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Behold: The Federal Reserve's First Plunge Protection Team

Tyler Durden's picture




 

By now everyone knows (even though as recently as several years ago it was a taboo "conspiracy theory") that the Plunge Protection Team is nothing but the traders located on the 9th floor of the New York Fed at 33 Liberty street, which transact either unilterally (because it is within their mandate) when buying (never selling) fixed income securities, or via Citadel when it comes to selling VIX or buying index futures to ramp the market at just the right time and break any bearish momentum. Sadly, with great central planning responsbility comes a great media black out, and no photographers are allowed to see Simon Potter, Kevin Henry et alin action before their Bloomberg terminals and trading turrets.

However, back in the day, when the fate of the global economy wasn't spoon fed to the population as being (erroneously) equivalent to every uptick (and rarely downtick) in the rigged, manipulated market, the Fed had fewer inhibitions about demonstrating its trading desk to the public.

Which is perhaps why the NY Fed has been kind enough to just release a pic of the NY Fed's "Open Market Operations" team - i.e., its last line of defense tasked with preserving the American way of life - as it was first seen in the heat of World War II, some time in 1944. Because when one thinks of the veterans, one must not forget the men and women who quietly held it all together by BTFD.

From the NY Fed:

In the years following World War I, the Federal Reserve Bank of New York began to realize the power of open market operations when purchasing a large number of government securities in the hope it would prevent a recession, and found that the action had a large-scale effect on the financial system. New York Fed president Benjamin Strong hoped to use these operations to show that the monetary system could support a multiple expansion of deposits and credit.

 

During the December 19, 1923 meeting of the Federal Reserve Board, President Strong submitted a statement on open market operations that explained how the New York Fed’s open market policy was affecting the economy. “The volume of open-market holdings with which the reserve banks entered the year 1923 put them in possession of an admirable instrument for testing the degree of dependence of the credit structure upon Federal Reserve bank accommodation.” As a consequence of these new actions taken by the Federal Reserve Bank of New York, the Open Market Investment Committee (OMIC) was formed in early 1923 with the hopes of having the Fed’s two methods of extending credit (rediscount and open market operations) “brought into harmony.”

 

Today, the New York Fed conducts temporary and permanent open market operations to implement monetary policy. Securities purchased through these operations are managed in a portfolio known as the System Open Market Account and are lent on a daily basis through the securities lending program.

Behold: the first Plunge Protection Team. Note the pencil sharpener in the foreground.

(PHOTO: Open Market Trading Room, 1944. Federal Reserve Bank of New York, all rights reserved. No use without prior permission.)

 

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Mon, 06/23/2014 - 14:39 | 4886371 ZerOhead
ZerOhead's picture

Speaking of  plunges...

Polls show new low of only 7% support for Congress as Team Obama informs Americans "No coup for you!"

http://www.gallup.com/poll/171710/public-faith-congress-falls-again-hits...

Mon, 06/23/2014 - 14:41 | 4886397 NotApplicable
NotApplicable's picture

Gee, wasn't it just last week when ZH commenters were arguing over the PPT not existing before 1998?

Mon, 06/23/2014 - 14:43 | 4886407 NOTaREALmerican
NOTaREALmerican's picture

Coulda been the ones who think we had "capitalism" at some point in the distant past. 

Mon, 06/23/2014 - 15:14 | 4886522 sessinpo
sessinpo's picture

NotApplicable     Gee, wasn't it just last week when ZH commenters were arguing over the PPT not existing before 1998?

-----

 NOTaREALmerican   Coulda been the ones who think we had "capitalism" at some point in the distant past.

-----

And probably the same ones that thought that the term NWO was first used by Bush Sr.

 

Mon, 06/23/2014 - 14:44 | 4886412 Freddie
Freddie's picture

Here is a good video of the Egptian people clebrating the end of (Obama's) Muslim Brotherhood in Egypt.

http://www.veteranstoday.com/2014/06/21/how-egyptians-view-muslim-brothe...

The Egyptian Army and people are brave.  Americans and the American military are cowards.

Mon, 06/23/2014 - 14:46 | 4886415 NOTaREALmerican
NOTaREALmerican's picture

Egypt is owned by 10 families. 

Mon, 06/23/2014 - 14:56 | 4886455 NotApplicable
NotApplicable's picture

So that's where those 10 Apaches are going?

Mon, 06/23/2014 - 15:18 | 4886530 sessinpo
sessinpo's picture

NOTaREALmerican    Egypt is owned by 10 families.

