Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Fed Laundering Money through the Big Banks Into the Stock Market

Politics / Market Manipulation Aug 04, 2009 - 02:31 AM GMT

By: Mike_Whitney

Politics

Best Financial Markets Analysis ArticleFed Chairman Ben Bernanke is a man who knows how Washington works and uses that knowledge to great effect.  His appearances on Capital Hill are always worth watching. He sits politely with his hands folded in front of him playing the bashful professor while one one preening congressman after another makes a fool out of themself. In contrast, Bernanke looks like a modest and thoughtful academic faithfully upholding the public's trust.  But things aren't always as they seem. The Fed chief is sticking it to the American people big-time and no one seems to have any idea of what's really going on. Former hedge fund manager Andy Kessler sums it up in a recent Wall Street Journal article, "The Bernanke Market". Here's a clip:


"By buying U.S. Treasuries and mortgages to increase the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn't put money directly into the stock market but he didn't have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. Stock and bond funds saw net inflows of close to $150 billion since January. The dollars he cranked out didn't go into the hard economy, but instead into tradable assets. In other words, Ben Bernanke has been the market."

What does it mean?

It means the revered professor Bernanke figured out a way to circumvent Congress and dump more than a trillion dollars into the stock market by laundering the money through the big banks and other failing financial institutions. As Kessler suggests, Bernanke knew the liquidity would pop up in the equities market, thus, building the equity position of the banks so they wouldn't have to grovel to Congress for another TARP-like bailout. Bernanke's actions demonstrate his contempt for the democratic process. The Fed sees itself as a government-unto-itself.

Over at Zero Hedge, Tyler Durden did the math and figured that the recent 45% surge in the S&P 500 had nothing to do with the fictional economic "recovery", but was just more of the Fed's hanky panky. Durden noticed that the money that's been sluicing into stocks hasn't (correspondingly) depleted the money markets. That's the clue that led him to the truth about Bernanke's 6 month stock rally.

Zero Hedge: "Most interesting is the correlation between Money Market totals and the listed stock value since the March lows: a $2.7 trillion move in equities was accompanied by a less than $400 billion reduction in Money Market accounts!

Where, may we ask, did the balance of $2.3 trillion in purchasing power come from? Why the Federal Reserve of course, which directly and indirectly subsidized U.S. banks (and foreign ones through liquidity swaps) for roughly that amount. Apparently these banks promptly went on a buying spree to raise the all important equity market, so that the U.S. consumer who net equity was almost negative on March 31, could have some semblance of confidence back and would go ahead and max out his credit card. Alas, as one can see in the money multiplier and velocity of money metrics, U.S. consumers couldn't care less about leveraging themselves any more."

So, the magical "Green Shoots" stock market rally was fueled by a mere $400 billion from the money markets. The rest ($2.3 trillion) was main-lined into the market via  Bernanke's quantitative easing (QE) program, of which Krugman and others speak so highly.

   Wouldn't you like to know if Bernanke sat down with G-Sax and JPM executives and mapped out the details of this swindle before the printing presses ever started rolling?

So, how long can this kind of fakery go on before our creditors grow weary of dealing with chiselers and stop buying US Treasuries altogether? Here's a blurp from Friday's Wall Street Journal on that very topic:

"Shaky auctions of Treasury notes this week reignited concerns about whether the government can attract buyers from China and elsewhere to soak up trillions in new debt.

A fuse was lit this week when traders noted China's apparent absence from direct participation in two Treasury bond auctions. While China may have bought Treasurys just before the auctions, market participants read the country's actions as a worrying sign that China and other foreign investors may be ratcheting back purchases at a time when the U.S. is seeking to fund a $1.8 trillion budget deficit.

This week alone, the U.S. deluged the bond market with more than $200 billion in record-size sales. The U.S. has had little trouble finding buyers in recent months. But that demand is fading, and the Treasury market has become volatile."

Uncle Sam is goosing the bond market just like he is the stock market. Take a look at Treasury's latest bit of chicanery which was stuffed in the back pages of the Wall Street Journal back in June:

"The sudden increase in demand by foreign buyers for Treasurys, hailed as proof that the world's central banks are still willing to help absorb the avalanche of supply, mightn't be all that it seems.

When the government sells bonds, traders typically look at a group of buyers called indirect bidders, which includes foreign central banks, to divine overseas demand for U.S. debt. That demand has been rising recently, giving comfort to investors that foreign buyers will continue to finance the U.S.'s budget deficit.

