Paul Craig Roberts Exposes The Plunge Protection Team's Fraud

Authored by Paul Craig Roberts,

After the extraordinary sudden loss in equity values, the last two days brought gains back to the stock indices (albeit with a late day tumble today).

What happened? Did the market sneeze, cough, or was something misread and today perceived in a different light?

In my opinion this is what happened:

The Plunge Protection Team, as they have done on previous equity market drops, or the Federal Reserve operating for the Working Group on Financial Markets, sent a purchase order for S&P futures to the trading floor. The hedge funds, seeing the incoming bid, front-ran the bid by stepping in and buying S&P futures. This pushed the market back up, ended the correction, and prevented financial panic.

The Plunge Protection Team was created in 1987, approaching the end of the Reagan administration, in order to prevent a market correction from costing George H. W. Bush the presidential election as Reagan’s successor. The Republican Establishment was desperate to reestablish its control over the party. The Republican Establishment, convinced by Wall Street that the Reagan tax cut would result in high inflation, found themselves instead confronted with a long economic expansion. In those days that meant that the expansion could be nearing its end, and a stock market correction could deny the presidency to George H.W. Bush.

To prevent any such correction, the US Treasury and Federal Reserve created a “working group” to intervene in the stock market in order to support values. Whenever the market starts to drop, the team purchases S&P futures which halts the market decline.

We have witnessed this on several occasions. And, most likely, again this week.

Pundits who speak about “market forces” are speaking about something that doesn’t exist. “Market forces” are the interventions that support existing values with money infusions.

How long can the fraudulent valuation of equities continue?

My sometimes coauthor Dave Kranzler and I think it can continue until the dollar as reserve currency comes under attack. Neither of us believed that the fraud could be perpetrated this long. The two other world powers, Russia and China, are moving away from use of the US dollar, but the consequence for the dollar could still be in the future. In the meantime, liquidity supplied by central banks and the interventions of the Plunge Protection Team could send equity prices higher.

Comments

Laowei Gweilo FBaggins Thu, 02/08/2018 - 02:24 Permalink

I'm not saying I disagree or that it's unlikely...

But what's the evidence that it's the Fed and a 'plunge protection team'?

I mean, it makes sense and I'd believe it, but what makes it more than just a theory? (serious question... I checked the article and googled it and it's rather light on evidence or even correlation of any sort ... just a lot of 'well there's no good argument for anything else so it must be the Fed). the journalists that coined the term admit they have no proof or firsthand knowledge, and the notable writers on it also say they have no proof but just 'we don't know who was buying and it doesn't make sense anyone else was, so it must be the Fed PPT'

i mean, couldn't it just be the banks? whales? fuck, the Illuminati? Darth Soros? NWO alliance of bankster CEOs? ... why is it the Fed PPT? they have a history of failing to stop crashes, TBH... they learned nothing from 1987 (why they were created) and did little to help 01 or 08... so now they are suddenly competent and saving markets?

i'd tend to agree with it... and certainly the Fed is different in more than one way after 08, so past incompetence doesn't mean their mandate couldn't have changed. just curious if there's a more detailed argument for it.

In reply to by FBaggins

sekhars Laowei Gweilo Thu, 02/08/2018 - 03:57 Permalink

why do you have to look evidence ?  use some common sense. One thing is sure and it is not a rocket science. Money printing should be considered fraud but as long as world accepts it as a legal tender they will continue this fraud. Any one who believes that market is a free market is naive. Once the dollar loses reserve status this game will be over. 

In reply to by Laowei Gweilo

Give Me Some Truth sekhars Thu, 02/08/2018 - 04:22 Permalink

I too think this is a "common sense" theory, or deduction, an educated hypothesis, etc. This said, it would be nice to see some more evidence. However, common sense again tells us that if some group or people are propping up the "markets," they aren't going to advertise this or release a press release about their activities.

We know something else telling as well. Everyone who is among the "powers that be" is adamantly opposed to an audit of The Federal Reserve. That is, they are actively seeking to stop any effort that might allow evidence to be revealed.

In reply to by sekhars

Eeyores Enigma Laowei Gweilo Thu, 02/08/2018 - 06:30 Permalink

Truth is, and it is widely published, hiding in plain sight, central banks around the world are in collusion on this, buying up each others bonds and stock markets, BOJ owns billions, Swiss bank billions, Brussels mega billions, and on and on. US dollar global capitalism at its last stages of wealth concentration is being defended with everything they got.

