Category Recession / Depression

Jan 29 2023

More Russian Sanction = World War III


Armstrong Economics Blog/Russia Re-Posted Jan 29, 2023 by Martin Armstrong

For the life of me, there is absolutely no logic to any of this attack on Russia except the desire to conquer and destroy it as any sort of a superpower or independent nation-state. Every President always sought peace until Biden who seems to be reading the cur cards for Armageddon. Even Henry Kissinger said every president has invited him to the White House EXCEPT Biden.

Even if we assume that the sanctions worked and forced Putin to withdraw from protecting the Russians in the Donbas whom the West had all agreed were entitled to their human rights and self-determination with the fake Minsk Agreement, what would happen in the political crisis in Russia? We confiscated all Japanese assets, put energy embargoes on them, and threaten to prevent them from dealing with any other country for energy. Roosevelt did everything he could to get Japan to attack Pearl Harbor. Biden has done the same to Russia.

The risk of overthrowing Putin would lead to a potential civil war and the further breakup of Russia with more nukes than the West. Of the 14,500 nuclear weapons on the planet, Russia and the United States own the lion’s share, with a combined total of approximately 13,350 nukes. The remaining 1,150 weapons are held by seven countries. The USA has 6,500 nukes and Russia has 6,800. Destabilizing Russia is just insane. Russia will wipe out Europe in the blink of an eye if pushed and they now know that this Ukraine bullshit is really a war of the USA and NATO against Russia and we are the aggressors.

I can say that US troops have been told that we will be at war with China by next year.

All my sources are saying that the Biden Administration is DOMINATED by inexperienced climate zealots who are demanding we have no time to wait and we MUST end fossil fuels NOW before there are any alternatives in place. They are the ones pushing to destroy Russia which is embraced by the Neocons, all because the majority of their GDP is all fossil fuels.

The sanctions now are imposed by the European Union and will ban imports of refined Russian fuels on February 5th, 2023, adding to its embargo on seaborne Russian crude oil that began in December. The EU is putting its entire future and the lives of ALL its population at risk for the Donbas which has been occupied by Russians for centuries and two former Russian leaders came from that region. It was Khrushchev who drew the border within the USSR purely for administrative purposes. That region was never occupied by Ukrainians.

There is no difference if Mexico had demanded Texas and everyone who lives there must surrender their language and their religion to fit the norm of being Mexican. Then Texans have no right to vote on their future. The entire Minsk Agreement has been a joke. It was a deliberate ploy to buy time for war. This has now confirmed to both China and Russia that the United States and Europe cannot be trusted. Treaties mean absolutely nothing! this stupid ploy has opened the door for World War III because there is no point negotiating with the EU, Germany, France, or the United States when they will not HONOR their agreements. That means there can be no resolution!

That leaves only All Out War to the Death

But hey! There will be new business opportunities as well. Just think of the guided tours to show how foolish these mortals have been. There will be plenty of nuked cities to explore. The good news, we will exterminate all the climate change zealots who insisted on destroying Russia. Yet it may be up to us to prevent the politicians from crawling out of their safe underground bunkers to the new light of CO2 free world after they killed off all those nasty trees and plants that need CO2 to survive. They say the one bug that will survive a nuclear attack is cockroaches. I guess that’s why we are supposed to eat bugs now.

Jan 27 2023

Shortage of Bread Contributed to French Revolution


Armstrong Economics Blog/Agriculture Re-Posted Jan 27, 2023 by Martin Armstrong

Food shortages have historically contributed to revolutions more so than just international war. Poor grain harvests led to riots as far back as 1529 in the French city of Lyon. During the French Petite Rebeyne of 1436. (Great Rebellion), sparked by the high price of wheat, thousands looted and destroyed the houses of rich citizens, eventually spilling the grain from the municipal granary onto the streets. Back then, it was to go get the rich.

There was a climate change cycle at work and today’s climate zealots ignore their history altogether for it did not involve fossil fuels. The climate got worse at the bottom of the Mini Ice Age which was about 1650. It really did not warm up substantially until the mid-1800s. During the 18th century, the climate resulted in very poor crops. Since the 1760s, the king had been counseled by Physiocrats, who were a group of economists that believed that the wealth of nations was derived solely from the value of land and thereby agricultural products should be highly priced. This is why Adam Smith wrote his Wealth of Nations as a retort to the Physiocrats. It was their theory that justified imperialism – the quest to conquer more land for wealth; the days of empire-building.

