Transcript: Ellen Brown, 29 October 2008

Ellen Brown, an attorney and author of "Web of Debt", describes the activities of the president's plunge protection team and recommends federalizing the Fed.

Thom Hartmann interviews Ellen Brown, 29 October 2008

[Thom]: What if the stock market – we saw the stock market over the last couple of days go up rather precipitously and we have seen the price of gold go down as much as sixty dollars in one day. In fact, in one hour. In an hour in which nothing appeared to be going on in the world that would justify that. What if there is not so much, you know, in the context of our first guest Ken Olson – you know some satanic plot behind the whole thing that is flipping the stars upside down on the GOP logo but actually, kind of an out-in-the-open conspiracy, as it were, to manipulate the economy and perhaps even for political purposes? I don’t know. We’ll see.

Ellen Brown is an attorney – she’s the author of "Web of Debt", is her website as well as the title of her book. And some of her writings I think have been absolutely brilliant. I have found tremendous resonance with them, and Ellen, I don’t have any idea of what your politics are but I trust your economics. Welcome to the show.

[Brown]: Thanks. My politics are like yours.

[Thom]: Oh, okay. You know, it’s very often you find people who are outing the Fed basically and proponents of gold that are very, very conservative. But nonetheless, it doesn’t matter. We have people on this show from every part of the spectrum. You have an article recently about the Plunge Protection Team that blew my mind, and rather than trying to tell my listeners about it, I wanted you to come on and talk about it.

Let me just set this up – and this is something that goes beyond your article – this is what immediately came to my mind. I am in the middle right now of reading a book called, "The Day the Bubble Burst" which was published back in 1979 and was written throughout the 60’s and 70’s by first person interviews with people who were there in 1929, and the subsequent years. And one of the points that they make in the book is that although the market crashed in ‘29 and in 1930 and ‘31 and even ‘32 things were pretty bad, it really fell apart after Hoover left office because to a certain extent, Andrew Mellon, the Secretary of the Treasury, had his own informal plunge protection team with a bunch of big bankers and financiers in New York who were doing their best to hold things together and when Roosevelt was elected, they just said, “Ah – to hell with it! and let’s make the democrat look bad” and the bottom really fell out and that’s when the banks started failing, right after Roosevelt took power, in large part because they stopped manipulating the market as it were -- to the extent that they could.

And I’m wondering if we are maybe even seeing something like that being played out. Tell us what the Plunge Protection Team is, what we’re seeing them do apparently right now, and what it might mean.

[Brown]: There definitely is a Plunge Protection Team. The official name of it is the President’s Working Group on Financial Markets. It was set up by presidential order under President Reagan in 1988 following the collapse in 1987. And it says right in the order that the purpose is to maintain market stability and it’s to use the treasury’s resources to do it. Which means, taxpayer money is going to keep the market stable.

[Thom]: To buy and sell stocks in the market in a way that’s not transparent in order to manipulate the market, basically.

[Brown]: Right. What they do is they buy stock futures and to try and set it. Often, you know, you think the market is going to go way down in the morning and you see that the futures are up. Well, how can that be? You know, why did sentiment suddenly change? But the Futures Market is very small so it’s quite easy to manipulate. And if that doesn’t work, for instance, yesterday – that 900 point rise was unbelievable. I mean there is no – nothing happened to explain that. The CNBC commentators were – first of all, it was only the last two hours of the day, so it wasn’t anything that had happened all day long. In fact the market was tending to sink before that and then suddenly it shot up 900 points and then on CNBC they were saying this was in anticipation of a rate cut and because investors had just seen the bottom and saw all these bargains and had just jumped in for the bargains.

[Thom]: The rate cut happened today and the market’s down 107 points right now.

[Brown]: Exactly, and the rate cut had been talked about before. It wasn’t like suddenly – it was only a rumor – it wasn’t like suddenly they announced that they were actually having a rate cut. Plus the rate cut is just not going to fix the problem. It’s not even – I mean it’s a trickle – the problem is the credit freeze and it’s not because the Fed fund’s rate is too high. In fact, it’s way, way low.

[Thom]: Um, hmm. So – and the LIBOR rate is still pushing three percent as I recall. The London Interbank Offering. In other words the credit markets are still pretty locked up and the banks are taking all this taxpayer money and using it to buy other banks rather than to loan money to people. I mean it’s just, it’s just totally bizarre. But back to the Plunge Protection Team. So this group is made up of the President, the Secretary of the Treasury, the Chairman of the Fed, and whom am I missing? There’s two others.

[Brown]: The head of the SEC, the head of the Commodities' Bureau, whatever that's called.

[Thom]: Exchange Commission, yeah, the Commodities Exchange Commission.

[Brown]: Whatever it’s called – CFTC or something [Commodity Futures Trading Commission - ed.] -- and then there are major banks that are there, I understand.

[Thom]: Oh, really? How interesting.

[Brown]: They’re the ones who actually execute the plan.

