"Half the work that is done in this world is to make things appear what they are not." ~ E. R. Beadle
Central bankers have been actively employing psychological strategies to deceive the masses for generations. In the future, we will write a more in-depth article on this topic. Central bankers have been recreating reality, and the poignant part is that the masses now assume that this altered reality is the new norm.
By now, everyone is aware of Dan Price, who in his infinite wisdom decided to oppose market forces and attempt to create a new paradigm; his version of equality. He decided to raise the minimum salary in his firm to $70,000. On the surface, you would think such a strategy would work... Take from the rich and give to the poor; the modern-day robin hood. In reality, the strategy was an utter failure; it rewarded the slothful the most, and the most fruitful the least. As expected, the talented decided to jump ship and look for greener pastures. In this scenario, an attempt to recreate reality was launched, but it failed due to its scale. The Fed took the same path, only on a much larger scale and the result has been a success so far. The Fed has been pumping money into the system via QE (through its various quantitative easing programs) and by maintaining an environment of ultra-low interest rates for an unusually lengthy period of time. QE has ended, but not the era of incredibly low interest rates. This gives many companies that have no edge and or very little of edge due to lack of real effort a new lease on life. They are able to issue debt and use this capital to create the illusion that all is well. In other words, they are getting a life line they do not deserve, via money they do not have, and will in many instances, never be able to pay off, to create the illusion that the company is prospering. Even companies that could improve their efficiency, and output are not doing so, because it's far cheaper to use this money to buy back their stock and inflate earnings, contrary to investing for future growth. Insanely cheap interest rates have encouraged corporate and sovereign borrowers to issue an unmatched $253 billion worth of long-term debt as of July 2015; $65 billion more issued over the same period last year... Some of these bonds have maturity dates of 100 years.
This quote from a recent article in the financial times sums up the current situation quite well.
"Take corporates. If they believed the economic outlook was positive and markets were distorted you might see them taking advantage by borrowing cheaply and then using that money to invest. But you're not seeing that. They are issuing the debt and using the money to buy back stocks," Mr Gallo added. - Full Story
The masses are jumping on the altered reality bandwagon hook, line and sinker; just look at how the precious metal's sector has been decimated over the past four years and continues to take a thrashing. The money supply has increased insanely since Gold topped out in 2011, a trend change we spotted in advance and advised our subscribers to embrace the dollar and move out of precious metals. Against such a back drop, precious metals should have soared to series of new all time new highs; instead, we find that they are trading at multi-year lows. This begs the question why? We just gave you the answer earlier.... The masses have bought the concept that money actually grows on trees, and that the Fed can control the markets indefinitely by either pumping insane amounts of money into the economy directly or setting up the conditions that will fuel a debt binge. This will work until the masses stop buying into this altered reality. However, we all know that the masses never ease out of or into an investment. They always rush in and our out, hence creating a feeding frenzy or triggering a stampede as they flee for the exits. The astute investor attempts to position himself/herself in anticipation of this move.
Instead of repeating what we already discussed in various updates sent out to subscribers over the past two years, we will highlight some of these excerpts below. These excerpts should help shed some light on how central bankers very effectively use this simple, but highly effective strategy to recreate reality.
When you control the bad and the good news, you control the outcome of the game. How high will this market soar? Well to issue very long term targets would be a waste of time as the situation is very fluid; meaning that this market will go as high as the masses allow it to go........... - Market Update May 17, 2015
When you think rationally and or use old parameters to gauge this market, every single bone in your body probably screams out that this market should crash and burn. That is accurate, but what is also spot-on is that as nothing is real, logic has no place when it comes to the illusory. How can you use logic (which is based on using real and compelling data) to judge an event that is deceptive in nature? Every statistic conceivable has been, is being or will be manipulated to satisfy whatever picture the manipulators want the masses to believe in. It takes two to tango, one to cry and three to have a party, thus the crowd is as complicit in this game as are the manipulators. The most likely outcome is that the markets will trade higher than anyone expects as long as the trend (based on our trend indicator) remains bullish. We also feel that the Dow will experience at least one 10% correction and possibly as much as 20%, as it has been a long time since the markets let out a decent amount of steam. This healthy correction will have the bears growling with satisfaction as they finally feel vindicated; instead of banking their gains, they will open up more shorts, and watch the diminutive profits they finally locked in vaporize, and add to their already hefty losses. On that note, we have evaluated the situation in Ukraine, and Greece. We feel that for the risk averse, buying properly in Kiev, Athens, and or one of the large cities makes for a great long-term investment. Every disaster is nothing but opportunity saying "Hello," most slam the door and run, instead of responding in kind.
