Category The ECM

Mar 24 2023

US National Debt – A Different Perspective


Armstrong Economics Blog/Uncategorized Re-Posted Mar 24, 2023 by Martin Armstrong

In 2010, Barron’s wrote a piece on me effectively laughing at my forecast that the share market would rally to new highs. What seems to inevitably unfold is this notion that whatever the event might be in motion, the mere thought of a reversal in trend appears impossible. When the press disagrees with Socrates, I know it will be the press who is wrong. And because they end up being wrong, of course, they cannot print a retraction so they will just pretend you do not exist rather than admit – Sorry, we were wrong. The Dow made that new high above 2007 by February 2013. That was 64 months from the October 2007 high.

I have been in the game for many years. With each event, it appears to be like Groundhog Day. They pop their heads out and declare they do not see their shadow, so the entire world will disintegrate and that is always based upon opinion. It is never backed by real analysis. Just the standard human trait of assuming whatever trend is in motion, will remain in motion.

Being an institutional adviser, I have never had that luxury. We have had to deal with some of the biggest portfolios in the world. They want accurate forecasting, and it has to be long-term – not day trading. They are not interested in the typical headlines of doom and gloom that the press love to print with every financial event simply to get readership. That is all they care about. It has been the financial version of the fake news.

When we step back and look at this favorite fundamental that people beat to death to predict the end of the world, the national debt, and the collapse of the dollar. Little did they know that the increase in National Debt during the 2007-2009 Financial Crisis was supposed to bring down the sky and end the existence of the dollar. We can see the sharp rise in debt simply made a double top with the Financial Crisis of 1985.

It was that previous 1985 Financial Crisis that set in motion the Plaza Accord which brought together the central banks creating what was then the G5 – now G20. Of course, like every government intervention, the side effect was the 1987 Crash and their attempt to reverse their directive at the Plaza Accord became the Louve Accord. When the traders saw that failed, the collapse in confidence led to the 1987 Crash.

It has always been a CONFIDENCE game as I pointed out with the 1933 Banking Holiday previously. In this case, the failure of the Louvre Accord which came out and said the dollar had fallen enough, once new lows in the dollar unfolded and the central banks could not stop the decline, led to financial panic by 1987 which manifested in the 1987 Crash.

This chart shows the quarterly change in the National Debt since 1966, Here you can see the 1985 and 2008 Financial Crises were on par. Neither one ended the dollar no less the world economy. So when I warned the share market would rally and make new highs and Barron’s laughed in 2010, I said the same thing after the 1987 Crash and people laughed.

In fact, on the very day of the low, I said this was it and that we would rally back to new highs by 1989. That was perfect and the market responded to the Economic Confidence Model (ECM) which has been published back in 1979. This was more than simply forecasting the 1987 Crash and the very day of the low. It clearly established that the ECM had revealed that there was a secret cycle behind the appearance of chaos even in economics.

Larry Edelson was actually a competitor at the time. But Larry respected that the forecast from the model was far beyond what people would ever expect. If we are ever going to advance as a society, we have to stop the bullshit and understand HOW markets trade and WHY. Larry did that. He understood that the model was something larger than just personal opinion.

Even those claiming to be using the K-Wave cannot make real forecasts. The basis of Kondratieff’s argument came from his empirical study of the economic performance of the USA, England, France, and Germany between 1790 and 1920. Kondratieff took the wholesale price levels, interest rates, and production and consumption of coal, pig iron, and lead for each economy. He then sought to smooth the data using an averaging mathematical approach of nine years to eliminate the trend as well as shorter waves. Kondratieff thus arrived at his long-wave theory suggesting that the economic process was a process of continuous waves of boom and bust.

Kondratieff’s work was compelling and contributed greatly to the Austrian School of Economics that first began to develop the concept of a Business Cycle. The general central principle of the Austrian Business Cycle Theory is concerned with a period of sustained low-interest rates and excessive credit creation resulting in a volatile and unstable imbalance between saving and investment. Within this context, the theory supposes that the Business Cycle unfolds whereby low rates of interest tend to stimulate borrowing from the banking sector and thus then result in the expansion of the money supply that causes an unsustainable credit ­source boom which leads to a diminished opportunity for investment by competition.

