Posted by: Dr Churchill | May 26, 2013

US Monetary Policy for Greenback the World’s Reserve Currency and the power of the mouth

When you manage the world’s Reserve Currency — You best be willing to do battle to stay on top. Because there are many contenders for the top spot and it’s obvious benefits and it’s not easy to keep yourself that way. It’s Glacier peak this mountain top and full ice teeth crampons are required at all times – lest you slip…

And you constantly have to fight for your ground too as other climbers are throwing ice balls at your head… You got to fight for the top spot. Because if the Yen or the renminbi or that upstart Euro, want to take you down — the knife fight is on baby.

So you use whatever weapons you have in your arsenal. And often times the best one is the quiet word. A Simple Word of Mouth. Otherwise known as propagating Your Message quietly and letting it be shared widely. Staying on the message – always – as in government induced propaganda…

This is a continuation of our previous post about propaganda and it’s uses for effective Monetary Policy, Government intervention, and market Corrections. If you want to read more from that earlier post — just  look it up here:

Propaganda is like oil. And like petroleum it does not ”dissolve” into the markets. Much like an Oil spill out into the sea — it simply stays high up on the water column and the lightest crude goes on top, because oil & water simply do not mix.

And the Federal Reserve announcements via the mouth of ‘the beard’ – have the same effect.  They act like an oil slick at sea.  Oil simply stays on top for a while giving a terrible rainbow coloured toxic-chem sheen…  and allows for smooth sailing of the ‘spiller’ while winding up the sea for all the others. When the movement of the seawater breaks through the ”oil sheen” — it unleashes a terrible flurry of pent up energy. It usually causes a topical storm.
You can’t expect ‘the beard’ to not understand this, because when Bernanke spoke at the Congressional committee, he appeared unawares – yet he measured his words rather carefully, leading me to understand the subtext and the real ‘code’ behind mere words and pronouncements about Monetary policy.

Propaganda much like Oil does not and cannot still the waves. Instead, it allows for a momentary lull before the coming storm. Always then, the tendency of the propagated message gets the sea movement exaggerated greatly.  In our case the Electronic Markets, the stock equity trading mechanisms, and the Bourses across the World — all started rocking and rolling. Swinging the pendulum widely off centre.

And the higher the source where the Propaganda ‘spill’ comes from — the more ”Oil in the Water” effect we see.  Add to that the fact that all of the automated systems are triggered by the string of the same Bloomberg code operating the simple Bloomberg terminals — and this makes this thorny problem even bigger.
Resilience isn’t built into the simple Codex of the disintermediated marketplaces of today…
Even the Market Makers, Leading Traders, Partners and Top Associates are all looking at the same Bloomberg screens to decide and execute trades when the automated trades are stopped. The message spreads predictably along the same market correcting and foreign currency thumping lines.

And if you want valuable actionable Intelligence for the Propaganda effect on the Markets and what mindful VALUE investors ought to do to carry the day  — here it is:
At these moments, the intelligent Investor simply concentrates to occupy the Higher Ground to avoid the Stampede . Of course he should have been holding on to this higher ground all along….


Occupy the higher ground, means to built you Financial Castle on safe high hilly and rocky foundation. And for you warriors out there — taking over companies and doing the M&A dance — be warned. Choose the Terrain you want to give battle wisely…
And when you win — built your city accordingly.
”The City of light up on a Hill” and all that jazz you’ve heard before in various talks of mine and the much shared and vaunted Panoisms

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