The Implication of Currency Dilution

VANCOUVER ( Silver Gold Bull) -- In our daily lives, we learn that there are many immutable principles of cause and effect. Drop an object and it will fall down, not up. Throw a rock at a pane of glass and it will break. Put an ice cube in the sun and it will melt.

So, too, is it with the cause and effect known as dilution. Whether we are an adult buying watered-down booze from a bar or a child buying a watered-down beverage from a lemonade stand, we immediately comprehend that diluting the product has reduced its value and thus we refuse to pay the same price for it.

Similarly, should a jeweler attempt to tell us that (less pure) 10-karat gold is worth as much as (more pure) 24-karat gold, we would simply scoff at such nonsense and walk away. As I have noted before, even the dim bulbs in the mainstream media can grasp the concept that if a company prints up a lot of shares (and thus dilutes shareholder equity), the value of its shares must decline.

Indeed, in the entire known universe we have only one example of an item that (supposedly) does not automatically decline in value as it is diluted: the bankers' fiat paper currencies. In fact, we have no shortage of clueless scribes claiming that it is possible for these currencies to actually increase in value as they are being diluted. Search the phrase "U.S. dollar rises in value" and you would acquire repetitive strain disorder before you finished reading all the idiocy on that subject.

Regular readers know that I have found this logical absurdity to be positively maddening. Suggesting that (any of) our incessantly diluted paper currencies could rise in value is just as insane as suggesting that I could drop something and it would "fall" least at first glance.

Then it occurred to me that there was one (and only one) theoretically possible scenario where a good that is being diluted could rise in value: if it was already worthless before the dilution even began.

Obviously something that is "worthless" cannot possibly decline in value, as a matter of definition. So even though there is no reason to expect a worthless item to increase in value (as it's being diluted), since it's impossible to decline in value then it becomes at least quasi-rational to suggest that it might appreciate in value (somehow).

There is no other possible exception to the principle of dilution: The only good that would not automatically decline in value as it is being diluted is a good which was already worthless before the dilution commenced.

This brings us back to the bankers' paper currencies. Who is it that insisted these paper currencies ever had any value to begin with? The bankers. Who is it that leads the media choir in talking about these paper currencies "rising in value"? The bankers.

When it comes to the near-comatose drones in the mainstream media (and their "experts"), it's not too difficult to believe they simply don't understand that these paper currencies were worthless to begin with.

However, when it comes to the bankers who created these paper currencies, it becomes much more difficult to believe these charlatans haven't known all along that they have been peddling worthless paper to the masses (as fuel for their infinite acts of fraud).

Is there any other evidence that implicitly demonstrates these bankers consider their own paper currencies to be worthless? Plenty. Let's start with 0% interest rates in the U.S., where the Federal Reserve has literally given away for free $trillions in freshly printed greenbacks -- all to the Wall Street crime syndicate.

When you give something away for free year after year after year (in incomprehensibly huge quantities), the obvious implication is that what you are giving away is worthless.

Then there is the insatiable gambling of the bankster crime syndicate. Any normal person, while dabbling in some occasional gambling, is very reluctant to place any large wagers -- especially if such a bet were at long odds. Even a billionaire would be unlikely to ever wager $1 million in a single bet, despite that amount representing only 0.1% of the billionaire's wealth. Then we have the bankers.

All "derivatives" are literally nothing but bets. The derivatives market is simply the world's largest (rigged) casino . Presently, that mountain of bets amounts to somewhere in excess of twenty times total global GDP. We don't know how much in excess because the bankers changed their "definition" of this market a couple of years ago in order to obscure the true quantum of their gambling.

Many of these bets are at extreme odds. Payouts in the ( totally fraudulent) $60+ trillion credit default swaps market can (and do) exceed 300:1. There is only one scenario where people engage in gambling with such reckless extravagance: when they are using "play money."

Whether we are talking about a game of Monopoly, or some other pretend "game of chance," the only time people engage in gambling with absolutely no qualms about losing is where they know they are playing with "money" that has no value. Note that such extreme gambling began long before these banks ever proclaimed themselves "too big to fail."

This is a very good time to remind readers that we are talking about "fiat paper currencies," currency that by definition only has value by decree (or "fiat"). Thus the "money" we are forced to use in our societies, thanks to our cabal of bankers and politicians, does/could only acquire any value at all by the decree of our governments.

Meanwhile, with all their acts and deeds we have the creators of all this fiat paper (the bankers) treating these currencies as if they are totally worthless - as they swap their paper for gold at the fastest rate in history.

As a matter of logic, I've once again demonstrated that our paper currencies are clearly worthless. However, with people having literally been brainwashed every day of their lives into believing that the bankers' paper is "money" I know this is a hard sell to the sheep. At the very least I have established that our central banks are absolutely unfit custodians for our currencies.

The Federal Reserve was created 100 years ago with a mandate of "protecting the U.S. dollar." Since that time the dollar has lost 98% of its value. These people are not guardians of our currencies, they are currency assassins because it is through the process of dilution that the bankers are able to steal all our wealth.

Giving these private central banks monopolies over the creation of our money-supply goes well beyond allowing the fox to guard the hen house. It is nothing less than giving the fox ownership of all hen houses.

As I and other precious metals commentators continue to remind people, there is only one way to protect yourself as the banksters steal your wealth with their (worthless) paper currencies: by converting that wealth from paper to metal -- and putting it forever beyond the reach of these confessed thieves.

So the next time that you hear someone claiming that a paper currency could "rise in value," understand that they are directly implying that the paper currency was worthless to begin with. Or they are just idiots.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.