JP Morgan is the US government

"For those short positions, like the overwhelming interest rate derivative positions on the books of Morgan Chase, are probably not Morgan Chase's own at all but rather the U.S. government's. Certainly no financial institution would undertake such disproportionate positions -- positions that essentially make Morgan Chase both the silver market and the interest-rate market -- without effective assurance that government would backstop those positions. No other investment bank has undertaken such disproportionate positions.

So much of the spending and lending by the Federal Reserve, Treasury Department, and Exchange Stabilization Fund is secret that there can be nothing outlandish about such suspicions. No one can deny that the government also has intimate and secret communications with J.P. Morgan Chase & Co. about the markets. After all, the bank is a primary dealer in U.S. government securities and often acts openly on behalf of the U.S. government and thus in effect has access to virtually infinite amounts of money for market intervention.

Indeed, there is long history along these lines, since even before creation of the Federal Reserve, J.P. Morgan himself -- the banker, not the bank -- functioned in extremis as the central bank of the United States. And in her prize-winning biography, "Morgan, American Financier," the writer Jean Strouse reported that Morgan's first big score in the financial markets was his cornering the gold market in New York during the Civil War. Further, Morgan's monopolizing of industries was a major cause of enactment of anti-trust law.

Yes, exhausting the metal available for delivery could blow up the commodity futures markets, an admirable objective insofar as those markets, overloaded with derivatives, long have been largely mechanisms of price suppression. (See the British economist Peter Warburton's 2001 essay discerning this: http://www.gata.org/node/8303.)

But if the metal runs out, the commodity exchanges will change their rules or implement rules already adopted requiring cash settlement and prohibiting new long positions. The government can cover any amount of such settlements in cash through its agents. This sort of thing has been done before and can be done again.

In short, take the metal out of the banking system -- yes, all you can. That will make market manipulation a lot more difficult and drag it into the open. But you won't crush J.P. Morgan Chase, for the investment bank is the government and the government is the investment bank.

The big objective here is to take control of the government away from the bankers and return it to the people. This is just the latest round in an old political struggle -- the struggle between the financial interests and the producing interests -- that has been simmering in the United States since William Jennings Bryan made it the center of his presidential campaign in 1896.

Advocating free coinage of silver back then, Bryan told the Democratic National Convention in Chicago that went on to nominate him: "Those who are opposed to this proposition tell us that the issue of paper money is a function of the bank and that the government ought to go out of the banking business. I stand with Jefferson rather than with them, and tell them, as he did, that the issue of money is a function of the government and that the banks should go out of the governing business."

CHRIS POWELL, Secretary/Treasurer

Gold Anti-Trust Action Committee Inc.