Feeds:
Posts
Comments

Archive for the ‘Financial Markets’ Category

Financial Crisis

They have also healed the hurt of My people slightly, saying, ‘Peace, peace!’ when there is no peace.

    – Jeremiah 6:14

A prudent man foresees evil and hides himself, but the simple pass on and are punished.

    – Proverbs 22:3

In his recent piece “11 Reasons Why So Many Experts Believe That A US Economic Crisis Is Imminent,” Michael Snyder makes the case that there are numerous and important economic indicators that are flashing red, warning us that a the next recession is imminent. I strongly suggest that you read it.

Predictions about the future are always difficult. Michael Snyder does not claim to be a prophet. Neither does this author. But God has given us his Word and the ability to reason from it. In the Scriptures we can learn the mind of God on what sound government is, what sound money is, and what pleases him as well as what incurs his wrath.

Gordon Clark and John Robbins both noted in their writings that the once Christian West is in a state of collapse and has been for some time. This collapse, which can be traced at least to the second half of the 19th century has advanced to the point where the nations that once rejoiced in the blessings of God brought about by the Christian Reformation of the 16th century are now falling apart before our very eyes.

It is beyond the scope of this series to look at all the ways in which the West is in collapse. Rather my focus has been on the failure of the Western financial system. That is quite enough for one series.

Getting back to Michael Snyder’s article after listing out the 11 economic danger signs, Snyder comments, “On the surface, the Trump administration is trying to assure us that everything is going to be just fine, but behind the scenes they appear to be preparing for the worst.”

Worth noting is that Michael Snyder is not some snowflake Trump hater. He’s a conservative Republican, but one who is honest enough to admit that the rhetoric out of the Trump administration does not match with the policies the President wants to pursue. Lowing interest rates and demanding Quantitative Easing – Quantitative Easing (QE) is a new term that came into common use during the 2008 financial crisis; QE is a roundabout way of saying “money printing,” which has the effect of destroying the value of the dollar – are measures designed to pull an economy out of a recession. These are not measures one uses when the economy is doing well, but when it is struggling.

It appears that Trump is concerned that the economy may tip over into recession before the 2020 presidential election. Were this to happen, it would weaken his chance of reelection.

Trump is right to be concerned. When the next recession hits, it likely will be much worse than the one we saw in 2008. In fact, many economic observers don’t speak of a coming recession. Rather, they speak of a coming Greater, or even Greatest, Depression.

Those who speak of a Greater Depression rest their case on the fact that the 2008 crisis was never dealt with honestly. The 2008 crisis was debt driven. There was too much debt in the financial system and not enough capital to service it. So what did governments and central banks do to “solve” the 2008 crisis? Unbelievably, they added more debt to the system!

While adding more debt to the system had the effect of reflating the collapsing bond market, stock market and housing bubbles and kicking the can down the road, not only did it not solve the debt problem, it actually made it much worse. As did the false prophets Jeremiah’s day, so too have done elected officials and central bankers in our time: They have healed the wounds of their people slightly.

I would like to be optimistic and say that the nations of the West will come to their senses and reject the policies, chief among them central banking, that have driven them to the point of bankruptcy, but it appears that this will not the case. There are simply too many powerful, vested interests to expect a change of course at this point. In the view of this author, it will take a major economic collapse before there is any opportunity for change.

But even an economic collapse of historic proportions will not be enough. As John Robbins has noted, events do not explain themselves, but must themselves be explained. Were an economic collapse to happen tomorrow, not a few people would take to the microphones of the MSM to declare that it is all the fault of too much liberty, that those who favor capitalism are to blame, and that what we need is more centralized government authority to pull us out of this mess and ensure that such a disaster won’t happen again.

Of course, such an explanation is nonsense. It is not too much economic and political liberty that has led the nations of the West to the brink of economic collapse, but too little. It is the central planners, the central bankers, the authoritarians and the socialists who have created this mess, and it is imperative that Christians point this out once the collapse occurs.

