Fed Market Manipulation, Surmounting The Main Threat To Profits And Protection
Politics / Market Manipulation Jun 27, 2009 - 04:06 AMBy: DeepCaster_LLC
In the near-century since 1913, (the year the U.S. Federal Reserve was established) the World’s Reserve Currency, the U.S. Dollar, has lost at least 96% of its purchasing power. Among the many casualties of this Massive Devaluation are Retirees, Investors, and Savers who “stored”, they thought, the fruits of their labors in U.S. Dollar (i.e. U.S. Federal Reserve Note) denominated paper “Assets”.
In the near-year since the Equities Markets began their Crash today’s hopeful wealth-builders, Investors, Savers and present and prospective Retirees (not often mutually exclusive categories) have seen their paper “Wealth” – Typically their Equities Portfolios – savagely reduced by as much as 30% to 40%.
The victims of these Devaluations have at least two things in common:
- They are mainly the victims of the Policies and Actions of the private for-profit U.S. Federal Reserve and
- It is unlikely that these victims will be able to regain or even preserve remaining wealth until the private for-profit U.S. Federal Reserve is abolished and its functions are assumed by the U.S. Treasury.
That is primarily because The Fed’s policies and practices which got us into this mess are not only continuing, but accelerating in intensity and scope.
Bob Chapman recently provided a concise summary of these policies and practices and their catastrophic effects on our Economy and Markets.
“What the Illuminati have done for over 20 years now, was to have the Fed, which they privately own, raise the level of growth in the supply of money and credit to ludicrous levels, while they simultaneously order their lackeys at the BLS to lie about the rate of the resulting inflation by using hedonics (statistical manipulations) that were intended to greatly understate inflation.
As a result, when real GDP was calculated, the GDP deflator, which is based substantially on the official (and falsely low) rate of inflation, and which is used to calculate real GDP, was obviously far too low. This farce resulted in higher levels of real GDP than were warranted by the data, because inflation was not being properly taken into account.
This is how they covered up the destruction of our economy via free trade, globalization, off-shoring and outsourcing, along with both legal and illegal immigration (slave labor). If the true figures were used, our real GDP would show that the rate of growth in our economy has been virtually flat to negative since 1990s has been nothing but false puffery, which resulted from profligate growth in the supply of money and credit, and not from growth in production. For this reason, when the Dow finally bottoms, we expect it to track back to its levels during the early 1990’s, which means roughly 2,500 to 3,500. That level will destroy everything, especially the wealth of our middle class…
The Illuminati are about to learn a hard lesson: Hell hath no fury like an American deceitfully parted from his money!!!
…We may think our republic is democratically free, but it isn’t. It is controlled by a privately owned Federal Reserve just as England is with the Bank of England.”
(emphasis added)
International Forecaster
June 20, 2009
Amplifying one point made in the Chapman excerpt, Deepcaster has been focusing for several years on the serious distortions of Official Statistics and the key Role they play in the Fed-led Cartel’s* Profit Making and Power enhancing Strategy.
Consider certain key Real Numbers calculated by Shadowstats.com the old-fashioned way - - the way they were calculated before political “adjustments” began to be made in the 1980s and 1990s.
Shadowstats.com makes a convincing case that Real Consumer Price Inflation is 6% annualized (June 17, 2009 report), M3 is still at about 7% (June 12, 2009 report), that Real Unemployment is about 20% (June 5, 2009 report), and Real U.S. GDP growth is a negative 5% (May 29, 2009 report).
Making matters worse, for years now, a Fed-led Cartel* of Key Central Bankers and their favored Financial Institutions have been overtly and covertly intervening in the Precious Metals, Equities, Strategic Commodities, and other Markets.
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*We encourage those who doubt the scope and power of Intervention by a Fed-led Cartel of Key Central Bankers and favored financial institutions to read Deepcaster’s December, 2008 Letter containing a summary overview of Overt and Covert Intervention entitled “A Strategy for Profiting from the Cartel’s Dark Interventions & Evolving Techniques” and Deepcaster’s July, 2008 Letter entitled “Market Intervention, Data Manipulation - - Increasing Risks, The Cartel End Game, and Latest Forecast” at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.”
