Posted originally on Jun 25, 2024 By Martin Armstrong
COMMENT: Marty, you are by far the greatest long-term forecaster ever. I worked on the floor in 2007 when the market crashed on the exact day of your ECM. Everyone called it Armstrong’s Revenge. That was the very day of the high in the Shiller Real Estate Index for 2007. I know you say the short term is noise, and you are not known for short-term day-to-day forecasts, which you avoid. I put my house up for sale and just sold it based on your May 3rd post where you said, “Home prices in the US are near all-time highs. ” The realtor told me that sales have started to decline, and I sold the high.
Amazing.
Thank you
Mike
REPLY: There is always a time to buy and a time to sell. The short-term is just noise. If the Dow or Gold rallies for two weeks and then declines, that does not alter the long-term course until we have reached a turning point. But people want to see you as a forecaster daily, which is nonsense. The more someone trades, the lower their performance, and the risks increase exponentially. I have done the long-term because we were the largest institutional adviser. They are not day traders.
Yes, the 2007 high on the Shiller Index was the precise day of the Economic Confidence Model. So far, all the indicators have confirmed that we should have a recessionary trend into 2028 with this turn in the model on this wave. With the prospect of war on the horizon, people will contract in their spending because of uncertainty.
We have gone through a period of a boom, but with war on the horizon, people will pull back on their spending, and we will generally enter a recession from May 2024 into August 2028. The shift from the Blue to the Red states is still occurring. So, real estate in the blue states will fall in price rapidly. The decline will vary from place to place.
Now we should enter a BUYER’S market whereas from 2020-2024 was a SELLER’S Market.
I just returned from a trip to Venice, Italy, and a local tour guide informed me of the following about the Venetian Republic, some of which is similar and some of which is slightly different than what you’ve mentioned in the past:
1. it was the longest-lasting republic in the history of the world, lasting about 1100 years, abolished only by Napoleon’s threat, to whom it surrendered
2. its longevity was attributed to its ability to keep corruption in check, which it did by several methods: its senators were given one term, and were chosen by randomly drawing names out of a bowl, which contained the names of all the eligible citizens of Venice; in summary, about 200 of those randomly drawn names were chosen to be in a pool of candidates, of which only about 50 of those were chosen to be senators for that term, based on a selection interview.
3. the Venetian mouth, which you have represented in the past, was only used to submit names of people who were committing crimes against the republic, and any accusation had to be signed by two witnesses; if the accusation was false, then the accusers would/could be put to death.
I found #2 above particularly interesting, as it would be akin to the US randomly selecting names out of a phone book to be representatives or senators. . .
Take care,
L
REPLY: Yes, there has always been a rivalry as to the longest-lasting Republic claimed by Venice. That is true only because Rome from 750 BC to 476AD went through being ruled at first by kings, then a republic in 509 BC, and Imperial Rome began eclectically with Augustud being granted that title in 27 BC.
The Mouth of Truth began with anonymous tips, which were obviously abused and eventually reformed. Venice had its corruption. The Dige was for life, not one year. After he died, his estate was seized and investigated, and any uncovered corruption saw whatever assets were given to the Treasury.
I’m sure you also saw the famous “Bridge of Sighs” because once convicted of any crime, you crossed that bridge and went directly from the court to the prison or from their dungeon (from the torture room) to the court. Venice did not turn the other cheek.
What he did not tell you is that Venice was a quasi-fascist State insofar as the entire fleet was owned by the government, but there was some private ownership.
I’m unsure if he also told you that the Venetians were notorious pirates. Venice engaged in trade beginning from the late 8th Century, but this was the slave trade. During this very early period, Venice was engaged in the selling of slaves to the Arabs from the Carolingian-Sclaveian wars. The name of the “Slavic” people means servitude or slave. In the pactum Lotharii of 840 between Venice and the Carolingian Empire, Venice was finally forced to reform and promised not to buy Christian slaves in the Empire and not to sell Christian slaves to Muslims.