---

Once again, proof positive that even after a reset, the top wealthy stay there. Not much changes but the names. Do I begrudge those wealthy? No, I don't buy into class warefare. I just want to dispel the notion that resets get rid of the wealthy and oligarchs. It doesn't.

Mon, 06/23/2014 - 15:28 | 4886571 NOTaREALmerican
NOTaREALmerican's picture

Re;  I just want to dispel the notion that resets get rid of the wealthy and oligarchs.

Agree,   "resets" generally just create an environment for more concentration of wealth, not less. 

Mon, 06/23/2014 - 16:10 | 4886782 detached.amusement
detached.amusement's picture

hence the notion of going french on the matter

Mon, 06/23/2014 - 14:36 | 4886378 pods
pods's picture

Awesome, so basically they were putting their fingers on the scale longer that I have been alive?

pods

Mon, 06/23/2014 - 14:42 | 4886402 NotApplicable
NotApplicable's picture

Those 'Twenties didn't roar by themselves!

Mon, 06/23/2014 - 14:47 | 4886419 Confused
Confused's picture

I wonder why they even bothered? 

 

pods, I hate to say it, but its possible it will continue long after we are all gone. 

Mon, 06/23/2014 - 14:51 | 4886430 NOTaREALmerican
NOTaREALmerican's picture

Could there possible be a system where the largest financial entity wouldn't want to "influence" the markets for the betterment of (uh, well) all mankind?

Mon, 06/23/2014 - 14:58 | 4886464 NotApplicable
NotApplicable's picture

Only if said entity was small enough that my hands can reach around its neck.

Mon, 06/23/2014 - 14:53 | 4886436 pods
pods's picture

It really can continue longer than we think. Certainly longer than those who bet against it can remain solvent.

As LoP says, it is about CONfidence.  And that is a fleeting thing.  If confidence is lost (geo-politically) and the FRN is dropped by some big players, it is game over.

If not, they will continue to print and drain us dry, drop by drop.

They (government) will try their best to maintain their illusion of control, because once that cherry is popped, all bets are off. The whole paradigm collapses and we are back to actually discussing wants and needs and (again hat tip LoP) true price discovery.

pods

Mon, 06/23/2014 - 14:58 | 4886448 Dr. Engali
Dr. Engali's picture

I'll bet a ham sandwich that we see it fall apart before the next presidential election. Of course if things go down the way i think the will, I won't be able to collect. Just like the short sellers will never collect when this 'market' gives up the ghost, because there is nobody left to collect from.

Mon, 06/23/2014 - 14:59 | 4886470 madcows
madcows's picture

Nah, after the election.  The FED/banks are into the Democratic party big time... even bigger than the repugnican party.  They won't let this bitch sink until they can pin it on the "other" party... they've invested way too much money buying the democratic seats.

Mon, 06/23/2014 - 15:11 | 4886478 Dr. Engali
Dr. Engali's picture

Hah...... Parties mean nothing. The banking cabal  doesn't care who is on the hot seat. They can skim from the republicrats  just as easily as they can from the democans. It will happen before 2016.

Mon, 06/23/2014 - 15:08 | 4886504 NotApplicable
NotApplicable's picture

That's just because it's the direction the political winds are blowing at the moment. By the time Hitlery is done, the pendulum will have shifted back to the "other" way (though it too will be redefined by then (Rand Paul, etc.)). This shit is purely generational, being merely a reaction to the previous scam du jour.

Any bankster who believes that party affiliation ultimately matters is a very junior partner.

Mon, 06/23/2014 - 15:22 | 4886546 madcows
madcows's picture

I agree.  What I meant was the current banksters have "invested" more in the current democratic crop of influence peddlers.  They aren't dumb.  They know the dems are poison right now. i bet they invest heavily in the next crop of republicans.  Meanwhile, they need to get the most out of the current purchases.  Unless things go really badly, look for the banks to back hildabeast, harry reid and the botox-bimbos from california, Boxer and Piglosi

Mon, 06/23/2014 - 15:54 | 4886706 disabledvet
disabledvet's picture

"Investing in victories on the battlefield."

The USA had no liquidity or debt issues in 1944.
The amount of gold in the vaults of the Fed at that time was a staggering 50,000 tons!

The World Bank located itself not on Wall Street but in Washington DC.

"And from the ashes of 1973 emerged the IMF."

