QUESTION: Mr. Armstrong; Who is being irrational? The markets or the analysts?
ANSWER: That’s simple. It is the analysts. The markets are ALWAYS correct. When you have bank failures unfolding, people will withdraw money out of caution. It is the very same reason there are ancient hoards of coins. You find coins in times of economic stress and uncertainty. This is a purely RATIONAL human response to uncertainty. It consistent for thousands of years. For any analyst to claim the markets are acting “irrationally” only proves they should look for another profession.
Sir Thomas Gresham began his career in 1543 working at Mercers’ Company at the age of 24 years old. He left England for Antwerp/Amsterdam which was the financial center of the day much like Wall Street. That was where he became a merchant businessman which was where banking existed in those days. He became an agent for King Henry VIII in the Antwerp/Amsterdam market. He became a trader and in so doing, he began to observe how capital moved.
The interesting aspect was that he was called in as a sort of crisis manager as I have been during financial upheavals. In 1551, Sir William Dansell, who was King’s Merchant there in the markets, ended up putting the English Government into a financial crisis thanks to his mismanagement. The English turned to Gresham for advice since he became quite astute at trading. They adopted his proposals. It was then that Gresham proposed a very ingenious tact. He advocated a FOREX intervention to push the pound higher on the Antwerp change. His intervention proved so successful that in just a few years King Edward VI had discharged almost all of his debts. By pushing the pound higher, he was able to repay the previous debts by devaluing them.
Therefore, the English Crown sought Gresham’s advice in all their finances until Mary came to the throne in 1553. Gresham was instantly pushed aside for Alderman William Dauntsey, who lacked trading experience and quickly sent the Crown into financial stress. Gresham was called back to deal with the mess once again.
Under Queen Elizabeth’s reign (1558–1603), he continued as a financial agent of the Crown and also became the Ambassador Plenipotentiary to the Governor of the Netherlands. This was the period of civil unrest in Antwerp which compelled him to return to England in 1567. This is also when the English had the founding of the Royal Exchange to compete with the Netherlands. It was Gresham who made the proposal to build, at his own expense, a bourse or exchange. This demonstrated that Gresham was a trader and understood how capital flowed. Apart from some small sums to various charities, Gresham bequeathed the bulk of his property (consisting of estates in London and around England giving an income of more than 2,300 pounds a year) to his widow and her heirs, with the stipulation that after her death his own house in Bishopsgate Street and the rents from the Royal Exchange should be vested in the Corporation of London and the Mercers Company, for the purpose of instituting a college in which seven professors should read lectures, one each day of the week, in astronomy, geometry, physic, law, divinity, rhetoric and music. Thus, Gresham College, the first institution of higher learning in London, came to be established in 1597.
Gresham’s Law (stated simply as: “Bad money drives out good“). He concluded this from his observations that foreign exchange back then was based on the metal content and weight of the coinage. Therefore, as debasement took place, people would hoard the old coinage of higher quality and spend the debased. Thus, the bad money drove out the good and actually shrunk the money supply in circulation.
He urged Queen Elizabeth to restore the debased currency of England. In so doing, you got to repay old debts with debased currency. Governments to this day practice that same trick. Repaying a 30-year bond today the bondholder cannot buy what the money was once worth 30 years ago. The interest does not really compensate for the loss of purchasing power over long periods of time.
The Federal Reserve is highly considering this option, and Powell has mentioned it numerous times in his speeches. This is part of the move toward a cashless society as the government continually hunts down its citizens for taxes. The Founding Fathers fought to prevent direct taxation. Yet, the failing current government is drowning in debt, so they are after every possible penny they can find. A CBDC would effectively provide the government with a glimpse of all your purchases. They could easily de-bank an individual or institution without a middleman or prevent someone from making specific purchases.
Ron DeSantis (R-FL) also put forward legislation to prevent Floridians from a CBDC. The governor accused the Biden Administration of trying to inject “woke ideology into the financial sector” and said that the current administration is promoting “a central control state.” “Our money says In God We Trust. The central bank digital currency changes that to In Government We Trust. That’s wrong and I am grateful for the Governor’s continued pushback of an out-of-control DC bureaucracy,” said Foundation for Government Accountability CEO Tarren Bragdon.