There is a sense in which Christians can be faulted for the collapse of the West, but not in the way that our enemies think. Our fault lies in the fact that we have not fought the good fight of faith as we ought to have. Too often we have been seduced, either by the pleasures of this world, by the so-called wisdom of this world, by our own laziness, by our own self-imposed ignorance, or by the fear of men, from teaching, rebuking, and correcting the enormous fallacies that have poured forth from both religious and secular thinkers over the past 150 years.

The ideas of Thomas Aquinas, Soren Kierkegaard, Karl Marx, Charles Darwin, Oscar Wilde, Sigmund Freud, Karl Barth, John Maynard Keynes and many others have replaced the systematic truth of the Scriptures in the West to the point that even many Christians have absorbed at least some of what these men taught under the mistaken notion that their ideas are Christian.

Christians in the late 19th and 20th centuries first lost the intellectual battle, and now their descendents are losing their countries.

(more…)

Read Full Post »

Financial Crisis

“In his book…A Christian View of Men and Things [Gordon] Clark comments that the growth of government is the greatest tragedy of the twentieth century.”

    – John W. Robbins, “The Growth of Government in the United States

The thesis underlying this series of posts and reflected in the series’ titles, is that the 2008 financial crisis never really went away. Yes, the stock market has recovered and gone on to hit new highs. Yes, we don’t see massive layoffs taking place or people standing in bread lines. So the visual cues that we expect in a financial crisis are not present.

Further, we see announcements in the press stating how strong the American economy is, and various statistics are brought forth to prove this, perhaps most notably a low unemployment rate.

Donald Trump has been very aggressive at touting the strength of the American economy. The day after the worst stock market plunge of 2019, the President tweeted, “The United States is now, by far, the Biggest, Strongest and Most Powerful Economy in the World, it is not even close! As other falter, we will only get stronger. Consumers are in the best shape ever, plenty of cash. Business Optimism is at an All Time High!”

Now at least some of this is likely true. Objectively speaking, America has the world’s largest economy as measured by Gross Domestic Product (GDP). But there are reasons to doubt some of the President’s other claims.

For example, while the President says that consumers are in the best shape ever, the very next day CNBC ran a story announcing that Americans are more indebted than ever before. This hardly supports the President’s claim that consumers are in the best shape ever.

And if the economy is doing so well, why, according to the Bureau of Labor Statistics, has the labor force participation rate never recovered to the pre-crisis level?

If everything is so great, why has President Trump publicly called for more Quantitative Easing (QE) and interest rate cuts? QE is a radical money printing scheme which was used by the Federal Reserve as an emergency measure to save the financial system in the 2008 crisis. Since QE is an emergency measure that was used to stave off financial collapse, why is it that, on the one hand, President Trump is telling us that the economy is doing great under his leadership, but, on the other hand, is calling for emergency QE as if the financial system were collapsing again?

Another item contradicting the official narrative that everything is awesome with the economy is the calls for interest rate cuts. In the link above, Trump was calling for the Fed to lower interest rates. In a strong economy, demand for money is reflected in rising, not falling, interest rates. If the President is calling for the Fed to lower interest rates, by implication, he is saying the economy is stalling out, not charging ahead.

In the opinion of this writer, the struggles of ordinary Americans to find work and to make ends meet are reflective of a financial system in disarray, not one experiencing rapid growth.

Further, it is my view that the economic problems roiling America stem from the fact the American government and financial elite have refused for more than a decade now to deal honestly with the serious financial crisis facing the United States. At the root of the problem is the Fed, America’s central bank. Central banking is inherently immoral, unchristian, and destructive of the legitimate interests of the great bulk of the American people.

One of the great evils that flows from central banking is another great plague of modern society: Big Government.

In the quote at the top of this page, John Robbins noted that Gordon Clark thought that the growth of government in the United States was the greatest tragedy of the twentieth century. Considering all the evils of that century, Clark’s statement is remarkable indeed.

