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Why is ‘Manipulation’ so Prevalent Today?

January 6, 2013

The problem is our Money ‘Unit’. Our ‘Unit’ is Subjective, Derived, and without any Objective Substance! Think ‘evolution’ of money!

Let’s talk about our money unit. What is it? Where does it come from? What is it suppose to measure? And why is manipulation prevalent given that our money unit is now imaginary (a unit of consciousness and then digitally created). To understand todays markets we need to understand our ‘consciousness’ and then differentiate between money symbols and physical money units.

Money starts out (initially) as an ‘idea’ of one’s mind (a ‘no thing’ item). It then is applied to some physical item from nature which emerges from barter transactions. Once an item (say silver) has been selected as a proxy or standard for valuation, it then is defined in a precise manner so the item is useful for objective valuation. Once an item (say silver) is defined precisely, we give the item a name (say dollar). It then becomes a currency unit. This currency unit can then be used as a tool or a medium for future exchanges of value. Those who desire to accumulate the item (which is now a physical coin and viewed as valuable) can then store this item as savings for future monetary transactions. This overview describes the history of money (in brief).

Today, however, our money unit is no longer physical nor is it an item from nature. Today, our money unit ($1) is merely a symbol (name and number) which is derived from consciousness. We could call it a psychological unit. Ask yourself, what is our ‘dollar’ today? Do we use silver coins (named dollar) today? Do we use gold coins (named dollar) today? Do we use paper notes (named dollar) today? Do we use digital or virtual images (within the computer screen) named dollar today? Let’s think about our currency unit (also called our basic money unit) and then let’s discern why this unit lends itself to manipulation by our financial authorities, traders, and math programmed computer algorithms.

For most of our economic history Americans have used physical money units (silver, gold, paper notes) as our tool or proxy for the valuation of goods. The psychological aspect of these units is revealed as we ‘value’ items for exchange. The primary reason for money is to serve as a tool for valuation. Under Capitalism we all legally own property and this leads us to exchange items of value between buyers and sellers within a marketplace. But what is ‘value’ and how do we ‘measure’ this concept? Historically, people have chosen some item from nature (like silver) as an item of value. This item has often been viewed as containing ‘intrinsic value’. We then specify scientifically the weight within this item to make it more precise as a measuring tool (to objectify value). When our item of value (say silver) has been specified and defined precisely we then give this new item a ‘name’. Thomas Jefferson, our Founding Father of money, chose the ‘name’ dollar for this specified currency unit (371.25 grains of Ag). Congress agreed. The result was the Coinage Act of 1792 and our new silver dollar. Defined precisely as 371.25 grains of pure silver (Ag).

Silver has precisely 47 protons and 47 electrons and 61 neutrons. So this element can be viewed as a thing of substance. With a thing of substance we can proceed to ‘measure’ the value of other items that people desire to exchange in a marketplace (bread, eggs, milk, etc.). History has proven that measurement of value via a silver coin does tend to stabilize prices within a marketplace over time (not perfectly however). ‘Value’ is always a subjective concept within the ‘minds’ of people. This means that derivation of value (even with silver coins) is not perfectly objective. This means that prices will become distorted and unstable as time progresses (part of this is due to changes in supply and demand). Money has always been an imperfect tool for valuation of goods and services. Nonetheless, it does work to some degree to grow our economy and assist us with creating new ‘wealth’ and ‘prosperity’ for our society.

So why do authorities who operate our monetary society change our money unit (say a silver coin) from the element we call ‘silver’ to a paper note (redeemable in silver)? One good reason is to increase the number of buy/sell transactions within a marketplace. By increasing the quantity of money units via ‘synthetic’ proxies of silver (paper notes) we can increase the velocity of money…and then create an environment for new wealth to be created (entrepreneurship). All this works well as long as people accept the ‘paper’ note with confidence and also trust the ‘words’ written on the note (i.e., the right to redeem in the real thing). The problem with ‘proxies’ or ‘representative’ units is that there is a tendency for authorities to over issue the quantity of units…which then causes ‘inflation’ and ‘value’ distortions. The new ‘proxies’, however, tend to work as long as people in the marketplace have ‘confidence’ and ‘trust’ in the issuing authority and the overall monetary system.

Since 1971, however, with the closing of the ‘gold window’ by Richard Nixon, our money units have evolved into merely psychological units. Convertibility of our paper units into gold ceased as of August 15, 1971, and all world currencies simultaneously lost their psychological ‘tie’ to gold on that date. This has resulted in the math based index monetary system of today. This math based index system (1973-2013) has now mostly eliminated the circulation of ‘paper’ notes (fiat money) as currency units and replaced these units with digital units (within our computer screens). Digital units are ‘virtual’ , ‘imaginary’, and mere symbolic representations of our original silver dollar coin (our starting point in 1792). Our Authorities now create these digital units via policy decision (out of their thinking) and then ‘type’ symbols (numbers) into a computer screen. So where does this leave us as of now?

Today (2013) we live with mostly digital units within our computer screens (96%) and the remainder consist of a small supply of paper notes and metal coins (4%). Our entire monetary system has evolved from physical money units (1792 to 1971) to mostly psychological money units (1971 to 2013). Our monetary system is now being ‘virtualized’ globally and money is becoming subjective, digital, and mostly imaginary (within our ‘minds’). Our credit cards, online checking accounts, mobile smart phone accounts, computer investment accounts, HFT trading platforms, etc. are all representations of our ‘virtual’ monetary system. Cyberspace has replace real-time observational space. Virtual reality has replaced Physical reality. Few seem to understand what has happened and what is happening within our real-time internet society.

Our entire planet is now mostly wired for speed of light transactions. We can now purchase virtual stocks, virtual bonds, virtual currencies, virtual mortgages, virtual derivatives, etc.  all within real-time and within our computer screen. With the click of a mouse button our Central Bank can create new digits (QE money) with no cost or physical effort. Ben Bernanke and other Central Bank policymakers can now just ‘think’ and then increase money units by ‘clicking’ money into circulation. Trillions of digital units (which we still call ‘dollars’) are ‘typed’ into the computer screen to increase the checking account of our Central Bank.  What a world we live in!

In conclusion, the reason we witness so much ‘manipulation’ in the markets today is primarily because our virtual (digital) money units lend themselves to this behavior:  official manipulation by our Central Bank, trader manipulation via speed of light trading decisions, math based algorithms which create buy/sell strategies with no human intervention, and because our Model for economics (Keynesianism) is mostly based on psychological math based formulae and subjective numbers. The entire monetary system has evolved into a mostly ‘imaginary’ system of symbols, index numbers, psychological manipulations of formulae, math algorithms, virtual currencies, virtual stocks, and virtualization of practically every monetary transaction. Just look in front of your nose and notice the computer screen. Where are your physical money units today? Where are your silver coins and your silver or gold certificates? Look inside your billfold or purse and notice all the credit cards (potential virtual money). Where does all this lead going forward?

We all are now ‘slaves’ of the money cartel and their monetary games. Few are aware that they are monetary ‘slaves’. Those who can manipulate the system do not sense any monetary slavery . Those with large on-line savings and investment accounts do not sense their ‘slavery’. But the vast majority of mankind (now some 7 billion human beings) are mostly ‘slaves’ to this virtual monetary system and this group of elite monetary brokers. The name of the GAME today is ‘manipulation’ and more ‘manipulation’. What is needed now is a recognition of our problems by opening up communication with everyone.  It all starts at the TOP and few at the bottom understand this GAME. Read this missive a few times to gain some understanding. I am:
3 Comments leave one →
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