Is The Treasury's Imminent Launch Of Floaters The Signal To Get Out Of Dodge?

Tyler Durden's picture

Today, our favorite IMF economist, and arguably one of the few people who sees the big picture, Manmohan Singh issued a paper titled "Money and Collateral", which, not surprisingly, deals with the issues of money and collateral. And while it provides an interesting read, we can jump to the conclusion which is, not surprisingly, that there is simply not enough collateral within the global financial system, which in turn inhibits the proper intermediation of banks in traditional monetary conduits (due to the need for central banks to intervene in the place of traditional banks and shadow banking entities), which keeps the money multiplier low. We have extensively covered the issue of collateral scarcity and encumbrance previously (read: "Encumbrance 101, Or Why Europe Is Running Out Of Assets", "No Record Profits For Old Assets: Jim Montier On Unsustainable Parabolic Margin Expansion For Dummies", "A Few Quick Reminders Why NOTHING Has Been Fixed In Europe (And Why LTRO 3 Is Not Coming)", "How The Fed's Visible Hand Is Forcing Corporate Cash Mismanagement") so the paper's conclusion should not come as a surprise: until cash is used to replenish a diminishing, cash-poor asset base, nothing can change. Unfortunately, in the ultimate Catch 22, under central planning companies are disincentivized from investing cash into CapEx and organic growth, and instead are spending it on M&A and dividends, the two worst decisions management can take over the long run. It was one of the tangential "boxes" in the Singh paper titled "Floating Rate Note “puts”—are they forthcoming?" that caught our attention because it reminded us that in all the distraction over the past 3 months, we had forgotten that probably the most important event of 2012 is about to take place, and it has nothing to do with Europe, or with a central bank's balance sheet. Namely: the imminent arrival of Floating Rate Note Treasurys, or Floaters. In reality, while we noted this very curious development before (here and here), we did not think too much into what the Treasury may be signalling. Which was a mistake, because if Singh is correct, the US Treasury may be telegraphing to the world that it, or far more importantly, the TBAC, is quietly preparing for a surge in interest rates. Which as everyone and the kitchen sink knows, is THE black swan event (or gray for you taleb purists).

But before we go there, let's take a tangent of our own to a point in history 61 years prior, known simply as The Accord of 1951. Here is how Wikipedia summarizes this footnote in history, which the Fed, the Treasury and any US administration would be delighted to have never been made public.

The 1951 Accord, also known simply as the Accord, was an agreement between the U.S. Department of the Treasury and the Federal Reserve that restored independence to the Fed.


During World War II, the Fed pledged to keep the interest rate on Treasury bills fixed at 0.375 percent. It continued to support government borrowing after the war ended, despite the fact that the Consumer Price Index rose 14% in 1947 and 8% in 1948, and the economy was in recession. President Harry S. Truman in 1948 replaced then Chairman of the Federal Reserve Marriner Eccles with Thomas B. McCabe for opposing this policy, although Eccles's term on the board would continue for three more years. The reluctance of the Fed to continue monetizing the deficit became so great that in 1951, President Truman invited the entire Federal Open Market Committee to the White House to resolve their differences. William McChesney Martin, then Assistant Secretary of the Treasury, was the principal mediator. Three weeks later, he was named Chairman of the Fed, replacing McCabe.

Few things to note here:

  1. The Fed keeping rates artificially low is nothing new - the Fed did it during and after World War 2, when the short end was anchored at ZIRP, even as inflation was soaring. So much for bonds indicating inflation.
  2. There was a time when the Fed was "reluctant" to monetize the debt. The result was a termination of the Fed head.
  3. There was also a time when the Fed was truly independent. That led to the Administration and the Treasury to force a coup at the Fed, and to put in a puppet regime which would monetize debt no questions asked. This in turn led to official media to proclaim that a thoroughly subservient Fed is now "independent"
  4. Nothing like naming the Fed's Washington D.C. HQ for the one man who dared to stand up to the president's demands for infinite monetization... and get sacked for it.

