QUESTION:

Dear Marty , what do you’re models say about the unrest in South America (Chili, Peru, Bolivia, Colombia, Venezuela, Argentinia) .

It looks like the whole continent is on flames.

All the best,

ciao G

ANSWER: I will update the Cycle of War in 2020. As I have stated many times, the computer has correlated both the international war among nations as well as the civil unrest which leads to revolutions. Normally, these two separate models move at different times. When they align, we get the most dramatic changes. This is what is taking place right now on a global scale. We have rising civil unrest around the globe. There is no place that is exempt.

We will see even the US 2020 elections become much more violent. It will be similar to the 1960s, but this is not over race. This time economics is driving the cycle which is being articulated in the battle between socialism v capitalism. Never before in history do we see the losing side simply refuse to accept their loss and move on. This nonsense that Trump is “#NotMyPresident” reflects the rising discontent which will turn to violence next year.

Then the socialists are out to destroy capitalism using climate change. This is also a cleverly orchestrated movement that is political beneath the surface. Shutting down fuel, ending cars and air travel — people have no idea that the agenda is to send society back to the Stone Age and end, not just industrialization, but capitalism.

This is not going to end well. The stupidity of people to ascribe to climate change without looking closely at the proposals is just an illustration of how easily the mob can be fooled. They are being convinced to surrender all their freedoms on the pretense that we face extinction in 12 years.

The central banks are keenly aware that they cannot stimulate economic growth, although they will not state that publicly. The wheel of fortune has completed its revolution. The central bankers are quietly lobbying the political side of the aisle to swing back to Keynesian fiscal policy and reverse austerity.

The 63-year-old Christine Lagarde was supported among members of the ECB who disagreed with Draghi. This resulted in a deadlock among Eurozone policymakers that began behind closed doors, but toward the end it began to spill out onto the streets. What I was hearing 2 years ago behind the curtain was starting to leak out. The Eurozone’s faltering economy was creating a huge divergence in ideas with Draghi. This resulted in a serious clash when it came time to the ECB’s rate-setting committee with departing President Mario Draghi’s negative interest rates and never-ending QE. If such policies were to work, it should have done so quickly within a year or two, and not 5 years of negative rates and 11 years of QE.

Lagarde was providing hints that she would seek consensus among politicians in the Eurozone for fiscal policy changes. She knew that the ECB could not win the fight to support the economy by itself. Publicly, Lagarde implied she would follow Draghi’s path and keep monetary policy ultra-loose to lift euro-area inflation. She really had no choice in that regard. Nevertheless, she is aware Draghi’s policy has been a failure but the ECB is trapped. Monetary policy at the ECB is doomed despite the fact she has said that the tools to tackle a downturn are available to the ECB and they must be ready to use them if needed.

Lagarde is steeping into a growing confrontation at a time of rising challenges for central bankers when the economy is turning downward despite all the stimulus and inflation remains subdued. At the same time, interest rates remain artificially low and there are questions over what policymakers have that could do anything to combat a more serious downturn. Lagarde has begun lobbying governments and arguing they need to step in with fiscal stimulus to fill the gap. Central bankers have lost their ability to control inflation or steer the economy while politicians are anything but united in the face of rising political separations and unrest.

Lagarde realizes the economy faces downside risks with inflation in a deflationary position. She has stated it’s “therefore clear that monetary policy needs to remain highly accommodative for the foreseeable future.” While she pretends that the ECB can cut interest rates further despite already being at a record-low -0.4%, she also realizes it is causing massive problems. It has become a deterrent for the euro to be considered a reserve currency. There have been other side effects from keeping rates well below zero for too long, such as promoting a pension crisis nobody wishes to address publicly for fear of creating a panic. She acknowledged these problems stating that the “ECB has hit the effective lower bound on policy rates, it is clear that low rates have implications for the banking sector and financial stability more generally.” Lagarde further acknowledged that “it will be essential to closely monitor whether adverse side effects may emerge in the future, the longer low interest rates are in place

One of the reasons North Korea has such a large army is not patriotism. Those in the army are fed before everyone else. North Korea has always had a major problem — growing food. From a timing perspective, 72 years from the birth of the 38th parallel brought us to 2017. The War Cycle involving North Korea brings us to 2020.92. The 38th parallel of latitude was established on September 8, 1945 (1945.68). This arrangement proved to be the indirect beginning of a divided Korea that would lead to the Korean War (1950–1953). The war resulted in the Korean Demilitarized Zone (DMZ) and subsequent Cold War. However, the collapse of the Soviet Union in 1991 deprived North Korea of its main source of economic aid. Without Soviet aid, North Korea’s economy went into an economic freefall in 1992, which was pretty much in line with the Economic Confidence Model calculated from the birth of the 38th parallel.

Kim Jong-il was already conducting most of the day-to-day activities of running the state. His father, Kim Il-sung, died from a sudden heart attack on July 8, 1994. He became the General-Secretary of the Korean Workers’ Party. Kim Jong-un’s power lies in his secret police force, exactly as the Stasi held power in East Germany.

