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20 July 2001

What if General Electric decided to sell its interest in CNBC to say, Newmont? Wouldn't the irony tickle you just a little? What message would Ron Insana be "delivering" to the markets then? Suddenly we might find ourselves in a world where everyone would worry about inflation rather than deflation. And instead of selling a lot of paper, CNBC's parent would be selling a lot of gold. That's because the network is a boiler plate, to the highest bidder.

The Greenspan Gold Standard
So what happens when you merge government power with corporate power? CNBC happens… or, as Benito Mussolini once said:

"Fascism should more appropriately be called Corporatism because it is a merger of State and corporate power."

Perhaps the 20th century fascist Italian dictator ought to know a thing or two about the topic. And what is a fascist ruler without a propaganda machine, if not a very lonely man? Although, he would not be that lonely in America, would he? He would have all the amenities a dictator would really need. A demagogue forum where the "free" press is owned by the government and business, and a central bank, which has claims against both government and business. And if it (FR) is allowed into the mortgage business, it will have claims against each and every citizen, as well.

According to Encyclopedia Britannica, Corporatism is:

the theory and practice of organizing the whole of society into "corporations" subordinate to the state. According to the theory, workers and employers would be organized into industrial and professional corporations serving as organs of political representation and controlling to a large extent the persons and activities within their jurisdiction. In actual practice, however, as the "corporate state" was put into effect in Fascist Italy between World Wars I and II, it reflected the will of the dictator rather than the adjusted interests of economic groups.

This is the scary truth that makes it difficult to determine who has more power and who therefore really swings the bat behind the scenes at CNBC. Though the Federal Reserve does not own CNBC (yet), GE does, it seems that wherever we go today, we land squarely in the Fed's jurisdiction. The global economy has become one big paper and digital money explosion, and in order to keep it working, it is not even discussed that the Federal Reserve has increasing jurisdiction over our lives.

Too be sure, we see General Electric Co. as an icon of global capitalism, more or less providing society with useful goods. Conversely, we see the Federal Reserve System as a source of modern day socialism; directing, or creating, capital flows to suit its own (or somebody's) vision of the future.

In the one case, you have capitalists using a fiduciary medium (of exchange) in order to manipulate the unsuspecting public, while in the latter case it is an elite group of bankers, which do so under the guise of government authority. The United States government is beholden to both, as are any other governments today, as a matter of fact.

Manipulating the public? What an accusation to make about such a widely acclaimed network. What evidence do we have? What would a half Trillion dollar publicly listed company want with a network that reaches more investors each day and throughout the day than all of the others put together? Why would a central bank want to regulate what is or is not allowed to be broadcast at all? More importantly, how important is it that we even address this critical part of the market feedback mechanism? Huge.

For all intents and purposes, it is a freely available broadcast. Now, if we were to let it all go, we might embrace the libertarian idea that all analysis, whether true or false, ought to be published. This way it is believed that people will become less vulnerable to the deceit, which can be typically buried underneath an official stamp of approval. It all sounds cogent... but for the moment, many people still believe what they read or hear in the news. And it is not in anyone else's interests, it seems, to lose their monopoly on determining what is true and what is not, so long as people are willing to trust them.

What's more, is that the audience, which the "free" television program caters to, is more likely going to be the layman who cannot afford, or justify, the expense of the Barron's, or The Goldenbar Report (plug).

In other words, the lay retail investor is subjugated to this public fiduciary breach of conduct more so than say, you are. It's odd that for a network so large, and which has affiliates in both Europe and Japan, there is a conspicuous paucity of divergent opinion on the show.

The evidence is largely circumstantial in that a specific dogma is both, identifiable as well as essential, to either the Fed or GE, or both. Undoubtedly, the Fed and General Electric (especially through GE Capital) are business associates like any other business man and his banker. But the fact remains that they are both at the top of their class, which lays a foundation paved with incentive for fiduciary abuse. Let's be frank. Why wouldn't the Federal Reserve use the opportunity to manage inflation expectations? Isn't that how they use their public speeches, for instance?

While controversial, the claim is hardly far-fetched. It is so plain that it is discussed in offices and meetings everywhere. But while the market was going the right way, no one complained, or cared. And, if the reader has trouble swallowing this observation then we strongly suggest unloading some more stock. The hand holding routine that is aired each and every day is incredibly familiar to anyone who manages money for a living.

Now that the market is going the wrong way, this issue will increasingly become a constitutional one.

So what is this doctrine that has identity and utility to those who know how to use it, in which dissent is not tolerated, and yet, is at odds with our essential liberty? Below are the more obvious themes that even the casual viewer should recognize:

  • There is no inflation, and if there is, it is always falling;
  • Equities are the best performing asset over the long term;
  • The European / Japanese economies are always worse off than the US economy;
  • The equity bifurcation is between value and growth - rather than commodity and concept;
  • Investors should always buy a weak market, particularly if there is no momentum;
  • The value of stocks is determined by growth in productivity (specifically, in the progressive innovation in information technologies) rather than the growth in money.

