Category End of Fossil Fuel

Jun 6 2022

Gold – Dollar – Inflation


Armstrong Economics Blog/Gold Re-Posted Jun 6, 2022 by Martin Armstrong

The American view during the 70s was more concerned about gold rather than the value of the dollar against world currencies. Most Americans never traveled to Europe so their impression of currencies was the Canadian dollar which was about par with the dollar that Americans would encounter when visiting Niagra Falls. I remember as a kid the family would drive up there and we would cross the border for the best view from the Canadian side. That was probably my first experience with a foreign currency other than ancient Roman coins when I bought my first one for $10 when I was probably 10 years old.

The other hot spot outside the United States was crossing the border to visit Tijuana in Mexico. That was a real hot spot largely promoted due to the Prohibition Days during the Roaring 20s. The Mexican peso was just this cheap thing that nobody really understood and they never understood how to count their change.

It was Roosevelt who confiscated gold from the banks and created a two-tier system whereby gold was used for international transactions, but silver was used for domestic currency backing until Kennedy ended the silver standard in 1965. Because gold was illegal to own except in coins dated 1947 or before, Americans really had little exposure to foreign currencies. They did not see the foreign exchange rate of the dollar during the 70s and 80s, it was all about gold. I even had a conversation with Paul Volcker who was focused not on the inflation rate as much as he too was obsessed with the rise in the price of gold from $35 in 1971 to $875 on January 21st, 1980 which he saw as the real inflation measurement.

As for the Europeans, they were focused on the dollar and the collapse of Bretton Woods. They were all buying gold after  March 1968 when the first crack in Bretton Woods took place allowing a parallel free market in gold in Europe. That was the birth of a two-tier monetary system. Overall, the Europeans were pushing the price of gold up in terms of dollars.

It was a wild time during the 70s. Because I was in New Jersey, the three major gold refineries were there. I was dealing with Englehard which ended up being Phibro post-1975 which took over Solomon Brothers. Before 1975, Americans could buy gold in coin form as long as it bore a date of 1947 and before. Austria, Hungary, and Mexico were the big sellers of gold. They were restricting coins with old dates so Americans could buy gold before 1975.

So I was in the thick of things back then insofar as trading was concerned. I had European clients in Gold and I dealt with all the Swiss banks at the time. By sheer fate, being a market maker in gold, taught me a lot. Gold was the first financial instrument for futures trading beyond currencies. The US bonds began trading in 1977 and S&P500 futures came in during 1985.

Gold rallied into 1974 on ANTICIPATION of Americans were going to run out and buy gold. They were expecting a gold rush. Being in the business, I never got one phone call about buying gold because it would be legal. Everyone who believed in gold had been buying gold coins all along.

The talk of the town was that gold would go to $500 as soon as the Americans were allowed to buy on January 1st, 1975. I sold gold short at the top mainly on a fundamental basis. I did not see any new demand. My Economic Confidence Model said it was a high. But I traded based on my observations.

I watched gold collapse back down to about $100 going into 1976. This is when after watching the ECM for 6 years, I went with it. I opened a new store in the Quakerbride mall and I signed a 10-year lease with a personal guarantee and I got them to eliminate the CPI clause. After all, the talk then was about another depression.

I watched 1968 was the first crack in Bretton Woods and the birth of the two-tier monetary system. The Organization of the Petroleum Exporting Countries (OPEC) oil embargo was a decision to stop exporting oil to the United States. Then-president Richard Nixon appeared particularly concerned that Arab nations might impose a selective embargo on the United States for its pro-Israel policy. He was correct. Oct. 19, 1973, was the official start of the embargo when the Middle East countries announced a 5% production cut per month in response to the Yom Kippur war between Egypt and Israel. They saw Israel’s victory in that war, was because of aid from the United States. The embargoing nations then threatened that the cuts would be restored once Israel withdrew from Palestine and Jerusalem. Obviously, that never happened.

As always, we MUST look at the CONTEXT of the period. First, the climate consensus was that we were heading to a new Ice Age – not global warming. That meant there would be a higher demand for oil to stay warm in winter. In 1971 and 1972, fears began to grow in the developed world that if we were not already running out of energy supplies, we would soon as additional nations adopt western industrial structures.

