BANK ASSETS ARE EPHEMERAL – HERE TODAY GONE TOMORROW

by Egon Von Greyerz, Gold Switzerland: It is not only paper gold which is Fake. Few investors realise that most of their investments are Fake.

Fake news and Fake assets are everywhere. Let’s start with social media which dominates major parts of the world. Facebook for example has 2 billion active users. WhatsApp has 1.2 billion users and Instagram 700 million. There will obviously be quite a lot of overlap between the various social media. But what it is clear that these three Apps reach billions of people and their power is much bigger than that of any other media; Social Media has more impact than newspapers or than television and is the only media that 2-3 billion people follow regularly. Most people and in particular young people don’t watch television and don’t read the papers. They get all their “news” from social media.

SOCIAL MEDIA SOURCE OF FAKE NEWS

Social media is instant gratification. You post something or you send a message and you get a message back or a number of likes which generates dopamine and makes you momentarily happy. But as I have experienced from our many grandchildren, social media is a perfect source of Fake news. Many young people using social media will be receivers of Fake News or bullying. Social media is perfect for spreading false rumours which are very often difficult to get rid of. Trump’s Twitter account is another example of alleged Fake News. Trump accuses the papers and television of Fake News and they accuse him of the same.

This is the world we live in today – a world with Fake markets, Fake assets, Fake values, Fake money, Fake people and Fake news.

FAKE IDENTITY There was recently an interesting example of Fake identity in Sweden. The head of Sweden’s biggest security company, Securitas, had his identity stolen in March. A loan of an undisclosed amount was then taken out by the person who stole the identity. The loan was not repaid and the Fake head of Securitas was declared bankrupt on July 10th. The real head of the company was not aware and has been fighting to reinstate his honour and position.

We are now in a world where everything becomes electronic entries. Real people are no longer important. We are just all electronic entries in a register.

MONEY IS FAKE It is the same with money. Money is today totally Fake. Money used to be silver or gold. To make trading easier, it was later replaced by paper money, on a one for one basis. So initially paper money still represented real value for goods and services. But bankers and governments soon realised that by reducing the amount of precious metal in a coin they could enrich themselves. They didn’t care of course that this was fraud and debased the value of “real” money. Later the same was done with paper money. When paper money was first introduced, it represented the amount of silver or gold held by the bank. Soon governments and bankers realised that by leveraging the silver and gold they could make a lot more money at the expense of savers and depositors. And so the Ponzi scheme started with Fake Money and Fake Assets.

ETFS HOLD FAKE ASSETS Today we have a situation when virtually all assets and all liabilities are just electronic entries leveraging the underlying “real” values 10s, 100s or 1,000s of times.

Money is leveraged many times, stocks are also leveraged by the issuance of various derivative instruments like ETFs or futures which supposedly reflect the underlying instrument but which in effect is just an electronic entry with nothing behind. Since the global debt position, including unfunded liabilities and derivatives, amount to over $2 quadrillion, so should global assets. But global assets are not even a fraction of that. Supposedly, global assets are $250 trillion, but these are all bubble valuations that will implode as the debts and liabilities implode.

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