What we have learnt over the years is the following;
- There will always be room for another massive disaster.
- Stress is the most destructive force in the universe (at least as far as living things are concerned). Therefore, if you are part of the living dead, then this probably does not apply to you.
- The best and most effective trigger for stress is fear of the unknown. 99% of humans know nothing that could be termed as relevant, and or the little that they know is more destructive than useful. Most humans selectively choose their stress (poison); if you can selectively choose your poison, you can also choose not to ingest anymore of it. Hence, the disease and the cure lie within your own hands. Do something about it or someone else will and the outcome will not be the one you wish, want, or hoped for?
- There will always be fear mongers warning you that the end of the world is nigh (so far their record is dismal for the world has not ended). Your best option is to view their dire warnings in the same light as the ravings of a lunatic.
- There will always be people who say I wish I bought when the markets were falling apart, but when that situation finally presents itself, these very same individuals will be the first to head toward the exit.
- Ironically, people worry about dying, instead of focusing on how to make each moment of this finite life more memorable. Dead men tell no tales because, the living are much better at it.
The strategy now used by the central bankers and top market manipulators is becoming more psychological in nature. The focus is on altering the perception. Once the perception is altered it does not matter what the reality is for a new alternate reality has been created. This alternate reality will replace reality and remain valid until the masses manage to break free from its hold. For months now, the Fed has been giving hints that it was going to taper off its $85 billion a month program, but when the markets reacted badly, it always backed off. However, this time the markets are holding up fairly well; it appears that they have priced in the fact that the Fed is going to start looking for a way to cut back on this program. In this sense, the markets are holding up rather well and one would have to say that they are now actually climbing up a wall of worry........ - Market Update Dec 12, 2013
The perception is changing; the masses are now becoming optimistic thus unless the trend changes we can expect the markets to rally even higher. One other thing to understand is that even though the rally in the markets has been artificially induced, the markets have actually recently issued "a true bullish signal." . What is this signal you ask? Well, both the Dow and SPX are trading at new highs. A true bull market is not in session until the old highs have been taken out. 9 out of 10 times when this occurs the market rallies significantly from the breakout point; the breakout point in this case is roughly 14200 (the old 2008 high).......... - Market Update Dec 12, 2013
Perception is everything, and not looks or money. If you can alter the perception, then you can create any reality or alternate reality you want. It appears that the breakout to new highs was indeed a bullish signal. This was not an easy call to make given that the markets had risen so much over such a short period of time. Now that the Fed has seen how easy it is to recreate reality, watch how the level of brain washing will increase exponentially. People that actually use common sense will start to feel like aliens in this world, for the majority of the populace will be operating in an alternate reality. You won't have to watch the TV series the living dead; you will start to run into them everywhere soon. Welcome to my World said the spider to the fly, to which the fly responded, which one........ - Market Update May 31, 2015
The new reality is that the mom and pop investor has just jumped into the market, and they have been sitting on the sidelines for a very long time. They have also been finally brainwashed into accepting the alternate reality that all is well. On that basis, we can expect the markets to rally much higher before they finally run into a brick wall........... - Market Update Dec 12, 2013
This action by the Fed to wittingly alter reality, by deliberately distorting the financial landscape, could be viewed as something appalling, if you stand on moral high ground or take the good Samaritan angle......... Both of which will produce mounting losses and a boatload of unnecessary stress. ......The observer's angle tells you to understand this phenomenon, and then find a way to benefit from it. The phrase "don't fight the Fed" was not coined without reason.
"A lie is only lie if you discover you are being lied to; until that moment most actually assume that they are being told the truth." ~ Sol Palha