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In other words, the Asset bubbles of the last decade, as well as the Fall, 2008 Market Crash were, to speak euphemistically, facilitated by The Fed-led Cartel.
And in connection with the Fed-led Cartel’s being a profit-making enterprise, consider the $13 Trillion! Which the Fed-led Cartel and favored Financial Institution made, in the 6 months between June, 2008 and December, 2008, when Investors around the World were losing Trillions in the Equities Market. And this fact is “hiding in plain view” on the Central Banker’s own Bank (The Bank for International Settlements) website www.bis.org, path: Statistics > Derivatives > Table 19. For extensive details on this $13 Trillion “Windfall” read “Opportunities & Threats in Derivatives Shocker” (05/29/2009 ) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
Thus the evidence continues to accumulate that U.S. Fed/Treasury policies favor the Mega-Bank Members and Allies of the Fed-led Cartel*, and disfavor Regional and Local Banks (witness the increasing number of bank failures) and, indeed, disfavor all of Main Street.
Indeed, Fed/Treasury policy of Bailing out the very Biggest Banks and allowing smaller Banks to bear disproportionate burdens, and even to fail, bears a remarkable similarities to what Fed policies caused in the 1930’s - - The Performing Assets of the smaller Institutions were scarfed up at fire sale prices, while Main Street’s Assets were devalued or outright confiscated, as under the Gold Reserve Act of 1934.
Acquisition of Performing Assets (while laying off Toxic Assets on the U.S. Taxpayer) is one of the Key Elements in the Implementation of The Cartel’s ‘End Game’ as Deepcaster has described in his Alert of 8/13/06 “Massive Financial-Geopolitical Scheme Not Reported By Big Media” and his June 2007, Letter “Profiting From The Push To Denationalize Currencies And Deconstruct Nations” available in the “Latest Letter Archive” and “Alerts Cache” at www.deepcaster.com.
But even more ominously, The Fed-led Cartel* has recently been pushing another Power Grab - - Authority to examine all substantial financial institutions. This proposal was recently made by The Obama administration itself!
As background to understanding The Fed’s ascending to power and the ongoing implementation of the Cartel’s Interventional Regime and “End Game” consider:
The Root Cause of our Current Crises and The Systemic Threat to Democracy and Profits
“…in every major US financial panic since at least the Panic of 1835, the titans of Wall Street – most especially until 1929, the House of JP Morgan – have deliberately triggered bank panics behind the scenes in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power.
Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.
That process of using panics to centralize their private power created an extremely powerful concentration of financial and economic power in a few private hands, the same hands which created the influential US foreign policy think-tank, the New York Council on Foreign Relations in 1919…”
"Behind the panic: financial warfare over future of global bank power” - F. William Engdahl, October 10, 2008
Consider the implications of the F. William Engdahl quote regarding “global bank power.” As Engdahl points out, the evidence is increasing that the recent financial panic and economic distress is and has been pre-planned as a part of Cartel Strategy to increase power and, in our view, to implement its “End Game.”
To understand the Cartel’s likely “End Game” we must understand the Root Cause.
The Root Cause of The ‘End Game’ Threat lies in the structure, functioning and policies of the private-for-profit “U.S.” Federal Reserve.
Various international private banks, several of which are headquartered in Europe, own the “United States” Federal Reserve Bank.
These International Bankers, acting through their “U.S.” Fed, make money by creating money out of “thin air” as eloquently described by the Dean of the Newsletter Writers, Richard Russell:
“I still can’t get over the whole Federal Reserve racket.”
Consider the following - - let’s take a situation where the U.S. government needs money. The U.S. doesn’t just issue United States Notes, which, of course it could. These notes would be dollars backed by the full faith and credit of the United States. No, the U.S. doesn’t issue dollars straight out of the U.S. Treasury.
