Source Pravda.Ru

Americans trapped in financial markets

The Americans turned out to be trapped in the banks scheming.

There are no free financial markets in the US, where people could trade financial securities.

Federal Reserve policy meanwhile benefits main banks at the expense of the rest of the world.

Paul Craig Roberts has investigated the financial instruments of the Federal Reserve and the Treasury.

There is a contradiction between a strong currency on one hand and on the other hand massive money creation in order to sustain zero and negative interest rates on the massive debt levels.

When gold hit $1,900 an ounce in 2011 the Federal Reserve realized that the precious metal market was going to limit its ability to provide enough liquidity to keep the thoughtlessly deregulated financial system afloat.

The Fed's solution was to take advantage of the fact that the prices of gold and silver are determined in the futures market where paper contracts representing gold and silver are traded, and not in markets where the physical metal is actually purchased by people who take possession of it. The Fed realized that uncovered short sales provided enormous leverage over the prices of the metals and that it would be profitable for the bullion banks, such as JPMorgan, Scotia, and HSBC, to short the market heavily and then cover their shorts at lower prices produced by selling as a result of triggering stop-loss orders and margin calls.

Also read: JP Morgan prepares for global war? Unprecedented silver accumulation

Thus, the bullion banks and the Federal Reserve make profits and protect the dollar by suppressing the prices of gold and silver. They do this by illegally selling huge numbers of uncovered shorts in the futures market. This illegal operation is supported by the so-called "regulatory authorities" who steadfastly refuse to intervene.

Neoliberal economists explain why interest rates can be negative in the face of massive debt and money creation. There is too much saving: The excess of savings over investment forces down interest rates. The negative interest rates will discourage people from saving and encourage them to spend, because the price of consumption in terms of foregone future income from saving is zero. It even pays to consume, because saving costs more than it earns.

The Federal Reserve also reported that a majority of Americans are so low on savings that they cannot raise $400 without selling personal possessions.

Paul Craig Roberts also wonders that, "there still are some Russians and some Chinese who want to be part of the sordid decadence that is the Western world".

Also read: China to eliminate dollar this October

Pravda.Ru

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