Governments across the globe are searching for the Philosopher’s Stone. By changing the banking system to instantaneous transfer, they can eliminate physical money and track everything we do in real-time. They want us to surrender all liberty and terminate our civil liberties. This is precisely how empires collapse.
Honest journalism has become a crime. I have appeared numerous times on Maria Zaric’s program, Zeee Media. Maria is a professional journalist who asks thought-provoking questions to the experts that appear on her show. Her content goes against the grain and traditional narrative. The Australian-based journalist has been questioning COVID, the Great Reset, governments, globalists, the war in Ukraine, and many other topics that are completely taboo in the mainstream media. They attempted to shut down her channel in the past. Now, she has been de-banked with no explanation.
“Do you shut down peoples accounts due to their political views by any chance?” Maria asked the bank representative, only to be met with silence. Maria had been banking with ING Bank for numerous years without issues. Her account was suddenly shut down shortly after releasing a story on domestic terrorism in Australia. ING Bank has been unable to explain why her account was canceled.
Interestingly, ING is a partner of the World Economic Forum. Maria has extensively covered the WEF’s agenda to “enslave humanity.” Is Australia secretly keeping track of journalists’ “social credit scores” to silence skepticism?
The idea of eliminating someone’s ability to bank is essentially eliminating them from society. We saw Canadado the same thing to those protesting the Trucker Convoy. Trudeau took things a step further by also de-banking people who simply donated to the cause. The Canadian government used the premise of money laundering as a way to coerce the banks into reporting any activity that could have been intended to help the protestors. I know of numerous people who were frantically attempting to remove their funds from the bank during this time.
As if the public needed more reasons to lose trust in the banking system. This is not limited to one bank or country. I discussed how banks have the ability to “cancel” someone after JPMorgan Chase de-banked the rapper Kanye West for antisemitic remarks. The bank acts as the jury and judge. Epstein was permitted to hold funds at JPMorgan Chase despite an ongoing pedophile ring trial. Bernie Madoff banked with JPMorgan Chase. The bank has secret ties to the Third Reich and helped the group funnel money through South America during World War II. Again, the bank acts as the jury and judge; anyone can be de-banked anytime for any reason.
Most countries may not openly have social credit scores, but they’re keeping tabs on us. They are keenly aware that resistance to this New World Order is building. So they are now using professional journalists as examples hoping that people will stop asking questions to learn the truth. That is one of the reasons why this blog is free of charge – you deserve to know the truth.
QUESTION: Marty there are a lot of people who seem to be trying to create a panic. Some are claiming the stock market will plunge by 50%. Others are saying nothing will survive other than gold. It seems like none of these people have any sense of what is really unfolding. They were saying the same thing for different reasons before the banking crisis. Can you offer any historical perspective?
Thank you. You seem to be the only real source these days.
ANSWER: The Bank Holiday took place the first week of March 1933. It began with governors closing down the banks in their states. Once one began, like COVID rules, they quickly jumped on the bandwagon. As reported by March 4th, 1933, some 41 states had already declared a banking holiday. Back then, the president took office in March – not January. Thus, Roosevelt was sworn in on March 4th, 1933. As the new president, FDR delivered what is arguably his best-known speech.
“So, first of all, let me assert my firm belief that the only thing we have to fear is…fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and of vigor has met with that understanding and support of the people themselves which is essential to victory. And I am convinced that you will again give that support to leadership in these critical days.”
The following day, Roosevelt declared a national banking holiday on March 5th, 1933. Then Congress responded by passing the Emergency Banking Actof 1933 on March 9th, 1933. This action was combined with the Federal Reserve’s commitment to supply unlimited amounts of currency to reopened banks. Back then, they effectively created a de facto 100% deposit insurance and this was before the FDIC was created.
However, what the history books have omitted because it revealed the real reason for the major banking crisis, was the confiscation of gold precisely as Germany did in December 1922 seizing 10% of all assets which unleashed hyperinflation in 1923.
