Category FED’s goal with the economy is like turning a F350 into a little red wagon

Apr 24 2023

The Great De-Dollarization


Armstrong Economics Blog/USD $ Re-Posted Apr 23, 2023 by Martin Armstrong

All we hear is the same claims that the dollar is dead and it will be totally worthless any day now. Over the last few weeks, all we hear from the majority now is that the dollar is finished. Virtually every page you turn or site you visit claims the death of the dollar. They are calling this the de-dollarization of the world economy and that the future of the US dollar as well as the American empire itself is now collapsing. The general claim is that the group of economically-aligned nations known collectively as BRICS is a major threat to the greenback. That was the same story we heard about the Euro back in 1997.

As their scenario goes, the BRICS [Brazil, Russia, India, China, and South Africa] have moved to form an anti-dollar colation and Saudi Arabia is considering jumping on board. They insist that once that happens, the “petrodollar” will die and cease to be a reserve currency.

This is then followed by the forecast that the economy will suffer and that any bounce in exports will be short-lived simply because the dollar will be dead for the long term. Of course, this has been the favorite forecast that they keep putting out since Bretton Woods collapsed. They were wrong back then for the dollar rose between 1972 and 1976 against the British pound, with the collapse of Bretton Woods. To try to explain why the dollar did not collapse, that is when they claimed that the dollar was backed now by oil rather than gold. That was just an excuse as always to cover up their wrong forecast.

They sold that story to Newsweek and now the dollar rally was because of oil which replace gold. Suddenly the dollar became de facto backed by oil. They needed an explanation to explain why all the old theories were wrong. They sold this theory and it made the front cover of Newsweek. Everyone said YES! That must be the reason. OPEC priced oil in dollars! Naturally, everything was priced in dollars because, under the fixed exchange rate of Bretton Woods, everything from wheat and corn to copper and gold was all priced in dollars.

Now they are saying the American empire is threatened by the potential commercial real estate collapse and the BRICS anti-dollar venture. So they are forecasting a great depression-style crash is possible in the not-too-distant future. They spin this to forecast the end of the America Empire. The London FT, always anti-American/Pro WEF, reports that the dollar as a reserve currency has declined from  73% in 2001 to around 55% by 2021. Yet the FT did state an obvious fact:

“But if you are a reserve-rich central bank elsewhere that isn’t going to be a lot of comfort. Moreover, would you really feel more comfortable in, say, the renminbi? Even if it was fully convertible and liquid, would you honestly feel more sure that Beijing will behave lawfully than DC? The dollar still looks like the proverbial least dirty shirt in the closet.”

COVID actually has played a major role in shifting the world economy. In 2020, the US economy was 24.75% of the world’s GDP. By the start of 2022, it had fallen marginally to 24.15%. What these dollar-forecasting jockeys do not understand, is that if they were correct and the dollar collapsed, then the very BRICS would collapse even further. Economically speaking, when the United States gets a head cold, the rest of the world catches ammonia. You can’t have it both ways. The strength of the dollar is not gold or oil, it is the American consumer.

The risk to the entire world is runaway inflation thanks to Biden pouring untold amounts of money into the black hole known as Ukraine. The Neocons, who control Biden, are planning to launch a war against Russia and China before 2024. This will only continue to accelerate inflation. That reduces the spending power of the American consumer and in the process, the US economic growth declines in real terms and with it, the rest of the world plunges into recession.

While Macron has figured it out that the Neocons are in charge of US foreign policy and he is telling Europe to stop being the puppet of the USA, that all sounds nice but Europe is marching into war with Russia. NATO is firmly in control of the American Neocons and they need war or face losing power. With Trump in the lead, they must stop him at all costs for he is anti-war, would haul the Neocons out by the necks, and defund NATO, as well as stop the climate change agenda.

The US dollar in the global economy has been supported by the size and strength of the US consumer-based economy. Its stability and openness to trade and capital flows without restrictions and it has never been canceled, are the major foundation of the dollar in addition to strong property rights and the rule of law. That is why Russians and Chinese buy US property for they are secure in their ownership of US property which cannot always be guaranteed outside the US.

Consequently, the depth and liquidity of US financial markets remain unmatched. For institutions parking billions, the United States represents a large supply of extremely safe dollar-denominated assets. Are they really going to switch to China or buy debt from Brazil?  Not a single institutional client will take that bait.

China has been divesting of dollar reserves because it KNOWS that the American Neocons want war. You do not fund your adversary who intends to wage war against you. China cannot shift reserve assets to Europe or Japan. They have been buying gold because it is geopolitically neutral territory. They are NOT buying gold as an investor thinking it will rally. That is irrelevant. If gold drops 25%, that does not translate into them becoming a seller.

