Posted originally on Apr 8, 2025 by Martin Armstrong
Some believe that Donald Trump is deliberately attempting to cause a sharp downturn in equities to force a flight into treasuries. If so, the Federal Reserve would have more of a reason to slash interest rates—Trump’s longstanding desire. Trump has stated that the markets are undergoing an “operation” of sorts, but I would not underestimate his long-term plan here.
Trump openly states that he wants companies to move manufacturing to the US to avoid tariffs. This will also promote domestic trade as companies will seek to avoid levies. US farmers will be incentivized to sell domestically, which could lower the price of groceries much to the pleasure of the American public.
The idea that a decline in the stock market could actually cause a flight into treasuries sounds counterintuitive on the surface, but when you understand how capital flows and confidence operate globally, it makes perfect sense. Capital moves globally and always seeks the safest place to park. Unexperienced and retail traders tend to panic at larger downturns and sell off.
Everything comes down to CONFIDENCE. A downturn in equities could cause a kneejerk reaction into treasuries because people still trust that the government will make good on their payments. Big institutional money began fleeing the public sector for the private sector years ago. What we have seen since the implementation of Trump’s tariffs is a new demand for treasuries.
The 10-year treasury yield dropped from 4.25% in late March 2025 to 4.01% by April 1, while the two-year fell to 3.68%. Billions have fled into the bond market since these tariffs were announced. JPMorgan, for example, said that there is now a 60% risk of a recession and is shifting toward the bond market.
Lowering treasury rates will make homes more affordable by decreasing mortgage rates. Individual nations were fleeing US treasuries, creating a massive risk for an eventual default. Suddenly, at least temporarily, the stock market no longer seems like a safe place to park money. The Trump Administration first showed the world that it was cutting spending and attempting to reduce the deficit. A downturn in rallies DOES NOT guarantee a rally in the bond market, but we are witnessing a short-term flow into treasuries. However, the computer has warned that 2028 will mark a major turning point in confidence where any remaining confidence in government vanishes. For now, we may enjoy a temporary decline in treasury yields due to these tariffs.
Posted originally on Apr 7, 2025 by Martin Armstrong
QUESTION: Mr. Armstrong, you have said that we have lost manufacturing because of taxes rather than tariffs. I believe you also said that a trade deficit is not a bad thing under your capital flow analysis. Can you please explain this? The press seems to say the opposite, but they are political fake news.
Thank you
GG
ANSWER: There are two account balances: the capital account and the trade/current account. Just because we have a trade deficit does not mean that it is negative for the economy. That is offset by the capital account, which is money coming in that is (1) foreign capital investing in the USA, from treasuries, shares, to real estate, and (2) US companies bringing capital home. Under Ronald Reagan, we had a rising trade deficit, but the economy was booming.
Volcker’s insane interest rates attracted foreign capital, causing the dollar to rise dramatically and sending even the British pound to nearly par in 1985. As the dollar rose, that brought down inflation, but it attracted foreign capital inflows. Interest expenditures flow through the current account when they flow outside the USA. That had nothing to do with goods or even services. It was interest payments on the debt.
The corporate tax rate in Michigan is a flat rate of 6% on federal taxable income (with certain adjustments) for C-corporations under the Corporate Income Tax (CIT), which replaced the Michigan Business Tax in 2011. The City of Detroit imposes a corporate income tax on businesses operating within its jurisdiction, a 2% tax on net income for corporations, and Michigan’s state corporate income tax rate of 6%.
If you look at where the US manufacturing hubs were, the local and state income taxes on top of federal taxes were the primary cause for manufacturing fleeing the USA. Add the fact that the Supreme Court ruled that because the federal income tax did not expressly exempt overseas income, that stupid decision meant Americans were subject to worldwide income on every level. I left New Jersey because if I held a conference in Hong Kong, I had to pay New Jersey 10% on top of the Feds for what? We held a conference in Philadelphia, and never again would I ever hold one there, for then I had to pay Philadelphia taxes, although I did not live or work there.
The Democrats make it sound like these corporations are greedy, and they go offshore because they get to pay $10 an hour instead of $20. That is the LEAST of the problem. It is always the taxes. You need accountants, and then lawyers, all to make sure to have crossed every “t” and dotted every “i” and all of these expenses are far more than anything you pay an employee. Now the latest is auditing you to see if you have “contract” employees instead of employees, since you do not take out taxes and match taxes on a contract employee. I just went through that audit, and it cost me $25,000 IN LEGAL AND ACCOUNTING FEES to prove I did not owe anything.