[Thom]: Right, and so Reagan put this into place after the big crash of ‘87 in order to stabilize markets, do you think it’s possible that the Plunge Protection Team is – first of all what’s the evidence that the Plunge Protection Team is involving itself in driving down the price of gold, down the price of oil – I was predicting back, by the way, a year ago that in the two weeks before the election we’d see gasoline – forget about the price of gasoline – it will be under three dollars (a gallon) because you've got a Republican as president and you've got a Republican running for president, and this is going to be a gift from the oil companies and the Republican administration.

[Brown]: Right.

[Thom]: And sure enough, here we are. Is this the Plunge Protection Team, the president’s office, manipulating the markets, both the commodities' markets and the stock market?

[Brown]: I believe so. There was a – Don Coxe is a strategist for the Bank of Montreal and he stated that what happened was this huge manipulation back in July and that’s when things were really going the other way – that gold was -- had broken through a 1000 dollars an ounce and oil was over 140 dollars a barrel and the dollar was just going down, down, down.

[Thom]: Right.

[Brown]: And so the central banks got together – and Fannie Mae and Freddie Mac were about to go bankrupt – so the central banks got together and they agreed to manipulate the dollar up so they would buy dollars and sell Euros and yen, and so there was this dramatic reversal in the dollar and there was no logical reason why that should be, and then meanwhile gold went suddenly dropped off a cliff and oil dropped off a cliff so oil is down to – I mean it dropped down by 50%.

[Thom]: Yeah – cause they’re countercyclical with the dollar. Now, if the fundamentals are that we’re now ten trillion dollars in debt which is more than 50% of the entire GDP of the United States. We’re adding two trillion dollars of debt this year. The M3 is off the scale – they have stopped publishing it, the rate at which the money supply is being inflated.

[Brown]: Um, hmm.

[Thom]: I think probably anybody rational would look at this and say we’re not looking at a great depression-deflation. We’re looking – we may over the short term, over the six, eight, ten, twelve months – but over the long term, over the next three or four years, we’re looking at a Weimar Republic inflation. In 1919 it took 8 Deutschmarks to buy one dollar and by 1923 it took 3.4 billion Deutschmarks to buy one dollar. And it seems to me that that’s the direction we’re going and yet we’re seeing the opposite happen right now, both in the commodities’ market and the stock market – are you, first of all, do you think that my analysis is right? and secondly, if it is, then I would project that in the weeks and months following the election – pretty much regardless of who gets elected, but particularly if it’s a democrat as president – then the Plunge Protection Team is going to say, “Okay, all bets are off! We’re going to walk away and we’re going to just dump this whole thing into this guy’s lap.”

[Brown]: I would agree that’s likely. An interesting thing about the Weimar Inflation – that was actually caused by the banks. People think that it was the government that was madly printing money, but it was the banks that were madly printing money. The Reichsbank at that time was privately-owned, just like the US Federal Reserve, and they were responding to short sellers who were madly selling the mark because the country was so heavily in debt, it was obvious that the mark was losing value so they were massively short selling which meant that they needed the marks to –

[Thom]: They needed marks to cover it.

[Brown]: Yeah, so the banks were just printing it.

[Thom]: They had three hundred paper factories feeding four thousand printing companies running Reichsmarks continuously. It was just amazing. We’re talking with Ellen Brown – we just have a minute left, Ellen, is her website – it’s brilliant. Her newest article about the Plunge Protection Team – what is your guess at what’s going to happen over the next year?

[Brown]: Well, if you look at Germany, it went absolutely bankrupt and then the way Hitler turned it around was he issued his own money. And I think that’s the only solution – is to give the money issuing power back to the government. And,…

[Thom]: For the Treasury Department to buy the Fed.

[Brown]: Right. If the Federal Reserve were actually nationalized, rather than having to monetize government debt, putting us more into debt every time they make a loan, they could actually issue credit outright – they could issue the full faith and credit of the United States.

[Thom]: I agree. I agree. I have been calling for that for some time, in fact. That we need to federalize the debt – or federalize the Fed, rather, and thus federalize the debt as well. Ellen Brown – A brilliant website – check it out! Ellen – thanks so much for being with us.

[Brown]: Thank you.

Transcribed by Caleb Burns.

Thom's Blog Is On the Move

Hello All

Today, we are closing Thom's blog in this space and moving to a new home.

Please follow us across to - this will be the only place going forward to read Thom's blog posts and articles.

From Screwed:
"If we are going to live in a Democracy, we need to have a healthy middle class. Thom Hartmann shows us how the ‘cons’ have wronged this country, and tells us what needs to be done to reclaim what it is to be American."
Eric Utne, Founder, Utne magazine
From The Thom Hartmann Reader:
"Thom Hartmann seeks out interesting subjects from such disparate outposts of curiosity that you have to wonder whether or not he uncovered them or they selected him."
Leonardo DiCaprio, actor, producer, and environmental activist
From Cracking the Code:
"In Cracking the Code, Thom Hartmann, America’s most popular, informed, and articulate progressive talk show host and political analyst, tells us what makes humans vulnerable to unscrupulous propagandists and what we can do about it. It is essential reading for all Americans who are fed up with right-wing extremists manipulating our minds and politics to promote agendas contrary to our core values and interests."
David C. Korten, author of The Great Turning: From Empire to Earth Community and When Corporations Rule the World and board chair of YES! magazine