The Biggest Bubbles: China vs. The U.S. by Jeff Nielson, Sportt Money
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.
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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?
Biggest Bubbles: China vs. The U.S.
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”.]
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.