There is perhaps no other area where the tunnel-vision,
hypocrisy, and corruption of the U.S. media is more visible than with respect
to its nearly incessant China-bashing. Previous commentaries have exposed
such vacuous drivel again
and again
and again.
While the subject matter of the Corporate media’s
China-bashing varies month to month, regularly interspersed in this
propaganda are numerous variations of “China’s economy is in a bubble.” Once
again this week, this is a theme in the U.S. mainstream
media . Once again, we see hypocrisy
of epic proportions.
Chinese markets have rarely looked more like Vegas
casinos. In recent weeks, investors have driven up trading volumes in China
to astronomical levels, betting on everything from rebar to eggs. China
traded enough steel in one day last month to build 178,082 Eiffel Towers and
enough cotton to make at least one pair of jeans for every person on the
planet.
Admittedly, numbers such as these should give any sober
individual cause for concern. They are an obvious symptom of the global
phenomenon of worthless,
paper currencies being used to pump-up, manipulate, and destabilize our
markets – to a degree never before seen in the history of our species.
However, singling out China’s markets as being “prone to bubbles” represents
hypocritical blindness on the part of the U.S. media which is too absurd to
be accidental.
In the United States, there is a little thing called “the
derivatives market”. The “notional value” of this market is somewhere in
excess of $1.5 quadrillion – more than 20 times larger than the entire,
global economy.
We’re no longer sure of the actual size of humanity’s
single, largest bubble, because when this bubble first exceeded $1
quadrillion in notional value (back in 2010), the banking crime syndicate
simply changed its “definition” of this so-called market, and overnight the
(supposed) notional value shrunk by roughly 50%. The U.S. derivatives markets
is the proverbial “mountain”, beside which China’s markets are mere
mole-hills.
Of course what the Big Banks call the derivatives markets
is not actually a “market”, at all. It is simply History’s largest (and
most-illegal) book-making
operation . In China’s markets, like all global equity markets, most of
the trading involves (at least in theory) tangible assets: equitable
interests in corporations, physical commodities, etc.
In contrast, with the derivatives book-making operation,
the banker “bookies” do nothing but place bets on
anything-and-everything. There are no proprietary interests involved. This is
how/why this book-making operation could ever become 20 times larger than the
global economy, upon which this so-called “market” is based. It is nothing
but naked gambling.
If there was one place in all the world’s markets which
resembled a “Vegas casino” more than any other place on Earth, it is
obviously the U.S. derivatives book-making operation. Of course, in
actuality, the derivatives book-making operation is far more crooked than any
Vegas casino, since it is totally corrupt.
Specifically, “the House” (i.e. the Big Banks who run
this book-making operation) refuse
to pay-up when they lose. In 2011; Greece defaulted on $100’s of billions
of its national debt. All those billions were massively “insured” in the U.S.
derivatives market, via so-called “credit default swaps”. Indeed, the total
amount of this fake-insurance exceeds the total amount of Western debt being
insured.
Furthermore, credit default swap gambling is based on
long odds, where the pay-outs can often exceed
100:1 . When Greece defaulted on $100’s of billions in debt, it
represented pay-outs in the $trillions, if not $10’s of trillions. Meanwhile,
the banking crime syndicate “backs” all this gambling with only a microscopic
fraction of the assets necessary to make such pay-outs.
The solution? The Big Banks, who not only operate but
“regulate” this Crooked Casino simply decreed that “there was no default”
when Greece defaulted on more than 75% of its debt, and thus they refused to
pay to the holders of this “insurance”.
Of course there is an even easier way of exposing how/why
U.S. asset bubbles dwarf China’s asset bubbles, in any and every respect.
Here the mainstream media is only too happy to assist us, with more of its
China-bashing propaganda.
The issue is surplus liquidity – what’s been
described as China’s “great ball of money,” which bounces around from
asset class to asset class as if in a pinball machine…By now, credit and
money growth has far outstripped any good opportunities for investment in
China’s real economy, which is hobbled by excess capacity. [emphasis mine]
Yes, the issue is surplus liquidity. Follow
the money. But let’s take a look and see whose “great ball of money is
larger” – China’s or the U.S.’s?
![](http://www.24hgold.com/24hpmdata/articles/img/Sprott%20Money-The%20Biggest%20Bubbles%20China%20vs%20the%20US%20-%20Jeff%20Nielson-2016-05-19-001.gif)
![](../style/all/img/bouton/Zoom_in_6.png)
![](http://www.24hgold.com/24hpmdata/articles/img/Sprott%20Money-The%20Biggest%20Bubbles%20China%20vs%20the%20US%20-%20Jeff%20Nielson-2016-05-19-002.gif)
![](../style/all/img/bouton/Zoom_in_6.png)
Above, we see a slowly expanding curve. Below, we see the Bernanke
“helicopter drop”, representing (by far) the most-excessive injection of
“surplus liquidity” ever seen in the history of human commerce. However, this
is not a full depiction of the greater size of the U.S.’s “great ball of
money”.
First of all, as regular readers are well aware, the chart above has been
falsified. Below is the last, legitimate representation of the U.S. money
supply [note: the U.S.’s “adjusted monetary base” is equivalent to its “M0
money supply”.]