It is the contention of this author that America is going bankrupt as a result of big government, a great evil which itself is the child of the prior great evil of central banking. Yet there is no serious attempt on the part of elected officials of either party to address this situation.

(more…)

Read Full Post »

Financial Crisis

A prudent man foresees evil and hides himself; The simple pass on and are punished.

    – Proverbs 27:12

In light of the recent upheavals in the financial markets, it seemed good to me to take this occasion to update my comments on ongoing financial crisis. I say ongoing, because it is my contention that the crisis that first manifested itself in 2008 has never really gone away.

In Ezekiel we read God’s complaint against the prophets of Israel. At one point he says, “Because, indeed, because they [the prophets] have seduced My people, saying, ‘Peace!’ when there is no peace – and one builds a wall, and they plaster it with untempered mortar – say to those who plaster it with untempered mortar, that it will fall. There will be flooding rain, and you, O great hailstones, shall fall; and a stormy wind shall tear it down. Surely, when the wall has fallen, will it not be said to you, ‘Where is the mortar with which you plastered it?’ ”

Such a wall, one built with untempered mortar, may appear sound. But when faced with the elements, it’s shoddy construction becomes evident to all.

In his Sermon on the Mount, Jesus expressed a similar idea when he compared the man who built his house on sand with the man who built upon the rock. For all we know, the house built on sand may have been beautiful in appearance, but it lacked a firm foundation and it fell. The house built on the rock took the beating and stood strong.

It is the contention of this author that the relative prosperity that the West has enjoyed since 2008 is rapidly coming to an end for the same reason that both Ezekiel and Jesus described: The real causes of the 2008 crisis have never been addressed, only papered over with fake solutions. Fakery, it would appear, is coming to an end.

In the following post, and perhaps posts, I’d like to explore at least some of the factors that are driving the West to bankruptcy. I’d also like to discuss what Christians can do to prepare themselves for the difficult financial times that lie ahead. Finally, I’d like to discuss what Christians can do once the collapse occurs to begin to rebuild our civilization on a sounder footing than we have today.

(more…)

Read Full Post »

Financial CrisisTrump touts ‘strongest economy in the world’ after disappointing jobs report,” ran a recent headline that managed to capture both the official line of the Trump administration and the contrasting reality portrayed by many recent underlying economic data points.

The February 2019 jobs report, released in early March, was expected to show a gain of 190,000 jobs, but instead reflected a gain of only 20,000. That’s a big miss in anybody’s book.

Now one could argue that President Trump’s statement is not negated by the disappointing jobs report. The US could indeed have the strongest economy in the world – depending on how one defines “strong” – and still do a face plant when it comes to the production of new jobs. All that is required for these two ideas to be true at the same time is for the rest of the world to be in a bigger mess than the US.

It is the contention, however, of this author that, in spite of all the talk of a booming economy coming from the Administration and from various sources on Wall Street and in the media, the US economy is not doing well and, in fact, is very likely headed into recession. It may actually be in recession as of this writing. Below are thirteen reasons why this author thinks so.

(more…)

Read Full Post »

Yield Curve Inversion

US Treasury yield curve as of close of business on 3/22/19.  Note the highlighted areas on the chart showing the 1-month Treasury yield is higher than the 10-year Treasury yield.  This abnormal situation is widely considered to be the most accurate predictor of a future recession. (Source, CNBC).

You may have heard that the US stock market got smacked around pretty hard today. The Dow was off 460.19 or 1.77%. The S&P and NASDAQ had it even worse, off 1.90% and 2.50% respectively.

But while the stock market plunge took center stage today, a major secondary story was the continuing inversion of the US Treasury yield curve. Typical was the headline on CNBC which read Bonds are flashing a huge recession signal – here’s what happened to stocks last time it happened.

