WHAT MAKES A MARKET A MARKET?
THE ANSWER: CIGARETTE BUTTS!
By Jon Rappoport
June 4, 2012
“One of the primary missions of public relations is convincing people that very large organizations are absolutely essential to maintaining order. Without these gigantic structures, we would all perish. The obvious corollary? Everyone is small, the structures are big. What a fabulous ruse.” — Ellis Medavoy, retired propaganda operative
In THE MATRIX REVEALED, I interview a former financial insider, Richard Bell (pseudonym), who spent many years on Wall Street as an analyst and trader.
This article is based on our conversations, and on my own research into various kinds of political/economic manipulation.
The major term I want to introduce here is Richard’s Organizational Threshold (OT). It is his assessment of how growth brings on insider criminal activity. I’ll take you through it.
A major obsession of human beings—organizing anything that moves—accelerated to an enormous degree in the 20th century. This trend obviously employs three strategies: building strength through sheer numbers (of people); structuring those people in compartments, by function, by importance, with managers overseeing their efforts; and coordinating compartments/managers to produce a desired overall outcome.
The OT is reached when it becomes apparent to many people within an organization that there is, in fact, an overarching system. The system can be understood, it can be seen, it can be described.
This perception is compelling. It is often more compelling than perception of the actual products an organization is making and selling.
“What do you know? I’m working in a system. I’m right here, in this spot, and I can view the whole structure around me, below me, above me. I can see it all. Fantastic. I may be a cog in the machine, but now I understand the machine.”
At this point, a certain significant percentage of people will turn their attention to gaming the system, the organization. It becomes their number-one goal. In their eyes, this is their best choice, their best option.
As Richard Bell put it to me: “Build any organization big enough, and you’ll exponentially increase lying and cheating and theft. It works every time. When people get a good look at the size and shape of the organization they’re in [or the market they’re trading in], ethics tend to go out the window. People feel trapped inside a giant structure, so they learn about that structure in order to take covert action against it and extract juice for themselves. Plot out this trend over time, and you get serious trouble. You get the decay, the end of whole empires.”
Of course, when it comes to highly organized trading markets, there are already powerful insiders who have been gaming the system since the beginning. They may have created aspects of the market for that very purpose. But now, many more people climb on board with the same motive.
Therefore, the original kernel of usefulness of that market or organization begins to turn sour and is lost. As more and more people try to game a system, a self-reflexive behavior emerges as the cardinal activity.
“Now that I see the whole structure, I want to work it to my advantage. I don’t care about anything else.”
Consider commodity futures trading. It was once advertised as a way farmers could try to protect themselves against crop losses incurred through acts of Nature. Eventually, it was overwhelmed by speculators, who were simply trying to work the framework and loopholes of the system, the organization.
Interestingly, this speculative approach only sustains itself if various traders, large and small, develop competing strategies, because for each buy order there must be a sell order. If every person working the system had the same strategy, the market would collapse. Buy and sell orders would routinely hang out to dry with no takers. Therefore, whether you want to ascribe conscious intent or human nature as the cause, it benefits the survival of the system if many competing investing strategies are promoted as “the answer.” I’ll revisit this in a moment.
An intelligent investor has to ask himself, “Do I want to trade in a market where the vast majority of people are thinking about what I’m thinking, and I’m thinking about what they’re thinking?”
Here’s a related question: “Do I want to guess what enormous investors with very deep pockets are thinking?”
Because now that’s what the system requires. Everybody is trying to game it. That’s become the whole nature of the enterprise.
And once that’s the case, any item under the sun is tradable, because all that matters is what people are scheming about.
I have a theoretical tray full of cigarette butts, and people and groups from New York to Hong Kong are willing to buy and sell it, because it’s there and it’s in the system and it’s for sale—and all people care about is gaming the system. The system, the market has become nothing more than the game of gaming.
From a purely pragmatic viewpoint, this creates danger. First, you risk exposure through an emperor-has-no-clothes revelation about cigarette butts, sparking great hand-wringing about the butts themselves.
And second, you are now in constantly shifting seas. Buying and selling are determined through estimates of what other people are thinking about buying and selling. We take this for granted these days, but it’s a still a prime concern.
And then there is this high strangeness. You can walk into a market and buy cigarettes. Poverty-stricken people living in cardboard boxes can trade and sell cigarette butts with a bit of tobacco left in them. And millions of people can buy and sell derivatives of cigarette butts worth tens of billions of dollars every day. (For cigarette butts, substitute mortgage-backed derivatives, based on huge numbers of mortgages that never had a chance of being paid off.)
When a whole society crosses the Organizational Threshold by miles, the society changes. It is craftier. It is far less ethical. It is delusional, too, because you are competing against other people who are trying to do nothing more than game what you’re gaming. (Successive generations of children grow up taking this for granted. It’s SOP.)
The upside of all this is that people who see the whole system they’re in can leave the system. That’s the natural response. Intelligence should breed such a response. Make the system more sane or leave it.
To what degree did any of the Facebook IPO buyers care about Facebook itself? It was simply one more “vehicle” for making profit. Facebook could have been cigarette butts. It could have been a word representing nothing. It could have been a garble of incomprehensible symbols. But it was “in play.” And it was the subject of much PR.
Gordon Gekko, in Money Never Sleeps, offers this (probably apocryphal, but nevertheless highly significant) description of trading madness: “Back in the 1600s, the Dutch, they got speculation fever to the point that you could buy a beautiful house on a canal in Amsterdam for the price of one [tulip] bulb. They called it Tulip Mania. Then it collapsed. You could buy ten bulbs for two dollars. People got wiped out, but who remembers?”