Venice was also at the head of the Fourth Crusade, but instead of going after the Muslims, they laid siege to and conquered Byzantium. This is a painting of the “Latin Rulers” conquering Byzantium.
The Venetians even issued Their versions of Byzantine coins between 1204 and 1261AD.
Enrico Dandolo (c. 1107–1205) was the doge of Venice from 1192 until his death. He is remembered for his corruption and shrewdness. He is the Doge who killed Christians in the Sack of Constantinople. Dandolo died in 1205 in Constantinople and was buried at the Hagia Sophia, which today is the Blue Mosque.
You probably visited the Cathedral in St Mark’s Square. The Turks stole St Mark’s body from Egypt, and the four horses you see stood on a chariot of Constantine the Great in Byzantium. They also liberated them.
Nevertheless, Venice became a powerful maritime power. Thanks to its bankers, its coinage became the dominant coinage and was only eclipsed by Florence. The fact that its coinage was recognized in international trade much like the US dollar is today confirms that in India, after imitating Roman coins for hundreds of years, they imitated Venetian gold ducats as well.
We have an extensive database, and the debt crisis of Venice, which nobody seems to want to talk about, is included within it. The Venetian gold ducat, meaning the Duke’s coin, was probably the most famous, thanks to the commercial and maritime power of the Venetian Republic. However, before 1284, Venice used the coinage of Byzantium in trade – namely the Byzantine gold hyperpyra. The Venetians imported goods from the East and sold them at a profit north of the Alps.
Byzantine emperor Michael VIII Palaiologos (1261-1282) backed the revolt of the Sicilian Vespers in 1282, and the cost of that war forced him to debase the hyperpyron. This was just one more in a series of debasements, and the Great Council of Venice responded with its own coin of pure gold in 1284. The practice of debasement has preceded him.
The major debasement of the Byzantine coinage had begun under Constantine IX Monomachos (1042-1055), with the purity of the gold coinage falling from 24 carats to 18 carats during his reign. In 1041, the year before he came to the throne, the Histamenon Nomisma had a weight of about 3.96 grams with a gold content of about 90%. The very first year in 1042, the gold content was reduced to 87.5%. Constantine IX did not take his responsibilities as Emperor very seriously. He seems to have assumed that the wealth of the nation was his to spend as he desired. He squandered money profoundly and this appears to have been the initial reason for the beginning of the debasement. The gold nomisma fell to 87%.
Minted in Venice from 1284 onwards, the Ducat competed with the florin, the reference currency of Florence, minted since 1252, which until then had dominated financial exchanges in Europe. It weighed 3,545 grams and was 98.6% fine gold, a very high purity for the time.
We saw banking start to rise in Northern Italy, especially during the 13th century. In 1282, the Republic of Venice organized most public finance activities under its Grain Office, which subsequently did a banking business on behalf of the government. It was the start of what we might call a Treasury today. It accepted time deposits from wealthy citizens as well as foreigners. Like the US Treasury, the Grain Office advanced loans to government departments and private enterprises. It was not until 1587 that Venice established a public bank on the Rialto. It would take until 1619 before it created a public Giro Bank, where funds were paid between accounts. That is what Giro means. I can write you a check, and we both have accounts at the same bank. Venice was too attached to trade, and the government sought to monopolize it. Venice clearly did not rival Genoa or Florence in capital management matters because it was essentially a quasi-fascist state where the government sought to engage in trade business, and thus, entrepreneurship was lacking. Interestingly, the city of Venice won an exclusion from the Sin of Usury and was allowed to trade with the Arabs, including the slave trade.
Venice was not a Papal State, and it often opposed the Vatican. Venice, Tuscany, and Modena formed an antipapal league to protect Parma, and France intervened. Peace was concluded in Venice on March 31st, 1644, and Pope Urban died soon afterward.
So, while Venice is the longest Republic, the practice of one term of office and out was prevalent in Nothern Italy with republics in general. As far as the random selection of a representative, this was taken from Athens. Here is a Kleroterion where names would be selected at random to be a representative in government and even to serve on a jury.
