Bill,

For readers who think you have gone loco, the Fed is not owned by US taxpayers, but it is a private company owned by:

1. Rothschild Bank of London 2. Warburg Bank of Hamburg 3. Rothschild Bank of Berlin 4. Lehman Brothers of New York 5. Lazard Brothers of Paris 6. Kuhn Loeb Bank of New York 7. Israel Moses Seif Banks of Italy 8. Goldman, Sachs of New York 9. Warburg Bank of Amsterdam 10. Chase Manhattan Bank of New York.

I don't think that the owners of the Fed are altruistic.

A quick google on "Federal Reserve" "private owners" will bring up many papers on how this happened and author thoughts.

If you trade for long enough, you will eventually come to the conclusion that at certain periods (usually at important inflection points), the fed is in the market. I support your view on this subject.

Opened an Interactive Brokers account a few months ago :)

I'm guessing that the trend is up for the little people fleeing to brokerages that support international trading.

I wonder how long the elite US brokerages houses will go until they allow the little people access to worldwide markets?

Keep up the great work, Bill. Your are a micro and macro economic maestro who helps me think about things beyond my abiity. Thank you.

Bill,
I couldn't agree with you more. The system seems to be locked in thinking that is to say the least, twenty years behind the times. Just look at the changes that have occured since the early nineties, Japan and it's ecocomy, the rise of the Euro. the fall of the USSR. and the emergence of China from old style communism, tremendous changes at some point you would assume that the Fed would have to make changes of a sort, but no. Same old same old, and now with the little guy, able with the aid of technology to do his own research and draw his own conclusions, well... I think you may be on to something here, maybe it's time the old boys club goes out looking for a new cow to milk, but then again old habits die hard, me thinks

Doug Ford

ALOHA !!

Ever hear the Nixon tapes or most recently the LBJ tapes. Here is LBJ in the middle of the Vietnam War meeting with his generals discussing how Vietnam is lost and all his generals agree but then what does he do? He initiates a troop build up in a desperate effort to turn the tide of the war his way in order for he and his generals and their politcal party and their elites to save face. How many youth in America died so the administration could save face? LBJ took that secret to his grave but once he left the White House he became a recluse on his Texas ranch and an alcoholic surely crippled by the guilt he had to secretly bare for the survival of his political party. What does LBJ have to do with market manipulation? LOTS !!! It shows you how far our leaders will go to manipulate the truth. If they have no qualms about sending some 50,000 American kids to their death then certainly ruining the "Little People" financially while they profit is NO BIG DEAL! EASY PEASY! Is it any coincidence the new Bush Chief Of Staff is an ex Goldman Sachs exec? Or that Bush's cousin is an exec with Goldman Sachs who just recently moved over to Lehmans? NOT ...

How and when was this manipulation created and by who? Of course it started way back when the Federal Reserve was first created in 1917. But in modern times there have been some quick moving changes that have in my belief accelerated and crossed the line morally. What I speak of is the PPT ...

First of all the PPT was created during the Reagan administration signed in by executive order 1203. PPT is just a nickname for the officially sanctioned Working Group For Financial Markets. Mainly designed to intervene in markets on a one day sporadic basis to either slow or prevent days like Black Monday that occurred October 1987. Problem is like all BIG government political entities safety nets get abused and are soon corrupted by greed and power. Witness the abuse of the Social Security Trust now full of US government IOUs. The PPT is no different ... originally to be used once in awhile it is now used daily to prop up an ever diverse and more complicated global financial web of indicators, timers and triggers ... Used now more than ever not to save markets but to save political parties and politicians from having the stigma of the President or party that "created the modern Depression" ... It is like financial musical chairs. On the day a Depression hits you don't want to be President then ... you get the immediate blame and scorn of the public(voters). Not good for your political future or your party's political future ...

The way they intervene is through the issuance of what is called REPOs, Repurchase Agreements, that are executed for the Federal Reserve through investment banks such as Goldman Sachs, Bank Of New York, JP Morgan and a few others(all choice big names on Wall Street). They mainly influence the markets broadly by buying up index futures rather than single companies, but would intervene in a GM or Fannie Mae or GE ... bellwether types.

What harm is it? None if you are Goldman Sachs who just turned a 85% increase in profits over last year.