The article goes on to quote equity strategist Jonathan Golub saying that a yield curve inversion has preceded each recession over the last 50 years. Golub is hardly alone in saying this. If you listen to knowledgeable investors, they consistently will tell you that a yield curve inversion is the most accurate predictor of an oncoming recession. But this raises the question, So just what is a yield curve inversion anyway?

(more…)

Read Full Post »

 

PPT

The Plunge Protection Team

 

“Well, what I wanted to talk about for a few minutes is the various efforts that are going on in public and behind the scenes by the Fed and other government officials to guard against a free-fall in the markets…”

– Former Clinton advisor George Stephanopolous on Good Morning America

 

Last week’s post served as an introduction to the President’s Working Group on Financial Markets, better known to the public as the Plunge Protection Team.

It seemed good this week to spend a little more time on the same subject, as the existence and the activities of this organization are perhaps the most important, least understood, and most underreported factors driving financial markets today.

Financial markets such as the New York Stock Exchange are presented to the public as the very essence of free market capitalism. But in the opinion of this writer, the reality is something quite different.

Far from being a place where buyers and sellers meet to determine fair value for financial assets, today’s financial markets are a rigged game designed to mislead the public about the true nature of the financial condition of the West.

Some may wonder why a Christian blogger would delve into the subject of the Plunge Protection Team (PPT). It seems on the surface as if it’s a bit conspiratorial, a topic more appropriate for some tin foil hat blogger than for someone intent and spreading the light of truth. But to see the discussion of the PPT in this light is, at least in my view, a serious mistake.

That the PPT is a real entity with real power is a very easy matter to prove. The case that it has been and is being used by the powers that be to prop up favored markets and suppress those out of favor, though circumstantial in nature, is quite strong.

Exposing such chicanery is among the most important tasks a Christian financial writer can undertake. As University of Austin finance professor John Griffin recently noted, the Bible’s command to “Have nothing to do with the fruitless deeds of darkness, but rather expose them,” can be applied to outing the lies and fraudulent activities of powerful financial and governmental interests in the same way it can be applied to other evil deeds.

With that in mind, let’s take a closer look at the PPT.

 

The Establishment of the Plunge Protection Team

Perhaps the most sensible place to begin our discussion of the PPT is with Executive Order 12631 of March 18, 1988. You may find it here in the Federal Register. But since it’s only a few hundred words long, I’ll reproduce it in full below.

Executive Order 12631–Working Group on Financial Markets

Source: The provisions of Executive Order 12631 of Mar. 18, 1988, appear at 53 FR 9421, 3 CFR, 1988 Comp., p. 559, unless otherwise noted.

By virtue of the authority vested in me as President by the Constitution and laws of the United States of America, and in order to establish a Working Group on Financial Markets, it is hereby ordered as follows:

Section 1. Establishment. (a) There is hereby established a Working Group on Financial Markets (Working Group). The Working Group shall be composed of:

(1) the Secretary of the Treasury, or his designee;

(2) the Chairman of the Board of Governors of the Federal Reserve System, or his designee;

(3) the Chairman of the Securities and Exchange Commission, or his designee; and

(4) the Chairman of the Commodity Futures Trading Commission, or her designee.

(b) The Secretary of the Treasury, or his designee, shall be the Chairman of the Working Group.

Sec. 2. Purposes and Functions. (a) Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation’s financial markets and maintaining investor confidence, the Working Group shall identify and consider:

(1) the major issues raised by the numerous studies on the events in the financial markets surrounding October 19, 1987, and any of those recommendations that have the potential to achieve the goals noted above; and

(2) the actions, including governmental actions under existing laws and regulations (such as policy coordination and contingency planning), that are appropriate to carry out these recommendations.

(b) The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.

(c) The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes.

Sec. 3. Administration. (a) The heads of Executive departments, agencies, and independent instrumentalities shall, to the extent permitted by law, provide the Working Group such information as it may require for the purpose of carrying out this Order.
(b) Members of the Working Group shall serve without additional compensation for their work on the Working Group.
(c) To the extent permitted by law and subject to the availability of funds therefore, the Department of the Treasury shall provide the Working Group with such administrative and support services as may be necessary for the performance of its functions.

