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Fed Responds To Allegations Of POMO-based Stock Market Manipulation
It is no secret that the Federal Reserve, and its now semi-daily interventions in market liquidity via ever increasing Permanent Open Market Operations (aka POMOs, next on deck - Wednesday and Friday for a total of about $7-8 billion), is rather hell bent on creating the impression that the economy is alive and well courtesy of a ramping stock market (when the causal relationship is always the other way around, but who cares). A reader got so disgusted by the POMO ramp game, he sent in an angry letter to Brian Sack's henchmen. Here is the Fed's response.
Dear Mr. (removed to maintain privacy):
Thank you for your recent correspondence in which you expressed your concerns about the Federal Reserve's influence on the stock market.
The Federal Reserve monitors all sectors of the economy, so that we can be prepared when crises arise. It is within this context that the Chairman is often called by Congress to offer his views on many issues that may or may not be directly related to monetary policy. I want to assure you that the Federal Reserve's monetary policy actions are not aimed at correcting or influencing any particular market. As you know, the goal of monetary policy is to foster conditions conducive to sustaining sound, noninflationary economic growth over time and policymakers must make decisions that provide the greatest benefit overall.
Again, thank you for writing.
Sincerely,JPD
Board Staff
So if "the Federal Reserve's monetary policy actions are not aimed at correcting or influencing any particular market" is it safe to assume that actions are aimed at "correcting and influencing" all markets in general? Well, the Fed is already rampaging in USTs, Agency securities and FX, would it be too naive to assume equities are for some reason excluded...
As for the whole premise of monetary policy boosting the economy, the picture below explains it best:
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+ 1,000,000,000,000,000
Sorry, I know that sounds like alot but soon it's really only going to be worth about +5.2 in Bernanke 'hella-yeah' points.
I can only hope, one day, that we reach the point you describe. The sooner the better.
Well, two words : PROFIT AND TAKING. + 65 ES points in 2 weeks time. Not bad for a humble trader. Thank God I am not an ECO NO MIST...:=)))
B U L L S H I T !!!
ECONOTRANCER
http://williambanzai7.blogspot.com/2010/09/econotrancer.html
THE APPRENTICE
http://williambanzai7.blogspot.com/2010/09/apprentice.html
Actually, get long the roach motel
market so you can get your own little piece of the
scam. Really. You can get out. HFT
traders are standing by to give you a
bid. Really....ask Robo.
Course, the pathetic volume sez there are
an ever decreasing number of bigger
fools but that don't matter.
The guy in the middle doesn't look so good.
'monetary policy actions are not aimed at correcting or influencing any particular market. As you know, the goal of monetary policy is to foster conditions conducive to sustaining sound, noninflationary economic growth over time and.." -- is that what the Fed have been doing, this is sound economic growth is it? They've been enriching the rich and impoverishing the poor, until they've been broken. It's the same business model as a large record company.
If anyone wants a ball park figure of the real cost of the QE operations that lie ahead over the years to come,there is a good article in yesterdays Daily Telegraph by Ambrose Evans Pritchard,the figure?Oh,over a cheeky bottle of Mersault Premier Crus - a mere $30 trillion,pity they don't cover this kind of thing in the MSM.I'm sure it won't be inflationary though,the nice man from the Fed said it wouldn't didn't he?
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100007647/qe2-in-round-trillions/
That's funny,... you know, Ben and Timmy have a sense of humor too. Just who came up with 'Maiden Lane'.... Everyone knows what a Maiden is.... and Lane is a euphamism for 'Lain'.... as in post virginity 'Lain'.... The American working stiff is the Maiden,... and guess who got,... well,... guess who lost her virginity,... at the hands of Ben and Jerr,... er,.. Timmy. Dealing debt out of their ice cream cart.