Thomas Malthus (1766-1834) warned the population would outgrow the food production so we needed to curtail the growth of the population and advocated deliberately creating a plague among the poor to reduce their number. If you ever really read Malthus, you can see the influence he has still had on people like Bill Gates,  George Soros, and Klaus Schwab.

Thus, in 1976 I went with the ECM. That was the wild wave of inflation and the very top of the next wave turned out to be 1981.35 which was the day of the high in interest rates.

What I learned was that none of the fundamentals mattered in the end. Gold would decline with inflation at times and rally at other times. It was more complex than that. The final rally from the $400 level to $875 had nothing to do with inflation, that was the invasion of Russia into Afghanistan.

The reliable was simply the objective analysis.

Jun 6 2022

Remarkable Admission, Pete Buttigieg Announces Biden Inflation Plan is to Create Increased Dependency State and Apply Socialist Economics, Biden Led Govt to Provide Medicine, Childcare, Housing and Food


Posted originally on the conservative tree house on June 5, 2022 | Sundance

Here is one succinct interview containing the smorgasbord of far-left policies the people behind Joe Biden are proposing as the solution to the inflation crisis they have created. It is remarkable to see it all packed into one 8-minute segment.  There is so much crazy in here it would take a week of articles to unpack it.

The ultra-leftist Biden Transportation Secretary, Pete Buttigieg, appears on ABC with George Stephanopoulos to discuss the solutions to the massive economic collapse that looms all around us.  Within the interview Buttigieg states the Biden administration goal is to use the high cost of living (policy driven inflation) as an opportunity for the government to take over household expenses and create equity via government distribution.

If reasonable people do not intervene quickly, the executive branch and legislative branch will move to begin subsidizing and controlling medicine, childcare, housing and food costs by diverting tax dollars into the social equity system.  Depending on income, the Biden administration plans to offset higher prices for Americans by providing the essential services and products they need.  In essence, Democrat-Socialism with a filter of equity in distribution, ie “enhanced dependency.”  WATCH:

Remarkably, Stephanopoulos references one of the most insane New York Times op-ed’s ever written around economics {ARTICLE HERE}.  Within the reference, the Democrat legislative proposal is for the government to take over the purchasing of essential products like food, fuel, gasoline and medicine.  The government would then distribute those products.  The entire premise is based on some academic leftist theory of economics that is just nuts. It looks nothing like capitalism.

The baseline for the approach contains the premise that inflation is driven by too many people chasing scarce goods. Thus prices are rising.  This is how the Democrats look at inflation and explain the problem.  Their solution is for government to buy the food at the prices they claim people cannot afford, and then sell the food at prices they claim the people can afford.  [Replace ‘food’ with any item they determine]

Notice in the interview when Buttigieg is challenged about the high cost of gasoline, he complains that oil companies are not drilling enough to generate the oil and refinery capacity that we need.  Essentially, the oil companies are to blame for not creating more supply.

Now, pause, and think about that.

The same Pete Buttigieg voices strong opposition to any further exploitation of oil and natural gas.  Buttigieg and the Biden administration vociferously advocate for green energy transition with extreme urgency and apply punitive punishment toward any opposition.  Moments later, they are blaming the oil and gas industry for not providing enough supply….

…. Do you know what that advocacy conflict sounds like?  That conflicted and twisted mental outlook is the psychology happening in abusive relationships.  If you had made me a better sandwich, I wouldn’t have needed to punch you in the mouth.  If the oil companies we restrict were doing the things we restrict them not to do, then things would be better.

Because the oil, gas, farms or (fill_in_the_blank) etc are not doing their jobs correctly – as to predict the damage caused by govt policy and offset the consequences – then government must take over the controls of the industry and manage the process.  History rhymes…

Jun 5 2022

Is the WEF Running Canada?


