Global Financial Ponzi Scheme

Is what we’re all chasing even real?

Trades and investments we make today are largely done electronically.

You aren’t trading gold-backed dollars for commodities or equity in a company. You’re trading a string of ones and zeros for another string of ones and zeros.

Think about it… When’s the last time you took delivery of a commodity or were sent a stock certificate after you bought shares?

Half the time, I’m in and out of trades faster than something could be stamped and delivered.

So, how do we even know those commodities or shares are real?

JPMorgan, for example, is estimated to have sold between $1 billion and $3 billion of silver that doesn’t even exist. You or I would call that fraud.

On Wall Street it’s called something like “naked short selling” or a “derivative” or “leverage” or some other bogus term to pull the wool over our eyes.

It’s like rebranding rapeseed as canola to make it more palatable…

Nobody wants to eat rapeseed just like nobody wants to invest in nonexistent silver.

And that’s just one way the banks and those who regulate them are doing whatever they want to enrich themselves with total disregard for people like us.

(Central) Banking Elite

When we invest or disperse capital independently, we take on the risk. If the trade goes sour, we lose money.

But these guys are trading billions of our dollars through pension, retirement, mutual, and other funds… and reaping egregious commissions and bonuses.

Even if they leverage themselves into the ground with trades they don’t understand, not to worry — they’ll land safely on their feet with a golden parachute deployed with still more dollars we worked hard to earn.

Obviously 2007 and 2008 taught us nothing, because the last few months have revealed malicious fraud and cover-ups at the highest levels…

John Corzine and MF Global leveraged to the teeth in high-risk off-the-balance sheet investments using CUSTOMER MONEY in an attempt to make enough money to hide its imminent insolvency.

The bets failed and the firm ended up stealing more than $1.6 billion from its clients as it transferred money from the customers’ accounts into the firm’s to hide liquidity shortfalls. That money has not been repaid. It never will.

Meanwhile, Mr. Corzine walks around a free man.

If you were trading with MF Global, did any of those investments ever really exist? Were they real?

A missing $1.6 billion indicates they weren’t.

Or take the recent exposure of LIBOR to be an utter fraud, conspiratorially manipulated by a small circle of elite bankers.

Many of the world’s investments and interest rates are affected in some way by LIBOR: bank lending rates, capital structures, mortgages, credit cards.

If the mother rate on which all that stuff was based was being manipulated for years, are the millions of loans and credits cards based on that rate also fraudulent?

You’d think that would be illegal — that those bankers colluding to defraud the entire financial system would be hauled in, their firms harshly penalized…

But that’s hard to do when the agencies regulating them are in on the scandal.

We know for a fact that the Fed was in on it.

One of the Barclays traders manipulating the rate told Fed official Fabiola Ravazzolo in an April 2008 recorded phone call:

“We know that we’re not posting, um, an honest LIBOR.”

Yet the Fed continued to play along for years as the knowingly manipulated LIBOR stole billions from the middle class.

It’s the definition of conspiracy — perpetrated by the highest levels of international banks, central bankers, and regulators.

And why would the Fed care? After all, they manipulate rates all the time, just under the guise of “policy.”

But the ruse can only last so long… You can almost feel it coming to a head.

Be Ready When It Does

Obviously, those who have been orchestrating this game know it’s almost up.

And they’re going to try to keep what’s yours when the house collapses.

That’s why the Fed recently gave new “policy” instructions in the form of a paper called, “The Minimum Balance at Risk: A Proposal to Mitigate the Systemic Risks Posed by Money Market Funds” (some more of those bogus terms to pull the wool over your eyes I noted earlier)…

What they’re trying to mask with those big words and their long report is a proposal that would deny your legal right to cash out your money market fund.

The official wording gives fund managers the option to “suspend redemptions to allow for the orderly liquidation of fund assets.”

That means when the run on banks starts because they are collapsing, the government is not going to allow you to take out your money.

It’s criminal, of course. But they’ve been doing criminal things for years — and there’s nothing to stop them because the supposed regulators are part of the conspiracy.

Bankers and Fed officials move seamlessly between the public and private sector, often finding cozy jobs on both sides in corner offices or in Congress or the White House.

Just ask Paulson or Geithner or Bernanke.

I’ll be covering topics like these from here on out in Wealth Daily: who’s lying to you, why, where we’re headed, how to prepare.

So before I get off on too long a rant today, let me leave you with some words from Zero Hedge on this topic, and we’ll reconvene next week.

(If you don’t read Zero Hedge, start. It’s a running no-bull commentary on the Ponzi scheme that is our current financial system.)

Here’s what it had to say about why the Fed wants to limit your ability to withdraw your funds:

At this point it is without doubt that even the government understands that when things turn sour, and they will, the run on the bank will be unavoidable: their solution – prevent money from being dispensed, when that moment comes.

And all too often, investors “discover” they were lied to, as the emperor, in any fiat system, always has no clothes. Just like in September 2008, when the banks were forced to look at each-others’ balance sheet and realize that there are no real assets on the left backing up the liabilities on the right, so the moment of enlightenment occurs at the most importune time.

What we know, is that now i) the government is all too aware that the market has become one huge Ponzi, and that all investment vehicles, even the safest ones, are subject to bank runs, and ii) that said bank runs, will occur. It is only a matter of time. And just as the president told everyone directly to buy the market on March 3, so the SEC, the Group of 30, and Barney Frank are telling us all, much less directly, to get the hell out of Dodge. Alternatively, the game of “last fool in”, holding the burning hot potato, can continue indefinitely, until such time as the marginal utility of each and every dollar printed by Ben Bernanke is zero.

My personal goal is to get my entire financial house in order in case that happens.

That means carrying zero debt, having physical wealth, property, protection, a useful hands-on skill set, and more.

I’ll be sharing how I’m doing that and why in these pages every week so you can snap out of the financial Stockholm Syndrome that’s been affecting the entire world for years.

Call it like you see it,

Nick Hodge

@nickchodge on Twitter

Nick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street’s Underground Profits. He also heads Nick’s Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor’s page.

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