The King of France had listened to the Physiocrats who counseled him to intermittently deregulate the domestic grain trade and introduce a form of free trade. That did not go very well for there was a shortage of grain and this only led to a bidding war – hence the high price of wheat. We even see English political tokens of the era campaigning about the high price of grain and the shortage of food to where a man is gnawing on a bone.

Voltaire once remarked that Parisians required only “the comic opera and white bread.” Indeed, bread has also played a very critical role in French history that is overlooked. The French Revolution that began with the storming of the Bastille on July 14th, 1789 was not just looking for guns, but also grains to make bread.

The price of bread and the shortages played a very significant role during the revolution. We must understand Marie Antoinette’s supposed quote upon hearing that her subjects had no bread: “Let them eat cake!” which was just propaganda at the time. The “cake” was not the cake as we know it today, but the crust was still left in the pan after taking the bread out. This shows the magnitude that the shortage of bread played in the revolution.

In late April and May of 1775, the food shortages and high prices of grain ignited an explosion of such popular anger in the surrounding regions of Paris. There were more than 300 riots and looking for grain over just three weeks (3.14 weeks). The historians dubbed this the Flour War. The people even stormed the place at Versailles before the riots spread into Paris and outward into the countryside.

The food shortage became so acute during the 1780s that it was exacerbated by the influx of immigration to France during that period. It was a period of changing social values where we heard similar cries for equality. Eventually, this became one of the virtues on which the French Republic was founded. Most importantly, the French Constitution of 1791 explicitly stipulated a right to freedom of movement. It was mostly perceived to be a food shortage and the reason was the greedy rich. Thus, a huge rise in population was also contributed in part by immigration whereas it reached around 5-6 million more people in France in 1789 than in 1720.

Against this backdrop, we have the publication by Thomas Malthus (1766-1834) An Essay on the Principle of Population was first published anonymously in 1798. He theorized that the population would outgrow the ability to produce food. We can see how his thinking formed because of the Mini Ice Age that bottomed in 1650. All of this was because of climate change which instigated food shortages. Therefore, it was commonly accepted that without a corresponding increase in native grain production, there would be a serious crisis.

The refusal on the part of most of the French to eat anything but a cereal-based diet was another major issue. Bread likely accounted for 60-80 percent of the budget of a wage-earner’s family at that point in time. Consequently, even a small rise in grain prices could spark political tensions. Because this was such an issue, and probably the major cause of the French Revolution among the majority, Finance Minister Jacques Necker (1732–1804) claimed that, to show solidarity with the people, King Louis XVI was eating the lower-class maslin bread. Maslin bread is from a mix of wheat and rye, rather than the elite manchet, white bread that is achieved by sifting wholemeal flour to remove the wheatgerm and bran.

That solidarity was seen as propaganda and the instigators made up the Marie Antoinette quote: Let them eat cake. . Then there was a plot drawn up at Passy in 1789 that fomented the rebellion against the crown shortly before the people stormed the Bastille. It declared “do everything in our power to ensure that the lack of bread is total, so that the bourgeoisie are forced to take up arms.” 

It was also at this time when Anne Robert Jacques Turgot (1727-1781), Baron de l’Aulne, was a French economist and statesman. He was originally considered a physiocrat, but he kept an open mind and became the first economist to have recognized the law of diminishing marginal returns in agriculture. He became the father of economic liberalism which we call today laissez-faire for he put it into action. He saw the overregulation of grain production was behind also contributing to the food shortages. He once said: “Ne vous mêlez pas du pain”—Do not meddle with bread.

The French Revolution overthrew the monarchy and they began beheading anyone who supported the Monarchy and confiscated their wealth as well as the land belonging to the Catholic Church.  Nevertheless, the revolution did not end French anxiety over bread. On August 29th, 1789, only two days after completing the Declaration of the Rights of Man and of the Citizen, the Constituent Assembly completely deregulated domestic grain markets. The move raised fears about speculation, hoarding, and exportation.

