Carpetbagger Paradise - by James McShirley

The term carpetbagger originally referred to post-Civil War Northerners who moved to the South during reconstruction for either economic gain, political gain, or both. They frequently arrived with hastily sewn suitcases made of carpet remnants, hence the moniker “carpetbaggers.” Carpetbagging has subsequently also become a popular description for non-native politicians who for expediency and opportunity establish political roots in some newfound territory. (Think: The Bush family in Texas or Hillary Clinton in New York.) Carpetbagging has now evolved to describe virtually any unscrupulous, or opportunistic outsider seeking financial gain. In the context of this last definition there has never been a time when carpetbagging has experienced such a renaissance as it has in modern finance. It’s the golden era of carpetbagging. You could say, in fact, we are living in a veritable carpetbagger’s paradise.

They Should have called it “Carpetbanking”

Of course, by definition all bankers are in the business of carpetbagging. The very nature of owning the pieces of paper we exchange for real goods and services means there’s a constant source of outside profiteering, at the expense of local people in useful society. You can’t buy, sell, lease, or conduct a single transaction without a carpetbanker somewhere getting his cut. Maybe though in the case of bankers we need to update the term carpetbagger to “Guccibagger.” Unscrupulous outsiders plying their trade elsewhere has been a Fed tradition since 1913. We’re no longer in Bedford Falls, Mr. Bailey. Mr. Potter’s heirs are alive, and prospering all over the planet.

National Pastime

Carpetbagging has indeed become so fashionable as to be a National pastime. Fully aided and abetted by the (not) Federal (and not) Reserve, with full cooperation from the Federal government it has morphed to new dimensions. Things like ZIRP, stock market bubbles, housing bubbles, and everything bubblelicious in between are all fully sanctioned events. By “sanctioned” I mean, heavily subsidized; ultimately by YOU, dear taxpayer. Carpetbaggers thrive on OPM and implicit guarantees of success. Why reinvent the con when you can merely pack up your magic carpetbag and climb on the carpetbagging hypersonic loop? All aboard!

The (Dis)information Super Highway

The carpetbagging highway is in fact a 10-lane super interstate stretching all the way from Silicon Valley to Washington DC. Buy Tesla? Of course, that Musk chap is working on a hyper-speed of light gismo which will transport you to Mars in the morning and still have you back by 8 PM to watch American Idol. With that in mind how can TSLA stock not hit $5,000? Amazon? It’s a foregone conclusion that the Bezos machine will eventually sell everything to everybody. He’s not only going to sell everything to everybody, he’s going to be able to read your mind and deliver it while you are still thinking of it! Gone are the days of even having to bother with those pesky keystrokes. Yessirree, in the land of Amazon there will be no exertion, no jobs, and no profits, yet somehow, it’s all going to work out. Who cares about social chaos and starvation when you can load the boat on AMZN now and get rich! Living in a carpetbagger’s paradise is like watching perpetual Brady Bunch reruns. Everything works out, and it always ends with a happy song.

Vegas Hotel, or a Tree in Southern Greece?

Gold and silver owners know full well the carpetbagging nature of derivatives, and how they are used to suppress and manipulate the underlying product. You in fact don’t need to know a damn thing about mining, precious metals, or even what gold and silver are, to profit handsomely from them. Does gold come from the ground, or does it grow on trees in southern Greece and Italy? Isn’t a golden nugget some hotel in Vegas where Elvis hung out? Who cares, why bother, just know that you will make money playing the cartel game. Short gold on 1% rallies, NFP Fridays, option expirations, and other key no-no times and you will come out like a Northern carpetbagger in 1868 Biloxi. The name of the game is take what they give you, and it’s obvious TPTB are fully quiescent in facilitating paper profits derived from suppressing precious metals, and in doing so ruin an entire industry.

Hard Times (At least for Now)

These are no doubt hard times for precious metal investors. The discouragement is understandable, the unfairness of it all hard to swallow. The Bitcoin, Tesla, and FAANG carpetbaggers have been partying like it’s 1999, a most recent investing mania era, in addition to the Prince song. Carpetbaggers rarely see the violent upper cuts that hit them out of nowhere. Like a few Northerners who got tossed out on their ear into a muddy street in the South it wouldn’t take much to turn this carpetbagger’s paradise into a 1-way muddy street to hell. Tesla, Amazon, and other Uber-bubbly delights can become the latest incarnation of 1990’s dot.com stocks, which never made money and fell back their intrinsic values: zero, or near-zero. Pack your (non-carpet) bags, we’re traveling back to the world of real money; which is always gold and silver. It’s been a long journey from 2011. The return trip should be far more pleasant, even if it isn’t on a Mars hyper-light-speed gismo.

James McShirley
November 30, 2017