This is what the U.S. does - - it issues Treasury Bonds. The U.S. then sells these bonds to the Fed. The Fed buys the bonds. Wait, how does the Fed pay for the bonds? The Fed simply creates money “out of thin air” (book-keeping entry) with which it buys the bonds. The money that the Fed creates from nowhere then goes to the U.S. The Fed holds the U.S. bonds, and the unbelievable irony is that the U.S. then pays interest on the very bonds that the U.S. itself issued. (With great profit to the private owners of The Fed - - Ed. Note) The mind boggles.
The damnable result is that the Fed effectively controls the U.S. money supply. The Fed is …not even a branch of the U.S. government. The Fed is not mentioned in the Constitution of the United States. No Constitutional amendment was ever created or voted on to accept the Fed. The Constitutionality of the Federal Reserve has never come before the Supreme Court. The Fed is a private bank that keeps the U.S. forever in debt - - or I should say in increasing debt along with ever rising interest payments.
How did the Fed get away with this outrage? A tiny secretive group of bankers sneaked through a bill in 1913 at a time when many in Congress were absent. Those who were there and voted for the bill didn’t realize (as so often happens) what they were voting for (shades of the shameful 2002 vote to hand over to President Bush the power to decide on war with Iraq).”
Richard Russell, “Richards Remarks,” dowtheoryletters.com, March 27 2007
After President Wilson signed the Federal Reserve Act into law in 1913, he reportedly said, “I am a most unhappy man, I have unwittingly ruined my country…a great industrial nation is now controlled by its system of credit…the growth of the nation, therefore, and all of our activities are in the hands of a few men…” Thus we have an early statement about the threat to “democracy” occasioned by The Fed.
Insightful economic forecaster Ian Gordon notes several negative consequences of the nearly 100-year reign of The Fed, consequences with which we cope today.
“Since its inception in 1913, the Federal Reserve Board has been responsible for almost 95% devaluation of the U.S. Dollar. All this has been achieved through its ability to continually inflate the money supply.
And, between 1985 and 2005, the Federal Reserve Board has increased the money supply by five times. This extraordinary money creation is merely the catalyst for debt creation. In a fiat money system, money is debt…there is absolutely no way this money can ever be repaid except by continued inflation. But, now that the credit bubble is blown up, inflation is no longer an option; bankruptcy looms.”
“The Federal Reserve…What Has It Done For You Lately? ”
Ian Gordon, December 29, 2007 (www.axisoflogic.com)
Market Intervention and The Cartel “End Game”
As Richard Russell points out the creation of ever-increasing debt and interest payments is unsustainable. Thus there will inevitably be a Day of Reckoning.
In order to stave off the Day of Reckoning (which, we reiterate, is coming mainly as a consequence of their dramatic monetary inflation and “easy credit” policies), the Fed-led Cartel* of Key Central Bankers and Favored Financial Institutions has created, and for the past several years has operated, an extraordinary “financial regime” built on dramatically increasing trillions of dollars (nearly $592 trillion as of December, 2008 - - see www.bis.org (path: statistics>derivatives>Table 19 and ff.) of Dark OTC (i.e. not Exchange-traded) Derivatives available for the manipulation of major markets ranging from Precious Metals to Crude Oil and Energy, to Equities and Strategic Commodities (see Deepcaster’s July, 2008 Letter at www.deepcaster.com).
To be sure The Cartel’s massive and increasing use of derivatives to intervene (Overtly and Covertly via Primary Dealers) in a wide variety of markets is fraught with danger (e.g. through actual and prospective counterparty failure as we are now seeing, as well as prospective Systemic Failure). Deepcaster, Warren Buffett and Jim Sinclair have pointed out the dangers of OTC derivatives. Indeed, Buffett calls them “toxic” and Sinclair has aptly described the financial system as “sitting on a… trembling mountain of derivatives…think Weimar Republic.” Unfortunately, Deepcaster, Jim Sinclair, and Warren Buffett are correct.
Second, the evidence indicates that The Cartel has developed a nefarious “End Game” plan, which we describe below.
