The PPT, of course, is the Plunge Protection Team.
The article is rather lengthy and a bit dated (March 26, 2003), but well worth reading through, since the Fed-PPT is increasingly active, staving off the Day of Reckoning, but making that inevitable Day even more horrendous when it comes.
Thereare at least two inflation calculators on the internet which indicate (believe it or not) that the 1800 dollar would actually buy MORE in 1913 than in 1800, probably due to the Industrial Revolution and the mass production of what had been handcraft items before. Enter the Federal Reserve and its printing presses; now your 1913 dollar is worth five cents!
"All progressresults from change, but not all change is progress."
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CORNERED RATS AND THE PPT
Nelson Hultberg
There is a new wrinkle to consider regarding the government's Plunge
Protection Team (PPT), which the investing public needs to be made
aware of. First, however, some groundwork on the PPT, its origins,
and its assumed purposes. Then I will present a theory about the PPT
that should further validate its existence and clue us in to what it
has planned for the future.
Conventional Wall Street media and Washington establishment types
are quick to denigrate those of us who theorize about the
establishment of a secretive PPT organization to manipulate the
markets. But it is a matter of public record that the Working Group
on Financial Markets (WGFM), which we allege to be the parent to the
PPT, was formed under the Reagan administration. It was done by
Executive Order on March 18, 1988.
This order states that the major appointees of this group are to be
the Secretary of the Treasury, the Federal Reserve Chairman, the SEC
Chairman, and the CFTC Chairman and those they designate to fulfill
their purposes. The purposes, as defined in the Executive Order, are
to "[enhance] the integrity, efficiency, orderliness, and
competitiveness of our Nation's financial markets and [maintain]
investor confidence." The order goes on to say, "To the extent
permitted by law and subject to the availability of funds therefore,
the Department of the Treasury shall provide the Working Group with
such administrative and support services as may be necessary for the
performance of its functions." (Executive Order 12631 of March 18,
1988, 53 FR, 3 CFR, 1988 Comp., p. 559)
The WGFM was formed in the aftermath of the crash of 1987 as a
natural effort by government bureaucracy to do for the economy what
it thinks it is supposed to do -- intervene and manipulate the
workings of the marketplace so as to create an ordered economy, an
economy that is to the greatest possible extent devoid of
volatility, disruption, severity, loss, etc. So it is in this
context that we need to consider the origins of the PPT. At the
time, there was great fear that something very big had to now be
done to regulate the stock market and smooth out its potential
volatility. The WGFM (in conjunction with mega-bankers they chose)
was to make sure there was always sufficient "liquidity" to prevent
any serious plummeting of the market again. And whatever additional
interventions were deemed to be necessary would have to be tolerated.
The fact that severe market volatility was largely a result of
government manipulation of the money supply and interest rates was
merely blanked out on by the WGFM and its creators. A study of our
nation's economic history will show to any objective observer that
there are natural fluctuations inherent in the free-market that
humans must always put up with, but which are always self-corrected
if the forces of the market are simply LEFT ALONE. This is basic
Adam Smith economics; the smoothest economy is a laissez-faire
economy. But these fluctuations become extremely exacerbated with
the intervention of government into the mix to try and "manage the
economy" so as to eliminate these fluctuations. The fact that the
Federal Government had become in the 20th century a massive
interventionist-manager of the economy, and thus a massive
exacerbator of these natural fluctuations, was something that just
could not be grasped by the bureaucratic mentality. The modern day
statist has been taught via Marxist-Keynesian indoctrination in
college to believe that a "free" market is dangerous, chaotic, and
unworkable. He is not capable (or not willing) to dispute this view.
Thus, he naturally moves toward more and more MANIPULATION of market
forces as his duty. And the very volatility he seeks to diminish, he
intensifies.
So the climate of government opinion in the aftermath of the 1987
crash was moving toward even more "interventionist-manipulative"
tactics than it had felt necessary during previous decades of the
20th century. In this climate, it is quite natural that the WGFM
authorities decided that something unprecedented had to now be done
to guarantee a safe, smooth, crash-free, perma-bull stock market.
Thus was born the idea of the PPT.