In reply to by Laowei Gweilo

peterpam Eeyores Enigma Thu, 02/08/2018 - 08:53 Permalink

You are right,Eeyores. That's why it is harder to track. The collusion of the central banks. Check out Nomi Prinz, who explains it really well. What appears to be a "unwinding" of the US Fedd balance sheet is simply an orchestrated control by the whole bunch of them trying to prop up their dying system. One of them picks up when another steps down a bit. The control is still there at every step, it has to be in this house of cards.

In reply to by Eeyores Enigma

mr bear Laowei Gweilo Thu, 02/08/2018 - 07:51 Permalink

Well, consider how unlikely is the possibility that with all of the powers available to them, the government and Wall Street would not have some system in place to halt catastrophic slides in stock prices.

Markets run on confidence, just like the dollar, and when that confidence shears away, it could be considered a proper role of government to find some means to restore it, and quickly. A PPT is a blunt instrument, to be sure, but the understanding that it's there builds a floor under confidence.

Misuse of the PPT can promote moral hazard, of course. But being immoral and eating is better than being moral and starving.

In reply to by Laowei Gweilo

PhilofOz JimmyJones Thu, 02/08/2018 - 00:48 Permalink

They're pushing that this list as can only be leaked by the FBI as they are the only ones to have possession of the laptops/HD, but NYPD got hold of it before them and surely they would have done full back-ups beforehand. I bloody hope so anyway! That list of names, numbers and e-mail addresses is going to be so much fun for a lot of people even so!

In reply to by JimmyJones

nidaar Wed, 02/07/2018 - 23:30 Permalink

"The Plunge Protection Team was created in 1987"

 

Why then we had 1992, 2000, 2008?

 

No, it is also the Damoclas' sword hangin over the head of Americans. What we had was a warning. TPTB's message is clear. Do as we want or else...

Boing_Snap nidaar Thu, 02/08/2018 - 00:04 Permalink

The PPT strategy works until TPTB decide its time deflate, that's the game, inflate asset prices, load up the suckers with debt, pull the rug out, take the assets.

Inflate/deflate works in all markets, for example look at the current margin debt in the stock markets. Look at the obscene mortgages people are on short terms for now.

Crash is coming for all markets, and the usual suspects are waiting with open arms.

In reply to by nidaar

Yen Cross Wed, 02/07/2018 - 23:34 Permalink

 The lame stream media bloviates constantly, about the <<<[lack of inflation].

  It must be stagflation?

  Keep printing banksters.  " kerosene is cheap"> and easy to make.

rsnoble Wed, 02/07/2018 - 23:52 Permalink

Wasn't that  long ago you mention the 'ppt' you were a nut job.  Even people on zerohedge accused you of being an idiot.  I got the tin foil crown numerous times.

Cash Is King Thu, 02/08/2018 - 00:11 Permalink

Providing liquidity huh? There are such huge air pockets on the specialist books you could fly the Hindenburg through em. How else can you explain 500-1000 point swings within minutes of each other and multiple times throughout the day? The volume doesn’t add up to justify these moves. When the mkt halted in ‘97 for a half hour we had one instruction from mgt., drop your bid to floor and clear your rack. If you were to slow you had to honor the 1000 share min you had to buy but the harassment for doing so by the guys was worse than being long a sinking rock. Point is our spreads were absurd like 23 1/8 bid offered at 87 7/8’s and last print was 94 1/4. The mkt was halted almost as fast as it opened back down around 500 if memory serves. It’s called AIRPOCKETS Guys massive airpockets and all it takes is some bafoon with the authority to take the street a mkt bid, no top and no limit. Buy everything you can even if you have to pay through the offer. Don’t fk it up! LOL only saw it once but it was a thing of beauty and a pure hellish fright! Oh the good old days.

Blankfuck Thu, 02/08/2018 - 00:22 Permalink

You mean these fuckers have been manipulating markets? I lost nearly a million fucking dollars trading-no fucking wonder! Can I sue these bastards and get my money back??

Mouldy Thu, 02/08/2018 - 00:56 Permalink

Probably done on purpose.

Sell off bulk at top dollar & scare the rats... They sell, sell, sell - Market dives then buy back stocks for pennies on the dollar pushing the market back up = Profit.

But that profit had to come from somewhere. I'm guessing people's 401.

JLM Mouldy Thu, 02/08/2018 - 01:15 Permalink

You nailed it.  It is a crooked game.  We have an intermediate bottom here with all the usual fear made worse by these X@#$#'s pulling out the rug so they can buy in cheap on huge volume.  That is not a conspiracy theory just the way the world works where money is involved.  Ask any trader in the futures pit.

In reply to by Mouldy