KeithGram: The “Crash JP Morgan” Campaign

It is now the second anniversary of a campaign to “crash” JP Morgan by encouraging people to buy silver (see Max Keiser).  The idea is that JP Morgan has a large naked short position in silver.  If people buy physical silver it will drive the price up and deprive JP Morgan of the metal it would need to cover its short position, thus causing prices to rise further until JP Morgan collapses.

 I don’t want to waste any more electrons debunking this conspiracy theory.  I have written many times on this topic, most recently in my (Open Letter to Ted Butler).

 I want to call attention to something else.  There is an old cliche in America, “cutting off your nose to spite your face.”  It is usually said in admonition when someone is doing something out of spite, and he will be the primary victim.

 If it were true that JP Morgan had a huge short position in silver, and a rising price could cause them to “crash” then is this something that people should want to occur?  To answer that, everyone should be clear on two things.  First, what happens when a company collapses?  And second, who are JP Morgan’s creditors?

 When a company collapses, it defaults on its debts.  The creditors of JP Morgan are “we the people” including our bank accounts, our employers’ payroll accounts, our pension funds, our insurance funds, our annuities, our brokerage accounts.  Creditors also include farms, grain elevators, food processing plants, the electric power companies, etc.  Other banks are creditors of JP Morgan as well; it is implausible that any would survive the collapse of JP Morgan.

 Without any money in the bank, and without a job to earn more, how will you buy food?  What happens when everyone else faces the same desperate circumstances?

 If you want to buy silver, go buy silver.  It is one of the two monetary metals.  It won’t cause any banks to collapse.  The silver price may rise or fall in the short term, though it is in a long-term rising trend.

 We face a serious crisis.  While the banks have played their role and it may be tempting to wish ill upon them, causing a banking collapse is not a serious solution.  Many of us are working to avoid collapse.  Accelerating collapse does no good for anyone.

Keith Weiner is the founder DiamondWare, a VoIP software company, and has a PhD from Antal Fekete’s New Austrian School of Economics in Munich. He is now a trader and market analyst in precious metals and commodities. He is also president of the Gold Standard Institute USA.

© 2012 by Keith Weiner

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11 comments to KeithGram: The “Crash JP Morgan” Campaign

  • Mitch

    Pure horse shit.

    JPM has killed America. Fuck them.

    Death cannot come soon enough to every shameless soul that ever stole from America while getting a paycheck from Fraud Inc.

    Down with JPM.

  • John

    This is the same type of argument used to justify the bank bailouts. You’re no Austrian!

  • hawks5999

    Keith Weiner is the founder DiamondWare, a VoIP software company, and has a PhD from Antal Fekete’s New Austrian School of Economics in Munich. He is now a traitor and market shill.

    FTFY

  • -Monetary Central Planning: http://www.world-depression.info/
    -Kevin Annett, money system to slave native people in Canada: http://youtu.be/8do5BVTkYfI

  • Hans

    Mr Weiner, has done more than anyone on this website to promote PMs; yet because he does not support your version of destroying the banking industry nor your ever lingering conspiracies you denounce him..

    Yes, the top five banks need to be reassigned, as to not damage the American economy or requiring bailouts, but this fault lies with us; CONgress; and governmental agencies…

    Besides this article was more about two questionable individuals than the ethics of banks…

    Both Max Keiser and Mr Bulter are an embarrassment to the metal community…

    • JR

      Yes, Keith makes a pertinent point;

      The creditors of JP Morgan are “we the people” including our bank accounts, our employers’ payroll accounts, our pension funds, our insurance funds, our annuities, our brokerage accounts

      A collapse of a major bank like JP Morgan would be catastrophic, since many smaller banks likely include as their ‘assets’ JP Morgan credit.

      My only query what be exactly how will a total banking collapse be avoided, since the ‘assets’ of all banks consists mostly of junk? At some undetermined point, it has to be ‘marked to market’.

    • I agree. It is refreshing to get some anti-MSM media from the likes of Mr. Keiser, but too often there is commentary loaded with conjecture and speculation and not based upon facts or reality. There will be no change in the system as long as the banking lobby is controlling Congress. I’ve been closely following Mr. Weiner’s writings and he backs everything he says with facts, not speculation. Keith Weiner as Fed Chairman! (If only to dismantle it!)

