The Hypocritical Financial Markets

QUESTION: I was told I should not listen to you because you manipulated the world economy with the bankers, and you were an adviser to BCCI and managed money for Saddam Hussein and Qadaffi. When I asked if you manipulated the world economy, then why invest against you? There was no reply. I watched the Forecaster, and it was clear you were against the bankers. It seemed that this was all about disagreeing with you on gold and was very hypocritical. Then I read your Plot to Seize Russia. It opened my eyes in many directions. Why do some people go out of their way to hate you? Do you have any idea?

WMB

ANSWER: If they hate me, it is because they are the shills supporting the real manipulations. Yes, I did manage money for Muammar Mohammed Abu Minyar al-Gaddafi, but not to my knowledge, Saddam Hussein, unless he, too, had some shell account structure.  However, I also had to manage the metal position for Aristotle Onassis and dealt with many other billionaires throughout my career. I never joined the bankers and they were behind instructing the CFTC to shut down Princeton Economics. The bankers know if they spin news that is bullish, they get the gold bugs to buy, and they inevitably sell to them to exist their trade. They manipulate the investors the same way the Fed tries to do with interest rates.

I believe it is the old story of people judging others by themselves. Whenever the bankers blow up, and I had forecast that would happen, it is not that I have a model, but I have more clients than they do. They would call the CFTC always complaining, claiming I had too much influence because they lost. Here is the analyst Larry Edelson talking about our forecasts about 10 years ago before he died.

These people do not understand cycles, so to them, the only reason I have been correct is that it can’t possibly be a model; it is influence. It has to be that I have more clients than anyone else. This is why the bankers were always trying to get me to join them. They thought I could say buy, and they could exit their trades or sell. Likewise, if I said sell then they could buy. How many times would that work before people figured out such a scam? Soloman Brothers was notorious for that back in the 1980s. Their analysts would say buy, and on the floor, it was Soloman Brothers selling. That was the perception regarding Henry Kaufman’s forecasts back then.

Goldman Sachs was criticized for creating products to sell to clients and then traded against them. The bankers have never looked at their clients as “clients” but as adversaries against whom they make money. My business was always the exact opposite. The bankers didn’t like that very much. I advised my clients against the bankers – that is why they did whatever they could to stop me.

It goes back to when I was in High School, and the Physics professor said there is nothing random, and then in Economics, they said everything is random so they can manipulate us by raising and lowering interest rates. I just concluded back in High School that someone was lying. It turned out to be the economists. This is why the bankers have paid bribes and sought to manipulate financial markets: they think it is influence that wins. They blew up in 1998 due to the collapse of Russian bonds, and they were bribing the IMF to keep the loans going. They blew themselves up on Mortgage-Backed debts. Just look at all the big crashes, and you will find these so-called professionals begging for bailouts. They are NEVER traders – they are manipulators.

The Neocons proposed to Gorbachev that Russia should join NATO. That is when the hardline-Communists staged the coup and attempted to take Russia back to the Soviet Union days. It was Yeltsin who stood on the tanks and pleaded with the army not to fire on their own people. When the army stood down, the coup collapsed without military power. It was a bloodless coup. That is a modern example of a situation where if the military refuses to support the current government, they have no power and collapse.

I have the De-Classified documents from the Clinton Administration. Hillary blamed Putin for RussiaGate because she lost in 2016, and ASSUMED Putin retaliated against her for interfering in the 2000 Russian election.  They tried to get me to invest $10 billion into Hermitage Capital Management to seize Russia. I declined. So they have never liked me very much because I do not play ball. I do not need the money. Sorry – I am not motivated by money, but trying to figure out how the world really works.

Berezovsky was their intended puppet ruler. Berezovsky even called me personally when I refused to fund this covert operation. The American Neocons/Bankers were blackmailing Yeltsin to appoint Berezovsky as president of Russia and call off the elections. The communists had filed an impeachment motion to overthrow Yeltsin, and this is how Putin came to power because he was not a politician, not an oligarch, and was NOT a communist. Yeltsin’s last words to Putin were – Protect Russia.