Armstrong Economics Blog/WEF Re-Posted Jun 5, 2022 by Martin Armstrong

The Canadian National Post has reported on the rising concern that the World Economic Forum is making all the calls as to what the Canadian government should do. They admitted that this question has “gained remarkable currency among Canadian[s]” particularly since the events of the Freedom Convoy. While they concluded that the WEF is not controlling Canada, implying this insanity is all the brainchild of Trudeau, they admitted that “it’s not entirely crazy to jump to the conclusion that an international cabal of ultra-elitists is secretly pulling the strings on world affairs (particularly when they keep claiming as much).”

I recently finished another documentary where I was actually asked: “Would you debate Schwab?” I answered “Yes!” I explained that throughout my career, I have been butting heads with academics worldwide. The ONLY one I met who was actually interested in how the world functioned was Milton Friedman who I cherish his autographed photo I keep on my shelf – not a bust Lenin as is the case with Schwab, which really is on his shelf.

I was impressed with Milton Friedman who came to listen to me speak in Chicago. When I was finished, he came up and said: “Hello. I’m Milton Friedman. That was the best speech I ever heard.” I was probably the largest foreign exchange adviser in the world. That is what made my company so famous. I have told the story before that prior to 1985, I was in Geneva having lunch with the head of one of the major banks in Switzerland. I had prepared a list of names like European Advisers I was going to open an office in Europe. I asked his advice on what name to use. He told me to name one European analyst. I was embarrassed for I could not. I apologized and said I’m sure there must be, but I just did not know of any. He chuckled and said there were none.

He then explained to me how currency had become political so no analyst working for a bank would dare say that their currency would decline. That would have been a political statement against the government. After World War II, politicians used their rise in the currency as a political validation that their policy was correct and so vote for them.

He said to me, that the reason everyone uses you is that you “do not give a shit if the dollars goes up or down!”  He explained to me why we had become so big on a global scale. As an American, saying the dollar would decline or rise was not a political assault upon the government. Nobody ran for office claiming the dollar was up against the Mexican Peso so vote for me! They would have e been laughed off the stage. It was another lesson in life that you cannot judge others by yourself.

As fate would have it, I had a client who was a senior VP at Franklin National Bank, which was once the United States’ 20th largest bank. Most people have no idea but in 1951, it was Franklin National Bank in Long Island, New York, that 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. The concept started spreading that same year when a bank in Michigan licensed the charge card program from Franklin. The idea was so popular, that in 1958, American Express launched its first charge card.

On October 8, 1974, it collapsed in obscure circumstances, involving connections to the Italian Michele Sindona who was alleged to be a Mafia banker. It was at the time the largest bank failure in the history of the country. Because I knew futures and international finance, I was asked to take a look at the problem the bank had.  The bank failed on a 10% move in the Italian Lira. Nobody seemed to understand international finance back then. Currency futures began trading on May 16th, 1972 following failed negotiations to reestablish a fixed exchange rate system. Thus being a trader, my client Walter Zenergle, asked if I could take a look at the problem. it was clear, that nobody yet understood about hedging risks except those of use who were traders.

The academics dealt in theory. Traders had to learn from their mistakes. After the failure of Franklin National Bank, it seemed that whenever there was an issue with currency, I seemed to get the call. When the Asian Currency Crisis hit in 1997, I was asked to come to Bejing to meet with the central bank. I was surprised that they had not called in some academic from Harvard. But went I got there, I discovered they had sent their people to work around the world on trading desks. They then returned to run the central bank. When I was asked by guys in the Fed and the US Treasury what was my impression of the Chinese central bank, I responded: “I was impressed. They only hired people with experience.”

The problem with academia has always been that it is entirely theory without any real-world experience. That is what impressed me about Milton Friedman. He came to listen to me speak to LEARN what was happening in the real world. Milton had said to me also that day, that I was doing what he only dreamed about. In 1953, he proposed a floating exchange rate system whereby the free markets would impose checks and balances against the policies of the government. Nilton has been the ONLY academic I have ever met that bothered to investigate rather than theorize as did Marx and even Keynes and certainly Schwab.

Unfortunately, Trudeau is listening to Schwab. Canada, Australia, and New Zealand as well as Europe are following the directive of Schwab. He is NOT in actual control. But the people running these political bodies are kissing his ring as if he is the godfather of economics.

