The only thing about international trade is that someone cannot have a trade surplus without another experiencing a trade deficit. We all cannot have trade surpluses simultaneously and we have to begin understanding this reality. The net capital movements around the world are showing clear signs that things will be intensifying and the net capital movement is headed for the dollar – but that does not mean day one. Sure, many will point the finger at Trump and blame him for a trade war etc., but in reality, the net capital movements are intensifying for reasons that have nothing to do with trade. Ushering in Trump will also have a profound impact upon Europe and now Merkel’s greatest challenge will be to hold the EU together for its core design was to enhance German trade by eliminating currency risk.

The insane policies of Angela Merkel combined with Mario Draghi in the ECB punish healthy companies with negative interest rates and reward companies that should be bankrupt by buying their junk bonds while trying to maintain this bail-in policy for the banks in the face of Quantitative Easing that helps bankers not the average person. This leaves one wondering whatever happened to common sense. Draghi thinks bailing out banks (depositors) is bad and buying junk bonds is a stimulus, which is beyond rational thinking even when totally drunk on New Year’s Eve. Undermining the people and allowing their money to vanish is exactly opposite of Quantitative Easing. His policy should be the exact opposite. The whole idea of insuring banks came from the Great Depression because people lost confidence in banks. Once the people lose that confidence, the entire economy will collapse and people hoard their money causing the velocity to collapse. This QE policy is only matched by the insanity of Prime Minister Narendra Damodardas Modi in India cancelling the currency overnight when India is an 80% cash economy. He never even asked the opinion of the central bank. Unbelievable! The lesson from the Great Depression was people hoarded their cash and refused to deposit into banks because they failed. The whole idea of insurance was to give the public confidence to use banks. With bail-in becoming law, from Canada to Switzerland, you really have to wonder how politicians cannot see what they are doing. The bottom-line is clear – it’s all about them and not the people.

The markets are the best indicator of the future for it is the only place people get to really vote without political shenanigans. Net capital movement is showing that the big money is starting to wake up. The capital movements are showing that there is a growing realization that Merkel will be defeated in 2017, and Le Pen may actually win in France while her conservative opponent is openly saying that the refugee policy of Angela Merkel was “absurd” and a “tragedy.” The French conservatives will now oppose Merkel’s refugee policy, and have begun to adopt Le Pen’s position. In Italy, there is a growing movement to follow Britain and the elections will bring in a sweeping anti-euro movement followed by a referendum to exit the Eurozone.

Meanwhile, under the pretense of fighting crime, the EU intensifies its hunt for cash focusing, among other things, on the cross-border transport of cash. The epicenter of capitalism is passing in its despair and in the absence of solutions to fiscal management. The quest to end the use of banknotes is just one more step toward their goal — totalitarianism. Instead of admitting this system is broke and incapable of being sustained, these people will not reverse their policy because the solution is terminating much of their power. They will be kicking and screaming as they are dragged into the light.

The trading of stocks of the Italian bank Monte Paschi had to be suspended from trading. The planned capital increase failed to raise the cash from the public and it is clear that it will take a lot more cash than expected. The ECB will have to blink. If they let the oldest bank in the world fail as a bail-in, there will be a run of the banks throughout Europe. They will not be able to stop the hoarding of cash unless they take the same measure as India — just cancel the currency overnight (which you can bet is being considered when faced with a major bank run in Europe). However, the anti-cash agenda of the Indian government is causing serious damage to the economy. The forced digitization of payment transactions does not work in many places and India is one of them when its economy is 80% cash. This was really a stupid move by the Prime Minister.

Meanwhile, gold held the support, the Dow elected two Daily Bearish Reversals, Crude elected two Minor Yearly Bullish Reversals warning of a test of $60, and the Euro fell to bounce off of its Yearly Bearish Reversal at 10365 reaching 10352 and then failed to elect it. With the US share market up for 7 years in 2015, a pause in trend seems likely failing to elect some critical numbers in various markets. Of course, the long-term remains unchanged. The markets are reflecting something far bigger at stake. Trump is bringing in hope of repairing the economy with consumer confidence at a 13 year high. Optimism is in the air, but this cannot alter the long-term trend without reforming the debt crisis as we have laid out. Only then can we postpone disaster a little while longer.

So strap yourself in tight. This is going to be a wild ride. We are still facing the total collapse of socialistic systems. So cheer up, this might be the best day of your life if you open your eyes and comprehend the global trend. We will be doing a special report reviewing the year-end closings and what the forecasts will be for 2017.

COMMENT: Hi Martin,

Not everyone hates the rich, for without them the lower class would have nothing.

What people are angry about are the disgusting bonuses to bankers after they failed everyone whilst hard working people with small businesses were the ones robbed and still being robbed via taxation.