Here's some good POMO articles:
http://www.chrismartenson.com/martensoninsider/martenson-insider-fed-pomo-activity-and-stock-markethttp://www.zerohedge.com/article/fed-ramp-stocks-september-thanks-front-loaded-pomo-schedule
http://www.zerohedge.com/article/guest-post-grand-unified-theory-market-manipulation This is a very interesting response from the Fed in that it is a non-denial denial. It is almost tacit admission that the Fed will do whatever necessary to reflate all markets. After all, what constitutes "crisis"? Any form of deflation can foster crisis in this economy since inflating valuations are necessary when debt burdens are too great as is the case nowadays. This is where Robert Prechter's "All The Same Market" hypothesis is relevant:
http://www.youtube.com/watch?v=JLejfG460WQ http://www.traders-talk.com/mb2/index.php?showtopic=109108
The struggle is between inflation and deflation. The Fed and government are pushing for inflation. The pressure in the real economy is deflationary as the overall credit bubble continues to pop. Interestingly, then, in some sense the struggle is between public and private control of human affairs. Where private control failed, government control is seeking to "bailout" the system. This is why one of my favorite quotes is from William Penn: "Men must be governed by God, or they will be ruled by tyrants." If We The People can not conduct thei pursuit of "self interest" in a responsible manner in the context of decentralized democracy, then our freedom is usurped by central authority and effective autocracy is established in the name of our best "common interest". BB and Obama are perfect representatives of folk who think their role in governance is to effectively "think for the people" and slyly run the entire show for everyone else's own good. The "Tea Party" phenomenon of popular opinion is the spirit of our Founding Fathers rising to the fore in disgust at the rise of central authority in governing America. Meanwhile, the sheeple and private interests of our society continue to behave like spoiled, selfish children happy to be bailed out after every mischievous, irresponsible mistake that undermines the welfare of the family-cum-nation. Everyone wants a wise 'father figure', AKA responsible autocrat, to fix the messes they continue to make since they behave like selfish children instead of responsible adults. My suggestion is that We The People grow up and stick with freedom instead of succumbing to the temptation of effective tyranny. The Fed has no right (literally no legal authority) to intervene in what were once free markets where price discovery to correct wrongdoing is an essential function. This does nothing to clean out the destructive weeds that have grown in the garden of American free enterprise, particularly with regard to financial excesses by the most undeserving, corrupt, selfish, irresponsible 'money changers' at the heart of the economic crisis now underway. The financial elite that have looted and wrecked our economy should be behind bars, not enjoying multi-trillion dollar bailouts so they can keep their maseratis and continue paying themselves multi-million dollar bonuses. Does crony capitalism get any more obscene than what we are witnessing today?Tyler,
Here is the perfect 185K/yr position for you:
http://jobview.usajobs.gov/GetJob.aspx?JobID=90843454
The letter started with "Dear Mr. Sucker".
And ended with the initials JPD - Just Printing Department.
Is this a Monty Python sketch? I admit, I never appreciated their brand of humor.
Hey CD- Anything and Everything??? Not til I see UberCollector9000 with 80,000,000 feedbacks buying my shit on Ebay! At least if they bought on Ebay it would help people... CB
Loan me a billion or so, but you get to hold on to it as long as you pay me 3% interest. Talk nice to me or invite me to a weekend at Bennie's, and I might take 2.75%.
CD;
It would seem that a "paper market" can and will be kept at any arbitrary level by the PPT (apply whatever name you wish) using "paper money" which is available to the manipulators in any arbitrarily large amounts ...
Good luck!
The Dow has been in a bubble since its huge rally on September 1. Right now it looks like it is in for a 250 point correction. This Fed story reinforces the perception that there is some concerted government effort to pump the markets going into the November elections. I think its reasonable to wonder the extent this disseminates out into the fascist collusion between the DNC and these large banks they got their political hooks into. I personally think the markets are too big to manipulate very long and the Democrats are overreaching here.
Art Cashin's comments the other day that yesterday's breakout above resistance would instigate a short covering rally seem prescient. That looks done, and his observation that the Autumnal Equinox tomorrow may be critical rings true. Things could get very messy when everybody wants out of a thin market at the same time and the bears start piling on.
You can only pump a bubble so long, and unless the Fed comes up with plan B, it looks like somebody's about to stick a fork in this one.
POMO BONG
http://williambanzai7.blogspot.com/2010/09/pomo-bong.html
ROFLMAO!!!
The SM and BondMarket (BM) are two of the more visible illusions of future storage. One thing they both have in common, is that they are articles of faith, or confidence.
The pump only runs (in the fiat system) when you can CON/FAITH the herd to store their future excess, and then perform an un-natural disaster where the herd accepts their own fault for ending at a loss.
The asset value of bonds can no longer rise (0 % interest). This market is ripe for harvest. The SM, after having performed its initial function of capitalizing a risk venture, performs an entirely different function in the casino domain. The faith in the casino is severely eroded by the HFTs and the blatant front-running.
But whatever is done, the herd cannot be allowed to wake up.
Falling off the mental storage (of future wealth) into the physical storage of wealth (gold, silver, whiskey, tools) cannot be allowed to occur. The amount of current mental perceived wealth doesn't fit in the physical world. At least not without a sever adjustment in price ratios. Calamity.
Uncle SoAwfullyMessed-up... - charged with "nation abuse".
