Steve Saville: “…there is no limit to how much new money the central bank can create.”

• The Federal Reserve – the central bank of the United States – issued over $16 trillion in loans, swaps, guarantees and more following the 2008 financial crisis. They also increased their balance sheet by nearly $4 trillion – thanks to their (digital) printing press. Much of that newly created currency was used to purchase dodgy bank debt that was worth little. “Money from nothing” is their specialty and they used it to “stimulate” the economy, a fantasy. The ECB and BOJ indulged in the same fantasy/scam.

• The Swiss Central Bank has created billions in new Swiss currency and used that currency to purchase the stocks of corporations. They created the currency from nothing, thereby diluting all existing Swiss currency units, and then purchased assets that have real value. Something from nothing is used by all central banks and is both a fantasy and a scam.

• If the Swiss Central Bank can create currency from nothing and purchase Facebook stock or gold mining stocks, other central banks can create currency from nothing and purchase physical gold from anyone who will sell the metal. Creating currency and using it to purchase gold is a great scam for those who can get away with it.

• A person speaking broken English called a homeowner. He claimed he was from “The Federal Government Grants and Treasury Department” and informed the homeowner that he had been randomly selected to receive a grant from the US government for $9,200. All the homeowner had to do was … something about his credit card … a scam.

• The US government owes nearly $20 trillion in official debt. Unfunded liabilities are considerably more. Total debt in the world, not counting unfunded liabilities, exceeds $200 trillion. If the debt must be “rolled over” but can never be paid, is it real? When will institutions no longer pretend that debt is real and reject the fantasy of repayment?

• If you borrow $10 billion from a friendly banker, spend it on jet airplanes, payoffs for your friends, and a well-deserved month vacationing at the gambling tables in Las Vegas or Wall Street, and have nothing left at the end of three months and no income to repay the debt, is the debt likely to be paid?

Certainly. You will take a $20 billion advance on a credit card.

Certainly. You will borrow $30 billion from another banker.

Certainly. You will borrow $15 billion from the same friendly banker and swear that you will balance your budget real soon.

Absolutely! It is an election year and we will believe anything in an election year.

Maybe not, but we do not discuss these topics in polite company.

• A homeowner received a recorded message from a man claiming to represent the Internal Revenue Service. He spoke in a very authoritarian manner as he informed the homeowner that the IRS had prepared a criminal indictment against the homeowner and that the homeowner or his attorney must call a certain phone number immediately or else the indictment would be filed. The recorded message suggested that non-compliance would result in dire consequences. What this would cost the homeowner was not mentioned in the recorded message but probably would be discussed at the call-back number as the scam progressed.

• A banker owns a vault. Inside that vault are 10,000 ounces of gold. He sells that gold, 100 ounces at a time, to 1,000 investors, assuming that nearly 100% will also pay the banker to safely store the gold instead of the buyers demanding delivery. In simple terms the banker has 10,000 ounces of gold and an IOU to the vault for 90,000 ounces of gold. The banker has an extra $100 million or so from investors for “paper gold” and everyone is temporarily happy. It appears to be a pleasing fantasy/scam.

• A homeowner received a recorded message that stated he was eligible for a $250,000 signature loan with no collateral. The money was supposedly available in two days. It sounded much too good to be true and had to be a scam because it did not originate from a central bank.

• The “War on Cash” has been mentioned often. If banks charge a fee to hold assets in an account (negative interest rates) the logical alternative is to reduce assets in bank accounts and increase cash and gold balances. Gold ownership is already discouraged in the media so the next target is cash – make it illegal or very difficult to hold cash so assets cannot be removed from the banking system. Previous examples of government initiated “wars” have been the “War on Poverty,” the “War on Drugs,” and the “War on Terrorism.” Their success rate has been low and the “War on Cash” will probably be equally unsuccessful.

• Wells Fargo opened 2 million largely unauthorized accounts, paid a huge fine, and fired 5,300 employees “related to bad behavior.” However the executive in charge “retired” with a bonus of nearly $125 million. This was NOT a fantasy. The executive in charge might not call it a scam but others probably would.

• Central bank policies that include ZIRP, the zero interest rate policy, and NIRP, the negative interest rate policy, do not help their economies, pension plans, insurance companies, nor the vast majority of the people. These policies appear to help the political and financial elite. Presidents, prime ministers, and central banks might not call ZIRP and NIRP a scam but others do.

In a world where fantasies and scams are ever-present and increasing, it is reassuring to know that gold and silver have been a store of value for thousands of years. As digital and paper currencies are further devalued during the next decade, gold and silver will substantially increase their purchasing power.

Gary Christenson

The Deviant Investor