When the government looks in the mirror, it sees itself as all-powerful. It has no idea about humanity. It’s always about them and never the people. Just look at all the states where manufacturing used to be. They left, and it was not because they were paying someone else cheaper wages. The Democrats have blamed the “rich” and corporations for the damage that they have done to society, all for their corruption and greed.
The current account of the United States is a critical component of its balance of payments, reflecting the nation’s economic interactions with the rest of the world. It comprises four main elements. As you look at this list, you will see what I am talking about that this is by no means simply goods and services. All dividends, interest, and profits from multinational corporations that flow out to foreign investors. Thus, selling US Treasuries to foreigners expands the “trade” deficit as interest is paid. Since China has 10% of the US national debt and interest expenditures of $1 trillion, in theory, we send them $100 billion in interest. Tariffs are not going to reduce that, but they could result in selling domestic assets and returning that investment home, which would then go through the Capital Account, reducing the Trade/Current Account Deficit. The Press and even most Congressmen do not understand this.
1. Trade in Goods and Services (Net Exports)
Goods:
Exports: Physical products sold abroad (e.g., machinery, aircraft, agricultural goods).
Imports: Physical products purchased from other countries (e.g., consumer electronics, oil, automobiles).
The U.S. typically runs a trade deficit in goods due to high imports.
Services:
Exports: Financial, educational, tourism, and intellectual property services provided globally.
Imports: Services purchased from abroad (e.g., foreign travel, software licensing).
The U.S. often has a surplus in services, partly offsetting the goods deficit.
2. Primary Income (Net Income from Abroad)
Investment Income:
Earnings from U.S.-owned foreign assets (e.g., dividends, interest, profits from multinational corporations).
Payments to foreign owners of U.S. assets (e.g., interest on Treasury bonds held by foreign governments).
Compensation of Employees:
Wages paid to foreign workers in the U.S. (outflow).
Wages earned by U.S. residents working abroad (inflow).
3. Secondary Income (Net Current Transfers)
Government Transfers:
Foreign aid, grants, and donations (e.g., U.S. financial assistance to other countries).
Private Transfers:
Remittances sent by foreign workers in the U.S. to their home countries (outflow).
Gifts or inheritances received from abroad (inflow).
Current Account Balance
The sum of these components determines whether the U.S. has a surplus or deficit:
Deficit: The U.S. has run a persistent current account deficit, driven by:
A large goods trade deficit (imports > exports).
Outflows from secondary income (e.g., foreign aid, remittances).
Partial offsets come from services surpluses and primary income (e.g., returns on U.S. overseas investments).
Key Implications
Reflects the U.S. role as a net borrower globally, financing consumption and investment through foreign capital inflows.
Highlights structural economic factors, such as reliance on imports and the dollar’s role as a reserve currency, and exporting dividends and interest on US investments.
Posted originally on Apr 7, 2025 by Martin Armstrong
QUESTION: Mr. Armstrong, you have said that we have lost manufacturing because of taxes rather than tariffs. I believe you also said that a trade deficit is not a bad thing under your capital flow analysis. Can you please explain this? The press seems to say the opposite, but they are political fake news.
Thank you
GG
ANSWER: There are two account balances: the capital account and the trade/current account. Just because we have a trade deficit does not mean that it is negative for the economy. That is offset by the capital account, which is money coming in that is (1) foreign capital investing in the USA, from treasuries, shares, to real estate, and (2) US companies bringing capital home. Under Ronald Reagan, we had a rising trade deficit, but the economy was booming.
Volcker’s insane interest rates attracted foreign capital, causing the dollar to rise dramatically and sending even the British pound to nearly par in 1985. As the dollar rose, that brought down inflation, but it attracted foreign capital inflows. Interest expenditures flow through the current account when they flow outside the USA. That had nothing to do with goods or even services. It was interest payments on the debt.
The corporate tax rate in Michigan is a flat rate of 6% on federal taxable income (with certain adjustments) for C-corporations under the Corporate Income Tax (CIT), which replaced the Michigan Business Tax in 2011. The City of Detroit imposes a corporate income tax on businesses operating within its jurisdiction, a 2% tax on net income for corporations, and Michigan’s state corporate income tax rate of 6%.
If you look at where the US manufacturing hubs were, the local and state income taxes on top of federal taxes were the primary cause for manufacturing fleeing the USA. Add the fact that the Supreme Court ruled that because the federal income tax did not expressly exempt overseas income, that stupid decision meant Americans were subject to worldwide income on every level. I left New Jersey because if I held a conference in Hong Kong, I had to pay New Jersey 10% on top of the Feds for what? We held a conference in Philadelphia, and never again would I ever hold one there, for then I had to pay Philadelphia taxes, although I did not live or work there.
