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President's top candidate to lead Fed knows all about gold market rigging

Section: Daily Dispatches

11:36a ET Friday, September 29, 2017

Dear Friend of GATA and Gold:

President Trump's top candidate for the next chairman of the Federal Reserve Board appears to be former board member Kevin M. Warsh, who has complained repeatedly about the Fed's manipulation of markets and in 2009 revealed to GATA that the Fed has secret gold swap arrangements with foreign banks.

According to news reports like this one from Bloomberg today --

-- Warsh met Thursday with the president and Treasury Secretary Steven Mnuchin to discuss the Fed chairman's job.

... Dispatch continues below ...


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In September 2009, adjudicating GATA's Freedom of Information Act request to the Fed for access to documents involving gold swaps, Warsh wrote:

"In connection with your appeal, I have confirmed that the information withheld under Exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."

[Emphasis added.]

Warsh's letter is posted at GATA's internet site here:

In an essay published in The Wall Street Journal in December 2011, Warsh complained that "policy makers are finding it tempting to pursue 'financial repression' -- suppressing market prices that they don't like," adding, "Efforts to manage and manipulate asset prices are not new."

That essay is posted at GATA's internet site here:

Last month in another essay in The Wall Street Journal, headlined "The Federal Reserve Needs New Thinking" --

-- Warsh wrote: "The Fed seeks to fix interest rates and control foreign-exchange rates simultaneously -- an impossible task with the free flow of capital. ...

"The Fed often treats financial markets as a beast to be tamed, a cub to be coddled, or a market to be manipulated. ...

"Real reform should reverse the trend that makes the Fed a general-purpose agency of government. Many guild members believe that central bankers -- nonpartisan, high-minded experts -- are particularly well-suited to expand their policy remit. They fail to recognize that central bank power is permissible in a democracy only when its scope is limited, its track record strong, and its accountability assured.

"The Fed is suffering from a marked downturn in public support. Citizens are rightly concerned about the concentration of economic power at the central bank. Long after the financial crisis, the Fed holds trillions of dollars of assets that would otherwise be in private hands. And it appears to make monetary policy with the purpose of managing financial asset prices, including bolstering the share prices of public companies."

Soon after his "financial repression" essay in December 2011, your secretary/treasurer reached Warsh by e-mail at the Hoover Institution at Stanford University in California, where he has been a distinguished visiting fellow in economics. I asked him if he had learned about "financial repression" during his service at the Fed and if he would identify the assets whose prices he wrote were being manipulated by policy makers.

Warsh cordially wished me a nice day.

But if Warsh is nominated and really objects to market manipulation by the Fed and believes that the central bank's scope should be "limited" and its accountability "assured," he will remain obliged to answer such questions, especially since his own writings indicate that he knows the answers and how incriminating they are to the central bank.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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