Sol Palha: Financial & Economic Insights Financial Disaster; How The Fed is The Master of Disaster

Financial Disaster; How The Fed is The Master of Disaster

Financial Disaster; How The Fed is The Master of Disaster

Nothing is more common on earth than to deceive and be deceived —
Johann G. Seume, 1763-1810, German theologist.

Financial Disaster

Updated Nov 2019

The Dow continues to put in new highs, but our three moving averages of new highs are trading well off the highs they put in last year. The 20 days moving average (current reading = 640) of new highs would have to surge past the 2500 mark to have a chance of putting in a new high. Based on this week’s readings, it would have to surge 400% from its current reading. It is extraordinary and disturbing that a market that appears to be strong is not as strong as it seems when one examines its internal structure.

V readings (our proprietary indicator that measures market volatility) have surged to yet another new high; we are now within striking distance from hitting the 1600 mark. We cannot remember the last time when V readings put in 4 back-to-back new highs. In fact, it appears that the surge (over 5.6%) in the past four weeks has set a new four-week record.

Given that the Dow has now put in an incredible 29 new highs and the volume has not once touched the 6.8 billion mark leads us to believe that some form of extreme manipulation is taking place. It is statistically impossible for a market to put in so many new highs on such low volume without something being amiss.

If one examines the history of the Dow (we have more than 100 years of history there), one will find that at any given point in time, the Dow trended higher on higher volume, especially if it was putting in a series of new highs.

Before we proceed, we would like to list a few very important quotes.

These quotes illustrate how the words Financial Disaster are all the Fed focuses when it comes to setting policy guidelines

The budget should be balanced, the treasury should be refilled, and the public debt should be reduced. The arrogance of Public officialdom should be tempered and controlled. And the assistance to foreign Lands should be curtailed, lest we become bankrupt.” CICERO, 63 B.C.

Thomas Jefferson, the 3rd president of the United States, offered the following quotes and did his level best to curtail the power of banks

The Truth is that we can never satisfy their (bankers) appetite for money.”

Banks of issue were more dangerous to the liberties of the people than standing armies, and the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”

The power to issue money should be taken from the banks and restored to Congress and the people.”

President Jackson made the following statement in his farewell address:

the banks of the United States waged war upon the people.”

It is one of the serious evils of our present system of banking that it enables one class of society – and that by no means a numerous one – by its control over the currency, to act injuriously upon the interests of all the others and to exercise more than its just proportion of influence in political affairs.”

President Jackson killed the banks and restored the power to create money to Congress. In his farewell speech (1837) he very clearly and openly stated the consequences that could befall a nation if the banks were allowed to take over. To read the full excerpt of President Jackson’s farewell address, click here.

Financial Disaster: Under the Guise of Trying to Stabilise the System The Fed Seeks To Undermine it

It is no secret that central bankers, under the guise of trying to provide financial stability, have been plundering every nation and manipulating the system to their benefit and to the detriment of the majority. However, things have now gone out of control. The following two facts should help provide support for this hypothesis.

The top 6 American banks have assets equal to 63% of the U.S. GDP; let that figure sink in. Imagine that six banks have assets equivalent to 63% of the world’s largest economy. Effectively they can manipulate any system. If one were to treat these banks as a nation, they would be in the top 5 countries of the world. Power corrupts, and absolute power corrupts absolutely. These banks will seek to gain even more control and will stop and do nothing unless their legs are chopped off.

The Top 6 banks are engaged in over 80% of all over-the-counter derivatives trades.

These banks’ only function is to facilitate the next Financial Disaster, and they do so with glee as they can buy top-notch assets for next to nothing and start the whole process again. The Fed will bail them out if anything goes wrong, as in 2008.

Were not banks created to lend money and help a business grow? So why are they using this money to trade the markets? When you combine these two pieces of data, it’s all but obvious that the banks have a free role to do as they see fit courtesy of the Feds. The Feds are providing these banks with virtually free money. Instead of lending this money out, they simply pump it into the markets, setting them up for another monumental correction. The function of a bank is to lend money, not to trade; new laws should be introduced, striping banks of their status if they earn more from trading than from their traditional business operations. Better yet they should be banned from trading in the financial markets.

One could go even as far as stating the financial crisis was engineered to help create a few super-powerful banks. It appears that this is the case, for the banks have not lost any power, but instead, we have fewer players with triple the amount of power.

These facts could help explain why the markets have continued to rise on thin vapour volume and why the precious metal sector (Gold, Silver, Palladium, etc.) has refused to mount a substantial correction in the face of a stronger dollar. Precious metals are the ultimate stores of wealth, for they hedge against the inflationary tactics central bankers employ to defraud the masses of their hard-earned wealth via the silent killer tax, otherwise known as inflation.

The Dow has put in 29 new highs and not once has the volume surged above the 6.8 billion mark. For example, the latest high (Monday, April 5th) volume was only 4.26 billion shares, half last year when the markets rallied strongly between March and July.

So why push the markets, you ask when they have already made much money? That’s where power, greed and arrogance come to play. Remember the quotes we listed above. Why would they stop if they can push it to the limits, destroy the psyche of traders and set up what appears to be a perfect trap? What do we mean by an ideal trap?

