Banking Manipulation – One Of The Biggest Deceptions
Let’s give the definition of banking manipulation:
Manipulation in general: manipulate people is to present things in a way that encourages them to think and act according to the goals of the manipulator.
Almost everyone, from childhood, tries to manipulate the people around them.
Definition (specific): Financial market manipulation is a criminal operation to create false appearances on the evolution of asset prices. Deception designed to induce investors to commit resources in one direction (purchases or sales) which, far from corresponding to their interest, provides undeserved gains to the manipulator.
Effects of banking manipulation on investors, markets, economy are resources diverted to the wrong pockets.
Banking manipulation has two negative effects:
Damage to investors. These victims can overpay an asset whose price was artificially inflated, or sell at prices artificially depressed.
Economic inefficiency in the allocation of resources,
Flooding in certain economic sectors and creating serious imbalances (wasted capital, overvaluation…),
Depriving other sectors of funds that would be better used.
Techniques of banking manipulation:
Two main categories of techniques are used usually for these frauds:
A) Falsifying information.
Various information channels are used: traditional media and internet, consultants, word of mouth (“viral communication”).
B) Divert market tool
By direct manipulation of the price / trend / market signals by initiating artificially purchases.
Banks are experts in building a web of hypercomplex operations characterised by a total lack of transparency which even sophisticated investors have trouble understanding exactly what they are, but are impressed by their “modernity”.
New clients of banks are paying – without knowing it – the interest and repayment of those leaving. This happens at small (a few victims) or large scale Ponzi pyramid chains like the case with Madoff where a considerable number of victims were affected.
Banking manipulation allows financial institutions to:
Offer cocktails of deceptive banking investment products combining unique background of various financial instruments to fit closely to the needs of investors (liquidity, profitability, safety, time horizon, tax and legal aspects).
Contribute to the creation of debt and bankruptcy of its clients by offering them incomprehensible bank contracts.
We can however hope that investors and ordinary people will have in the future more financial literacy to interact with the banking system and not “to be fooled” by it. As in any field, policy makers, rather than experts, must remain.