ZeroHedge.com reported in “Ex-Plunge Protection Team Whistleblower: Governments Control Markets; There Is No Price Discovery Anymore’” that,
“One year after the great stock market crash in 1987, US President Ronald Reagan launched the ‘Working Group on Financial Markets’ . . . . [which came to be] known as the “Plunge Protection Team.”
Where the Working Group previously prevented sudden market falls (panics), it now also causes persistent market rises in order to instill public confidence in the markets, economy and government, itself.
However, according to Dr. Pippa Malmgren—a former member of the Working Group on Financial Markets—government manipulation of the markets has grown so ubiquitous and unaccountable that, “there’s no price discovery anymore by the market . . . governments impose prices on the market.”
I think Dr. Malmgren is right.
The markets’ fundamental purpose is to “discover” the proper prices for various products, commodities and products at any given moment. When we know something’s proper price, we can make informed and reasonable decisions as to whether we should buy or sell that item. The result is the most efficient use of capital.
However, the free markets’ price discovery mechanism depends on markets running honestly. Once government, Wall Street or whoever begins to manipulate market indices, the result may be a happy illusion that gives people confidence in their economy and government. But that manipulation is also results in a price lie that inevitably deceives people into buying to selling at false prices. Price lies cause the misallocation of capital, which causes confusion and inefficiency in the economy, which eventually causes the economy to collapse.
No matter how much President Reagan may have loved this country, his invention of the “Plunge Protection Team” may ultimately lead to our national decline and even destruction.
Lies matter. Lies destroy and even kill.
Today, lies are so predominant in the US and global markets, that “there’s no price discovery anymore”—just price falsification. As a result, we don’t know whether to buy or sell, borrow or lend. That confusion will spawn mistakes that will ultimately grind us into poverty.
Our economies are dominated by lies.