When you have intervention on this magnitude it distorts financial reality. This is the same thing that is happening with the US dollar and gold ... reality is distorted by the PPT. To put it in layman's terms: Imagine getting in your car and you live in Las Vegas and you start driving to Los Angeles and your gas tank shows you have a full tank. Then all of a sudden right out in the middle of the Mohave Desert your car stops running. When you try in vane to restart the car and pop the hood lookingfor the problem and spending hours dissecting and searching you finally bang on the gas tank under the car and it makes a hollow, empty clang ... You never suspected the gas tank was half full because you relied on the normally accurate gas gauge. Now there you sit in the middle of the desert in 125 degree heat with your whole family now in danger. That's what harm the PPT does ... You cannot make plans for a monetary crisis or stock market meltdown like that of the Great Depression with manipulated markets. Why? Because the gas gauge does not work any more ... the financial indicators of the past that gave out warnings(like gold)are broken and no longer work. Government data like the CPI and jobs numbers are so manipulated for political expediency that they are not reliable and give out a false sense of security that all of us and fund managers depend on to make financial investment decisions for the benefit of our family's financial future. It creates a house of cards built on lies and corruption. The US government and Wall Street will not announce a monetary collapse or stock market meltdown ... we, the investing public with our financial futures in 401ks and pensions, will be the last to know.

You mention the GLD and SLV as a savior for the "Little People" in order to escape the Wall Street manipulation trap. NOT !!! GLD and SLV are permitted to exist by the elite watch dog SEC for a reason. Is there any doubt these ETFs will benefit Wall Street again and not the "Little People"? It is no coincidence that you cannot go out and buy a Canadian Maple Leaf gold one ounce coin as part of your IRA or 401k. That is the reason that I gave up contributing to my IRA in 2001 and started buying Credit Suisse one ounce gold bars and Maple Leafs instead. After all IRAs and 401ks are really financial straight jackets with no liquidity or flexibility in todays fast changing and chaotic market conditions. Besides these financial straight jackets for retirement are not tax exempt ... deffered only ... to a time when I believe taxes will be higher than they are now. Back to GLD and SLV ... neither of these ETFs are monitored by an independent auditor, but by the bank. That is like the fox guarding the hen house. What do you get for your hard earned US IOUs(fiat money)you get another IOU that say you own "paper gold" or "paper silver". You're now still in paper and still under the control of Wall Street, The Fed and the US governemnt. What do you think that the bullion these ETFs possess will be used for? These ETFs now have a bullion base with which to control the POG(price of gold)and therfore the US dollar. Gold and silver are real assets and real money not printable paper. If you own paper you own a IOU ... The paper can be a GLD, GM or GOOG certificate or a paper currency like a US dollar. Its all debt based. The war now going on is between corrupt government and their corrupt currency and real money. Gold and silver can never file bankruptcy and are nobody's liability ... so says 6000 years of human financial history. This was what our Founding Fathers understood and why they wrote that only paper currency backed by gold or silver was legal under the US Constitution. You will also never see the word "Democracy" anywhere in the US Constitution. What word in the US Constitution will you see many times over? LIBERTY !!! Exactly what is not found in the current BIG government, its stock markets or its IOUs ...

Very interesting kaimu, great post. I am really impressed with the quality of the posts at this site. Thanks again Bill.

Kaimu,

Yours is an interesting read.

However, History is ALWAYS prologue. Western civilization (the civilization this thread is based on, I assume) is littered with the trash left behind by corrupt governments and their corrupt financial markets. This era, our era is not unique. Read History.

Folks like us are blessed to have the financial resource to make choices as to whether we choose to risk capital, or not, in the fiscal marketplace. My concern is for the “others�. Those decent, HONEST, hardworking folks who earn just the average (i.e. middle class) to provide for their families, buy a house, maybe, put their children through college, maybe, and hopefully retire with a vested pension or 401k, maybe. I rarely read discussions or threads about them; however, there are a hell of a lot more of them than there are of us (the “lucky few�). They can't buy gold by the ounce, because they have just enough to acquire the basic necessities for themselves and loved ones; they don't trade securities because they haven't the disposable income to engage in risky enterprises. They are more likely to invest financial capital through the “sell siders� with a hope, a prayer, and maybe a dream of a better future for themselves and family.