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. After a few months of tracing all the various layers of shell 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 Saudi billionaire Adnan Khashoggi (1935–2017), who once owned one of the world’s largest yachts, the 86-meter Nabila, named after his daughter at a cost of $100 million to build. This yacht appeared in the James Bond film “Never Say Never Again.” After Khashoggi, the yacht was sold in 1988 to the Sultan of Brunei, who was another one of our clients at the time. He flipped the yacht, selling it to Donald Trump for $29 million that same year.

On top of that, what I thought was a company turned out to be a secret partnership between Gaddafi, Khashoggi, and Ferdinand Marcos of the Philippines. I thought I was dealing with a hotel chain out of Geneva. During the ’80s, you just never knew who was who.

The Floating Foreign Exchange Rate system had just begun in 1971. This was not a subject you could get a degree in. This field was built from scratch, and it took a trader’s understanding of the world economy at that moment in time. Currency futures only began trading on May 16th, 1972, following failed negotiations to reestablish a fixed exchange rate system. By chance, a collector who was a client, Walter Zenergle, asked me if I could look at the problem at the bank. It was clear that nobody yet understood about hedging risks.

Walter was a VP at Franklin National Bank, which was once the 20th largest bank in the USA. Most people have no idea, but in 1951, Franklin National Bank in Long Island, New York, issued the first card that most resembles today’s general-use credit cards. For the first time, customers could purchase items and pay them off quickly or be charged interest if the debt carried over. Participating merchants had to pay a fee for each card purchase. By 1952, about 28,000 customers and 750 businesses had signed up for the card, which eventually became the Mastercard.

Walter came to me because I understood currency. He thought the problem at the bank was caused by the floating exchange rate system. Indeed, on October 8, 1974, Franklin National Bank collapsed in obscure circumstances involving connections to the Italian Michele Sindona, who was alleged to be a Mafia banker. At the time, it was the largest bank failure in the country’s history.  The bank failed because of a 10% move in the Italian Lira. Nobody seemed to understand international finance or currencies back then, and there was no understanding of hedging within just three years of the collapse of Bretton Woods.

After that, when there was a currency problem, people would seek me out to get that guy who was called in for the Franklin National Bank. In addition, I was being called in globally because of currency fluctuations. Yes, I was advising BCCI on currency globally. I dealt with their London office. They were one of the biggest international banks back in the 1980s.

BCCI’s founder was the Pakistani Agha Hasan Abedi (1922-1995), who founded the bank in Luxembourg in 1972 following the collapse of Bretton Woods. Abedi was keen on currency fluctuations. That is likely why I was called in to provide FX forecasting. BCCI was created with capital, of which 25% was from Bank of America and the remaining 75% was from Sheikh Zayed bin Sultan Al Nahyan (1918-2004), the ruler of Abu Dhabi in the United Arab Emirates at the time.

Yes, I was also friends with members of the Royal Family of Qatar. Saud bin Muhammad bin Ali bin Abdullah bin Jassim bin Muhammed Al Thani (1966-2014) was a friend of mine who was interested in FX but was a competitor of mine in ancient coin auctions. We were probably the two biggest collectors of ancient coins in the world. Because of our friendship, he had offered Qatar as the headquarters for our operation but could not grant me citizenship because I was Christian. Yet, Qatar is the richest nation on Earth on a Per capita basis.

I was advising a company called GRANEDEX, which was a front for Russia’s KGB. 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, 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 wildest days in global finance.

I lectured on foreign exchange and international capital flows in the 1980s in Chicago. To my shock, Milton Friedman came to listen to me. When I finished, he walked up to introduce himself and said it was the best lecture he ever heard and that I was doing what he had only dreamed about. We became friends, for I did not know then, but Milton had written about the floating exchange rate system and how it would put a check and balance against governments back in 1953. Only then did I understand what he meant that I was doing what he had only dreamed about in 1953 in his Essays in Positive Economics – some 18 years before the collapse of Bretton Woods on August 15th, 1971.

Milton saw three types of monetary systems: Fixed, pegged, and floating rates. Most never looked deeply into the exchange rate system. Under a floating exchange rate monetary system, the central bank sets a monetary policy. Still, it has no exchange-rate policy itself, for that is created by the free market on a sort of autopilot basis. Therefore, the monetary base is determined domestically by a central bank.