  • George Orwell

    I accept that the people promoting the idea of ‘crashing’ JPM and/or the entire banking system may be of questionable character AND the idea of wishing (or working) to cause such a crash may be a classic example of ‘cutting off your nose to spite your face.’
    However, the fact that this idea has any supporters among serious people should be a warning to our society.
    When the people who are the bedrock of a society (the middle class small business owners and professionals) feel so alienated from the system of which they are the cornerstone, I wonder how long it can endure.
    The author has obviously succeeded under our current system and would like to retain the fruits of this success (I am in the same situation). However, I do recognize that saying, ‘can’t we just all get along’ is hardly helpful.
    Our current president has polarized our society. His support comes almost exclusively from the aristocracy of the state (people made wealthy by the state by running it or rent seeking from it) and the clients of the state (people living off the state directly through state employment or indirectly via so-called ‘entitlements).
    Neither of these groups produce anything (or at least nothing that is really economically viable).
    Does anyone, for example, believe that either so-called ‘green energy’ or unionized auto companies could stay in business without government support?
    The producers of our society have been demonized to the extent that some (many?) are ready to contemplate societal collapse rather than continuing on our current path. I think that they underestimate the horrible consequences of such a collapse, but the fact that they are willing, or hoping, it will occur is profoundly disturbing to me and shows that our current leadership (from both major parties) is completely discredited in the eyes of the people that drive the economy and produce the wealth that sustains our society.
    The ascendance of the mob and its manipulators and the alienation of the producers of wealth, in my opinion, is the real issue. JPM may, or may not, be manipulating the silver market. That many of the people that support our society on their metaphorical shoulders are, or are contemplating, shrugging is the real issue and, I think, the thing that should keep all of us awake at night.

  • Keith Weiner

    Wow, I had not expected such a bipolar response! To those who hate me for this, frankly you need to develop some reading comprehension skills. I did not say what you imagine I said.

    I run Gold Standard Institute. GSI’s mission is to promote the use of gold as money again, and help create a path away from the nightmare of the Fed, central planning of money and credit, legal tender laws, and the irredeemable dollar. We promote the gold standard, oddly enough.

    Gold is going to be used as money again one way or the other. Isn’t it better to find a way to avoid 472AD on the way to it?

    JR: I propose the concept of a transition plan in my paper on gold bonds: http://keithweiner.posterous.com/gold-bonds-to-avert-financial-armageddon. I am working on more detail right now.

    George: Your point is well taken. Among the things that are collapsing are both good will between men, and trust between men. If and when men cannot trust one another, and therefore cannot deal with one another using reason, then only one other way of dealing exists. Brute force. This is why the various voices promoting “crashing JPM”, i.e. collapsing civilization, are so concerning.

    How many people here are prepared to spend the short remaining part of their life working 14 hours a day in the muck to produce a bare subsistence living? Or to endlessly fight to defend even that from those who would take or destroy what you have that they do not?

    • JR

      As long as it doesn’t involve the quantity theory of money Keith. The quantity theory of money is the most evil doctrine in human history, those who promote it are either ignorant or evil.

      To sound like a broken record, stock to flow is a quantity argument, a stable quantity through time relative to existing stock, but a quantity argument nonetheless. I don’t care if Menger said it, because if he did, he was wrong. And you’ve given Jaitley the boot from GSI & Fekete has distanced himself, so you no longer have to promote the bullshit idea that the USD has the marginal utility closest to gold, due to its stock to flow ratio.

      Value is a product of quality, nothing more. As the ultimate extinguisher of debt, money is precious. Life is also precious, so is it quantity of life that you value, or quality? Put it this way, you likely wouldn’t want to live forever if your only option was to toil “14 hours a day in the muck to produce a bare subsistence living” now would you?

      Only gold can be money because only gold has the constant quality that enables it to extinguish all debt – not just today & tomorrow but always. Only gold is a standard of quality, thus value. So only gold can regulate the quality of credit. A real bill is not real unless it matures into gold. Only gold can impart, and maintain, the ‘moneyness’ of debt.