Proof That Central Banks are Directly Intervening in the Markets
In 2009, Fed Chair Ben Bernanke swore under oath that the Fed would never monetize the debt.
But over the next seven years, the Fed spent $3.5 trillion doing precisely that.
As I write this, the Fed continues with this spending spree… and will buy up 40% of all new U.S. debt issuance in 2020.
Clearly, the Fed is a master of misdirection. Like a magician that’s shifting the audience’s gaze from what he’s doing with his other hand.
But there’s something else that the Fed is doing that no one else sees. And it could lead to massive short-term profits for those that do…
You see, the Federal Reserve is manipulating the stock market.
Yes, you read that right.
And I’m not talking about manipulating the markets indirectly by cutting interest rates to make money cheaper… nor am I talking about providing extra liquidity to Wall Street via quantitative easing (QE) programs.
I’m talking about the Fed literally buying stocks outright – hundreds of BILLIONS of dollars’ worth of interventions being made every year.
And they’re not the only ones, either.
Consider that the Swiss National Bank literally prints money and buys stocks in the U.S. stock markets. (You can see a recent SEC filing from November 2019 in which it lists the companies it owns here.)
The Bank of Japan also prints money and buys stocks outright. As of March 2019, it owned 80% of Japan’s ETFs. Yes, 80%. And it is a top-10 shareholder in over 50% of the companies that trade on the Japanese stock market.
These are not small positions, either. Between the Swiss National Bank and the Bank of Japan alone, we’re talking about over $300 BILLION in stock positions.
Of course, we’re here to discuss what exactly the U.S. central bank is doing…
What Happens at the Fed behind Closed Doors
Technically, the Fed is not supposed to buy stocks or stock futures. And they certainly do not include those assets on their balance sheet listings, which are published every week.
However, we know from Fed meeting minutes that the Fed does indeed own positions in the markets that it does not publish.
Case in point: Back in October 2012, then-Fed Governor Jerome Powell (now-Fed Chair), explained what happens when the Fed decides to sell its investment positions during a discussion:
“So when it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response. So there are a couple of ways to look at it. It is about $1.2 trillion in sales; you take 60 months, you get about $20 billion a month. That is a very doable thing, it sounds like, in a market where the norm by the middle of next year is $80 billion a month. Another way to look at it, though, is that it’s not so much the sale, the duration; it’s also unloading our short volatility position.” [Emphasis my own.]
Source: Federal Reserve
Here, Powell is stating that the Fed has a “short volatility” position ― meaning the Fed is either shorting the Volatility Index (VIX) via futures, or options.
However, I believe the Fed is doing more than this. I believe the Fed is OPENLY intervening in the stock market on a regular basis.
Whether it’s a direct intervention or done via a proxy, I don’t know. But I have personally watched the market react in ways that indicate a clear intervention by the Fed.
I have a way to prove this, too, which I’ll get to tomorrow.
As you’ll soon see, there’s a way to cash in on these interventions for incredible profits.
More on this tomorrow…
Editor, Money & Crisis