But in a little-noticed switch on June 1, the Treasury changed the way it accounts for indirect bids, putting more buyers under that umbrella and boosting the portion of recent Treasury sales that the market perceived were being bought by foreigners." ("Is foreign Demand as Solid as it Looks, Min zeng)

Nice touch, eh? So, someone doesn't want you and me to know when foreign demand drops off a cliff, so they just bend-and-twist the definitions so they meet the Fed's requirements.  How's that for transparency?. Apparently, Bernanke et al. don't believe the Chinese have translators who can make sense of all this subterfuge. That may be a miscalculation, however, given recent rumblings from the Orient.

By Mike Whitney

Email: fergiewhitney@msn.com

Mike is a well respected freelance writer living in Washington state, interested in politics and economics from a libertarian perspective.

Mike Whitney Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

John Sparacio
05 Aug 09, 22:01
The Bubble Will Burst

This is a great article!

Also read for another viwe - http://www.gather.com/viewArticle.action?articleId=281474977763967


liam
07 Aug 09, 06:14
hyperinflation

if this article is true then inflation or hyperinflation has already started. the bank of England has started printing money again. so has the ECB and we will see the fed follow suit again following englands lead, they have no choice if they dont we will have an immediate deflationary recession which will kill our credit based economy and see us all poverized over night .The bubble may not burst for a long time in fact we may see a huge asset rise.or a fall with the next correction(only goldman knows). if the correction comes at all with all this paper money now coming into the system. The dollar is set to fall below 78 and when it does it will drift lower. Any one who has not bought gold should load up . Gold is now being bought as a currency. Its is the only one which has a limited supply. It does not take a genius to figure out what the average investor should be buying to hedge inflation.

goldman and hsbc who are the custodians of SLV and GLD, They hold together the largest gold and silver shorts EVER. the rumour is they are using the SLV and GLD reserves to short gold and silver.Am i missing something here ,Only a dumbo would trust those guys with their gold or should I say paper gold.


Bob Veigel
10 Aug 09, 13:46
Fed Laundering and/or The Fed Scam.

Call it what you like. It is deceitful and damaging and dangerous to the economy and to America. And it appears that our government (Congress) is saying that what is going on is OK. Enough red lights have been flashing that, if Congress was truly concerned, an audit would have been underway a long time ago. But, even with threats by the Fed to Congress, no action by Congress is underway. I call it collusion between the Fed and our government. What do you call it?



12 Aug 09, 02:26
FED screwing the country

Madoff went to jail for a Ponzi scheme that was infinitesimal compared to the 96 years the FED has been screwing the country !


Tom
27 Aug 09, 00:48
Who stole our Money?

The only real financial crisis of the U.S.A. is hiding in the audit of “The Fed Scam”!

Audit “The Fed Scam” bills HR 1207 must pass in The House and S 604 must pass in The Senate immediately! Any Representative or Senator that does not vote in favor of and support these bills or tries to “water-down” or stall these bills is clearly a Traitor and “Sold Out” the United States of America!

“Few men have virtue to withstand the highest bidder.” --George Washington

Does our government think that we are now here to serve them? Are they out of their minds?

Some of our leaders today have acquired a very “twisted” view of their roles. Do we now have those who can no longer handle the power we entrusted them? Why have they abused and taken advantage of us? Do they no longer think they are accountable to us and believe they can do whatever they please? Our “public servants” have developed a “spirit of insubordination” and have gotten way out of control! This has to stop right now! This is ridiculous! If they do not want to listen to and serve us wholeheartedly, we no longer need them! “We need to do a major house cleaning immediately! Enough is Enough!

It’s time for “We the People” of the U. S. A. to get VERY ANGRY!

We need to keep a real close eye on all our government “public servant” employees. Our government was set up to serve U.S. and we no longer want any secrets about our money. We no longer want any misguided governmental arrogance directed at us!

This Is A Very Public Matter!

We demand real transparency, with open books and plenty of civilian watchdog czars. Government czars are an insult to the intelligence of the American people! Many of are entrusted government employees are a total disgrace to U.S. They only care about their own best interests!

The most conniving, low life, manipulators in all of history put “The “Fed Scam” together! Since its inception in 1913, “The Fed Scam” has helped to devalue our dollar by 95%. During the recent economic crisis, it has poured TRILLIONS of dollars into the economy with no oversight, has made secret agreements with foreign banks and governments, and has refused to tell Congress or the American Public who is getting our money. They have the power to print it, but it is not their money! This is our money! They are blood-sucking thieves!