Benner

Here is a chart of the business cycle that was created by a farmer named Samuel Benner. Benner based his work on Sunspots, which actually incorporated solar maximum and minimum that today’s Climate Change zealots refuse to consider. Nevertheless, someone manipulated Brenner’s work and created a chart to try to influence society handing it in with a wild story to the Wall Street Journal published this cycle on February 2nd, 1932, when the market bottomed in July 1932. Still, nobody knew who had investigated this phenomenon in 1932.

WSJ1933

When I was doing my own research reading all the newspapers to understand how events unfolded, I came across this chart. I found it interesting that during the Great Depression people were reaching out and some began to embrace cyclical ideas. The problem with both Kondratiff and Brenner was that the period they used to develop their cycles was the 19th century because the real Industrial Revolution was unfolding and in the 1850s, 70% of the civil workforce were all in agriculture. Consequently, if you constructed a model based entirely upon one sector, it would work only as long as that sector was the top dog.

Being a historian buff, it quickly hit me that NOTHING remains constant and that the economy will ALWAYS evolve, mature, and then crash and burn. Where agriculture was 70% of the workforce in 18590, it fell to 40% by 1900, and then down to 3% by 1980.

Just look at energy. The earliest lamps, dating to the Upper Paleolithic, were stones with depressions in which animal fats were burned as a source of light. In cultures closer to the sea, they began to use shells as lamps which they would burn at first animal fat. Clay lamps began to appear during the Bronze Age around the 16th century BC and the invention quickly spread throughout the Roman Empire. Initially, they took the form of a saucer with a floating wick.

We even find Roman oil lamps as luxury items crafted out of bronze. There are collectors of terracotta oil lamps for there is a vast variety of motifs. There is everything from dolphins, and various entities, to erotic oil lamps, which may have been used in brothels. The point is, if you constructed a model on oil, you would have surely accomplished similar results to Kondratief and Brenner.

Then of course, just as the energy moved from animal fats to vegetable oils, by the 19th century it returned to whale oil which was extracted from the blubber. Emerging industrial societies used whale oil in oil lamps and to make soap. However, during the 20th century, whale oil was even made into margarine.

Then the discovery of petroleum and the use of whale oils declined considerably from their peak in the 19th century into the 20th century. Ironically, it was fossil fuels that probably saved whales from extinction. Hence, now we are entering a period where they deliberately want to end fossil fuels and move to solar and wind power. Obviously, just a cursory review of energy reveals the problem of basing a model on the current energy source or major economic industry. Things change with time.

Mar 18 2023

Chaos & the Secret Order to Everything


Armstrong Economics Blog/ECM Re-Posted Mar 18, 2023 by Martin Armstrong

Economics is the ONLY field where cycles are denied. Moreover, people do not even comprehend how COMPLEXITY emerges. Alan Turing was a brilliant mathematician who is probably the father of computers for he built the really first computer to break the German Enigma Machine. The man was Alan Turing. He invented the computer and broke the German Enigma Code. You can watch the movie The Imitation Game to get a general idea of his achievement.

But Turing did something even far more astonishing. He had a theory that within nature, what appears to be chaos was just a mask that hides a natural order. He was the first to think that there might be a mathematical order that defines nature. There is a mysterious aspect of Morphogenesis. All the cells in an embryo are identical. Then the cells begin to clump together and actually become different from each other. The mystery was how identical cells know to form different things such as skin, eyes, brain, or bone. There is no central command center.

Turing 1952 Morphogenesis

The phenomenon of Morphogenesis is what is the essence of mystery. This process becomes self-organization. Before Turning, absolutely nobody had any idea of how this process even worked. It was also a great mystery of life itself. It was Turning who published on March 15th, 1952, the Ides of March 3.14, his mathematical explanation of Morphogenesis. Turning’s formula was revealing for it uncovered a secret order behind the mask of chaos. Despite being one of the most brilliant minds ever and all his contributions even breaking the German code, because he was a homosexual, a judge order him to prison or subject him to hormone injections to cure him. He committed suicide on June 7th, 1954 because of the abuse of the government which ignored all his contributions.

What Turning discovered in nature, was that there is a hidden order in which identical cells then change and become specific parts of the end result without any specific coding. What would appear to be simplistic formulas, suddenly emerged into a complexity that baffled the human mind. This is what I discovered in economics. A secret cycle that defines the complexity which we also cannot see with the naked eye.

