A Refusal to Believe Your Own Eyes

DowThe following was written this past week by my friend and Christian brother Franklin Sanders, to his clients.

“Mercy, what kind of lies we tell ourselves to avoid facing the truth! Right here on the Dow chart, http://schrts.co/Q6KUW0, you can see about all you need to know about stocks’ direction. They broke out of a pennant (or maybe a rising wedge), and are now trading below their 20-day moving average, which is below the 50 DMA, which is below the 200 DMA, a bearish alignment. Same picture in the S&P500, yet those who cannot face the truth that stocks have broken refuse to see it.”

It is incredible how much humans want to believe the big lie and outright theft from the banking class. And, until that point when “Pinocchio’s nose” can no longer be hidden, people are incredibly willing to accept the big lie because they want to believe in whatever makes them feel good or, in some cases, because of fascist-type governments, over the barrel of a gun they are forced to take whatever they can get.

As Franklin Sanders points out in his remarks above, it is obvious that a bear market has commenced. But either people don’t want to believe it or those selling stocks don’t want us to believe it. And so it is difficult for people to believe things are changing even when the changes are patently obvious. The remarks from Franklin were recorded after the markets closed on Wednesday. By the time the markets closed on Thursday, Pinocchio’s nose had grown even longer, prompting even more bearish comments on stocks but also turning more bullish on gold. It does seem more obvious with each passing day that major markets are approaching a tectonic shift, whether Wall Street wants to believe it or not. The big lies are of course coming from Wall Street and the banking community. But there is nothing new under the sun regarding the abuse of those evildoers.

Have folks already forgotten the criminal behavior of bankers that led to the financial crisis of 2008-09? When I started out in the banking industry, I was a credit analyst. In good conscience I worked hard to try to determine the likelihood that borrowers could repay their debts and do so without harming their companies financially. But then came the junk bond scams of the 1980s, which essentially robbed shareholders, draining liquidity from corporate coffers and into the hands of bankers. That was followed then by the packaging of hundreds of credit card loans or auto loans and then finally mortgages in what led to the housing crisis that triggered the 2008-09 debt and equity market implosion that nearly resulted in a far bigger depression than that of the 1930s.

Of course the subprime loans were the sickest of most fraudulent of all loans. Not only did bankers allow individuals to lie about their financial situation while looking the other way, the bankers and their crony capitalist friends also lied through their teeth on multiple levels while a complicit government looked the other way as well.

Just to review, here is how the subprime scam created by Wall Street bankers worked:

• Hundreds of thousands of ordinary real estate home mortgages were bought at a discount from issuing American banks, which enjoyed earning front end fees and then handing off “sick” loans to unsuspecting investors.
• They packaged these loans into individual bonds, using the interest payments of these mortgages to pay interest on the bonds.
• Insurance companies guaranteed the borrowers against default. Most notable of these companies was AIG, which of course went bankrupt and was subsequently bailed out by you and me, the taxpayer.
• Three monopoly rating agencies out of New York then provided another lie by tacking on AAA or very high ratings to these synthetic debt instruments.
• Those loans were then bought by unsuspecting foreign banks around the world as well as pension funds. But of course given the sick nature of the underlying mortgages, it was just a matter of time before the cash flow spigot ran dry and the system collapsed.

The establishment said over and over again after this happened, “No one could have seen this coming,” which was just another big lie. My friend David Tice and a handful of other Austrian-schooled investors were warning over and over again it was just a matter of time.

Now, after seven or eight years following the last crisis, we are being told by the same media liars that there is no need to worry. Everything will be okay. And given short memories, there are still many if not most Americans trusting in the establishment propaganda.

But once again, truly free market types, most notably Austrian thinkers, know we are nearing a crisis period because the lies just keep on coming. You have a choice to either gamble and believe the liars will prevail a while longer or you can pay attention to reality and prepare for a terrible day of reckoning. While your editor has been on the wrong side of this viewpoint longer than I would like to admit, can there be any doubt now but that the days of the bull market for stocks are numbered and the days of the bear market for gold are ending as well? Thursday’s major move in gold could indeed be the start of something big for gold and gold shares. Of course, perpetrators of the big lie will do all they can for as long as they can to keep you buying their product, not honest wealth like gold. How much longer can the big lie prevail? With reports of physical gold running out at the LBMA while the equity market is teetering on the brink, I have to believe it won’t be too much longer, although you never know what games of deceit the bankers and their bed partners in government will play next.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.