Then on October 21st, 1789, a baker, Denis François, was accused of hiding loaves from sale as part of a conspiracy to deprive the people of bread. Despite a hearing which proved him innocent, the crowd dragged François to the Place de Grève, hanged and decapitated him, and made his pregnant wife kiss his bloodied lips. Immediately thereafter, the National Constituent Assembly instituted martial law. At first sight, this act appears as a callous lynching by the mob, yet it led to social sanctions against the general public. The deputies decided to meet popular violence with force.

So, food has often been a MAJOR factor in revolutions. We are entering a cold period. Ukraine has been the breadbasket for Europe. Escalating this war will also lead to accelerating the food shortages post-2024. It is interesting how we learn nothing from history. Wars are instigated by political leaders while revolutions are instigated by the people.

Jan 24 2023

Here We Go Again – Altering the Formula for CPI


Armstrong Economics Blog/Inflation Re-Posted Jan 24, 2023 by Martin Armstrong

There are some who are claiming that the revision of the CPI is to help the Federal Reserve stop fighting inflation. This is typical for Americans who only watch the Fed and nothing else. The formula for the CPI has been routinely altered. Real Estate used to be included but when that was rising too much, they replaced that with rents. When rents started rising, they replaced them with controlled rents.

This is NOT about helping the Fed to lower rates or stop raising rates as the majority seem to be touting. Powell is not that stupid and this will have ZERO impact on Fed decisions going forward. This is all about government spending which is a far greater problem than worrying about the pressure on the Fed. Virtually EVERY government program is automatically INDEXED to CPI. Thus, agencies’ budgets are automatically increased each year based on the CPI. Your taxes are indexed to the CPI. By reducing the CPI, they collect more taxes! There is NOBODY in Congress or at the Bureau of Labor Statistics that gives the Fed a second thought.

Even if we look at inflation using the pre-1980 formulas, the CPI is approaching 10%! When we calculate inflation by eliminating everything that is really irrelevant and focusing on food, energy, transportation, and taxation, which they do not consider at all, the reality of our number came in at 32% for 2022. That is a far cry from the official number. This is simply calculated by Socrates from an unbiased perspective.

What a new wonderful world the Biden Administration has created. Thank you, COVID & the Russian Sanctions. The largest increase we found was obvious fuel between gasoline and diesel used in trucking and homes averaging 65%+ Turning to basic food, eggs were up nearly 50%, flour rose by 25%, cooking oil 23%, butter was up 35%, Chicken by 14%, and Rice by 18%. If we throw in toothpicks, paperclips, etc, then the more we can include the lower the inflation rate. We do not include rent or real estate. Our number is far more accurate to the daily living expenses than the near 10% level of the government. They also do not include sales taxes. The national average rise in rental rates was 7.8%, in Florida it was 8.5%, and in NYC 1.5% when controlled.

When I would buy a desktop IBM XT during the 1980s, it was always about $7,000 for a top-of-the-line. Today, that cost has come down significantly. Obviously, we do not buy computers every week. Should that really be part of a formula? The BLS has made so many revisions to the CPI over the decades it is really a political tool these days.

Back in the ’90s, our staff was dissecting every statistic. We discovered that they were overstating economic growth because they counted government employees twice. The total all personal income, and then government spending. I called the head of the BLS and asked surely this had to be backed out somewhere for hiring government employees to increase GDP rather than the private sector. They reviewed it and finally just said – no comment.

The idea that this latest revision of using one year as a weight instead of two will allow the Fed to stop tightening is really the rantings of people who only look at the Fed for everything as their guidance. There is a lot more incentive behind this revision and the Fed was not a consideration.

Jan 23 2023

Soros Owns Mainstream Press?


Armstrong Blog/Tyranny Re-Posted Jan 23, 2023 by Martin Armstrong

COMMENT: Marty, As you know I worked for _____________ in NYC. We all know you were innocent back then. I have followed you for probably 30 years. Everyone knew that the bankers told the CFTC that you had to be silenced. Your forecast cost them a lot of money when they assumed they could control the market.

It is no longer a mystery why the mainstream press refuses to ever even talk about your Economic Confidence Model and how it has always been right. The press is on the payroll of George Soros who hates your guts for his biggest losses were always against you.

I am passing this article on because I think it sheds light on who is on Soros’ payroll.

