The Greatest Con of All

The Grandest Grift Ever
Adam Less - Senior Editor, Wave Length Options Weekly
Posted in TAIPAN DAILY - Thursday November 11, 2010

These Devils are Killing America -- But the Pay is Really Good!

Friends, I am truly torn today, between the moral and the practical.


I have read with great interest and concern my compatriot Justice Litle's calls to arms against the "creature from Jekyll Island," i.e. the U.S. Federal Reserve. Heck, I've written a fair amount myself as to how Washington has become a wholly owned subsidiary of a Wall Street cabal intent on making insane profits by ripping off each and every rube who has done business with them over the past 10 years.

The cons are manifold and seemingly endless: Just today, I read a six-page report out of Bloomberg noting how 10 years of highly profitable interest rate swaps are literally killing the municipalities that were suckered into them.

And now, just to dot the "i," Wall Street is shaking down these nigh-bankrupt towns and villages for billions more to get out from under these farcical arrangements. (I won't burden you with the details of this grift. If you are enthralled by this sort of lurid "true crime" story, you can read all about it here.)

The Greatest Con of All...

But the grandest swindle of all, the one that has responsible folks in an uproar around the globe is the plan to rob Washington and Wall Streets creditors blind -- with each and every U.S. citizen in the country written off as "unavoidable collateral damage."

This time I will go into the details, because it is essential that we all understand EXACTLY what is going down here.

Over the past few years Wall Street and Washington have borrowed dollars on a hitherto unheard-of scale. You are of course familiar with the credible acceleration of our federal debt (currently $13.7 trillion and rising by $4.15 billion per day.)

But Wall Street has been equally profligate: Nonfarm nonfinancial corporate-business credit market liability as of the end of the second quarter of 2010 was $7.2 trillion, and growing roughly $100 billion a quarter. And didn't we just hear about Goldman Sachs peddling $1.3 billion in 50-year notes locked to a mere 6.12%?

The last thing any of these guys plan to do is pay it all back.

... And How the Game Is Run


Oh, they might pay back each individual dollar. (Or they just might not!) But the Federal Reserve Chairman's and the Secretary of Treasury's publicly declared intent is to dramatically reduce the purchasing power, value and cost of each one of those dollars, so that they and their puppet masters will, in the end, truly only return pennies on the dollar.

This is what it means when they say that they want more inflation. Borrow X in VALUE, now (forget the dollar figures for a moment). Return ½ X in VALUE later.

As for that collateral damage? Each and every dollar YOU are getting paid in, banking or spending, why, it gets cut in half too!

This progressive destruction is actually offers several side benefits for Washington and Wall Street as well. Inflation forces dollars out of savings, where they will simply be destroyed, and into Wall Street's pocket as purchases that you must make sooner rather than later (lest the damn price go up). It allows well-connected speculators to make fortunes (as seen in the recent bubbles in real estate, oil and bonds). And it allows Washington to increase the amount of raw dollars it takes from you as taxes.

Sorting Out My Moral Dilemma

Now, I began this column noting a dilemma. On the one hand, I am morally outraged at these grand grifts, and horrified at the various destructions such tactics engender, including the cyclic destruction of wealth when the bubbles pop and the fostering of permanent cynicism regarding our nation's endeavors.

But on the other hand, Washington and Wall Street kind of figured I might be, so they are offering me a bit of a bribe. And I just might be cynical enough by now to take it.

You see, a normal, unmolested stock market might grow at a few percents a year for decades at a time. (At least we presume so, since we haven't seen such a beast in my lifetime.)

Boring!

While this might be a wonderful orderly method for allowing folks to send capital to companies in exchange for modest profits, it would be boring as all get out for option traders, who simply adore volatility.

But the very cyclic nature of the Axis of Error's grand grift, the booms and busts that it creates, is a devil's playground as company share prices swing up and down not in accordance of the abilities of management or the interest of customers in product, but rather more like leaves twisting in a foul erratic wind.

Have you seen some of the market's moves over the past weeks as the herd tries to factor the future impact of trillions of new dollars? Investors have been enticed to sink trillions of dollars into the market, all the while knowing damn well that the market will almost certainly crash again, but staying in dollars means losing a fortune anyway.

The (Admittedly SWEET) Wages of Sin


In the past week alone, one of my option trading services has posted fresh new maximum gains of 188% by going short the dollar and long gold, 160% from an oil company, 193% off a car maker (we all know it's Ford, so why the hell am I being so coy?), 150% from a major materials outfit, 99% from "the worst tech company in the world," and 91% off a couple of transports. And when the seesaw flips the other way, we will simply move into puts and make even more.

It's a bribe, plain and simple. But it's a really good one.

Do I shut my mouth, accept a modicum of complicity and take home the cash? Do I join with the protestors, and attempt to guide the country back to sanity?

I hope that the question is not quite so black and white. Perhaps the best I can do is speak out loudly when I see conmen, pickpockets and muggers, while still attempting to help folks navigate the world they have created.