Jun 5 2022

Biden Implies Ukraine May Need to Cede Territory to Russia During Negotiated Settlement


Posted originally on the conservative tree house on June 4, 2022 | sundance 

During press remarks yesterday, Joe Biden implied that Ukraine may need to cede territory in Eastern Ukraine to Russia as part of a “negotiated settlement.”

The statement came at the end of remarks centered around the May jobs report and Biden’s claim that U.S. consumers were in the best economic position of the past decade, therefore the government must begin increasing direct subsidies to offset energy costs and massive inflation pressure.  When Biden was asked, “does Ukraine have to cede territory to achieve some peace?” he stated:

[Transcript] – [F]rom the beginning, I’ve said and I’ve been — not everyone has agreed with me — nothing about Ukraine without Ukraine.  It’s their territory.  I’m not going to tell them what they should and shouldn’t do.

But it appears to me that, at some point along the line, there’s going to have to be a negotiated settlement here.  And what that entails, I don’t know.  I don’t think anybody knows at the time.

But in the meantime, we’re going to continue to put the — the Ukrainians in a position where they can defend themselves.  Thank you all so very much. (link)

It has been obvious from the outset that annexing Eastern Ukraine, the region containing a majority pro-Russia population, was always the intended objective of Russian aggression.  With Biden making this admission public, it raises the question then why did we agree to send $40 billion?

Russia’s hold on the Eastern Ukraine Donbas region is now essentially complete.  This is the area that had been in a state of civil war since 2008, and the Russian annexation would essentially bring that conflict to an end.

Any Ukraine-Russia negotiation would come down to Ukraine acquiescing to the territory already lost.  It’s not like Russia is going to give it back.  The “negotiated settlement” amounts to the Ukraine and western NATO alliance admitting Russia has accomplished its intended objective.

It seems doubtful that Joe Biden sought approval from the U.S. State Dept, CIA and Senate Foreign Relations Committee, specifically those who are conducting this proxy war, prior to this statement.

Remarks at 18:13 of video. WATCH:

Jun 4 2022

WEF Praises Quiet Lockdowns


Armstrong Economics Blog/Tyranny Re-Posted Jun 4, 2022 by Martin Armstrong

In a deleted video posted on the World Economic Forum’s website, the group praised the lockdowns for offering a quiet atmosphere.

The dystopian post-apocalyptic setting certainly seemed quiet at times. Here is what the latest lockdown sounded like in Shanghai for those who have already forgotten:

https://rumble.com/embed/vxsuhy/?pub=4#?secret=6bzhrA33L3

Jun 4 2022

Former Trump Official Peter Navarro Handcuffed and Put in Leg Irons by FBI, Joe Biden State Police Force


Posted originally on the conservative tree house on June 3, 2022 | Sundance

Former economic and trade advisor Peter Navarro appeared outside the courthouse in Washington DC after his arrest. [Two Videos] WATCH:

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Full remarks and press conference below.

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Jun 4 2022

Joe Biden Begins Using FBI to Arrest Political Opposition from Prior Administration


Posted originally on the conservative tree house on June 3, 2022 | Sundance

Peter Navarro was the former Senior Trade and Economic Advisor to President Trump and a staunch critic former of U.S. policy toward China.   The January 6th Commission demanded all his documented communication with President Trump and anything that might be related to the authorities of the J-6 Committee.  Navarro did not comply with the Democrat subpoena from the committee.

Attorney General Merrick Garland, acting on the authority of Joe Biden, instructed the FBI to arrest Peter Navarro and bring him to federal incarceration.

Put in more clear terms, Joe Biden is arresting his political opposition for failing to reveal confidential and privileged communication with the former President.

Democrats are using the FBI as the federal police agency to arrest their political opposition. This is happening right now.

This is happening in the United States of America.

Think about it.

(VIA NBC News) […] Navarro, 72, was indicted by a federal grand jury on Thursday for contempt after snubbing a subpoena from the House committee investigating Jan. 6 seeking testimony and documents.

