The Federal Reserve and Conspiracy.

Recently the financial blog Zero Hedge asserted that The Federal Reserve Bank has engaged in manipulation of the stock market. For some of us this is already accepted, and no great pains need be taken to prove the thesis. However, economist Edward Harrison of the financial blog nakedcapitalism took issue with Zero Hedge's claims as he felt the piece contained insufficient evidence and contained an unappealing tone of conspiracy. In fairness to Mr. Harrison, it must be said that the article had nothing in the way of hard evidence to support any specific, or for that matter, any general claim of market manipulation by The Federal Reserve. What was very clear in the comments section of Mr. Harrison's piece, and of perhaps the greatest interest in the entire discussion, was how strongly people feel about the idea of conspiracy. The following was my contribution to the main topics of debate:

Let’s cut to the chase. We know there is a PPT, more properly referred to as The Presidents Working Group on Financial Markets. At the same time, even though we are armed with that knowledge, the opaqueness of the institutions in question, and the timidity, if not cowardice, of those who might remove the veil of secrecy surrounding the workings of these institutions, make it well nigh impossible that manipulation of the kind under discussion will ever be traced to its source. Auditing the Fed will probably not uncover all that they have engaged in (good, bad, and illegal) to date, but it is a legislative initiative whose passage I believe is imperative.

As for conspiracy theories, one has two choices. One can subscribe to the sensible view, as many do, that some of the worst events in our recent (and not so recent) past are nothing more than the result of incompetent and bumbling officialdom, OR you can hew to the notion that powerful interests do not come by their power by chance-which is another way of saying they are competent- and are supremely interested in maintaining their advantage. And, perhaps, most importantly, not only do powerful interests not play by the rules, but generally they have contempt for them and act accordingly.

From such realities are “conspiracies” made. And once one has truly understood and accepted the immortal words of Frederick Douglass, “Power concedes nothing without a demand. It never did and it never will” one realizes that conspiracies, while not necessarily the norm, whatever that is, are far more common than most would like to believe.