Deutsche Bank Pays $38 Million To Settle Silver Manipulation Lawsuit, by Tyler Durden.

2016 is shaping up as the year when countless conspiracy theories will be confirmed to be non-conspiracy fact: from central bank rigging of capital markets, to political rigging of elections, to media rigging of public sentiment, and now, commercial bank rigging of silver. …

Deutsche Bank had agreed to pay $38 million to settle U.S. litigation over allegations it illegally conspired with other banks to fix silver prices at the expense of investors.

The Importance of The Deutsche Bank Silver Fix Lawsuit Settlement, by Graig Hemke.

[T]he true significance of this lawsuit will be on display over the coming months and years as innumerable new class action lawsuits are filed against The Bullion Banks for their collective role in rigging and manipulating the precious metals markets. …

This is the first time that a settlement has been reached in a precious metals price rigging lawsuit. It’s also the first time that a Bank has agreed to turn state’s evidence against the other Banks that rig the process. The two items ensure that the case against both HSBC and Scotia is being built and that they will soon be forced to settle, too. Already, a NY judge has allowed the case to proceed into legal discovery (subpoenas, depositions, documents, etc) for the first time ever.

Perhaps the two decades of allegations that big banks manipulated the price of gold and silver lower are true and will be proved. Or not. We shall see.

Allegedly this manipulation was at the behest of certain western central banks, who produce and manage paper currency. They don’t want competition from the old currencies of gold and silver, and they don’t want high gold and silver prices to draw attention to the unsustainably high rates of manufacture of paper currencies since going off the gold standard in 1971.

This is an issue that affects everyone, because currency plays such a vital role in the real economy. Whilst of obvious benefit to some, currency mismanagement hurts the wider real economy and everyone’s real wealth. For instance, there is a primae facie case that this mismanagement of paper currencies has made the wider community poorer since the gold standard was finally abandoned in 1971 — due to falling productivity:

US industrial productivity falls after going off gold standard in 1971

That graph comes from “Price inflation” is not the biggest problem by Steven Saville, a savvy financial speculator who writes a newsletter, who also says:

All else remaining equal, an increase in the supply of money will lead to a decrease in the purchasing-power (price) of money. Furthermore, this is the only effect of monetary inflation that the average economist or central banker cares about. Increases in the money supply are therefore generally considered to be harmless or even beneficial as long as the purchasing-power of money is perceived to be fairly stable [2% per year]. However, reduced purchasing-power for money is not the most important adverse effect of monetary inflation. …

[B]y taking a wide-angle (that is, long term) view it will often be possible to see the effects on the economy of shifts in monetary inflation.

As an example of how long-term shifts in monetary inflation/intervention can be linked to long-term shifts in economic progress I present the following chart [above] of the US Industrial Production Index. The chart shows that the industrial-production growth trend flattened at around the time that the ‘golden shackles’ were removed, that is, at around the time that the Fed was essentially empowered to do a lot more. This is not a fluke. The chart also shows that the ramping-up of the Fed’s monetary interventions in 2008-2009 has been followed by the weakest post-recession recovery in at least 70 years. Again, this is not a fluke.

Lest anyone doubt that central banks manipulate markets, note that their main job is to explicitly set prices in the most important market of all, interest rates. A bunch of bureaucrats set the price of money. The whole financial world now hangs on the words of central bankers, waiting for clues about the future of the economy — this is not a market economy any more.

Price setting didn’t work for the Soviet Union, and it doesn’t work too well for the west. Before central bank interference, which stepped up big time in 1971 but stretches back in some form or rather to 1694 with the establishment of the Bank Of England (the rest of the west soon copied), interest rates were stable at close to 6% for century after century, without the boom-and-bust cycle that so enriches the banking community.

The only question is how many markets do the banks target prices in, and how much and how often.