Inside the Illusory Empire of the Banking Commodity Con Game

smartknowledgeu's picture

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Triggernometry's picture

I agree that supply/demand is rarely present in its pure form, but then again all textbooks are filled with idealized relationships which often require highly restrictive assumptions be made. Holding degrees in mech eng and astrophysics does not make me smarter, does leave me with the perception of just how tiny our planet is. Regardless of how oil is formed(not created), population driven demand will at some outpace production/extraction resulting in a noticeable inflection point, as it should be obvious supply and demand do not share parallel slopes. As for gold, the physics tell us the amount of gold on the planet is increasing for the time being. This is because elements heavier than gold decay into gold faster that gold decays to lighter elements(just comparing half-lives here). This does not mean gold will be cheaper or easier to find; however it should be reasonable to expect cost of extraction/refinement increase or decrease in proportion to the amount of energy required, thus population driven energy demand will take its toll on precious metals, as well as all other commodities inclusive of food. I don't mean to get long winded, the article makes great points about questioning the shit we're fed since birth; but the limiting reagent in commodities pricing over the long term is ultimately population, as it can set demand up parabolically across the board. By all measures, whether poverty, hunger, or climate change(human energy pollution is completely disregarded), we seem on the brink of, if not past the maximum sustainable population. I am not suggesting population control(like China) or genocide, but it seems inevitable our species must tackle the problem in order to avoid undue mass suffering.

sbenard's picture

Did anyone actually read this ENTIRE article, every word of it? I don't have that kind of time to spend on on article.

That said, I was fascinated by the "abiotic theory of oil production". This make sense to me.

If I were God and was creating a world, by whatever means He does it, I would create it in such a way as to provide energy resources that were enough and to spare for the needs of all those souls that would one day occupy that space. It is the only way that would be just and fair to all his spirit children. Thus, having energy resources that are regenerative in nature makes perfect sense.

MarketFox's picture

One of the major distortions in prices have to do with insurance against big bets....

The insurance can add up to several times the actual underlying asset market price....and herewithin lies a good portion of today's problems....

There should be stipulations as to a total market having not to exceed ie 1.1x the underlying value including insurances....

Look into this further....JS....

I like the way your mind gets from point A to point B....

strannick's picture

Yeah, the peroration was almost as long as the article.

Hook Line and Sphincter's picture

Words that speak to the omnipotence of the Fed and their handlers. Groveling and murmuring partial secrets of the ultimate conman who has God-like qualities. So much intelligence here at Zerohedge, but so little who speak about this particular subject with fortified authority. Unbalances me and dangerously increases my need for satisfaction when I find myself restricted from embracing and understanding the boogieman's specific nature.

My arrogance is bruised.

The WHY is easy for me, but come on...

WHO, specifically, are they? WHAT are the hidden rules of the con?

WHERE does the world find them?

Is there a one of them who has defected from their ranks? 

The best I can do is walk by the three card monte and refuse to play? When I see a scam it infuriates me. I hate to admit it, but it's because it lights an inferno against my ego. There are plenty of knuckles out there in need of some fresh scrapes.

Is the only way to fight their con, their unbridled evil, their true and unparalleled rebellion a change of soul? Where is the fun in that?

Sometimes I find myself angry that I'm not one of them, even though its the last thing my spirit would allow. My arrogance rivals theirs. Their knowledge I covet. Their soul I understand. 

And to contemplate, if I can't grasp what should be a simple con because of the collective cognitive dissonance (including my own) that resides here, then what else of importance am I blinded to? What can't I see? 

It shouldn't be so hard. You see I know I'm blind, so I scrambled clumsily up to the mountain top. Someone shout back to me.

Red Shield's picture

If the banking cartel prefers to spike prices when faced with excess supply in order to create artificial demand via hoarding, then it makes sense that oil is continually created, just like crops are continually grown in seasons. I believe that oil is created, and seeps through ancient cracks in the mantle caused by comet collisions long ago. In addition, I belive that oil is created in seasons, like crops, and that growth is determined by the activity of the sun. During the 11 year solar cycle, when the earth's magnetic fields are relaxed during a solar minimum, more high energy rays are allowed to penetrate the magnetic shield, which then penetrates deeper into the earth, charging the earth in a way, thus creating a bumper crop of oil. Incedentally, that solor minimum occurred right around the time that oil began fluctuating like crazy, indicating that there was a pending supply glut that needed to be worked out and sold off via some heavy hoarding and wasting. I also believe that the occurence of the Gulf and Michigan spills (among others) this summer were caused by underlying pressure from within the supply line at the source, which broke old pipes not designed to handle an increase in pressure due to a growing supply from within.

I believe that people have been trained and conditioned to pay extra for resources at times when they are most abundant and readily collected so as to create a type of opposite syndrome, wherein people subconscously do the opposite of what is good for them, which is evident in the way people enmasse choose to eat and live on a daily basis, which has led to a cancer epidemic and extensive growth in healthcare needs, which is exactly why Obama had to make healthcare a major focus (and legal requirement) in the middle of a major recession.