Court documents indicate that the government requested that Navarro’s indictment be sealed until his “arrest operation is executed.” The U.S. Attorney’s Office told NBC News that Navarro “is in custody pending the court appearance” later Friday. (read more)

Jun 4 2022

Joe Biden Says Today, “Americans Feel More Financially Comfortable than Any Time Since 2013”


Posted originally on the conservative tree house on June 3, 2022 | Sundance

There was a really bizarre dichotomy on display today within the teleprompter script prepared for Joe Biden to use.

Dear Leader took to the microphones to brag about his economic accomplishments and remind Americans how all good thinking people should be feeling:

“Since I took office, families are carrying less debt; their average savings are up.  A recent survey from the Federal Reserve found that more Americans feel financially comfortable than at any time since the survey began in 2013.”

[Source Transcript] – {Direct Rumble Link} WATCH:

Do you hear what he is saying?  Americans have less debt, their savings are up, and they are more comfortable financially today than ever before.

If those remarks were based on reality, then why was the following segment stated exactly 52 seconds later in the same script?

…”one way we can make things a little better for families is by helping them save on other basic items their family needs on a monthly basis, like their utility bills, their Internet bills, their prescription drug bills, and other costs like housing. My goal is to make sure that at the end of the month families have a little more breathing room than they — than they have now.” (link) 

These are not two different speeches; these are two paragraphs a few moments away from each other in the exact same speech. [Full Transcript Here]

This speech should ring massive alarm bells, not because of what is being said – but because the people behind Biden are just phoning in the propaganda now and not even trying to hide it or give the illusion of a president in control.  No president, in command of the office and the issues, would read those two paragraphs of a prepared speech and not point out the literal hypocrisy his handlers were telling him to read.

Full Remarks, filled with denial, lies and some of the weirdest gaslighting to date.

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Examples from speech:

…”The price of gas is up $1.40 since the beginning of the year when Putin began amassing troops at the Ukrainian border.  This is the “Putin price hike.”

Example #2:

…”Putin’s war has raised the price of food because Ukraine and Russia are two of the world’s major breadbaskets for wheat and corn — the basic product for so many foods around the world.” 

Jun 4 2022

May Employment Report Shows 390,000 Job Gains, with Losses in Sectors Reliant on Disposable Incomes


Posted originally on the conservative tree house on June 3, 2022 | Sundance 

The Bureau of Labor and Statistics (BLS) has released the May jobs report {DATA HERE} showing a net 390,000 jobs added overall.

The leisure and hospitality sector gained 84,000, as restaurants and hotels appear to be recovering from the massive pandemic losses.  However, within the reporting there is concern about the sectors that are now showing signs of increased employment weakness, including 61,000 job losses in retail.

The unemployment rate remains the same at 3.6% in May. About 330,000 people joined the labor force, however the participation rate remains below prepandemic levels.

Most analysts like the Wall Street Journal are explaining the contradictory sector specific numbers by saying, “Consumers, who loaded up on goods such as televisions and furniture early in the pandemic, have started to shift their spending to in-person services such as travel or restaurant meals.”  While there may be some truth to that outlook, it appears that most macro-perspectives are still discounting the extreme increases in price that are now baked into this new ‘transitional economy.’

Consumer purchasing is very prioritized because food, fuel, energy and housing are now eating up much more of the average person’s paycheck.  People cannot pay 30 to 50% more at the gas station and grocery store and still retain disposable income for durable goods purchases.  That’s the basic issue.

The durable goods sector shows the contraction in employment due to the loss in disposable income.

Here’s the main graphic [Table-B] showing where the jobs are being gained and where the jobs are being lost.

Jun 4 2022

House Representative David Cicilline Introduces 2022 Democrat Campaign Strategy, Constitutional Rights are “Bulls**t”


Posted originally on the conservative tree house on June 3, 2022 | Sundance

Democrat House of Representatives member David Cicilline (Rhode Island) delivered remarks during a congressional hearing about the second amendment rights of Americans.  Within his prepared remarks Representative Cicilline says the quiet backroom part out loud and introduced the modern democrat perspective on the constitution.  WATCH:

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When people show you who they are, what their priorities maintain and how they structure their outlooks, it is generally the best idea to accept it.

If constitutional rights are “bullshit,” then what control mechanisms remain to restrain excessive government power?