Useful Idiots and the PPT
Nelson Hultberg
April 2, 2003

In my recent article on the Plunge Protection Team, I stated that discussing how the PPT could be structured was theorizing. This is important to keep in mind when dealing with the issue. We in the gold community are quite certain that the PPT exists. There is just too much circumstantial evidence to indicate otherwise. But HOW it exists, we are not so certain of.

The Federal Government is a vast hydra-headed monster engaged in countless avenues of bureaucratic exploitation, with access to thousands of amoral operatives, skilled propagandists, high-tech wizards, malevolent CIA stringers, academic collaborators, and useful idiots of the media, etc. all easily influenced by the "powers that be" to perform whatever actions they deem necessary to maintain the neo-fascist combine of corporate statism that now rules America. All pervasive control is the name of their game, and maintaining that control is the all-important purpose. Economic "stability and order" for the country (and even the world) become the justifications for whatever actions are adopted. Individual rights, constitutional legitimacy, personal freedom, and moral propriety are not concepts that these ruthless pragmatists accept, much less understand. Such notions to them are anachronistic ideas that went out with the 19th century. Just not on their cerebral radar screens. So we must expect just about anything out of these people.

This is why it is not invalid to talk about offshore front organizations and illicit purchasing of equities by secret organizations such as the PPT. Clandestine policy and murky organizations are naturals to the power lusters who wheel and deal in the labyrinthine swamps of today's Washington. This is the nature of all evolving tyrannies. They rely more and more on subterfuge rather than statesmanship, naked power rather than proper principle, and raw pragmatism rather than constitutional restraint.

It appears that my essay of March 26th, "Cornered Rats and the PPT," struck a chord throughout America and even around the world. Scores of emails began hitting my computer in the wake of its posting. And they asked some very pertinent questions -- questions that need to be answered to clear up any confusions and hopefully strengthen our case for the PPT's existence. This I will try to do in the following. I caution the reader as he reads through the answers that we are in uncharted territory here, territory that is not accepted by the establishment as even existing, and for which there is no public information whatsoever. So we are dealing in theory, or a hypothetical as the talking heads like to term it. Such theorizing is based upon a large array of circumstantial evidence, a rational appraisal of human nature, and a clear knowledge of past history. But it is still theory, and consequently it could be wrong in some of the specific details.

Questions Arising about the PPT

1) Question number one: Doesn't the PPT just operate in S&P futures, skipping in and skipping out, rather than going "net long" stocks? Consequently, wouldn't that negate any funneling of new money into the economy?

Yes it would if we assume that the PPT only operates in S&P futures. But why should we assume that the PPT only operates in futures and only skips in and out? If the Fed is empowered to purchase Treasuries as an asset publicly, why could not its PPT arm purchase corporate equities as an asset secretly from an offshore account?

The accepted assumption is that the PPT has been operating only as a "match to kindling" in the market (to use the wonderful analogy of Will Reishman at Euro Pacific Capital). That is to say the PPT merely lights the fire by intervening into a dangerous market sell-off with massive purchases of S&P longs to check the fall. This ignites short covering, which then brings in the hedge funds and other institutional money to try and catch the train before it leaves the station. A large rally ensues, and the PPT then sells its long positions into the hedge fund and institutional buying. In this way, they never go "net long" stocks. They do not accumulate inventory. Thus, they do not actually add their Fed printed "new money" to the system. So their actions are not inflationary.

This undoubtedly is the way that the PPT has been operating for the past decade; and it is probably the way they are operating today. But will it be the way they continue to operate as the economy gets weaker and weaker? Because they always sell their positions back to the hedge funds who follow them, no sustained rally can ever be created. Their selling back of their positions will always snuff out the intensity of the rally before it can begin -- at least it will in a bear market. By the looks of the Dow over the past three years, this seems to be the case. All its rallies fizzle out, so if the PPT has lit the match, it then douses the fire a week to a month later by closing out its positions. In the nineties, such match lighting strategy would result in a sustained rally because overall sentiment was still ragingly bullish. But for the past three years, such match lighting has been operating in a decidedly bearish sentiment, and thus it results only in rallies with no legs.