The Democrats make it sound like these corporations are greedy, and they go offshore because they get to pay $10 an hour instead of $20. That is the LEAST of the problem. It is always the taxes. You need accountants, and then lawyers, all to make sure to have crossed every “t” and dotted every “i” and all of these expenses are far more than anything you pay an employee. Now the latest is auditing you to see if you have “contract” employees instead of employees, since you do not take out taxes and match taxes on a contract employee. I just went through that audit, and it cost me $25,000 IN LEGAL AND ACCOUNTING FEES to prove I did not owe anything.
When the government looks in the mirror, it sees itself as all-powerful. It has no idea about humanity. It’s always about them and never the people. Just look at all the states where manufacturing used to be. They left, and it was not because they were paying someone else cheaper wages. The Democrats have blamed the “rich” and corporations for the damage that they have done to society, all for their corruption and greed.
The current account of the United States is a critical component of its balance of payments, reflecting the nation’s economic interactions with the rest of the world. It comprises four main elements. As you look at this list, you will see what I am talking about that this is by no means simply goods and services. All dividends, interest, and profits from multinational corporations that flow out to foreign investors. Thus, selling US Treasuries to foreigners expands the “trade” deficit as interest is paid. Since China has 10% of the US national debt and interest expenditures of $1 trillion, in theory, we send them $100 billion in interest. Tariffs are not going to reduce that, but they could result in selling domestic assets and returning that investment home, which would then go through the Capital Account, reducing the Trade/Current Account Deficit. The Press and even most Congressmen do not understand this.
1. Trade in Goods and Services (Net Exports)
Goods:
Exports: Physical products sold abroad (e.g., machinery, aircraft, agricultural goods).
Imports: Physical products purchased from other countries (e.g., consumer electronics, oil, automobiles).
The U.S. typically runs a trade deficit in goods due to high imports.
Services:
Exports: Financial, educational, tourism, and intellectual property services provided globally.
Imports: Services purchased from abroad (e.g., foreign travel, software licensing).
The U.S. often has a surplus in services, partly offsetting the goods deficit.
2. Primary Income (Net Income from Abroad)
Investment Income:
Earnings from U.S.-owned foreign assets (e.g., dividends, interest, profits from multinational corporations).
Payments to foreign owners of U.S. assets (e.g., interest on Treasury bonds held by foreign governments).
Compensation of Employees:
Wages paid to foreign workers in the U.S. (outflow).
Wages earned by U.S. residents working abroad (inflow).
3. Secondary Income (Net Current Transfers)
Government Transfers:
Foreign aid, grants, and donations (e.g., U.S. financial assistance to other countries).
Private Transfers:
Remittances sent by foreign workers in the U.S. to their home countries (outflow).
Gifts or inheritances received from abroad (inflow).
Current Account Balance
The sum of these components determines whether the U.S. has a surplus or deficit:
Deficit: The U.S. has run a persistent current account deficit, driven by:
A large goods trade deficit (imports > exports).
Outflows from secondary income (e.g., foreign aid, remittances).
Partial offsets come from services surpluses and primary income (e.g., returns on U.S. overseas investments).
Key Implications
Reflects the U.S. role as a net borrower globally, financing consumption and investment through foreign capital inflows.
Highlights structural economic factors, such as reliance on imports and the dollar’s role as a reserve currency, and exporting dividends and interest on US investments.
Posted originally on Apr 4, 2025 by Martin Armstrong
COMMENT: Marty, I have now heard it all. When I asked why the stock market crashed, I was not told it was tariffs. I was told that “Armstrong told his clients there would be a Panic at the end of March to the first week of April. All the huge wealth funds are Armstrong’s clients.” I guess they flipped a coin. Heads, Trump did it; tails, Armstrong did it. I don’t think you will ever escape blame.
We need another WEC, ASAP.
Joe
REPLY: Look, the computer from the start of this year pointed to the last week of March and the first week of April. That was well before the tariff announcement. Trump’s tariffs are opening doors, not closing them. Maybe the smart ones figured that out and turned to me. These people can blame me as always. I think the difference this time is that we have opened Socrates so the entire world can see it. BTW, while Tucker is blocked in China, we are not. Everyone knows this is not my personal opinion.
This is the ONLY fully functioning AI computer with over a 40-year track record. I have often heard that they may not do what we forecast, but they certainly do not want to be on the opposite side. We warned that the AI stocks had peaked. They just got overdone at the start of this year. The computer projected this crash, for as Maggia once said, It’s Just Time.
