There is an Executive Order from the 1980s which allows market
manipulation and some interesting consequences, if, it is being used in this day and age. Market manipulation is happening. It is truth. Someone
behind the scenes is pulling strings to make a ton of money.
But who is really behind this manipulation? The answer isn’t simple to say the
least.
by Virginia Nicholson
Here is an explanation of one possible market manipulator:
Executive Order 12631 March 18th, 1988
This order, signed by Ronald Reagan, created the Working Group on Financial Markets or WGFM. Its purpose is, "Recognizing the goals of enhancing the
integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence."
What does that statement
really mean ?
In layman's terms: The WGFM is going to mess with the markets, to make them look nice.
Why? So investors will not panic and cause a market crash in a time of crisis.
The people in the WGFM are predictable... They consist of the leaders in government finance:
(1) Secretary of the Treasury
(2) The Chairman of the Board of Governors of the Federal Reserve System
(3) The Chairman of the Securities and Exchange Commission
(4) The Chairman of the Commodity Futures Trading Commission
Our current members are as follows:
(1) Timothy Geithner
(2) Ben S. Bernanke
(3) William H. Donaldson
(4) Acting Chairman Michael Dunn
Most will recognize the top two members, as they have been in the media for various issues in the last 10 months. These men are extremely active in
our current economy.
Karl Denninger of The Market Ticker goes into further detail on the powers of the WGFM in the stock market.
"There is a significant difference between existing and what a lot of people think (The WGFM) does. Which is this whole concept of they come into the
market and buy index futures whenever they want to goose the stock market. There is a problem with doing that... the futures market and the index
market is a zero sum game... for every winner in the futures market there is a loser. For every loser there is a winner.
So If I come into the futures market with an order to buy 20 million dollars worth of index futures or 20 billion dollars worth of index futures for
that matter, then at some point those index futures have to be either sold or they expire and when they are sold obviously there is a closing
transaction that is the exact opposite effect of whatever the original transaction is."
Denninger went on to say that it is almost impossible to inflate the market without a trader knowing. Once a trader noticed someone willing to throw
away as much money into the market to keep it as high as possible, the jig would be up.
Recently the Federal Reserve announced it would be buying our own Treasuries to boost the economy, basically buying our own debt.
Federal Reserve to buy Treasuries to boost economy
This action taken by the Federal Reserve is called Quantitative Easing.
It is: "A monetary policy tool, in which a central bank—like the Federal Reserve, floods the market with cash, in an attempt to stimulate an
economy in recession and to stave off deflation."
Quantitative Easing is market manipulation at its most public.
When a country buys its own debt from itself, it is not a good sign. It is considered by many to be the last policy to avoid a repeat of 1929.
The simplest way to describe quantitative easing is this:
The United States is using its credit cards, to pay off its credit cards, without bringing any of the money earned from its job into the mix.
Michael Rozeff, a retired Professor of Finance, describes the technical explanation as such:
“It is a central bank’s "purchase" of government securities (bills, notes, bonds) directly from the government.
The term 'purchase' does not capture the essence of the actual transaction.
The government issues say, a Treasury bill. This is a liability of the government.
The central bank takes this bill and holds it as its asset. It provides the government with its own official and legal State money or notes (or a
checking account for such).
The central bank accounts for this note issue as its liability. It is an IOU transferred to the government (or State).
In the usual setup, these notes cannot be redeemed for anything. That is, if the government brought these notes to the central bank, it would get
nothing in return for them. Hence, the money issue is not really a liability of the central bank. The government accounts for the receipt of these
central bank notes as an asset.
The net result of the transaction is that the government succeeds in transforming a liability (its issue of Treasury bills) into a new asset (its
holding of central bank notes).
If a person issues a debt and receives an asset from someone else in return, there is no new asset involved. If a baker issues an IOU and gets an oven
in return, the oven is not an increment to the stock of ovens in the world, but, when the government issues its IOU (the Treasury bill), it gets an
entirely new asset, the central bank money.
In the U.S., the government pays interest to the FED that holds the bill, but the FED returns this interest to the Treasury. Hence, the Treasury bill
held by the FED is really no liability to the government. The net result of the transaction is that the government has a new asset that it can spend,
namely, the FED’s Federal Reserve notes."
Learn more about Quantitative Easing here:
Bruce Krasting, an economist who's appeared on the Fox News channel and worked for Drexel Burnham Lambert, Citicorp, Credit Suisse and Irving Trust
Corp, gives more insight into quantitative easing and it's dangers.
"Quantitative easing was an important step in stopping the slide in the economy last fall. It was an emergency measure. The emergency is over.
Quantitative easing is now a problem; it is no longer a solution.
It is extremely unlikely that the Fed will recognize this reality in the near term. It is more likely that they will vote to expand their purchases of
government securities as was indicated in the Fed’s recent minutes.
Mr. Bernanke actually believes that he can control the market. This observer
believes that he is in for a rude awakening.
When forecasting interest rates, there are normally three possibilities. Either rates can remain stable or they can go up or down.
Today there are only two possibilities. Rates can remain stable or they can go up. There is no risk that they will go down.
In the short run it is possible that the rapid run up in rates in the last two months will result in a few months of relative stability. However rates
are going to have to move significantly higher by the end of this year. My guess is that the next leg up will happen in September. If I am wrong it
will happen by the end of the month. Either way those green shoots will turn brown by autumn."
There is evidence that quantitative easing has actually made the situation worse.
Take this chart for example:
Notice the extreme jump from 4.84% to 6.52% on 30 year fixed mortgage rates.
This means, "Bluntly: Bernanke's screwing around just cost you 15% of the value of your house in one day." said Deninnger, "(his) tampering has
done nothing but made the problem worse!"
Reduced spaces between paragraphs (as requested)
[edit on 22/8/09 by masqua]