How the Plunge Protection Team Came About
Bill King of the highly regarded King Report in New York tells us
that the PPT sprang from an analysis written and presented by former
Fed Governor Robert Heller in 1989. After his paper was published is
when the PPT agenda was formalized.
King refers to his associate John Crudele's writing on the subject
of how the stock market was to be rigged. "Heller had just left the
Fed when he gave a speech suggesting that the central bank should
step in and take direct action to keep the stock market from
collapsing. The Fed had taken action before. It made sure there was
enough liquidity during the crash of '87 to keep the system going.
It may have even strong-armed a few banks into propping up the
market. And it has often lowered interest rates at opportune times.
"But Heller's idea was different. He wanted a more direct approach,
especially when the bond and currency markets were becoming
uncontrollable [like they are these days]. Heller believed that in
an emergency, the Fed should start buying stock index futures
contracts until it managed to pull stocks out of their nosedive.
Essentially, whenever there is heavy buying of these futures
contracts it causes the underlying stock market to rise. The futures
contracts can be bought cheaply; they are highly leveraged so you
can get more bang for your buck, and they eliminate the need for a
rigger to purchase, say, all 30 stocks that make up the Dow. Heller
explained that the process was simple. And it is. The trouble is,
the government never has had authority to rig the stock market."
[email from Bill King, March 11, 2003 -- kingreport@ramkingsec.com]
King, who at the time was running several equity trading desks in
New York, goes on to say that it was during Q1 of 1990, as the Japan
bubble was bursting, that massive S&P futures buying began to be
used extensively by the trusted agents of the PPT, big 'name'
brokers in New York. During the crises of the late 90's, this
massive buying increased even more. By this time, many skeptics of
such manipulation in the investment advisory business began to
realize it was definitely taking place.
If you still doubt, here is a BBC release from the latest King
Report on the issue: "A deal was struck last week in the United
States between a former Japanese finance minister and the head of
the U.S. central bank, the Federal Reserve's Alan Greenspan. There
was an agreement between Japan and the United States to take action
cooperatively in foreign exchange, STOCKS and OTHER MARKETS (bonds?
GOLD?) if the markets face a crisis," Chief Cabinet Secretary Yasuo
Fukuda said....
We know never to believe anything until it's been officially denied,
so we were pleased to note that U.S. Treasury Dept spokesman Tony
Fratto did just that, stating: "The administration's views on
markets on interventions are well-known and there has been no change
in our view." [King Report, March 24, 2003]
What needs to be grasped by all Americans who invest their money in
the equity, currency, and commodity markets today is that the PPT is
not a fantasy conjured up in the minds of conspiracy wackos who see
aliens from outer space climbing over their backyard fence every
other month. It is a verifiable reality. It exists. It is bigger
than any of us imagine. It is the result of the hideous statist
mindset that is taking over our country -- which believes that all
aspects of economic life must be regulated and MANIPULATED by
central planners from Washington. Yet such omnipresent manipulation
and regulation goes contrary to the logic, the freedom, the entire
meaning of America. When manifested in specific areas like the stock
market, it becomes especially unsavory. If such an organization to
rig the stock market was ever to become widely known throughout the
country, then confidence in the integrity of the markets would be
greatly diminished and probably destroyed. So the PPT and all
federal bureaucrats who know of it must continually deny its
existence. They must travel by night and operate through surrogates.
A New and Sinister Use of the PPT
For the past 12-14 years then, the PPT has been used by Washington
to control the price movements of the NYSE through the buying of S&P
futures as former Fed governor Heller advocated. Whenever a crisis
appears especially threatening, the PPT swings into action to shore
up equity prices on the exchange. The media sycophants of the
establishment turn a deaf ear to such a claim, but it is accepted by
most astute followers of the market today. The sheep who idolize
CNBC choose to ignore such revelations when divulged to them because
it is in their interests to have such a shoring-up agency putting a
floor under them. They are happy with such an arrangement, and being
unable to grasp the long range ramifications of such market rigging,
they just dutifully go along to get along. That their profits are
protected is all they care about. The fact that eventually such
rigging will destroy the integrity of the markets as free
institutions of trading is for someone in the future to worry about.
Well that future is rapidly approaching us. And it concerns the new
theoretical wrinkle I alluded to above. This is purely hypothetical
on my part. I have no verification to prove the claim that follows.