The Crisis Intensifies - – The “End Game” Implementation Begins
Deepcaster has described The Cartel’s apparent ‘End Game’ in detail in its June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations “ and its August 13, 2006 Alert “Massive Financial-Geopolitical Scheme Not Reported by Big Media” posted in the “Archives” at www.deepcaster.com. Fortunately, a Bill was introduced in the U.S. Congress (H.Con.Res.40), which opposes this nefarious scheme. But consider the following key aspects.
The ‘End Game’
The clue to the character of The Cartel “End Game” is the Strategic and Prosperity Partnership Agreement signed by Presidents Bush, Fox of Mexico and Martin of Canada in Waco, Texas in March, 2006.
This multi-faceted Agreement was signed without the approval of Congress, or the knowledge of most of the American people.
It is clear from the multifaceted “End Game” Plan reflected in this Agreement why the Bush Administration was so resistant to defending U.S. borders.
It is also clear that One Key Component of the End Game Plan is the dissolution of the United States Dollar and other currencies into a New Currency, one “candidate” for which is the “Amero.” Indeed, two bits of anecdotal evidence that this plan is being taken seriously are:
- That the “Swiss Portfolio” Investment Advisory Company has already touted the “Amero Alternative” on its website; and
- The London investment firm Jeffries International Ltd.’s Vice President, Steven Pervis, said that the coming “Amero” will have “a big impact on everybody’s life.”
Another New Currency “candidate” is the SDR’s recently issued by the IMF – the first de facto Global Currency! Thus we are impelled to assume that The Cartel is pushing the Amero and/or SDR’s, or their functional equivalent, as the eventual, and their favored, alternative to the U.S. Dollar.
Given that Policy, it is also clear that The Cartel certainly intends to continue its interventional efforts at suppressing the prices of Gold and Silver. They do this in order to prevent their attaining increasing legitimacy as the ultimate Store and Measure of value money, and thus becoming even stronger competitors to their New Global, and Regional Currencies, and their existing Fiat Currencies and their Treasury Securities.
In the event of the success (from The Cartel’s perspective) of the continuing implementation of the End Game Plan which includes destruction of the U.S. Dollar as The World’s Reserve Currency, doubtless The Fed-led Cartel intends to transmogrify itself into The (still private and still very profitable) Central Bank responsible for issuing the Amero/SDR’s and/or their functional Equivalent. Additional details regarding The Cartel’s “End Game” are provided in Deepcaster’s August 3, 2008 Alert and June 2007 Letter available at www.deepcaster.com.
The key question for the long-term is whether The Cartel will be able to pull it off. Certainly they have been The Primary instrument in causing The Financial and Economic Crises, (mainly through excessive monetary and credit inflation) and have thus far been successful in instituting Regional (e.g. the Euro) and, now, Globally (e.g. The IMF SDR’s) currencies.
If The Fed is not able to continue to lead its Cartel to success in implementing its “End Game,” the No-Salvation, No-Return Systemic Crises that its policies are creating, the ensuing Mega-Crisis would clearly and publicly be its responsibility.
In that event, is it not highly likely that The Fed would be unable to continue as a privately owned for-profit entity? One can hope.
Yet, in spite of all this the Obama Administration wants to increase The Fed’s power by Making it the “Systemic Risk Regulator”, specifically the Fed would have the power to examine any firm they claim threatened financial stability. What a catastrophe the granting of that new power to The Fed would be.
And the Obama Administration is requesting that The Fed be granted this authority even though the Fed’s Inspector General recently testified she has NO knowledge how our money is being spent there, and No idea what is going on there.
Fortunately, a Majority of members of the U.S. House of Representatives have endorsed Rep. Ron Paul’s ‘Audit The Fed’ bill (H.R. 1207). Rep. Paul has also introduced an Abolish The Fed Bill (H. R. 2755). If these Bills pass or come to close to passing it may be possible to stop this Fed Power Grab.