This is why different cycles unfold in all the sectors such as metals, commodities, share markets, currency, bonds, etc, and when they align that is when we get the superposition events. I will explain more in my forthcoming book on the Economic Confidence Model. One bubble will be in the real estate markets, such as 1792 and 2007-2009. Other bubbles took place in commodities such as in 1919. Still, others took place in currency markets and capital concentration such as the 1989 peak in the Nikkei in Japan or the 1929 bubble in the USA.

In 2020, we warned that this cycle would be a debt crisis wave, but also a commodity wave with rising inflation and interest rates into 2024. We must understand that each bubble is different for it all depends upon the cyclical aspect of that particular sector and does that line up with others to produce a super-wave that becomes the bubble.

Right now, we have a crisis in banking because far too many banks have just listened to the mainstream media and failed to understand that interest rates would be rising – not declining. Since 2020 we have been warning that interest rates were at a 5,000-year low. A simple bounce to just 5% would be devastating. Many banks attend our conferences because they are sophisticated and do not make hedging decisions based on the latest headline on MSNBC.

I am working hard on having Socrates articulate the complexity. I hope to roll this out this year – ASAP. My personal interpretation is generally on point, but not always. What looked to be dominated by geopolitical events in April, appears to be combined with the banking crisis, and in all honestly, I could not imagine that the FDIC even considered not covering 85% of the deposits. I should not have had to even explain that doing that would mean that small businesses have systemic risk in all banks. I actually had to explain there would be a major banking crisis in April that would make the Great Depression appear like a dress rehearsal.

As such, this banking crisis does not appear to be finished. It will still move into April 10th or so. Then the ICC issued a criminal indictment for Putin when they have no such jurisdiction by their own authority. They have become yet another political tool of the Neocons determined to create World War III.

We have entered the period of COMPLEXITY where we are not looking at a single sector in a bubble. We are looking at a really dangerous contagion of COMPLEXITY and the Neocons could care less about the economics. They have control of the White House and this is their chance and they are NOT backing down.

God help humanity!

Mar 7 2023

Is the US Following Ancient Athens?


Armstrong Economics Blog/War Re-Posted Mar 7, 2023 by Martin Armstrong

COMMENT: Marty,

Zelinsky has tried to portray himself as a military leader, cloaked in the symbolism of a military strongman. Gaddafi, Hussein, Stalin, and even Hitler come to mind. All were seen as ardent nationalists. Zelinsky did this to attract enormous weapons and capital to this country, ensuring that his face becomes the symbol of the military leader.

In truth, Zelinsky is a figurehead whose survival depends on outside assistance. Ukraine continues to bleed out citizens, while its military gets eviscerated. Even with the weapons provided by the West, Ukraine’s military was never of the caliber of Russia’s. A Heroic figure he is not.

The West probably bet the sanctions and outside pressures would force Putin to withdraw. No one counted on Putin to stand his ground. Putin’s determination to crush Zelinsky means his tenure is linked with his war record and battlefield performance.  Panic is now setting in. Zelinsky is as much a puppet regime as we saw in South Vietnam. It lacks broad support and like the one in Saigon, Kiev will collapse sooner or later from outside pressure.

Once collapse happens, military defeat means political defeat. Therefore, the West is panicked to raise the stakes and step in to bolster a puppet regime. The US entered Vietnam slowly, then suddenly. It now appears NATO is following this same process, first indirectly, now perhaps directly. They have turned Ukraine’s future into some kind of existential life-or-death battle. For NATO, that is certainly the case. Having squandered untold billions, their military readiness is now on the line.

Kennedy tried to block the expansion of the US presence in Vietnam and was assassinated for it. Johnson enthusiastically took over and then realized his generals, Westmoreland to be precise, had no real plan. Johnson lost by blindly following the military. Trump tried to keep the US out of wars and was ousted by a fraudulent election. Biden enthusiastically took over echoing Johnson. As with Vietnam, an unpopular regime with no support, Ukraine is likely even more corrupt and ripe for destruction. Pumping in billions won’t stop the eventual collapse. Zelinsky’s failures on the battlefield are synonymous with Vietnam.

