Conspiracy Truth

What the Fed did, and I was part of it, was front-loaded an enormous market rally in order to create a wealth effect.  –  Richard Fischer, former Dallas Fed President on CNBC (via Zerohedge)

It is absolutely mind-blowing that this statement by a former Fed bank President did not get widespread coverage by the entire financial and general news media.  This is a senior Fed official admitting that the Federal Reserve rigged the stock market.   Stop and think about for a moment.   Blogs like this one have been asserting for well over a decade that the Federal Reserve rigs the stock market.   Here is a former insider – a high-level former insider – stating in a public forum – that the Fed rigged the stock market to go higher in order to “create a wealth effect.”

And boy did it work.  The wealth effect was created by a transferring a few trillion from the middle class venues of stock market investment – pension funds, IRAs, etc – to Wall Street and the corporate insiders who have been dumping their shares into this market.  There’s plenty of hidden avenues of transfer. Consider that your 401k or your public pension fund is probably about 20% allocated into private equity funds. Those funds have fueled a tech bubble of unprecedented size in Silicon Valley.  Hundreds of billions of wealth have been “extracted” as the p/e firms invest at absurdly high capitalization rates and the insiders partially cash out.

The transfer is not quite complete.  When the stock market crashes again, all of the middle class avenues of stock market exposure will collapse in value but the elitists will be left sitting on piles of wealth that they removed from the markets.  This is wealth that came from your retirement fund or from your overpaying for a home.

How is it at all possible that this extraordinary admission from Richard Fisher is not on the front page of the Wall St Journal, New York Times, Washington Post, Barron’s, etc?  THIS is an example of the factors causing the collapse of the United States.

Everything thing that was a factor in causing what happened in 2008 is even more of factor now. It’s just a matter of time before it all blows up.  – from my podcast interview with Phillip Kennedy of Kennedy Financial

Our discussion includes the movie, “The Big Short,” the housing market, Fed policy and the precious metals market.  I explain why I believe that the precious metals sector represents an opportunity of a generation.

I think what the Fed wished it had done is start raising rates earlier so that they would have room to lower rates now and try to stimulate things. But I think the ability to stimulate the system with monetary policy – I think that ship has sailed…

2 thoughts on “Conspiracy Truth

  1. “How is it at all possible that this extraordinary admission from Richard Fisher is not on the front page of the Wall St Journal, New York Times, Washington Post, Barron’s, etc? THIS is an example of the factors causing the collapse of the United States”.

    Investigative journalism in the mainstream media is largely dead.

  2. ZIRP+QE served to boost stock market returns via stock buybacks and benefited mostly the wealthy (Wall St.), but not the real economy (Main St.) since the “wealth effect” is largely ineffective. Thus we have even more income inequality, but no organic economic recovery. The Fed has blown asset bubbles in housing and stocks (again). This is as intended, since it benefits the plutocracy and TBTF banks the most. Follow the money.

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    http://www.hoisingtonmgt.com/pdf/HIM2014Q1NP.pdf
    HIMCO
    Quarterly Review and Outlook
    First Quarter 2014

    “After examining much of the latest scholarly research, and conducting in house research on the link between household wealth and spending, we found the wealth effect to be much weaker than the FOMC presumes. In fact, it is difficult to document any consistent impact with most of the research pointing to a spending increase of only one cent per one dollar rise in wealth at best.”

    “Some studies even indicate that the wealth effect is only an interesting theory and cannot be observed in practice.”
    ———————————-

    “It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are. If it doesn’t agree with experiment, it’s wrong.” – Richard P. Feynman

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