This creates a sideways, range-bound movement for equity prices. It still accomplishes good results as far as the PPT is concerned because it creates a floor under which prices will not be able to drop. It also makes some nice profits for the PPT, as the "black box boys" get left holding the bag at the rally top and have no one to follow them to buy their positions at the elevated prices.

This, we can be pretty certain, is the methodology of the PPT. But what if the day comes when a floor can no longer be maintained by just "lighting the match" and then selling into the hedge funds later? What if the day comes when they need something stronger, such as actually going "net long" and accumulating inventory? It should be obvious that they would not hesitate to do such a thing. These are desperate men, and since they have a printing press, why not put themselves in a position where they can buy stocks secretly via an offshore corporate front, instead of buying bonds openly through conventional market operations?

These are men who will not hesitate to recall all greenbacks and replace them with a new colored money. These are men who will not hesitate to devalue the dollar just as Argentina did if things get bad. So why not establish an offshore corporation to go net long billions in stocks BEFORE things get to the dangerous "depression stage?" Why not try and check ahead of time any danger whatsoever of deflation? Heavy deflation would require drastic hyper-inflationary measures, which would then require devaluation. Hello Argentina? Do not want to go there for sure. Would not accumulating inventory in an offshore account then be the lesser of the two evils? I have to believe that since they have a printing press, an offshore account, and an S&P futures buying program already in place, the idea of going net long and accumulating an inventory of Dow 30 stocks is certainly a contingency plan.

If the Fed is faced with a steadily weakening dollar and a stagnant economy come Spring of 2004, and it has a choice between buying bonds in the open market and setting off alarm bells, or buying stocks from an offshore account and setting off no alarm bells, which would they prefer to do? Not a very difficult question. The PPT's front corporations will start accumulating large holdings of Dow 30 stocks. An ounce of prevention is worth a pound of cure.

Hell, it's only printed money. Why face a depression and a place of infamy in the history books? Why not try to buy some time? "Surely a turnaround in the economy will come soon," they reason. "Surely the profit picture will improve. Surely capital expansion will begin to take place. Let's try to put off the disaster until next year. Let's authorize XYZ Corp to open the spigots and accumulate stocks for god's sake!" This is how human nature operates when facing a catastrophe, and a catastrophe is rapidly approaching our marvelous government manipulators in Washington and New York.

2) Question number two: Wouldn't any newly printed money eventually show up in M3 calculations, which would negate any benefits of trying to increase the money supply secretly?

Yes it would eventually end up in M3, but Bob Rubin faced the same dilemma in the nineties with his gold leasing scheme to keep the dollar strong while inflating it. And it didn't seem to set off the FOREX markets. So, while M3 figures are something to be aware of, they can't be terribly important to the head boys at Treasury. What seems to be the more important alarms are things like the Fed openly dumping gold and monetizing bonds. This, they have to try and avoid if possible.

Moreover, the calculations of M3 are not exactly figures that we can go to the bank on. They are somewhat vague and subjective. Just ponder the evolution of all the M's (M2, M3, Mz, etc.) over the past decades. With the onset of computerization, it has all become an unbelievable maze of statistics. What do they say, "There are lies, damned lies, and statistics." Then there are government statistics that many believe to be severely corrupted to serve Big Brother's statist agenda. So the point is that, because of its subjectivity and lack of transparency, M3 does not constitute as dangerous an alarm bell as the actual entrance of the Fed into open market operations. Washington honchos hate clear cut signals of weakness that can't be covered up or rationalized away -- such things like the sale of gold and the monetization of bonds. Therefore, I would have to believe that the Fed and the Treasury have a strong interest in trying to secretly inject money into the economy. An offshore PPT account would be an excellent vehicle to do so.

3) Question number three: If so many people are involved in this mega-conspiracy, why has it not been exposed by now?

