On the eve of the holiday of Passover, it seems appropriate to review the enslavement of the people to the Pharaohs of the fiat currency. In the biblical version, as each plague was delivered, Pharaoh found some excuse to ignore it and even further increase the weight of slavery on the Hebrews. As he ignored the plagues each subsequent one became greater in severity. Finally, the most terrible plague was delivered; the killing of the first born. The contemporary fiat currency Pharaohs have ignored the basic causes of a number of plagues, and increased servitude by further accelerating currency creation and bailing out the bad loans made by bankers.

Several fiat currency plagues of the 1990's which have been ignored resulting in even greater fiat currency creation (increasing of the bondage) were the S&L bailout's of the early 1990's, the 1995 Mexican bailout and the LTCM bailout of 1998.

http://www.gold-eagle.com/editorials_98/noland113098.html

Record negative trade balances continue, with yet another all time record being posted this past week. These can be ignored with relative safety as long as the dollars come back to the U.S. Bond and stock markets. In fact, in a sort of perverse fashion, the world's biggest debtor has the strongest currency. There was a strengthening of the U.S. dollar against almost all currencies this past week as foreigners ran to the dollar.

On Tuesday April 4, 2000 the NASDAQ index plunged 13.5% before turning around, in what many saw as a CPT engineered rescue, to erase the loss.

http://www.gold-eagle.com/gold_digest_00/joubert032000.html

http://www.gold-eagle.com/gold_digest_00/joubert032400.html

Another warning was ignored and papered over!

The latest warning (plague) was the 10% plunge in the NASDAQ on Friday April 14, 2000. Some cited the inflation data as the trigger for this event. Inflation is, of course, the ubiquitous product of a fiat currency. Our currency became a fiat currency in 1971 when President Nixon closed the gold window on foreign nations. This completed what was started by F.D.R. in 1933-1934; the removal of the controls on currency expansion by using gold as a backing.

http://www.gold-eagle.com/editorials_00/clawar040300.html

When a currency can be printed at will (it takes no more effort to put three or four zeroes on a piece of paper than one) it isn't long before a mountain of debt or a credit bubble appears. The banks are able to lend more and more money using lower and lower standards of consumer and business creditworthiness. Somewhere in the economy all those extra dollars chase some assets driving the price to historically unreasonable levels. In the current situation, the first visible asset area has been the tech stock market represented by the NASDAQ Index. On the 14th of April, the NASDAQ had fallen 10% for the day, 26% for the week, and a large 35% since its March 23, 2000 peak. Other assets will follow as evidenced by the inflation data reported on that day. The removal of "inappropriate" items from the CPI and new methods of statistical smoothing cannot hide this effect forever.

While others have followed the attempts to plug the severe inflation-related paper asset plagues; I have focused on one aspect of gold price manipulation, That is, the selling of gold on the NY spot market to counteract any price spurts that appear overseas the night before. If the gold price can be controlled then this historical signal of currency/ stock market problems will not appear. In effect, various plagues become, if not invisible, much harder to detect. This is extremely important to the continuation of the fiat currency theft of assets engineered by the Pharaohs contemporarily known as the political and banking classes. The political class, beyond the pain of direct taxes, uses the fiat currency creation to continually expand government programs and power over (not to) the people. The banking class increases its power by keeping consumers continually in debt, with loans at rates as high as 24%.

As illustrated by the data in Table's 1 & 2 the NY spot market puts consistent downward pressure on the spot gold price, which cancels out any overseas buying the prior evening. Both the overseas gains and the NY losses occur on exactly 71.19% of all trading days where the NY market and most overseas markets are open. On only 8.5% of the trading days will you find the combination of an overseas loss and a NY gain.

The overseas market spot price for gold goes up about a dollar a day while the NY spot market price goes down about a dollar a day. The consistency is so formidable that, if you could take the January 25, 1999 NY spot closing and remove the subsequent NY trading, you would have a current gold price of $343.95 ($285.75 + $58.20). It might even be higher since the psychological weight of the continual beating down of overseas gains would be removed. Various statistical tests performed show that most differences examined would occur by chance less than 1 time in 1000.

For those of you who prefer a little more subjectivity and a different dimension of analysis, a visual view of the data appears in figure 1. An inspection of the figure will show the preponderance of blue below the zero axis (NY trading losses) and purple above the zero axis (overseas gains).

And so we see that another technique for hiding the plagues being visited on the fiat currency Pharaohs is still being used. It is difficult to get an exact count of the plagues, but it now seems to be very close to 10.

Harry J. Clawar Ph.D.
Hjc@angelfire.com

24 April 2000