Price Protection Group

Asher Edelman had an astonishing interview on CNBC Fast Money this afternoon.  In it he claimed that Reagan’s Executive Order 12631 which established the Working Group on Financial Markets resulted in the fabled Plunge Protection Team which he called the Plunge Protection Group, reporting only to the President.  Comprised of the heads of the SEC, Treasury, the Fed and the CFTC, it works with major banks like Goldman Sachs and Morgan Stanley to smooth stock market function by buying during times of stress by buying stocks in the open market.  But he further postulated that under Trump and hence Mnuchin, he suspects it is now being used nearly every day to prevent drops in the market, and ascribes the noted lack of recent volatility to this.  Further he states that it is done using taxpayer money.  You can see the short video here (click if the video below does not embed properly):

Now I do not know whether he has some special knowledge of this group gleaned during cocktail banter in fabulous parties in NYC, but if what he is saying is true here is what needs to happen to anyone who has ever been involved in such a wrong-headed and unAmerican activity:

This Is America!!!  There would be a special place in a deep dark hole in Hell reserved for any official or banking personnel who participated in or even had knowledge of stock buying activity directed by the Secretary of the Treasury.  If Ronald Reagan sanctioned such a thing my estimation of him would drop several notches.  In all seriousness though, it would be totally inappropriate for the government to be involved in any way in the purchase of stocks or even corporate bonds (here’s looking at you Kuroda and Draghi).  Any person involved in such a scheme should resign immediately, or be fired or removed from office with the loss of all pension or other benefits, including all past officials still living.  Bank officials participating in or knowing of it, now or in the past, should resign or be fired immediately and be stripped of nearly all their personal wealth.

There is no place in American capitalism for the government to be getting involved in the stock market for any reason.  The Fed doing QE with an EYE toward lifting stock prices is bad enough.  They can get away with it because they can pretend they are prosecuting monetary policy through their accepted methods of buying and selling Treasury securities in order to add liquidity or drain liquidity from the banking system, though QE is stretching that to its limits.  Directly purchasing and selling stocks, impacting financial markets for political purposes is not OK.  Let us hope Edelman’s speculations are wrong.

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