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In no aspect of our lives has the brainwashing of bankers had a more profound effect than when it comes to “investing”; and yet, once we strip away that propaganda, the truth becomes painfully obvious.

Let's start with a basic principle: all investing is gambling. I realize that there are many investors who spend a great deal of time and effort in doing their “due diligence”, and who will take offense at my conclusion. Understand that professional gamblers who “play” the horses also spend large amounts of time with their own “due diligence” - handicapping the horses they bet on. The only difference between “playing” horses and “playing” stocks and other “investments” is the level of risk, or probability of success.

In this respect (thanks to the bankers' propaganda), investors labour under the delusion that their form of gambling is inherently superior to the other recognized forms of “gambling”. In particular, these investors will steadfastly claim that they can make a more reliable return on their equities-gambling than the “investors” who frequent race-tracks and casinos.

The facts say otherwise. All equities markets are a “zero sum” game: that is, for every winner in a trade there is a corresponding loser. This is tempered by two dynamics. Some corporations produce real wealth, and thus their shareholders will participate in that increased wealth, over time; and some corporations (either through bad luck or bad management) destroy wealth – and their shareholders also participate in those losses.

In theory, this means that equity investing should be able to generate a positive return over time (if investors are reasonably competent in choosing their investments). However, even here investors face a dilemma. The larger and more-established corporations are usually safer to hold, but to obtain that “safety”, investors must sacrifice with respect to potential “return”, since it is much easier for smaller corporations to produce a high rate of growth than large corporations.

Of course, even the largest corporations can suffer spectacular failures. Just ask the shareholders of Enron, or Nortel, or Lehman Brothers, or Merrill Lynch, or Washington Mutual, or Wachovia Bank, or (today) BP Plc. Those “spectacular failures” can rapidly destroy any and all real gains in one's investing – especially once we factor-in another “dynamic” of markets: our wealth is constantly being stolen by the bankers.

Bankers steal from us in so many ways that it would be impossible to discuss them all in a single commentary. So I will refrain from discussing how bankers steal from us through excessive “service charges” (to use automated functions), and usurious interest rates on their loans, and instead simply focus on how they steal from “savers” - both individually and collectively.

With respect to both of these forms of theft, the bankers steal from us openly. Thus, we must tip our hats to the effectiveness of the bankers' brainwashing campaign. Other thieves can only gaze on enviously as the bankers steal from us year after year – without even a word of protest from their victims.

This banker-stealing is the epitome of simplicity. Because we no longer have a “gold standard”, our “fiat currencies” are no longer vessels of value, but purely instruments of debt: every new dollar created (“out of thin air”) is created through debt. This debt-creation is a two-stage process: first the central banks “lend” the money they have printed (out of thin air) to the banker-oligarchs, then the banker-oligarchs lend-out that money to the broader economy. So where is the “stealing”, you ask?

One aspect of the theft is relatively trivial: the bankers borrow at a very low rate, and lend at a much higher rate. Let's attach some numbers to that. Today, the U.S. banker-oligarchs 'borrow' all their money at 0% (i.e. it is all free money) and they lend that free money at interest rates which go all the way up to the 30% interest small-business credit cards – which JP Morgan dangles in front of credit-starved American businesses.

However, as I just stated, this is a relatively trivial aspect of banker-stealing. They do most of their stealing through diluting our money. Every time they 'borrow' $1, they immediately lend $10 (or more) – and every one of those additional $9 which the bankers created out of 'thin air' is just as 'real' as the dollars which “the little people” are forced to earn though their labours. They then lend this counterfeit money to us and get us to pay them interest on their counterfeit money. Bravo!

Because the bankers have created a massive bureaucracy to cover-up that dilution (through grossly distorted economic “statistics”), and because we have been subjected to decades of propaganda legitimizing this stealing, most average citizens are still unable to understand how the bankers steal through diluting our money.

Let me use an analogy. As I have stated in previous commentaries, “fiat currencies” (i.e. money backed by nothing) are essentially nothing more than “shares” in the countries which issue these currencies, so let me illustrate the concept of banker-dilution using the corporate model.

