Reprinted from www.libertylobby.org, home of The SPOTLIGHT archive
Fed Memo Reveals Action to Prop Up Market
In the afternoon of October 19, 1987, as share prices dropped dramatically and panic swept Wall Street, Federal ?Reserve Chairman Alan Greenspan quietly stepped in to prop up the sinking stock exchanges.
Problem is, Greenspan's maneuvers were a devious and criminal operation that cost unsuspecting American taxpayers a staggering $13 billion.
The fact that the Fed rigged the securities markets, long familiar to financial insiders, has been confirmed by one of the Fed's own internal documents, made available to The SPOTLIGHT by well-placed sources.
Written in March, 1989 by Robert Heller, the memorandum recalls that as the stock market was collapsing in the fall of 1987, the Red went into action "rapidly disbursing unlimited funds though open market operations and the discount window." Heller was serving as a Fed governor at the time.
The money was funneled through a network of banks to key brokerage houses and market makers on condition they immediately begin to buy stocks broadly enough to stem any panic sell-offs, the memo states.
Attempts to boost or depress the value of publicly traded securities "by artificial or collusive or fraudulent means" is a Class A felony banned by a succession of federal statutes and state laws issued since 1932.
But Heller's paper ignores such legal prohibitions as if they were intended only for ordinary citizens, not for the high officials of the Federal Reserve.
The Fed was already involved in manipulating currency trades, Heller notes. It "buys and sells foreign exchange to prevent disorderly conditions in foreign exchange markets...The stock market is the only major market still without a market maker of unchallenged liquidity or a buyer of last resort."
Heller assures Greenspan the Fed could buy and sell foreign exchange easily.
"Daily trading volume on the New York foreign exchange market which the Fed has been manipulating for years is $130 billion, while daily equity trading on the New York Stock exchange, the American Stock Exchange and the NASDAQ over- the-counter market ranges merely between $7 billion and $10 billion," Heller reports.
The 13 billion the Fed injected into the markets to halt the 1987 crash was more than enough to buy all the stocks traded on a typical day," the memo notes.
And that was just the problem, Heller argues. The Fed's hasty market-rigging ended up flooding the payments system and financial markets with too much cash.
A review of the most recent sharp stock slump on October 27-30 revealed the Fed was now following the strategy proposed by Heller to manipulate trading on Wall Street.
As the Dow composite stock index declined sharply in the morning of October 27, key brokers began to get huge cash orders for Standard & Poor stock index futures from a sudden rush of "mystery buyers," related stockbroker Thayer Corman.
Recalled this veteran floor trader. "It was 'buy, buy, buy -- and never mind the odds. Was it an attempt to jack up the market? Listen., when you're drowning you don't care who throws you a rope -- you grab it."