Cheers

All the best

WH

REPLY: Thank you. I have heard that from many sources. The CFTC wanted to stop our forecasting at the request of the bankers. They thought they could manipulate markets for “the” perfect trade. They always blew up and blamed me because we had more than $3 trillion under contract back in the ’90s – the equivalent of 50% of the US National debt at the time.

Soros is manipulating the press to press for the destruction of Russia to further his one-world government. Perhaps making that much money causes mental illness whereby you become a demigod to redesign the world. I have ZERO respect for Soros, Gates, or Schwab. They should all be thrown into a padded cell, handed a game of monopoly, and let them try to manipulate each other.

Jan 19 2023

December Retail Sales Drop -1.1%, November Sales Data Revised Lower to -1.0%


Posted originally on the CTH on January 18, 2023 | Sundance 

There is something predictable about Main Street economics, eventually what you see around you overwhelms the great pretending.  CTH has been outlining the state of the consumer economy in great detail for quite a while, and though it is difficult to note when the outcomes will surface, eventually they do surface. [Reminder Here]

CONTEXT. CTH outlined the moment when the purchasing power of the U.S. middle class actually began contracting.  It was March and April of 2021 when that Rubicon was crossed.  We saw it in the second and third quarter data from 2021, but few were willing to admit.

What changed in those two months back in ’21 was a dramatic drop in the “unit sales” of stuff within the consumer economy.  The drop in unit sales was hidden because it happened simultaneously with the first wave of massive spike in prices.  Prices rose so fast the sales data was giving an artificial impression of sales growth, but in the background the actual unit sales dropped.   Those analysts correcting and adjusting historic data to ‘inflation adjusted terms’ are now noticing.

Additionally, and not coincidentally – because the metrics are connected, you will note this line from the Wall Street Journal review of the producer price index. “The producer-price index, which generally reflects supply conditions in the economy, rose 6.2% in December from a year earlier, the Labor Department said Wednesday, the slowest annual pace since March 2021.”  In essence, the current rate of wholesale price increase on materials is now returning to the rate of price increase that happened in the period when prices spiked.  Again, this is predictable.

Inflation is the measure of the ‘rate’ of price increase over time.  March and April of 2021 were the beginning of the first inflationary spike.

Driven almost entirely by the supply side shock from Biden energy policy, in the subsequent 20 months the rate of price increase skyrocketed, peaked August 2022, and now the rate of increase starts returning.  This does not mean price declines; this means the rate of growth in the price increase is lessening.

This is a cyclical outcome.

After 20 months of dropping unit sales, a result of massive price increases; and as the rate of inflation now starts to moderate created by the cyclical nature of it; what we now see is the inability of the price increases to continue hiding the drop in unit sales.   [Background pdf Data] Total retail sales data is now exposed and that’s why we will see this increasing story about negative sales data as the inflation cycle plateaus.

(Via Wall Street Journal) – Retail spending fell in December at the sharpest pace of 2022, marking a dismal end to the holiday shopping season as rising interest rates, still-high inflation and concerns about a slowing economy pinched American consumers.

Purchases at stores, restaurants and online, declined a seasonally adjusted 1.1% in December from the prior month, the Commerce Department said Wednesday. Sales were also revised lower in November and have fallen three of the past four months.

The decline in retail spending late last year adds to signs that the U.S. economy is slowing. Hiring and wage growth eased in December, U.S. commerce with the rest of the world declined significantly in November, and existing-home sales have fallen for 10 straight months. The Federal Reserve said Wednesday that industrial production slumped in December, led by weakness in the manufacturing industry.

S&P Global downgraded its estimate for fourth-quarter economic growth by a half percentage point to a 2.3% annual rate after Wednesday’s data releases. Economists surveyed by The Wall Street Journal this month expect higher interest rates to tip the U.S. economy into a recession in the coming year.

“The lag impact of elevated inflation weighs heavily on U.S. households, it’s very clear that the median American consumer is still reeling from the loss of wages in inflation-adjusted terms,” said Joseph Brusuelas, chief economist at RSM US LLP. “We’re moving towards what I would expect to be a mild recession in 2023,” he added. (read more)

When the Baghdad Bob economic pretenders say, “mild recession,” anticipate something more akin to a mild nuclear meltdown, something with breadlines and soup kitchens.

