US Banks v Foreign Branches of US Banks

QUESTION: Marty, finally we decided to open a bank account in the USA which is not part of the CRS. But now we do not know which US-bank is safe enough and where to go! You mentioned that Goldmann Sachs, Citigroup, Morgan Stanley, Bank of America and JP Morgan Chase have derivative exposure linked back to Deutsche Bank. So those banks are not safe enough. The can fail in a contagion. You said also that Wells Fargo has the least derivative exposure.

In another article you said that the BANK of NEW YORK would be good as a custodian. Would the Bank of New York be safe enough in a contagion? The Bank of New York has a branch in Frankfurt. Could we open an USD-account in Frankfurt and still be outside the CRS? Or would this be a major fault.

Would you please give us a hint how to proceed as this choice is way over our head. Which bank is safe and outside of the CRS at the same time.

Thank you very much for sharing your experience and knowledge with us!

ANSWER: Wells Fargo is a bank that is perhaps more accessible. Bank of New York has a big custodian business. Wells Fargo does not have offices outside of the US that provide services to retail or small business customers. Remember that any branches of US banks outside the United States are not part of the Fed system and are not FDIC insured. If you want a retail type of arrangement then Wells Fargo may be better. Bank of America has probably the best facilities for wiring money internationally online.

If you are dealing with a US branch of any bank, it must be FDIC insured and that is per person, not per account or banks. You do not want any account with a US bank’s branch outside the USA for they would be under the control of the local central bank.

NOTE: I do not receive any referral fees from either Wells Fargo or Bank of New York. We do notaccept any commission from banks or brokers for any referrals whatsoever. We maintain our strict policy of no conflicts or interest.

Banks – Interest Rates – Mortgages

COMMENT: Martin, as an avid follower, I took your advice to heart to try to fix our interest rate for the loan we have on our house. This was the answer I got from our direct advisor: “Have looked at your file, you can still enjoy your low-interest rate until 01/12/2020, in other words refinancing is only recommended at the earliest in November 2020. Your capital will then fall to 37,000 euros outstanding, the interest may already rise to 3 % (then you still benefit in November compared to refinance now!) ? Repocrisis is in the USA, Europe is supported by the ECB, which keeps interest rates low? Or am i wrong?” Isn’t this the perfect example of how well people are informed, even those working at the banks? Or do we already see some intended lingering of banks, trying not to get caught on the wrong side of the risk? Thanks for answering or using this in your private blog as a perfect example…


ANSWER: They may have been instructed from above to keep loans floating because the Repo Crisis is demonstrating that rates are under pressure to rise, not fall!

If you have a mortgage that is floating, lock it in with a fixed rate.

Those looking to buy have a dilemma. On the one hand, real estate prices are high in many regions and you can wait for prices to come down before buying. On the other hand, when prices start to tumble it will be the result of an inability to get long-term fixed loans so prices will fall to where people will be able to get loans or pay cash. The solution may be to buy when you can get a long-term fixed mortgage and then hedge it with eventually shorting rates where there will be a liquid marke

Could the Fed Ever Exit the Repo Market?

It is stunning how after more than three months, the analysis on the repo market is still nowhere close to reality. I believe that those in the trenches are, like me, afraid to really explain what is taking place for fear they will be blamed for creating a financial panic.

The popular explanation in September was repeated by the Wall Street Journal: “For one, Monday marked the deadline for companies to submit their quarterly federal tax payments.” This was standard analysis put out by the countless pundits the press rely upon and they have to come up with some explanation and quick. When analysts spout out their explanations to mainstream media it is because they are trying to get business. People have often asked me why I do not do mainstream media interviews. First, I do not need the business. Secondly, when you have real clients, they prefer to pay for information and do not want it on the front pages of newspapers for free. They appreciate analysis that is exclusive rather than as common as dirt. Hence, the analysis put out in the press about the Repo Crisis is coming from people who have no real clients in the area and lack the expertise in the field to start with.

Not even the central banks understood what was going on because even they tend to be domestically oriented. Despite the obvious fact that we live in a global economy, all the economic theories, analysis, and experience have been domestically focused. Unless someone has been in the trenches globally, they will never see the wildcard coming from external sources. Hence, we get the calls to explain things ONLY because they know all the other major institutions are also coming to us as some sort of the central point of reference.