The US congress has disgraced itself. As with Vietnam, there was no declaration of war. It became incremental and it took nearly 15 years to extricate ourselves from this mess. The blank check spending then is now in overdrive in Ukraine. That country will disappear but unlike Vietnam, from which we would eventually retreat, the US now is so deep inside Ukraine. Retreat would mean the collapse of Nato and the withdrawal of the US.

Who today is the Republican version of Nixon who will get us out of this mess? And who is the next Henry Kissinger to negotiate out of this modern disgrace? No, this is not like Vietnam. This is much worse. We have no leadership, just as is now evident with the puppet in Kiev. We, too, have a puppet in Washington. So two puppets trying to pretend they have each other’s backs ensures that what unfolds has no coda ending like Vietnam. Rather, it looks more like some roll of dice all-or-nothing gamble, echoing the epic debacle of Hitler’s Germany. It’s really the end of the US hegemony now in play.

MS

REPLY: We have followed the same exact path as Athens following the Defeat of the Persian Invasion. They became arrogant and compelled other Greek city-states to pay tribute to them for protection against another possible Persian invasion which never came. The various city-states began to rebel and a coalition was formed led by Sparta ushering in the Peloponnesian War. In the end, Athen lost if status as the financial capital of the known world.

The United States has lost every war contrived by the Neocons ever since World War II. There have been no overwhelming victories. Even the Chairman of the Board and Chief Executive Officer of JPMorgan Chase & Co, Jamie Dimon, has come out and said that his top concerns include Ukraine and China. Only a fool does not look at the geopolitical events unfolding. The Biden administration is firmly in the hands of the Neocons. God help us!

Mar 3 2023

Is Zelensky the Anti-Christ?


Armstrong Economics Blog/Ukraine Re-Posted Mar 3, 2023 by Martin Armstrong

A lot of people are writing in asking interesting questions about Zelensky. I seriously doubt he will be remembered with any respect by history. Indeed, Zelensky is by no means a world hero. He deceived Russia by pretending to promote peace to get elected and the Ukrainian people, but certainly not the world. He is the Dark Angel of Death spreading nothing but death and destruction for the entire world all because Ukraine refused to honor the Minsk Agreement that would end this war in 15 minutes and save the sovereignty of Ukraine. But no! The hatred of Russia is so intense, he is willing to totally destroy Ukraine all for the chance of creating World War III just to destroy Russia.

He is a sick psychopath who is most certainly a  person who engages repeatedly in war criminal activities with his fake sirens and plots to drag in the entire world. The behavior of this sick individual demonstrates that he not only has zero remorse or empathy for those he has victimized even in his own country for he has sent to their deaths, yet now as he is losing he puts out propaganda to desperately drag in the entire world. Any news organization that supports Ukraine should be abolished and stripped of its license. Any advertiser supporting this FAKE NEWS is a co-conspirator with not just the FAKE NEWS, but the Neocons leading us to World War III and the major destruction of Western Civilization.

Many are calling Zelensky the AntiChrist since he is “hailed by the globalists and their corrupt media as a great leader.” He is certainly the devil for he is only trying to lead the world into the horrors of war over territory that historically has never been Ukrainian and certainly Ukraine was never even a country before 1991. Many readers are also pointing out that Zelensky engages in a bi-sexual activity, but that cannot be confirmed. I understand the allegation when he dances around nude and in such a manner in women’s high heels.

Some claim that Zelensky’s name numbered algorically=18…3 6s=18. Others have written in asking if his name is 666 in some ancient language since in English it would be 446. We MUST cut off Ukraine from any funding which is now TWICE that of the entire military budget of Russia. We have politicians like Joe Wilson who needs to be impeached. They should be removed from office as a clear and present danger to the American people. To even propose to put a marble bust of Zelensky in the Capitol next to George Washington and Thomas Jefferson so just how insane this has become.

Zelensky used FTX to launder money back to the Democrats to fund their reelection. Every single member of Congress who has supported Ukraine MUST come clean regarding all their political donations. Ukraine is the MOST corrupt government on the face of the planet.  We now need to weed out all those who have been bought and paid for. FULL DISCLOSURE  NOW!