He hope this little incident that nobody talks about puts everything we live through nowadays with the Fed, and its endless appetite for US paper, in a far more comprehensible light.

Yet while entertaining, this historical incident also teaches us about the future, and what may be imminent. Here is Manmohan Singh:

Floating Rate Note “puts”—are they forthcoming?


At the time of the discussions leading up to the Fed-Treasury Accord of 1951 which ended an extended period of artificially suppressed interest rates on Treasury bonds, there was much internal debate about the potential deleterious impact on bondholders from a “surprise” rise in rates. There was also concern about a potential buyers strike and/or fear that a new market equilibrium would entail a sharp spike in rates. This discussion was conditioned by the similar situation faced by the U.S. Treasury in 1919 after it promised to stabilize bond prices during and after WWI. This policy caused conflict with certain Fed policymakers and the eventual losses on Liberty bonds were still remembered by Congress and the Treasury in 1951, 30 years later. As a consequence, at the time of the announcement of the Accord, buyback options were offered by the Treasury, that is the U.S. Treasury offered to swap the outstanding stock of long-term debt with new long term debt with higher coupons (coupled with restrictions on sales before maturity). The idea was to cushion the market from capital losses.

Bingo: "prevent capital losses" by way of the modern version of 1951's Treasury puts. In a day and age, i.e., now, when investors generate the bulk of their wealth from capital appreciation (thank you ZIRP), and in which capital losses would be the deathknell for a US market in which the bulk of consumer and non-financial cash is already invested in the capital markets (recall "This Is Where The Developed World's Households Have Invested Their Money"), capital losses within the one asset that has been a cash magnet ever since the Second Great Depression, would be devastating. How devastating? Simple bond math: since a bond's yield is determined by its fixed cash coupon and its price, in an environment of rising interest rates (especially on the short-end which are duration magnified exponentially by the time they reach the long end) when the coupon can not be changed (or is 'fixed' as stated), the price of the bond has to drop to keep the yield rising. A good example are the new Greek 10 Year bonds, which because of their ~4% cash coupon, and 20% yield demanded by the market, are trading at just about 20 cents on the dollar.

Needless to say an 80% capital loss on the 10 Year Treasury would be cataclysmic for all those who believe their money is "safe." Also for America, and for modern capitalism.

So what is a Treasury to do? Well, unfix the fixed portion, or the cash coupon, so that rapid moves in interest rates are absorbed not by the capital loss to keep the yield higher, but by a spike in the variable interest margin over Libor. That way even if the Fed were to lose control of both the long and the short end, capital losses would be minimized, something of absolutely critical value in a society transfixed with capital preservation.

In other words, the market under the guise of the TBAC will provide the instrument, or product, that will be best suited to buffer a surge in interest rates. Ironically, the very act of rolling out this product is thus the alarm bell that higher rates are a-comin'.

This is how Singh sees the current comparable event, the imminent launch of FRNs, as comparable to the bond swap of the 1951 Accord:

Might the U.S. Treasury go down a similar path again in conjunction with an eventual Fed exit strategy? In the current environment, markets have witnessed a 30 year secular decline in bond market yields. Serious market turbulence might result, significantly greater than that associated with the February 1994 “surprise” rise in rates initiating a tightening cycle, were the market to believe it were embarking on a steady (or rocky) rise in rates from near zero to a “neutral” fed funds rate of 400 bps and a "normal' 5 percent yield on 2-year U.S. Treasuries. The recent TBAC’s proposal for floating rate notes (FRNs) seems an obvious option to cushion the transition for the market. As an indication that the eventual unwinding and normalization of the yield curve will take time and inflict pain on holders of fixed income debt, the market appears already to be requesting such "puts". In this context, it is useful to quote from recent TBAC report (Jan 31, 2012)


“… ways to explore the viability of Treasury issuing floating rate notes (FRNs). In particular, the presentation [attached] assessed potential client demand, optimal maturity, reference index, and reset frequency. The structural decline in the stock of global high-quality government bonds, coupled with an increase in demand for non-volatile liquid assets, should make U.S. government issued FRNs extremely attractive. Pricing for a hypothetical two year FRN was estimated to be in the arena of 3 month Treasury bills plus 8 basis points.”

