Emergency Rate Cuts Never Work

COMMENT: Marty, it is always obvious why you were named Economist of the Decade, Hedge Fund Manager of the Year, and FX Analyst of the Year for the Swiss Peg break. As you said on the private blog;

“Let’s see but it appears that we could have a bear trap forming with a plunge into Monday but then a bounce. Monday would be a 3-day reaction plunge. There remains the risk of a bounce and then a more serious pattern forming in September.”

Your skills are renowned, but your motive is to help society. People need to know that governments and central bankers go to you because you do not charge them and have no conflicts of interest. You could keep Socrates, trade only for yourself, and make a fortune. But you care. While others claim the Fed should pull an emergency 0.25% base cut, only you point out that theory never works.

Many are concerned that you have no one to pass Socrates on, and you have toyed with the idea of going public for its survival. There are those among us who share your view and would help.

Please comment on that for society.

Paul

REPLY: Look, 99% of the analysis you hear on TV is nonsense. These are people who repeat the same stupid theories that everyone else does, and not a single one ever takes the time to investigate whether their statements are true or false. Be it FOX or CNN; they only allow analysts who speak the same fake analysis. They would never dare to put me on TV because I would contradict what they say and all their guests.

This is typical of what the Daily Mail just published: “Economist issues dire warning about the US economy.”

He places the blame on the Fed for keeping its main interest rate at a two-decade high since 2022 in its zeal to stifle inflation.

Those hikes are now hitting the economy hard, he said, suggesting the Fed should have lowered rates earlier.

‘I really do worry that we may lose US economic exceptionalism because of a policy mistake,’ he told Bloomberg TV, as worldwide markets continued to plummet.

Here is the last Emergency Rate Cut, which was on March 4th, 2020, in the middle of that plunge. Three days later, the market made new lows and continued to fall. NOBODY ever seems to review past actions and simply ask, did that work?

YES, I can walk into any central bank. They all know (1) I refuse ever to accept any money from any government because there will ALWAYS be strings attached. (2) I am NOT allowed to invest in any shares, for I cannot have a CONFLICT OF INTEREST when I must comply with the laws of every country because we are GLOBAL – not domestic. Normally, when the government falsely charges you, they will charge you with something else like insider trading or tax fraud. I could not have any such personal account, and instead of saying I ran a clean shop, they said, “You are one smart MF” because they could not find anything despite advising on numerous takeovers. Even after the HSBC takeover of Republic National Bank, the former head of HSBC came to my London office to ask my opinion on buying that bank.

It is impossible to deal with all the different laws internationally. In some jurisdictions, if you asked me about IBM and I had just one share, I would be required by law to reveal everything I own to the client. You cannot be an international adviser with anything that can be seen as a CONFLICT OF INTEREST.

They came to me in 1985 when they were creating G5 and the Euro. I was the first Western Analyst to be called into the Bank of China. I have had a front-row seat to the world. I have made more than I could spend. Money does not define a person; it defines character. Contracts are WORTHLESS, for if the person on the other side is not trustworthy, the contract means nothing. I grew up when your word was your bond. Before recorded phone lines, you had to honor your word, or nobody would deal with you.

It is always difficult to choose a successor. I must also consider their character. I would never take in someone from the NY bankers or Bill Gates. Money is not the issue. I like the character of Elon Musk, but this is a very difficult proposition. I have traded billions and advised on trillions. Then you finish for the day and go out to dinner, and it costs you $300. Billions are just phone numbers, as we used to say. That kind of money is only suitable for bribing others to do what you want – i.e.Gates and Soros. It cannot be spent on living expenses. It is monopoly money. It’s not “real” at that point. Accomplishment makes a man – not money.