In Herbert Hoover’s memoirs (1951), he documents the fact that Franklin D. Roosevelt (FDR) played a very dirty game of politics. There were rumors that FDR would confiscate gold in 1932 BEFORE the election. These rumors spread and people ran to banks to withdraw their funds. The night before the election in 1932, FDR denied that he would do such a thing. After FDR won the election, the real bank panic began. FDR would not take office until March 1933.
The run on banks began as the Great Depression started. In 1929 alone, 659 banks closed their doors due to mismanagement and speculation. Ironically, to save money on paper, it was also in 1929 when the currency was reduced in size to save money. This time, they want to move to digital and save 100% on printing money. Here in 2023, the failures are due to the WOKE agenda which has deprived the banks of risk management rather than speculation.
However, as the 1931 Sovereign Debt Crisis hit, the number of bank failures skyrocketed. Goldman Sacks and others were selling foreign bonds to Americans in small denominations., As Europe began to default, US banks holding foreign debt and individuals in need of cash led to a banking panic for external reasons. Here is a chart showing the listing of bonds on the NYSE. We can easily see the collapse in the bond market thanks to the 1931 Sovereign Debt Crisis.
By 1932, an additional 5,102 banks went out of business. Families lost their life savings overnight. Thirty-eight states had adopted restrictions on withdrawals in an effort to forestall the panic. By March 4th, 41 states had declared a bank holiday shutting down banks. Bank failures increased in 1933, and Franklin Roosevelt deemed remedying these failing financial institutions his first priority after being inaugurated.
However, it was actually the election of FDR that started the banking crisis post-1931. Hoover pleaded with FDR to please come out and address the gold confiscation rumors. People had been hoarding their gold coins fearing the rumored confiscation. Despite Hoover’s plea for FDR to come out and deny the rumors after the election, he remained silent. Given FDR’s manipulation of Japan and the attack on Pearl Harbor which he appeared to instigate with sanctions confiscating Japanese assets in the USA, denying the sale of any energy to Japan, and then threatening to use the fleet to block them from buying fuel from anywhere else, They Japanese attacked Pearl Harbor. There were Senate investigations afterward about FDR’s role because the US had already broken the Japanese code and knew in advance about the attack on Pearl Harbor. He did that to force the US into World War II.
It was in his character to remain silent and create the worst banking crisis in history before he was sworn in as president. FDR was a radical socialist and many viewed that he admired Lenin. If it were not for Mr. Jones exposing the truth behind Stalin, even the corrupt New York Times journalist promoting Stalinism was meeting with FDR. The run on the banks became massive when FDR won the election on November 8th, 1932. FDR allowed the banking system to implode with people rushing to withdraw the money in gold coins.
At 1:00 a.m. on Monday, March 6th, 1933, President Roosevelt issued Proclamation 2039 ordering the suspension of all banking transactions, effective immediately. Roosevelt had taken the oath of office only thirty-six hours earlier.
The terms of the presidential proclamation specified:
[N]o such banking institution or branch shall pay out, export, earmark, or permit the withdrawal or transfer in any manner or by any device whatsoever, of any gold or silver coin or bullion or currency or take any other action which might facilitate the hoarding thereof; nor shall any such banking institution or branch pay out deposits, make loans or discounts, deal in foreign exchange, transfer credits from the United States to any place abroad, or transact any other banking business whatsoever.
For an entire week, Americans would not have access to banks or banking services. They could not withdraw or transfer their money, nor could they make deposits. The entire economy ran simply on cash in your pocket.
While the first phase of the banking crisis unfolded after 1929 due to speculation losses (hence Glass–Steagall Act), then the second phase was the 1931 Sovereign Debt Crisis, it was the third phase with the election of FDR that led to thousands of banks failing as there was a mad rush to withdraw your gold coin. But a new round of problems that began in early 1933 placed a severe strain on New York banks, many of which held balances for banks in other parts of the country. About 4,000 banks failed during this period alone bringing the total to over 9,000.
