Fed and the Stock Market

With Bernanke still running the show, at least in the ES futures, the invisible hand is there picking up those futures, until it suddenly stops one day. Some more on the subject of the importance of a rising stock market and the Fed. From Ilene.

After reading Lee Adler of the Wall Street Examiner’s article, I asked him, “Why is it the Fed’s job to be propping up the stock market? Doesn’t it make the whole market a Fed-controlled game, rather than what it started as – a mechanism for companies to raise money and people to invest in public companies?”

Lee answered: “Bernanke has made no bones about it. He sees the stock market as a legitimate instrument of policy manipulation. It’s his biggest tool, much bigger than the ones between his ears and his legs. The Fed works for the banks, and the capital markets exist as a means for ‘capitalists’ to extract wealth from the public. Stock markets weren’t started for the purpose of enriching the public, that’s for sure… The Fed has two clients, the US Treasury, and the banking system. It operates to make sure that they stay in business.”

Chart The Wall Street Examiner

Lee also noted that the history of the Fed is replete with a variety of programs where it tried to manipulate something. “The stock market manipulation is relatively new as an overt policy tool, but the Fed can’t manipulate indefinitely. Eventually the unintended consequences will rise up and bite it in the ass.”

Worth moving up, “the grateful unemployed” asked an excellent question in the comment section of Zero hedge: “So why did the Fed precipitate the 2008 crash? Any thoughts?”

Full article here.