Free markets SHALL always be corrupted by those whom greed is an all consuming trait. The bright side to this is: in every generation a few good capitalists are born who put the welfare of the country and its people above their own self-interest. Current and former capitalists such as Sam Walton, Warren Buffet, Bill Gates, and Ray Kroc fit my criteria. I know, I know, some will reply “Bad Choice!� However, consider the impact these individuals have had in providing jobs and opportunities to the common folk. An enterprising individual with guts and determination can elevate his/herself from slinging hamburgers at McDonalds to owning a franchise. And common folks, IMHO, are not these current Generation Xers who believe they are “entitled� to a $100k starting salary because they were fortunate enough to graduate from some “prominent nursery school�. They are living in a fool's paradise, again IMHO.

Finally, I'm not in disagreement with YOUR world view, I just wanted to reply based on MY world view, because you clearly put a great deal lot of thought and a bit of anger in your post and it would be a shame if no one commented.

Thanks!

Bill,
Look who is trying to join your "little people" bandwagon:WSJ,Barron's,lawyers. More it changes more it stays the same.

The sentiment that resonated most closely with my feelings on the subject is the visceral pain I feel

trying to participate in what I am now learning (thanks Bill) is a fixed game. We as part time traders and

investors work hard to decipher technical trends in the markets,exhaustively poring over charts, and in my

case, writing software filters to try to discover viable trading candidates. We work real,real hard.

We analyze the macro environment in an effort to see whether the economic climate supports our trading view.

Then we trade on this work. Often times the trade goes awry, and we chalk it up to some flaw in our decision

making process, some exogenous factors that we did not account for. Ok, I can live with that. But slowly, over

time, suspicions creep in that maybe something isn't quite as advertised. That CNBC's explanation of

a market down day being due to reports of mad cow or H5N1 or the Russian Sunburn missle or presidential

flatulence, and an upday to a high consumer confidence reading, might not be so accurate.

Then you hear stories about the PPT, or about the Feds intervention in the money supply and you

start to get this sick, gut wrenching feeling that you're being played. That all your effort is a joke. Who knows about this before you do,(maybe better to ask who doesn't know before you do)

The broker dealers from whom the Fed buy securities so that they can inject money into the supply obviously have

advance knowledge that the rest of us don't. The oil executives who crafted our energy policy under Cheney's

watch, sure do. And what about all those puts on AMR before 9/11? You start wondering what you don't know, what

else they are hiding. I have Russian friends who came here during the 80's and remarked that the only thing they
missed about their old country was its honesty. It was brutal and horrible, but at least there were

no surprises. Actually, on balance I rather be lied to. :)

Anyway, I love this country. I am just sad that I no longer feel loved back.

ALOHA !!

I believe we are where we are today as the largest debtor nation that every existed in human history by design ... Since the Federal Reserve was created you can track how the purchasing power of the US dollar has diminished steadily over time. All you have to do is ask some senior citizen what they bought their first house for or their first car for in 1946.

As it comes to retirement for the baby boomers this dilema is getting exponentially worse. I myself do not expect to retire, although I am making financial decisions in an effort to. My main financial strategy is the same as China ... own hard tangible assets with as little exposure to the US dollar as possible. It is my opinion that contributing to an IRA or 401k or pension is the same as contributing to future financial desperation. In some twenty years or so what will a US dollar buy? Right now $30k will buy you a half decent vehicle. You need to spend over $50k to get a recognized status machine luxury vehicle like a Lexus SUV or a Hummer ... celeb-mobile. I have already dumped many hundreds of thousands of dollars into the Social Security(FICA on your paycheck) black hole so why would I want to dump more down that same hole in an IRA? I personally have no faith in the US government or its partners ... the Wall Street brokers and banks.

I will offer to those of you the "BEST" investment you canmake for your future. Instead of pumping your hard earned cash into retirement vehicles put your cash into paying off debt and buying and holding gold and silver ... not GLD or SLV but the real metal.