There are billions of dollars in the bond markets, and while long-term rates are slowly rising, they do not even come close to the potential gains many have locked in the past year. Imagine if bond players were pushed to abandon the bond markets; how much money would flow into the equity markets? Once this occurred, the bankers could start to bail out the billions pouring from the bonds markets would sustain their selling into rallies. Once out, they could build up massive short positions and eventually trigger a monstrous correction/crash. This would, in turn, trigger a rush into the bond markets as traders looked for a safe place to park their money so that the vicious cycle would continue.

Read the book “The Coming Battle by Lorraine Walter.” It is over 100 years old, and it explains how every recession and depression is actually engineered in advance. This is not hearsay; it provides quotes showing how the bankers have done this in the past. You can purchase this book from our book Store or simply search on Google.

Financial Disaster facilitated by the PPT Team

The PPT (Plunge protection team has openly acknowledged its existence after hiding in the shadows for decades). This article provides some info on this topic. Full Story

The Fed is using every bogus excuse in the book to maintain low-interest rates; the primary beneficiaries of this move are the big banks. They borrow the money for next to nothing (the average Joe cannot take advantage of this lovely feature) and then use this money to trade.

Our smart money indicator has remained in the neutral zone for months now. It sensed something was wrong and just moved into the neutral zone as it has refused to issue a sell signal.

Volume has always been vital, for it indicates market participation. Volume is shockingly thin and if it occurred once, or twice we could ignore it, but one cannot ignore the fact that the Dow has put in 29 new highs on substandard volume; statistically, it is impossible to state that something is not amiss. Perhaps this is why our smart money indicator refused to issue a sell signal. This indicator has always astounded us with its ability to keep one on the right side of the market. It moved into neutral territory and remained there for several months. This was the very same indicator that issued a powerful buy signal in February 2009 after staying on the sidelines for an extended period.

The Baltic Dry index, another leading economic indicator, is well off its Nov 2009 highs, indicating something is wrong.

If the Dow trades within or above the 10,999- 11050 ranges for more than three days in a row or closes above 11100 on a weekly basis, it could potentially trade to 11,800.


There are many signs that all is not well.

Additional factors that also support the extreme market manipulation theory:

1) In March 2009, there were less than six sectors with a positive score; today, every sector (roughly 200) has a positive score, and only one sector has a negative score. Even when the markets were crashing, at least five sectors had a positive score, but today even the worst junk has moved up significantly, and we only have on industry with a negative score. This shows you how extreme the current environment is; even the worst Junk has rallied dramatically from its March 2009 lows, yet not much has improved since March.

2) Another solid reason to keep the markets up is due to politics. The incumbent party does not want to lose its majority stake, and a poorly performing stock market on top of a terrible job market will be the fastest way to lose the top dog position. And as we all know by now, most politicians are willing to sell their souls and those of others if they can for a price.

3) Our particular futures-to-equity indicator has moved even more in favour of the futures market. The current score is 67 for futures and 33 for the equity markets. This is a risk-to-reward indicator, and it now states that the futures markets (very high-risk markets) offer a better risk-to-reward ratio than the equity markets. Generally, when it is in favour of the futures markets, the difference has been minimal, usually 1-4 points. This is the first time in decades that the point differential has moved past 15. This gives you an idea of the potential long-term risk associated with the equity markets now.

As we stated before, power corrupts, and absolute power corrupts absolutely. A few large banks now control almost everything (at least it where it matters the most, for example, the supply of money) and can at their whims generate another massive selling wave. In times such as these, where inflation is on the rise, an enormous currency crisis is just waiting to occur, and financial markets are racing to the extreme zones, the best way to hedge/protect is to have a position in precious metals (Gold, Silver, etc.). Gold has stood the test of time, can one say the same for any paper currency? Let’s not forget that the US has declared bankruptcy twice before. Those who forget history are doomed to repeat the very same mistakes.

We will end with two quotes from ‘The Coming Battle” by Lorraine Walter.

The greatest financial mistake of my life was in what I had to do with the passage of the present national bank act. It ought to be repelled, but before it can be done, there will be such a contest between the banks on one side and the people on the other as has never been witnessed in this country”. Salmon P. Chase.

fifty men in these United States have it within their power, because of the wealth which they control, to come together within twenty-four hours and arrive at an understanding by which every wheel of trade and commerce may be stopped from revolving, every avenue of trade blocked, and every electric key struck dumb. Those fifty means can paralyze the whole country, for they control the circulation of currency and can create a panic whenever they will”. Chauncey M. Depew.

Other articles of interest

The Art of Becoming a Better Investor

The Fannie May and Freddie Mac debacle (March 29)

The competitive currency devaluation era gains momentum (March 25)

A small but Strategic victory for Google (March 23)

Palladium; the Stealth bull Market (March 22)

The Devalue or Die era is picking up steam (March 16)

Euro Woes Part II (March 14)

Lack of Interest in Gold ETF could lead to a strong correction (March 13)

Gold Trading Like A Currency? (March 12)

Robbing the Old to Pay the Rich (March 8)

Precious Metals and the Dollar (March 4)

Gold and Silver (Feb 26)

Random Musings (Feb 13)

The Engineering of A Financial Crisis