Category Economic Subjects

Mar 9 2020

Black Swan!


“Only thing we have to fear is fear itself”  FDR 1933

As I write this the Dow futures are down 1,200 points. Oil is down over 20 percent. Gold is way up—no wait, it’s going sideways and silver back down under $17. So much for safe havens. Precious metals are also considered commodities and are now treated as such. Everything is getting punished and many bubbles will get popped.

The coronavirus is the trigger that is causing the crash. It’s a crash that should have happened in 2008. Instead the banks were bailed out and even rewarded for their criminality with taxpayer-paid bonuses. Lower rates and never-ending QEs caused the stock market to skyrocket to outrageous highs. It seemed like it would only go up and the party would never end.

Now the party’s over. Debt is turning out the lights. There’s a huge amount of debt everywhere in the system. Everyone got way too greedy and overextended including the ChiComs. Some conspiracy theorists are saying they released the virus intentionally to do away with a few hundred surplus workers. Their economy was due to crash and they know the virus is a good distraction from that.

In America we have a $23, soon to be $24 trillion national debt. It’s so much that most ignore it as something meaningless. A billion is a number that’s difficult enough to comprehend. A billion minutes ago, Jesus walked the Earth. Every two hours, the US Government spends $1 billion. It’s all debt money, and the interest must be paid back to the Federal Reserve’s private central bankers. Maybe this crash will open eyes and we can finally jettison the vile system of money that has plagued hard-working US citizens for over 100 years. Our corrupt banking system also allows fractional reserve lending, which means more debt. Corrupt politicians have given the ’too big to fail’ big banks permission to become casinos and now they’ve run up over a quadrillion in derivative bets.

The average consumer is nearly maxed out on credit cards and paying the robber baron bankers an outrageous interest rate. The bankers create that ‘unsecured’ debt money out of thin air.

It’s all a con game. It’s all fake. Still, as Ayn Rand once said, “We can ignore reality, but we cannot ignore the consequences of ignoring reality.

We should have faced those consequences long ago. Hold on—we’re in for a rough ride that will be difficult to ignore.

—Ben Garrison

Mar 9 2020

A Real Fact Check on the Trump Tax Cuts


Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Mar 9, 2020 by Martin Armstrong

While the Democrats love to yell at the rich for always getting richer, in 2016, there were 541 US billionaires with wealth totaling about $2.4 trillion. In 2019, there were 607 US billionaires with wealth totaling about $3.1 trillion. Of course, this is based on stock market valuations and is not cash in the bank. There is no doubt that the wealthiest Americans have gotten wealthier under Trump, though others have also gained.

According to the Federal Reserve, the combined wealth of the top 1% of American households, which includes all members of Congress, increased 18% from the fourth quarter of 2016 to the third quarter of 2019 — from $29.18 to $34.53 trillion. However, the combined wealth of the bottom 50% of households actually increased 55% from $1.08 trillion to $1.67 trillion. In truth, there were far more people who have benefited from the Trump Tax Cuts than what the Democrats ever will admit.

That is a REAL Fact Check!

Mar 9 2020

2022 & Repo Crisis


Armstrong Economics Blog/Economics

Re-Posted Mar 9, 2020 by Martin Armstrong

QUESTION:  Mr. Armstrong I Hope your health is holding up with all the viruses. My first question is Feb 13 the Fed printing money increased by 13 billion however it is buying short term debt as in 1-day debt how long can they keep this up it is a fake stimulative of the stock market right?

The second question Do you still see something happening to Trump in 2021 ?

Thank you

S

ANSWER: The year 2022 looks to be more of an issue for the president. I do hope Trump is there for 2021, because I fear a career politician will not understand the Repo and Monetary Crisis. They will do whatever the Deep State instructs them to do. The Repo Crisis is in no way similar to people’s understanding of the crisis. I am not concerned about the amount of money. They are going to be forced to be the market-maker in Repo permanently.

Categories: Economics
Mar 6 2020

Coronavirus Conspiracy to Eliminate Paper Money?


Armstrong Economics Blog/Technology

Re-Posted Mar 6, 2020 by Martin Armstrong

Many people are starting to question why this coronavirus has been whipped up into a major panic when the annual flu kills far more people. Perhaps they have enlisted the conspiracy contingents who turn everything into the end of the world and are so eager to paint doom and gloom as a lethal weapon for mass financial destruction. They may not realize that they are being played for fools spitting out various conspiracies such as biological weapons laced with AIDS that will kill 50% of the population without a single shred of proof.

Curiously, the World Health Organisation (WHO), which is a specialized agency of the United Nationsestablished on April 7th, 1948, and is headquartered in Geneva, Switzerland, has advised people to use contactless technology instead of cash as banknotes may be spreading the coronavirus. It is interesting since paper money has long been recognized as a hospitable environment for gross microbes including viruses and bacteria. Both can live on most surfaces for about 48 hours. However, the claim is that suddenly paper money reportedly transports a live flu virus for up to 17 days. The question emerges: If this has always been the case, then suddenly why now warn about using paper money? Is this part of a broader plot to eliminate cash in order for governments to take whatever taxes they need when the entire social structure is collapsing around them?

Sweden has been the leader in eliminating cash. They have suddenly realized that there is a major risk to digital money and have advised citizens to now ‘Stockpile coins and banknotes‘ in case there is a cyberattack on the banking system. Living in Florida, you instinctively have to hoard some cash due to hurricanes. The power went out where my bank was for about a week. Without power, it became a cash-only society very fast if not instantly. There are two risks to digital currency: cyberattacks and power failures.

