Platinum Coin: A Deadly Distraction At The Precipice ~ The Risk Averse Alert

Friday, October 04, 2013

Platinum Coin: A Deadly Distraction At The Precipice

What good is the now well traveled platinum coin option in overcoming the U.S. Treasury's debt ceiling when, at best, its usage could only perpetuate an unsustainable fantasy that, something other than the banking system's collapse is the inevitable fate of today's wildly imbalanced economic state? It's only purpose is detracting from real solutions. This is no different than the libertarian call for a return to the 19th century's gold standard. Whereas the platinum coin would venture extending hyperinflationary breakdown, the gold standard, enforcing deflationary collapse. Both alternatives would serve to promote misery in economic marginalization. Both alternatives are pure distractions and not at all worth serious consideration.

Attempting to perpetuate today's dream world by way of the U.S. Treasury issuing its platinum coin is a non-starter in fact. Were the magic platinum coin issued, the very act, itself, would expose the true value of outstanding Treasury securities the coin would serve to replace. The new "currency" this silly coin supposedly would be anchoring immediately would devalue today's currency "anchored" by both public and private sector debt.

The fact of the matter is production debt facilitates is currency's only true anchor. Not some rare object, like gold, lend currency its value, but rather rarefied objects forming much "something" from "nothing," such as production represents. With all manner of financial chicanery counting today as "GDP"—a fact boldly exposed by QE—any act of government impinging upon the means of perpetuating this mirage called "GDP" will result in a catharsis. If the act does not address the U.S. economy's decades running trend of collapsing production—particularly its potential for increase—then doom awaits, and this with 100% certainty now, all things remaining relatively equal (i.e. corrupt and driven toward sustaining a fantasy fed by copious quantities of illegitimate debt). That is why it is vitally important the federal government seize the Federal Reserve and transform it into a national bank from which credit can be directed to the purpose of increasing domestic production throughput potential. As some act of government imminently will be necessary, either prior to the banking system's collapse or in response to it, the only sane, workable solution requires institutional changes whereby debt is made a blessing and not a curse, reversing today's crushing burden whose end portends the physical and financial economy's chaotic unraveling.

The battle being provoked by feckless wonders leading both political parties in Washington and their irrational ideologue underlings -- all stripes advocating for the "free market" as faithful promoter of the general welfare -- centers on fantasy today's debt burden is sustainable, rather than a late-stage manifestation of a Ponzi scheme. The trouble now is any manufactured market rout attempting to swindle concessions gutting federal outlays necessarily risks an uncontrollable financial calamity. This very dire, real prospect surely is the reason why manageable swindles alone since 2008 have been facilitated by runs at key points within the capital structure effectively compelling central banks to cease any thought of exiting QE. Yet as a multitude of risks have grown only more acute over the interim since limitless QE became the order of the day, capacity to manufacture asset runs has become significantly diminished. More on these risks shortly.

Under normal conditions we might expect [largely manufactured] runs playing up some perceived risk to the effect of coercing weak hands into surrendering their stakes, that stronger hands be more fully positioned at the onset of better days pending. Accompanying this we would see typical fear dynamics wherein trading activity increases, both at various moments in fear-driven decline, as well as in recovery and subsequent, continued gain. This in hindsight reveals asset accumulation. We have seen none of this, ever, since March 2009. Just how woefully vulnerable is today's capital structure has been abundantly clear. That this state of affairs could persist for as long as it has is not the least perplexing when considering the fact it cannot indefinitely be sustained, as accumulating and still growing risks are certain to manifest in systemically threatening panic. Therein exists real possibility of unimaginable chaos, impossible to escape no matter how fixed eyes are on the exits.

Again, Capo Confetti is being put out to pasture for a reason. The proposition that, the trans-Atlantic banking system is at the precipice of a hyperinflationary blowout a la 1923 Wiemar Germany, with attendant shutdown of the physical economy, as well as a complete rout of purchasing power locked up in savings, is not the least far fetched. Extraordinary imbalance in the era of QE takes form in the contrived sanctity of a certain class of unassailable contract—strictly financial in nature—versus necessity to marginalize another form of contract, the likes extending from supreme laws at the foundation of nation states to positive laws establishing social equity. In the lurch hangs tranquility necessary for progress and growth. Great masses are being provoked into action whose effect could gravely upset the apple cart, while unworkable ruses are promoted across the spectrum attempting to confuse and keep the masses in check. Yet just as in the U.S. the push toward increasing austerity is meeting decided resistance, so too in Greece are there elements more numerous driven to resist the demise of the social contract. This new development not yet widely recognized meets a precarious financial backdrop whose capacity to suffer a hit on confidence is virtually nil in today's more highly charged political environment.

Further raising probability we are at a decisive moment where some discreet discontinuity threatens chaos is prospect the Bank of England may be actively attempting to back the U.S. into a corner, that the dollar reserve system be destroyed. There are no shortage of means to hang the U.S. out to dry. Any number of global vulnerabilities could precipitate a chain reaction financial collapse whose ultimate consequence would rout the U.S. Treasury market. For the dollar reserve system to be destroyed this is prerequisite. Lacking ability to wage war at will—this capacity meeting growing resistance—if Treasury would be saved, the only alternative is rejection of today's free market free-for-all dominated by hopelessly insolvent albatrosses. Otherwise Treasury's increasing obeisance to the economic wrecking machine that is today's Wall Street, long ago hijacked by the lure of London's offshore derivatives casino, is essential. Yet this, too, is meeting growing resistance, which amidst a precarious financial backdrop finds little capacity to coerce complicity without risking calamity positively crushing political forces whose grotesque means of extortion serves to embolden opponents who could permanently neutralize any new effort to further subdue sovereign authority.

It's not hard to imagine the Republican party is being encouraged to self-destruct. Were this not such a dangerous and costly game it would funny. Yet with the Financial Fraud Forum remaining in the thick of political intrigue and yelling "default" in the crowded pigsty that contains today's U.S. ruling class, we have to imagine there are alternate plans to whip Ivy League trained jellyfish into servile conformity. In this light a precarious financial backdrop could be purposely exploded for the sake of producing cover masking consolidation of the more vile closet fascists feigning love for the Constitution whose cultivation in the midst of chaos might gain backbone from a military-industrial complex gravely threatened by today's illusion of "wealth" rapidly forced down the drain.

It seems there is no other choice but actively precipitate calamity. How do we ignore the world's foremost political body doing its utmost to act this out? You couldn't ask for a weaker Executive either! Good lord, they're holding all the cards and the best they can do is grovel, letting dysfunction rule the day. Well, it's no secret who pulls the strings. This week's family reunion reaffirmed illegitimate wards of the state remain at the helm. Fine theater for manufacturing a smokescreen, no doubt. We're only left to wonder whether any among their number pondered who might be taken out in a manner like 9/11, making survivors appear victims rather than perpetrators yet again.

* * * * *
© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.

There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!