Dear Friend of GATA and Gold:
In their commentary today, Pam and Russ Martens of Wall Street on Parade report that the fantastic financial derivative positions of four behemoth U.S. banks, including JPMorgan Chase and Bank of America, were sharply reduced from trillions of dollars to mere billions in just a few months before the Federal Reserve began a rapid cycle of interest rate increases that likely would have caused the derivatives to cause huge losses for the banks.
The Martenses ask: How did the banks unload so much of their doomed positions so quickly and avoid catastrophic losses? And who could have purchased so much doomed product from the banks?
These questions are the same implicitly raised by Ted Butler's report this week that there recently have been huge increases in the monetary metals derivatives held by JPMorgan Chase Bank and Bank of America:
That is: With these derivative positions on the books of the behemoth banks being so fantastically large, far larger than similar positions held by other banks, are the positions really those of the banks at all, or are they actually the positions of an entity that can create infinite money with computer keystrokes -- that is, the U.S. government?
Twenty-two years ago the British economist Peter Warburton anticipated such things with his remarkable essay "The Debasement of World Currency: It Is Inflation But Not As We Know It""
Warburton wrote: "What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts.
"On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur.
"On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities, or anything else that might be deemed an indicator of inherent value.
"Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the U.S. dollar but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets. ...
"How much capital would it take to control the combined gold, oil, and commodity markets? Probably, no more than $200 billion, using derivatives."
So far in financial journalism it seems that only the Martenses have much curiosity about these derivatives of spectacular size. Being so large, these derivatives must have some spectacular purpose, something like what Warburton anticipated: the destruction of the market economy and the imposition of a totalitarian regime far more successful than its predecessors because of its surreptitiousness, and, crucially, the cowardice of nearly all financial journalism.
The Martenses' commentary is headlined "Wall Street's Most Dangerous Derivative Secrets Are Hiding in Plain Sight in a Regulator's Report" and it's posted at Wall Street on Parade here:
May it spark some curiosity elsewhere.
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