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Financial Crisis

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

Proverbs 22:3

The hits – negative economic news, that is – just keep coming.  To underscore what I mean by bad economic news, consider the following headlines from just last week:

Yet for all that, stocks hit a record high on Friday with the Dow closing above 28,000 for the first time.  CNBC’s headline on Thursday summed up the mainstream financial press’ exuberance quite well, “This is now the best bull market ever.”

How is it possible, on one hand, for there to be so much bad economic news and, on the other hand, for stocks to be hitting record highs?  We dealt with this topic last week, but this topic is of such importance that it bears additional commentary.  The answer to this question, to borrow a turn of phrase from one commentator I follow regularly, is that nothing’s real.  We have fake financial markets designed to manipulate your perception of reality.

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Financial Crisis

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

    Proverbs 22:3

Dow hits record as stock market rally extends into 5th week” ran Monday’s AP headline. The same day, CNBC was even more ebullient, proclaiming “After Dow hits a record, analysts believe these stocks will lead the measure to its next milestone.” So what shall I say? The past three months I’ve been writing series talking about the ongoing financial crisis of 2008 and not only are the stock markets refusing to crash, they’re hitting records highs! To make matters worse, Yahoo reports that “Gold Suffers Worst Week in Three Years as Bulls Run for Cover.”

I guess I should just give up writing about financial matters, right?

Or maybe not.

You see, my thesis that the American economy has never recovered from the 2008 financial crisis is not based upon where the Dow or S&P averages close or the price action of gold and silver in a particular week.

As a Scripturalist, that is, as someone who believes that the Bible has a systematic monopoly on truth, I seek to analyze the markets and the overall economy, not by what the day’s headlines report, but by the propositions found in the Word of God.

When looked at in light of the Scriptures, we can see that what is hyped as the greatest economy ever is, in reality, a house built upon sand, which, in the opinion of this author, the coming economic storms will sweep away.

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“The greatest threat facing middle and working class Americans is our depreciating paper currency.”

    – Ron Paul

Gold, Peace, And Prosperity, The Birth Of A New Currency
by Congressman Ron Paul (Auburn, Alabama: Ludwig Von Mises Institute, 2011, 91 pages with index).

There is, perhaps, no more critical subject facing our nation at the moment than the activities of the Federal Reserve, the central bank of the United States of America. But while the Fed’s actions over the past 100 years have had a profoundly negative effect on the lives of nearly all Americans, very few people are aware of the ways in which they are robbed by Fed policy. Even more frustrating from the standpoint of those who believe in sound money is that that there appears to be little desire on the part of Americans to cure their ignorance by studying the machinations of these masters of the universe who run the Fed.

Gold_Peace_Prosperity

One of the principle reasons people remain in the chains of ignorance concerning the Fed is the reporting of mainstream financial journalists. The stories one sees in the mainstream press about financial matters – whether in print or on television, it matters not – seem designed more to steer people away from the truth about the workings of the Fed rather than lead them to understanding.

In stark contrast to the long-winded flim-flam one hears on most news outlets about the Fed, Ron Paul’s Gold, Peace, An Prosperity, The Birth Of A New Currency (hereafter Gold, Peace And Prosperity) is a breath of fresh air. In his typical fashion, Paul manages to be both profound and concise in his comments. This book, a short 91 pages including introductions by Henry Hazlitt and Murray Rothbard plus an index, equips the reader with more sound teaching about the problems with our current Federal Reserve system as well as how to fix it than entire shelves full of books by most authors.

Did I mention that this is a short book? Just to give you a sense of what I mean, it can be read in one sitting. When I re-read it for this review, it took me a little over two hours reading at a leisurely pace and taking notes. As John Robbins noted in his exposition of Philemon, many scholars make the assumption that nothing short can be profound. But this is a mistake. Gold, Peace, An Prosperity stands as proof of this.

Worth noting is that this book was first published in 1981. That is significant for the reason that Ron Paul was part of the Gold Commission convened by President Reagan at the time to study the possibility of returning the United States to the gold standard, an option that ultimately was voted down by the Commission. The next year, the Minority Report of the Gold Commission was published under the title The Case for Gold (see here for free pdf and epub downloads), which is considered something of a modern day classic by advocates of sound money. I would by all means recommend reading The Case for Gold, but I think Gold, Peace, An Prosperity is an even better place to start. While The Case for Gold provides more detail than Gold, Peace, And Prosperity, the latter is less technical in its language and much shorter, making it an ideal read for those just starting to learn about sound money, or, for that matter, those who would like a refresher course from one of the few statesmen of recent times who actually understands the monetary problems we face as a nation as well as what is needed to fix them.