Biden should be IMPEACHED to save the nation. He is the puppet of the Neocons who only seek death and destruction. Consequently, Biden is without question a clear and present danger to the United States and the entire world. Anyone in Congress who supports Zelensky, Republican or Democrat, should be called to account for all their finances as well. Ukraine is the most CORRUPT government in the world! The corruption scandals there right now are beyond belief. Any Ukrainian who supports this man desires NOTHING!

They argue he is a jew and an atheist who married a Christian and had his children baptized. He dances around nude acting homosexual and is a disgusting role model even for his children no less the world. And this is the hero That is all true, but I thought the Anti-Christ was supposed to be someone the Jews accepted as their Messiah. I looked it up: Jesus said: “I have come in my Father’s name, and you do not accept me; but if someone else comes in his own name, you will accept him.” John 5:43. I am not a religious or Biblical scholar. So I am not qualified to really speak on this subject.

Zelensky has ZERO remorse and ZERO respect for anyone’s life whatsoever. April 17, 1965, was the largest Anti-War Protest against Vietnam. You could be drafted at 18, yet you were too young to drink or vote but not to die. That was so unconstitutional for those people who died there had no right to even vote on whether should we be at war or not. Once again, Biden is doing the very same. They are changing the draft codes to now include girls. He has now waged World War III against Russia with no vote from the people. He is a disgrace to the idea of a free society.

If Zelensky is not the AntiChrist, he is doing a hell of a good job acting out the role. This psychopath should be overthrown by the Ukrainians. What do they stand to gain by conquering the Donbas where they would only abuse the Russians there, treat them as scum, and systematically exterminate them just as they did to the Polish, Hungarians, and Jews during World War II which even horrified the German-Nazis.

I cannot comment on if he is the AntiChrist. He certainly seems to be worshiped globally pretending to be standing for Democracy and Peace while preaching World War III. That is just not my expertise when we get into religious prophecies. All I can say is that he is certainly leading the world to its doom. He seems to be a real live psychopath and the perfect man for the job in high heels for this age when we no longer even know what a woman is.

Go ahead, try to draft our young girls and boys and lead them to the slaughter for this demon. This TIME the anti-war protest of April 17th, 1965 will be nothing by comparison to 2023. Our computer has been projecting major civil unrest. I would not be surprised if people even breathe through the gates of the White House and this time they might see a real insurrection on Capital Hill. It is time to flush the toilet and flush Ukraine down the drain to save Western Civilization as a whole. World War III could be avoided in 15 minutes – honor the Minsk Agreement and bar all Neocons from Capital Hill. The people of the Donbas have a human right to vote on their own sovereignty. Even in a divorce, a judge will ask a child which parent he would prefer to live with. We owe that to the Donbas.

Feb 7 2023

Can the Future be Altered?


Armstrong Economics Blog/Armstrong Economics 101 Re-Posted Feb 7, 2023 by Martin Armstrong

QUESTION: Good afternoon – Will try to make this one quick. Know you are busy. Have you ever asked Socrates how to “defeat” its predictions? Or to reduce volatility/amplitude of projected events?

(Really, you should be recognized alongside Adam Smith, Ricardo, et al. for your discoveries and contributions.)

JN

ANSWER: Because the entire world is connected, it does not appear that it is possible to prevent an event from unfolding. I have come to the conclusion that the best we can ever hope to accomplish is to reduce the magnitude of volatility.

The CFTC had even subpoenaed me demanding a list of all my clients worldwide. I defeated them in court. Their argument was that I had been manipulating the world economy and by turning over my client list, they would prove the magnitude of my influence. These people do not believe in forecasting for they only believe in manipulating society. Even Larry Summers claimed that if you create a model that actually worked, then that would dictate the future.

What these people miss is the fact that we are all connected globally. This is why government IS THE PROBLEM for they think that they can manipulate the future. But since we are all connected globally, it is impossible for one nation to alter the course of the global trend.

The world economy cannot be manipulated. It is far too complex to alter the course of the entire globe. It has been governments that have always created war. Look at every time the bankers thought that they had the guaranteed perfect trade, they have blown up and run to the government for bailouts.

Their allegation against me has never changed. If I say gold will double and it does, it is ONLY because I have too many people as followers rather than the fact that the computer has identified the trend.

So Socrates has confirmed on many occasions – the world economy must travel through these cycles. It is just how society functions.

