Clear Evidence The Fed is Manipulating Markets
I am convinced that the Fed is secretly up to no good. That’s because I see clear evidence they are manipulating markets, all markets including stocks, bonds, foreign exchanges, and precious metals to meet their own selfish purposes.
Think about it: Stocks and bonds are up, gold is down, and currencies are pegged with narrow bands, REGARDLESS of the fundamentals.
Also, you may have noticed that a few weeks ago, on November 11, 2013, Andrew Huszar, an ex-Fed insider published his own mea culpa in the Wall Street Journal, apologizing for his role in executing “Quantitative Easing,” or QE for short. This was the Fed’s first plunge into bond buying.
The Fed’s cover story was (and has been) that this was a program for helping Main Street, but actually, according to Mr. Huszar, it was the greatest backdoor Wall Street bailout of all time.
Here’s a little history. About five years ago, in 2009, the Fed started a new program of massive bond purchases. At that time, Ben Bernake claimed the Fed’s motivation was to help affect credit conditions for households and businesses. He spun it as an initiative of “credit easing.”
Well, despite this lofty rhetoric, the program didn’t help credit become any more accessible for Main Street. In fact, banks were issuing fewer and fewer loans. Although many Fed managers voiced their concerns that this Quantitative Easing wasn’t working, they weren’t listened to.
QE wasn’t providing any relief for Main Street, but was only providing benefits to Wall Street. The banks enjoyed lower cost of making loans and huge capital gains on the rising values of their securities holdings.
In 2009, Wall Street had its most profitable year EVER, and 2010 looked like it was set to be the same.
Then, only a few months later, the Fed announced QE2, a new round of bond buying. As Mr. Huszar mentions in his Wall Street Journal article, Germany’s finance minister called the decision “clueless.”
So, where are we today? The Fed continues to buy about $85 billion in bonds each month without any evidence of stopping or tapering. Over these last five years, they’ve purchased about $4 trillion in bonds. Without a doubt, this has been the largest financial intervention in the history of mankind.
And sadly, it hasn’t generated more than a few percentage points of U.S. growth.
The bottom line is that QE has only helped the banks stay in business and rake in record profits. It has done nothing positive for Main Street.
The record profits came directly from the Fed printing money out of thin air and giving it to the banks. There has been no social benefits provided to any of us, other than helping to prevent the big banks from imploding and destroying the global economy.
But ultimately, it’s just an illusion, and very few people see it for what it really is. It’s just not possible to print real wealth out of thin air.
Printing money does not create any wealth. All that happens is that everyone loses more and more of the value of their money. And in the end, faith in the currency is lost, and the currency collapses.
And that’s where I believe this will all end.
All of this Fed shenanigans will continue until it blows up in their face. And the recovery will be long and extremely painful.
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Also, I would love for you to chime in on this and tell me what you think
Your theory is an interesting one Justin albeit a little uniformed.
If this was the case then you would NEVER have market corrections or crashes. The Fed would simply jump in an save the day every time. However history clearly states with startling evidence that the Fed has no predictive powers at all and very few reactive powers.
Since it’s inception in 1913 the Fed has debased the currency a little over 95% in a very short period of time by creating credit. It’s mandate by itself is contra to free markets by stimulating a 2% per annum rate of inflation or in other words artificial wealth. Inflation is the hidden tax or nightmare that has caused the destruction of our standard of living. In it’s most aggressive phases it is the very reason bubbles form.
If the Fed had the powers that it thinks it has it would be able to control employment, deflation and inflationary forces much more efficiently than it thinks it does. In time we will see how history portrays the Fed and other central banks. I doubt it will be very favorable.
Spot on mate!! The only thing I disagree on is that there will be no way for a recovery. The USD will so worthless, and so much in debt, the only way out will be to disban the currency!
Hi Larry,
I am sure you are aware of Executive order
12631, which created the Plunge Protection team ( signed into law in 1988 by Ronald Reagan) and has been manipulating the markets ever sense..
Quite the study in market manipulation..
In your analysis you fail to suggest what were or are the alternatives to QE… You seem to disregard that the consequences of the crisis are already long and painful. Without QE the entire system would have imploded by now…
good article. so if people are aware of this manipulation, why is it that gold keeps going down instead of going up, with all of this fake money!!! Don’t you think it makes sense to buy gold for now until this bubble pops?
The bankers never make pure game
I THINK YOUR ARE RIGHT ON, AND T WILL BE VERY BAD WHEN THE—- HITS THE PEOPLE
so it took you this long to figure it out? the fed has been manipulating everything thing since it was formed. it was formed on the basis of manipulation. its a complete fraud system. tell me which other country has a federal reserve that lends money to the treasury? tomorrow even if US defaults nobody going to see a dime coz the fed owns everything.
Fed is manipulating I also think so, but very important point is that up to what time they can do so.
does the fed earn income on the money it prints? if so, how much, and is this not a conflict addressable in a civil class action?
also, what evidence do you have of the market manipulation?
We are pawns in a chess game. The Fed like alot of government departments in all countries, will only let us know what they want us to know. There are alot that goes on behind closed doors we don’t know about. Just 1 point, China, India have been buying bucket loads of gold as a hedge off the US, and as the price falls, Gold is being devalued. I guess the price of gold is determined by the open market?, or is it?