What is also obvious is that if the TBAC is quietly shifting the market into preparation mode for "a steady (or rocky) rise in rates from near zero to a "neutral" fed funds rate of 400 bps and a "normal" 5 percent yield on 2 year U.S. Treasuries" as the IMF warns, then all hell is about to break loose in stocks, as by now everyone is aware that without the Fed liquidity, and not just liquidity, but "flow" or constant injection of liquidity, as opposed to merely "stock", VIX will explode, equities will implode, and all hell would break loose.

It is not yet certain if the TBAC will proceed with implementing FRNs. Although, since the proposal came from the TBAC, read Goldman and JPM, and what Goldman and JPM want, they get, it is almost certain that in about a month, concurrent with the next quarterly refunding, America will slowly but surely proceed with adopting Floaters.


The second charge was to explore the viability of Treasury issuing floating rate notes (FRNs). In particular, the presentation [attached] assessed potential client demand, optimal maturity, reference index, and reset frequency. The structural decline in the stock of global high-quality government bonds, coupled with an increase in demand for non-volatile liquid assets, should make U.S. government issued FRNs extremely attractive. Pricing for a hypothetical two year FRN was estimated to be in the arena of 3 month Treasury bills plus 8 basis points.

A discussion then ensued over whether 3 month Treasury bills or Fed Funds Effective was the more appropriate floating rate index. In conjunction with fixed-rate issuance, FRNs give Treasury an attractive alternative to increase the average maturity of its debt. While more analysis on the specifics of the program must be done, the Committee was unanimously in favor of Treasury issuing FRNs.

As a reminder, this is what Treasury's Mary Miller said earlier:

Treasury continues to study the possibility of issuing Floating Rate Notes (FRNs).  The Treasury Borrowing Advisory Committee suggested in its February 2012 charge that FRNs could complement Treasury’s current suite of products.

Treasury recognizes that FRNs may provide a number of benefits to government finance, and plans to announce a decision regarding whether or not to introduce an FRN product at the May 2012 Quarterly Refunding.

What happens once we get Floating Treasurys nobody knows. But if 1951 is a precedent, when the unstoppable force of central planning finally rammed right into the immovable wall that is reality, it may be time to start heading for the cliffs.

Finally, here is the TBAC's FRN presentation:


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Almost Solvent's picture



That shit that circles and circles the drain when you flush but just won't go down?


ACP's picture

Be: Uhhhh, huh-huh, huh-huh, huhuhuh...he said floater.

Bu: Shut up Beavis before I have to kick your ass again!

SilverTree's picture

A POS that just wont flush.

strannick's picture

With FRNs, Treasury buyers still buy into a raising rate enviroment, but then the stock market crashes... Maybe to offset this, it will be QE3 and FRNs. Something for everyone. That might account for gold's solo spike without stocks today.

The Big Ching-aso's picture



Speaking of floaters, is it warm in here or are my frog legs just feeling hot flashes?

monkeyboy's picture

So it's just one big game of IOU.

slewie the pi-rat's picture

what was it they usta say?

...people with floating avatars shoudn't...  ...?

TruthInSunshine's picture

I will agree, with an intent to not overstate anything or engage in hyperbole, that this very well may be a watershed event in the annals of full fractional reserve banking Ponzi-nomics & chicanery.

It ranks right up there with the:

Bretton Woods Agreement

Plaza Accord


The Federal Reserve Act of 1913

and the de jure closing of the gold standard in 1971 (helping to perpetuate Deep Capture of America's legislative, executive and judiciary branches of government).


