LOTS OF MISSING BULLION AND CASH
There's a very strange article over at Zero Hedge that was brought to my attention by C.J.D.M. - to whom a big thank you - that raises a number of very large questions. You can file this one under "more missing money," only here there's a slight indication of where it's gone missing, and that, we we'll see in my high octane speculation, is the problem. Here's the article:
Hundreds Of Billions In Gold And Cash Are Quietly Disappearing
The first little bomb dropped in this article is the following:
And another remarkable observation, or rather lack thereof: "One can see that since the end of 2016 the implied build in non-transparent gold investment has been much larger than the build in visible gold ETFs (see Exhibit 18). This is consistent with reports that vault demand globally is surging. Political risks, in our view, help explain this because if an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault, where it is more difficult for governments to reach them, makes sense. Finally, this build can also reflect hedges by global high net worth individuals against tail economic and political risk scenarios in which they do not want to have any financial entity intermediating their gold positions due to the counterparty credit risk involved."
In other words, Goldman points out that just over the past three years, there have been tens of billions in gold flows which have mysteriously and inexplicably disappeared from the official record, yet which are most certainly taking place behind the scenes as the world's "top 1%" brace for a major shock.
There you have it: more missing gold. But then another little bomb is dropped; not only has gold gone missing in lots of private buying, with the implication that it's being hoarded, cash itself - paper money - is being hoarded:
We do know one thing: of the $1.7 trillion in US dollars in cash circulation in 2018 (up from $1.2 trillion 5 years prior), the vast majority is offshore, where it is quickly and quietly disappears as the world's second best physical store of value (after gold of course). A Fed economist, Ruth Judson, wrote in 2017 that about 60% of all U.S. currency, and about 75% of $100 bills, had left the country by the end of 2016 — for a total of about $900 billion in U.S. dollars kept overseas. Socking those bills away "provides some protection against economic turmoil, especially in countries with a record of instability in their own financial systems", the paper said.
Take Australia: there the stock of Australian bank notes on issue relative to the size of the economy is near the highest it has been in 50 years, said Philip Lowe, governor of Australia’s central bank: "He showed off newly printed bank notes to diners at a recent event in Melbourne and estimated that about $2,000 in printed bills exists for every Australian." And just to inspire confidence in his own job, he added: "I, for one, don’t have anywhere near that amount" on hand. In a few years, he will wish he did.
To be sure, there is the criminal element: as anyone who has watched a documentary on Pablo Escobar knows the Colombian drug kingpin buried tens of billions in the ground for "safe keeping" (in fact, as "The Accountant's Story" writes, "Pablo was earning so much that each year we would write off 10% of the money, or about $2.1 billion, because the rats would eat it in storage or it would be damaged by water or lost"). As such, dollar bills are often vital grease for criminal gangs and tax cheats.
Physical cash is also popular with preppers and "collectors" who worry about a future collapse of the financial system.
But these two groups are far too small to explain the wholesale loss of cash as central bankers scramble to "follow the money" and glean how society's saving and spending patterns change in a time of zero and negative interest rates. As the WSJ notes, bankers aren’t just hunting down cash to satisfy their own curiosity. If central banks don’t know how much cash is out there, they could print too much currency and risk inflation.
There you have it: there's so much missing cash and alleged hoarding of cash going on that's being done by (1) the criminal underground, (2) ordinary people, especially in countries with fragile economies, that (3) central banks cannot track how much has actually been hoarded and taken out of circulation. Add to this the FASAB 56 regulations that have effectively taken the US federal government budget completely black, and you have...
... a problem.
So consider the following high octane speculation. What the various articles about missing gold and hoarded cash are implying (which the Zero Hedge article states explicitly), is that the central banks are ignorant of significant cash flows. If true, then that means they've lost control of the system, or at least significant segments of it. I cannot help but think there's at least a partial truth here, at least as far as the hoarding goes. Such a loss of control would serve to rationalize the dramatic increase in the last few years of central bank advocacy for widespread introduction of crypto-currencies as a mechanism to reassert control over financial flows and the amount of liquidity in the system. But the flip side of that view is the implication that the central banks are to a certain extent therefore not a part of the problem. In other words, what we may be looking at with articles like this (and the articles it is based upon), is a limited hangout position: "We don't know what's going on nor where all this cash is going, therefore, to maintain stability, we need to introduce crypto-currencies, preferably backed by gold." Of course, this too is a bit of nonsense, because the whole financial meltdown was largely a problem of central banks and major prime banks and their own reckless speculation and outright fraud - think mortgages, derivative swaps and so on - to begin with.
Having gutted the system, they now want to move into crypto-currencies. It's a convenient way to cover your tracks.
