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The G-7 Forex Intervention Is A Perfect Example Of How Manipulated The Global Currency Market Really Is

What do governments and central banks do when they don’t like what is happening in the financial markets?  They directly intervene and they manipulate the financial markets of course.  On Friday, the central banks of the G-7 acted in concert to drive down the value of the surging yen.  So why did they do this?  Well, the fear was that a rising yen would hurt Japanese exports at a time when the economy of Japan needs all of the help that it can get.  So, as central banks have been doing with increasing frequency, they directly intervened in the Forex market in order to bring about the result that they desired.  Unfortunately, this is not an isolated incident.  The truth is that foreign governments, central banks and large financial institutions are constantly manipulating the Forex, precious metals and stock markets all over the globe.  You see, in today’s global economy the “stakes are so high” that the free market cannot be trusted.

The reality of the matter is that none of the financial markets are really “free markets” anymore.  Not that they are completely rigged, but to say that they are very highly manipulated would not be a stretch.

At least this time the manipulation was made public.  Of course it would have been really hard to hide the fact that all G-7 central banks intervened in the Forex on the same day.

The last time there was such a coordinated intervention in the global currency market was back in 2000 when central banks intervened to boost the struggling euro.

But the truth is that individual central banks attempt to manipulate the Forex all the time.

Some of these interventions become public.  In September 2010, a bold 12 billion dollar move by the Bank of Japan to push down the value of the yen made headlines around the globe but had only limited success.

Another example of this from last year was when the Swiss National Bank experienced losses equivalent to about 15 billion dollars trying to stop the rapid rise of the Swiss franc.

Many nations around the world have become extremely sensitive to currency movements.

In particular, there are several Asian nations that are known to be constant currency manipulators.  For example, Singapore is very well known for intervening in the foreign exchange market in order to benefit exporters.

And that is what this most recent intervention on behalf of the yen was all about.  It was about making Japanese exports cheaper.

But who is going to say no to Japan right now?  It is believed that Japan asked the G-7 to do this, and so they did.

Japanese Finance Minister Yoshihiko Noda told the media the following about this massive intervention in the marketplace by the G-7….

“Given yen moves after the tragic events that hit Japan, the United States, Britain, Canada and the European Central Bank have agreed with Japan to jointly intervene in the currency market.”

So isn’t the Forex supposed to be a free market?

If you still believe that, I have a bridge to sell you.

According to Kathleen Brooks, the research director at a major Forex trading firm, it looks like there is a certain level that global authorities simply will not allow the yen to rise to….

“It looks as though global authorities are willing to pull out all of the stops to defend the 80.00 level in dollar/yen.”

The following is the full statement released by the G-7 defending their currency intervention….

Statement of G-7 Finance Ministers and Central Bank Governors

March 18, 2011

We, the G-7 Finance Ministers and Central Bank Governors, discussed the recent dramatic events in Japan and were briefed by our Japanese colleagues on the current situation and the economic and financial response put in place by the authorities.

We express our solidarity with the Japanese people in these difficult times, our readiness to provide any needed cooperation and our confidence in the resilience of the Japanese economy and financial sector.

In response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities, the authorities of the United States, the United Kingdom, Canada, and the European Central Bank will join with Japan, on March 18, 2011, in concerted intervention in exchange markets. As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We will monitor exchange markets closely and will cooperate as appropriate.

But it is not just foreign governments and central banks that manipulate financial markets.

If you want to try to make money on the Forex, you had really better know what you are doing, because most “little fish” get swallowed up and spit out.

A number of years ago I actually invested in the Forex and I rapidly learned that it is not a “clean game”.  I discovered that there are industry insiders that openly confess that several of the “big fish” in the industry brazenly “stop hunt” and regularly trade against the positions of their clients.

Not that stock markets around the globe are much better.  It would take thousands of pages just to document the well known cases of stock manipulation and insider trading.

And don’t get me started on the precious metals markets.  As I have written about previously, very compelling evidence of manipulation in those markets has been handed to the U.S. government and they have essentially done next to nothing with that evidence.

Not that people don’t make money in the financial markets.  Some people make a ton of money.  But those people are experts and they know how to survive in a “dirty game”.

If you are an amateur, you really need to think twice before diving too deeply into the financial markets.  If you think that you can jump into the Forex or the U.S. stock market and “get rich quick” you are in for a rude awakening.

The financial markets have become a game that is designed to funnel money to the “sharks” and to the “big boys”.  Once you put your money into the game, the odds are that “the house” is going to win.