Feb 7 2023

Major Media is Never Interested in Forecasting


Armstrong Economics Blog/Press Re-Posted Feb 7, 2023 by Martin Armstrong

COMMENT: Marty, it has become obvious that the media promotes everyone but you. I have attended your WEC events and have met central bankers and people from all the major investment banks both in Hong Kong and at your Berlin Conference. The media avoids you like the plague. But everyone of any substance attends your events. Obviously, the media avoids you to suppress the truth when those in power listen to you. Very interesting.

Can’t wait for Dubai

FW

ANSWER: What I do know is that the major media needs its talking heads. It is irrelevant if what they say is right or wrong. It is only the content they need. They do not want someone like me telling the world what you preach about interest rates is not just wrong, it hurts a lot of people.

I was doing a TV spot I think in 1983. It was FNN that became CNBC. I was doing an interview with Walter Bressert. I gave our forecast that the British pound would fall to par by 1985. The pound was near the $2 level at the time so it was a 50% drop. The host was shocked. He turned to Walt and asked – “What do you think about that forecast?” Walt and I were good friends. He replied, “I would not bet against his computer.”

That was the last time I was on FNN. They want the standard BS. They do not want real analysis, especially long-term which our computer has been the best at compared to anyone. So, I’m not sure it is some conspiracy plot. I think it’s just self-interest. Major media will occasionally cover our forecasts, but generally only after the events.

Barrons had reported our forecast from 2010 that the stock market would make new highs, only when they thought it was a joke. When it happened, they never reported that we were the only ones with that forecast.

Major media is not interested in actual forecasting. They only fill content. They just need the talking heads. They do not care if they are ever right. They are selling content – not real analysis. Even the BBC wrote about the economic forecast at DAVOS on how they are always just wrong. They wrote: “There is just one problem: economists have a poor track record for getting it right.” Why? Simply. When people forecast they are expressing an opinion. They are influenced by the current trend and as such, they can never see in advance the change in that trend.

Our computer is usually correct on the long-term trends. It has never missed a shift in the business cycle that I can recall. The media is just not interested in something like that. They want the controversy and personal opinions for they themselves form personal opinions just as they have bought into Climate Change and now they are promoting World War III.

Jan 30 2023

Can Forecasting be Infallible?


Armstrong Economics Blog/Socrates Re-Posted Jan 30, 2023 by Martin Armstrong

QUESTION: Do you think that Socrates will ever achieve infallibility?

KJ

ANSWER:  I have only shown our Global Market Watch model at conferences. It is a pattern recognition model that is learning every day. I have pointed out that nothing is infallible but if anything can achieve that, it will be this model. Right now, it’s not too bad, but it is still in its infancy. What has shocked me more than anything is that it has identified over 80,000 patterns. This is incredible to me. However, it explains why it is impossible for a person to actually forecast correctly. There are so many subtle variances that something may not be what we think is unfolding.

Eventually, it is theoretically possible that we reach some limitations of the pattern variances. If that can be achieved, then and only then would you be able to forecast infallibly.

Yet there is something else of tremendous importance. Socrates has been virtually infallible on the long-term trends and events. What I have come to understand is that there are so many possible variations in the day-to-day trends, but it does not alter the long-term. It projected a financial panic in 2008 10 years in advance. How do so many events unfold to the very day of the Economic Confidence Model? All I can say is that these events, which have nothing to do with my personal opinion, confirm that there is a hidden order of complexity that the make human eye cannot possibly see. There are just way too many events that unfold precisely on the very day of a target to be just coincidence. There is a far greater order that exists and people will disparage these forecasts because they think they only work because we have a huge client base.

Jan 27 2023

Forecasting the Future


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

QUESTION: So if I read you right, you never anticipated that your computer would also forecast war and geopolitical events. ChatGPT seems to be able to find things and answer questions. But it cannot forecast the future by itself. So what did you do that is even more impressive than ChatGPT?

DW

ANSWER: Being a programmer since my teens, was the key. Being a trader, I had experience in both fields, which enabled me to TEACH my system how to analyze. So Socrates is not going out to the web and collecting what everyone has to say. It is analyzing the data all on its own.

