QUESTION #1: Would you comment on Zoltan Pozsar of Credit Suisse calling this QE4 for year-end.

QUESTION #2: Martin,

You said that the Fed didn’t raise rates a few days ago because the Repo crisis won’t let them. Interestingly, Trump hasn’t blasted Fed chairman Powell for not lowering rates more over the past few weeks. Do you think Trump is aware that the Fed can’t lower and that’s why he’s hasn’t attacked Powell lately on Twitter? Perhaps Powell told Trump the Repo situation in their Nov. 18th unannounced meeting.

Jack

ANSWER: I do not know if Pozsar is being too caviler with his comments or if he’s deliberately trying to spread disinformation. This is by no means a “fourth version of quantitative easing” when the US economy remains strong and the Fed has acknowledged that fact. It does seem to me that he is trying to deflect people from looking at Europe and pointing his finger at the Fed. The Fed is compelled to be the man in the middle because banks have withdrawn from lending to banks because they do not know who has the risk with Europe. The US Treasury stated it is investigating the over-regulation by the BIS, which has impacted the repo market. The Fed is trying to control short-term rates and this has NOTHING to do with “stimulating” the economy. The BIS has impacted the regulation with Basel III, which the BIS will not accept responsibility.

Calling this Repo Crisis QE is up there with calling Trump a racist because of his wall. Yet, Mexican is not a “race” any more than being American, German, Greek, Italian, Spanish, or British. The term is ethnicity, not race. This is not Quantitative Easing, which is lowering interest rates and stimulating the economy. The Fed is trying to prevent short-term rates from rising because there is a liquidity crisis created by banks refusing to participate in the repo market.

The suggestion that the Fed will have to move to long-term bonds fails to understand what is taking place. I cannot imagine that any banker would make such a statement. They either do not know what the repo market is or they are trying to create disinformation to protect Europe. This is very curious.

I believe the White House has been briefed on the crisis and it has also impacted the China trade negotiations.

The Repo Crisis is only Part II of this Mother of All Financial Crises. Where Quantitative Easing was buying in long-term debt to try to lower long-term interest rates and stimulate the economy, the Repo Crisis is entirely different for its objective is to prevent short-term rates from rising. The Fed did not lower rates today and hinted that rates would remain unchanged into 2020 BECAUSE the pressure is rising for short-term rates to rise. This is confirming that all central banks have LOST control of short-term rates.

We face something that has NEVER before been witnessed in economic history. I have written this report which will include an update next year because this is a critical issue that will dictate the fate of everything else. This is the Index to the Report

The US border guards have been illegally searching laptops and phones for anything that might lead to hidden money. A Federal Court in Boston has ruled warrantless searches of the phones and laptops of international travelers violates the Fourth Amendment. It is amazing that you would even have to take them to court to force them to honor the Fourth Amendment. The ruling came in a lawsuit filed by the American Civil Liberties Union and the Electronic Frontier Foundation on behalf of 11 travelers whose smartphones and laptops were searched without individualized suspicion of any wrong-doing. The ACLU described the searches as “fishing expeditions” where border guards must now demonstrate individualized suspicion of contraband before they can search a traveler’s electronic device.

COMMENT #1: Hi, Marty if you can, let the readers know if the “mother of all financial crisis” is the big bang.

N

COMMENT #2: Wow. I am left speechless. I think your title Repo Crisis is misleading. This is just the staging ground. It takes someone in the international arena to understand the implications of this going forward.

Thanks for making this an updating service.

Bill

REPLY: Perhaps I should have named this report “The Mother of all Financial Crises.” The Repo Crisis is just part II in the lead-up to Big Bang that nobody seems to grasp is already unfolding. This is the Sovereign Debt Crisis on steroids. Whatever they could have done wrong, they have done with absolute precision. The projected losses for institutions I have laid out will range from 40% to 60% of assets. This time, whoever is caught holding will not be bailed out this time around. This is the combination of the 1998 Liquidity Crisis and the 2007-2009 Financial Crisis. So hang on to whatever you can grab ahold of. You will need it for this one.