So what can we glean from this short but not so sweet E.O.?

For one, it’s a high-powered group. As Section one tells us, it is comprised of the Secretary of the Treasury, the Chairman of the Federal Reserve, the Chairman of the Securities and Exchange Commission and the Chairman of the Commodities Futures Trading Commission.

In fact, one would have a hard time coming up with a higher powered group of financial overseers than the officers referred to above.

But it’s not just the group’s power that’s impressive. It’s also highly secretive.

Signing the GRA

FDR signs the Gold Reserve Act of 1934.

Consider the US Treasury Department, home to a powerful and secretive group known as the Exchange Stabilization Fund (ESF). The ESF was, as it were, born in monetary sin and shapen in financial iniquity, the seed capital of which was extracted out of the hides of the American public by the iniquitous Gold Reserve Act of 1934. As Investopedia notes,

The Gold Reserve Act of 1934 is an act that took away the title of all gold and gold certificates that were held by the Federal Reserve Bank. The Gold Reserve Act of 1934 made the trade and possession of gold a criminal offense for the citizens of the United States. Sole title of this gold was given to the U.S. Treasury. It was not until 1975 that Americans could again own or trade gold.

Article 1 Section 10 of the US Constitution reads, “No state shall…make any Thing but gold and silver Coin a Tender in Payment of Debts,” but the after less than 150 years, the federal government decided it was proper to criminalize the possession of real money. In this writer’s opinion, that’s about all you need to know to properly assess the authoritarian character of the members of Congress who drafted the legislation and of Franklin D. Roosevelt who signed it in to law.

EO_6102_Gold Confiscation

FDR’s Executive Order 6102 forced Americans to turn in their gold, valued at the time at $20.67 per ounce.  In 1934, the Gold Reserve Act revalued gold at $35 dollars and ounce, causing Americans to lose 69% on the gold taken from them.

Worth noting is that Gold Reserve Act completed the transfer of wealth from the American people to the federal government that had begun the previous year with Executive Order 6102, which required Americans to turn in, “all gold coin, gold bullion, and gold certificates now owned by them to a Federal Reserve Bank.” Roosevelt’s Executive Order required that this be done by May 1, 1933, with criminal penalties of a, “$10,000 fine or 10 years imprisonment, or both.”

“The main rationale behind the order,” Wikipedia notes, “was actually to remove the constraint on the Federal Reserve which prevented it from increasing the money supply during the depression.” In other words, the Fed couldn’t rob people effectively enough when they had gold in their possession. First they had to take the gold, then the powers that be could go about the nefarious business of plundering the people.

Once the government had the gold, it didn’t take long for them to finish their act of robbery. Another feature of the Gold Reserve Act (GRA) was that it revalued gold. Prior to the passing of the GRA, gold was valued at $20.67 per ounce. The GRA set the price of gold at $35 per ounce, meaning that upon its passing, Americans immediately suffered a loss of about 69% on the gold forcibly taken from them by the FDR’s 1933 Executive Order. 

Question:  So if the American people lost 69% on their gold, did that wealth just disappear?  Answer:  Of course not! The stolen wealth was merely transferred to the Treasury where it was used as seed capital for the ESF.

As Wikipedia rightly notes, “The resulting profit that the government realized funded the Exchange Stabilization Fund established by the Gold Reserve Act of 1934.”

The ESF has now been in business for 84 years, making it one of the longest running criminal enterprises in Washington D.C.And given the many outrageous crimes committed daily in the Swamp, that’s saying quite a lot.

The Federal Reserve, the central bank of the United States, while more in the public eye than the ESF, still manages to operate to a large extent in secrecy. Several attempts have been made to audit the Fed over the years, but to date, the Fed has successfully resisted all attempts to open its books to public scrutiny.