Yeah, I noticed the same thing! They are trotting out the showhorse, maybe hoping that we make a subconcious association between the false prosperity of the nineties and President Obama's as-yet-unfulfilled promises for hope and change? It is odd seeing former president Clinton socializing with the talking heads when it's not a presidential election year. Shows the Dems are very nervous.
Yeah, I noticed the same thing! They are trotting out the showhorse, maybe hoping that we make a subconcious association between the false prosperity of the nineties and President Obama's as-yet-unfulfilled promises for hope and change? It is odd seeing former president Clinton socializing with the talking heads when it's not a presidential election year. Shows the Dems are very nervous.
Apologies to all for the double post. Faux pas.
PS-In the name of national security, please no more questons or we will eliminate you with an algo infested with a brain virus.
Thank-you in advance,
Ben
Gawd, I'm really having a good morning. The posting was supposed to be a reply to aerojet's comment.
What I'd really like to know is WHO writes a letter to the FED and has so much weight, that they actually get a response?
And to top it off, WHO is that person that also reads ZH?
Is not me, I never won the academy award. I should have been nominated by my own standards but hey, they made a mistake.
So, who reads ZH and gets a response from the FED? Which category were they awarded for?
Whoever you are, if you're planning to make a movie about the GFC.. call me.
I have to admit, it was me.
That was quite the quaint form letter. Just hit the macro key and then print.
USSA
Bank of England tells of secret £62bn loan to save RBS and HBOS
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6646923/Bank-of-England-tells-of-secret-62bn-loan-to-save-RBS-and-HBOS.html
Bank of England advisers not told about secret £62bn loan to HBOS
http://www.guardian.co.uk/business/2009/dec/03/bank-england-secret-loan-hbos
Bank gave RBS and HBOS 'secret' £62bn loan
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6929451.ece
Fed Refuses to Disclose Recipients of $2 Trillion
http://www.bloomberg.com/apps/news?pid=20601109&sid=apx7XNLnZZlc
Fed Fights Request To Disclose Who Got $2 Trillion In Bailouts
http://www.istockanalyst.com/article/viewarticle/articleid/3775032
Is Obama manipulating the stock market?
Economist claims president 'jawboning' economy to boost Dow
http://www.wnd.com/index.php?fa=PAGE.view&pageId=92100
VIDEO: Federal Reserve Manipulating Stock Prices?
http://www.chartingstocks.net/2009/09/video-federal-reserve-manipulating-stock-prices/
Does The Government Actually Manipulate The Stock Market?
http://www.businessinsider.com/does-the-government-actually-manipulate-the-stock-market-2010-2
Bob Prechter did a piece on Yahoo Tech Ticker, explaining why he is even MORE bearish lately. For those of us who can't figure out his fractal based theories, all we need to know is that a) this is an election year b) the Fed is ramping up the market to please their bosses c) Wall Street doesn't care about employment, earnings, or nuclear war. They just want their employees in Washington to show them the money.
I'm out of zombieland and living in Costa Rica. I'm discharging debt and instructing 3rd party interlopers to get out of my financial affairs. You don't need to be a superstar to get a response from the "supposed" overlords. Just use the 1933 bankruptcy process. i.e. I sent a pertinent letter to the Office of the Comptroller of the Currency outlining the fraudulent mortgage contract I received in 2003.
The local CEO of Bank of America called me to ask how I wanted my house back (since I had stopped paying my taxes to the bank in 2009, and they tried to foreclose). I told him I'm discharging the debt under UCC.
You can make a difference by just calling their BS. If you owe under color of law, you discharge under color of law. It's that simple.
As far as making a killing off the US downfall, I'm not so sure. Financing and credit is pouring into Latin America. I'm starting a new business down here. High tide raises all boats or something of the sort.
Hey, I'm all for sticking it the banks after they stuck it to my yet-unborn grandchildren with TARP...but how are you not going to jail?
Serious question--would love to replicate it without the jail part.
Are you serious about discharging debt the proper lawful way?
Look up the Uniform Commercial Code on the Cornell Law University website.
Read Article 3 with a Blacks Law dictionary. It says we "human beings" are transmitting utilities. We create money/credit with our signatures.
At birth, our birth certificates are sold to the IMF. We become official DEBTORS. The government creates a Ces qui te trust in our name with all CAPS. This is your "person" corporate fiction. You are now eligible to conduct your activities in commerce. However, you are not educated to know how commerce works. Under law you are even considered an expert, because you write checks and letters every day. However, you are officially a Debtor. The implication is that the IMF is the Creditor, since they bought your birth certificate and gave your credit to the US government.
