by Scott Thill
from AlterNet Website
For decades now, the Federal Reserve has been suppressing the true value of gold to keep its prodigious impact out of the market, which is currently dominated by fiat currencies like the dollar and light-speed binary code transactions like high-frequency trading. If you stripped away the Fed's continuing manipulation, gold's free-market value, currently hovering around $1,000 per ounce, would increase by multiples.
Wait, are you yawning? Why are you leaving?
The Federal Reserve, along with investment banks, hedge funds, governments and even you (yes, you), have not been just manipulating the so-called real value of gold and other financial instruments for decades, you've also been manipulating reality itself for centuries.
Because gold is just chemical element, or a precious metal as it is called in the business, which means you can't eat, grow or use it to power your house or car.
But what gold is good for, and admittedly has been since the beginning of recorded history, is storing notional value: It is simply an idea made shiny, attractive, and up until our recent Great Depression rerun, pretty lucrative.
In other words, it is a hyper-reality, a
consensual hallucination to borrow a term from novelist William Gibson. It
has value as a currency because we decide it does, just like the fiat
currency system that replaced it, not because of anything it can actually do
on its own.
But as the War on Terror and return of the Great Depression have both shown us, security is often an illusion masking the subtraction of further freedoms and values. It tends to make a small percentage of people very rich, at the expense of others less fortunate.
That includes those who cannot afford to pay
over $1,000 an ounce for gold futures. Or physical gold, which goldbugs are
hoarding for the day they foresee Neil Young's aforementioned knights in
armor coming to collect their riches for a king, lately President Obama,
demanding their total obedience to what Douglas described as the more
democratic fiat money system.
A presentation from GATA chairman Bill Murphy explaining massively unsustainable short positions in gold and silver from the usual suspects like HSBC, JP Morgan Chase and more, including the hated Goldman Sachs, ex-employer of current CFTC chairman Gary Gensler. Sure, this probably doesn't come as a shock to anyone familiar with those banks, and their regular practice of naked shorting everything else in financial reach at the expense of trillions in taxpayer bailouts.
But for its part, the CFTC is staying out of the gold conspiracy theory for now.
It should be a well-attended affair, given the inevitable flight to gold after the housing bubble imploded under the bloated weight of other notional value instruments like CDOs, SIVs, MBSs and other alphabet-soup investment stratagems.
everything went to holy hell in 2007, gold
was trading around a lavish $600 an ounce and holding steady. After the
meltdown, it has nearly doubled. And if GATA is to be believed, the value of
physical gold could be many times more than that, which would put its price
of security somewhere near $4,000-$5,000 an ounce. That's security out of
the range of normal world citizens, but well within the reach of those
either rich or hip enough to gold's so-called real value.
And it should be stopped. GATA believes that process begins with transparency in gold.
But what's out in the open is that gold's real presence on this Earth is annually declining: Global gold output has steadily declined, as has the global economy's reliance upon its fractional standard. These are no accidents. As a natural resource, like the much more valuable oil and water, its real-world power is finite.
But as a notional signifier, GATA and other goldbugs seem to believe that gold's value is being unfairly restricted.
Which on its face seems illogical: If anything, the world needs much more water and oil than it does gold, silver, copper, diamonds or other precious metals and minerals. And just because, like oil, all of the easily obtainable sources of gold have already been found and plundered doesn't mean gold's price, like oil, should go up.
It should go down, as its inherent inadequacy to
our 21st century, an age of quickly decreasing natural resources, becomes
more apparent. And it is apparent.
But not because the world needs to turn back the
clock on the gold standard at the expense of fiat currency. In fact,
exposing gold as just another fiat currency, a pretty notional nugget you
can wear on your finger much like dollars line your wallet, is overdue.
Which is why the mark in the first paragraph didn't fall for the conspiracy
theory. Everyone already knows gold is fake money disguised as real value.
If the dollar dies, so does the United States as we know it. Of course, taking the veil off gold won't be the only Cesarean knife plunged into the republic's back.
This will require Washington to auction off about $96 billion in debt a week.
Once China and the oil-rich states walk away
from our debt, which one day has to happen, the Federal Reserve will become
the buyer of last resort. The Fed has printed perhaps as much as two
trillion new dollars in the last two years, and buying this much new debt
will see it, in effect, print trillions more. This is when inflation, and
most likely hyperinflation, will turn the dollar into junk. And at that
point the entire system breaks down.
Hedges, James Kunstler and many others believe the United States will devolve into a militarized, nationalist dystopia, a scenario that is less far-fetched by the day in the era of puppet ciphers like Glenn Beck and Sarah Palin.
The technological optimists at Wired believe we'll transcend the bonds of these material fiat currencies and go further hyper-real, firing electronic payments by iPhone via Twitter and other virtual value systems.
"The Future of Money," Daniel Roth's story for the March issue trumpeted, is "Flexible, Frictionless, and (Almost) Free."
Hoarding stores of physical gold in a new century filled with environmentally and economically aware citizens sustainably exchanging real-world goods and services, while paying for them with electronically notional currencies plugged into a value system unhinged from an Earth whose natural resources are shrinking by the day, looks less attractive by the minute.
In fact, it looks like the past, not the future.
And we all remember the past, don't we? Not pretty.
What did Marx say about history
repeating itself twice?
We know Goldman Sachs and other hive-minds for mathematics Ph.Ds, proprietary algorithms and carnival barkers have been gaming the gaps between these real and notional values, at the expense of our republic's integrity.
But we've paid them billions more for it anyway,
which is lunacy: Exploiting the stress fractures in economics' clumsy house
of cards isn't intended to fortify it. It is intended to destroy it, and it
has succeeded brilliantly.
But if we want notional value to survive the
21st century, we're going digital or going home to our makers.