Now, you must keep in mind that almost every financial media outlet used the same Retail Federation talking point about anticipating an 8% increase in holiday sales last year.  [Reminder] Apparently, collective pretenses must be maintained.  Meanwhile, news crews and camera crews were having a desperate time finding any holiday shopping to use as background footage for the claims that sales were strong.  Here we are in January and the pretending has hit reality.

Negative retail sales in November and December when prices are roughly +10% over the prior year, means the unit sales collapse was far more dramatic…. Far more.

Trying to survive policy driven price increases in housing costs, energy costs, electricity costs, home heating, food and fuel costs has forced consumers to reevaluate purchasing decisions.  Consumer demand for non-essential items has collapsed, and Americans are dig deep into their savings just to sustain unavoidable expenses.  Eventually, pretending this is not happening is going to run into the wall of reality.

On one hand the leaders of large multinationals must pretend everything is splendid; after all, the only acceptable position they can articulate is to support interest rates being raised because demand is just too darned high….  pretending.  But on the other hand – those same suppliers and multinationals are furiously trying to calculate how to avoid being stuck with billions worth of unsold inventory and idle industrial equipment.

Jan 18 2023

Manipulated Economic News on Inflation – Prepare for Bad Corporate Earnings Reports as a Result of Poor Holiday Sales


Posted originally on the CTH on January 17, 2023 | sundance 

There has always been a general shaping and interpretation surrounding economic news, specifically as it relates to the impact of pricing on consumers and corporations. However, against the backdrop of supply side inflation, the financial gaslighting from the Wall Street Journal stands out at the top.

Without pretending, and looking directly at the Main Street reality, CTH has outlined inflation as a matter of monetary and energy policy.  From that standpoint the timing and scale of price increases (inflation measured over time) was predictable.  Our current status is an inflationary plateau, where prices remain high but stabilize for likely two quarters.

What the Wall Street Journal outlines as a “shopper rebellion against high prices” is complete hogwash.  Notice in the construct of the narrative, the demand side (consumers) is identified as the cause of diminished revenue & profits for corporations.  They continue pretending that inflation was not driven by energy costs.

(WSJ) – […] Many companies raised their prices substantially last year to offset higher fuel costs and higher prices for ingredients, parts and labor. As fuel prices have dropped and pandemic supply-chain snarls have eased, some of those costs have come down.

That is a good sign for the economy. It suggests that some inflation in the past year resulted from extreme supply-demand imbalances brought on by the pandemic and the war in Ukraine and which are now fading.

Notice the transparent lack of mentioning ‘energy policy’ as the inflation driver.

[…] The study, by economists at the Federal Reserve Bank of Kansas City, found that higher markups—the gap between what a firm charges and what it costs to produce an item—were a major driver of inflation in 2021.

They concluded that companies in some cases were raising prices in 2021 in anticipation of future cost pressures, rather than because of market power or outsize demand. Andrew Glover, a senior economist at the Federal Reserve Bank of Kansas City who was involved in the study, doesn’t expect prices to fall this year, he said, but he anticipates that the pace of increase will continue to slow.

Inflation is the rate of increase over time. We have experienced two years of massive price increases. Yes, the rate of those increases will moderate, this is the plateau, but the price will never drop. The current prices are a direct result of fixed energy policy.

[…] Unit sales of food and beverages fell 3% last year, but on a dollar basis they rose 10%. That showed consumers were willing to pay higher prices for groceries but bought fewer items.

[…] “People need to eat,” said Krishnakumar Davey, a president at IRI. Shoppers are nonetheless buying less when possible and, in many cases, buying less expensive versions of necessities such as toilet paper and laundry detergent.  (read more)

Meanwhile the Fed is worried that wages will be forced to increase.  Here is the real worry for the Wall Street Journal, “If consumers believe high prices will persist, they could seek bigger raises, and businesses, seeing higher labor costs, could continue raising prices.”  Yes, workers, forward inflation is your fault.

Government policy drives up prices, but workers needing wage increases to pay for those higher prices… well, that is not acceptable to the government, comrade proles.

