Last week on this page, we spoke about: "a ...determined attempt to refuse to see what is right in front of one's eyes. The divergence between reality and perceptions becomes wider by the day."
Of course, the gulf between reality and perceptions has been growing all year. One could write a book, and many individuals are undoubtedly doing just that, to document the shear between the onstage antics and behind the scenes chaos which surrounded the approach to war, the fighting, and the subsequent "peacekeeping" efforts in Iraq. The whole thing was, and remains, so inept that even the mass US media is starting to question the "veracity" of the main players in the drama.
A lot of this, of course, revolves around the amazing series of "porkies" which were laid out with a straight face by various members of the Bush Administration to "justify" their attack on Iraq. The sad fact is that the only difference between the lead up to the Iraq war and the lead up to almost any other war you care to name was that the disinformation this time was extraordinarily inept. Most of its was exposed - on the internet - as fabrication within hours of it being released.
The sad fact of the matter is that most people expect politicians to lie, and a depressing number of people don't much care about it. Well over a century ago, Chancellor Bismark coined the famous bon mot: "Never beleive anything is actually true until it has been officially denied at least three times." Times haven't changed much, have they?
The thing that gets people REALLY upset is not the suspicion that a politician is lying, but a suspicion growing into a conviction that a politician (or high government official) might be telling the truth.
In this context, we give you the man who many (on the Gold chat sites and forums) have nominated for "man of the year" - that intrepid Governor of the Federal Reserve, Mr Ben Bernanke.
On Wednesday, July 23, speaking to a university audience in California, Mr Bernanke reiterated a pledge which he first made famous way back in November 2002. Mr Bernanke confirmed one more time that, if necessary, the Fed WOULD cut US rates (at least the Fed Funds rate) to ZERO and WOULD start buying up longer-term Treasury debt and other forms of debt paper.
Audiences in the US, and right around the world, have been hearing this from both Mr Bernanke and Mr Greenspan on a regular basis for nearly a year now. When Mr Bernanke made the statement yet again in California this week, a large number of people finally BELIEVED HIM.
The US Dollar dived. Gold climbed $US 8.00. Silver awoke from a multi-year slumber and soared $US 0.28 or 5.9%. Treasury debt yields went into orbit, with the yield on the ten and thirty year paper hitting 2003 highs. Not exactly the outcome that Mr Bernanke (or his boss) would have been angling for, but then Mr Bernanke is a HIGHLY TRAINED economist and as such has an unshakeable conviction that reality is that which fits into economic equations.
The normal mode of operation used by a politician or influential public "servant" is to deny that they are about to pass a particular law or make a particular policy decision. Get enough denials (see Bismark above) and you may be sure that the law or policy decision is imminent. The problems REALLY start when a politician or influential public "servant" repeatedly assures all and sundry that they ARE going to do something. The Fed IS going to cut rates to zero. The Fed IS going to monetise every piece of debt paper in the US. We WILL do these things (if we have to). It has now been said often enough that it is believed, and look at the initial consequences.
So, what's the difference between a denial of an intended action and a confirmation of an intended action? The action which a politician is denying he is contemplating may be absolutely harebrained, or deadly dangerous, or hugely immoral, or quite often all three. The fact that the individual persists in denying his intention gives the consolation to many people that their leaders at least recognise the nature of the action they are denying.
But when an action is patently absurd, counter productive, harebrained, deadly dangerous etc. etc. - and an individual repeatedly confirms that he or she WILL do it - that consolation does not exist. The conviction slowly grows that the individual in question actually believes that what he or she wants to do is a "good" thing or will actually "work". Once that conviction sets in, what follows inevitably is the conclusion that the individual in question is a lunatic and should be locked up before the action can be taken.
Mr Bernanke - and Mr Greenspan - have been stuffing both feet in their mouths at almost every speech they have made this year. They have been lauding the methods of all historical financial charlatans and crackpots as SERIOUS MONETARY POLICY. It is too early yet to be sure, but the initial signs are that they are finally being believed.
Gold and Silver have zoomed this week, on large amounts of reliably reported PHYSICAL buying and on huge jumps in volume and open interest on the futures markets. It is becoming more and more difficult by the day to escape the fact that the Fed is hell bent on turning the $US into confetti and the US financial "system" into chaos. Both precious metals, and Gold stocks too, are teetering right on the brink of breaking loose from many years of neglect.
Up until very recently, the Fed was seen by most as omnipotent. Up until this week, the Fed was seen by many as having the situation under some kind of control. But now, more and more individuals are starting to suspect that the Fed might be populated by raving lunatics. Mr Bernanke has REALLY stuck his foot in his mouth this time.