How stupid does Wall Street think we all are? – Financial Policy Council

June 3, 2011
Ziad K. Abdelnour

Exploring Financial Strategies and Economic Insights

"Wall Street & Misinformation" addresses the pervasive issue of misinformation within the financial markets and its impact on investors and market stability. The blog critiques the mechanisms through which misinformation spreads and the challenges it poses to making informed investment decisions. It calls for stricter regulatory measures to combat financial misinformation and enhance market transparency. By providing examples of how misinformation has influenced market behaviors and led to financial losses, the blog underscores the need for investors to critically assess information and for authorities to implement more robust systems to safeguard the integrity of financial data.

While the big boys try to sell the “dumb money” on a recovery under a “greater fool” theory, the smart money knows the score. While the snake oil salespeople at the retail investing level selling financial channels have been saying for years that we’re in a “recovery” (albeit a slow one), we all know that nothing has changed and that we’ll soon have another crash.

Why am I so confident this crash will happen sooner than later and is inevitable?

It is because the causes of the previous financial crisis haven’t been resolved and the government hasn’t done anything to fix the basic problems in our economy.
It is because we still have a quadrillion dollar derivative overhang which dwarfs the size of the total global GDP by a factor of 10 to 1
It is because derivatives still haven’t been regulated and are still growing strong.
It is because creditors and investors are still at the behest of a central bank (Federal Reserve) and policymakers that are robbing them of their money every day.
It is because complacency is coming back and we are losing momentum every passing day.
It is because regulators and lawmakers who needed to impose rules so failing banks could be shut down, allowed those incompetent banks to operate indefinitely with taxpayer support. They clearly have taken all the wrong steps in terms of the structural underpinnings of our capital markets.

In the meantime, Utah has declared gold and silver to be legal tender – with the value of the coin determined by the weight of precious metal it contains.

The law is the first of its kind in the United States. Several other states, including Minnesota, Idaho and Georgia, have considered similar laws.

Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.

Now if all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Maybe central banks should pay closer attention to it.

On the same note, China just recently edged out India to become the world’s largest buyer of investment-grade gold products, according to a World Gold Council report.

In the first quarter, Chinese consumers purchased 90.9 metric tonnes in gold bars and coins, valued at $4.1 billion.

That’s more than double the amount Chinese consumers were buying a year ago.

With virtually all of the world’s countries printing money like mad, it is not gold – but rather fiat currencies themselves – which are in a bubble. In that light, maybe gold is not really overpriced as some Wall Street analysts are leading us to believe.

So maybe it is time to stop listening to the supposed “Wall Street gurus”, since all that we’ve been hearing from them, for a decade now, is disinformation, stupidity and ideas that only fit their narrow agenda and bottom line.

Your feedback as always is greatly appreciated.

Thanks much for your consideration.

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