Plunge Protection Team

Feature image of Steve Mnuchin, Treasury Secretary

Dear Friends,

From time to time I’m asked for a market opinion, especially in today’s confusing economic environment. When contemplating market movement, it might be helpful to think about the possibility of legal government sponsored manipulation. This article which I wrote in 2016 might be enlightening.

Asher Edelman

We often point our finger at the Chinese government’s manipulative market intervention not knowing that the U.S. Government has in place the “Working Group on Financial Markets” created on March 18th, 1988 with precisely the purpose of manipulating markets.

This body is composed of the Secretary of the Treasury, the Chairperson of the Board of Governors of the Federal Reserve System, the Chairperson of the Securities and Exchange Commission and the Chairperson of the Commodity Futures Trading Commission. It is colloquially referred to as the “Plunge Protection Team.”

It has the right, and probably uses it more often than we might imagine, to enter into all markets with taxpayer money and the responsibility to encourage the major financial players (banks) to join in. As no minutes are kept and there is no transparency as to the activities of the “anti plungers” one can only guess that when the markets are struggling the favored banks are informed and enter the market along with the U.S. taxpayer. The 1% is thankful.

Watch those sudden rallies from out of nowhere. If we are correct, in our observation the “Plunge Protection Team,” though successful for the short term pops, protectors have fared no better than the Chinese in turning markets.

Asher Edelman