond complex they gain an understanding of this which cannot be read from a book. When one gains first hand experience as a market participant you come to appreciate the inter-relatedness and nuances that make up the personalities of various markets.

Even so, it's not till one juxtaposes the institutional brokerage business with the retail side of the financial services industry that they would become acutely aware that certain things are seriously amiss.

From an institutional transactional standpoint, precious metals aren't viewed any differently than bonds, equities [stocks], treasury bills or Eurodollar deposits - they are simply "another financial product" that traders transact. But from a retail perspective, one realizes quickly - how the world is viewed extremely differently: Bonds are generally viewed as "bedrock safety" and their issuers [corporations and governments] pay handsome fees to the financial services industry to issue and market them. By virtue of their coupons [income streams] and perceived safety, they are ideal instruments to recommend to pensioners requiring income in their retirement years. Dividend paying stocks [with income as well as realty trusts or REITS] are viewed in much the same manner - cash cow type products for those who marketed and brought them to market - as well as offering clients the desirable attribute of income with the added prospects for capital growth. Common equity is espoused for "growth" through capital gains. Coincidentally or not, company's that require the most frequent services of investment bankers to infuse additional working capital through "issuance of new equity offerings" are typically awarded [or assigned, take your pick?] the highest stock trading multiples by analysts who also happen to be, coincidentally or not, employed by the same crowd of financial service providers. These mutually beneficial trough financings and accompanying "enhanced multiples" serve as the grease or sweat equity that lubricates the wheels of Wall Street and the capitalist system.

What is incredible is the derision with which precious metals - as an asset category - are viewed on the retail side of the financial services industry. To say that metals are "slighted" as an asset category is a complete understatement. In fact, most financial institutions would have us believe that precious metals are a garden variety commodity no different than wheat or lumber. To drive the point home, one look no further than Investors Group, Canada's largest manufacturer of mutual fund products with well in excess of 100 proprietary funds on their product shelf; yet, they have exactly zero dedicated to precious metals. Given that this same company has funds of every other "hot as well as traditional sector" - from internet start ups to portfolio funds to specialty mergers and acquisitions funds to the "safety" of bond funds - isn't it odd if not outright queer that no offering exists representing precious metals with their 6,000 years of documented history and the fact that gold is still held on the balance sheets of Central Banks around the world to this very day as an official reserve asset.

This omission becomes even more glaring when one stops to consider that oft cited independent rater Ibbotson Associates,

carried out a study with respect to the portfolio diversification benefits of gold, silver and platinum bullion. The study covered a 33-year period from February 1971 to December 2004. Ibbotson determined that of the seven assets classes, the precious metals asset class is the only one with a negative correlation to other asset classes. It also concluded that precious metals is the only asset class with a positive coefficient to inflation. Of particular note was that precious metals performed best when they were needed the most by providing positive returns during the years that traditional asset classes had negative returns. Ibbotson determined that investors can potentially improve the risk-to-reward ratio in conservative, moderate and aggressive portfolios by including precious metals bullion with allocations of 7.1%, 12.5% and 15.7% respectively.

It's not till one pauses to consider all these queer circumstances - along with the aforementioned disconnect in academia - that one begins to question mainstream disbelief that the price of precious metals are surreptitiously managed or rigged.

Rainmaker Or Rain Man?

After articulating my research and observations about the precious metals markets for more than two years, I would now like to share a personal experience which I recently encountered that was actually the seed for the piece you are now reading.

It's the spring of 2006 and the kids are just finishing up their academic year at university. As the school year concluded, arrangements were made with a fellow parent to make the 4+ hour trip to the university our kids were attending to assist them in moving their personal effects back home.

How many of you have ever spent an impromptu 4+ hour car trip with someone you scarcely know? Having recently had the opportunity to do just that, I'd like to report, I found the experience enlighteningly educational to say the least.

During the drive, I learned a few things about my new found traveling companion. He was born in Syria and his father sent him away to Spain in his early teens - because in his dad's words - prospects were bleak in his homeland. He speaks five languages fluently, studied hard and he became a doctor - an M.D. He married a Ukrainian girl and emigrated; first to the Dominican Republic and then to Canada - where his Spanish M.D. credentials were not recognized. He enrolled in medical school again and became a doctor for a second time - a psychiatrist this time.

As we drove along - commenting about how "big" a year it had been for our kids, we began reminiscing a bit about our own childhoods. I conveyed to him some of my fond memories about growing up on Canada's east coast and asked him what his "warm spot" was growing up?