In the first chapter of the book titled “Impending Social Strife?,” Paul writes, “We probably will see widespread civil disorder in the 1980s.” Looking back 38 years, some may be tempted to discount Paul’s argument for sound money by accusing him of being an alarmist. “You see,” they will say, “we didn’t have widespread civil unrest in the 1980s, so all this talk about economic collapse in 2019 is just so much conspiracy theory nonsense.”

What shall we say to this? Does the fact that widespread civil unrest did not occur in America in the 1980s refute Paul’s argument against the Fed and for sound money? No, it does not. While it may seem odd to many today that there was serious consideration of a return to the gold standard in the early 1980s, one has to remember the context. America had just gone through the terrible stagflation – stagflation was a term coined in the 1970s to describe a situation where there was simultaneous inflation and little or no economic growth, a state of affairs that the standard Keynesian economics of that time could not account for – of the 1970s that followed hard on the heels of President Nixon’s decision to take America off the Bretton Woods gold exchange standard in 1971. Just to give you a sense of the inflation of the 1970s, gold went from $35 dollars and ounce in 1971 to around $800 an ounce at its peak in 1980, a surge of roughly 2000%.

Second, all the problems that Paul identified in 1981 with the Fed are still with us today and are far larger than what they were when he first wrote. On October 22, 1981, 38 years ago almost to the day, the federal debt first topped $1 trillion. Today in 2019, it stands at over $22 trillion. According to this CCN article, the 2019 federal deficit – the deficit is the yearly amount by which federal spending outstrips tax revenue; the debt the total of all previous budgetary shortfalls – was $984 billion. Stop and think about that for a moment. It took the federal government over 200 years to accumulate $1 trillion debt, an amount it’s now adding on a yearly basis.

What Ron Paul did not foresee in 1981 was the cunning ruthlessness of the central bankers and the politicians to not only maintain the corrupt system, but also to expand it. In 1981, there was no Plunge Protection Team. No one had ever heard of Quantitative Easing and if anyone had spoken of negative interest rates, he would have been laughed to scorn. Yet the bankers, politicians and news media have managed not only to sell the public on all this financial flim-flam, but they make it seem downright normal. This was possible largely because the American people did not take to heart Paul’s warnings from 1981.

Ron Paul was right on target when he wrote, “The greatest threat facing middle and working class Americans is our depreciating paper currency.” This was true in 1981, and it’s true today in 2019.

I highly recommend Gold, Peace, An Prosperity. Not only is it a great primer on the dangers of the central banking, paper money and the importance of sound money, reading it makes me want to shout the title of a more recent book by Paul, End the Fed!

Chapters include: Foreword by Henry Hazlitt; Preface by Murray Rothbard; Impending Social Strife?; The People are Demanding an End to Inflation; Depreciation is Nothing New; “Not Worth a Continental”; The Best Medium of Exchange; Cross of Paper; How Our Money was Ruined; The Stage is Set; Is Business to Blame?; Are Banks to Blame?; Are Unions to Blame?; Inflation and the Business Cycle; The Guilt of the Economists; The Alternative to Inflation; Money and the Constitution; Morality and Transfer Payments; Citizen Control of Money; Day of Reckoning; Free Market Money?; Legal Tender Laws; An Historical Precedent; The End – or the Beginning; Index.

 

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Financial Crisis

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

    Proverbs 22:3

In Part 8 of this series, we began formulating a Biblical theory of prepping. In Parts 4-7, we had looked at some examples of prepping in Scripture. While the examples of Noah, Lot and Joseph clearly establish that God approves of prepping, it seemed good to me to begin to articulate some of Christian prepping’s main components with an eye to defining the term.

In last week’s post, I closed by asking the question, For whom do we prep?, and answered, in part, that we prep for ourselves. It may seem strange to say that we prep for ourselves. After all, isn’t that just obvious? Not necessarily. The unchristian idea of altruism has so tainted many Christians’ thinking that some believers think that it is somehow sinful to think of their own interests. But although it is common to hear Christians deny they have a self interest, this is not a position consistent with the Scriptures.

