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http://www.sprott.com/pdf/TheVisibleHand.pdf
Executive Summary
This report examines information indicating that the U.S. government has surreptitiously intervened in the American stock market. Important findings include the following:
• A statement by former presidential adviser George Stephanopoulos and credible British press reports appear to confirm suspicions that the United States has a socalled “Plunge Protection Team” whose primary responsibility is the prevention of destabilizing stock market declines. Comprising key government agencies, stock exchanges and large Wall Street firms, this informal group was apparently created in 1989 as an outgrowth of the President’s Working Group on Financial Markets. This revelation is significant because the government has never admitted to private-sector membership in the Working Group.
• The Plunge Protection Team is not merely concerned with the stability of the stock market. Speaking in 2001 as a correspondent for ABC’s “Good Morning America,” Stephanopoulos also revealed that at the time of the Long Term Capital
Management crisis in 1998, the Federal Reserve directed large banks to prop up the currency markets. This was apparently done to diffuse a global currency crisis. We believe this crisis was rooted in the disorderly unwinding of the yen-carry
trade, which resulted in the U.S. dollar plummeting against the Japanese currency.
• In response to the September 11 terrorist attacks, the Federal Reserve and large Wall Street firms prepared to support the main stock markets by buying shares if panic selling ensued. Multiple news reports indicate that investment banks and brokerage houses took concerted actions in the aftermath of the tragedy.
• Before the 2003 Iraq invasion, the U.S. and Japan reached an agreement to intervene in stock markets if a financial crisis occurred during the war. Though it was announced at a press conference by a Japanese government official, the U.S.
never publicly acknowledged the accord.
• We believe the stability of domestic stock markets is considered by the U.S. government to be a matter of national security. Interventions are likely justified on the grounds that the health of the U.S. financial markets is integral to American preeminence and world stability. This conclusion flows from an extraordinary financial war game exercise conducted by the Council on Foreign Relations in 2000 and attended by key policy-makers. In this vein, an article in Euromoney magazine disclosed that simulation participants displayed a willingness to consider government intervention in the stock market in the event of a financial crisis.
• A 1989 USA Today story revealed that government regulators asked market participants to buy stocks in October 1989 to prevent another plunge. When these overtures proved ineffective, large brokerage firms appear to have intervened in
the futures market to support the underlying index. In this regard, the recovery
This report examines information indicating that the U.S. government has surreptitiously intervened in the American stock market. Important findings include the following:
• A statement by former presidential adviser George Stephanopoulos and credible British press reports appear to confirm suspicions that the United States has a socalled “Plunge Protection Team” whose primary responsibility is the prevention of destabilizing stock market declines. Comprising key government agencies, stock exchanges and large Wall Street firms, this informal group was apparently created in 1989 as an outgrowth of the President’s Working Group on Financial Markets. This revelation is significant because the government has never admitted to private-sector membership in the Working Group.
• The Plunge Protection Team is not merely concerned with the stability of the stock market. Speaking in 2001 as a correspondent for ABC’s “Good Morning America,” Stephanopoulos also revealed that at the time of the Long Term Capital
Management crisis in 1998, the Federal Reserve directed large banks to prop up the currency markets. This was apparently done to diffuse a global currency crisis. We believe this crisis was rooted in the disorderly unwinding of the yen-carry
trade, which resulted in the U.S. dollar plummeting against the Japanese currency.
• In response to the September 11 terrorist attacks, the Federal Reserve and large Wall Street firms prepared to support the main stock markets by buying shares if panic selling ensued. Multiple news reports indicate that investment banks and brokerage houses took concerted actions in the aftermath of the tragedy.
• Before the 2003 Iraq invasion, the U.S. and Japan reached an agreement to intervene in stock markets if a financial crisis occurred during the war. Though it was announced at a press conference by a Japanese government official, the U.S.
never publicly acknowledged the accord.
• We believe the stability of domestic stock markets is considered by the U.S. government to be a matter of national security. Interventions are likely justified on the grounds that the health of the U.S. financial markets is integral to American preeminence and world stability. This conclusion flows from an extraordinary financial war game exercise conducted by the Council on Foreign Relations in 2000 and attended by key policy-makers. In this vein, an article in Euromoney magazine disclosed that simulation participants displayed a willingness to consider government intervention in the stock market in the event of a financial crisis.
• A 1989 USA Today story revealed that government regulators asked market participants to buy stocks in October 1989 to prevent another plunge. When these overtures proved ineffective, large brokerage firms appear to have intervened in
the futures market to support the underlying index. In this regard, the recovery
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