But if the reader will keep an open mind and think logically, he
should come to the same conclusion that I have.
What, in the minds of Federal Reserve and Treasury bureaucrats, is
the most important economic need facing our economy today? And as a
result of this need, what is it that they desire to do the most? I
would say their greatest desire is to counter the potential forces
of deflation that have devastated Japan for over 10 years, and now
threaten to afflict us also. If this is so, then the most crucial
problem the Fed and the Treasury has is to get liquidity into the
system so as to hopefully maintain consumer spending and stimulate
new capital expansion, but to do so without spooking the foreign
holders of American equities and bonds into repatriating their
funds, which would bring about a crash of the dollar and the Dow. If
the Fed starts printing up dollars wholesale as Bernanke postulated,
then alarm bells begin sounding throughout the Forex markets and the
dollar starts falling like an elevator with a severed cable. This
Washington cannot tolerate. But since it is becoming more and more
evident that mere Fed manipulation of interest rates is not going to
be enough to counter the forces of deflation, the printing presses
have to be brought out. How to start printing money, though, without
setting off the alarm bells?
Here is where the Clinton-Rubin "strong dollar" policy and its gold
leasing scheme becomes instructive. Rubin understood that to
confront the Republican revolution of '94 and insure Clinton's re-
election he needed to inflate the money supply; but to do so, he
needed to suppress the price of gold so as to not alarm the Forex
markets. However, he could not suppress the price of gold by just
selling Fed owned gold. That was public; it would set off the Forex
alarm bells and negate his desire to keep the dollar "strong" while
still inflating it. He therefore hatched the scheme to lease gold to
the bullion banks who would then sell it into the market. Leased
gold could still be carried on the Fed's books as an asset; the
movement of the gold would not be acknowledged to the world. The
bond vigilantes and Forex markets would not get alarmed. The dollar
could be inflated, yet made to appear to be strong. Capital would
continue to flow into America. Clinton could be re-elected.
The lesson here is that any substantial printing to inflate the
money supply must be done SECRETLY. If it is done in large amounts
by conventional monetization of bonds and deficits, then it will set
off those nasty alarm bells in the Forex markets. The dollar will
plummet, capital will flow out of America, and the Dow will crash.
So the Fed has to print up billions of dollars and inject them into
the economy without public acknowledgement. Enter the PPT! The
Treasury Department has by now found that it is a natural vehicle to
use to funnel "new money" into the market secretly. Since the PPT's
operations and existence must always be kept secret, then its
funding (at least its major funding) must also be orchestrated in
clandestine manner. It must be done offshore. And this is where the
funding for the PPT undoubtedly comes from. Rubin probably initiated
this procedure. The Fed prints up billions of dollars and slips them
into an offshore bank account for say XYZ Investment Corp (which is
established as a front for the PPT). JP Morgan and Goldman Sachs are
then designated as the brokers for XYZ Corp to act as the funnels to
bring the "new money" into the economy via the PPT's "market
stabilization activities." Thus, there are unlimited funds for use
to short gold, buy dollars, and buy S&P futures whenever the markets
look to be in jeopardy. Whenever the offshore account runs low, the
Fed merely prints up more money for a PPT operative to deposit into
the account.
Thus, the Fed and the Treasury accomplish two things that help them
to keep their sinking ship afloat: 1) They shore up both the equity
and dollar markets and put a cap on the gold market, and 2) they
also inject billions of "newly printed" dollars into the economy,
which helps them to counter deflation. The important point, however,
is that the new dollars are injected into the economy SECRETLY!
There is no public record of their entry like there would be if the
Fed monetized the purchase of bonds through its open market
operations. So the Big Government-Big Banking cartel gets to control
the equity, currency and commodity markets, and it also gets to
funnel billions of newly printed dollars into the economy without
sending out an alarm to the world. In this way, the Federal Reserve
can print money big time without causing a big sell-off of the
dollar in the Forex markets and an exodus of foreign capital out of
America.