Nobody here has probably even heard of World War II...let alone comprehended the enormity of the battles...let alone the war.

Forget Royalty...entire nations need a safe place to park their gold. Hitler and the Germans were winning everything.

"People are still reliving the dream." A dream that ended in the jungles of Vietnam.

Mon, 06/23/2014 - 15:20 | 4886540 NotAMathWhiz
NotAMathWhiz's picture

Learn to make your own ham, doc, it's better than that crap you buy at the big chain supermarket.

Mon, 06/23/2014 - 14:36 | 4886380 Stoploss
Stoploss's picture

Oh, well they shouldn't be taking SOMA and trading.

Drugs are bad, umkay, real bad.

Mon, 06/23/2014 - 14:36 | 4886381 sodbuster
sodbuster's picture

Where's the puters???? lol

Mon, 06/23/2014 - 14:37 | 4886382 NOTaREALmerican
NOTaREALmerican's picture

Protecting the Merican way of life, for nearly a Century.  

Mon, 06/23/2014 - 14:37 | 4886384 goldhedge
goldhedge's picture

I hope they have a big net to catch all those Mofos being thrown out the windows.

Mon, 06/23/2014 - 14:38 | 4886388 Kaiser Sousa
Kaiser Sousa's picture

thank the MoneyChangers.....

"Twenty-six percent of Americans has no emergency savings, according to a report by Bankrate.com.  Over the past four years, there has been little to no progress when it comes to Americans ‘saving capacity. Even those who manage to save aren’t putting away enough. As many as two-thirds of people in the U.S. don’t have the recommended six months of expenses saved. The percentage of people with savings enough to cover at least three months shrank to 40 % in 2014, compared with 45%, a year earlier. Despite Americans being more secure in their jobs and more comfortable with their debt since the recession ended, their savings capacity remains weak even among those with highest-income household. Only 46% of those with annual income of $75,000 or above have enough savings to cover six months of expenses.
“People are not making progress. Incomes are stagnating and expenses are high,” said Greg McBride, Bankrate.com’s chief financial analyst. He said that many people are still struggling with payments from the past years and high household costs. The report also indicates that the segment of the population aged between 30 and 49 are the most likely to have no emergency fund compared with younger people. “That is alarming because those are the people with a house, two cars and a dog but still with no emergency savings. You need emergency savings,” he added."

http://blogs.wsj.com/numbers/one-in-four-americans-has-no-emergency-savi...

Mon, 06/23/2014 - 14:41 | 4886395 NOTaREALmerican
NOTaREALmerican's picture

Savings is for pessimists.  REAL Mericans are always optimistic about the future of the world's greatest country. 

Anybody who saves is nothing but a pinko hippy who hates everything Merica stands for,  and the troops.

Mon, 06/23/2014 - 14:54 | 4886442 MrPalladium
MrPalladium's picture

Yes, Warren Buffet told them so!!

Mon, 06/23/2014 - 14:51 | 4886429 venturen
venturen's picture

wait till the crooks on wall street become more and more despreate...gas $10/gal, beef, chick and pork $10/lb(as supply and demand are used the price can be the same), oil $500/barrel,  wheat, corn ($100 bushel)

 

They destroyed many viable business, the market is 100% over priced, bonds LOL!

 

As the dollar looses it value things are going to get worse...alot worse!

Mon, 06/23/2014 - 14:56 | 4886454 madcows
madcows's picture

It sucks either way, but I'd rather be in bonds than in stocks.  I'd rather be bled slowly than repeatedly assphucked by vampire squid.

Mon, 06/23/2014 - 15:49 | 4886685 Bemused Observer
Bemused Observer's picture

You'd be better off with tangible investments. If you don't have the appetite for PM's, then land, coins, art. Hell, buy bulk lots of feminine hygiene products and keep them in a storage locker...THEY will have more value than any of the systems paper if TSHTF. In fact, you may well end up as some kind of local hero as the guy with a storage locker full of Tampax after the stores shelves empty.

This is something most folks who prep haven't considered (or don't talk about...)If you are wondering what kinds of small tangibles you can 'stack' that will be easily traded, buy a few cases of tampons. They're small, individually wrapped, and don't spoil. They are also going to run out pretty quick if there's a store-run, and they WILL be missed, oh yes indeed they will! Those little cardboard tubes are gonna be like cigarettes in prison in the months following an economic collapse. The shortages of these taken-for-granted products is one aspect of a post-collapse world that is going to grate on a LOT of female nerves. Producing a handful of "Maxi-Absorbency" will make you instantly popular and welcome, buy you a lot of goodwill. And may be easier to trade for daily needs than PM's which may not have an agreed-upon value for everyone for a little while.