Then Fed Chairman Janet Yellen’s letter to House Speaker Paul Ryan and Minority Leader Nancy Pelosi is instructive on this point. In her letter dated November 16, 2015, Yellen objected to auditing the Fed, saying that subjecting the Fed to an audit would “politicize monetary policy decision…undermine the independence of the Federal Reserve,” and was “based on the false premise – that the Federal Reserve is not subject to an audit.”

While the Fed may be audited in some sense as Yellen argues, it’s not the type of thoroughgoing audit Ron Paul and Rand Paul have argued for over the years.

Yellen, as Fed Chairmen before her, and doubtless as those who will come after her such as current Fed Chairman Jay Powell, was jealous to guard the Fed’s “independence.” Translated into plain English, she wants to continue the ability of the Fed to serve the interests of the financial elite, principally the big banks that own the Fed, at the expense of the American people.

Evidence of the PPT’s Handiwork

For our purposes, I will not go in to a great deal of technical detail in an attempt to prove the case that the PPT manipulates markets. Rather, I shall rely on quotes from those who would know. Considering that these quotes come from highly placed and well-qualified individuals, their comments deserve serious consideration.

The term Plunge Protection Team can be traced to a 1997 article in the Washington Post of the same name. According to the piece, “The government has a real role to play to make a 1987-style sudden market break less likely.” So just how does the PPT do this? Well, the article doesn’t say specifically. It talks about ensuring communication between government agencies remains open. But does mere communication help stabilize markets in the midst of a crisis? Imagine the following conversation:

    Treasury Secretary: Hey, the S&P’s off 5% already and it’s only 11am!! What do you      think?

    Fed Chairman: Yep, darn if it’s not.

Talk, as they say, is cheap. And very obviously stabilizing markets requires more than just talk. Implied, though not explicitly stated, is that the Fed and probably the ESF will intervene in the financial markets to produce the sort of “almost miraculous” recovery that occurred the day after 1987’s Black Monday. After all, no one can see what the Fed or the ESF are doing with their vast financial resources. “Pay no attention to the man behind the curtain,” is not just a famous line from the Wizard of Oz, it’s the M.O. of these two groups. And they both have better curtains than did the wizard.

In short, of course the Fed and the ESF are rigging the markets. The Washington Post all but said so back in 1997. “But,” as the cheesy infomercials like to put it, “wait, there’s more!”

Consider the statement at the top of this post by George Stephanopoulos on Good Morning America. I’ve seen the date of his appearance as alternatively September 17, 2000 and September 17, 2001. If it was the later, this was the first day that the NYSE reopened after 9/11. In either case, this Clinton insider very clearly hints at governmental intervention in the financial markets to “guard against a free-fall.”

The quote from Stephanopoulos continues, “the Fed in 1989 created what is called the Plunge Protection Team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and other exchanges and they have been meeting informally so far, and they have a kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem.”

In 2015, Dr. Pippa Malmgren who actually served on the PPT and whose father was a high level presidential advisor and scholar made this telling remark,” [T]here’s no price discovery anymore by the market…governments impose prices on the market.”

The New York Post’s John Crudele has written critically of the PPT for years. Typical of his work is this story from 2014, ” ‘Plunge protection’ behind market’s sudden recovery.”

In 2007, Crudele expressed his frustration with the lack of transparency by the US Treasury on the workings of the PPT, writing,

After a year and a half of stalling, the US Treasury finally complied with The Post’s requests for information about The President’s Working Group on Financial Markets – delivering 177 pages of crap.

In essence, the Treasury’s Freedom of Information officials said that the Working Group – affectionately nicknamed the Plunge Protection Team – doesn’t keep records of its meetings.

How interesting and convenient!