![](http://www.24hgold.com/24hpmdata/articles/img/Sprott%20Money-The%20Biggest%20Bubbles%20China%20vs%20the%20US%20-%20Jeff%20Nielson-2016-05-19-003.gif)
![](../style/all/img/bouton/Zoom_in_6.png)
That is still a partial glimpse of the U.S.’s
Great Ball of (Funny) Money. How excessive was/is the U.S.’s “surplus
liquidity”, in total? How far has U.S. funny-money growth “outstripped any
good opportunities for investment”? We see something which is supposed to be
theoretically impossible, in anything remotely resembling legitimate markets.
We see the U.S. with simultaneously its largest-ever stock market
bubbles and its largest-ever bond bubble.
It is one of the most fundamental principles of markets
that stock markets and bond markets are counter-cyclical: when one
goes up, the other goes down. Thus it is impossible to ever have simultaneous
bubbles in both of these markets…or at least it’s supposed to be
impossible.
How can these insane/impossible bubbles simultaneously
exist in the U.S., not just for a period of months, but for several years?
This utter perversion of markets (via money-printing) has been explained in
previous commentaries.
It starts with the form of financial fraud which the
bankers call “fractional-reserve
banking” : conjuring vast quantities of additional funny-money into
existence via nothing more than the act of “lending”. What many readers may
still not realize, is that the (excessive) money-printing depicted in the
charts above is only the initial flow of liquidity from the monetary tap.
In every fiat currency monetary system, the vast majority
of all (funny) money created comes into existence via banks, and (primarily)
Big Banks “lending” what does not exist . In the U.S. system of
monetary fraud, for every $1 dollar of official money-printing received by a
Big Bank, it is allowed to “lend” $35. This is $35 which does not exist
– until it is “loaned” into existence, out of thin air. Pure fraud.
How can such fraud exist, systemically, in all our
monetary systems? Simple. First, the banksters assigned the fraud a
euphemistic label, so it doesn’t sound like an inherently illegal act. Then
the banksters commanded their puppet politicians to decree that such fraud
was legal, and even established fraud-ratios,
as (supposed) limits on the extent of such monetary fraud.
Lastly, the mouthpieces of the Corporate media were/are
instructed to characterize such obvious fraud as being legitimate, and even
supposedly “necessary”
for our economic survival. Yes, the only way for humanity’s economies and
societies to survive is to base their commerce on absurd, systemic, monetary
fraud, which (as a matter of basic arithmetic) is guaranteed to
catastrophically implode over time.
However, this is still just the tip of the iceberg
regarding U.S. monetary fraud, and the actual size of its Great Ball of
Money, a financial wrecking-ball beside which every other “great ball of
money” (including China’s) pales into insignificance. The U.S.’s
fractional-reserve fraud is literally multiplied by the additional fraud
known as “0%
lending” – another inherent act of financial/monetary crime.
In China, which has legitimate interest rates in its
monetary system, additional (funny) money is also created via
fractional-reserve fraud. But because these additional billions in
funny-money are conjured into existence at real rates of interest ,
requiring additional funding to service such debts, such increases in the
supply of funny-money are finite.
In the U.S. system of monetary fraud, where (for seven
years) the Federal Reserve “loaned” money to the Big Banks with no interest
attached, the capacity for the Big Banks to conjure (i.e. counterfeit)
additional $trillions is literally
infinite . Via the combined fraud of fractional-reserve banking and “0%
lending”, just three of the Big Bank tentacles working together could (legally)
counterfeit $1 quadrillion. If merely five of the
One Bank’s tentacles conspired in this counterfeiting, they could
(legally) conjure $1 quintillion. Etc.
The U.S.’s Great Ball of (counterfeit) Money is infinite
in size. It explains the “impossible” co-bubbles in stocks and bonds.
With infinite “surplus liquidity” in U.S. markets, we can have a high-tide,
simultaneously, in all asset classes. This brings us to one, final point.
With the Western banking crime syndicate in control of
the U.S.’s infinite Great Ball of Funny-Money, not only can the banksters
simultaneously pump-up all U.S. asset classes to bubble levels, they can
pump-up all markets, everywhere. While the Corporate media talks about
Chinese “investors” having pumped absurd amounts of capital into its markets,
the real culprits could be Western bankers.
Yes, the U.S. bubbles are larger, and much more
insane/precarious than China’s bubbles. But the real point here is that what
we are calling “China’s bubbles” could simply be even more Western-based
bubble-blowing.
![](http://www.24hgold.com/24hpmdata/articles/img/Sprott%20Money-The%20Biggest%20Bubbles%20China%20vs%20the%20US%20-%20Jeff%20Nielson-2016-05-19-004.gif)
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Jeff Nielson is co-founder and managing partner of Bullion Bulls
Canada; a website which provides precious metals commentary, economic
analysis, and mining information to readers and investors. Jeff originally
came to the precious metals sector as an investor around the middle of last
decade, but with a background in economics and law, he soon decided this
was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.
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The views and opinions expressed in this material are those of the author
as of the publication date, are subject to change and may not necessarily
reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the
accuracy, completeness, timeliness and reliability of the information or any
results from its use.