News & Analysis
The Fed Claims It is Responsible for Half of US Stock Market Gains – Are We Grateful?
Market Savior? Stocks Might Be 50% Lower Without Fed ... A report from the Federal Reserve Bank of New York suggests that the bulk of equity returns for more than a decade are due to actions by the US central bank. Theoretically, the S&P 500 would be more than 50 percent lower—at the 600 level—if the bullish price action preceding Fed announcements was excluded, the study showed. Posted on the New York Fed's web site Wednesday, the study sought out to explain AP why equities receive such a high premium over less risky assets such as bonds. What they found was that the Federal Reserve has had an outsized impact on equities relative to other asset classes. For example, the market has a tendency to rise in the 24-hour period before the release of the Fed's statement on interest rates and the economy, presumably on expectations Chairman Ben Bernanke and his predecessor, Alan Greenspan, would discuss or implement a stimulus measure to lift asset prices. – CNBC
Dominant Social Theme: Thank goodness for the Fed. Oh, thank goodness.
Free-Market Analysis: One of the world's major central banking institutions has now admitted that the impact of monetary manipulation has pushed up American equity markets, the biggest in the world, by about 50 percent for at least the past ten years.
It will be instructive to see if all those who are so upset over the phony LIBOR scandal now react to this news with the same amount of indignation. Will Eliot Spitzer suggest that such manipulations constitute the scandal of the century? Will Rolling Stone take the lead in blasting this sort of market rigging? Will the British bureaucracy beat its collective breast?
What's that we hear? The sound of collective silence?
You can see our LIBOR articles here:
One of the central planks of our modest publishing enterprise has been the distortive effects of central banking on the larger economy – domestically and worldwide. It is a massive criminal enterprise that benefits a tiny handful at the expense of everyone else.
Why does it continue? Because the power elite itself, a handful of dynastic families, apparently maintain their hold over the world via money printing. Without the ability to print money from nothing, the entire rotten enterprise of world government would collapse.
The justification for modern monopoly central banking is that it is "legal." But there is nothing legal in the generally accepted definition of the term about giving plutocrats the right to generate trillions, collectively anyway, while the elderly and the young languish with inflation that decimates their savings and interest rates that are too low to replenish them.
This is why we know the mainstream media is corrupted and controlled by Money Power. In a normal environment, if you explained to someone what central banks are and how they operate, that person would likely become indignant and want them shut down. But such ordinary, normal reactions are lacking within the context of the modern media.
These intelligent, literate people can discover plenty of private corruption, but hardly ever do they focus on what the government is doing or why, especially the federal government. Over and over, we hear that if Americans are disgusted with the federal government, they can "throw the bums out."
We also read, eternally, that "the people get the government they deserve." The idea is that over generations Americans in particular have become corrupt, soft and lazy. The logic then is such people elect equally corrupt individuals to represent them.
What nonsense this is. Throughout history, complex civilizations have been ruled by secret cabals that influence society behind the scenes. It is no different today, only grander in scale as the ambition has grown. As society progresses, the corruption and manipulation become overwhelming. It has nothing to do with elections and everything to do with human nature.
Today's Money Power wants nothing less than world government. They have thoroughly corrupted the halls of governments throughout the West – and then throughout the world.
This is the REAL problem that the mass of the West's citizens face. Their governments work for them in name only. In reality, like a head severed from a body and then regrafted onto another person entirely, government's outward face remains the same even though its functionality belongs to a stranger.
Thanks to the Internet, there has been plenty written about this aggregate "stranger" – this tiny, power elite that has its own agenda and methods for implementing it.
What can be said most certainly – if one examines the elite's methodologies – is that they are purposefully ruining civil society around the world. Nobody escapes from the deliberate warring, regulatory authoritarianism and economic ruin that are being inflicted regularly now.
The idea is apparently to make people suffer so much that they will welcome any kind of relief, even world government. Out of chaos ... order.
Central banking is not the entire manipulation, of course. As we have pointed out for years, the elites have traditionally manipulated populations via fear-based promotions ... dominant social themes that are intended to scare people into cooperating with globalist enterprises.
But certainly central banking is a prime tenet of elite manipulations, a central plank on which everything else rests. As a result it ought to be exposed by those who believe that world government ought to be constructed openly so everyone has a say in its potential organization.
For those in the mainstream media who cynically decry the idea of a one-world conspiracy, open or closed, we respond, simply ... "Examine the financial system and the monopoly central banking that runs it."
How is it that such a ridiculous system, which provides trillions in capital to only a few, survives and thrives without a conspiracy of silence? The answer is that there IS a conspiracy of silence when it comes to this most abusive of all financial systems.
And that conspiracy of silence will continue. The New York Fed itself – trying clumsily to counter the terrible press in the alternative media – released this factoid regarding the markets to show people how helpful American monopoly central banking really is. They are so far gone in their privilege and corruption that it apparently never occurs to them that some people will RESENT the idea of such massive manipulation.
What about those who hold gold and have lost massive amounts of capital due to this admitted manipulation of the stock market? What about those who sold the market short while central banking manipulations forced it up? What about new companies that could not gain traction because those already established were the recipients of equity capital they didn't deserve?
We could go on and on. We've written many times that the larger US equity markets have little to do with free-market capitalism. Now the New York Fed – in a move of idiotic hubris – has issued a statement that fully confirms the impact of central banking.
Without such market-rigging the authoritarian construct of American capitalism would likely crumble and fall away. Entrepreneurs would have a chance again. The powers-that-be would have much less opportunity to influence American culture by propping up vast enterprises that the culture would ordinarily reject.
There are many reasons why monopoly central bank monetary manipulation is terrible for society and only one real reason why it continues and is tolerated – it's LEGAL. The powers-that-be long ago manipulated the system to legalize money creation that partakes of government credibility but benefits only a very few.
Now that this system is finally crumbling, thanks to what we call the Internet Reformation, the elites are alternatively defending it and planning for something else. What "they" have in mind is a system of world fiat currencies – a basket of them – either backed by gold formally or informally. Either way, this may result in some kind of controlled gold standard.
It will be sold to people as a more democratic way of creating money but it won't be. The only solution to the current money crisis is a true competition in money that will result (likely primarily) in an informal gold and silver system backing digital paper.
This is the resolution, with various elaborations, that the human race decides on over an over – and has done for thousands of years. It is not a gold standard in the formal sense of the word, merely an expression of monetary freedom and choice.
There is, of course, another option that may be propped up by the powers-that-be: the idea of a purely paper money controlled by government. Greenbackers, Georgists and social creditors alike support some kind of government-supported paper money. The elites would not be averse to such a monetary solution because the elites ultimately control government, especially large government.
The only way to get rid of elite control is to starve it out via a reduction in government power and breadth. Education about the way freedom works and a dedication to small-community, agrarian living are surely preferable to the warfare state that exists today.
Conclusion: Are we supposed to be grateful to central banking for propping up the US stock exchange? Are YOU, dear reader?