Many who hate my guts still subscribe to Socrates to hate the next forecast. I subscribe to the NYT and the Washington Post, NOT because I believe them, but because I want to know the next fake news they are reporting.
Just because some major fund takes Socrates does not guarantee they follow what it says!
Posted originally on Apr 1, 2025 by Martin Armstrong
England has fallen. Politicians permitted open borders and permanently altered society. England is no longer a Christian nation. They have abandoned their core traditions and beliefs for outsiders who vote for liberal policies. The UK is now debating implementing new sentencing guidelines to establish a two-tiered justice system that will ensure white, straight, Christian men receive the harshest sentences.
Under new guidelines, judges and magistrates will obtain pre-sentence reports for offenders from minority groups. They will be asked to consider an offender’s religion, race, and sexuality to ensure their treatment is favorable.
Justice Secretary Shabana Mahmood is reviewing the blatantly biased policy. “The guideline states that a pre-sentence report will normally be considered necessary for these cohorts. A pre-sentence report can be instrumental in assisting courts in the determination of their sentence. But the access to one should not be determined by an offender’s ethnicity, culture or religion,” she stated. “As someone who is from an ethnic minority background myself, I do not stand for differential treatment before the law like this.” You know the situation is dire when even the liberals are questioning its validity.
Sarah Jones, the industry minister, declared that England cannot have a two-tiered justice system. “We disagree with this decision. I think it’s really important in the country that people are trusting in the justice system that we have and that means you can’t have a two-tier system, it has to be fair, it has to be equal to everybody and so we have asked them to think again about this guidance,” Jones stated.
The Labour Party announced it would increase migrant spending by 30% this year. The majority of mayors in major cities are Muslim, which is not a negative but a sign of how society has changed. Muhammad has been the most popular baby boy name in the UK in recent years. The UK has lost its identity and is no longer a Christian nation. Pew Research Center believes that Muslim women will have more children than Christian women by 2035, and Islam could become the most followed religion in the world. Build Back Better nations are becoming unrecognizable as the very essence of their cultures and traditions is challenged.
I lived in London for years and fell in love with the city, but it has drastically changed, and I would not want to return as a permanent resident. Politicians are willing to change the rule of law to punish their own citizens. Britain is voting itself into extinction as repopulation theory destroys their culture and the nation they once knew.
Posted originally on Mar 31, 2025 by Martin Armstrong
The USCongressional Budget Office is warning that the federal deficit has hit a point of no return. It is far too late to cut wasteful government spending. Politicians have kicked the can down the road for far too long and left us with a financial system held up through perpetual borrowing that cannot be reversed.
The CBO’s long-term forecast shows the federal deficit rising to 7.3% of GDP by 2055, but the figure is currently at 6.2% as of 2025 and this is an optimistic report. In contrast, the 30-year average from 1995 to 2024 was 3.9% of GDP. Public debt is projected to hit 156% of GDP by 2055, up from the 100% of GDP we face today.
Now the CBO mentioned that Trump’s tariffs could negatively impact the economy but we reached the point of no return years ago. Trump cannot be blamed for the current situation in the least. “Mounting debt would slow economic growth, push up interest payments to foreign holders of U.S. debt and pose significant risks to the fiscal and economic outlook,” the Long-Term Budget Outlook: 2025 to 2055 stated.
The Baby Boomer generation is at or nearing retirement and Social Security benefits are currently at 5.2% of GDP. The CBO believes this will reach 6.1% of GDP in 2055 but fail to recognize the fund is drying up. The Ponzi Scheme will come crashing down.
Interest expenditures alone have hit 3.2% of GDP as America. In 2024, the US spent $881 billion simple to finance its massive debt, and that figure is projected to reach $1.8 trillion by 2035. We spend more on servicing debt than we do on defense spending at this point.
Raising taxes cannot solve this massive issue, but that will not prevent the government from attempting to extort the people to cover their fiscal mismanagement. The government knows it is trapped and will continue to hold off on paying down their debt as long as possible. Worse still, other nations are decreasing their investments in Treasuries as we have seen with China and Russia. Japan is our main buyer now but they have their own colossal problems.
The debt crisis is global. America is far from the only nation facing an outright default, and as I have warned, we will see the pieces crumble one by one with America being the last frontier. This is precisely why Europe wants war because they are attempting to delay the inevitable collapse. Some believe they can confiscate Russian natural resources and save the day, but that is simply neocon fanfiction.
