Deutsche Bank Proclaims Western Currencies Worthless
by Jeff Nielson
Monday, 13 August 2012
Regular readers know that I have very little tolerance for bankers talking out of both sides of their mouths. So when I saw yet another piece of blatant banker double-talk, I wasn’t about to let it pass without comment.
In “The Implication of Currency Dilution”, I explained the dynamics of the concept of dilution. When a bar waters-down its booze, the value of the liquor declines. When a lemonade stand waters-down its lemonade, the lemonade is worth less. When a company prints-up shares (i.e. “dilutes” its share structure) the value of the shares decreases. When we “dilute” our gold from more-pure 24 karat gold to less-pure 10 karat gold, the gold is worth less.
Indeed, in our entire realm of human commerce we are currently told that there is only one good which does not become worth less as it is diluted: the paper currencies of Western bankers. As I went on to explain in that prior commentary, as a tautology of logic the only good which does not (automatically) decline in value when it is diluted is a good which was already worthless before the dilution commenced.
Hence when some talking-head from Deutsche Bank muses that “QE 3 might do more harm than good for gold”; it directly and unambiguously implies that the bankers’ paper currencies are already worthless. Here it’s interesting to note the dramatically different tune these bankers are now singing from little more than 3 years ago.
When the bankers first proposed “QE”: deliberately conjuring vast amounts of our (paper) money out of thin air; it represented a form of monetary insanity never before attempted by our species in even its most extreme hours of financial desperation. Why had no other bankers ever before engaged in such appalling monetary recklessness?
For the answer to that, we need only remind ourselves of the primary reason the bankers gave us for their first batch of “QE”: they wanted to deliberately create inflation (i.e. destroy the value of our currencies) because they were “worried” that we might have a mild deflation in our economies. Why were these bankers universally terrified of even the mildest deflation taking hold in our economies? Because the $1.5 quadrillion (or so) in ultra-leveraged Ponzi-schemes being operated by this banking cabal would implode completely in any extended episode of deflation.