On June 24, U.S. stock markets experienced their second triple digit drop in two days, as economics across the globe begin to unravel. These massive drops in equities, commodities, and nearly all paper based financial products are not an accident, and as the recent FOMC minutes from last week suggest, the Federal Reserve is intimating that their program of pumping up the economy with over $85 billion per month may soon be coming to an end.
Coupled with this move is the realization that nearly every economic indicator that led to record stock markets around the world has been tied to manipulation of the very tools that formulate the credit and currency systems that allow for global trade. These manipulations have helped to create the illusion of recovery and growth, and the revelation of these fraudulent schemes are helping to accelerate the current unraveling of stocks, bonds, housing and commodities, as the consequences of several years of direct manipulation on the global financial system finally arrives.
Beginning with the manipulation of ratings by agencies tasked with determining the risk and value factors of bonds, treasuries, and stocks, to the infamous Libor manipulation that affected in one way or another, the price of credit for items such as student loans, credit cards, and housing mortgages, manipulation over seven economic controls in the financial framework has allowed a small number of bankers, investors, and institutions to receive trillions of dollars in ill-gotten gains that were pillaged from the wealth of the citizens in the Western Economy.
Ratings Agency Manipulation
Besides the ongoing lawsuit against Standard and Poor’s for fraud in their Sub-Prime mortgage ratings, Congress has investigated nearly all the ratings agencies for their manipulation of assigning AAA or AAA+ ratings to MBS and derivative securities which led to the 2008 credit crisis. Recent attempts by some of the ratings agencies to correctly rate securities, bonds, and other financial investments has actually backfired, as leading bankers, along with certain politicians, have challenged any attempt to correctly rate risky investments sold to hedge funds, investors, or the public.
Interest Rate Manipulation
In September of 2012, former Congressman Ron Paul said it best regarding the Federal Reserve’s artificial manipulation of interest rates.
Because the interest rate is the price of money, manipulation of interest rates has the same effect in the market for loanable funds as price controls have in markets for goods and services. – Paul.house.gov
This manipulation, especially over the past five years, has led to artificial price increases for housing and commodities, a massive rise in the rate of inflation, and an increase in the money supply to the point where the real value of products and investments are virtually unknown.
Foreign Exchange Rate Manipulation
The great economist John Maynard Keynes made his fortune through currency arbitrage and exchange rate trading. Billionaire investor George Soros in 1992 nearly broke the Bank of England when he led speculators into nearly destroying the British Pound in a shrewd play on the currency. The power to print or control money is the power of nations.
So when the massive manipulation scandal hit earlier this month regarding the WM/Reuters currency rate swap system, it simply added to the list of the growing number of monetary and financial platforms that are much readily controlled by insiders to skim money from investors who do not have access to the tools the bankers do.
Libor Rate Manipulation
When the Libor rate scandal shocked the financial world in June of 2012, it exposed perhaps the greatest financial crime and fraud in the history of the world. Libor is the daily interest rate agreed upon in London through which all banks loan money to one another as desired. From that Libor rate, individual banks then lend money to corporations, businesses, municipalities, and even individuals for a myriad of reasons such as credit cards, home mortgages, and even small business loans.
The NY Fed, which was run at the time by former Treasury Secretary Timothy Geithner, knew about the Libor rate manipulation as far back as 2007, and chose to do nothing about, facilitating the Federal Reserves part in allowing the fraud and criminal activity by the banks and lenders to continue for several years.
Swap Rates and Derivatives Manipulated
Warren Buffet called derivatives financial weapons of mass destruction, and as they currently make up $1.2 quadrillion in debt obligations around the world, even a minute change in their value is enough to collapse the entire global economic system, which is has an annual GDP of only $71.8 trillion.
In April of this year, the CFTC accused and is investigating up to 15 Wall Street Banks in manipulation of interest rate swaps that affect the $379 Trillion market.
The Commodity Futures Trading Commission has issued subpoenas to ICAP Plc (IAP) brokers and as many as 15 Wall Street banks as part of an investigation into possible price manipulation of benchmark interest-rate swaps, according to people familiar with the matter.
The ISDAfix levels, which the Federal Reserve includes in a daily report on money-market rates, are used by everyone from corporate treasurers to money managers to determine borrowing costs and to value much of the $379 trillion of outstanding interest-rate swaps globally. – Bloomberg
Stock and Equity Manipulation
For any investor in the stock market, the tried and true method of determining the value of a company and their stock was to study the fundamentals and technicals of that company, and the industry.
But since the stock market crash of 2008/2009, that former model no longer has value as the stock market rise to all-time highs was not achieved by economic recovery and industrial growth, but my money printing and Federal Reserve intervention.
On Feb. 21, the president of the Federal Reserve’s regional bank in Dallas admitted in an interview that the recent gains in the stock market have come not through improvements in corporate fundamentals, or sustainable economic recovery, but instead through the artificial manipulation by the U.S. central bank in the markets themselves. Just as the Dow, S&P 500, and Nasdaq have crossed highs not seen since before the credit crisis, the primary causation for the more than 30% rally in stocks has been the continuous inflow of money by the Fed to ensure stock prices remain high.
The Fed has artificially sustained markets. – Dick Fisher, President of the Dallas Federal Reserve bank – Examiner
And as the Federal Reserve hints at slowly or precipitously ending the QE programs that artificially manipulated the markets upwards, the response on the DOW, S&P, and Nasdaq has been swift and harsh, losing almost 1000 points in the last month alone, and nearly 500 points in the past two days.
Gold and Silver Manipulation
Out of all the commodities and investments hit by manipulation, few have been more spectacular than the attack on gold and silver, and primarily, the paper gold and silver markets.
J.P. Morgan Chase is intrinsically tied to the Federal Reserve (shareholder), and the CFTC (agency which regulates commodity futures), and through their partnership with the fiat currency printer (Fed), and gold and silver contract regulators (CFTC), they have been allowed to short the paper prices of gold and silver through massive infusions of naked shorts to protect themselves, and the U.S. dollar.
In fact, the historical path of manipulation is so obvious, a commodities trader back in May issued to his clients the exact scenario, three times during the week, of what gold and silver would do, when it would do it, and who was facilitating it. His predictions in every case where dead on.
“Three times this week, I am going to tell you the low price of gold with near perfect accuracy, and one of those three times, I am going to tell you events that will precede the low and the exact time that gold prices will crash.” – Zerohedge
Nearly every country outside the U.S. and the Eurozone is buying gold in the belief that the end of the dollar is in sight. China is also currently working on creating economic trading blocs that bypass the dollar, and the creation of a new gold trading note is in the pipeline for trade between nation states.
Gold and silver have been the true catalysts that signify the true value of products and services, and as the dollar becomes more and more under attack from other economic powers, the manipulation on gold and silver will only increase and the disconnect between paper gold and physical gold will accelerate.