The question that is now dominating everyone’s inquiries, can the Fed exit the repo market after being the dominant source of liquidity for more than three months? What will it take for the Federal Reserve to withdraw from its daily liquidity operations in this $2.2 trillion market for repurchase agreements (repos)?

All I am prepared to say publicly is that the solution is beyond the powers of all the central banks combined. The solution is not attainable without political concessions, which politically are just off the table. This is going to require a major reform that is unlikely to take place and will not even be recognized until the crisis erupts on a much larger scale

Pension Crisis – Congress is Unable to Act Because of Gridlock

Trump has called the Democrats the do-nothings. All they have been focused on is impeaching Trump for the polls they are looking at behind the curtain all show Trump will beat whoever they put up as their candidate. the motto has been – if you can’t beat him, impeach him. There is no other area where the Democrats have just failed to act with a major crisis looming in 2021 than the spreading of the Pension Crisis.

There are pensions that are multi-employer funds which are perhaps the first to fall in the private sector. The Republicans did slip a rescue package into the massive $1.4 trillion spending bill passed last month. That was all because the United Mine Workers of America pensions would have failed completely and the push from environmentalists against mining and energy only puts pensions in those areas at serious risk after 2020.

The Republicans, interestingly enough, have no problem with the bailout but want to raise premiums that employers must contribute. Conversely, the Democrats who have been backed by such unions have argued for low-interest loans and not to force higher premiums on employees or employers.

The Republicans and Democrats are so deeply divided on how to solve the broader pension crisis problem, that this immediate impasse illustrates what I have been warning about that government is just collapsing incapable of bipartisan solutions. The Democrats simply refuse to act for they fear that Trump would get the credit for solving the pension crisis among unions that traditionally have backed the Democrats.

This entire issue has become not about solving any crisis but who gets credit and thus we have a government incapable of acting for the benefit of the people. As I have said, this is how governments eventually collapse. They become so corrupt and divided, they are incapable of managing the state.


FOREX & the Wild West Days of the ’80s

QUESTION: Mr. Armstrong; I was told that you were indeed the largest forecaster in foreign exchange. The story in London is you advised nearly all the Middle East and were the most important adviser on currency to BCCI, the bank the governments took down back in 1991 along with Salomon Brothers. They made a movie about BCCI. Is it true that you were an adviser to BCCI?


ANSWER: The ’80s were the wild west in finance. I have told the story of how many banks operated back then. I would be called in and told someone wanted to give me $1 billion to manage back then when $1 billion was a lot of money (now it’s trillions). I would go to various banks and there would be a curtain between me and the potential client. I was not allowed to know who they were. I was turning down that business because it was just too wild for me.

Yes, we were advising BCCI on foreign exchange. They were passing it on to specific clients who at the time I did not know. I became concerned when I accepted an account for who I believed was a Saudi individual. The account was opened at Rudolf Wolf in London and after a few months of tracing all the various layers of corporations, it turned out I was managing money for none other than Muammar Mohammed Abu Minyar al-Gaddafi. I closed the account and within a matter of weeks, he was back through a completely different channel.

Perhaps one day I will write a book about those days. I ended up managing money for even Mr. Khashoggi once owned one of the world’s largest yachts, the 86-meter Nabila, which appeared in the James Bond film “Never Say Never Again,” which was later bought by Donald Trump. On top of that, what I thought was a company turned out to be a secret partnership between Gaddafi, Khashoggi, and Ferdinand Marcus of the Philippines.

The Floating Foreign Exchange Rate system had just begun in 1971. This was not a subject you could go get a degree in. This was a field built from scratch and it took a trader’s understanding of the world economy to cope with the events of the 70s and 80s. I was the leading adviser in FX because there really were no others with any track record. When I say I was called into just about every crisis from 1973 onward, it is not an exaggeration.

I was advising BCCI on currency globally. I was advising a company called GRANEDEX which turned out to be a front for Russia. I could never tell who was who. I had even the counter-revolutionary army in Iran coming to me for they were trading to make money to overthrow the religious government in Iran. I would be on a phone call with a client from Saudi Arabia who asked about gold and I said it depended on what OPEC would say that day. He put me on hold and dialed into the OPEC meeting and they put me on speakerphone. Those days taught me about war and how capital flows could be used to forecast war and geopolitical events. It cut my teeth of those wild west days.