*On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. As a result, “[t]he Bretton Woods system officially ended and the dollar became fully fiat currency, backed by nothing but the promise of the federal government.” This action, referred to as the Nixon shock, created the situation in which the United States dollar became the sole backing of currencies and a reserve currency for the member states. At the same time, many fixed currencies also became free floating.

nope-1004's picture

Ironic that preservation of capital is front and center in light of the fact that capital has been so badly debauched over the last few years by the Treasury and Fed.  If Singh is correct, rates will rise very soon.... perhaps the easiest way out now.

IMO, rates have to rise at some point though, either by error or by design, as the current financial obligations are clearly unsupportable.  The easiest way out is to inflate.  Default is an admission of failure, and inflation will be chosen over default anyday at the obvious expense of the masses (sheeple) asleep at the wheel.


derek_vineyard's picture

The floaters will have negative real yields....look at negative 5 and 10 year TIPS----preservation of capital is why companies are hoarding cash and not hiring or investing---these corporate leaders know what we on zero hedge know-----risk is greater than reward in most asset classes

put on a happy face for as long as you can

FinkPloyd's picture

"The floaters will have negative real yields"

 This seems to make a lot of sense considering the amount of info on ZH that rising interest rates will be a death knell.

derek_vineyard's picture

fink    you will NEVER see positive real rates again under USA currency--the next step is collapse or 'reset'

         which will probably occur over a 2-5 day panic period when bond holders get routed or legislated  out of their principal


in 2008 money markets froze.....the government could have let ALL banks go belly up and backstopped the majority of the principal and embarked on a new banking system let only lehman fail and bear was sold and the collapse was POSTPONED and the realization of balanced budget, job creation and fiscal prudence was NOT re-established within our society

The Big Ching-aso's picture



"Hey, Bernanke.   Do you know what the PHUCK you're doing?"

"No.   But I did stay at a Holiday Inn Express last night."

Oh regional Indian's picture

From what I'm reading, the PTB playbook for Extend and Pretend seems to be thus:

Long bouts of controlled deflation interspersed with short bursts of wealth destroying hyper-inflation. 

When the world is your chessboard, the playing field is huge, the levers are SO many and time..... they look to have all the time in the world. Literally.



Nukular Freedum's picture

Tips are a con job since they always adjust to the FEDs la-la land definition of inflation. What may be happening is a return to. Volckeresque approach to dealing with incipient inflation, which would not be a bad thing (if this is the case one presumes that the FED now believes that the financial sector is now strong enough to weather the storm of long overdue normalization.
I have written a post about what the FED interest rate policy should classicaly have been since day one of the ZIRP crisis.

derek_vineyard's picture

5 years TIPS   -1.30 plus the UNDERstated rate of inflation 

10 year            -0.27


all maturites of TIPS exceeded 3.00% right after 2008 meltdown (due to deflation expectation)

negative yields on an understated infaltion rate???????????   crazy compressed market

derek_vineyard's picture

here comes a possible law :     50% of private pensions and IRA's MUST be invested in USA debt at government pegged rates (to keep rates down, budget managed and save the country)     this is highly probable or some hybrid thereof


rates cannot go up much without imploding the debt, so japan-esque measures will be taken

GeezerGeek's picture

I wonder if requiring that a large part of retirement assets be put in government debt is politically possible.The outflow of money from the stock market would probably make the DJIA crash, and that is probably the most prominent number that the average clueless person follows. I doubt many of the Joe Six-pack types know or care about Treasury rates directly, but the DJIA falling rapidly will cause a serious lack of confidence in whoever happens to be president at the time. Why do you think Ben pumps up the market? Because Barack would be tossed out in a heartbeat if the DJIA was around $8000 come November.