There are more, but I think you get the general idea… it is true that each and every one of these assertions is false to the nth degree, where n = infinity. We spend much time refuting them each week, so we don't need to do that today. However, even if they were not wrong, they cannot be right all of the time, which is what appears to be the way it works here. Furthermore, while our reasoning is debatable, there remains the question of the utility of these (permanent) themes. To whom would these themes be of greatest advantage, if perpetuated upon the public?

The first two themes as well as number four and six, are of greatest utility to the Federal Reserve, while the first and third are of greatest advantage to the Treasury, and dollar policy. The second and fifth themes are Wall Street doctrine... note the pun in number five.

Now here is the important part: we are NOT discussing this to build the case that CNBC broadcasts are somewhere in between highly misinformed and outright deceitful. We already know that the answer lays somewhere in between.

We are going to answer the question: why is it that the curriculum today is to motivate the ownership of technology stocks over "value" stocks, discounting anything to do with relative value? It is in the answer to this question that we can arrive at an intuitive connection between the public television program and the Fed.

For one thing, it is in the interest of the Federal Reserve System to support the value of the stock market today, which is why they spend their resources preparing reports that justify its valuation. However, this they cannot realistically do if the only option for investors is to invest in expensive "value" (oxymoron) blue chips, especially if those blue chips are really commodity producers, or related sectors. But they can try the old rolling correction theme... we haven't heard that one in a while.

It is reasonable to expect a central bank prefer to direct capital from expensive sectors of the market into the cheaper sectors of the market, rather than allow it to exit the market, all together. But while we can present the incentives and the other circumstantial evidence, there is no way to know how they do this if it is not by some broad application of the phrase: moral suasion.

Nonetheless, it is our fiduciary responsibility to you, as members of the free press, to report it how we see it. And that is how we and many peers see it today.

In any case, the second reason for the technology bias at CNBC is that such a theme promotes the spending of marginal money on intangibles (read:paper), and therefore can sustain the prolific inflation policies of a central bank, by supporting theme number two. Look at it this way: if for every piece of paper you borrowed, you had a choice between another piece of paper and a physical good, which do you think the central bank would want you to buy, and what do you think would happen if everyone preferred the physical good, instead?

While many conventional economists grapple with the question of how it is that in the US, easy money results in asset inflation, while in other parts of the world, it results in consumer price inflation, look no further than the large US market for intangibles. You do not even need to discuss CNBC to recognize the propensity for asset inflation via the dollar.

Interestingly, the discussion of inflation expectations is the key to this whole puzzle... it is the campaign, which the FR has waged for years in order to control the inflation that it produces itself. In our view, the goldilocks combination of low consumer price inflation and high asset price inflation is the result of a successful victory over expectations, and to that end, the (common law) marriage between corporate and state power has likely been responsible.

Think about how useful an outlet like CNBC would be to achieve that end.

So whatever the pleasure, be it promoting a market rally on 401K day for GE, or putting a dent in inflation expectations for the Fed, or promoting the dollar paradigm for the Treasury, whomever CNBC truly works for, it is certainly one of these groups before it is the individual investor. The only question that will be asked at some unknown time in the future is how we empowered such a group of misfits to misinform us for so long - notice that the CNBC book center is harder to find... that's where you'll find all the expert market advice that Federal Reserve notes can buy.

Nonetheless, the elite group of international bankers, which sponsor the Federal Reserve System, owns Wall Street, and almost outright at that. What's more, they prefer to hide behind the veil of capitalism, which they will blame when it serves their purpose… witness the World Bank protesters complaining against capitalism today. Why aren't they protesting GE if it is capitalism they truly despise?

And when the United States government has to go into debt again, in order to support our lavish lifestyles, this group will blame prolific government spending if the program fails to achieve said results. And who will blame the banking system?

Nobody… because everybody owes it.

So what is CNBC if it isn't the product (boiler plate) of the merger between state and corporate power? There is a difference between a "free" press, and "the free press." A failure to uphold the latter, in our humble opinion, is a failure of the Constitution.

Our criticisms of these insidious activities are incidental to our main aim, which is to arm you with as much truth as you need to make the right choices. What good to an investor is a politically correct analysis? None, it's a money losing proposition.

This Week:

  • Greenspan denies inflation, again.
  • Robert Kessler says Treasuries are the buy of a lifetime! That's news to us.
  • A technical analysis of the primary trend in 17 representative commodities.
  • The ECRI's Future Inflation Gauge works with the business cycle but not as well with either the dollar or the 20 year (approximately) monetary cycle.
  • Does dollar policy react to the Future Inflation Gauge?
  • The bullish case for the dollar is in jeopardy.
  • Notice the one day (post 401K day) reversals in the stock market averages?

Subscribers Only Beyond This Point

Edmond J. Bugos

The GoldenBar Global Investment Climate is not a registered advisory service and does not give investment advice. Our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While we believe our statements to be true, they always depend on the reliability of our own credible sources. Of course, we recommend that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you to confirm the facts on your own before making important investment commitments.

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