Much to everyone’s relief, when the institutions that could reopen for business on March 13th, 1933 saw depositors standing in line to return their stashed cash to neighborhood banks. Within two weeks, Americans had redeposited more than half of the currency that they had withdrawn post-FDR’s election on November 8th, 1932. This would prove to be a sneaky trick of FDR to get people to redeposit all the gold coins they had withdrawn – as we are about to explore.
The stock market was also ordered closed when FDR came to power. With the cleverness of a real con artist operating a Ponzi Scheme to gain the confidence of the people, FDR needed the gold coin to be deposited for Phase 4 of the banking crisis. On March 15th, 1933, (The Ides of March), the stock market was allowed to reopen. On the first day of trading, the New York Stock Exchange recorded the largest one-day percentage price increase ever.
The week before the closure, the Dow Jones Industrials fell to 49.68. The week following the closure, the Dow rallied to 64.56 – a percentage gain of virtually 30% over the banking holiday. The shorts who were better on the collapse of the market once it reopened were devastated. It was a major short-covering rally.
With the benefit of hindsight, the nationwide Bank Holiday and the Emergency Banking Act of March 1933, ended the bank runs that had plagued the Great Depression, but it also set the stage for the confiscation of gold. What you have to understand is that Franklin Delano Roosevelt’s (FDR) actions in 1933 were not directed simply at gold. He was embarking on what he called the New Deal, which was a Marxist Agenda that was very popular at the time. His New Deal would end austerity, whereby they were maintaining a balanced budget in the belief that they needed to inspire confidence in the currency.
It was this balanced budget philosophy that also inspired John Maynard Keynes who argued that in times of economic distress when the demand has collapsed, that is when the state needs to run a deficit and increase the money supply. There was a simultaneous international flight of capital from Europe to the United States in the face of European sovereign debt defaults. That capital flight lasted for nearly two years until FDR won the election in 1932. There was much concern that Roosevelt would do what Germany did in 1922 in confiscating assets. That was the rumor about the possible confiscation of gold.
Milton Friedman criticized the Fed because the capital flows poured into the US but they refused to monetize it. We can see that as Europe defaulted on its debts in 1931, the capital rushed head-first into the dollar. Then we see that the dollar peaked in November 1932 with the election of FDR fearing that would weaken the dollar and exploit the economy. All this gold came to the USA pushing the dollar higher, but the Fed refused to monetize it, was Milton’s criticism. The backing of gold behind the dollar doubled in supply between 1929 and 1931.
So, you must separate gold and the devaluation of the dollar to comprehend what the issue was all about. FDR could have simply abandoned the gold standard, as did Britain, and not confiscated gold. However, that would have also been sufficient to end austerity. But the bankers would have profited and sold the gold overseas at higher prices. Roosevelt in his confiscation of gold was intended to deprive the private sector of profiting from his devaluation of the dollar which was rising the price of gold from $20 to $35. You must keep in mind that he even degraded Pierre du Pont (1870-1954) and called him the “Merchant of Death” because he produced arms for World War I and made a profit off of that war demand. Many saw Roosevelt as a traitor to his own class.
The confiscation of the gold was for two reasons. First, FDR was changing the monetary system from one where there was no distinction domestically from internationally to a two-tier system. Gold would freely circulate without restriction only internationally. Therefore, the confiscation of gold was altering the monetary system moving to a two-tier monetary system with gold only used in international transactions.
Consequently, FDR confiscated gold to move to a two-tier system and to deprive Americans of any profit from his devaluation. What FDR then did was confiscate gold from all institutions ordering them to turn over whatever they had. Ironically, this move was intended to target bankers rather than the public. FDR did not have people knocking on every door demanding all their gold. That is why there are plenty of US gold coins that have survived. If individuals possessed them rather than an institution, then they kept what they owned
Therefore, Roosevelt was able to seize whatever gold existed in banks. He declared all contracts void that had gold provisions for payment. It was in Perry v. United States – 294 U.S. 330 (1935) that the US Supreme Court ruled that Congress, by virtue of its power to deal with gold coin as a medium of exchange, was authorized to prohibit its export and limit its use in foreign exchange. Hence, the restraint thus imposed upon holders of gold coins was incidental to their ownership of it, and gave them no cause of action. id/P. 294 U. S. 356.