Mon, 06/23/2014 - 16:14 | 4886803 detached.amusement
detached.amusement's picture

hahahahaha

-bemused reader

Mon, 06/23/2014 - 23:34 | 4888182 Bemused Observer
Bemused Observer's picture

Don't laugh...I'm gonna write Tweets, a blog, and post annoying status updates on Facebook until it catches on, and becomes a "thing".
Then I will incorporate, over-value my company and sell it to a bunch of Wall Street "investors" who will lose half their money 14 minutes into the IPO...they will then avoid disaster by selling to pension funds who have no CLUE what they are invested in.
I will sip Coronas on a Mexican beach and use my money to formulate plans to successfully grow lettuce on the Moon, cause really, what ELSE would one do with countless billions of dollars? Unfortunately this will end badly due to the bad timing of the endeavor, and people will get pissed cause I have enough money to even think of this, and am such an asshole. I will curse them all as Philistines as they beat me senseless with their shoes.

Mon, 06/23/2014 - 14:54 | 4886445 madcows
madcows's picture

Gen X and Y are F-ucked.  They are the ones with houses and kids.  So, they have high costs of living and little ability to relocate.  The Millenials likely haven't begun the American Dream, and may not be as strapped.

But, hey, the Banksters don't care.  They're phat and happy.  A couple generations of debt slaves under their belt. 

To the next generations.  Fuck the system.  Don't buy a house.  Don't buy a car, unless you can do it with cash.  Oh, and don't have a family... it's easier to move out of the cuntry then.  Fuck the oligarchs.

Mon, 06/23/2014 - 15:05 | 4886496 John Law Lives
John Law Lives's picture

"Incomes are stagnating and expenses are high,” said Greg McBride, Bankrate.com’s chief financial analyst."

Damn it.  Janet Yellen said surging food prices are just NOISE.  Put your brain aside and B-E-L-I-E-V-E like a good pleb and max out your credit cards via cash advances and throw it all in the market - because Janet Yellen said there is no sign of a bubble in equity markets.  Trust the Fed.

FedFUBAR.

Mon, 06/23/2014 - 15:26 | 4886564 moneybots
moneybots's picture

"Damn it.  Janet Yellen said surging food prices are just NOISE"

 

She also said savers wear many hats, therefore it is acceptable for her to screw them over.

 

Let them eat cake crums.

Mon, 06/23/2014 - 15:09 | 4886511 NotApplicable
NotApplicable's picture

I've got some buckets of pennies and nickels. Does that count?

Mon, 06/23/2014 - 14:45 | 4886409 Dr. Engali
Dr. Engali's picture

It's funny that it only took a handful of humans and a chalkboard to preserve the financial system, and now it takes a legion of people, sophisticated robots, and super computers to essentially do the same thing. I don't think complex systems have made us better off.

Mon, 06/23/2014 - 15:01 | 4886480 NotApplicable
NotApplicable's picture

Kind of like how a single lie starts out simple, but requries ever more effort over time to keep facade in place as disconnects are discovered.

Mon, 06/23/2014 - 15:36 | 4886602 NOTaREALmerican
NOTaREALmerican's picture

Personally,  i think most of what we see now is encapsulated in that sentence.  The "over-time" concept makes all the small lies bigger, but it's hard to imagine that the problems started with very small lies.

Mon, 06/23/2014 - 14:51 | 4886426 John Law Lives
John Law Lives's picture

Too bad that having a PPT that BTFD on command can not save (once) great cities like Detroit:

Nearly Half Of Detroit Water Customers Can’t Pay Their Bill
June 23, 2014

CBS Detroit (WWJ)

http://detroit.cbslocal.com/2014/06/23/nearly-half-of-detroit-water-cust...

Mon, 06/23/2014 - 14:52 | 4886435 SmilinJoeFizzion
SmilinJoeFizzion's picture

back in those days you could sniff lines right off the corner of your desk instead of blasting one off your kneecap in the mensroom

Mon, 06/23/2014 - 14:55 | 4886447 pods
pods's picture

<chortle>

+1

Mon, 06/23/2014 - 15:25 | 4886556 Cthonic
Cthonic's picture

a coke and a smile?