Humans are the latest seasonal crop to be harvested via hospitals, and there is no doubt that they are abundant in supply.

chopper read's picture

interesting take; that is 'thinking outside of the box'.  you're nuts.  I like it. 

Problem Is's picture

Although I like and try to support posts that expose propaganda and question the myth narratives that control society with +5's...

This one is just too long and convoluted to be effective.

You could:

  1. Edit out about 10k words...
  2. Get to your point much more quickly...
  3. The first 5 paragraphs are redundant and some what unnecessary... (See [2] Get to the point...)
  4. Drop the siamese twins analogy... It is known as a symbiotic relationship.

In the words of some basketball player who won 11 championship rings in 13 years:

"Good idear, bad execution."

Cognitive Dissonance's picture

Edit out about 10k words...

The word count was only 8,385.

But hey, who's counting, right? :>)

kridkrid's picture

Or he could have just posted this:


"If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." - Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, 1935.


In 1942, Federal Reserve Chairman Marriner Eccles testified before the House Committee on Banking and Currency, that “if there were no debts in our money system, there wouldn't be any money."

And included two graphs... one that shows the expansion of private and public debt and one that shows the growth of M3.  Two graphs, two different sources, exactly the same.


Downtoolong's picture

Last year I made the painful effort to actually read through industry testimonials in a series of CFTC hearings on the oil price shocks of 2007-2008. Two things about the hearings struck me as odd:


1)      Among the 16 presenters at the hearings, most were from the banking and investment community. There were only two presenters involved in the physical oil and gas industry, and the largest of those two derived most of its income from oil trading vs. production. The other representative from the physical oil industry was a heating oil distributor from Vermont.

2)      All of the presenters from the banking and investment community argued vehemently that speculation was necessary for oil markets to function efficiently. Yet, all of them insisted that neither they nor their clients engaged in significant speculation. (who knew there were so many dentists and members of the AARP investment club trading oil futures on the NYMEX).        

Yorick7's picture

While I agree there is a certain amount of fraud in the world by human nature and that life is not fair, and by the way not just in finance, I'm sorry but I have to dismiss this article with all due respect as a tin foil hat wearing conspiracy rant.

MagicHandPuppet's picture

Ha ha ha... Yorick, you are an idiot... with all due respect, of course.

Yorick7's picture

Nice, I'm an idiot.    Why?

Cognitive Dissonance's picture

With all due respect, I think you've got the wrong guy. This idiot is Yorick7.

snowball777's picture

+1  Good intentions, but unhinged nonetheless.

Oracle of Kypseli's picture

I am challenging anyone to try and manipulate used car prices, cement, gravel and the like.

You can manipulate paper assets and promissory notes, but not physical anything.

Take any commodity and only apply physical purchaces and you are guaranteed a supply and demand prices +or - storage and carrying charges.

Have a nice day. Legislate derivatives out of existence and you got yourself an honest market.

Hedging of commodities should only be allowed by professionals in this business. Miners in mining commodities, farmers in food commodities etc. general public has no business in speculating in any of these.



chopper read's picture

with whom would these 'professionals' hedge?

bada boom's picture

I bet you I could if I was the Fed.

Cognitive Dissonance's picture

Thank God you were able to sweep it all away as just another "tin foil hat wearing conspiracy rant". Good for you.

We now return you to your regularly scheduled programming already in progress.

Cognitive Dissonance's picture

I have always said, both privately and even publicly on my company’s website, that understanding fraud will contribute much more insight to the world of investing than the study of any “official” numbers and statistics released by corporations and governments. Today, more than ever, I believe that an understanding of the fraud and rigging games of bankers is not only essential to anyone interested in investing in capital markets today, but that it is also 100% necessary to survive the growing global monetary crisis during the next 5 to 10 years.

Bingo! Give this man a cigar and more space to post. While many here on ZH are calling for a "collapse" this huge Ponzi has a long way to go before The Great Unwind. The survivors will be those who see with clear eyes and self imposed blinders removed.

Chartist's picture

If you think the middle east is a powder keg now, imagine if oil was really priced by supply and demand rather than the artificial support I believe it gets now...

stumpydoo5's picture

Question: Does it matter how long the oil production process takes?  What matters is the rate at which it is created, and the rate at which it is extracted and burned.  I agree with the gist of the manipulation.

LowProfile's picture

Well, the FREE MARKET should answer that for us...

Oh, wait...

hbjork1's picture

I am confused.  Somehow when I subtract 1642 from 1758 I keep getting 116 instead of 200. 


Space Monkey's picture

Read carefully:

...Galileo was declared guilty of being “vehemently suspect of heresy” and was imprisoned from 1633 until his death in 1642. It was not until 1758, more than 200 years after the death of Copernicus, that the Church finally revoked a general ban on all books...