The dollar in international reserves stood at 60+% at the start of 2022 against the US share of GDP at 24.25%. This comparison belittles the argument that the dollar is finished. Eventually, the US will lose the wars it is starting and the dollar will be replaced perhaps as soon as 2028. The IMF is already licking its lips and rubbing its hands together eager to get control of the reserve currency. But they too will collapse. We have a Directional Change next year and a Panic Cycle in 2025. So buckle up.!

Remember one thing, even with the debasement and collapse of the Roman Denarius between 260AD and 268AD, it still took 224 years for Rome to completely collapse. When war breaks out, capital flight will still be to the dollar. It will not be to public assets, but private. The United States is still supporting the entire world economy. The BRICS need the US consumer to keep their economies functioning. All this talk of the dollar being finished is really nonsense. That day will come, but when the US consumer no longer buys.

Remember 1997? The Euro was going to dethrone the dollar. They claimed the new EU will be a bigger economy than the US. The problem was, they lacked a consumer economy, and low taxes, and they routinely canceled their currency to force people to pay taxes. It is always the same story over and over again.

Apr 22 2023

House Judiciary Committee Releases Evidence of U.S. Intelligence Community Conducting Domestic Political Disinformation Campaign


Posted originally on the CTH on April 21, 2023 | Sundance 

The House Judiciary Committee has released evidence {Letter Here}, gained from a transcribed interview with former Acting CIA Director Mike Morell, showing a coordinated plan by former and current Intelligence Community officials (both parties) to work with the political campaign of Joe Biden in order to influence the 2020 election outcome.

Within the transcribed interview, Mike Morell admits to receiving a phone call from current Secretary of State Anthony Blinken, with a request to create disinformation and protect Joe Biden from scrutiny over the Hunter Biden laptop revelations.  Morell then coordinated with 50 intelligence officials to fabricate a claim that Russians had created the Biden laptop story as a disinformation campaign.  The reality was that Morell organized the U.S. intelligence community to create disinformation on behalf of Joe Biden.

[House Judiciary] – […] “Based on Morell’s testimony, it is apparent that the Biden campaign played an active role in the origins of the public statement, which had the effect of helping to suppress the Hunter Biden story and preventing American citizens from making a fully informed decision during the 2020 presidential election. Although the statement’s signatories have an unquestioned right to free speech and free association—which we do not dispute—their reference to their national security credentials lent weight to the story and suggested access to specialized information unavailable to other Americans. This concerted effort to minimize and suppress public dissemination of the serious allegations about the Biden family was a grave disservice to all American citizens’ informed participation in our democracy.” (more)

[SOURCE]

The United States federal police force, the FBI, is politically weaponized against American citizens.

The United States intelligence community is politically weaponized against American citizens.

The United States justice department, the DOJ, is politically weaponized against American citizens.

We need to take down the four pillars that support the Fourth Branch of Government.  The Office of the Director of National Intelligence (DNI), the Dept of Homeland Security (DHS), the Dept of Justice National Security Division (DOJ-NSD), and the Foreign Intelligence Surveillance Court (FISC), all need to be dissolved.

After those four pillars are removed, the Patriot Act needs to be abolished and the FBI placed under the jurisdiction of the U.S. Marshals service.

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Apr 18 2023

China v Taiwan – The Draft Begins


Armstrong Economics Blog/War Re-Posted Apr 18, 2023 by Martin Armstrong

Chinese President Xi Jinping announced that he is preparing for war. The military budget will grow by about 7.2% this year after it has already doubled over the past decade. This is not a sudden decision. China has been quietly positioning itself for quite some time and has taken notes over Russia’s missteps with Ukraine. The People’s Liberation Army (PLA) is now drafting soldiers, and veterans and college-educated students will be at the top of the list.

Wars are now fought through intelligence and strategies rather than pure brute strength. The PLA is seeking out both women and men and is particularly interested in those with a STEM background. China’s announcement comes after Texas Republican Rep. Michael McCaul visited Taiwan to “provide deterrence to China.” Worse, McCaul told the international press that America would fight alongside Taiwan if Congress approved.

In typical political fashion, McCaul proposed a world war! “Taiwan is in a very different position from Ukraine,” McCaul said. “Number one, they’re not battle tested or ready. They are not prepared for war.” His solution? “When you look at Ukraine, they had NATO supporting them. You don’t have NATO in the Pacific,” he continued. “That’s why when looking at Japan, South Korea, Philippines, Australia, we need to start having these discussions as a deterrent for peace.”

Peace was never an option with Ukraine, and Zelensky made it known that he would not meet Moscow on any agreement. In fact, NATO and others directly helped Kiev break its promises to Moscow, such as France and Germany helping to broker the Minsk Agreement hoax to buy time for Ukraine to build up its military. China has a strategy and a mission.