The Supreme Court held that it could not say that the exercise of this power by Congress was arbitrary or capricious. id/P. 294 U. S. 356. They held that even if the Government’s repudiation of the gold clause in the government bonds was unconstitutional, it did not entitle the plaintiff to recover more than the loss he has actually suffered, and of which he may rightfully complain. id/P. 294 U. S. 354. Therefore, the Joint Resolution of June 5, 1933, held:
“insofar as it undertakes to nullify such gold clauses in obligations of the United States and provides that such obligations shall be discharged by payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts, is unconstitutional.” id/P. 294 U. S. 349.
Yet, swapping gold for dollars created no loss that was cognizable even though the taking of gold was unconstitutional. Clearly, the Supreme Court did not consider the loss in terms of foreign exchange. The Court reasoned:
“Plaintiff has not attempted to show that, in relation to buying power, he has sustained any loss; on the contrary, in view of the adjustment of the internal economy to the single measure of value as established by the legislation of the Congress, and the universal availability and use throughout the country of the legal tender currency in meeting all engagements, the payment to the plaintiff of the amount which he demands would appear to constitute not a recoupment of loss in any proper sense, but an unjustified enrichment.”
In my understanding of the law, those who argued before the Court made purely a domestic argument. A dollar was still a dollar in domestic terms so there was no cognizable loss and the Court did not reach the constitutional question. Had they argued that their loss was with respect to some debt owed in British pounds, they there was a loss. Purely domestically, the only loss would have been to inflation and the Court would never rule against the government on such an issue.
All of that said, there does not appear to be any historical precedent for the stock market to collapse by 50%, all tangible assets to turn to dust, and only gold will survive given a banking crisis where Biden and Yellen sit on each other’s hands and do nothing. Trust me. Every major Democratic donor will be screaming. And as for those claiming the Fed will reverse its position, say inflation is suddenly no longer a problem, and monetize everything in sight, this is even too big for the Fed. have to create QE and absorb all the debt, there to things have changed. If the Fed does that, it will also lose all credibility. It squarely understands that inflation comes from handing Ukraine a black check to the most corrupt government in the world. The Fed raised rates yesterday for it cannot back down. It is choreographing the best it can but the bankers do not listen.
If they simply stand behind all the deposits, then there will be no panic. That is what they did in 1933 and the market rallied in confidence thereafter.
COMMENT: Marty, it’s refreshing to have Socrates that is totally unbiased. It projected continued rising rates into next year and the Fed just proved its point. It is not backing down.
Thank you. Socrates is very enlightening.
ANSWER: I know there were a lot of talks that surely the Fed had to lower rates and start QE all over again. Most of those sorts of comments have no real experience in markets. They just mouth a lot of hot air. Perhaps instead of putting masks on cows, we should do that on the shills. The Federal Reserve had no choice but to raise interest rates although it was just by a quarter point. Not to do so and the Fed would lose all credibility and the market would then not take them seriously.
You MUST understand that this crisis has unfolded because too many banks were wrapped up in WOKE culture and hired people who were UNQUALIFIED to run risk management. Some were more excited about cross-dressing as a woman and winning the Rainbow award in banking than actually protecting the bank from the risk of rising interest rates.
In a statement released at the conclusion of the meeting, Fed officials acknowledged that recent financial market turmoil is weighing on inflation and the economy, though they expressed confidence in the overall system. “The US banking system is sound and resilient.” They had no choice but to make this statement.
“Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation. The extent of these effects is uncertain.”
The Fed is saying that their rise in rates will in fact reduce inflation and economic activity. The banks have this yield curve risk and that is different from the 2007-2009 crisis where the debt was based on fraud. Here, the debt is US Treasuries so they are not going bankrupt from that aspect, but it is a liquidity crisis.