For those that still do believe that the financial markets are a good way to build wealth, at least be prudent enough to get some sound financial advice.  There is no shame in having a financial professional invest your money for you.

But it is no guarantee of success either.  The truth is that millions of Americans have experienced a lot of pain in the financial markets over the last few years.

As the global economy becomes even more unstable, the manipulation of the financial markets by governments and by central banks is going to become even more dramatic.

As financial markets around the world crash and rise and crash again a whole lot of people are going to be wiped out financially.

You don’t have to be one of them.

  • mondobeyondo

    It isn’t just global currencies and stocks that are being manipulated. It’s also precious metals such as gold and silver, and commodities too.

    All the better to tilt the pinball machine in your favor, if you can get away with it.

    The big boys know what they’re doing. They’ve been playing pinball for a long, long time. An amateur stock broker or currency trader doesn’t stand much of a chance. Ignore those visions of sugarplums and million dollar profits. If you’re not an “insider”, or know someone who is, you are toast. You will lose your shirt – and your pants, and then your underwear.

    Pirahnas show no mercy. Their only goal is to eat you alive.

  • mondobeyondo

    If you do decide to dip your toes in the pirahna pool, be sure you know what you’re doing.

    Martha Stewart was once caught with her hand in the cookie jar, trying to break the rules in her company’s favor. Oops, she wasn’t quite slick enough! She’s a great home economist, but a lousy investment professional.

  • http://www.osixs.org morpheus

    Just more proof that our economic system is a fraud and can’t be fixed. It’s really just a ponzi scheme that is starting to unravel. And like suckers, we hold onto it for dear life.

    Wake up people. It’s time!

    “THE REVOLUTION HAS STARTED”

    Read “Common Sense 3.1” at ( http://www.revolution2.osixs.org )

    FIGHT THE CAUSE – NOT THE SYMPTOM

    “Spread the News”

  • PaulF

    The JPM silver short “conspiracy” is even mainstream now – the NYT (I think) did a piece on it.

  • http://www.planorperish.com/ Gutter Economist

    “As financial markets around the world crash and rise and crash again a whole lot of people are going to be wiped out financially. You don’t have to be one of them.”

    Really???

    It is more like dammed if you do – dammed if you don’t. If you leave all your money in a Federally Insured Savings Account, you will continue to lose purchasing power thanks to the US Congress and Federal Reserve. In addition, pension funds are invested in the financial markets.

    A few more Forex Facts:

    (1) 15% of trading is by commercial banks and the remaining 85% is by speculators.

    (2) 95% of traders lose money (including commercial banks), 4% break even, and only 1% earn regular income.

    For most people, owning a few bags of pre 1965 US silver coins would be better than doing nothing.

    The Utah legislature passed a bill this week allowing gold and silver coins to be used as legal tender in the state – for the value of their precious metal, not just the face value of the coins.

  • Patriot Alice

    Revolution against whom? Your neighbor? Just smarten up! Whenever the general public’s economy goes through a downturn, it is harvest time for the titans of finance. Just like a farmer who knows when to plant and when to harvest, so do the Gods of finance.

  • Dan McDonald

    I am no economist, but I wonder how much such funneling of money by governments and the big boys would be possible if we had a gold standard that made it a person’s right to exchange their paper currency for a fixed amount of gold with regular auditing of gold supply demanded by the system. The problem with fiat money, is that if the market does not respond to the money issuer’s liking, the money issuer may simply flood the market with new money. One of the insights of Austrian economics (Von Mises, Hayek) has been that fiat money and fractional reserve banking interfere with the free market’s ability to establish market values and prices. The market destablized by fiat money and interventionist monetary policies interferes with the market pricing system. If that did not happen, then those who tried to fight the market (the sum total of decisions made by people making economic decisions with human free will) would pay a price for not understanding the market. Today the price is paid not by those who misread the market directions, but by those who lack the ability to channel funds into the system to manipulate the market. I suspect this would be much harder to do if the ability to print paper money out of thin air did not exist.

  • http://www.danielrevelationbiblestudies.com Robert Stout

    Thanks for another great article on the manipulation of global currency market!!! Yes, Morpheus, you on dead on when you talk about a REVOLUTION is coming to a neighborhood like yours real soon!!! It is difficult to get the American people to band together on many issues, but their scree lack of duty to help themselves and others really staggers the imagination!!!All the lies and deception of this ponzi scheme of the super rich and the banks are coming to an end real soon!!! When the financial crash comes, many of the rich will jump out of 10 story buildings to their death!!! My granddad was alive during the crash of 1929 and he said that many of the rich could not handle their losses and committed suicide!!! I hope thousands of people take a serious look at this article and react!!!