PhD. economist Paul Craig Roberts, former Undersecretary of the Treasury under Ronald Reagan and former Wall Street Journal Associate Editor, is another highly placed individual whose written extensively on the activities of the PPT. In his article “Do Financial Markets Still Exist?” he wrote, “For many decades the Federal Reserve has rigged the bond market…and for about a century, central banks have set [rigged] interest rates…It appears that…the Fed is rigging the stock market by purchasing S&P equity index futures in order to arrest stock market declines driven by fundamentals.”

In December 2008, widely watched market commentator Nouriel Roubini was quoted as saying, “The Fed (or Treasury) could even go as far as directly intervening in the stock market via direct purchase of equities as a way to boost falling equity prices.”

Nouriel Roubini was formerly an advisor to New York Fed governor Tim Geithner, a major figure in the 2008 financial crisis.

Market analyst Charles Biderman commented in 2009 that while the market cap of US stocks soared by more than $6 trillion, “We cannot identify the source of the new money that pushed stock prices up so far so fast.”

In the same article, Biderman quotes former Fed governor Robert Heller’s 1989 Wall Street Journal opinion piece where Heller wrote,

Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole.

Do you think a former Fed governor just might know a thing or two about what it takes to rig the stock market?

In a 2017 appearance on CNBC’s Smart Money, “Legendary vulture investor Asher Edelman, the 1980’s model for Gordon Gekko,” argued that, in his view, the PPT was the only thing propping up the market. He also expressed his concern about being in the market, saying that “I don’t know when the plug is going to be pulled.”

Finally, I come to my main man Dr. Ron Paul. Paul has commented many times over the years on the activities of the PPT. In a May 4, 2018 appearance on CNBC’s Futures Now, the good doctor had this to say,

I think the plunge protection team is alive and well. I think they’re involved and they do provide some protections. The world is engaged in that type of maneuvering. But eventually though, the market rules.

More examples could be provided, but I hope the above citations, all taken from prominent and respected people, will help the reader to see the PPT less as a myth or conspiracy theory and more as a reality, one which influences the public perception of the stock market and, hence, the entire US economy, and one that accomplishes this end by very dishonest, deceptive and immoral means.

Closing Thoughts

Investopedia, a mainstream, and in many ways helpful, provider of investment information, dismisses any notion of the PPT’s manipulating markets as conspiracy theory. As its article on the PPT puts it, “The name PPT was coined by the Washington Post in 1997. Although the team had a viable purpose when initially created, conspiracy theorists suspected that the team was created to shore up, or even manipulate, the markets.”

Now where would anybody get such an absurd idea? As the quotes above demonstrate, it’s not whackadoo weirdo conspiracy theorists who are the ones talking about the PPT’s market manipulations, it’s some of the most mainstream, most connected, most market savvy voices out there who believe this.

If the PPT is, in fact, manipulating financial markets, and it is the conviction of this author that this is what is happening, the PPT and its constituent organizations such as the US Treasury Department and the Fed are guilty of violating any number of Biblical and Constitutional principles of government.

The origins of the Fed and of the ESF should immediately alert anyone jealous of his liberty that these groups are up to no good. The Fed’s origin can be traced to a secretive meeting on Jekyll Island, Georgia in November 1910. The ESF was created by open fraud on the part of Congress and the Roosevelt administration with the cooperation of the previously mentioned Federal Reserve.

The Bible demands open meetings, but the Fed and the ESF love the darkness and will not come to the light, lest their evil deeds be exposed.

Such agencies, based as they are on lies and theft, never can bring forth good fruit. As Jesus said in his Sermon on the Mount, “A bad tree bears bad fruit.” And if the Fed and the ESF work evil on their own, what shall we expect when they combine forces as parts of the PPT?

Is it much of a stretch to suppose that such agencies, having worked financial evil on their own, would produce even more evil when they combine forces in the PPT?

Should Americans expect transparency and honesty from such bad actors? Or would it be more reasonable to expect that they, like the rulers of the Gentiles in Jesus’ day, would “lord it over” the people.