In the case of Facebook, we could still see a hidden aspect of the game: the downturn after the opening was part of a shakeout, and the shocked buyers who sold their shares (to smarter insiders) will watch the stock price move up (taken up) to yield major profits. But not for them.
Perception of the shape of organization doesn’t always reveal the true nature of the game, but it does reveal how the game can be narrowly looked at, in order to try to gain an advantage, to win.
That is what the father of modern PR, Edward Bernays, saw when he looked at the whole of modern society. Not the true nature of civilization, but a way to manipulate it for gain, and in the process pervert commerce in all its forms.
“We are governed,” Bernays wrote, “our minds are governed, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society.”
Apparently, “smooth function” was Bernay’s ultimate rationalization for his innovations in operant conditioning: if we don’t plant the same ideas and images in millions of minds, chaos will ensue.
It turns out that every fascist views the masses with the same disdain and horror, and envisions installing an overarching order of conformity, achieved in one way or another, as the only solution.
What is never calculated, however, is the response to such a program. People at large figure out the system and apparatus of mind control. They see how it is organized, and seeing it, a significant number of them decide to game what is being done to them.
“They cheat; so I’ll cheat. That’s all work really is: a con.”
Now the society spirals to a new low.
Here is a far more important Bernays observation, the ultimate glimpse of danger for any manipulator. And it holds a key for us:
“It is sometimes possible to change the attitude of millions but impossible to change the attitude of one man.”
In the end, it is the individual who counts; the resistant independent alive individual who sees a different set of meanings for himself. An individual who isn’t blinded by belonging to a group that promulgates one-mindset-fits-all.
That is where the buck stops.
Returning to something I touched on earlier, Richard Bell told me, “To understand markets, you need a starting point or a question that really leads you to a deeper level of analysis, as opposed to a maze that takes you around and around. One of those questions is: what would happen if every investor used the same precise system to rate stocks? Well, it’s obvious, isn’t it? The whole mechanism of gambling on the market would dissolve, because every order [to a broker] needs, somewhere, its opposite.
“From this you can deduce that misinformation and misdirection are keynotes to maintaining the whole charade. It’s called ‘advice,’ but it’s really PR. It’s varieties of opposing PR, in which yes and no are declared about the very same item. Yes and no. Buy this. No, sell this. No, stand aside. Or, buy this because of X. No, buy this because of Y.
“Confusion. That’s the sine qua non of markets. Churn the PR. Flood the field with contradictory nonsense. Can you imagine what would happen if wars were fought on the basis of battlefield intelligence like this? Armies would end up killing their own civilian populations in great numbers.
“Sun Tzu wrote, ‘Engage people with what they expect; it is what they are able to discern and confirms their projections.’ Do you see? Float various strategies and advice, for investing, that will fit what investors are able to discern, given their state of mind. You’ll end up making the market, because from this come both buyers and sellers of the same item. And this is what you must have.
“This is what makes a market. This is all that makes a market.”
The primary deception derives from keeping alive the basic goose that lays golden egg after golden egg. To do that, you must spread around enough PR (advice) that will appeal to investors who approach the table with different and conflicting mindsets and preconceptions. Having achieved that, the market will flourish.
As fewer individuals choose to invest in stocks and commodities, and as the field is dominated, more and more, by investing institutions and groups, it becomes obvious that these institutions must be convinced to approach buying and selling in opposing ways,
according to different outlooks and “philosophies.” So the PR reaches higher on the food chain. It targets these groups.
This must continue to happen, to allow every buy order to have a corresponding sell order, to keep the goose alive and healthy.
Of course, the definition of health, in this case, is entirely perverse.
Richard concluded our initial conversation with this: “All right, so now I’ve given you enough so you can see the basic underlying structure, the system, the organizing principle of trading markets. You can see it. Do you choose to walk away, or do you say, ‘Wow, now I can start figuring out a way to cheat the cheaters.’ That’s the fork in the road. Not just for markets, but for society. How do you respond?”
I told him I would interview him as many times as he would sit down with me.
At our next conversation, Richard laid out a formula for destruction: “Think about government debt. This is the hammer. Tremendous amounts of PR are being launched to convince everyone that the function of government is to ‘take care’ of populations, from cradle to grave. This is called humanitarianism. This is called social justice. The point is, it [the PR] has a covert motive: leading governments over the edge into bankruptcy. What I’m saying is, the PR is intentional. It’s a campaign to lead governments to ruin. That’s the real intent. But because so many people are already devoted to gaming the system, they support this PR and these government benefits. They look at the benefits as personal victories in a war to ‘cheat the cheaters.’ You can make a formula out of this. Step one: build organizations to such great size that people who work inside them decide their most important objective is cheating the system. Step two: Offer these cheaters more and more benefits. Step three: The cheaters will naturally accept the benefits because they’re already in a criminal mindset. Step four: Governments providing the benefits go off the cliff into deeper and deeper bankruptcy. Step five: Rescue the governments by putting them under a more severe globalist system of supra-control. Step six: Now, through globalism, the most important organizations are far larger than they ever were before. The people who work within them are further motivated to cheat, lie, and rob…”
Jon Rappoport
The author of an explosive new collection, THE MATRIX REVEALED, Jon was a candidate for a US Congressional seat in the 29th District of California. Nominated for a Pulitzer Prize, he has worked as an investigative reporter for 30 years, writing articles on politics, medicine, and health for CBS Healthwatch, LA Weekly, Spin Magazine, Stern, and other newspapers and magazines in the US and Europe. Jon has delivered lectures and seminars on global politics, health, logic, and creative power to audiences around the world.