Losing Taiwan would be seen as an unfathomable loss, and they are prepared to go to war against any nation that intervenes. The West has already stretched itself thin by hyper-fixating on Ukraine as their own economies crumble. Interestingly, US intelligence services believe China will invade Taiwan in 2027. The computer also indicates that a world war could peak as early as 2027, with 2024-2027 being a period of concern.

Apr 18 2023

Why Does the ECM Work On So Many Things?


Armstrong Economics Blog/Uncategorized Re-Posted Apr 17, 2023 by Martin Armstrong

COMMENT #1: Hi Martin, corn also turned nicely on the ECM:

JB

COMMENT #2: Hello Marty, I just want to point out that the Japanese yen broke really hard on the 10th. Not sure if this will prove to be a precursor of what is to come.

Thanks from Tokyo, your old home ground.

AS

COMMENT #3: Well the ECM also marked the reversal in trend in the 30-year bond. It peaked at 134 and fell to 130 by the end of the week. That was just remarkable.

Colin

COMMENT #4: Martin; is this chart real that people are sending around claiming it was Benner’s work?

Mat

ANSWER: As far as this chart of Brenner’s Cycle being real, the answer is no Someone has made it up and signed his name. They have at least extended his cycle correctly. The last time someone tried that they skewed the cycle to make it look like it forecast the Depression 1932 low.

When the WSJ published it, it showed 1932 instead of 1931. Brenner did not extend this out in this manner. What is important to understand is that Brenner was a farmer and farmers understand the cycles in nature. Economists and governments pretend they can smooth out the cycle and eliminate the booms and busts.

The business cycle always wins as both former chairmen of the Federal Reserve conceded – Arthur Burns and Paul Volcker.

Back during the 19th century when Brenner was observing the business cycle, it was still based on commodities. Kondratieff took the same data. I believe the reason WHY the Economic Confidence Model has been so accurate is that it was based on a list of Panics – not one sector of the economy. Therefore, the ECM incorporates weather as Brenner and Kondratieff did by using the commodity sector. Yet just that the ECM was derived from financial panics, it was not based on any one specific type so it strangely seems to have incorporated the whole gambit.

Furthermore, all previous cyclical analysis was based on just a single market like stocks. They have failed because they could not account for the external influence of a contagion. The fact that this list began with the Turks’ siege of Vienna, means that the list was also influenced by war and from an international perspective.

This is a fascinating subject that I will explore in far more detail in my coming book.

Apr 14 2023

Credit Where Due, Glenn Greenwald Nails This Discussion of Media and the U.S. Intel Leaks


Posted originally on the CTH on April 14, 2023 | Sundance 

There are times when CTH and the perspective of Glenn Greenwald do not align. This is not one of those times. {Direct Rumble Link Here}

In this segment with Tucker Carlson, Glenn Greenwald nails the agenda, motives and outcomes of the U.S. media as they relate to the recent classified intelligence leaks. This is a solid three-minute encapsulation of the problem. WATCH:

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Apr 13 2023

The Dollar Sophistry


Armstrong Economics Blog/USD $ Re-P osted Apr 12, 2023 by Martin Armstrong

QUESTION #1: Dear Martin Armstrong,
Thank you for your unwavering support of humanity and truth. The question I have is about the growing number of countries seeking to divorce themselves from the USD in favor of the alternate BRICS system. Yet when I try to make sense of the current Secured Dollar Funding Complex involving Cash Lenders, Fixed Income and Repo Clearing Banks, Commercial Paper, CD’s, Syndicated and Interbank Loans, Wholesale, Retail and Corporate Deposits, Corporate & Sovereign Bonds, etc. How likely is the world to cleanly disconnect from this entangled web and over what anticipated time frame, rapidly or a long drawn out affair?
Sincerely,

Roy

QUESTION #2: Marty, is all this sudden talk about dethroning the US dollar coming just when April was a major target for the Euro bounce?

HJ

COMMENT #3: You have always said when China starts selling dollars, it is time for war. It looks like they are right on schedule.

Pete

ANSWER: All of this talk of dethroning the dollar is right on time. Yes, April was the target and we should be very careful here for this April/May period is critical on a global basis. As for the BRICS displacing the dollar in the trade as so many are saying, this only PROVES they are just putting out biased claims being anti-dollar with pure sophistry. This reveals that they do not understand anything about the economy, trade, or international finance.

Yes, the Euro elected a Monthly Bullish Reversal (Buy Signal). However, it MUST exceed 11100 on a monthly closing basis to suggest the euro can advance further on a sustained basis. If the Euro exceeds intraday the February high, then a monthly closing below 108 would warn we may be looking at the war and the flight to the dollar would unfold. I would expect that capital controls would be introduced by the end of the year.