Imagine you are the shareholder of a large corporation. You slowly build up your shares over time, by buying them with the earnings of your own labour. Meanwhile, another shareholder is a bank. Every time the bank buys one share it is allowed to print-up nine more shares for itself. As this process progresses, day-after-day, year-after-year, it is totally obvious what two consequences will result

First, the bank is diluting the total share structure so rapidly that for most (legitimate) shareholders, the value of their shares will decrease faster than they are able to accumulate them – resulting in a guaranteed, net loss over time. Secondly, with the bank allowed to essentially counterfeit vast numbers of new shares every time it acquires one share legitimately, obviously over time it is the bank who will hold most of the shares (i.e. own the corporation) – with 90% of the bankers' holdings being counterfeit-wealth stolen from the legitimate shareholders (who are not allowed to counterfeit shares).

As an aside, many investors understand the concept of “naked shorting”. This is where traders (primarily bankers) “short” shares without borrowing any (to make the transaction legitimate). This “naked shorting” is exactly the same thing as counterfeiting shares (and then dumping them onto the market). As we all know, the bankers see nothing “wrong” with being allowed to engage in naked shorting – and now we know the reason: the bankers spend so much of their time engaging in counterfeiting that they have lost the capacity to recognize this as a crime.

In the true, hypocritical fashion of bankers, those same U.S. bankers went crying to the U.S. Securities and Exchange Commission when other players in the market started naked-shorting the banks. They hid under the SEC's skirt and demanded that the SEC create a special rule to protect them – and only the banks. Clearly, these bankers are adamant that they must be the only ones in our economies who are allowed to engage in counterfeiting.

Having now explained how the bankers are allowed to counterfeit vast amounts of “money” every year to steal from all “savers” collectively, let's quantify the cumulative results of decades of such stealing. With the U.S. dollar still being the world's “reserve currency”, it is most relevant to focus upon the counterfeiting of U.S. bankers. Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95% of its purchasing-power – which is the same thing as saying the bankers have expanded the money-supply by greater than a factor of twenty, and diluted all the wealth of legitimate currency-holders by that same factor. However, more than 80% of that dilution has occurred in the less than 40 years since the gold standard was abolished.

This leads to the obvious conclusion that it is much easier for the bankers to steal-by-dilution without a gold standard than with one. This explains one aspect of the bankers' pathological hatred toward gold. However, I digress.

The second way in which the banks steal from savers is individually. Clearly, anyone who simply holds cash is maximizing their losses from banker-dilution. But even those savers who try to protect their wealth (by collecting “interest” on their savings) are also guaranteed losers. Once again, the bankers rely upon statistical lies to cover-up much of their crimes.

While the precise figure varies over time, for simplicity, lets assume that the bankers dilute our money at a constant rate of 10% per year. Ultimately, the rate of money-dilution and the rate of “inflation” (i.e. price inflation) must be identical over time, so we can use the two terms interchangeably, for conceptual purposes. What this means is that a saver would have to receive a 10% interest rate on their savings, simply to avoid losing money day-after-day.

Once again, let's add some real numbers to this concept. In fact, U.S. money-printing has exceeded 10% per year in recent years – as the U.S. government attempts to “print” its way out of insolvency. However, since there is always a time-lag between money-dilution and price-inflation, and since most investors only care about the ultimate consequence of dilution (price inflation), I will focus on inflation numbers.

John Williams (of Shadowstats.com) is a well-respected U.S. economist who calculates U.S. economic statistics using the same methodologies which were used a generation ago – before the U.S. government incorporated a virtually infinite number of distortions into these “statistics”. Mr. Williams calculates U.S. inflation as having been above 9% all this year, and except for a few months of genuine deflation in 2008 he has calculated similar rates of inflation both prior to and after the Crash of '08.

This means that any saver who isn't receiving an interest rate of over 9% on their savings instrument is having their wealth stolen by bankers every day of every year (by the same bankers who 'borrow' at 0%, and immediately dilute that money by a factor of ten). Naturally, this immediately explains why the U.S. government has made lying about inflation one of its highest economic priorities.