End “The Fed Scam” Now! We must never again allow private banks to create or control our money! Why should we pay interest on our money! We must never again allow our “public servants”, to keep any secrets about our money! Our big mistake was to trust our government. They can not be trusted! History has taught us this, over and over again. We have been warned over and over again. Why do you think we have so many economic problems now?

“Congress can revoke central bank’s charter ‘at any time’” --Ron Paul

http://www.tomdavidd.com/blog/

Anybody who supports “The Fed Scam” is clearly a Traitor to “We the People” of the United States of America!

“We can all commiserate forever about how bad things have been, are, and will continue to be. But I don’t think that we can afford to wait for elections in order to have our say about putting a stop to this madness. Enough, already! Let’s start talking treason, prison, and death penalties for all malefactors in government who subvert, ignore, skirt and otherwise trash the Constitution of these United States of America. Those who have sworn to uphold the Constitution and have then ignored their oaths of office are guilty of perjury and malfeasance in office.” –Stephen A. Langford (personal communication to this author)


Tom Dowling
27 Aug 09, 00:50
Fed Chairman Ben Bernanke stole our Money!

The only real financial crisis of the U.S.A. is hiding in the audit of “The Fed Scam”!

Audit “The Fed Scam” bills HR 1207 must pass in The House and S 604 must pass in The Senate immediately! Any Representative or Senator that does not vote in favor of and support these bills or tries to “water-down” or stall these bills is clearly a Traitor and “Sold Out” the United States of America!

“Few men have virtue to withstand the highest bidder.” --George Washington

Does our government think that we are now here to serve them? Are they out of their minds?

Some of our leaders today have acquired a very “twisted” view of their roles. Do we now have those who can no longer handle the power we entrusted them? Why have they abused and taken advantage of us? Do they no longer think they are accountable to us and believe they can do whatever they please? Our “public servants” have developed a “spirit of insubordination” and have gotten way out of control! This has to stop right now! This is ridiculous! If they do not want to listen to and serve us wholeheartedly, we no longer need them! “We need to do a major house cleaning immediately! Enough is Enough!

It’s time for “We the People” of the U. S. A. to get VERY ANGRY!

We need to keep a real close eye on all our government “public servant” employees. Our government was set up to serve U.S. and we no longer want any secrets about our money. We no longer want any misguided governmental arrogance directed at us!

This Is A Very Public Matter!

We demand real transparency, with open books and plenty of civilian watchdog czars. Government czars are an insult to the intelligence of the American people! Many of are entrusted government employees are a total disgrace to U.S. They only care about their own best interests!

The most conniving, low life, manipulators in all of history put “The “Fed Scam” together! Since its inception in 1913, “The Fed Scam” has helped to devalue our dollar by 95%. During the recent economic crisis, it has poured TRILLIONS of dollars into the economy with no oversight, has made secret agreements with foreign banks and governments, and has refused to tell Congress or the American Public who is getting our money. They have the power to print it, but it is not their money! This is our money! They are blood-sucking thieves!

End “The Fed Scam” Now! We must never again allow private banks to create or control our money! Why should we pay interest on our money! We must never again allow our “public servants”, to keep any secrets about our money! Our big mistake was to trust our government. They can not be trusted! History has taught us this, over and over again. We have been warned over and over again. Why do you think we have so many economic problems now?

“Congress can revoke central bank’s charter ‘at any time’” --Ron Paul

http://www.tomdavidd.com/blog/

Anybody who supports “The Fed Scam” is clearly a Traitor to “We the People” of the United States of America!

“We can all commiserate forever about how bad things have been, are, and will continue to be. But I don’t think that we can afford to wait for elections in order to have our say about putting a stop to this madness. Enough, already! Let’s start talking treason, prison, and death penalties for all malefactors in government who subvert, ignore, skirt and otherwise trash the Constitution of these United States of America. Those who have sworn to uphold the Constitution and have then ignored their oaths of office are guilty of perjury and malfeasance in office.” –Stephen A. Langford (personal communication to this author)


William J Pyles
30 Nov 11, 10:17
Fed helps market

The core of economic happenings is not about what is happening put about knowing what is happening. When people learn the real actions of the Fed (which have been happening guised in transfers, bail outs and economic shadows of approved actions) our economic values will be subject to a market more confused by what is legal, moral or generally accepted. The remedies will be very interesting!


Post Comment

Only logged in users are allowed to post comments. Register/ Log in