When Korea was split in 1945 into Communist North against the South, the terrain has always dictated the situation. About 65% of Korea’s heavy industry was located in the north, but, due to the harshness of the terrain, only 37% of its agriculture existed in the North. This is why the North often has bouts of famine. The crops are failing in North Korea exactly on time. The BBC has reported that the harvest is expected to be worse than usual, which is going to increase the already severe food shortages in the country and may result in a military crisis. I explained on March 29, 2018:

“The entire world is going to go nuts 2031/2032. There will not be a country that is spared from political and economic events. The risk a serious famine in North Korea which could result in the people rising up will arrive in 2023. That pressure will begin here this year 2018.70 – which will be September 13th, 2018. This appears to the turning point that is not just concerning North Korea. It is appearing around the world in many markets. The risk for political change in North Korea comes into play as soon as 2019/2020.”

We are looking at conditions that would normally lead to a revolution in North Korea. There will be a rise in civil unrest. The question becomes whether the army will stand behind Kim and increase international war tensions or divide to overthrow him. There is nothing like famine to force political change.

COMMENT: Mr. Armstrong;
What I have witnessed from your Socrates and the private blog the past two days, Nov. 29, 30, 2017, has got to be one of the most incredible man-made technological wonders ever created.
I am only a few years into your models but the past two days has left me stunned. The Socrates system and your blogs have captured, analyzed, and translated what I used to call the mood of the markets. I could for some time see underlying patterns and capture general ideas of trends by market fundamentals and of course political/investor influences, but how to analyze it all yet capture the actions of a human driven market to a precise time is nothing short of earth shattering (with a touch of “I told you so” if I may add).

There is a natural explanation captured within the Socrates analysis, which to me boggles my mind as most algorithms, codes, formulas are not at all natural. I recall reading the night when you said the outputs of your models “came to you”. The computer was giving answers but how to translate them was the key. That moment must have been like no other.

Your market skills were proven, then you set out to offer this public service, commercial free no less, which naturally has pissed off the ones that wanted an unearned advantage, credentials, and limelight. Strange how the pure-hearted always come out on top.

During my formal engineering career, I have had a nose for finding the best tool, system or person for the job, and finding your work crushes other analysts, those who are now, as you have put it so eloquently “getting their face smashed into the sidewalk.”

I want you to know that I am one of the little people you seem to want to help. One that relies on the savings over time and can now guide not only my own future but others as well. I am fortunate because I had to save on my own, employers don’t give benefit packages to cripples, because if they did I wouldn’t have got the job. At investing I wasn’t bad at nailing a few market trends but I had to learn on my own since nothing I came across made any sense to me, but learning your system is dominating knowledge. I want you to know that I study your writings a good sixty hours a week because I may not be the sharpest knife in the drawer but there’s no sense in not trying. I’m not that good yet but I can’t get enough.

You gave me this confidence sir, so as petty as this letter is, I just want you to know that this is one life that is bettered because of your generosity and those people in your organization who must be some of the best to offer such an incredible gift.

I owe you one;

RH

REPLY: The entire objective of what is behind my motives here is to demonstrate that we can manage the economy if we understand its true nature and how everything is linked together. Granted, perhaps only an international hedge fund manager has such an opportunity to see a world from a very high altitude, whereas a domestic fund manager just looks at the local headlines and the latest cryptic ramblings from the Fed. In the international arena, you have to pay attention to everything everywhere. When I was in Singapore, the election took place the night before in the neighboring country. I had to know what took place and who was involved. I cannot say, oh let me get back to you on that, and then go ask Google. We have to pay attention to politics everywhere because that implicates COUNTRY RISK – the #1 criteria on investment strategy.

I have poured all my experience into training Socrates. I taught it HOW to analyze, and turned it loose upon the world. There is NOTHING out there like it. It cannot even be copied. It incorporates my personal trading experience of more than 50 years combined with my understanding of programming.

That said, my motive is to try to make a difference in this world for my own family in the future. This is not about making money for me. If that was my objective, I would be selling advertising and people’s names. We get a lot of requests to advertise on our sites. I reject that because people trust me and they might take that as some sort of endorsement. The best thing is not to accept advertising because I cannot stand behind what others are doing.

We will have an opportunity in 2032 to reshape society. It is my hope that the more people who witness Socrates will realize this is not me personally writing over 1,000 reports daily on instruments around the world. Then its accomplishments will prove that there is a hidden order behind the veil of chaos. When we run the Dow through our Chaos Models, a clear pattern is revealed confirming that this is no random walk. This is also why there are some who are desperate to prevent people from listening to Socrates or me. They want to keep the status quo. Others try to criticize me as if I was one of them and offering just personal opinion. They cannot get their head around that this is a computer that sees everything on a global scale, with the most sophisticated models in the world, and it can articulate completely on its own. It is something that will survive my death, which was my goal.

As they say, you can’t take it with you. So the answer — find a way to leave it behind!