Not only is the U.S. government desperate to hide the rate at which its masters (the Banker Oligarchs) are stealing from the savings of its own citizens, but it is equally desperate to hide the rate at which it is stealing, itself. The foreign chumps who are still foolish enough to lend the U.S. government money at interest rates of 2-3% (or less) are will end up suffering losses at least as great as those of U.S. savers. Thus, while U.S. inflation currently exceeds 9%, the U.S. government peddles the lie that it remains under 2%. As a further “bonus”, every percentage-point of inflation which the U.S. government hides through its statistical lies can then be used to pump-up the U.S. GDP estimates – since GDP estimates are only valid after being deflated by the prevailing rate of inflation.

With the U.S. pretending that inflation is under 2%, when it is actually over 9%, we get some idea of how much “padding” is being added to every U.S. GDP report. Put another way, since none of the U.S.'s recently reported positive rates of growth has been equal in size to the statistical “padding” added by the U.S. government, it is obvious there is no “U.S. economic recovery”.

Having established that all savings is being steadily and rapidly stolen by the bankers (whether in the form of bonds or simply deposits), this brings us back to equities – where U.S. equities markets are rigged to a greater degree than even the most-crooked casino. As I established in the earlier discussion, under a best-case scenario it is difficult for equity investors to make any real “profits” over time (meaning net gains which are above the rate of inflation).

Undoubtedly, there are many investors out there beating their chests, and adamantly proclaiming that they are among the few (outside of bankers) who ever make real “profits” in their investing. It is easiest to illustrate this fiction by looking at U.S. markets. As the Dow struggles (once again) to recapture the 10,000-point plateau, any reasonably informed investor must be aware that the first time the Dow passed the 10,000-level was more than a decade ago.

Does this mean that U.S. investors have (on average) achieved a zero-return over the last ten years? Of course not. Throughout these ten years, the administrators of this U.S. Ponzi-scheme have been constantly removing the worst performers from the Dow-30, and adding the best-performers from the broader S&P 500. In other words, someone who bought the Dow index a decade ago would have done much worse than a zero-return – and then had whatever was left of their portfolio cut in half by inflation. The meager dividends which these companies pay-out don't come remotely close to covering such massive losses.

This raises an interesting question: given that many large U.S. corporations have generated large amounts of real wealth over that ten-year period, how could U.S. equity markets (as a whole) be a massive money-loser for investors? Part of that question has already been answered: naked shorting. With the bankers being allowed to counterfeit the shares of corporations by (so-called) “regulators” through naked shorting, this would explain how the wealth produced by U.S. corporations has also been stolen by the bankers.

Those who have studied the naked shorting of bankers closely, measure such trading as amounting to more than $1 billion per day. With U.S. bankers being allowed to counterfeit shares on that scale, it suddenly becomes obvious how profitable U.S. corporations end up producing nothing but losses for legitimate investors over time. Naturally, similar equities “counterfeiting” is allowed to take place in the equities markets of most Western nations. U.S. bankers aren't the only ones who know how to steal.

Let me sum-up the scenario facing investors. First the bankers create massive inflation. This (seemingly) leaves all investors with two choices: put your money into some savings instrument (and suffer guaranteed losses versus inflation, every year), or gamble in rigged equity markets and likely lose much more. With the bankers having created the largest differential (in history) between the amount they steal via dilution (with one hand) and the pitiful “interest” they pay out (with the other hand), this translates into the most economic pressure in history on investors to opt to gamble their wealth in equity markets, and “chase” other supposed “high return” investments.

At this point, I'm sure that patient readers are asking themselves, “when is he going to talk about gold?” Rest assured that you have not been misled by the title of this commentary. Unfortunately, it simply takes much longer to explain (and demonstrate) how the bankers are stealing our wealth than it takes to show how gold protects that same wealth.

I will also add (for all the “silver bulls” out there) that when I selected the title for this commentary that I used the phrase “...gold or gambling” for purely literary purposes. The same arguments which I will use to explain the virtues of holding gold also apply to silver (even though the market fundamentals for the two metals are quite different).

