September 5, 2019 | Let’s Understand Our Digital/Virtual Markets!

Yesterday and today our digital Dow Index was pumped up some 200 points (Wednesday) and some 300 points (Thursday). This was done at the opening of the market. I have noticed this situation for years (it happens on a regular basis). Some traders (prior to opening of the markets) will pump up (and sometimes down) the digital prices. All this happens in milliseconds (usually at the opening of these markets). You can watch this happening on your smart phone trading app. Why is this now possible?

First of all we need to understand that our markets are now computer driven and algorithms are the key tool for trading these digital/virtual markets. Trader sentiments and logic are secondary when markets can be manipulated by trading algorithms (and from sources unknown to general traders). Another change from yesteryear is that our central banks now trade these digital markets. Our Fed (for example) has a markets group (traders) who occupy the 8th and 9th floors of the New York Fed on Liberty Street, N.Y. What are they trading and for what goals?

The Bank for International Settlements (BIS) also has trading facilities in Basel and Hong Kong. Why are they trading our markets? The Swiss central bank trades our markets, the Bank of Japan trades our digital markets, and many other central banks are likely doing the same. This is new to our markets since all this digital trading (by our central banks) has evolved mostly since 2008. The financial crisis of 2008 created a new environment which many pundits still do not discern.

Some 500 day traders at the N.Y. Fed can trade these digital markets and change trends with their trading strategies. This trading is not transparent and our media are not allowed to follow these traders actions and determine why they do what they do. Our markets work on sentiment and emotion. If positive events are not happening in the real world of economics, then select traders can pump up these digital markets with their trading operations. This action can also be coordinated by select central banks (if they desire coordination globally).

The America financial system also has a group called the Plunge Protection Team. This group of traders can also manipulate our markets with their actions. This group has been around since the early 80’s and few are allowed to monitor their trading decisions. Few understand their reason for existence. Another entity that is not transparent is the Exchange Stabilization Fund which operates out of the U.S. Treasury building. Who knows what these traders are doing in real-time? Why no transparency?

Our markets are now digital/virtual and this means that computers and algorithms can manipulate all these markets in real-time (without anyone knowing what is happening). A few select traders (behind closed doors) with unlimited trading digits can change trends, create sentiment, and pump-up and/or down, any market which allows insider trading to occur. Our system is totally digital/virtual when it comes to what our big boys are doing. They do not use paper or metals to trade our markets. They use digital money which can be created with the stroke of a computer key (out of nothing).

Everyone needs to understand that these digital markets may not reflect real economic activity. Production could go up event while a digital market goes down (and vice versa). Our economy could be in recession even while our digital stock markets go up and up. I noticed all this while watching the digital markets over in Venezuela in 2017 and 2018. This digital market was called the Caracas General Exchange. It has crashed twice yet it continues to re-evolve.

As I write this Caracas General is up some 13% (today) even while the Venezuelan economy is in a depression (economically). This digital market is up some 3768% year-to-date even while the Venezuelan economy has a declining economic market for basic goods and services. This is a sham situation which is allowed to continue simply because digital traders can use algorithms and trading digits to manipulate this market in real-time. Few seem to comprehend the nature of these virtual/digital/imaginary markets.

How can anyone rely upon the results of these digital markets when they do not reflect the reality of our real economic activity? We could be in a depression (in real terms) and the digital stock markets could continue to go up and up (like Venezuela). Also, the general production economy could be growing while the digital stock markets could tank. Is this a system we should support? My sense is that our system is the problem.

Digital money is virtual (imaginary). It was not meant for trading value for value. We are living with imaginary markets which have no real relation to material reality. This fools nearly everyone as the markets do not reflect the real sentiments of our traders who invest in these markets. Give this issue of digital/virtual markets some reflection at your leisure. Are these digital/virtual markets capable of representing our sentiments and our real economic activity? Personally, I don’t think so! Venezuela is my reference point.

Watch a digital market in real-time to discern the subjectivity of these markets. I use the Webull app and the CNBC app for my observations of these markets. Real-time trading activity is displayed via these app’s. I am sure there are many other apps which do similar. The other website which I watch daily is the debt clock site: http://www.usdebtclock.org. This site is superb for discerning the big picture. Have a great day and keep learning. I will do the same!

I am: https://kingdomecon.wordpress.com.

Don Swenson September 5th, 2019

Posted In: Kingdom Economics

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