  • The Unicorn

    Theres also Naked short selling
    http://en.wikipedia.org/wiki/Naked_short_selling

    When this happens everyone is touched in some way.The SEC usually fines the company that did the Naked short selling.That does nothing for everyone that was affected.I would like to see a class action lawsuit aganist any Corp.,bank that has been involved in Naked short selling basically about everyone that has money invested in the stock market would be part of the claim.By the way Naked short selling is illegal!!! but its done anyways.

  • DeathSpiral

    http://www.youtube.com/watch?v=ZPWH5TlbloU

    Very cool animated video about the Federal Reserve… Gotta watch this one!

  • impeachRonPaul

    The gold standard crowd are so clueless. Get a grip.

  • Dan McDonald

    The gold standard crowd are so clueless. Ben is that you? How much power do you own by being able to print paper money at will? How much crony capitalism will you foist upon the rest of us. Unfortunately for Utah, their legislators are now deemed terrorists by US government, which has just put a man in jail for offering people silver as money as an alternative to inflationary building federal reserve notes. Yes the DOJ did call this a terrorist scheme.

  • anti-impeachronpaul

    impeachronpaul: as always you bring zero to any discussion.

  • Rick Moss

    Let’s talk about real relief for the middle class. How about a 3 day work week while you retain the same pay as a 5 day work week? This is better than begging for crummy jobs that are in short supply? We have to be smarter. Democrats and Republicans can’t help us. So why don’t you help yourself. Wake up. If you want a better life, take charge of it…. Join with the rest of your countrymen and women.

    JOIN THE REVOLUTION
    Read “Common Sense 3.1” at ( http://www.revolution2.osixs.org )

    We don’t have to live like this anymore. “Spread the News”
    FIGHT THE CAUSE – NOT THE SYMPTOM

  • Otown Right Guy

    ImpeachRonPaul, like the vast majority of Dr. Paul’s critics, you are a horse’s ass! You are a mental midget not fit to shine the great and honorable Ron Paul’s shoes.

  • ForexLoser

    Actually it goes deeper that that. I traded the Forex about 4-5 years ago for a short while. You’re right on about the stop searching. I tested it one night close to a holiday weekend by investing in the NZ when there wasn’t a lot of volume trading. I personally believe the central bank or some other entity can see exactly what kind of trades are being placed and have some type of bot running on the server. If you try to make any kind of logical trade using a stop/limit, the bot will immediately respond by sending the price down to catch your stop or hold the price to keep it from reaching your limit. The response was so immediate that it is impossible that it was a human action, the speed at which it took place was instantaneous. I tested the theory by constantly changing my trade type and stop limits and forced the program to chase me down the chart and then back up the chart. As long as I stood out there naked then things continued normally. The Forex market is totally bogus, just a casino for the big boys to play with their owned countries and currencies.

  • http://www.pathtoasia.com rhea

    I don’t think free markets are as free as they once were.. Just as I don’t believe that democracy is actually as democratic as it once was. I think as soon as you have really big players in any market its prone to corruption an manipulation. However, I do believe that long term the markets will move to where they should be, all things being equal. So really what these parties do is push things around but the end result will always be the same.

    We help Americans find jobs and prosperity in Asia. For details, visit http://www.pathtoasia.com/jobs/

  • http://Rense.com Steve

    It’s a Ponzi scheme, a rigged game. It is all rigged, finance, politics, economics, religion, all of it is rigged. Only solution is opting out of the system. Best way to do that, buy some land and live a self sufficient lifestyle to the extent that you can. You are still stuck in the system but as little as humanly possible. Never vote, and spend only on necessities.

  • impeachRonPaul

    Ron Paul is a religous right fascist against personal freedom. he wants religion to be made law. Ron Paul is whats wrong with the earth

  • Lennie Pike

    Steve,

    I agree 100% with you.

  • Lennie Pike

    Steve,

    Except that if you do live that way, you can interact with others who are living the same way, create your own money which would have to be gold and silver, and leave the Riggers out.

    The Riggers should be identified, and even if they want to join honest society after it has grown to the point where the Riggers can no longer survive, we still keep them out – even if they begin to contribute – which they will be forced to.

    Jail is the place for them, and that is very lenient.

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