I might make this a more substantial post later. But for now I’ll just include a comment from elsewhere on this blog. Our economy is increasingly becoming a sort of hologram. Where sectors of it are subject to illusions a great deal of a time. The Americans are the path-breakers here. This is extremely dangerous and an attack on the resource allocation of the price system. If you have an understanding of how this works it will help you make more money on the stocks. But we are seeing a real breakdown of our pricing system. Its as if whole sets of price controls were being put on things all over the place and then suddenly relaxed and all without people knowing about it.
It used to be thought that only price controls could lead to shortages under capitalism. What we are seeing now is pyramiding on pretty much all frequently traded items so that price cuts loose from supply and demand for extended periods, then when the can cannot be kicked down the road any longer we see a price surge to clear most of the backlog and then the price crash comes again. Now this might be a great wicket for the 24 hour trader. But its a disaster for the society and the economy. Consider what it would mean for functioning under conditions of being under attack. We would fold like a house of cards if we were not able to fix this corruption to our markets with some despatch:
“No these lurches in prices we see are definitely part of fractional reserve on cash, shares and pretty much everything the now corrupted capital markets can pyramid on.
That is quite clear from the theory of speculation. Speculation is meant to specifically smooth out prices. But see how many speculators there are out there. See how much money many of them make. And yet they are a total failure at fulfilling that assigned theoretical economic role. So no the wild price surges are definitely about ponzi-everything world. We are talking about a virtual reality economy. A sort of hologram. An illusion. A system of delayed-reality.
Take the oil price last year for example. There was good industry information. The price ought to have risen above 100 and stayed there. Instead it surged all the way to 145USD and dropped back down to 70.
Speculators asleep on the job? No way. They were more active then ever. Earning gross revenues higher than at any time. And yet they failed in terms of their theoretical economic role. They may have even made things worse. Now the oil price is going to go very high again since the hologram ends when the inventories run out.
There seems to be this endless pretense with you guys that you can have all this socialist and fiat money interventionism and it doesn’t affect the basic nature of the price system. This appears to be a mania of sorts. But the free market assumptions can only hold for a free market. And the ponzi-instability could not be more obvious and is directly implicated in the 1000 trillion (TRILLION) in outstanding derivatives.”