Fill out a UCC 1 Financing Statement. Claim yourself in ALL CAPS as the CREDITOR of the DEBTOR. You register yourself as the owner of your own productivity and wealth. You are the secured party creditor, not the IMF.
Article 3 describes how all transactions are paper based. You get a presentment (a bill). You accept the presentment for value, and returned for discharge, and settlement of the account. Write those words on the bill. To discharge you must write a piece of paper that says the amount you owe, which is the transfer instrument. Then, you send the presentment, transfer instrument, and a voucher (promise to pay) to the Treasury and then to the company, where you are discharging debt. You use form SF5510 (at the GSA forms library under the Standard forms tab) to signal to the US Treasury that you are setting up a non-cash discharge of debt with a financial institution. Sure, some people make the mistake of assuming they have to pay with their dollars. But hey, that's their problem (a common attitude of Satanist bankers). The UCC does not specify any debt must be discharged with FRNs.
Read about signatures and agency. When you sign indicating you are the agent of the Creditor, you can discharge debt and create the money with your signature at the same time.
Basically, this is how it works. You must stay in compliance with the UCC to avoid dishonor of your debts. They give you fake loans under color of law, you discharge your debt with paper under color of law.
You must do the research to find out why this works correctly. Do your cross-references diligently, because there's so much disinfo on the web.
There are quite a few critical concepts still not covered here. For example, every bit of money you spend is tax. When you send FRNs to the bank to pay for a mortgage, you are contracting with them to be your tax collector. Banks foreclose not so much because you didn't pay money (they know there is no money, and there is no debt), but because you set up the contract with them to be a tax collector on the account and you turned around and stopped paying with FRNs. You became a tax delinquent.
If you had just signed the money coupon they sent you on your first payment and sent it back to them, you would have contracted to discharge with the money order.
The UCC specifies that a company that sends a presentment or bill must also provide the money order or means to discharge the bill. Don't try it with the utility companies. It's the law, but they will cut your utilities anyway.
No, you pay with FRNs which are to be considered as your petty cash account. Then, on your tax return you get the return of your tax by filling out 1099B barter forms for every bit of cash you spent all year long at the grocers, gas station, clothing stores, etc. And I don't mean the sales tax-- every bit of cash you spend is a tax on your income. It gives a whole new meaning to the words Income Tax Return.
If you get credit for a mortgage when you buy a house, use 1099 OID because new money is created.
This has the ring of truth, and matches what I've learned so far. But it raises one huge question that you don't mention.
How can a human live their life free of the endless insanities attached to UCC and the "person" who is not them, but is some wacko fictitious entity in all CAPITAL LETTERS created for the benefit of predators-that-be?
Yes, I can see why many would like to take advantage of the corrupt system created by these predators-that-be vipers: FederalReserve, international gangster-banksters, governments.
But what about the few purely honest folks who have better things to do than memorize 23 trillion pages of bogus UCC/acts/statutes/regulations and other predatory nonesense? How about somewhat who just wants to live as a human being, and focus all their intellect on comprehending the universe, producing what they want and need to live and enjoy life, travel (without licenses, registrations, insurances, permissions, passports, etc), trade real, physical goods with other humans for same, and most of all utterly avoid pretending that fictions are real (fiat money, debt, currencies, all fictitious entities including government, corporations, courts, etc)?
One problem with your approach (while it has huge advantages) is this. It assumes the predators-that-be have some kind of legitimate ethical right to create a system in which productive individuals can be given worthless signatures for the real, physical goods they create. This is the exact same scam (and probably the source-of) fiat currencies, fractional reserve fraudulation, and endless ponzi scams. Even worse, once one "opts-in" to such an open-ended system, how can one complain when he becomes subject to other massively bogus parts of the UCC and other private, corporate "rules", and ends up screwed? You enjoy the advantages, you suffer the disadvantages, no?
In other words, do you also know a way to totally disavow the criminal system these predators-that-be have created, and live the real, honest, ethical, productive life of a natural, healthy, curious, responsible sentient being?
There are two philosophies to deal with this system once you understand what is going on.
"Man on the Land" sovereignty
You file a recission of your signature on the social security contract. You rescind your voter registration. You rescind your driver's license. These are some of the many adhesion contracts that we have signed, unknowingly, to give up our sovereignty. Apparently, there are several forms to rescind your signature on the SS contract that are floating around on the net, and the one posted on the Social Security website is not the most ideal form.