I can see the possibility that future retirement savings must be invested as you suggest. It doesn't matter, in my opinion. It's all just rearranging the deck chairs on a sinking ship.

MeelionDollerBogus's picture

"I wonder if requiring that a large part of retirement assets be put in government debt is politically possible."

Good sir,

might I remind you it's now legal for police to bust in your door without a warrant and you NOT being permitted to block entry, that it's legal to strip-search you for even a minor alleged offense, and to remind you that the TSA regularly gropes childrens' genitals and scans your naked picture to allow you to pass a gate.

Politically possible?

Welcome to fucking Wonderland, Alice, enjoy your stay.

BandGap's picture

I was thinking the same thing. what point do interest rates start to rise?

Sam Clemons's picture

Rates didn't rise for about 20 years during the Great Depression days.  The Fed, if they do control the stock market which many people allude to here, will definitely let stocks tank in order to prevent yields rising dramatically.

What is more important to them?  Corporate stocks and their investors or the ability to fund the US Military and every other part of Government?  I'd bet on the latter.

Mentaliusanything's picture


well said you must save the farm
























jeff montanye's picture

see sydney homer's history of interest rates.  long term gov't yields (average of all over twelve years) rose from a low in 1930 of 3.19% to a high in 1932 of 4.29% (fourth edition, page 351) and this was in an environment of money supply decline and spreading world depression.  after 1932 rates began falling and bottomed in 1941 at an average of 1.95%.  from there they rose, accelerating after 1950 and 1968 to a high average annual yield of 12.87% in 1981 (pages 375 and 376).  here's a graph but it's a little hard to read:

derek_vineyard's picture

asset prices will be routed before bond prices are for sure...maybe both

government can't afford high rates....when its down to survival...fuck the asset prices; legislate pensions and IRA's to buy pegged rate bond at japan-like rates to keep budget from imploding

mrdenis's picture

If forced purchesed of T bonds how could state actuaries still state a return on pension of 7 to 9% be attained ,which enables states to underfund pensions ? 

MeelionDollerBogus's picture

You don't need to state a rate of return. You mandate it into law then no one can leave. Yield-chasing will be over. Pensions will be jailed.

Teamtc321's picture

Spot on as usual Truth.


Fiat Currency: Using the Past to See into the Future

Fiat Money -Toilet Paper Money

The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well.

"Why would it be different here in the U.S.? Well, in actuality, it hasn’t been. In fact, in our short history, we’ve already had several failed attempts at using paper currency, and it is my opinion that today’s dollars are no different than the continentals issued during the Revolutionary War. But I will get into that in a moment. In the meantime, I will show you that fiat currencies have not been successful, and the only aspect of fiat currencies that have stood the test of time is the inability of political systems to prevent the devaluation and debasement of this toilet paper money by letting the printing presses run wild."


CSA's picture


Questions:  On a gold standard (paper backed by gold), wouldn't counterfeiting eventually collapse the system?  How does a country account for people who want their "physical gold" when the holder of paper comes calling, but the vault is empty due to counterfeiters draining it?  Do you expect fallible man to create the perfect "counterfeit proof" paper currency or is electronic currency better?  Because everyone knows hacking is non-existent.  If the gold standard was the panacea, there would easily be one country who currently ruled them all and has withstood the test of time.  This isn't really directed at you, more for other people to respond.  I don't have answers, only questions. 


HurricaneSeason's picture

There isn't anything in the vault, now. You wouldn't have to worry about the counterfeiters if the banks are storing the gold with no audits. Who could you trust to audit? Less than a gram of gold or silver would need to be put into the coin or note and be verifiable.

CSA's picture

Interesting additional points, thanks.

Overflow-admin's picture

"Because everyone knows hacking is non-existent"


I bet my physical gold you don't ever know the historical definition of hacking. Hackito Ergo Sum

MeelionDollerBogus's picture

Stick to coins & bars not paper promises.

Problem solved.