In the opinion of this writer, the answer very obviously is the latter. And one of the ways these organizations “lord it over” the American people is to continually give them a false picture of the real economy by rigging markets to support the official narrative that everything in the economy is awesome, that the stock and bond markets are safe and stable and the best places for your money, and that you should never consider being so foolish as to put your money elsewhere such as gold and silver.

This official rosy scenario was encapsulated in Janet Yellen’s comment in June 2017 when she said that another 2008 like financial crisis is not likely “in our lifetime.”

To this I would reply, that really depends on whose lifetime you’re talking about.

(To be continued…)

Read Full Post »

PPT

The Plunge Protection Team.

“There’s no price discovery anymore in the market…governments impose prices on the market.”

– Dr. Pippa Malmgren, former member of the President’s Working Group on Financial Markets

When I began writing this series on the 2008 Global Financial Crisis (GFC), the 10th anniversary of which we marked last month, it seemed best to provide the reader with some context.

After all, we’re marking the 10th anniversary of the event, which for many people seems like ancient history already. So there’s that. But more importantly, to really understand the GFC and the Great American Bailout of 2008, a little history certainly helps provides some perspective.

The crash of 2008 did not happen in a vacuum. Rather, it was the inevitable result of prior decisions, some of which could be traced back to the 1987 Black Monday crash that wiped out over 22 percent of the value of the Dow Jones Industrial Average in a single day.

Other contributing factors could be traced further back to the 1920’s and 1930’s, the years immediately preceding and following the stock market crash of 1929. Just as the 1920’s roared in large part due to excessive money printing by the Federal Reserve, the party ended in 1929 when the Fed, attempting to reduce the money supply that had created a financial bubble, instead crashed the stock market.

The 1930’s saw unprecedented governmental regulation of the financial markets and of the economy in general, the effect of which was to prolong the economic misery far longer than was necessary. During that decade, economist John Maynard Keynes supplied the needed intellectual justification for all this governmental regulatory interference in his 1936 book titled The General Theory.

In Keynes twisted world, it was savers who were causing all the problems in the industrialized economies of the West. What was needed was more debt. And if people wouldn’t go into debt on their own volition, then their governments needed to step up and do the spending for them.

Finally, one could trace the 2008 crisis back to the progressive era of the early 20th century, specifically, the creation of the Federal Reserve in the United States.

For the purpose of this series, it is not my intention to cover the creation of the Fed, the Great Depression or Keynesian economics in great detail. For our purposes, it is sufficient to note them here. Lord willing, I hope to address these topics in future series.

In last week’s installment, we left off discussing the October 1987 stock market crash, an event that has come to be known as Black Monday.

As part of our discussion, we noted that on the Tuesday following the big Monday crash, things were looking pretty shaky for major US markets. But just when things looked their worst, an event occurred which some observers described as almost miraculous, a huge and unexpected rally in the futures market that jump started a rally in the major market indices.

Some attributed the rally, “to a mysterious burst of bullish sentiment.” Such an explanation seems strained to this author. Why, in the midst of the worst market crash in history would there be a “bust of bullish sentiment.” One of the basic rules of stock trading is to avoid attempting “to catch a falling knife.” If the market’s tanking, let it tank and buy once it appears a bottom has formed.

More realistic is the view of some traders who chalked up the rally to manipulation of the futures market by a few major firms.

Although the article from which I drew this history, a Pulitzer Prize winning piece from the Wall Street Journal, did not specifically mention governmental or central bank intervention, it is the opinion of this author that ultimately it was the federal government in conjunction with the Fed that “saved” the day.

One of the reasons for my opinion is Executive Order 12631 which was signed by then President Ronald Reagan in March 1988, just a few short months after the big crash of October 1987. It established what is officially known as the President’s Working Group on Financial Markets, a group better known by its more informal name, the Plunge Protection Team.

It is to this Executive Order that we now turn our attention.

(more…)

Read Full Post »

Older Posts »

%d bloggers like this: