Since the Fed apologists insist that the Fed makes no profit from its operations, where do they get the funds to play the market, if not from thin air?
Does this look like free enterprise with free markets as Econ 101 says? Sure doesn't look very free to me. We now have a casino economy, where political decisions are made that help the global enterprises at the expense of the American Public.
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New York Post-November 6, 1998
The Federal Reserve is just dying to admit that it has been doing brilliant - but alas, questionable - things to keep the stock market bubble inflated. A Wall Street Journal article on Monday is the closest the Fed has ever come to making this admission, although the newspaper apparently didn't know what it was on to.
The Journal story was about the bailout of the hedge fund, Long-Term Capital Management, and how the Fed stepped in to save the day.
The story gets interesting in the seventh paragraph, when it starts talking about Peter Fisher, the 42-year-old, No. 2 man at the New York Fed, whose official job is running the Fed's trading operation.
In that capacity, Mr. Fisher is the Fed's eyes and ears on the inner workings of stock, bond and currency markets and is given a wide degree of latitude about deciding when certain events pose broader risks, the article says.
He begins most workdays at 5 a.m. by checking the status of overseas markets...and ends them 11 p.m. the same way. In between Mr. Fisher SWAPS intelligence and rumors with traders and dealers from his office in the Fed's 10th-floor executive suite that overlooks the trading floor he runs, the piece continues.
As I pointed out in a previous column, the market has done some strange things in the wee hours of the morning, especially between 5 a.m. and 7 a.m., which ultimately affect how equities do in the New York market.
Now I'm not necessarily against rigging the stock market. In fact, back when stock prices were collapsing a few months ago and everyone was whining, I wrote in this column that someone at the Fed or the Treasury ought to figure out how to rig the market and start doing it.
I even pointed them to a piece in the Journal back in October, 1989 when former Fed governor Robert Heller, suggested that it was the government's responsibility to rig the market in times of emergency.
But I also believe that if the markets are being supported by the government that Washington should be responsible enough to alert the investing public. If people still want to put money in the market, fine. Maybe they'll even want to put more in.
Remember Tokyo rigged its stock market for many, many years until its stock market collapsed and destroyed the economy.
Now back to Fisher.
What exactly does he give to these traders and dealers he talks to at 5 a.m. in the morning? Swaps, which is the word the Journal reporter came away with, implies a give-and-take. What is Fisher, the second highest person in the New York Fed's hierarchy giving to traders?
Just gossip? Or is Fisher giving away what Wall Street calls inside information.
And why are Fisher and the Fed concerned about the stock market? The Fed has jurisdiction over the dollar and, as an extension, bonds. It would be a big expansion of the Fed's powers to suddenly have authority over stocks.
But since this nation's economy has become so dependent on the stock market's success, the Fed's current interest in equities would not be surprising.
I asked to talk with Fisher. I said I wanted to know about his interest in the stock market and the swapping of information.
The Fed wouldn't allow it. I'm sorry but we've not going to make Peter available, said a spokesman in New York. He's kinda busy. I think the spotlight on him right now is a little too bright.
You're damned right it is too bright - it almost caught him doing his trick with the market.
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