Government’s Plan for the Stock Market

Although we don’t know what it is, we know there is a plan to keep stocks moving higher. How do I know? Fantasy free means that we study people and institutions according to how they function and pay no mind to how they are perceived. Government is commonly perceived as a fatherlike benevolent entity that spreads fairness and goodwill across the land. In real life, government belligerently promotes the interests of the most politically powerful citizens.

Representation in government goes to the highest bidder. Representation is easily transferred. Send a representative to Washington and you have in actuality hired a thief. But, the thief is not loyal to you necessarily and you get outbid. You only voted. Money counts for much more than your vote.

Few doubt that for many decades, fiscal and monetary policy have been pointed towards enhancing asset prices on behalf of the highest paying political players. More is done in government with winks and nods that is ever accomplished by legislation. The public normally deals only in short, concise packaged ideas. What government actually accomplishes goes right under the average person’s radar.

From 2006 to present, support of stock prices has been massive. There is great public and private cooperation. The Federal Reserve denies directly buying stocks. They do accept equities as collateral and that amounts to about the same thing. They work with the primary dealers who, with winks and nods, provide assurance that newly created money will support the stock market. With off the record conversations, corporations are assured that if they buy back their own stock, the Federal Reserve has their back. Foreign central banks buy stocks with no reservations or restrictions.

Many lofty reasons are given for Federal Reserve activities but their only real purpose is to move stocks higher. Talk is that the Federal Reserve is out of tools and the market is about to fall under its own weight. It is pointed out that corporate buybacks are waning despite constant coaxing by the Federal Reserve and others. The Federal Reserve actually still has plenty of options and these options will be used. Over the coming weeks expect game changing, unbelievably good news for stock prices. The good news will be repeated despite being manufactured for the occasion.

The last thing the Federal Reserve will do is find a way to directly absorb any excess supply of stock by buying directly. So what if it is illegal. They will do it anyway. There is no limit to how much Federal support is available for the stock market. Honest investors only have access to what they earn. Central banks can buy stock with dollars that are really no different than monopoly money. If more is needed, more is made available.

Don’t automatically expect that the financial markets will finally reset and normal free market conditions will be reasserted. There is no incentive on the part of anyone in power to make it turn out that way. Chances are much greater that central banks will continue buying stocks until the majority of assets in the world are owned and controlled by governments.

There are many paths back to totalitarianism. The most likely one to enslave the world population is for government to control the factors of production, just by buying the institutions which own those factors now. Of land, labor and capital, capital is the hardest to control but there is a process currently in the works by which that task can be accomplished.

(Visited 15 times, 1 visits today)

About Fantasy Free Economics

James Quillian independent scholar,free market economist,and teacher of natural law. Who is James Quillian? Certainly I am nobody special, Just a tireless academic and deep thinker. Besides that, I have broken the code with respect to economics and political science. Credentials? Nothing you would be impressed with. I am not a household name. It is hard to become famous writing that virtually no one in the country is genuinely not in touch with reality. But, if I did not do that, there would be no point in my broking the broken the code. If you read the blog, it is easy to see that there are just a few charts, no math and no quantitative analysis. That is not by accident. Given what I know, those items are completely useless. I do turn out to be highly adept at applying natural law. Natural law has predominance over any principles the social science comes up. By virtue of understanding natural law, I can debunk, in just a few sentences , any theory that calls for intervention by a government. My taking the time to understand the ins and outs of Keynes General Theory is about like expecting a chemistry student to completely grasp all that the alchemists of the middle ages thought they understood in efforts to turn base metals into goal. Keynesian theory clearly calls for complete objectivity. Government can only make political decisions. Keynesian techniques call for economic decisions. So, why go any further with that? Fantasy Free Economics is in a sense a lot like technical analysis. Technical analysis began with the premise that it was impossible to gain enough information studying fundamentals to gain a trading advantage. Study the behavior of investors instead. Unlike technical analysis, I don't use technical charts. What I understand are the incentives of different people and entities active in the economics arena. For example, there is no such thing as an incentive to serve with life in the aggregate. In the aggregate, only self interest applies. It is routinely assumed otherwise. That is highly unappealing. But, I am sorry. That is the way it is. I can accept that because I am genuinely in touch with reality. Step one in using Fantasy Free Economics is for me to understand just how little I really know. A highly credentialed economist may know 100 times what I do based on the standard dogma. Compare the knowledge each of us has compared to all there is to know and we both look like we know nothing at all. There is always more than we don't know than what we do know. I am humble enough to present myself on that basis. Why? That is the way it is. I am not bad at math. I have taught math. What I understand is when to use it and when to rely on something else. Math is useless in natural law so I don't use it. While others look at numbers, I am busy understanding the forces in nature that makes their numbers what they are. That gives me a clear advantage.
This entry was posted in Daily Comments and tagged , , , , . Bookmark the permalink.