The ECM has pinpointed key turning points in the global economy, and the next phase of this crisis is unfolding right before our eyes. The sovereign debt crisis is inevitable, and as we approach 2028–2032, we will see capital flow away from the West once confidence in government collapses.
Posted originally on Mar 31, 2025 by Martin Armstrong
The US Department of Health and Human Services (HHS) announced plans to cut its workforce by a quarter, eliminating 10,000 positions. Robert F. Kennedy Jr. has vowed to gut the entire agency in his effort to Make America Healthy Again, vowing that eliminating excess bureaucracy will allow the agency “to do more with less.”
The agency plans to cut $11 billion in public health funding, and while Kennedy admits there will be a “painful period” ahead, one must look at the numbers and realize that these inflated agencies have not led to improved health care. “All of that money,” Kennedy said of the department’s $1.7 trillion yearly budget, “has failed to improve the health of Americans.”
America is one of the sickest nations in the developed world. Critics believe that these cuts will damage public health, but America is spending nearly 18% of its GDP on health care initiatives without results. The average American will not live to see 80 years of age. The average life expectancy stands around 76.4 years, according to the CDC, with women living an average of 79.3 years and men expiring sooner at 73.5. Those figures have been steadily declining each year. In comparison, the global average is 82.5 years.
The US ranks 32 out of 38 OCED nations for life expectancy. Yet, the US spends far more per capita on health compared to other developed nations. In 2023, America spent $13,432 per capita. In comparison, Switzerland and Germany, the second and third highest spenders, only pay a bit over $7,000 per capita and have healthier populations.
Young Americans (25-29) are dying at a rate 3X higher than their peers in advanced economies. Kennedy’s main platform has been to speak on behalf of the children of America, who are facing increased risks of illness compared to past generations. Kennedy claims 66% of children suffer from some form of a health condition, with other estimates putting this figure closer to 40%.
The Biden Administration increased the health department budget by 38% and inflated the workforce by 17%. Additional funding did not address the root causes of America’s health epidemic. Kennedy plans to consolidate 28 divisions into 15, and will cut regional offices from 10 to 5. A more cohesive agency will provide a “new era of responsiveness and a new era of effectiveness,” as we cannot continue funding measures that are not producing results.
Posted originally on Mar 31, 2025 by Martin Armstrong
Two men were pulled over while driving on I-20 in Texas, carrying $250,000 worth of gold bars. US law permits and encourages law enforcement to confiscate assets. Civil asset forfeiture enables the government to simply seize assets and declare that the owner is guilty of money laundering before any due process occurs.
“We have to be able to prove what that criminal activity was, in other words how they got the money that they laundered. A lot of times that’s hard when your case starts with a traffic stop,” DA Tonda Curry said. Officers and drug sniffing dogs searched the men and their vehicle but found nothing aside from the gold. Curry initially attempted to pin the men with money laundering charges but could not make a case. The DA then determined that the men were involved in some criminal organization “that defrauds the elderly with investment-type scams.”
Since they were instantly charged with a crime, the law permitted the officers to confiscate the gold. “So he can’t give it back to them and let them go on down the road, it’s not theirs,” the DA explained, saying that charging the men with a civil case would be easier to prove than an actual criminal investigation.
“Even if I can’t say exactly what [crime] it was, why should they be able to profit off of it? Why should it not go back into fighting crime in our communities?” Curry said.
Civil asset forfeiture is blatant legal theft. The lawyers for the men received 24 oz of the stolen gold, and the county confiscated the rest that was worth an estimated $195,000.
“For a small county like ours, it’s a big, big relief for the taxpayers,” she said. “Even if I can’t say exactly what [crime] it was, why should they be able to profit off of it? Why should it not go back into to fighting crime in our communities?”
The entire premise of civil forfeiture is that the government can seize your assets without even charging you with a crime, let alone convicting you in a court of law. The government deploys law enforcement to act as their mob collectors, and again, no crime needs to be committed. This happens regularly, and the person who happens to be in the wrong place at the wrong time is immediately GUILTY until proven innocent. They have taken people off trains, planes, traffic stops– you name it–and accused them of criminal activity. If the government finds you with a tangible asset they want, they can take it from you, and it is then your responsibility and obligation to prove that you did not commit a crime.
The government has openly taken gold, cash, homes, cars, and even businesses in the name of money laundering, or in this case, an unnamed crime that they did not need to prove because the men happened to be Chinese nationals. So they stole a quarter-million from them and deported them back to China, then cheered that the funds would help the local government.
Law enforcement agencies no longer act as protectors of the public but as revenue collectors, seizing property from people who, in many cases, have done nothing wrong.
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