The Federal Government will do anything to avert deflation, keep the
Dow and the dollar from crashing, and keep gold and silver from
skyrocketing. USING THE PPT ALLOWS IT TO DO ALL THREE IN A SIMPLE,
SECRETIVE WAY. It's a perfect tool for the disingenuous
Machiavellians who run Washington today. As stated, I have no proof
of any offshore funding, and no Deep Throat contact has informed me
that the Treasury has bumped the PPT's role into a vehicle to inject
substantial amounts of "printed" dollars into the economy. But such
a role is as natural as members of a Mafia family operating
neighborhood protection rackets. It fits the personas of the
participants, and it fulfills their needs.
Will Such Manipulation Work?
There is an adage that no man and no group is bigger than the
market -- even government men and groups. This can be borne out by
any perusal of history. All savvy theoreticians accept this truth.
And it is especially true if the market trend that the government is
attempting to manipulate is a Kondratieff winter. The only thing
that will cure this kind of bear market is the PURGING OF DEBT,
which is precisely the opposite of what the Fed and Treasury
machinations are geared to do. They are hell bent upon creating more
debt and more fiat money to chase more goods and services higher in
price. This is what they conceive to be "stability" and "prosperity."
So in the long run, the PPT's manipulatory tactics will not be able
to stop the gold and silver bull market, nor will they be able to
stop the continued bear market in equities. No government has ever
been able to reverse or stop a "primary bull or bear trend" once it
is launched. All government manipulators can do is delay the
ultimate destination of the market and make for wild swings of high
volatility. All they can do is buy some time, which is what
desperate men always try to do when their backs are against the wall.
What these manipulators don't realize is that a secular bear market
is like a great northern blizzard. All we can do is try to calculate
its duration. All we can do is hunker down and ride it out, while
loading up on various storm shields that might gain value in
freezing weather. The manipulators' efforts to stop the development
of the blizzard will fail, but this doesn't keep them from trying to
stop it, and in the process creating havoc and volatility along the
way.
Therefore, what we can expect from the Fed on an ever increasing
scale in the upcoming years is an effort to "manage" the dollar down
slowly so as to alleviate America's trade and current account
deficits, while trying to keep the Dow from crashing, and also at
the same time helping JP Morgan and its cohorts in New York to ease
out of their short derivatives. Thus, the Fed needs to push gold
down to a low enough price where JP Morgan, et al can buy their
shorts back without too much of a loss. This buying back then causes
the gold market to shoot up, which then necessitates that the PPT
come in and push it back down to where JP Morgan, et al can then
dump some more of their short contracts. Jim Sinclair thinks the
recent rocket up to $390 in gold was the first big attempt by JP
Morgan to close out some of their short positions. It put tremendous
buying pressure on the price, and it had to be contained. So the PPT
was brought in to push the price down again. (I am not saying that
gold didn't get overbought; it did. But you can bet that the PPT was
right there helping to push the price down once the market turned.
And it will be ever with us into the foreseeable future trying its
damndest to convince the world that gold as an investment vehicle is
a fool's choice.)
So the Fed's strategy is to try and keep the Dow above 7000 and gold
below $400 until all the dangers are purged, i.e., until the New
York banking cartel has eased out of its short positions and U.S.
corporations are beginning to make profits again. That's why the Fed
will be making liberal use of the PPT along with lots of rumors and
smear campaigns over the next decade. This is a very dangerous game
that these participants are playing, and we need to be aware of it.
As stated above, the only thing such PPT rigging can accomplish in
the long run is more WORTHLESS DOLLARS being funneled into the
economy, which is just more of the paper money poison that is
killing us. But such rigging will be able to buy the Fed and the New
York cartel some time. If Greenspan can pull this off until June of
2004, he then retires, and can drop the whole mess in the lap of his
successor. He can then escape to his knighthood and become an elder
statesman. The crash will come on someone else's watch. So it's a
good bet that such motives and manipulations are a prominent part of
his present rationale.
This, in my opinion, is the vision of our Federal Reserve and
Treasury bureaucrats who are in bed with the mega-bankers of New
York City. These are desperate men, and desperate men blind
themselves to long term reality. They shrink their focus down to the
short run, so as to buy time. This is why the PPT is going to become
a much bigger and more dangerous element in the investment markets
as this decade unfolds. We must always keep in mind that desperate
men are like cornered rats. They will use any means at their
disposal to avoid loss and humiliation. These are the people who are
governing us today -- cornered rats.
Nelson Hultberg
March 26, 2003
Nelshultberg@aol.com
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