FMNN: JUICED NUMBERS - HOW THE GOVERNMENT GETS THE STATISTICS IT WANTS, MARKETS GET MANIPULATED, AND CITIZENS GET DELUDED - AND WORSE

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JUICED NUMBERS - HOW THE GOVERNMENT GETS THE STATISTICS IT WANTS, MARKETS GET MANIPULATED, AND CITIZENS GET DELUDED - AND WORSE

To answer the exceedingly important question regarding how the markets are manipulated one must recognize that there are two main methods of manipulation.One is direct through daily injections of repos (repurchase agreements) into the market by the Federal Reserve. Repurchase agreements are loans (at Fed Fund rates) issued daily by the Federal Reserve to primary dealers, the proceeds of which are used to buy, for example, Dow index futures, if the Fed seeks to boost the Dow. So, the several primary dealers (e.g. Goldman Sachs, J.P. Morgan) who apparently work under the Fed's direction are able to use these loaned funds to buy or sell various securities and futures to affect the markets. [Note: One species of Repos, POMOS, never has to be repaid, but explaining the significance of that (beyond the obvious) is beyond the scope of this article.] the fact that the loaned funds can be used to purchase derivatives, as well as plain equities, gives the manipulators the tremendous leverage which derivatives afford. Those who doubt whether the government has the capacity to manipulate the markets (and especially the larger markets like the multi-trillion dollar currency and bond markets) are invited to inform themselves about the $32 trillion interest rate derivatives colossus at J.P. Morgan Chase, or the $1.5 trillion derivatives position at the Bank for International Settlements (the Central Bankers' Bank). And that $32 trillion derivative position at Morgan is the position at just one of the Fed’s several “primary dealer” firms.

The other major form of government market manipulation can most accurately be called indirect. It consists of "massaging" various statistical measures and data to come up with results that suit the manipulator's (usually, whatever Presidential Administration has power at a given time) preferences, insofar as its' political, economic, or financial or market goals are concerned.