Simply put, gold perfectly preserves wealth. For not merely centuries, but millenia, holding gold has provided 100% protection from the stealing of bankers. This explains the other aspect of the bankers' pathological hatred of The Metal of the Sun. Just as a “gold standard” limits the rate at which the bankers can plunder entire economies, holding gold protects us individually from these predator-parasites. A younger Alan Greenspan devoted an entire essay to stressing this basic fundamental.

To try to dupe ordinary citizens into (foolishly) refusing to protect their own wealth, by converting it into gold, the bankers have been enormously successful in peddling a half-truth: “gold produces no income”. This banker-myth is extremely deceptive, on two fronts. First of all, as I have painstakingly demonstrated, the “zero income” from gold must be compared to the large, negative “income” (i.e. loss) which all savers suffer by holding bonds or any kind of deposit, or the large (net) loss which almost all investors suffer from holding equities. Suddenly, “breaking even” doesn't sound too bad.

And now we get to the fundamental deception which the bankers have inflicted upon us with their propaganda. Most households can operate with a net surplus, that is: their income from their labours exceeds their basic expenses- or at least it does until being tempted by bankers into taking on too much debt. Clearly, if the bankers weren't rapidly stealing that surplus from us day-after-day, with their relentless dilution of our paper currencies, we wouldn't need to “invest” our money, in order to safeguard our futures. We could simply accumulate those daily surpluses, and then protect them with gold.

In other words, it is the relentless stealing by the bankers of the fruits of our labours which then forces us to hold some form of their poisonous banker-paper – where the bankers then steal from us a second time...unless and until we convert our wealth to precious metals. Ironically, there is a commercial for a Canadian bank currently on television which flogs the slogan “you're richer than you think”. In fact, for every citizen who shuns the bankers' paper, and opts for precious metals instead, that slogan is literally true.

The second deception of bankers is that gold cannot appreciate in value independent of inflation. In this respect, there are two important dynamics. Both I and a number of other precious metals commentators are gravitating toward the concept of “peak gold”. In other words, despite a quintupling of the gold price from its absolute low over the course of roughly a decade, global gold production has been increasing by a paltry 2% per year, on average – and if not for the fanatical growth of China's gold mining industry (now the world's largest producer), global gold production would be falling.

But don't look to buy any of the gold being mined in China. The Chinese government has been quietly hoarding most Chinese gold production to itself, which is how it was able to (secretly) increase its reserves by 70% - since gold acquired by governments internally does not have to be either reported at the time of purchase, nor disclosed when stating “official reserves”. Thus, the actual amount of gold accumulated by China's government could be several times what it has reported.

Given that the less gold China reports having acquired, the less this will “stimulate” the market (and drive up the price), it is a reasonable assumption that the actual amount of gold acquired and held by China significantly exceeds what it has reported to date. Meanwhile, China's citizens (with their massive savings, and massive numbers) have quickly vaulted numerous other countries to become the world's largest gold consumer. With gold available to Chinese citizens in small quantities for the first time in nearly fifty years, the vast majority of China's 1.25 billion citizens have decades of gold-buying on which to catch-up.

Meanwhile, the per capita incomes of other “BRIC” nations and “emerging markets” are also rising – in real terms, not the inflation-doctored lies which Western governments use to hide the falling wages of most of their own citizens. These younger, growing markets also (for the most part) have populations growing at rates above those of Western nations.

Thus, with both global populations and global incomes rising at rates far in excess of the increase in the gold supply (with the same applying to silver), this means that gold is becoming more “precious” on a relative basis every day. In economic terms, with the demand for gold certain to exceed supply (by a considerable margin) every year, for as far into the future as we can see, this makes gold (along with silver, and most other commodities) an asset which now performs two functions: it perfectly preserves the wealth of the holder and will generate a reliable long-term appreciation in that wealth.

As I said in the title, today (more than any other time in history) investors have a choice: they can hold gold or they can gamble-away their wealth by “investing it” in swindles which the banksters have spent thousands of years perfecting.

