Friday, 5 December 2014

Simple market manipulation explained

The current western world's economic policies are working exactly like a tapeworm sucking your blood so gradually you rarely notice more than a relative tiredness and weakness, but cannot see how or where it is coming from.

They siphon your wealth silently and subtlely to their friends, supporters and families while people just feel life is harder and they have less but can't quite work out how or why.

It is incredibly simple. They use a handful of basic blunt instruments to manipulate the system, taking the exact amount of capital and shifting it from the people to the minority, the economics are impossible to misunderstand, and once exposed the people should storm parliament and take them down within a day, not wait for the next election so they can come back in any combination and do exactly the same.

So how do they do it? There are various ways, but these are the heaviest weapons, ones developed in recent years and adopted worldwide operating the same mass theft wherever you live in the western world. The triad of high house prices, low interest rates and quantitative easing extract a portion of everyone's wealth and returns it to bankers, governments and property companies.

Why? Who gains from higher house prices? Anyone with two or more homes. They can keep theirs and sell the others so turn them into assets. We can't if we only own one as if we sell it for a lot we have to live somewhere else which has gone up the same amount. It's like trying to chase your own tail. The distance will always be the same however large or small you or your tail is. How do they make house prices rise? Manipulate supply and demand. Low interest rates make monthly payments for mortgages lower, so the remainder is taken up by house price rises so you end up paying exactly the same amount per month. This is jointly calculated by mortgage brokers and estate agents worked out on what people can afford to shell out monthly, and is divided between principal and interest, but the amount never changes as it is the recognised maximum the individual can handle.

The quantitative easing maintains the ability to lower interest rates and not crash the economy as the fake money mops up the inflation enough to hide it long enough to continue indefinitely. Then as interest rates are so low and house prices are so high many savers shift from cash to property and increase demand and prices further in an endless spiral. Then to finish the job the government throw the doors open to foreign buyers to raise the demand even further as the same houses are now being chased by more people, and the economy tanks. There is no greater outgoing than a mortgage for anyone, it's a minimum of 25 years, and the higher the price the fewer people can afford one in the first place so will rent, which (unlike a mortgage payment) rises with inflation. So people are shifted from mortgages to renting and end up paying far more in the same period as while mortgage payments remain the same (adjusted for interest) as based on the buying price, rental rises every year on average.

The banks and governments borrow huge amounts at base rate (no one else does, they barely pay less for loans outside mortgages when rates are low), and if the rates rise they will lose the most, so they don't, possibly ever.

You've been had, big time, everyone, everywhere. And it was so easy!

Fact: There are 6-7 times more net savers than borrowers.

Fact: Average house prices were 3X average income up to the 70s. They are now 10X. For exactly the same thing, which is an essential. And that is how they did it.

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