There are several reasons why it remains unknown. First of all, it doesn't have to be a mega-conspiracy at all. Not a lot of people need to be involved to pull this off. For example, a Treasury higher-up sends an ex-CIA operative, known as a "stringer," to the Bahamas to establish XYZ Corp. The Treasury higher-up then establishes a salary of $250,000 per year (easily hidden in today's trillion dollar budgets) for the stringer to stay there. His mission is to buy S&P futures and accumulate inventory of Dow 30 stocks whenever it is deemed necessary. The money to fund the PPT's purchases is created in today's world by the pressing of a computer button. And with a little creative legerdemain, easily laundered through the convoluted financial derivative dealings and interrelationships of global banking.

The orders for the PPT's equity purchases then come to the designated U.S. brokers as an offshore corporation buy, not as something of government origin. So no brokers have dealings with anything known as the PPT. None of the other WGFM members (even Greenspan himself) need to know that the PPT exists and is engaged in rigging the market. They no doubt suspect that it exists, but since they see it in their best interests to tolerate such an organization, they merely look the other way and dismiss it to the public as a right-wing fantasy. Their quasi-ignorance gives them the capacity for plausible denial. They reinforce the establishment sycophants in the media (the "useful idiots") with such a viewpoint. And if the useful idiots of the press suspect such a thing exists, they quickly dismiss it because it is in their best interest not to bite the hand of the authoritarian state that feeds them. Since there is no hard proof of PPT existence, and since any belief that such a thing might exist brands one as a "conspiracy nut" at posh Washington gatherings, the lap dogs of the press, so desirous of social approval, conveniently blank out on the issue.

Human nature is such that political bureaucrats, once engaged in the pursuit of power that makes up contemporary Washington, will partake in the most abominable rationalizing to justify the ruthless careerism upon which they have embarked. As evidence, consider the administrations of every President going back to Roosevelt. Have they been examples of probity and honorable statesmanship, or have they been morasses of flagrant deal making, egregious privileges, disgraceful scandals, and rank corruption on a par with all the tyrannical humbugs of history? We're dealing with ruthless AUTHORITARIANS who have no clear ethical compasses guiding them, no clear sense of constitutional restraint. Rationalizing and blanking out on the malfeasance surrounding the job becomes one of the first skills to be learned upon arriving in Washington. After all, its for the "good of the country." Rights and legalities are for yahoos who seek a limited government world that we just can't tolerate anymore.

Added to all of this is the horrible fact that a great part of the public actually wants the PPT to be a part of their investing lives. After all the Fed intervenes into the currency markets regularly. Why shouldn't it be OK for the Fed to intervene into the stock market and the gold market? These people just don't get alarmed at such intervention because they think of it as "what government is supposed to do." They don't think of it as something sinister or detrimental. They like the idea of being "protected" from the downside moves in the stock market. And thus they don't get upset by those who warn against PPT interventions. They don't dwell on the damage that will ultimately be done to the INTEGRITY of the NYSE as such intervention begins to increase in the upcoming decades. They think short range only. As James Spader said in the movie Wall Street, "What's in it for moi?"

But if the stock market can never fall, then we don't really have a stock market do we? We have something else. We have a perma-bull market that always goes up. This is one of the reasons why the late nineties became such a huge bubble. Investors felt that Greenspan and the Fed would always come to the rescue and keep the market shored up because Greenspan had intimated this many times in his testimonies before Congress. "The Fed would never let the stock market fall again like in 1987 and 1929," was the message that went out loud and clear to both Wall Street and Main Street.

In face of this kind of government "guarantee," investors will become much more bullish than economic conditions warrant. They will bid up stocks in wild abandon, which then leads to a much more horrific collapse. By telling the market that the Fed will always shore it up whenever it is in jeopardy of plummeting, the Fed creates a much bigger bubble than would normally come about. It creates much more volatility.

Part of "legitimate" trading is the fear of loss. It is what keeps traders sane. But remove this risk, and they will not be intelligent investors in stocks anymore. They will become wild speculators consumed with greed. By trying to create a totally safe stock market, the government merely creates a more dangerous market in the long run. It makes the boom and bust swings much more severe. In search of stability, it creates the exact opposite.