I have handled some of the biggest projects ever and advised globally. To this day, we have people attending the World Economic Conference from 137 different countries. Because the world was such a crazy wild west sort of atmosphere, I turned to be just an institutional adviser of public corporations because I gave up on trying to figure out who the clients really were at times.


Can Central Banks Ever Control Long-Term Rates?

QUESTION: Marty, you said that central banks can only control short-term rates not long-term. Do you see a scenario where they could control the long-term rates?

Thank you for your insight


ANSWER: If you ASSUME that there is a free market, then the answer is no possible way. Under a hybrid market, a central bank can split between public and private debt as is taking place in Japan. The Bank of Japan has announced it will buy unlimited amounts of government bonds to prevent interest rates from rising.

Under this hybrid market, a central bank can simply buy all government debt but this results in the total destruction of any free market in government debt. The government should at that point just print money and not even bother to issue any debt.

This results in a divergence between the fake government bond rates and the free market private interest rates. The spread will widen dramatically. Even during the Great Depression the spread between AAA corporate debt and government debt fluctuated according to where the confidence resided. As the sovereign debt crisis took place in 1931 with governments defaulting on their debts, the spread diminished as people began to trust corporate debt more so than government debt.

The third possibility is a closed market which means that the government can fix long-term rates that were done with usury laws. Even in Roman times,  Cicero tells us how the cap on interest rates existed only in Italy. This led to excessive interest rates being charged by Brutus in Cappadocia of 40% compared to 10% in Rome.

Paul Volcker had to have the usury rates raised in order to raise interest rates to 14% to fight inflation back in 1981. It was also illegal for a Catholic to charge interest in loans so the Jews were the first bankers coming out of the Dark Ages. The Catholics got around that by stacking the interest costs into the price.

The final type of system that would control long-term rates would be Communism where everything is just outlawed and the economy is entirely closed.

Under a free market, the central bank sets the wholesale short-term rates which is why it has been focused in the repo market. If it attempts to just buy in all government debt, then private rates will rise and that is what is taking place right now. The Fed can peg long-term rates as they did during World War II, but that applied only to government debt. To prevent prices from rising the political legislature imposed wage and price controls.

So there are ways to fix the long-term, but at the cost of a free market.

The Fate of Europe

This is a special report entitled “The Fate of Europe” which dives into the shocking reality behind the curtain of the Euro and why it has failed to become a major reserve currency. The Fate of Europe is a very important report to understand the backdrop to what we face going forward and the risks both for European readers as well as for the rest of the world in light of the risks of global contagions. Like the Great Depression, the crisis we face will begin in Europe once again and spread like a contagion eventually engulfing the world economy.

Nigel Farage delivered the keynote speech at the Rome WEC. He called the World Economic Conferences we have been holding since 1985 – the “alternative to Davos.” This report is unique for two reasons. First, when the Euro was being formed, the commission attended our WEC in London in 1997. I discussed directly on how the create the euro from scratch. We published detailed recommendations back then.


This report exposes the reality behind the curtain. The entire design of the EU is to deliberately deny any right of the people to ever vote on their own future. The politicians have assumed that the people are TOO STUPID to know what is best for them. In fact, Germany, the foundation of the entire European economy, was NEVER given the right to vote to join the Euro. Chancellor Kohl admitted that he acted as a dictator because he said if he ever allowed the German people to vote, he would have lost 7 to 3.

This report is essential to understand the risks in Europe. Most people have no clue because the second reason this report is unique is that no European analyst working in any of big financial institutions are ever allowed to criticize the EU or speak negatively about the Euro.

The Fate of Europe … $295


Understanding the Global Economy from the Dollar to the Euro

Many people continually talk about the dollar crashing. They say the dollar is supposed to crumble to dust and be dispersed into the wind. The bias against the dollar has been turned into a religion primarily propagated by the gold promoters. Unfortunately, they fail to understand the relationship of the dollar to the world economy. Additionally, they only look at the United States and ignore the economic trends outside the USA.


This report deals with the next monetary reform that many will call Bretton Woods II. What is the future for the dollar? Contrary to what many have been preaching since 1971, the dollar has survived. Right now there remains a dollar shortage, which is one reason the dollar has been rising since 2008 when the euro once stood at $1.60. The report also discusses the transition to digital currencies.

Hoarding Dollars ….. $295