Seize Mars's picture

Good post, but I'll point out that, like a lot of other things, fiat was actually invented in ancient China. It didn't start in Rome.

cranky-old-geezer's picture



Preservation of capital?  When the Fed has debased the US dollar 40% in 4 years?

Wall Street seems totally blind to currency debasement, looking only at numbers, ignoring the shrinking value of those numbers.  (Today's 13,000 Dow is equivalent to 7,800 in 2007 dollars.  Today's 1,300 S&P is 780 in 2007 dollars.)

If treasuries went back to 5%, people holding them would still be losing money because the dollar is losing way more than 5% value each year, more like 10%.

People holding treasuries would have to get 10% yield just to break even with inflation, just to maintain their real purchasing power. That's not making a profit.  It's just breaking even, not gaining, not losing.

Federal borrowing is draining wealth out of the economy at the rate $150 billion a month.  That's why the economy isn't recovering.

Fed is keeping interest rates near zero so the federal government can keep draining $150 billion a month out of the economy.  No, QE hasn't stopped, it's going right on. 

If the Fed stopped printing and the federal government was forced to pay markert rates for borrowed money, their interest expense would jump to $800 billion a year, maybe even $1 trillion a year, half of all federal taxes collected.

But nobody would loan them $150 billion a month in  normal credit markets, so the Fed must keep printing and buying treasuries, if not directly, then thru proxies.

And the Fed must keep rates near zero so interest expense doesn't balloon up and destroy the federal budget. 

Oh wait, there is no budget.

Anyway, you get the point.   The federal government simply cannot handle higher interest rates with $16 trillion of debt, so rates WILL stay near zero from now on.  They'll NEVER go back up.  EVER.

This is the end game for the federal government.   Their last few years of existence.  When federal debt reaches $20 trillion, that's probably it, the dollar will collapse, the Fed will collapse, the federal government will collapse, ...and America will collapse.

TruthInSunshine's picture

Don't worry. The Bernank would tell us that he hasn't massively distorted asset prices, thus creating yet another bubble (but this time, a wide basket of extremely over-inflated asset prices, rather than just a defined, concentrated or housing one), which will create a far more devastating series of crises when it inevitably implodes.

It's all normal and healthy, from a micro and macro economic perspective, efficiency of markets, and efficiency of price discovery, when a company that developed an 'app' that lets you alter your photo to a black & white one and then share it with those in your social media circle, to be purchased for a billion USD, nor for Facebook, which is an abysmal failure in actually creating revenue let alone profits, gets tagged with a 50 to 100 billion USD market valuation, nor for [insert whatever example of thousands you'd like to here]....




By the way, look for bank failures and municipal defaults (as Meredith Whitney predicted, being only off on the timing, and certainly not the magnitude; it's going to be epic - check out your local papers to see the cities, townships, villages near you that are running on $$$ vapors) to re-surge with a vengeance soon.

Seize Mars's picture

Well I think I will be just fine, thanks.

chubbar's picture

Here is an excerpt from a GATA article written in 2009 that exposes a Confidential Federal Reserve Document in the possession of William McChesney Martin. This is followed by some interesting comments, particularly by Catherine Austin Fitts. 

"The document, which is marked "Confidential," is from the papers of William McChesney Martin, Jr., and this collection is held by the Missouri Historical Society. A scanned image of the original document is posted by the Federal Reserve Bank of St. Louis at the following link: ical/martin/23_06_19610405.pdf

Most importantly, GATA consultant James Turk has brilliantly dissected this document in an essay titled, "The Federal Reserve’s Blueprint for Market Intervention," which has been served at The Matisse Table and at title of this confidential report is:

Confidential - - (F.R.)