His warmest recollections of childhood were infrequent trips he used to make to Beirut, Lebanon with his father. Their infrequent 3-1/2 hour trips there were usually for the expressed purpose of banking. He conveyed to me how beautiful a city Beirut had been which in turn prompted me to ask, what happened there anyway?

Having grown up with an awareness that Beirut, Lebanon was often referred to as formerly being the "The Garden of Eden" or oasis of the Middle East that had "somehow" been overrun by evil external forces and transformed into a vipers den of extremism; I was simply curious how this transformation occurred?

Another Big Piece of the Puzzle Falls Into Place

What my new found friend reiterated to me was a brief history of Lebanon - which he referred to, coincidentally, as the "Switzerland of the Middle East". I must admit, the mere mention of this analogy made my ears perk up and - speaking of role reversals - I began questioning my new found psychiatrist friend with further probing questions.

He revealed to me that the Switzerland comparison was accurate on two counts. Firstly and unbeknownst to me, the geography is apparently strikingly similar. Secondly and of most interest to me, Lebanon's history is one steeped in BANKING. Well, I confessed that I was completely ignorant to this fact and simply had no idea. Pressing for more color than this, I inadvertently got a brief summation of one man's [who had actually been there] account of the fall of Lebanon:

When the State of Israel was created in 1948, a great many Palestinians were displaced and settled in Lebanon. As it was explained to me, the Palestinian people have historically been very adaptive and "pick up" quickly on indigenous industrial activity. In the case of Lebanon, the major indigenous activity was "BANKING" and the Palestinians quickly became proficient as bankers and began wooing the Petro-Currency banking business of their fellow Arab oil rich states. You see, they had a natural advantage to the Anglo/American/Swiss triumvirate banking establishment in this regard since they spoke the language and had the same customs of their target clientele. This was a situation that was completely and utterly untenable to the world's existing axis of banking power which was quickly moving toward "fiat" U.S. dollar hegemony.

It was explained to me that the funding which originally "seeded" the extremist's organizations that initially destabilized Lebanon was categorically of Swiss origin. These organizations were funded with the expressed purpose of consolidating Switzerland as the only choice as the epicenter of the world's petro-currency/ Central Banking focal point.

Wouldn't you suppose that a degree in economics, including specific courses on the economics of the global petro-trade and oil, would have yielded at least a few snippets of this material? I would suggest that this detail has been left out purposefully and for good reason. Then again, "winners" have always had the responsibility of writing and recording history - haven't they?

Therein lies the beauty of secret squirrel Swiss banking society - there is virtually no paper trail and hence no "smoking gun" to prove the alleged interference. Is this all fanciful thinking? I would only suggest that it's uncanny how well the pieces all fit together and how consistent this tale is with our current global predicament - with U.S. Dollar hegemony struggling and wanting to fail - while unseen, secretive and little understood forces preventing it from doing so. The forces that seem intent on propping up the U.S. dollar do so by excessive printing and debasement of their own currencies. This seeming "race to the bottom of the currency barrel" - which is widely portrayed as countries acting in mercantilist self interest - has given rise to de facto or proposed regional currency blocs, namely, the Euro, a proposed new Asian bloc currency and even rumblings of a possible North American Monetary Union.

Lest we forget, currency is one of the distinguishing characteristics that define a country's uniqueness and sovereignty. Some would argue that it's been the plan of Central Bankers all along to do away with those things that make us unique - and impose One World Government on us all. To suggest that such a process is not already gradually "empirically occurring" is ignoring reality. Working groups are already organized studying the eventuality of integration of the U.S., Canada and Mexico.

If, as and when all fiat currencies fail together; is this what has been intended for us all along? The framers of the U.S. Constitution feared as much if their country "fell prey" to Central Banking. Even President Wilson recognized his own folly within three years of passing legislation that created the Federal Reserve,

"I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world - no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but the Government by the opinion and duress of small groups of dominated men."

Would such a development - complete fiat failure - scare everyone sufficiently to gain acceptance for one world currency - and one world government for good measure? Is this what politicos have had in mind right from the start when they coined the phrase "The New World Order"? You be the judge.

Just Remember.......

"We shall have World Government, whether or not we like it. The only question is whether World Government will be achieved by conquest or consent." - James Paul Warburg, whose family co-founded the Federal Reserve - while speaking before the United States Senate, February 17, 1950

Rob Kirby
Kirby Analytics