The Fed is short selling the market.. As I put in my thread earlier..
Check it out yourself!
Consumers should expect a deep recession, triggered by the "stealth methodology" of the Federal Reserve to "depress" the market even while
lowering interest rates in an ostensible effort to stimulate economic growth, an economic analyst is charging.
"The Federal Reserve is directly involved in manipulating the stock market," said economic analyst Mike Bolser in a telephone interview with WND
The New York Stock Exchange finished the day down 108.03 points, closing at 12,635.16, much as Bolser predicted, despite recent emergency Fed rate
cuts of 1.25 percentage points aimed at stimulating the economy.
"Fed wants the Dow Jones Industrial Average and other financial indicators to descend in a managed way," Bolser said. "The Fed wants to drive the
DJIA toward the 8,000 level, or below, in order to help create a deep recession which will have the effect of slowing consumption across the board,
and dampening the otherwise harmful effects of inflation.
"A falling DOW is only one element of the recession effects of the excessive Fed-created housing and credit creation, whose bubbles are now
bursting," he added.
"Without this recession, we would be on quick trip to hyper-inflation," Bolser, the author of an internationally followed newsletter published in
conjunction with his InterventionalAnalysis.com website, said, "and the Fed wants to prevent this."
(Story continues below)
In his twice-daily subscription newsletter, Bolser has devised a quantitative methodology for utilizing Federal Reserve repurchase agreements to
predict upward and downward movements of the DJIA, measured on a 30-day moving average.
Yesterday, Bolser noted the Fed added $18 billion to repurchase agreements, edging the pool up to a total of $153.158 billion in unexpired temporary
Repurchase agreements involve a sophisticated use of government securities issued every day by the Fed, but little understood or followed, even by
A repurchase agreement, as defined by the Fed, is a government security offered by the federal government to a small list of specified primary
government securities dealers, for a limited period of time, usually 28 days or less, with overnight return being the most common.
The government securities are "rented" by the primary dealers and they can be added to the primary dealer's portfolio or collateralized and then
used in the open market to implement the Fed's open market policy.
At the end of the repurchase agreement, the Fed obligates itself to take back the government securities from the primary dealers, effectively
canceling the contract.
Meanwhile, while holding the government securities let out by the Fed in the repo agreement, primary dealers are free to utilize the liquidity
provided by the repurchase agreement to manipulate the economy in accordance with the Fed's true monetary policy, whether publicly declared or
Primary dealers use the funds provided by the government securities they hold under the repurchase agreements to buy dollar exchange futures
contracts, stock market futures, or to buy commodities contracts, including gold mining shares, all in accord with implementing Federal Reserve
monetary policy to manipulate currency, commodity and stock markets up or down, depending what goals the Fed wants to accomplish at any particular
time, the economist alleges.
Over the past several months, however, the Fed has implemented a policy to issue smaller amounts of daily repurchase agreements, with the goal of
reducing the total pool of repurchase agreements available to the Fed's short list of 20 banks that are qualified by the Fed to serve as primary
government securities dealers participating in the Fed's Open Market Operations.
Only the 20 banks specified in the Federal Reserve Bank of New York's list of primary government securities dealers are allowed to participate in Fed
"The primary government security dealer banks are like a private club," Bolser told WND. "You get to stay in the club as long as you take the
repurchase agreements and enter the markets to implement Fed monetary policy the way the Fed wants it implemented. Violate the unspoken rules, and you
risk being thrown out of the club."
Yesterday's $18 billion addition to the repurchase agreement pool caused the total amount of the outstanding repurchase agreement pool to remain
below the DJIA 30-day moving average in a clear trend.
Bolser used this data to predict the Fed was manipulating the stock market lower, a controversial prediction when most economists see the Fed's
emergency actions to reduce the target Fed Funds rate 1.25 percentage points lower over an eight-day period that ended with last Wednesday's meeting
of the Federal Open Market Committee.
"Ultimately, the government is in the business of inflating the dollar," Bolser said, "so the Fed is trying to engineer a recession, in order to
cushion the pernicious effects of its own inflation."
"In my view, the government intentionally desires a deep recession not unlike that of the 1930s," he continued. "The Fed, however, dissembles,
attempting to display the opposite impression with its rate cuts."
"Cutting rates will not boost the economy in an environment where the credit bubble has burst and banks are afraid to lend," he explained. "But
decreasing the repurchase pool will push the economy down, especially when the primary banks execute monetary policy in accordance with the wishes of
the Fed to short the market with future contracts that push the indices down."
Bolser argued the Fed's ability to manipulate the market by increasing or decreasing the pool of available repurchase agreements amounts to a
"stealth methodology" where the Fed can now depress the market, while implementing a policy of lowering interest rates, which most economists would
see as trying to stimulate economic growth and the stock market.
"You have to remember the primary goal of the Fed is to support the bond market, which the Fed has done for quarter century," Bolser stressed. "The
Fed needs a strong bond market so the Treasury can sell the enormous amount of Treasury securities, especially to China, that we need to sell to
finance what this year may be as large as a $400 billion dollar budget deficit calculated on a cash basis."
"As a result, the friend of the Fed is the bond speculator," he added.
Among the U.S. banks and securities firms currently on the list are Bank of America Securities, Cantor Fitzgerald, Countrywide Securities, Bear
Stearns, Daiwa Securities America, Goldman Sachs, Greenwich Capital Markets, HSBC Securities (USA), J.P. Morgan Securities, Lehman Brothers, Merrill
Lynch Government Securities, and Morgan Stanley.
Also on the list are France's BNP Paribas Securities, Great Britain's Barclays Capital, Switzerland's Credit Suisse Securities, Japan's Mizuho
Securities, and Germany's Dresden Kleinwort Wasserstein Securities.
"These dealers are the foot soldiers of the Fed, as it implements monetary policy," Bolser said.
Studying Bolser’s "Repos/DOW" chart from Dec. 7, 2007, through yesterday, a broad correlation between the downward movement in the Fed repurchase
agreements pool totals and the DJIA as seen by tracking the 30-day moving average is clear.
"With this strategy, the Fed hopes we won't experience the extreme 'stag-flation' we had in the late-1970s," he argues. "The Fed hopes to induce
a recession to manage downward stock prices and commodity prices, including oil, gold, copper, and lumber, as well as the overall consumer demand for
"Stag-flation" is an unusual economic situation combined when economic stagnation is combined with inflation, much as the economy is currently
experiencing, such that economists fear we are entering a recession while food and energy prices continue to rise sharply.
[edit on 10-10-2008 by GrndLkNatv]