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written by Jeff Nielson, January 02, 2012

Jollyjugg, by definition "naked shorting" equates to counterfeiting shares.

In the mechanics of a "short" trade, the shorter BORROWS the shares which are then sold/shorted onto the market. With naked shorting, no "borrowing" of shares ever takes place - so the shares sold onto the market were literally conjured out of thin air (i.e. counterfeited).

So if a banksters engaged in a naked shorting operation on a company where the shorting totaled 1 million shares, that is identical to simply printing-up 1 million counterfeit shares. Note that this counterfeiting of shares DILUTES the equity base of the company being illegally attacked in this manner, meaning that naked shorting (like much/most bankster manipulation) meaning that naked shorting is MUCH more destructive with respect to the share price of the company under attack.

In turn, this means that naked shorting tends to be MORE PROFITABLE than legal shorting - which is why the Wall Street banksters prefer to do their shorting ILLEGALLY.

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written by jollyjugg, January 01, 2012

Hi Jeff,

Thanks for a fantastic article explaining how banksters dilute and loot. I had a question about "naked shorting". You mentioned that banksters can counterfeit shares of large corporations by issuing themselves more shares. Are you saying that even though they are also investors in some corporation, banksters can issue more counterfeit shares for themselves without the knowledge of the majority owners (say promoters) of these corporations? Also I have always noticed that when stock market falls, it takes only minutes of madness to destroy the "notional wealth" of shares that are built up over months or even years. I always used to think that it is panic selling and people are insanely dumping their shares fearing the worst. But lately I have also heard about shorting of shares which is more like a bet against the share price going up with out traders actually having the physical shares to trade on. Are these two phenomenons the same? Could it be possible that stock prices are rigged by banksters and traders when stock markets fall madly?

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written by Jeff Nielson, June 12, 2010

Paxjds, that reminds me of a piece I saw on a mainstream spam-site - with which many of us are familiar.

The message being flogged was "buy and hold is dead": so we're all supposed to become TRADERS in their rigged casinos. I guess the bankers were complaining to the media-parrots that there are STILL some investors who aren't giving the bankers the chance to whip-saw them at regular intervals.

So to summarize: first they create inflation, to force us to "invest". Then they ratchet-up the inflation to force us to chase higher returns, and NOW that still isn't enough "risk" for our wealth - so we're also supposed to try to "swing trade" in these rigged-casinos.

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written by paxjds, June 11, 2010

Not only are the markets rigged as Jeff has so well described and also a zero sum game, put they also get you buying and selling with commissions to rip you off further.
Since the Federal Reserve Bank has reduced puchasing power of the dollar around 80% since 1980, the peak price of Gold to meet the old high should go to about $7,000 using shadowstats figures. With the trillions of dollars Elmer Fudd, I mean Ben Bernake, has created out of thin air in the US and European bailouts there is no telling how high gold will go once these bailouts hit the streets. I believe Jeff pointed out that this is more bailout and currency debasing under Obama than the whole world combined since the beggining of time in the major world economies. One cannot rule out a real peak in Gold to go to $25-$50,000 an OZ by 2020.
There is no gold bubble right now and it has a very, very long way to go till one can even begin to think of gold in a bubble.
With the Massive Fiat Bubble that is taking place, Gold is just trying to catch up. As the massive dam (of Fiat money) begins to collapse, gold will break out and head towards is true value as real Money. Cracks are now appearing in the dam and Banksters are doing all they can to suppress the price of gold and silver. AS the paper fiat moneys approach 0, the massive rise in gold price will soar to its true value. I can see uncle sam coming out with new Blue money, Europe with new Purple money, and Japan with new yellow money. All of them telling us how these new paper moneys are so much better and valuable than the old money or gold. What a crock on Donkey Dew that will be do. Elmer Fudd at the Federal Reserve does not realize that a Chinese peasant in a rice paddy today buying gold to preserve his wealth has about 10 times more brains than he does. Lets face it, these currencies are as Broke as Broke is Broke. The Flood Waters of Fiat money collapse is upon us. Start Buying Gold and Silver to protect your personal wealth and don't listen to the Elmer Fudd's of this world.