First of all, the very reason they created the Euro was to end FX risk and to create a single market. If the BRICS create a competitive currency, then they are introducing FX Risk and that will REDUCE trade with the United States. If the dollar declines, then they will suffer a loss of trade. What makes the US dollar the reserve currency is the fact that the US is the largest consumer-based economy that everyone wants to sell to. I find it laughable how these people pretend to understand finance but are ignorant in reality offering nothing but sophistry.

They can create whatever currency they desire, but they cannot force the FX risk on their buyers. I helped to reorganize the Japanese auto industry where they priced their cars in dollars to the States and took back the FX Risk to be managed. They beat the Germans who were pricing their cars in DMarks during the 70s and soon their sales were declining to the Japanese. I was then later called in by German companies to teach them about FX Risk. and market share. Creating some new reserve currency is pointless if they put the FX risk on their customers.

As far as China, I cannot believe how the bias has skewed the analysis. People are actually saying they are selling dollars because the dollar will be dethroned. China has been dependent on the US economy to make money. They would NEVER sell dollars to simply dethrone the reserve status of the dollar. They are selling dollars because YOU DO NOT FUND your enemy. We are headed into war. They know that. This is all geopolitical and those who just hate the dollar are going to get sucker punched because they are missing what is really going on here.

They have been buying gold NOT because they are bullish – but because they must sell US bonds for in times of war the US will just default on all bonds held by China. I think it is time to get your head out of the sand and open your eyes. This is not about dollars and gold. This is about preparing for World War III.

Apr 13 2023

Inflation Plateau Continues During March, Real Wages Shrink Again, Future Energy Costs Start to Rise Again with Oil


Posted originally on the CTH on April 12, 2023 | Sundance

In the latest round of statistics from the Bureau of Labor and Statistics (BLS) the March inflation data has been released [DATA HERE]. The Consumer Price Index (CPI) climbed 0.1% in March after advancing 0.4% in February.  This puts the 12-month CPI outlook at 5% inflation. [See Modified Table A on Left]

A 4.6% decline in March gasoline prices was offset by higher rental and housing costs.  That was the primary driver of the lowered inflationary data as gasoline is weighted heavier in the impact.

However, that said, gasoline prices are already rising again after Saudi Arabia and other OPEC+ oil producers early this month announced further oil output cuts.  This puts the April CPI data (starting to be assembled this week) on track to increase over March.

Overall, in the big picture the data shows the plateau of sorts as we described for this spring.  This plateau will be followed by another bump as a result of current input costs and prior energy costs traveling through the supply chain.

Energy services, electricity and natural gas, are stable but higher than last year.  The crop cycles carry those increased costs from field to fork.  Consumers cannot avoid those food prices increasing.  The more processing involved in the food sector, the higher the price increase.

Housing increases are another unavoidable cost and generally cycle with a lag within them.  As leases expire, the new lease rates increase accordingly.  The same is true for insurance rates.  Both unavoidable sectors have a rolling lag that hits the consumer upon renewal.

On the wage side [DATA HERE] wages went up .03% but the work week declined 0.3%.  Essentially nullifying earnings growth with fewer worked hours.  With inflation at 0.1%, real wages declined .01%.

For the total 12-month cycle noted by the BLS data, “real average hourly earnings decreased 0.7 percent, seasonally adjusted, from March 2022 to March 2023. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 1.6-percent decrease in real average weekly earnings over this period.” For the year, wages continue to fall far short of inflation; meaning real wages are negative.  Actual real wage growth has been negative for 24 consecutive months.

The main street economy is feeling all of these impacts.  The paper economy (Wall St) is not feeling these impacts at the same level.  The chasm between the haves and have-nots is widening.

Apr 11 2023

Soros, Blackrock, and Bud Light (Ep. 1987) – 04/10/2023


The Dan Bongino Show Posted originally on Rumble on: Apr 10, 11:00 am EDT

Apr 10 2023

Poor Kids (documentary)


Armstrong Economics Blog/North America Re-Posted Apr 10, 2023 by Martin Armstrong

This documentary is extremely hard to watch but accurately depicts the hardships millions face in the modern industrialized world. We cannot turn a blind eye to the pain and suffering that poverty creates. This is happening today in the wealthiest country in the world.

Below is an update from the documentary that aired in 2012. There was a slight glimpse of hope when Obama left office and the economy improved under Trump. Still, the funds we send overseas are needed at home. Those with the least suffer the most when the economy turns down.

This a raw reminder to count your blessing on this Easter Monday.