Central Bank Interventions Have Become Extreme

There are no markets anymore – only interventions.  – Chris Powell, Treasurer of GATA

Markets are supposed to act as information transmission mechanisms, with asset prices reflecting all of the fundamental information that goes into the process of “price discovery.”  But when Central Banks and Governments interfere – or intervene – in markets, it completely disrupts the information transmission, price discovery function of markets.

If Central Banks and Governments interfere with markets, there’s no reason to even have markets and it becomes completely useful to participate in financial markets in any capacity, unless of course you have access to the inside information connected to the market intervention.

The extreme volatility of the markets right now is nothing more than 100% evidence of Federal Reserve intervention in U.S. markets.  It also reflects the extreme degree to which the Fed is interfering and manipulating the markets.  Take yesterday for example:

This intra-day graph reflects the tug-of-war that occurred among the Fed’s interventions to prevent the market from a catastrophic drop, the hedge fund algo programs trying to time the Fed’s interventions and the rest of the market trying to unload extremely overvalued stocks.   That demonstrates the degree to which the U.S. capital markets have gone completely off the rails.

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It is now widely understood and accepted that Central Banks are actively buying stocks in order to support the equity markets.   Japan openly admits this.  The Swiss National Bank files SEC 13-D filings disclosing its purchases.

If central banks purchase stocks in order to support equity prices, what is the point of having a stock market? The central bank’s ability to create money to support stock prices negates the price discovery function of the stock market.

Dr. Paul Craig Roberts and I co-authored a report which discusses the issue of Central Banks buying stocks.  As it turns out, the Fed is likely the entity funding the Swiss National Bank’s purchases of stocks like Apple and Google.  You can read the entire article here:   Central Banks Have Become A Corrupting Force

With Central Banks attempting to control the direction of markets as a means of dictating policy, it has made any participation in the financial markets completely meaningless.

This will not end well.  History tells us there’s a limit to a Government’s ability to manipulate markets.  At some point the money printing and market support mechanisms will fail and the result will be much worse than if they had let the markets freely determine the outcome.  It’s not a question of “if,” it’s just a question of “when.”

15 thoughts on “Central Bank Interventions Have Become Extreme

  1. Each individual of the market is free to intervene by monetizing debt-free bullion. Bullion based currency in circulation purges debt right out of circulation.
    Gresham’s Law, as it has historically applied to bullion of FIXED values promoted hoarding based on the FIXED values. The problem was the fixed peg, not the bullion.

    You cannot pour new wine into old wineskins.

    Bullion is now a real-time , debt-free currency, with fully scalable liquidity based on the trade value.

  2. The CB message is clear: Buy AAPL, sell gold.

    This is exactly what they do. They sell their gold in order to buy AAPL. These guys are fricking crazy!

  3. I watched yesterday with absolute awe. Today has been entirely predictable.

    The problem we all have- we have together. How long can they keep this mf’er held together with duct tape and baling twine?

    At this point, only an idiot would think we have “free” markets- I am disgusted. I am gonna buy more metal, more miners, and screw it- if I have to sit on it ten years, so be it.

  4. ” There are no markets anymore – only interventions. – Chris Powell, Treasurer of GATA

    Markets are supposed to act as information transmission mechanisms, with asset prices reflecting all of the fundamental information that goes into the process of “price discovery.” But when Central Banks and Governments interfere – or intervene – in markets, it completely disrupts the information transmission, price discovery function of markets. ”

    What we are observing is the undertaking of a free market under siege , in slow motion. They will run tests like the one that we are witnessing present day , to observe how the general population reacts . So far to their advantage there are no uprisings. They own the markets and they will tear them down brick by brick. We are the frogs in the slow boiling kettle. To sleep we go without one bit of rebellion. To hell with physical gold and silver , so they anticipate .

  5. Dow Jones> sound of hot air pfffffffffffffffff…………Exits closed. Definitely deer in the headlights moment. Funny stuff.

  6. “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”–Ludwig Von Mises

    All the PPT has done is stave off the inevitable final and total catastrophe, nothing more.

    The day of reckoning is getting closer. “Markets” (yeah, right) are roiling, China’s epic bubble is deflating, a full on currency war underway, and the end of the debt super cycle is upon us with deflation now washing over the world.

    When the 1-100 year storm reaches landfall the Treasury and Fed in a coordinated effort w/the PPT and other central banks will fire all their ammo (gimme all you got Scotty!) at mother nature but their efforts will be in vein.

    They will launch QE4 (rebranded under a new name), more helicopter drops over Wall Street, more bailouts (to save TBTF institutions), push rates negative, pull the plug on markets (and blame it on a “technical glitch” or “Russian hacker”), followed by bank holidays, a false flag attack, and a nice little war designed as a convenient scapegoat and diversion.

    Somewhere along this time continuum the price of gold aught to wake up and rise a few bucks … you’d think. LOL

  7. Following lyrics by The Doors’ Jim Morrison from “When The Music’s Over” are appropriate at this time.

    (Have been appropriate for a while, and will continue to be till around Halloween by when the whole thing should have collapsed. I expect to keep playing this song on repeat till Halloween.)

    https://www.youtube.com/watch?v=jLAr-WlxMZY

    When the music’s over
    When the music’s over, yeah
    When the music’s over
    Turn out the lights
    Turn out the lights
    Turn out the lights, yeah

    When the music’s over
    When the music’s over
    When the music’s over
    Turn out the lights
    Turn out the lights
    Turn out the lights

    1. Dante …. you gotta admit they make a great real-time measuring tool to use gold bullion as a fully liquid real-time currency. DEBT-FREE.

      I hope you don’t look at the USD and other fiat numbers as filling the role of currency only and currency, only ? There’s two side to this yin-yang application. They’re ALL measures to support debt-free trading by using real-time bullion valuations to support the trading of gold widgets for other economic widgets.

      Bullion cannot properly support a currency role if the trade value is fixed as it was in the past. The weight of gold is limited and finite. The fixed peg had to go at some point.

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