This is actually the root of why the three major Athenian philosophers were anti-democratic. The real objection was that these people were selected randomly and lacked experience, intellect, or any skill to be in charge of anything, no less the welfare of the people.
Posted originally on Jun 19, 2024 By Martin Armstrong
QUESTION: Mr. Armstrong, I don’t mean to be disrespectful, but it certainly seems obvious just how many governments are using Socrates. The head of Serbia has come out and said we could be in World War III in three months. Orban came out and said NATO was “getting closer to war” every week, and he refused to participate in the alliance’s long-term plan to aid Ukraine, which Budapest has called a “crazy mission.
My question is, do you think Socrates influenced the time for this?
FD
ANSWER: I understand what you mean. That is actually the same theory as to why they put me in prison to shut me up. They always assume that events can be influenced by merely forecasting them. They believe in random walks because they are incapable of seeing the patterns. They try to manipulate society by themselves, attempting to steer us through their hoops just as they have lied to start every single war starting with Vietnam. Yet, when they have constantly been wrong, and their Keynesian Economic Models are failing, all I have ever heard is that I have manipulated the world economy only because the forecasts were correct. That proved it was not the model, but my influence.
I have paid the price for my discovery, and so has my family. There are those who want to force the world to respond as they desire, and all I do is say here is the cycle, and this will be the outcome. They do not like that. This is the secret cycle as the New Yorker called it, because they do not teach cyclical theory in universities because we have to be able to manipulate the future.
I was turned off by formal education because, in real science and physics class, they said there is nothing that is random, but in economics class, I was told everything is random so they can manipulate us to create their perfect world. I figured someone was a liar.
I went with Einstein rather than the Marxists. Yes, at this stage, many governments, companies, and individuals around the world subscribe to our services. It is not that they do as the forecast states. Many who disagree still want to know what we are saying.
Many have come to realize that the forecasts are NOT my personal opinion. Real, intelligent people have realized that LONG-TERM forecasts are infallible because a single factor does not change the course of the trend. We are headed into war because we have chronic fiscal mismanagement, and they need war as a distraction and to provide the excuse to default, and then a new government gets to start fresh all over again. That becomes inevitable, but the trend is set in motion, and the government will NEVER reform to save the nation when they must relinquish power.
Most people DO NOT comprehend how forecasting works or the global economy within which we live. There is the short-term NOISE, such as the share market may be up 300 points today and then down 500 tomorrow. Some wish to try to judge you based on that nonsense. The Global Market Watch has demonstrated that there are tens of thousands of patterns that make the short-term appear to be random – but nothing is random, and only a fool makes such an argument. All the numerous short-term trends combine into a single voice, and that resounds loudly through the hall of time and circumstance. It is like politics. Raise taxes, and you get civil unrest. Just look at most revolutions – they are over taxation. Yet politicians will increase taxes always to retain their position of power, and that inevitably leads to revolution. All of the daily ups and downs do NOT alter the long-term trend for that is set in motion that stretches back decades that cannot be altered.
This is why our model is divided by TIME. You can be a 7-day bullish trend on the daily level that is no more than a minor reaction on the Weekly level. The long-term trend cannot be altered by a single event. It is forged in the furnace of life where everything from climate and war to economics and politics combine to make the trend. As they say, such people cannot see the forest because they are focused on a single tree.
Back at the 2011 World Economic Conference in Philadelphia, which you can see in the video, I stood up and warned that the War Cycle would shift in 2014, and that was indeed on target with the Ukrainian Revolution – Maidan of 2014. But in 2013, still one year in advance, I warned:
So many wars have occurred in Crimea since ancient times that the sum of all the parts enabled the computer to pinpoint Ukraine, where this would all begin. Here is a coin of Nero issued for his intervention into Crimea – the Bosporus at the time.
The LONG-TERM forecasts are much easier to do than where the Dow closes tomorrow. When I die, they should play one of my favorite songs – Sinatra’s My Way!I was lucky to see him live once at the Latin Casino in Cherry Hill, New Jersey. Indeed, I did it my way, and I would not change the past, for that is what has taught me what I know today.