Today, I’d like to continue, and hopefully conclude our discussion of the Biblical theory of prepping by exploring the other parties for whom Christians prep apart from themselves. But before we do that, I’d like to briefly review the financial news from last week.

When I began this series a couple of months ago, the stock market was recovering from a serious downturn in early August that was, apparently a reaction to the Fed’s decision to lower interest rates and the inversion of the Treasury yield curve. The Plunge Protection Team (PPT), apparently, saved the day once again, pushing the major stock indices out of correction territory. But even though the stock market has been stabilized and, at least on the surface, things seem normal, there are abundant signs that all is not well on Wall Street.

Just last week (September 29 – October 5), there were more signs of major problems in America’s economy. First, as MarketWatch reports, the Chicago Purchasing Managers’ Index (PMI) dropped in September for the third time in four months. The expected number was 50, but the index reported 47.1 in September. So what does all that mean? When it comes to the PMI, any reading above 50 means the economy is expanding, any reading below 50 indicates economic contraction. Not only did the September number come in well below expected, but it actually was the worst reading since 2009, around the time of the last financial crisis.

Second, the ongoing “repo madness.” Not only has the Fed been bailing out the overnight repo market to the tune of $75 billion every night, but last week pledged to continue the bailout. Originally, the Fed was going to supply funds to the repo market just for a few days. This was then extended to October 10. Friday, the New York Fed announced that it will “continue to boost liquidity in money markets [the repo market] into November.” Fund manager Dave Kranzler said of the repo operations that they will eventually morph into outright money printing. With every extension of the Fed’s repo market intervention, Kranzler’s evaluation comes closer and closer to being realized.

Third, the chances of a Fed interest rate cut in October are going up. The reason behind this seems to be the previously mentioned bad September PMI reading, which was not limited to just the US, but extended to other industrialized economies as well. Please keep in mind, the Fed cuts rates when it sees economic activity slowing down, either in an attempt to prevent a recession or to pull the economy out of one. If the US economy were really as strong as the Trump Administration would like people to believe, they would not at the same time be pushing the Fed to lower interest rates.

Fourth, layoffs. As was widely reported last week, Hewlett-Packard (HP) announced that it plans to cut its workforce by up to 16% and expects to cut between 7,000 and 9,000 jobs from its global workforce of 55,000. Kroger, America’s biggest grocer, announced plans to lay off hundreds of workers last week, as question arose about its turnaround plan.

In summary, last’s weeks economic news provided further evidence that the US and world economies are slowing down. It has been in anticipation of a significant economic shock that I undertook to write this series on prepping several weeks ago. Let us now continue to look at what the Bible says about prepping.

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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…)

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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.

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PPTThe PPT was hard at work today. “So what,” you may say. Or, “What on earth are you talking about?”

As for “what are you talking about,” I mean by the PPT The President’s Working Group on Financial Markets, better known as the Plunge Protection Team (PPT).. Regarding the “so what,” the PPT is the government’s market rigging machine. They’re so good at it that according to one former PPT insider, “there is no price discovery anymore by the market…governments impose prices on the market.”

Today’s action in the US stock market was a perfect example of this. As you can see from the chart below, at one point in the day the Dow Jones Industrial Average (DJIA) was down about 140 points, a significant drop. And this on heels of several rounds of bad US economic news, the ongoing collapse of one of Canada’s largest mortgage lenders, major problems with China’s credit market, the weekends big election in France which has the potential to break up the European Union, and, oh yeah, the threat of war breaking out in North Korea, Syria, Iran, the South China Sea and Eastern Europe.


But a funny thing happened on the way to a market crash. Out of nowhere, someone started panic buying stocks. Up, up, up went the market until the DJIA closed the day just 6 points down from where it began.

There’s an old saying among stock traders, “Don’t try to catch a falling knife.” That’s a way of saying, don’t by a stock while it’s on the way down. Just let it drop until it finds a price floor.

The market was tanking today, and had very good reason to tank, but the powers that be wouldn’t let the Dow – or as Andy Hoffman likes to call it, the Dow Jones Propaganda Average – fall.

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