If you believe as I and most of Asia and Russia that the future of the US dollar is dim then you need to prepare for that eventuality. Holding debt is preparing for failure. Holding a huge mortgage and credit card debt is exactly what you have been trained to do. In a US dollar collapse everything we import will increase in cost. In other words Walmart will look like Neiman Marcus. Your grocery store may as well change its name to SafeWay Marcus! We import a lot of food, medication, clothing, electronics, vehicles ... practically everything you need to survive on a daily basis is imported or tied to oil/gas. As infaltion erodes your purchasingpower people will be faced with the choice of paying a mortgage payment or eating. WHich would you chose? In the early 1980's I was a private investigator working for Equifax in Houston, TX. I was contracted by local banks to serve 60 day mortgage delinquency notices to homeowners in the Houston area. Certainly a dangerous undertaking since Texas is full of angry people who religiously carry guns. Luckily for me most of the houses I visited were empty and my report read like "house is destroyed" ... ditto ... ditto ... ditto !!!

My startegy has been ... number one ... pay off all my real estate loans. I live in Hawaii and I owe no mortgages. Number two ... get off the grid. A lot of people assume that means generate your own power by installing solar or wind generators ... NO ... when I say get off the grid I mean "get independent not dependant". Examples are grow your own food, collect your own water, generate your own power ... provide for yourself. Signs of a decaying Empire are all around you. Crumbling infrastructure is a big sign.

We all got a wake up call as to just how vulnerable the US governemnt is. We all watched it on TV last August ... it was called Katrina and Rita! You saw what Mother Nature could do ... what happens when we have a total economic and monetary meltdown? SafeWay and Chevron will not be open and your utility company will be like China and Mexico is now ... sporatic power at best. During Katrina we all saw the civil unrest ...

Retirement in the future will be based on acquiring and "owning" tangible assets not paper ... not debt. Taxes will be much higher than today. If you do not believe me then go look at the Bush FY2007 Budget now on display. You will see that by 2010 your elected officials plan to raise taxes on individuals to increase tax revenues by 52%(2010 is another four years away not twenty years). They also list a tax increase for corporations of 12% by 2010. By electing the same two party(Rep and Dem) power structure you insure "We The People" will live a Third World lifestyle.

Kaimu,
While in theory and principle, I agree with some things you say (decaying empire, etc), don't you think that the extremes you mention are hundreds of years away, if ever?

Markets always find equilibrium eventually. As Bill has pointed out many times here: the Fed can't rig the markets forever. Some people will be devasted by the market reversion and they can thank their own voracious appetite, the Fed money printers and the banks who all claim to be everyone's buddy for their plight.

From your posts, you seem happy with the financial strategy you ascribe to. I am sure the rest of the readers here are comfortable with theirs. No matter what anyone here posts, one's wealth is their business so let's all try to respect that.

I have no doubt the Fed and everyone within six degrees of separation of a Fed governor is trading on inside information. I am sure it happens in most publicly traded companies, as well, and in every other investment arena, but the Fed is the king of them all because they control the most capital.

Regarding the comments about buying lots of silver and gold as assets, I would suggest against that. Silver, maybe. Gold, no. Its worth about as much as paper money in an environment where gold is needed as currency. Gold and silver are not primary industrial metals, thus they are unnecessary and subject to volatile swings in valuation.

I do, however, agree with the assertion of converting cash and notes to other, more useful assets. An asset is something you can use if the all the lights go out and the grocery stores close. Shelter, clothing, solar panels, windmills, ethanol distillers, vehicles, arms & ammunition, foodstuff, and especially water.

There is a much more valuable asset, however, if you really want to get free of the powers that control the grid. The best asset to gather is knowledge. For one, it can't be taken away once you have it. It cannot be stolen, it is not part of a balance sheet, it is not taxed, and after you pay for it once, its yours forever. You can also share (duplicate your information in someone else's mind) as often as you want without dilution. With knowledge you can make your way through a depression environment using your wits, but unless you know how to smelt metals, gold and silver are just a razor's edge more valuable than notes.

Getting back to Fed insider trading, if we really want to change the game, we need to find out exactly how they are doing what they are doing, then expose it publicly (create awareness in others) through the media. This is what they do to us and clearly, it works.

For the most part, humans are simple creatures, no less trainable than the average family dog. Conditioning is how the big wigs do it, so your defense is remove yourself from the stimuli they are sending out day after day via the media. This is simple high school stuff. They send out the stimuli over and over and eventually they a get a response. Depending on the response, the stimuli is tweaked to be ever more effective. When we expose the reality of a situation, awareness increases and over time a threshold is reached and the knowledge becomes ubiquitous. When everyone is watching the thief, the thief has a lot more trouble stealing things and there are a lot more of us than there are of “them.�

Getting off the grid makes no difference in a man's attempt to be free of the tyrannies of authority. On the day that being off the grid benefits you most – when everyone else loses power and you still have it - you will be the only guy in town with power and you are going to have a bigger problem than if you had no power at all.