Posted originally on Jun 6, 2024 By Martin Armstrong
COMMENT: Marty, I attended your Toronto Institutional session when the Bank of Canada had a table of 10 people. People would ask you what the central banks were looking at, and you would respond. Everyone then turned to see if they flinched. They were the best of times, as they say.
For us long-timers, it was no surprise that the Bank of Canada was the first to cut rates in turn with the ECM. I know you do not like to court the mainstream press, but one of these days, somebody has to have the guts to stand up and say that there is a business cycle.
Your legacy has made a difference. I share your goal to purge our governments of political manipulation that causes more harm to the people and the economy than anything else.
It was refreshing to see the Bank of Canada act with the ECM. You even put on the blog that June would be the opportunity for the central banks to cut rates. Well done, as always.
KW
REPLY: Yes, they were simpler days. It’s nice to see you are still active. Most of the major central banks know the Economic Confidence Model. It was good to see that the Bank of Canada acted in advance for the first time until waiting for the crash. It would be better if they could purge the fiscal side of these insane pretend experts like Janet Yellen and the Neocons. Then there will be a future worth leaving our grandchildren.
We now have universities inquiring about buying quantities of the books I have been publishing. It is great news that they are starting to introduce students to reality. I am working hard to finish the major book on the Economic Confidence Model, the New Yorker Magazine, called The Secret Cycle.
Posted originally on Jun 5, 2024 By Martin Armstrong
We would like to thank our invaluable AE community for gathering together in London for the Economic Confidence Model seminar. I heard some say that the annual event has become akin to a reunion of friends. It is indeed a distinct congregation of concurring intellects seeking truth.
If you missed the seminar, there is still an opportunity to purchase a virtual ticket. This option will provide you with a complete video of the event, as well as the slides displayed during the presentation and special reports.
Posted originally on May 28, 2024 By Martin Armstrong
Economics is well known for rather unrealistic theories based upon fundamentally unsound principles, such as the assumption that all things remain equal. Reality parts with academics whenever such assumptions are drawn to a foregone conclusion. However, greater false assumptions, which go unnoticed, lie at the foundation of so many theories in economics – primarily the assumption of linearity.
In our thinking process, we all are trapped by the Aristotelian sequence of logic – if X takes place, then Y must follow. Unfortunately, we think linearly and, as such, most theories seek to embellish this very basic assumption. The financial world honestly wants to believe in simplistic notions. Raising interest rates and demand will subside along with inflation is one false linear assumption. Man prefers to believe in linear relationships and systems because anything beyond two variables becomes far too complex for rational thought processes.
Man’s natural tendency toward linear thinking has indeed created many heated battles. The arguments between supply and demand-side economics is one such example. Given the assumption of a linear economy, demand-side economists argue that the economy can be controlled through the manipulation of government spending and interest rates. In effect, demand-side economics seeks to use the consumer (demand) as a club to beat capital over the head. Yet these same demand-side economists claim that supply-side economics benefits the rich at the expense of the poor. Strangely enough, throwing the consumer out of work and causing higher unemployment to affect lower demand is the core of demand-side economics. It is hard to see how the demand side benefits the poor at the expense of the rich. The supply-side economist argues that there should be less government intervention in demand. Instead, the government should stimulate the economy by encouraging greater output through supply stimulation.
Both sides have identified two extremes within a non-linear system, even though their arguments, based upon a linear assumption, assume that the other is totally wrong. If we look at just the last 10 years of economic activity, we can clearly see changes within the infrastructure that provide a period when each form of economic management would indeed be appropriate.
Looking at the period 1976–1980, it would be difficult to label this period as anything other than an inflationary spiral led by demand. Raising interest rates would be appropriate under such conditions when demand flourishes wildly beyond its normal capacity. Hoarding and speculation were in full bloom. Therefore, one should employ “demand-side” economics when demand is, in fact, out of control.
