I was recently asked to sit on an expert panel, analyzing an inflation/deflation debate between Harry Dent and Peter Schiff. Sitting with me on the panel were Doug Casey, Chris Mayer, and Karim Rahemtulla, as well as Messrs Dent and Schiff.
All of these guys spend prodigious amounts of time on financial analysis, and I don’t, so I wondered what I could bring to the party.
As I ran the subject through my mind, however, I realized something important had been left out of the analysis – something that I added to the panel and which I’d like to explain here. It was…
The Black Box
Without question, the central player in US markets (even world markets) is the Federal Reserve Bank. Every serious financial analysis concerns itself with Ben Bernanke and his successor Janet Yellen; indeed they have to, as the Federal Reserve single-handedly holds up the US stock and housing markets.
But when we talk about the Federal Reserve (or “the Fed,” for short), we are overlooking something very important:
Bernanke and Yellen are mere employees of the Federal Reserve, not the owners. And we don’t know who the owners are.
If you’re new to this subject, that may sound ridiculous, and I can’t blame you for thinking so. But, the fact is, we really don’t know. The US government doesn’t own it and isn’t telling who does.
We do know that the Fed is a private banking group that has been given a monopoly on the creation of US currency, and the list of its owners is a closely held secret.
The true owners are almost certainly reflected in the roster of Primary Dealers who skim from US dollars (actually Federal Reserve Notes) as they are being made, but we really don’t know much more than that. There was a list that circulated in about 1930, but that was a long time ago.
So…
Who are the people that Bernanke and Yellen take orders from? We don’t know.
What do these people want? We don’t know.
What are their long-term asset positions? We don’t know.
Who might they protect, aside from themselves? We don’t know.
If things get rough, will they obey politicians? Probably not, but we don’t know.
Continue reading →