Some wealthy people deserve what they earned, the bankers who sank everything through feeding this greed mentality during the housing market crisis however deserve nothing.

If a company or an individual goes bankrupt, they lose everything, but the bankers were rewarded for their foolishness and that’s where the hatred really began in this current time.

Regards
A

REPLY: You are correct. Unfortunately, the assault in Germany upon the Jews began after people directed their anger at the Jewish bankers. That anger then spread to Jewish business owners, and then, what the hell, get all the Jews.

The bankers are a special class today because the big boys are the primary dealers who the government needs to sell their debt. If we stopped borrowing, then the bankers would lose their clout. Absolutely everything is wrong with how the New York bankers have taken the reigns of power in Washington.

My concern is the very loose way we deal with terms as a society. The Occupy Wall Street movement targeted stock brokers — not bankers. I myself walked out of our office, at the time in Philadelphia, and was off to a meeting in a suit and tie. The Occupy Wall Street protest was at City Hall right in front of my office. When I walked out, one protester yelled at me, “You corporate liberal!” I just looked totally amazed. What was that supposed to even mean? I was a corporate businessman who gave the company’s money away? I just laughed. They yell slogans but they do not understand what they are protesting or that they are yelling at the wrong people. That can easily turn very ugly.

Trying to understand forecasting will be critical as we move forward. The HUGE turning point appears to be 2018 and that is most likely when things will start to come unglued. How do I even make such a statement? This is not a claim that I make based upon some gut feeling. I arrive at this statement not by looking at some domestic fundamental or speculation on what Trump might do or not. It is not based upon my contacts behind the curtain. This is simply looking at Socrates and nothing else.

So how do I arrive at that statement? It is the process of understanding that everything is connected. I have argued against the conspiracy theorists who claim gold is not up because it have been manipulated by the bankers. I have fought against the “real” manipulations and warned clients when they are in action. But the bankers are not capable of manipulating a market counter trend – nobody is. We have had 8 years of quantitative easing by Mario Draghi without any success. Not even a central bank can manipulate the economy no less a single market. The entire Plaza Accord was the gathering of 5 countries to try to manipulate the dollar lower for trade. The US Treasury and Federal Reserve Bank could not pull that off. Why listen to such nonsense about gold is manipulated to prevent a rally? These types of nonsense PREVENT you from understanding how the world really works.

When I warned the White House back in 1985 and trying to manipulate the dollar lower creating the G5 would increase the volatility and lead to a crash in 2 years (1987), the White House responded and said they disagreed that volatility would increase.

Of course, when the 1987 Crash hit, the Brady Commission was forced to request my work. My greatest accomplishment was to prevent them from taking crazy sanctions against the market plays when the real cause was the G5.

 I was advising the equivalent of about 50% of the value of the US National Debt at that time. The Japanese to ease trade restrictions, had been buying US debt and owned bout 33% of the US national debt at that time. I warned the Treasury that to lower the value of the dollar by 40% as the Plaza Accord said that was their goal, the would set off a crash and higher volatility because foreign investors will be forced to sell and exit the dollar. Yes, the value of exports would look good to foreign consumers, but US assets would also look like a sell. Capital will move to the most advantageous location globally because we are all connected.

On May 28th, 1997, again I wrote to then Robert Rubin who was Secretary of the Treasury. Rubin was doing the same thing and trying to talk the dollar down criticizing the Japanese. Our models were warning of another crash and indeed it hit within just a few weeks of my letter and became known as the Asian Currency Crisis. The Asian financial crisis was a period of financial crisis that gripped much of East Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. Indonesia, South Korea and Thailand were the countries most affected by the crisis.

It was Tim Geithner who responded in just 4 days.Our model has been well known behind the curtain for decades. When the Asian Currency Crisis hit, I was invited to China to meet with the central bank.

By monitoring the world, what emerges is the overall trend. Trump won not by some isolated fluke. We put that forecast out years in advance and it did not matter the flip-flopping polls or how much money Hillary spent. Our computer saw the trend forming decades in advance. The Catalonia vote in July 2016 to separate from Spain followed by BREXIT was showing you the global trend. Once you understand that NOTHING takes place in isolation, you can see the trend coming before it arrives.

Our forecast that gold would peak in 2011, the US share market would rally to new highs made back in 2011 that Barron’s thought was nuts, and that the euro would collapse, were all connected. If one unfolded, the other HAD to follow. Once you see that the world capital flows dictate the outcome of everything, then investing and trading becomes a lot easier.

So why do I try to teach people? Because I can say buy or sell. Most people will not do so unless they agree and/or have confidence in that conclusion. The way to invest securely demands you have confidence in you action.