Chris Martenson Interviews Charles Biderman: The Problem With Rigged Markets
by Chris Martenson
“Even Wile E. Coyote had to come back down to earth sooner or later”, says Charles Biderman, founder of TrimTabs Investment Research. In his opinion, the prices of stocks and bonds – enabled by excessive financialization of our economy and central bank money printing – have been defying gravity for a dangerously long time.
If we continue to do all we can to preserve the status quo — to maintain “phony” asset price levels as Charles calls them — at best we will restrict overall growth and handicap the economy.
The problem isn’t so much the unfairness and malinvestment evident in a rigged market. As Charles shrewdly asks: what happens when the market becomes un-rigged?
We’ve never experienced the unwinding of an entirely manipulated financial system, so we can’t predict for sure. But at this point, a painful collapse of our markets and loss of the US dollar as the world’s reserve currency seem entirely plausible.
On Market Manipulation
The market is rigged. In January of ’10, I went on CNBC and on Bloomberg and said that there is no money coming into stocks, and yet the stock market keeps going up. The law of supply and demand still exists and for stock prices to go up, there has to be more money buying those shares. There is no other way in aggregate that that could happen.
So I said it has to be coming from the government. And everybody thought I was a lunatic, conspiracy theorist, whatever. And then lo and behold, on October of 2011, Mr. Bernanke then says officially, that the purpose of QE1 and QE2 is to raise asset prices. And if I remember correctly, equities are an asset, and bonds are an asset.
So asset prices have gone up as the Fed has been manipulating the market. At the same time as the economy is not growing (or not growing very fast.