Operation Bernhard was an exercise by Nazi Germany to forge British banknotes. The initial plan was to drop the notes over Britain to bring about a collapse of the British economy during the Second World War. Obviously, undermining the currency of a nation during a war has been a strategy throughout all of time. The question that would certainly arise is if all money is crypto or digital, then an attack on the banking system and/or power grid would undermine the economy of an opponent.

Moving to electronic currency may be a desperate attempt to save socialism, but it would also open the door to sophisticated cyber attacks to undermine that economy.

Mar 6 2020

The European Bank Scandal Nobody Talks About


Armstrong Economics Blog/Banking Crisis

Re-Posted Mar 6, 2020 by Martin Armstrong

Last October, the European Union’s (EU) top court ruled in favor of Polish consumers who took out mortgages in Swiss Francs, allowing them to ask Polish courts to convert the loans into the local zloty currency in a blow for lenders. Back in October 2019, the Court of Justice of the European Union, based in Luxembourg, gave a judgment in favor of Polish victims of unfair mortgage agreements crafted by the banks. The bankers created mortgage loans in Swiss francs to be reimbursed in Polish zloty claiming that the currency was very stable and it was, therefore, a good deal. When the Swiss franc peg broke on January 15, 2015, mortgages throughout Europe were sent into turmoil for the bankers had been selling their mortgages linked to the Swiss franc.

The banks involved in crafting mortgages linked to the Swiss franc were Santander, BCP, BNP Paribas, and Commerzbank, as well as Poland’s biggest lenders PKO BP and Getin Noble Bank. Crafting such complex structures for the consumer is not something that will hold up very well in Europe moving forward.

Mar 4 2020

How to Determine When New Highs Are Coming


Armstrong Economics Blog/Forecasts

Re-Posted Mar 4, 2020 by Martin Armstrong

QUESTION: Marty, your explanation of the 1987 Crash and the Nikkei are very informative. Can you elaborate on how we can see that on Socrates?

Thank you for the education

UD

ANSWER: The easiest way to see that is by using the Energy Model I developed. The very purpose of the model is to measure the amount of energy in the system, which is not the same as looking at the price movement of charts thereof.

 

Compare how the Energy Model performed on the Great Depression and then look at the 2007-2009 Financial Crisis. The Dow did not make new highs on the Energy Model until 1954. That took 25 years to accomplish. This was a Public Wave where sentiment shifted to secure government bonds, and equities were viewed as the speculative play toys of the rabble.

Now, look at the 2007-2009 Financial Crisis. We were making new highs on the Energy Model by February 2010. This confirmed that we would be making new record highs and this became the Most Hated Bull Market in history.

The 1987 Crash was interesting, for the Energy Model continued to make new highs after the market peaked. This was a warning we were dealing with a short-term event, not long-term. However, that high in energy from 1987 was not exceeded until July 1995. From that point onward, the US market began to rally significantly.

The US share market broke out on our Energy Models in July 1995 while the dollar bottomed against the Japanese yen in April 1995. This also confirmed we were dealing with a capital flow shift that would turn toward the dollar and the US equities.

Our Energy Models were designed to provide a completely different view of market activity. Even if we look at the standard oscillator, it peaked in January 1925 and that was not exceeded even into 1929, It was finally marched only in February 1955. So that was no help in really forecasting the Great Depression or the rally thereafter.

The Energy Model offers a completely different perspective and it has nothing to do with oscillators or moving averages. Moving average convergence divergence (MACD) is one of the most commonly used technical analysis indicators. However, the MACD (26/12) did not cross until June 1930. So this trend following momentum indicator looks at an asset’s momentum to ascertain whether the trend is up or down, but it failed to provide a trading signal that would have gotten you out of the market for nine months after the high. Therefore, oscillators and moving averages can be good confirmation tools, but they are not consistent insofar as providing always an advance warning.

Mar 4 2020

Fed Cuts Rate on Schedule!


Armstrong Economics Blog/Interest Rates

Re-Posted Mar 3, 2020 by Martin Armstrong

The Federal Reserve is in full panic mode. The Federal Reserve cut interest rates Tuesday in a rare emergency meeting, responding aggressively to the growing threat the coronavirus poses to the economy and markets. The Fed lowered its key federal fund rates by half a percentage point to a range of 1% to 1.25%, the central bank said in a statement.

We warned over the weekend that Socrates had pinpointed this week and then the week of March 23 for actions by the Fed. The Fed is between a rock and a hard place. It had to act in response to the collapse in economic data for the 1st quarter, but at the same time, rates are rising in the real world due to perceived credit risks. This means that the Repo Crisis will get worse and the Fed will have to become the permanent market-maker to maintain short-term rates at these levels.

The steep cut of 50 bp was an emergency half-percentage point rate cut on Tuesday in an effort to protect U.S. economic growth from the impact of the coronavirus outbreak. However, the production lines are already declining. The Fed is looking at how the press has whipped this up into a global panic. But as we can see, volatility will rise further at the end of the month and we should expect this to manifest in a serious escalation of the Repo Crisis as early as May/June

Mar 4 2020

Federal Reserve Chair Jerome Powell Statement and Press Conference Following 50 Point Fed Drop…


Posted originally on The Conservative Tree House on March 3, 2020 by 

Earlier this morning the Federal Reserve (Fed) announced a .50 drop in their lending rate in response to the potential for economic impacts from the coronavirus.  Following the rate cut Federal Reserve Chair Jerome Powell delivered a statement and held a press conference.  [Video Below]