We encourage you to encourage your Senator and President Obama to support these bills AND to OPPOSE giving The Fed any increased Power. Increased power for The Fed entails an increased threat to the Profits and Wealth Protection Of Investor – Citizen around the world.
A Solution Which Addresses Current Realities
Rather, and as an alternative to The Cartel’s planned “End Game,” the U.S. Treasury could assume the functions of the Fed and begin to function as it is constitutionally authorized to do, as The United States National Bank issuing United States Notes (as President J.F. Kennedy authorized the U.S. Treasury to do before he was killed) solidly backed by the monetary metals, Gold and Silver. However, we investor--citizens must cope with the system as it now exists. Thus we offer the following Guidelines to help insulate you from the negative effects of Fed Policies, and to help you profit as well.
A Strategy for Profit and Protection
Normally, (that is to say in a Genuine Free Market situation) the go-to “Safe Haven” Assets in times of Financial Crisis would be the Precious Monetary Metals Gold and Silver, as well as other tangible assets such as Strategic Commodities.
We say “normally” because nearly every time another Financial Market and/or Economic Crisis has come prominently into the public eye in recent years The Cartel* has successfully taken down the price of what would normally be the Safe Haven Assets - - the Precious Monetary Metals.
A prime example occurred during the much-publicized demise of Bear Stearns in March, 2008, which was accompanied by a vicious Takedown of Gold and Silver. In a non-manipulated Market, given the fact that Bear Stearns reflected great and increasing weaknesses in the Financial System, Gold and Silver should have skyrocketed. But instead they were dramatically taken down.
Similarly, during the Fall, 2009 Market Crash Gold was taken down from $900/oz. during September, 2008, down to the low $700s when it should have exploded upward.
Yet, it launched again toward $900 in December, 2008 and has actually traded above $900 for most of 2009.
So the question now, near mid-year, 2009, is it different this time around? Have Gold and Silver finally thrust off the shackles of Cartel Intervention? Or will The Cartel be able once again to cap and take down the prices of these Precious Monetary Metals and Strategic Commodities? Deepcaster has addressed this question in a Forecast he recently issued for the likely fate of Gold, Silver, Crude Oil & the U.S. Dollar in the Alerts Cache at www.deepcaster.com.
One thing is certain: The Cartel will certainly attempt again to take down Gold, Silver and Strategic Commodities at the earliest opportunity because the Strategic Commodities and Precious Monetary Metals are Competitors as Stores and Measures of Value with the Central Bankers’ Treasury Securities and Fiat Currencies, including their New Currencies.
Thus Deepcaster has developed is a Strategy which accommodates Cartel Interventional attempts and at the same time provides excellent Profit Opportunities, whether the Interventional attempts are successful or not.
A major premise of The Strategy is that one can certainly remain a Hard Assets Partisan (as Deepcaster is) while at the same time insulating oneself from future Takedowns. The following points provide an outline of The Strategy (particularly as applied to the Gold and Silver Markets) and are designed to help avoid Portfolio unpleasantness, or even possible financial ruin, in the future, as well as to profit along the way:
- Recognize that The Cartel is still Potent, as difficult as that may be psychologically for Deepcaster and other Hard Assets Partisans to acknowledge. The Cartel is still the Biggest Player in many markets and, if the timing and market context are propitious, the Biggest Player makes Market Price. In addition, The Cartel has the advantage of de facto controlling the structure and regulation of various marketplaces and that is a tremendous advantage; just as the Hunt Brothers years ago discovered much to their dismay and misfortune, when they tried to corner the Silver Market.
- Accumulate Hard Assets near the Interim Bottoms of Cartel- induced Takedowns.
- In order to know when one is near the bottom of a Cartel-generated takedown, it is essential to take account of the Interventionals as well as the Technicals and Fundamentals. Paying attention to the Interventionals facilitated Deepcaster recommending five short equities positions as of early September 2008 (just before the Fall Crash) all of which we subsequentially recommended be liquidated quite profitably.