Nevertheless, in the post-1986 era and particularly since the ’87 crash, speculation is hardly the issue. We do not find excessive demand leading to the hoarding of commodities, as was the case leading into 1980. Yet, governments around the world are still employing demand-side economics to curb inflation, which is being caused by real shortages in labor and commodities. Clearly, in this case at least, supply-side economics makes much more sense. If interest rates continue to rise, the world economy will be threatened by a sharp and severe recession. However, the shortages on the supply side in energy, agricultural, and base metals will not be corrected by raising interest rates. Higher interest rates will not cause the weather to return to normal. Higher interest rates will certainly not encourage miners to open new mines. Higher interest rates will also not cause a reversal in trend within the energy sector where exploration has been cut by more than 50% in the last two years.
Supply-side economics is as valid as demand-side economics. Everything within the system has a time and place because the system itself is non-linear. The chart provided illustrates our Theory of Non-Linear Intervention. This theory is very simple and based upon actual observation.
The standard economic assumption under demand-side economics is that raising interest rates will lower demand and inflation. Continually raising interest rates does not prevent inflation. At some point in the system, confidence breaks down, and higher costs in interest rates only add to the costs of production and doing business. Eventually, this spurs inflation instead of reducing it. They attempted to go to negative interest rates, trying to stimulate inflation by punishing people if they failed to spend their money. This attempt failed because they overlooked the simple fact that people will hoard when worried about the future.
The evidence of this is all the hoards of ancient Roman and Greek coins that reveal in times of uncertainty, people simply buried their money for a rainy day. The very basic assumption that the system is linear is obviously incorrect. The business cycle exists throughout all times and portrays the system as non-linear. If any effect is taken to extremes, the exact opposite effect emerges. This is the result of non-linear intervention. Each economy possesses a different infrastructure. Consequently, the threshold where interest rates will cease being anti-inflationary and transform itself into the catalyst of inflation resides at different levels in each economic system. Differences in the value of labor, taxation, political systems, and market mechanisms must be taken into account.
In conclusion, government intervention, which seeks to manage the economy in an efficient manner, always fails because they are conflicted with self-interest. They are the biggest debtor within society. Attempts to only manage the economy by demand-side economics ignore the free market entirely. Intervention cannot possibly work when government remains in the dark about how the economy even functions. They fail to comprehend the direction and cause of inflation or deflation. The first step is recognizing that there is a business cycle, the second is to accept that a cycle exists, and third, we merely try to prepare for the downturns exactly as David advised the Pharaoh – seven years of plenty v seven years of drought.
“I named my computer model after Socrates because the oracle of Delphi had said that he was the smartest man in Greece. He tried to prove the oracle wrong and the process proved it to be correct. He was put on trial and sentenced to death because he knew too much. My computer has taught me a lot in geopolitics, we had a major bank in Lebanon in the 1980’s and they asked if I could create a model on the Lebanese pound. I put the data in the computer and it came out and said their country would fall apart in 8 days. I thought something was wrong with the data. When I told the client, they asked me what currency would be best, and I said the Swiss Franc. Eight days later the civil war begn. Obviously they saw the movement of money themselves and came to me for the timing. The same thing happened with a client in Saudi Arabia who was a big shipper. He called me asking me what gold would do tomorrow because Iran was going to begin attacking shipping in the gulf. So once again, there was advanced information about war. By 1998, I understood how the computer was forcasting such events. I warned in June at our London conference that Russia was about to collapse. The London financial Times had snuck into the back of the room and reported that forecast on the front of their newspaper on June 27th 1998. Russia collapsed about 6 weeks later.”
Posted originally on May 25, 2024 By Martin Armstrong
Like to thank everyone for attending the London ECM Conference. We apologize that we were only able to accommodate a small audience. The venues in London are much smaller than what we can do in Orlando, It was so nice to be back in London after so many years.
I have created this site to help people have fun in the kitchen. I write about enjoying life both in and out of my kitchen. Life is short! Make the most of it and enjoy!
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