The problem here is, if one is going to do that, one has to have some accurate idea of how much gold there actually is, and some accurate idea of its assayed purity. And the problem there is, we simply don't know. So in other words, their solution to the black box of missing and hoarded gold and cash, is to create an even bigger and blacker black box as the solution: crypto-currencies in the control of central banks, backed by gold. How much gold? Well, we really don't know. We're simply supposed to trust them.
But since any move to a global crypt0-currency system will by its very nature be a bigger blacker black box, and as a result of the lack of trust in the central banking system, this will only provoke a move on the part of ordinary people to maintain actual physical media of exchange, like cash and bullion. In other words, the hoarding being detailed in the articles might be interpreted as pre-emptive moves precisely against the emerging central bank plans to move to crypto-currencies. Such a move makes sense on their part, for it allows them to keep a vast hidden system of liquidity and finance firmly under their control. The real question now is whether or not the other players - the intelligence agencies, the criminal undergrounds, and even ordinary people - will allow them to do that.
See you on the flip side...
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The problem is what is a capitalist economy?
It might be better to hord newspaper rather than money paper to prepare for the penultimate end times. Unlike gold you can even eat it.
All that is delicate, human balancing of promises and fears, and realities w/friends and intimates are exposed when the future of savings, pensions, trusts and set-asides collapse into a present of immediate survival.
The last kind of monetary temporality: Crisis/Catastrophe.
Thus begins the alchemy of making money beyond the State.
This happens again & again; the last was Depression 1933 w/Wells, Shape of Things/”air dollar” and/or Hugo Gernsback’s The Revolt of Scientists/the renegade technocrats crashed the economy completely to justify their immediate takeover. Not a coup, at least in their mind’s eye; but creating a future as it was meant to be.
“Pardon me ma’am,” she said. “but does she tell the truth?” “of course not, ” said Lil. She tells the future. It’s not the same thing, you know.”
-Boris Vian, Red Grass.
“I’am trying to get root access to the future.
I want to raid its system of thought”.
I have always doubted that a global crypto-currency would make total sense to Mr Global. I mean what would Government excuses be to not locate all the drug pushers and fraudsters etc. Good databases and algorithms would highlight them like a lighthouse. Surely there must always be a break in the fence for the black market and underground to work. Maybe that’s where gift cards come in – here in NZ one use to have to provide ID to purchase them, then that inexplicably stopped.
Good point, Leonard.
I maintain current govts are either incompetent or complicit in the global drug trade, or NOTHING would move.
Just wondering who theses swindlers are paying off? Are they trying to buy their ticket on a seat on some spaceship when Armageddon overtakes Earth I would like to know?
How do you spell Perestroika in English?
Trump sounds more n more like the Yeltsin. That’d be about right with OBusha the Gorbachev. Who’s the Putin?
BTW, did anyone see Adam Green’s documentary clips today with Dershowitz explaining Chabad control over Putin and all?
Feminism is always where the deflation sets in culturally, representing abstract power, in fantasy land. Pandora’s box!
Gamblers follow the moon cycle, driven by emotions towards abstraction. It is all in their mind. Hollywood’s kabbalah!
The art of lying, is about not getting caught, by puncturing the illusion, at the auspicious moment. The casino roulette!
The clean getaway!
Speaking about the manipulation of language, “crypto-currency” initially referred to a blockchain-based system with OPEN SOURCE CODE used to create a digital medium of exchange requiring no other “backing” than the collective effort made to “mine” it. Now this involves drawbacks, above all due to the fact that “no digital system is secure”. There is no sign that these mooted “central bank cryptos” will even pretend to be transparent. Claims that digital bucks, yen, marks etc. are “gold backed” are unlikely to be believed, though attempts could be made to impose their use by force or by draconian discouragement of the use of other means of exchange. This would involve more costly micro-management of billions of people throughout the world. And perhaps, as the novelty of smartphone use wears off, not everyone will be willing to bow their backs, as the Chinese appear to be doing, to centrally managed entrainment….
It all comes back to that tried & true starting point:
Trust Me. This time is different, because…
There is definitely a rising drumbeat around crypto-currencies. There is also a fair amount of literature that the NSA was the original ‘expounder’ of the basics of crypto-currencies. So, I would place crypto-currencies as a further surveillance & control mechanism. Central banks, as just one aspect of the ‘squid’, would also be ordered to hop on the bandwagon. Under this ‘op’, whether crypto-currencies are backed by gold or unicorns is immaterial…
Looks sounds n smells like it’s to be bitcoin. Probly a few others like libra will be used to herd us in. Nice to be given a choice of devils to vote for and dance with eh? Like Jackson Brown sang, whether or not u choose to play u wind up playin anyway.