VANCOUVER ( Silver Gold Bull) -- Regular readers know that I have very little tolerance for bankers talking out of both sides of their mouths. So when I saw yet another piece of blatant banker double-talk from Deutsche Bank (DB), I wasn't about to let it pass without comment.
"The Implication of Currency Dilution"
, I explained the dynamics of the concept of dilution.
When a bar waters down its booze, the value of the liquor declines. When a lemonade stand waters down its lemonade, the lemonade is worth less. When a company prints shares (i.e. "dilutes" its share structure), the value of the shares decreases. When we "dilute" our gold from more-pure 24 karat gold to less-pure 10 karat gold, the gold is worth less.
Indeed, in our entire realm of human commerce we are currently told that there is only one good that does not become worth less as it is diluted: the paper currencies of Western bankers. As a tautology of logic, the only good that does not automatically decline in value when it is diluted is a good that was already worthless before the dilution commenced.
Hence, when some
from Deutsche Bank muses that "QE3 might do more harm than good for gold," it directly and unambiguously implies the bankers' paper currencies are already worthless.
It's interesting to note the dramatically different tune these bankers are now singing from little more than three years ago.
When the bankers first proposed quantitative easing, it represented a form of monetary insanity never before attempted by our species in even its most extreme hours of financial desperation. Why had no other bankers ever before engaged in such appalling monetary recklessness?
For the answer to that, we need only remind ourselves of the primary reason the bankers gave us for the first batch of QE: They wanted to deliberately create inflation (i.e. destroy the value of our currencies) because they were "worried" we might have a mild deflation in our economies.
Why were these bankers universally terrified of even the mildest deflation taking hold in our economies? Because the $1.5 quadrillion or so in ultra-leveraged Ponzi schemes being operated by this banking cabal would implode completely in any extended episode of deflation.