U.S. Foreign Exchange Operations: Needs and Methods

James Turk notes:

In short, it lays out what the Treasury and Federal Reserve needed to do in order to begin intervening in the foreign exchange markets, but there is even more. This document plainly shows what happens when government operates behind closed doors. It also makes clear the motivations of the operators of dollar policy long described by the Gold Anti-Trust Action Committee and its supporters -- namely, that the government would pursue intervention rather than a policy of free markets unfettered by government activity. The run to redeem dollars for gold had put the government at a crossroads, forcing it to make a decision about the future course of dollar policy. This paper describes what the government would need to do by choosing the interventionist alternative.

This document provides primary, original source supporting evidence that GATA has been right all along.

I have long hoped that a "confidential" document like this one would eventually emerge. There are no doubt countless more like it, as evidenced by the Federal Reserve's and the Treasury's refusal to provide all the documents requested by GATA under its recent Freedom of Information Act request. Maybe those documents will eventually see the light of day too.


James makes a key point regarding one of the assertions of this report…

"The basic purpose of such operations would be to maintain confidence in the dollar."

James T notes…

"This statement confirms one of the basic planks of much of the work by me and others that has been published by GATA over the years. The efforts to cap the gold price have one aim. It is to make the dollar look worthy of being the world's reserve currency when in fact it is not."


This significant report was written some 48 years ago, yet could have been written at any time in the past 10 years during which GATA has discovered blatant manipulation of the prices of gold and silver … as well as noted ludicrous counterintuitive dollar market action, which has been most noticeable in recent days, as our hysterical financial crisis in the US intensifies.

James Turk’s title says it all: it is a blueprint for the gold price and financial market manipulation so prevalent now. Ironically, there is a common misconception out there that the US is in the financial market mess it is in today because of too much deregulation. To some extent that is very true, as the likes of Secretary Paulson and Gary Gensler urged Congress to allow the US investment banks to increase the allowable debt/credit on their books from 12:1 to 40:1.

Yet, just as big a problem was the secretive interference in the US financial markets which allowed credit and risk issues to go completely out of control in America … meaning too much secretive market manipulation … and in a hidden way, too much regulation. Had the gold market not been artificially suppressed and allowed to trade freely, the price would have soared these past years, interest rates would have risen dramatically, and there would have not been the reckless investment bank shenanigans that have put our financial system in such peril. Simplistically, it is generally acknowledged that if gold had been allowed to keep up with inflation for the past 28 years, the price would be over $2,000+ per ounce. The GATA camp knows why it is not there RIGHT NOW!

Had the Plunge Protection Team (Working Group on Financial Markets) not stepped up their constant Hail Mary play activity after 9/11 to drive the DOW mysteriously higher in the last hour of trading on the New York Stock Exchange, the market probably would have broken down much earlier than it did and given the investing public more of a clue that something was wrong, instead of the misleading Stepford Wives drill that "Everything is fine."

What is profoundly disturbing about the discovery of this confidential document is it fits in with much grander conspiracy theories than where GATA is coming from. Since this document, based on what has happened, really is a blueprint for market manipulation since 1961, it feeds into the worst fears of those who are constantly on the case about the Bilderbergers, Council on Foreign Relations, Trilateral Commission, and so on. This document to William McChesney Martin, Jr. is EXACTLY what I have been seeing and reporting over the past decade … not that much different than those who pointed out the Madoff Ponzi scheme during the same period of time. To learn that this market deception and manipulation was conceived when I was a freshman in high school is almost beyond comprehension, especially since the Wall Street crowd hasn’t permitted a serious discussion about it ALL THIS TIME! Nor has our government allowed a true independent audit of US gold reserves since the Eisenhower Administration in 1955.

It also feeds right into the scary notion revealed in a famed President Clinton comment that goes something like … "I didn’t realize I wouldn’t be in control here when I became President." … meaning there were far more powerful background forces pulling the strings and on how he must operate.

GATA doesn’t want to go there, but based on this new discovery, it certainly opens up further comments for fair game, even for some of GATA’s Board of Directors. Adrian Douglas (an oil industry consultant who is presently off to Angola) sent the following email to James Turk:

Congratulations. This was an excellent analysis. What a stunning document! Real dynamite.