Mon, 06/23/2014 - 14:54 | 4886441 Eeyores Enigma
Eeyores Enigma's picture

I see Curley, Larry  and ......Hey Moe!!!

Mon, 06/23/2014 - 14:58 | 4886466 kchrisc
kchrisc's picture

The Theft Revelation Prevention Team is more like it.

Mon, 06/23/2014 - 15:31 | 4886568 what's that smell
what&#039;s that smell's picture

those who own the stuff will do anything to keep the stuff.

those who don't own the stuff sit on their fat asses laughing at honey boo boo.

if you want the stuff, you're gonna have to take the stuff from those who have it.

and don't let ayn and the randroids sell you any of that superman bs.

Mon, 06/23/2014 - 18:55 | 4887319 Mr. Ed
Mr. Ed's picture

Where are these gratuitous shots at Ayn Rand coming from...huh?  I don't think you gang of paid trolls ever actually read anything she wrote.  Whatever whacky things you might criticize her for, promoting banking shenanigans isn't one of them.

And that mealy mouthed turd Greenspan shouldn't taint anything she ever said.

Mon, 06/23/2014 - 15:03 | 4886485 madcows
madcows's picture

THE MARKET IS DOWN 0.1%.  WHERE'S THE PPT, HUH?  Oh, yeah.  It's Monday.  BTFD.  Tomorrow's Tuesday.  Get in on the monday low.  Tomorrow's POMO MOMO, you HOMO.

Mon, 06/23/2014 - 15:23 | 4886548 moneybots
moneybots's picture
"Behold: The Federal Reserve's First Plunge Protection Team"

 

Were they asleep in 1929-32?  1987?  2000-2002?  late 2007-early 2009?

The chart of the Dow is reminding me of the chart of the Nasdaq bubble.

Mon, 06/23/2014 - 15:24 | 4886552 Cthonic
Cthonic's picture

The ascendance of open market operations was an end run around Regulation A and consolidation at the NY Fed of the primary means of market interference employed by the Fed system at the time, the discount rates set by the regional federal reserve banks.

Mon, 06/23/2014 - 15:43 | 4886651 U4 eee aaa
U4 eee aaa's picture

Here is another pic of them in an impotent meetin'

http://www.threestooges.com/wp-content/uploads/2013/10/TTS_Curly-Bday_TT...

Mon, 06/23/2014 - 16:23 | 4886846 Againstthelie
Againstthelie's picture

Benjamin Strong, Benjamin Strong. Hm...

Ah, got it!

Hjalmar Schacht, the chief of the German central bank wrote in his memoirs, when he visited the New York Fed to see the German gold, Strong went with him down to the safe to show him the gold, but couldn't find it.

Hjalmar Schacht, a freemason, said to Strong: Nothing to worry for, I have fully trust in you.

Isn't it good, to have such honorable persons care for belongings of the nation in such a generous way? Strangely these people act very differently when they are dealing with their personal money...

Mon, 06/23/2014 - 17:46 | 4887134 world_debt_slave
world_debt_slave's picture

hey, if at first you don't succeed, try, try, again.

Mon, 06/23/2014 - 18:14 | 4887211 Herdee
Herdee's picture

My emergency savings are mostly in Canadian gold mining shares, GTU.un, CET.a, PHS.u ( all on Toronto)and physical gold bullion and silver kilo bars.Also,a few collector coins and Canadian silver dollars (pre '68).I don't keep a lot of cash in the bank.I have a safe bolted to the basement floor.I'm very aware of what is in the Canadian Government Bail-In provisions.People will have their wealth controlled and equities used by Governments.It's safer under the mattress.Don't get me wrong,you've got to have some in there to pay the bills and have a cushion,but that's it.Always order your emergency dry food kits.Have enough for a couple of months.Everyone should also have a generator,emergency lighting and a water filtration system.I still have my gardens and green house and I dry food too with my Ronco food dehydrators.If you drink wine you should be making and storing it and if you smoke,store up a little BC Big Bud.The reset will come,it's just when,not if.Don't be afraid to initially cash some into the new system when gold plays a role,you'll do very well if gold is repriced to reflect all the newly printed money by all Governments.Trillions and trillions of new Euros,Dollars and Yen.Think about it.She could get reset and pretty high too.It's not a question of if there's enough gold in the world,it's just a question of how high the G20 has to reset it.You'll pick up assets really cheap when the new money comes out.Tick-Tock...

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