This is the trend of our entire society which started back in 1913 -- the attempt to remove all risk from our endeavors by having the Federal Government "manage and manipulate" all the ups and downs and difficulties of life. It is what will ultimately enslave us in some sort of futuristic, authoritarian Brave New World. But in order to see the horrible ramifications of such a world, one has to be able to think long range. One has to be able to see the big picture of history, to understand human nature for what it is, to realize why the Constitution was written as a literal document. This is certainly not the way the New World Order crowd thinks, and it is not the way their "useful idiots" in the press think. We are being overrun by short range mentalities today, and it does not bode well for the future.

What Are We to Conclude?

I have one thing to say to the skeptics of the establishment press. We are dealing with a "Creature" of immense proportions in the Federal Government. This creature is a result of decades of ideological conditioning in the schools of three generations of Americans to accept the idea that Big Brother is necessary in order to have a smooth running economy. This creature operates in the way it does because the intelligentsia of our country has defaulted on its basic purpose -- to pursue truth and preserve freedom. While conspiracies, both profound and inconsequential, abound throughout life, they are not the PRIMARY cause of what we have wrought today. The primary cause of the creature is the ideological fallacies that have been taught to three generations of Americans. But the conspiracies act as virulent concomitants to the ideological conditioning -- integral parts of the process. This is because it is the nature of humans in pursuit of power to conspire to have more power. The PPT is a conspiracy because someone in Washington thinks that it will preserve "stability and order" for the country as well as accrue power for its initiators, and because its activities are illegitimate. It does not need to be a mega-conspiracy to function at all. The CIA is involved in thousands of illegal covert activities that have never found the light of day, have never been exposed by self-servers in pursuit of large book contracts. Police and prosecutorial corruptions are covered up by scores of participants for entire lifetimes. Why then could not a small group of clever, high-level Treasury bureaucrats and CIA stringers orchestrate the operations of the PPT while all other federal higher-ups remain conveniently out of the loop year after year?

Because the Federal Reserve's mandate prohibits the purchase of equities does not mean that it will refrain from purchasing them, as establishment reporters so naively conclude. The nature of government is that it will do whatever is necessary to preserve order. And disorder is the hallmark of our day. This disorder, and the corruption that is growing exponentially in reaction to it, cannot be overcome with puerile, flippant attacks against those who are trying to warn about its ramifications. Our country would be far better served if those who are pledged to the pursuit of truth (the media and the academy) quit fleeing from the truth. The fact that there are many conspiracy theories circulating throughout our society based upon ludicrous premises, does not mean that ALL conspiracy theories are bunk. The premise of a PPT operating to maintain order in the equity, currency, and precious metal exchanges is totally logical. It comports with the nature of government and the nature of men. Japan's government, right now, buys stocks openly. Therefore, it is certainly no stretch to assert that America's government is involved in the same pursuit, but doing it secretly because of its illegality?

All tyrannies depend for their existence upon the creation of a vast array of intelligent and well-meaning, but naive, intellectuals -- what Lenin called the "useful idiots" who will go out and proselytize the masses to convince them that things are best left up to the State, that freedom is old fashioned, and that all-powerful government is our friend. These are men and women who prefer popularity over principle. They thus lack the courage to challenge the authoritarians who are manipulating the academic, financial, and political arenas that reinforce the despotism. They are gullible minions who can be led to believe that tyranny is necessary in the modern day, that it isn't really tyranny if we don't call it that.

This has been the case throughout history. Tyrannies have always depended upon collaboration from the more pusillanimous of the citizenry. Ayn Rand called it the "sanction of the victim" in her great novel Atlas Shrugged. The Vichy government in 1940 France was based totally upon such collaborators with the Nazis. It is the same today with America's neo-fascist economic evolution. Our country's intelligentsia is being split between a large corps of collaborators (the establishment media and academia) and a small, but ever growing, band of freedom fighters (libertarian and conservative contrarians). The fact that the tyrannical aspects of the Federal Government continue to grow is testament to its power and to the complicity of the establishment collaborators throughout the academy and the media. But their days are numbered; the rebel forces are growing by leaps and bounds. Tom Paine lives. The Founders' vision has not yet been extinguished. Gold will once again reign supreme. Truth has a way of rising up in the most startling ways. It is our talisman, and it will bring these collaborators, these manipulators, down. I look forward to that day indeed.

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