If these people who scream loudly but know nothing really about finance keep up the nonsense, they will only add to the uncertainly. This inflation is accelerating thanks to the war.
The banking crisis continues and it is impacting funds that have been buying bonds. Allianz, a subsidiary of Pimco, is writing off countless millions with Credit Suisse bonds. The banking crisis has been the result of artificially low-interest rates for far too long and banks were used to free money and buy long-term bonds all because they were making their money on the spread. Now that rates are rising, their risk management was effectively nonexistent, and thus the losses and widespread.
The Allianz subsidiary Pimco is one of the largest asset managers in the world. They have to now write off a loss in Credit Suisse bonds and it’s ain’t over yet as we head into April 10th.
In an interview on May 11, 2014, I explained on USAWatchdog that confidence always outweighs reality. “It’s basically what you believe. There have been all sorts of studies on fundamentals that say if interest rates go up, stocks go down. It is simply not true. The stock market has never peaked with interest rates twice in history. If you think you are going to make 25% in the market, you’ll pay 10% interest; but if you really think the market is only going to go up 10%, you won’t pay 10%. So, it’s always the difference between what you believe and reality.”
The people have lost all confidence in government. We have heard rumors of a “soft landing” from the Fed for the past year, but the situation continues to worsen. Washington maintains that everything is stable as banks continue to fail and inflation rages on. There can be no price stability when war is at play. Biden just released his latest budget plan that no reasonable person would condone. I explained in 2014 that great empires all come crashing down after piling on massive debt. People believe hyperinflation would cause such a scenario, but debt is the major player. Once the government accumulates enormous debt, it targets its citizens aggressively. That is what we are seeing today.
So where should you put your money? I said in 2014: “One of the number one questions I get all the time is where do I put my money? If the banks can just take whatever they want now, there will be bail-ins rather than bail-outs. People are afraid. What do you do with the cash? So, people are buying things like real estate and stocks, just trying to get money out of the banking system.” That sentiment is continuing and the latest CPI report even showed that shelter costs are rising at the highest rate since June 1982. Smart money has been trying to escape the banks for years. There was no incentive until very recently to park money in the banks due to artificially low rates.
I also explained that the Fed would only bail out deposits and had been asking institutions to change their models. “Everybody knows I advise some of the big institutions around, and I can tell you that they have told me directly that the Fed went to them and told them they will not be bailed out for proprietary trading. It will be only on deposits. That’s it,” I stated. “The Fed has been going around telling them, ‘hey, you better change your models.’ They don’t think it will be a flight to quality as it was before. You buy the long term (Treasuries) and that saves you. They don’t think that’s going to happen. It’s quite interesting. . . . It looks like the long term (Treasury bonds) is going to end up starting to rise.”
Sound familiar to the current situation? People have moved from the public sector into the private sector. We are well into a private wave, and the public will not go back to the public sector for many years to come.
QUESTION: If the metals are not trading at a fair value relative to everything else, then does that not prove they are manipulated?
ANSWER: Your problem is the assumption that everything must be trading at some fair value. That is up there with the theory of random walks. ALL markets trade for periods where they remain well below fair value. That was the entire takeover boom of the 1980s which they also blamed on me because I was advising many of the takeover players. I simply showed these charts back then which show in terms of book value, the Dow Jones bottomed in 1977. The market was grossly undervalued because you could buy a company, sell all its tangible assets, and double or triple your money. Michael Douglas’ famous speech in that movie about “greed” would not even be possible if everything always trade like some mythical robot at fair value. Everything overshoots and undershoots.
The metals are NO DIFFERENT. Every market swings between grossly UNDERVALUED and then grossly OVERVALUED. This is part of the business cycle. If there were no periods of gross undervaluations, there would not be a sudden boom either.
This is what you have to come to grips with. There is such a thing and the business cycle. Our cyclical analysis would not be possible if everything was trading at a flat line of fair value. This nonsense in metals is made up of people who have been wrong, and need to blame someone else. It is like blaming climate cycles on CO2. This notion of fair value is rooted, I hate to tell you, in Marxism, because he too did not understand the business cycle.