- For example, regarding Gold & Silver, near such Interim Bottoms, accumulate a combination of the Physical Commodity (Deepcaster prefers “low premium to melt” bullion coins) and well-managed Juniors with large reserves. (Deepcaster provides a list of such Junior Candidates in our December 20, 2007 Alert “A Strategy for Profiting from Cartel Intervention” available in the Alerts Cache at www.deepcaster.com.) The “Physical” and “Juniors” are for holding for the long-term as a Core Position.
- Then, to the extent one wishes to speculate on the next “long” move, one should buy the major producers or long-term call options on them. These latter positions are for ultimate liquidation at the next Interim Top and are not for holding for the long-term.
- However, there will be a time when The Cartel price capping is ineffective and Gold & Silver make record moves upward. The benefit of this Strategy is that one will likely be long in one’s speculative positions when this happens.
- Near the next Interim Top, liquidate the long options and majors. Again, in order to know when we are close to the next Interim Top, it is essential to monitor the Interventionals, as well as Fundamentals and Technicals.
- Near that Top, sell short or buy puts on Majors. We re-emphasize the Majors as preferred vehicles for trading positions because such positions are more liquid and tend to be quite responsive to Cartel moves.
- At the next Interim Bottom, cover your shorts and liquidate your puts and go long again to begin the process all over again. We emphasize that it is essential to consider the Interventionals as well as the Fundamentals and Technicals in order to determine the approximate Interim Tops and Bottoms.
- Finally, Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of The Cartel. It is truly outrageous that the average unsuspecting citizen, and prospective retiree, can and does put his hard won assets in Tangible Assets only to have those assets effectively de-valued by Cartel Hard Assets Takedowns and Taxpayer-funded Bailouts of Cartel Members and favored financial Institutions. This is extremely injurious to many average citizens in many countries who are saving for the rainy day or retirement and have their retirement and/or reserves effectively taken from them. In order to help prevent this and similar outrages, we recommend three possibilities:
- Become involved in the movement (first to audit and then) to abolish the private-for-profit U.S. Federal Reserve as Deepcaster, ex-Presidential candidate Rep. Ron Paul, and legendary investor Jim Rogers, all have advocated. Rep. Paul has introduced the ‘Audit the Fed’ Bill H.R.1207 (which already has a majority of Members of Congress as co-sponsors), as well as the Federal Reserve Abolition Act, H.R.2755. The non-Profit activist organization www.carryingcapacity.org strongly supports these bills.
- Join the Gold AntiTrust Action Committee, which works to eliminate the manipulation of the Gold and Silver markets (www.gata.org). GATA is a non-profit organization, which makes a great contribution by gathering evidence regarding the suppression of prices of Gold, Silver and other commodities.
- Work to defeat The Cartel ‘End Game.’ Deepcaster has laid out the evidence regarding the Ominous Cartel “End Game.” Clearly The Cartel is sacrificing the U.S. Dollar and the “Main Street” Taxpayer/Investor to prop up Favored International Financial Institutions and to maintain its Power. But this sacrifice cannot continue forever.
Additional insights and details regarding this Strategy which are essential to profiting from the Fed’s Policies, are laid out in Deepcaster’s article of 9/26/08 entitled “Protection and Profit from Bailouts Failed to Doom” and 6/30/06 “Profiting from Cartel Intervention”, in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com.
Protection and profit require Proactivity and attention to the Interventionals, Fundamentals and Technicals, not “Buy and Hold.” “Buy and Hold” rarely succeeds anymore as current market conditions attest.
Indeed, the Key Point of the Strategy for Protection and Profit is careful attention not only to the Fundamentals and Technicals but also to the Interventionals. These Overt and Covert Cartel-generated Interventions have the power to move markets as those who study the matter can attest.
Thus, the Key to Profit and Protection is a Strategy: Successful Investors must become Long-Term Position Traders, with their trading choices informed by the Interventionals, as well as the Fundamentals and Technicals. Moreover engaging in the Actions suggested above can help prevent The Cartel’s solidifying its Superpower status.
By DEEPCASTER LLC
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