Now, compare that to Bretton Woods’ fixed exchange rate system. Milton saw that politicians set the exchange rate yet have no power in the money supply since that is the central bank’s domain. Hence, under a fixed exchange-rate regime, a country’s monetary base is determined by the balance of payments, moving in a one-to-one correspondence with changes in its foreign reserves. That often led to trade wars and protectionism, as was the case under the gold standard during the Great Depression.

Many assumed that pegged exchange rates were just the same as fixed exchange rates. Milton saw them as quite different. A pegged exchange ​rate system involves the central bank aiming for money supply and the exchange rate that would lead to exchange controls and were anti-free-market mechanisms focusing on international balance-of-payments adjustments. Therefore, pegged exchange rates lacked any free-market automatic response mechanism that would produce natural balance-of-payments adjustments. Consequently, pegged rates would require a central bank to manage both the exchange rate and monetary policy.

Unlike floating and fixed exchange rate systems, pegged exchange rate systems would result in conflicts between monetary and exchange rate policies. Indeed, I had argued against the Plaza Accord in 1985 and wrote to President Reagan, warning this would lead to an imbalance and a crash within two years, which became the 1987 Crash. They had sold one-third of the US debt to Japan, and this idea of manipulating the dollar down to reduce the trade deficit would cause the Japanese to sell US assets. The capital inflows reversed from inflows between 1980 and 1985 because of the excessive interest rates to stop inflation by Paul Volcker, which led to a new panic in selling US assets.

Under a pegged exchange rate system, a central bank often attempts to sterilize the ensuing increase in capital inflows, which expands the domestic money supply by selling government bonds to reduce the domestic component of the base. When outflows become “excessive,” a central bank attempts to offset the decrease in the foreign component of the base by buying bonds, increasing the domestic component of the base.

Balance‐​of‐​payments crises would typically erupt as a central bank begins to offset the withdrawal of the foreign component of the monetary base with a domestic increase in the money supply buying in government bonds. FX traders will then jump into selling the currency in response to the increase in the money supply based on what they perceive is happening.

Therefore, Milton theorized what would happen going back to 1953. It is important to stress that economic freedom was the primary motivator for Friedman’s theories – not the gold standard v fiat as the novice gold advocates keep pushing who are oblivious to how the economy works or the politics required for a gold standard. The entire social system would come crashing down, including Social Security. Politicians would not know how to run for office if they could not promise to rob the rich to give to the poor. There is a lot more to any type of fixed exchange rate system than meets the eye.

Milton came to listen to me BECAUSE I developed a Capital Flow Model to track the rise and fall of currencies. This is what he meant by saying what I was doing was what he had dreamed about way back in 1953. Milton’s work in the chapter The Case for Flexible Exchange Rates was perhaps THE MOST influential forward-thinking on economics ever written. I was unaware of it until he shook my hand. It is next to impossible to find this in digital format. You find countless others commenting on this chapter. I cherish my autographed 1953 copy to this day.  Milton concluded that what I was observing running around the world was indeed true back in 1953.

“The nations of the world cannot prevent changes from occurring in the circumstances affecting international transactions. And they would not if they could. For many changes reflect natural changes in weather conditions and the like; others arise from the freedom of countless individuals to order their lives as they will, which it is our ultimate goal to preserve and widen; and yet others contain the seeds of progress and development. The prison and the graveyard alone provide even a close approximation to certainty.”

Today, they are preparing capital controls, central bank digital currencies to control our spending, and pretending to raise taxes they claim will prevent the natural cycles in climate. That is up there with raising the taxes on the rich, which never results in lowering taxes for anybody else. All of this is because the fiscal side depends on their Ponzi Scheme of issuing endless new debt to pay the previous debt while expanding it. After all, they are incapable of fiscal management. This entire house of cards is coming down. When it does, the majority of the people will be told it is because of the rich, and we have to get them just as they did in Russia and China, costing the lives of over 200 million people who resisted. History repeats BECAUSE human nature never changes. Those in power will NEVER relinquish that power willingly. As the old saying goes:

Hopefully, this time, the system will be so unstable it will collapse all by itself, just as communism did in the blink of an eye in 1989. It is now 34 years since that event. Our time has come. That is one major reason some hate my guts.