In essence, you opt out of the social security system. You go numberless. In fact, there is no legal requirement for anyone to have a social security number (since social security benefits are not contractual on the part of the government; it's just a service that may be stopped at any time), but the ss number smooths the way for getting a job, opening a bank acount, a driver's license and so forth. There are banks who will service an account without a social security number. Good luck finding them. And there's a way to sign your W2 even without a social. Good luck convincing your new employer.
The sovereignty option is an endless test of endurance, since you don't have standing in commerce. You can't even set up a contract with the DMV to indicate you are a free traveler on the land and don't need a driver's license. What are you going to do when a policeman stops you and you don't have id or registration? You can spend your time writing rescission letters, but they can still put you in jail and throw away the key. You have to know a heck of a lot of the Common Law and the judicial system to maneuver. You'd have to become a private attorney general.
If you have a place to live, and you've reestablished your allodial rights at the BLM, you can barter and trade and use local scripts and FRNs to meet your economic needs. If you are ready to opt out of the big city and live with your neighbors somewhat akin to the turn of the century, you have it made. With prospects of a civil war, we may be headed this way shortly anyway.
Capture the STRAWMAN
This option allows you to take charge of your financial affairs. You file the UCC 1 Financing Statement. You can Accept for value any contract, presentment, or claim against you.
You can discharge debt.
You can send contracts to governmental agencies instructing them how you want your affairs handled. For example, you can send a letter to the Social Security office and instruct them that you are rescinding your signature for cause: the material terms and conditions of the SS contract were not disclosed to you and you restore your rights nunc pro tunc (then as now) as a free being from your time of birth. However, they are to administer your account as retirement with full benefits coming to you under law.
You can set up your own insurance through an indemnity bond and send a contract to the DMV and the Department of Commerce declaring yourself as a Traveler upon the public motor ways, since your vehicle is not used for public transport. You can retrieve the Origin of Manufacture certificate for your vehicle from the Department of Commerce, since you actually own your own vehicle. You have to teach yourself just as much as a private attorney general.
The reason why so many businesses get so big and wealthy is because behind the scenes they get access to our credit without our knowledge. For example, say you send your granny to an assisted living home. For companies that are working FinCap (Financial Capitalism) and LawCap (Law Capitalism), not only do they bill your grandma for services each month, but they access her credit through her social security number and get deposits directly from the Treasury for $800 per month. The form to get this kind of sweetener is posted in the GSA Standard Forms library.
How do you think Warren Buffet runs Geico? He is probably getting premiums in money from people and accessing their social security numbers at the same time for a double dip.
For banks I have no problems using their monetary system and serving them like for like. For my local dentist, I try to pay my bills with money. But the next step would be to get my taxes paid back to me by filling in a 1099B form for the dental bill and send it in with my Income Tax Return form.
Admittedly, taking charge of your financial affairs is a chore, but not much more difficult than paying the bills. You have to train yourself. The PTB have taken our rights because they assume it is too hard for the unwashed masses to understand how to administer their financial affairs.
The lawyers, judges, bankers, and CPAs are aware and mostly trained. They engage in professions that earn so much money that they don't need to use this system. It's wonderful when you are rich, you always have plenty of cash to do anything.
The most important point here is that you are no longer a child, ignorant on how the monetary system works, or a ward of the state, and you are truly in charge of your financial affairs.
This makes me come to two realizations. Our American society could have been the first society where everything was paid for. As taxes on income were recycled each year, your pay would come back to you. Over the years, each person would accumulate the wealth of their own labor.
All it would have taken was an additional class in high school to teach everyone how the monetary system works and how they can work and take care of their well being. It would have been a great equalizer between rich and poor.
Utopia/Dystopia we are on the ragged edge.
"The Federal Reserve monitors all sectors of the economy, so that we can be prepared when crises arise."
bwaaahhahahahhahahhhhaaaaahahahahhah
translation: "The Federal Reserve's all seeing eye in the sky looking at you can read your mind. We are the maker of rules and bender of markets we can cheat you blind.
"We have installed cameras at every corner to deal with fools.
"We want to be prepared to allocate 23.7 trillion usd to bail out our bankster proxies when their nobel prize winning trading strategies go bad."
fuck you benhole.
Question: "is it safe to assume that actions are aimed at "correcting and influencing" all markets in general?"
Answer: Yes!
This answers the question that has been plaguing me in recent weeks. Is the Fed influencing commodity markets/prices?
Answer: Yes!
No wonder commodity prices are skyrocketing and in a bubble like that of 2008!
Thanks for such a great post and the review, I am totally impressed! Keep stuff like this coming!...
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