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Dear Friend of GATA and Gold (and Silver):
Noting J.P. Morgan Chase & Co.'s
central role in suppressing the price of the monetary metals, particularly
silver, the international journalist and provocateur Max Keiser has been
waging a campaign to smash the market-manipulating investment bank by
persuading civic-minded people to buy and take possession of at least 1 ounce
of the precious metal. A comic excerpt from Keiser's recent program on the
Russia Today television network promotes the campaign at YouTube here:
http://www.youtube.com/watch?v=hC3ewlIWizs&feature=player_embedded
Of course GATA applauds anything that
gets people out of paper claims and into real metal, but we're skeptical that
even the exhaustion of public inventories of silver and the explosion of the
huge short positions nominally on Morgan Chase's books will hurt the bank
very much.
For those short positions, like the
overwhelming interest rate derivative positions on the books of Morgan Chase,
are probably not Morgan Chase's own at all but rather the U.S. government's. Certainly no financial institution would
undertake such disproportionate positions -- positions that essentially make
Morgan Chase both the silver market and the interest-rate market -- without
effective assurance that government would backstop those positions. No other
investment bank has undertaken such disproportionate positions.
So much of the spending and lending by
the Federal Reserve, Treasury Department, and Exchange Stabilization Fund is
secret that there can be nothing outlandish about such suspicions. No one can
deny that the government also has intimate and secret communications with
J.P. Morgan Chase & Co. about the markets. After all, the bank is a
primary dealer in U.S. government securities and often acts openly on behalf
of the U.S. government and thus in effect has access to virtually infinite
amounts of money for market intervention.
Indeed, there is long history along
these lines, since even before creation of the Federal Reserve, J.P. Morgan
himself -- the banker, not the bank -- functioned in extremis as the central
bank of the United States. And in her prize-winning biography, "Morgan,
American Financier," the writer Jean Strouse
reported that Morgan's first big score in the financial markets was his
cornering the gold market in New York during the Civil War. Further, Morgan's
monopolizing of industries was a major cause of enactment of anti-trust law.
Yes, exhausting the metal available for
delivery could blow up the commodity futures markets, an admirable objective
insofar as those markets, overloaded with derivatives, long have been largely
mechanisms of price suppression. (See the British economist Peter Warburton's
2001 essay discerning this: http://www.gata.org/node/8303.)
But if the metal runs out, the commodity
exchanges will change their rules or implement rules already adopted
requiring cash settlement and prohibiting new long positions. The government
can cover any amount of such settlements in cash through its agents.
This sort of thing has been done before and can be done again.
In short, take the metal out of the
banking system -- yes, all you can. That will make market manipulation a lot
more difficult and drag it into the open. But you won't crush J.P. Morgan
Chase, for the investment bank is the government and the government is the
investment bank.
The big objective here is to take
control of the government away from the bankers and return it to the people.
This is just the latest round in an old political struggle -- the struggle
between the financial interests and the producing interests -- that has been
simmering in the United States since William Jennings Bryan made it the
center of his presidential campaign in 1896.
Advocating free coinage of silver back
then, Bryan told the Democratic National Convention in Chicago that went on
to nominate him: "Those who are opposed to this proposition tell us that
the issue of paper money is a function of the bank and that the government
ought to go out of the banking business. I stand with Jefferson rather than
with them, and tell them, as he did, that the issue of money is a function of
the government and that the banks should go out of the governing
business."
Chris
Powell
GATA.org
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