END THE RIGGING
Propping up markets is perilous
Dear John: I run a commodity futures trading firm.
I have become convinced of the Federal Reserve’s manipulation of futures markets (and others) over the course of my trading. I know in the past you have written about the Plunge Protection Team (PPT), which could be doing the manipulation.
Three things: First, I am wondering if you can point me to resources that expose these activities.
Second, the PPT membership (I call them the four horsemen) seems to be unraveling as President-elect Donald Trump ascends. With the SEC chairman resigning and a new treasury secretary coming, half will be gone. Trump just needs to dump Fed Chair Yellen and maybe these ridiculous interventions will cease.
And, third, please write more about this stuff. The American people need to know and Trump needs to purge the rat’s nest. E.O.
Dear E.O.: Well, hello. Welcome to the enlightened side.
The next time the stock market is about to collapse, I’m not sure Donald Trump will be there cheering, even though he has said there is a bubble.
Remember what happened the night he won the election. The stock market was about to crash when his friend Carl Icahn, the billionaire, bought $1 billion worth of Standard & Poor’s stock index futures contracts and saved the day.
And the German Federal Bank saved European markets when the British voted to leave the European Union. The Germans admitted it.
But this kind of manipulation has been going on for decades, right under the noses of regulators and right in front of investors who simply wipe their brows and say, “Wow, this market is really resilient.”
It’s only resilient because it’s being rigged — just like was proposed by Robert Heller right after he quit the Fed in 1989. You can look up his article in the Wall Street Journal from October 1989.
Anyway, everyone will be happy with this manipulation until it stops working. And then there will be hell to pay. And nobody will be able to say I didn’t try to stop this dangerous practice.
The PPT — which is the nickname for the President’s Working Group on Financial Markets — is a great idea until suddenly it isn’t.