It got me thinking as to whether the heist they have pulled is bigger than we think. The BIS as we know, and as mentioned in this memo, is the organization that allows for cooperation behind the scenes of the Central banks. We know they went private to prevent any need for public disclosure seeding the opportunity for Reg Howe’s lawsuit. We have plenty of evidence that Central Bank gold holdings have been depleted. We keep saying that the gold is "gone". But what do we mean by "the gold is gone"? Gold is not like crude oil, expensive wine, even silver… it does not get consumed. It has not "gone"; it has changed ownership. The Central Banks leased out gold to the bullion banks. Now who did the the bullion banks sell the gold to? We know that the bullion banks can’t get the gold back. If the central banks ask for the gold back the bullion banks can declare bankruptcy or settle in cash. How convenient! The Central bank gold has gone into someone else’s hands that are unknown and the loss will eventually be written off. We know that Central Banks are owned or controlled by some of the richest families and/or entities in the world. Is it possible that these "bankers" can benefit from a fiat Ponzi scheme while it can be maintained AND still end up with the gold in which case they can benefit from a return to a gold standard and when the gold standard eventually gets abused and abandoned in the future they will play the whole fiat game over again? It would certainly require cooperation between central banks to pull off such a heist.

It would be great to have the whole world sitting in a room and ask those who own more than 10 million ozs of gold to raise their hands!

The crime may be more than manipulating the price of gold to "defend the US dollar" and concealing the evidence from the public. The Cartel may well have aided and abetted embezzlement of the citizens’ gold of the Western world. And who ever has it, they bought it perfectly legally from the bullion banks with fiat currency.

This seems to make sense because Central bankers and the "elitists" (Rockefellers, Rothchilds, Morgans, Mellons, Carnegies, Vanderbilts etc etc) are not stupid. They must know gold is real money. They can study monetary history too. The fiat money game in this context is a decoy for the theft of sovereign gold.

It is not without precedent, the great inflationist, John Law, was arrested escaping with a coach loaded with gold and silver!

Is this a bridge too far in conspiracy theory?

Which provoked this reply from another GATA Board member, Catherine Austin Fitts (Assistant Secretary of Housing/Federal Housing Commissioner at the United States Department of Housing and Urban Development in the first Bush Administration)…

My hypothesis since 2001 is that the NWO is shifting assets out of sovereign governments and shifting liabilities back in. The goal is to reengineer global governance into the hands of private banks and corporations in a manner that dramatically centralizes control. This is why the creation of a genetically controlled seed and food supply, etc.

To achieve such centralization requires the centralization of the gold and silver stores. Whoever has the gold has the most powerful financial asset. So if you want a new centralized currency, you need a monopoly on gold and silver. I think part of the end game is to shift back to something involving some kind of gold standard.

If you use fiat currency to acquire ownership and control of all the real assets on the planet, then you need a gold standard to make sure you keep them.

So, it would not surprise me to see G8 and GATA start to move into alignment, strange as it may sound.

Vampyroteuthis infernalis's picture

It is about time to end this BS charade. Purify the system by forcing everyone to bankruptcy! We can build a better society afterwards.

aleph0's picture

Don't forget the most important part .. purge all those top banksters , politicians and other crooks ... for life.

LooseLee's picture

Purge 'em? Execute 'em!

LooseLee's picture

Purge 'em? Execute 'em!

Stuck on Zero's picture

Is this about the bullshit to energy scheme funded by Obama?

km4's picture

Here's your floater

CaddyShack Pool Scene - YouTube

Bookdoc's picture

It's those new government mandated toilets...

zorba THE GREEK's picture

Floaters are what you get in your eyeballs when you're old.'s picture

Floaters are light dumplings which float on top your stew or sauerkraut. Heavy dumplings are called sinkers.