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written by Jeff Nielson, June 11, 2010

Thanks for the comments.

Yes, Dylan, the over-leveraged debt which the bankers foist upon us then becomes another weapon to use against us.

Here, the U.S. government is an indispensable ally. Keep in mind that no one is holding more insolvent debt - but the bankers have been legally permitted to engage in grossly fraudulent accounting with their own insolvent debt.

Meanwhile, ordinary U.S. homeowners (and most small businesses) cannot hide behind fraudulent accounting - so when THEY default, the banksters seize property.

So, yes, you're right that bankers screw borrowers as badly as savers. The one difference is that borrowers have (to some extent) created their own problem. Savers are TOTALLY INNOCENT VICTIMS.

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written by Dylan, June 11, 2010

Another great article Jeff. It does seem that inflation (diluting savers' wealth) seems to be the main way the bankers steal from all the rest of us.

But they have evolved ways of screwing borrowers as well. If you have to take out a large mortgage (large because of the previous inflation) in order to buy a house, they can catch you out with their equally artificial bouts of deflation. Because they have the monopoly on information, they first protect their own wealth in the bond market for example (like money buried in the ground), then they contract the credit and engineer busts, whilst profiting from those busts many times over (replicated Credit Default Swaps), the value of the assets that the outsiders own then goes down in terms of money and so they are snared in the debt-trap, losing real wealth.

These bouts of deflation never compensate for the overall inflation, beacuse only the outsiders suffer from the purge, whilst the value of the elite insiders' stolen money increases during this period.
How much money is actually waiting in the wings in the secret accounts of the counterparties? The deflationists argue that all this money creation has failed to inflate prices beacuse it hasn't been lent out by the banks. But what if this was never the intention of the bankers, what if the money is being siphoned off into the these secret accounts? This is deflationary for the rest of us, as we pay off the robbers that robbed us.
What will happen to all this money? Will it not be used to buy up gold, silver and other commodities on the cheap? Is this not happening now? Can't hypefinflation be injected directly into the ecomomy, bypassing the rest of us?
All that money printing during the Weimar incident seemed never to be able to catch up with the prices, was this because the real inflation occurred first in the currency markets, where our friends, the specs where able to "borrow" near infinite amounts of German currency to speculate with, shorting (counterfeiting)the republic to oblivion?

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written by daveddawg, June 10, 2010

Hey Jeff, Thanks for all the good work. I haven't been her for a while, but see you on goldseek occasionally. I am always impressed by not only how well you write, but how valuable the content is as well. Keep up the good work!

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written by Jeff Nielson, June 10, 2010

Hi PRice.

Thanks for the link. The tax status of gold, as it is currently viewed, is highly dubious. Gold is both money AND "currency" if you hold legal-tender coins.

There is no justification or precedent in tax law for taxing someone's CURRENCY. That is, if I convert a bunch of Canadian dollars to U.S. dollars - and happen to make a gain on that currency (when I ultimately dispose of my U.S. dollars), that gain is NOT taxable.

The EXCEPTION to that rule is if you TRADE currencies (actively). Thus, any investor who simply ACCUMULATES legal-tender gold and silver coins (but doesn't "trade" them) should NOT have to pay ANY tax if that investor ultimately realizes a gain.

The situation is somewhat different for bars - which are NOT legal-tender currency.

Lastly, if/when a "gold standard" is reintroduced, this would FORCE governments to change the tax-treatment of gold.

As for Seeking Alpha? They simply decided to censor our content. I think they found it embarrassing when after just 8 months on the site I had moved all the way up to #5 "Instablogger" on their site.

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written by PRice, June 10, 2010

Excellent! Once in a while, someone nails it, and you've done it here, Jeff.

Another recent blog post that nails it is from that handsome guy, Gordon Gekko:http://gordongekkosblog.blogsp...ollar.html

Hey Jeff, why isn't this on Seeking Alpha?

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