When all the lights across the city are dark, your off-the-grid house will shine out like a lighthouse and you'll be lucky to get out of your own residence in one piece. Just think how much worse this scenario becomes when they find out you have a basement full of gold bullion, in addition to your electricity and food! You've seen those Frankenstein movies where the villagers go after timid Frankie because they are afraid. When people are afraid they behave irrationally.

Everything we need is within us or within someone we know. Distilled further, people are the only real assets. Trees would never become homes were it not for humans. Metal and shiny rocks would never become jewelry without humans. The way humans transformed these materials into other materials is through knowledge. As cliché as it sounds, knowledge is power. That's the sole purpose all of us are on this site, after all .. to gather and exchange knowledge.

I've never visited a site where there were so many good perspectives in the comments. Although I disagree with some of the comments, I respect your viewpoints and you all have me thinking. I am grateful to have stumbled upon this venue. I resonate with what you all are doing here.

ALOHA !!

Simplicity is best at all times ...

As simple as I can make it is to say all modern fiat currency is based on "confidence" ... nothing more than that. I have been alive for more than forty years and I can only go by what I see and my experiences. What I have experienced is that the dollar I had back in the 70's buys a lot less than it buys today. Based on that "knowledge" I have "NO CONFIDENCE" ...

I have started to take action on my own in order to do what I can to protect what wealth I now possess. Aparently most people in the USA still have "confidence" in the US dollar and the US government ... a contrarians delight! What good is it to have "knowledge" and not act? What is the definition of insanity? Doing the same thing over and over and expecting a different result.

The one financial event no American has experienced yet is a monetary collapse. Ask Russians and Argentinians what that is like and then times it by 1000 since the US government has more printed dollars circulating in the World than any country in human history.

I have an exit strategy and I have been living off the grid for years now and so have all my neighbors out here in the jungles of the Big Island. Even if no monetary collapse ever happens in the USA living off the grid is reward in itself since my cost of surviving(living)is very low. It is no coincidence I chose the jungles of Hawaii and not the suburbs and cities of Los Angeles or New York. Where I live there is no TV service, cell phone service or car radio signal. No freeways, no police, no crime, no visible neighbors, no lines, no commuting lanes, no road rage ... like life back sixty years ago. Our community here takes care of itself. You will find that is so of most rural farming regions worldwide, where traditionally unemployment is high and government/corporate services are low since income and voter density is low. NO VOTES NO CARE ... If all communities took care of themselves more we would not have the anchor of BIG government around our necks like we do now. During the Depression of the 1930s the soup lines were in major cities not at rural farms.

Life in rural America is simple ... You have to respect simplicity. A long forgotten concept in the lives of all modern day Americans.

Well kaimu, think of it this way, if a monetary collpase happens(I strongly doubt this, a recession/depression/inflation? maybe, but not collapse), you would want to owe your bankers as much money as possible and have as much money in real assets as possible.
Perhaps instead of paying off your loans, learn different trading strategies(like the trading Bill teaches and preaches) and other real estate strategies. Suppose you could buy a house with no money down(at a cheap price from a motivated seller), using bank money/private lender money. Suppose that you could generate positive cashflow from that money. Wouldn't it be better to have more bad debt that way? ;) Of course, this would hedge yourself against a crash, as the money would be worth less but real assets would be worth more.
Of course, just throwing out ideas there, there are more than one way to skin a cat and profit big from future projections. Disclaimer:I'm not a registered financial advisor... boilerplate follows...
Another interesting point, is that many big inventions sprouted out of big guvt's investments, like the internet we know today. Or space programs. The private sector would have never invested in such programs as they are way too expensive and do not create short term profit,or maybe will be unprofitable for the next few decades. Yet without internet, we wouldn't hear from you, and vice versa. So it's kinda a paradox here, where big guvt can create wealth with some programs with benefits invisible for now, but rewards pouring in later. It may also take responsibilities that no company would ever do.