Because I was also a history buff, I saw how civilization rose and fell. There was obviously a  cycle to absolutely everything. Since even taking energy, we use to just burn wood, then oils, then whale oil, and then oil. There is a cycle to innovation. Not personally knowing if that will change to something else, I had to construct my system with my experience and then allow it to discover entirely on its own.

I have explained at conferences that we had a client, the Universal Bank of Lebanon, who found a ledger recording the daily prices of their currency back decades. They asked if we could create a model. The data was input and the system forecasted that their country would go into chaos in 8 days. I thought something was wrong with the data. They calmly asked – What currency would be best? They saw themselves the crisis coming and in 8 days the civil war began. The same took place with a Sausi client who was a big shipper. He wanted to know what gold was going to do for Iran was going to start attacking shipping in the Gulf the next day. I asked: Are you telling me a war will start tomorrow? Oh yes, he replied. So by 1998, it was clear that the computer was capable of projecting wars. That is when I stood up in our London WEC in June 1998 and warned that Russia was about to collapse in 30 days. That became the Long-Term Capital Management collapse with the Russian bond market.

So ChatGPT is cool and it will dazzle everyone. I wrote such a program during the early ’80s to teach my computer how to use natural language to communicate. I used my children as the input. The program I wrote was designed to have a conversation. It would retain a database of who you were so if it asked if you had a dog and you said yes, it would ask you its name and remember that. So the next time you came back it would ask you how is your dog. It had so impressed my daughter should bring all her friends over. I was working with Dragon Systems back then when it was hardware. So the computer would talk verbally to them and they thought it was alive.

We will release a portal where you can ask Socrates questions and it will respond. But this is focused on the economy, not the name of Lady Gaga’s dog. Socrates is totally different from ChatGPT.

Jan 13 2023

Our Extreme Long-Term Model Forecasting Tools


Armstrong Economics Blog/Training Tools Re-Posted Jan 13, 2023 by Martin Armstrong

QUESTION: Mr. Armstrong, Your reputation precedes you. They call you the legend because you have been the only analyst who forecasts events years in advance. Throughout the rise and fall the stock market, you called for only 2 year correction from 2000 and 2008 and the market would remain in a bullish trend. I read that Barrows piece on you where it seemed they laughed at your forecast I think in 2010 when you said the market would rally and make new highs. You did the same in 1987. My question is, do you have a particular indicator that allows you to see the long-term like that in the stock market?

PE

ANSWER: This is why I stress that to be a successful trader, you have to conquer your emotions. I was always institutional. Our reports were too expensive for the retail world for they use to go out over telex, which would cost $75 alone per transmission back then. That is why we opened offices around the world to reduce delivery costs. We would send one transmission to that office and they would redistribute it to the clients in that region. We are gathering all our old forecasts that were in storage and will try to assemble them on annual basis for reference.

When FAX became common, we moved to that delivery system and that brought the costs down dramatically. Today, it is email and that is all free. So that is why we became the largest institutional adviser. However, because our clients were institutional, we had to specialize in reliable long-term forecasting. Day traders were not our focus.

We developed our Extreme Long-term trend indicator. This has successfully calculated that these corrections where everyone calls will be the next Depression were only short-term corrections. The calculations are extensive, but this indicator has been used by our Institutional Clients to provide underlying confidence in what is REALLY unfolding in the markets on a broader basis.

These are the charts I was showing at our institutional sessions around the world going into 1985. This indicator was starting to take off on the Quarterly level in 1982. It was fully outright bullish in 1984 on the Yearly Level one year before the ECM turned in 1985. This is why I ended up advising a few of the takeover players back then who they ended up making the movie Wall Street about with Michael Douglas and his famous speech on greed.  What the movie did not explain was that the book value declined so much that we could buy companies, sell their assets, and double or even triple our money. I was warned that we were entering a takeover boom.

We took out the back cover of the Economist in July 1985 to forecast that the deflation was ending and a new Private Wave was beginning that would eventually peak in 2032.

The ECM even picked the high in the interest rates at the Fed. Our long-term forecasts have been amazing. They even impressed me. As I said at the last WEC, nobody has tried to defeat these models more than me. True, I do not like their project into 2032. But that is my personal opinion which is not something clients rely on. We all know that the forecasts can only come from Socrates. These indicators have been reliable and you cannot forecast the future from a personal gut feeling.