Magazine article The New American

Fed Manipulations in the Crosshairs: Evidence Is Overwhelming That the Federal Reserve Is Manipulating Stock, Bond, and Gold Prices to the Benefit of Big Banks and the Detriment of Average Americans

Magazine article The New American

Fed Manipulations in the Crosshairs: Evidence Is Overwhelming That the Federal Reserve Is Manipulating Stock, Bond, and Gold Prices to the Benefit of Big Banks and the Detriment of Average Americans

Article excerpt

Before the economic meltdown was in full swing, a Florida real-estate developer named William Pitts correctly read the signs pointing toward tough times ahead. In an effort to preserve some of his savings, he bought financial products that would increase in value as real-estate and banking collapsed. It seemed like the sensible thing to do. But though his analysis was correct, his investments went bust--because the U.S. Federal Reserve made them go bust.

Pitts told THE NEW AMERICAN that in early-to-mid 2008, he became aware that well-respected financial analysts who had evaluated the health of large banks and the real-estate market concluded they were in terrible shape. And it was true. Examining the publicly disclosed financial statements of the big financial institutions also revealed trouble on the horizon.

Based on that information, Pitts sold his stock in large financial firms like Citibank and Bank of America while taking a "short position," essentially betting that their value would go down. Along with countless others acting on the same information, he also purchased various exchange traded funds (ETFs) that would do well as real-estate's and the big banks' fates declined. And it would have been a smart move, Pitts recounted, "but then, a strange thing started happening": massive cash infusions and major purchases of equities and stocks in both financials and real-estate.

It turns out that under the guise of "stabilizing" the economy, the Federal Reserve banking cartel had set in motion a series of actions that would eventually transfer trillions to the bankers at taxpayers' expense, all while decimating the investments of countless average Americans like Pitts. The Special Inspector General for the Troubled Asset Relief Program (SIGTARP) estimated the potential total cost of the combined crisis bailouts at $23.7 trillion, or more than $75,000 per person in the United States.

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Redistributing the Wealth

Pitts explained some of the Fed's manipulations: "When we begin looking at--this and it's pretty common knowledge now--the central banks were loaning these large financial institutions huge sums of money at virtually zero percent interest. ... So they're taking this huge amount of money that's being borrowed from the Fed, and really making money doing two things: one is all of the banks buying each others' stock and running up the value of it to increase their net worth on the books ... and then they're also borrowing huge amounts of money from the Federal Reserve and buying U.S. Treasuries ... which means guaranteed returns from the U.S. taxpayer." When the Fed gives new money to the banks and they buy Treasury Securities, they are basically earning free profits in the form of interest on those securities courtesy of American taxpayers, since the government will have to tax citizens to pay back the bonds plus the interest. Wealth redistribution, government style!

In addition to borrowing newly created money at almost no interest and purchasing treasuries to earn higher returns, the banks are also getting another massive but little-noticed central-bank subsidy: The Fed is actually paying banks interest to keep their money parked there, essentially giving the banks America's money and paying them not to lend it out. And that's just the beginning.

In mid-2009, Fed Chairman Ben Bernanke admitted to Congress that the Fed had distributed over $500 billion to 14 foreign central banks from 2007 to the end of 2008--so-called "liquidity swaps." That money was then handed out to foreign financial institutions. And of course, none of this was disclosed to the public. These swaps aren't good for the little guy either. The Fed prints dollars and sends them to central banks around the world that request them in exchange for the other central bank's currency, then those foreign central banks loan out the dollars to banks in their area, supposedly to prevent a rise in the value of the dollar and rising interest rates. …

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