Psychological & Economic Deception are Wall Street’s Weapon of Choice, because these weapons are very easy to deploy, cost very little and are ignored by the masses. This creates a win-win situation for the big players as such tricks can be employed for decades to come. In fact, if one goes back in time, one can see that similar strategies were employed, for example the tulip mania. A more recent example is the current insane bull market; the masses have been conned into believing the stock market will crash; instead as we predicted it continues to rise higher and higher.
Despite such deceptive practises, astute investors can always make money in the markets if they follow certain guidelines. The same cannot said of the masses. When it comes to the Financial markets, the masses walk with their eyes wide shut. In other words, their heads are stuck in the sand. They are oblivious to what’s going around, and if you try to warn them, they are apt to strangle you. This situation is strikingly similar to “Plato’s allegory of the cave.”
Psychological Manipulation is Rampant
The idea is simple; alter the angle of observation and you can get the masses to swallow almost anyting. By altering the angle of observation what was once deemed to be a lie can be sold as the truth. One can easily deal with this kind of manipulation. All you have to do is take anything that comes from Wall Street or Mass Media outlets with a barrel of salt. The data you obtain from these sources should be viewed from a contrarian perspective. Look at the situation from all angles without getting attached to the picture one observes from a particular angle.
Those that limit their line of sight by adopting a fixed posture have already lost the game. They have willingly reduced their range of observation by at least 50%. The same principles can be put to use in the stock Market. Do not commit yourself to one camp; the perma-bull or the perma-bear cam; in doing so you only have access to 50% of the data.
Data is there to be used not to be blocked. The top players direct the masses to make permanent choices or take permanent positions that are detrimental to their Financial well being. The players doing the pushing though are not plagued with these handicaps; they easily navigate from one camp to another, never forming any attachment with any of these camps.
Hot Money is being used to create the illusion all is well
This so-called economic is based on hot money. Cut the money supply and the wondeful economic recovery will come to a crashing halt. Some experts state that the Fed is throwing 2-3 dollars to generate 1 dollar in returns. No regular business would survive for long if they employed this methodology; such restrictions do not bind the Fed. They can create five dollars with the same ease they can create five billion.
To control a beast, you need to make that animal feel helpless; once it feels helps it enters it a stage known as “learned helplessness”, and in this state even the most ferocious of beasts becomes docile. Experiments have shown that once rats are made to feel helpless and then put into a pool of water, they give up and drown rather quickly. Instead of swimming for hours and hours trying to live, they usually give up almost immediately and drown.
Central bankers are utilising the same strategy, only this time, they are working with human subjects and not mice; the goal is to push the masses into a state of helplessness. Nobody seems to want to resist; compare today’s resistance to that of the 50’s, 60.s, 70’s, 80’s, etc. and it appears pathetic in nature.
The Fed will pretend to eliminate the supply of hot money, but in reality, it’s not going to be cut. Without the hot money there is no economic recovery and by default this Bull Market will come to a crashing halt. Secondly, the masses are not making a fuss, so the Fed really feels no pressure to tap down on the monetary spigots. They have feeble attempts to raise interest rates, but Yellen just noted that inflation is below the Fed’s 2% target range so, the Fed is going to move to the sidelines. Translation, this economy is weak and might need another injection of hot money. By raising rates slightly from an extremely low level, the Fed has more room to manuevere in the future.
This experiment will not end well, but that is the Fed’s main goal to create “boom and bust” cycles. Every boom and bust cycle has been created by the Fed. Examine each boom and bust cycle and you will see the pattern. Easy money policies created the boom and then a sudden tightening of the money supply fostered the bust cycle.
Conclusion
Once we got off the Gold standard, the Fed’s primary function has not been to control interests rates for the benefit of the masses. Their goal has been to use interest as a weapon to trigger boom and bust cycles. The masses still don’t understand what is going on and with the passage of each day, fewer and fewer individuals know the dangers of Fiat.
It took roughly 100 years for the debt to go from 0 to 1 trillion dollars, now we add that amount to the debt each year. It is insane, but the masses are silent, and who knows when they will finally decide enough is enough. So far, everyone that has attempted to place a date and time on the masses snapping out of their slumber has been proven wrong.
One can assume that this experiment will continue for quite awhile and with no resistance, the Feds will continue to flood this market with money. In such an environment, one should view sharp corrections as buying opportunities; the stronger the pull back the better the buying opportunity, provided the trend is positive.
Originally posted at the Tactical Investor
