Wednesday, December 25, 2013

Crudele: It Looks Like the Fed Is Manipulating the Stock Market

NyPo's John Crudele writes:

Ben Bernanke’s Fed has been so successful in pumping up the stock market, in fact, that just about everyone with any gray matter left on Wall Street has officially protected himself by uttering, “bubble.”

As you might have heard, the stock market is making record highs almost daily (as it did Monday, for the 48th time this year). And prices are up 25 percent this year alone.

This despite the fact that corporate earnings (which are supposed to determine stock prices) are weak.
The biggest recent pop in stocks, in fact, occurred last Wednesday, right after the Federal Reserve said it was going to scale back on its quantitative easing (QE) program by $10 billion a month.

Through this highly unorthodox QE policy, the Fed has managed to keep short-term interest rates exceptionally low. This has benefited banks, Wall Street, investors and Washington, which probably couldn’t afford to fund itself if borrowing costs reached normal levels.
But it has taken trillions out of the pockets of Americans who rely on savings. It has been called — by me and many others — the greatest effort to make the rich richer and the poor poorer in history.

So reasonable people were worried that the stock market wouldn’t be happy when the Fed decided it needed to cut back on QE. But, amazingly, stock prices rallied very strongly last Wednesday nevertheless.

Why? The official explanation we all gave at the time was that despite the tapering, the Fed was still being very accommodating on interest rates, and Wall Street needn’t worry.

But something else may have been going on. And if you were watching stock prices right after the tapering announcement, you would have noticed that the market fell sharply before suddenly climbing.

It looked like someone suddenly got an insatiable hankering to own stocks. Could it have been the Fed, or one of its Wall Street proxies?[...]Maybe the Fed or one of its secret Wall Street agents was actually buying stocks!

Read the entire Crudele column, here.


  1. To be honest I would be shocked if the Fed WASNT manipulating (or at least attempting to) the stock market.

  2. The Fed can print unlimited amounts of money. It can give it to whomever it wants to buy stocks. It can manipulate the stock market to record highs even when businesses are performing poorly. At some point it will bring the country down. It could be next month, could be 10 years from now. Are there any economic tools that can predict the timing of the downfall? Is it possible to reverse the trend or is it too late? Is it still even possible to avoid a catastrophe ?

  3. Being a legal counterfeiter has its advantages.