Jan 16 2023

Roman Gods & Religion Was Not as it Might Seem


Armstrong Blog/Ancient History Re-Posted Jan 16, 2023 by Martin Armstrong

QUESTION: You mentioned that Rome actually believed in the freedom of religion. I am correct then that the multitude of gods was the result of that? And you are saying they were not pagans in the sense that the Christians portrayed?

GH

ANSWER: Yes. They allowed all their conquered states to worship whoever they believed. Yet the fascinating thing is that these were more like Christians envisioned saints insofar as each was in charge of something. The Romans believed in an afterlife, but they did not believe that all these “gods” were actually those who created them. For example, you would go to Posiden if you were Greek to plead for a safe voyage and if you were Roman you would go to Neptune. Neptune is the Roman sea and freshwater god, while Poseidon is the Greek god of the sea. So there were subtle differences where Neptune was in charge of even lakes while the Greek Poseidon looked over the sea exclusively.

Here is a rare coin of Philip I (244-249AD) struck in Phrygia. The Reverse shows the story of Noah with his wife emerging from the famous Ark. This coin was sold at auction by Leu Numismatik AG in Winterthur, Switzerland for 240,000 Swiss francs. Even the story of Jesus was not so strange for Zeus was said to have sent his son to earth to help mankind. His name was Hercules.

The Christians called everyone else pagans. But these various “gods” were never seen as the person who created the earth and humans.  Athena was merely the “goddess” who was the protector of Athens. She did not create the world or humans. So the definition of what was a “pagan” is not exactly as the early Christians presented. This is also why so many then converted to Christianity for those to whom they prayed were never seen as the “almighty” for created everything.

Jan 16 2023

Why Are Ancient Coins Rising in Price?


Armstrong Economics Blog/Ancient History Re-Posted Jan 16, 2023 by Martin Armstrong

QUESTION: I went to the New York show and I sat in on that CNG auction to watch the Diocletian medallion. A friend said you told him you thought it would bring $750,000 on an estimate of $500,000. Well, it brought $1.9 million to everyone’s shock. It seemed that prices were generally double estimates on most things. I was curious if you would comment on that.

Cheers

CP

ANSWER:  Yes I know. I was watching it online. I do not know who was the buyer or the underbidder. One dealer told me it was a collector. Ancient coins are rising because they are a global market. If you have American, British, or German coins, naturally the best market will be in those countries. However, when it comes to ancients, there are buyers in China and Russia coming into the marketplace in addition to Americans and Europeans.  Simply put, ancients are a global market for they bring to life history and much of history has even been confirmed by the coinage.

The prices have continued to rise even in the face of rising interest rates and the Fed’s attempt to cause a soft landing. The fact that these coins are still rising sharply confirms what I have been warning that our computer does NOT see another Great Depression and complete collapse in the share market. We are in this trend where money is simply trying to get off the grid.

Jan 16 2023

Posner on NATO v Russia


Armstrong Economics Blog/Russia Re-Posted Jan 16, 2023 by Martin Armstrong

Jan 16 2023

Sunday Talks, Maria Bartiromo Interviews Matt Taibbi About the Twitter File Discoveries, DHS and FBI Officials asking Twitter to Unmask Thousands of Users


Posted originally on the CTH on January 15, 2023 | sundance 

Journalist Matt Taibbi appears on Sunday Morning Futures with Maria Bartiromo to discuss his findings within the ongoing review of the Twitter communication files.

As Taibbi notes, the FBI was asking for the unmasking of several thousand accounts to include usernames, use identity, ip addresses, geolocation of the account holders and other personal identification data that would normally require a search warrant.  The Dept of Homeland Security (DHS), the FBI and in some cases the CIA would submit these requests and Twitter was fulfilling, albeit sometimes uncomfortable in the compliance demand.  WATCH:

https://youtube.com/watch?v=tQUkJYtuxyQ%3Ffeature%3Doembed

.

If you have followed the research behind “Jack’s Magic Coffee Shop,” none of this is likely surprising.  However, the ramifications and blatant violations of the fourth amendment are quite stark.   It was not that long ago when you would have been accused of being a conspiracy theorist for making these now provable claims.

Mr Taibbi continues to provide the most pertinent takeaways from his reviews.  And to his credit, Taibbi always notes there is a pre-filter applied to the information he is receiving; so, it’s highly likely the intelligence state is still controlling the scope of public awareness behind the justification of “national security”.