QUESTION: Hi,
I am not sure if I understand how it would work but obviously, this is highly hypothetical today.
If the reserve currency is SDR, we still need debt denominated in SDR and a very large and deep market accessible by investors to park money there.
If individual countries have their own currency and issue their debt in that currency, or SDR for that matter, is it not just the same as the EUR today! Credit risk has to match with the currency of the central bank if I understand the shortcoming of Europe today.

PH

ANSWER: You are correct. As soon as you borrow in another currency, you will then encounter FOREX risk. Third world countries have been borrowing in dollars extensively. As the dollar rises, we will see defaults BECAUSE of the currency risk.  It would not matter if countries borrowed in dollars or SDRs, they will encounter the same currency risk. At the very least, countries must be prohibited from borrowing in foreign currencies, or preferably, governments should be prohibited from borrowing PERIOD! The Roman Empire lasted for nearly 1,000 years. They neither had a central bank nor a national debt. There are other ways to restructure the global financial system. I am preparing the full solution that we need to examine based upon history and what has worked and what has failed

QUESTION: Was it Herod Agrippa who ruled Jerusalem when Jesus was Crucified? Someone said his coins are common.

ANSWER: No. It does get confusing. Herod Agrippa I (born 11BC; ruled 41 – 44 AD) after Jesus was crucified. Agrippa I was the last King of Judea with the royal title reigning over Judea. He was also the father of Herod Agrippa II, who was the last King from the Herodian dynasty. Herod Agrippa I  was the grandson of Herod the Great and son of Aristobulus IV and Berenice. He was born Marcus Julius Agrippa being named in honor of Roman general and statesman Marcus Vipsanius Agrippa, who had been the right hand of Emperor Augustus. Herod Agrippa I is the king named Herod in the Acts of the Apostles 12:1 (Acts 12:1). The Jewish historian Josephus refers to him as “Agrippa the Great”.

Josephus tells us that, following the murder of his father, Herod Agrippa I was sent by Herod the Great to the imperial court in Rome. There, Tiberius became very fond of the boy and he was educated alongside his own son Drusus with whom he became good friends. He also became a close friend of the future Emperor Claudius. On the death of Drusus, Agrippa, who had been recklessly extravagant and was deeply in debt, was obliged to leave Rome.

All the Judean kings of the Herodian Dynasty issued small bronze coins. They did not put their portrait on these small bronze coins They are fairly common. The Herod you are thinking about was Herod III Antipas.

QUESTION: Was the first Jewish revolt about taxes? I think you said it was previously.

HJB

ANSWER: Correct. While there were tensions over religion, what really began the crisis was taxation. Later, the death of Nero and religion came into play about 2 years after it began. It is true that the rebellion of Judaea began in the year 66 AD, originating in ethnic and religious tensions but Rome had generally allowed every region to keep their own gods. In the case of Judaea, they were not fond of using coins with images of various gods. The crisis truly erupted due to anti-taxation protest that resulted in attacks upon Roman citizens.

The Roman governor, at that time, was Gessius Florus. As the rebellion over taxes began, he responded by plundering the Jewish Temple seizing wealth to compensate for the decline in taxation. The following day he arrested numerous senior Jewish figures who were not directly connected to any violence. Meanwhile, on September 22nd, 66AD, Emperor Nero created the Legio Legio I Italica. He also appointed Titus Flavius Vespasian legate of the army of Judea and in command of three legions — V Macedonica, X Fretensis and XV Apollinaris. These actions resulted in justifying a large-scale rebellion which began in October 66AD. The rebels were able to annihilate the Roman garrison (a cohort of Legio III Cyrenaica) in Jerusalem resulting in King Herod Agrippa II and all Roman officials fleeing from Jerusalem for their lives. Meanwhile, Sicarii captured the fortress of Masada overlooking the Dead Sea.

With the fall of Jerusalem, Cestius Gallus, legate of Syria, marched into Judea and lead a Roman army of 30,000 men to put down the Jewish rebellion. At its core was Legio XII Fulminata, plus 2,000 picked men from the other three Syrian legions, six more cohorts of infantry, four alae of cavalry, and over 14,000 auxiliaries. The auxiliaries were furnished by Rome’s eastern allies, which included Herod Agrippa II and two other client kings, Antiochus IV of Commagene and Sohaemus of Emesa, who lead their forces (largely archers and cavalry) in person.

Gallus lead his main force down the coast from Caesarea via Antipatris to Lydda, detaching other units, by land and sea, to neutralize the rebel strongholds at Joppa, Narbata and the Tower of Aphek. With Galilee and the entire Judean coast in his hands, Gallus turned inland and marched on Jerusalem but broke-off the siege in November 66AD. As he withdrew his forces to retire to winter quarters, the Jewish rebels ambushed and defeated him. Some 5,300 Roman troops are killed in the battle. The Jewish rebels now captured his pack animals and his artillery which they used during the next siege by Titus four years later. This was a major victory for the Jewish rebels and it became a major disgrace of the Roman military. The Jewish rebels captured even the eagle standard of Legio XII Fulminata. Gallus abandoned his own troops in disarray and fled for his own life to Syria.

During 66AD, the Jews thus took control of Jerusalem and began to issue their own coins. The Judean Free Government was formed in Jerusalem including former High Priest Ananus ben Ananus, Joseph ben Gurion and Joshua ben Gamla elected as leaders. Yosef ben Matityahu was appointed the rebel commander in Galilee and Eleazar ben Hanania as the commander in Edom. Later, in Jerusalem, an attempt by Menahem ben Yehuda, leader of the Sicarii, to take control of the city failed. He was executed and the remaining Sicarii were ejected from the city. Simon bar Giora, a peasant leader, was also expelled by the new government.

Vespasian was given the task by Nero of crushing the rebellion in Judaea province. His son Titus was appointed as second-in-command. Vespasian invaded Galilee in the fall of 67AD. He avoided a direct attack on the reinforced city of Jerusalem. Instead, Vespasian launched a directed campaign to crush rebel strongholds and punish the population. Within several months Vespasian and Titus took over the major Jewish strongholds of Galilee and finally overran Jodapatha, which was under the command of Yosef ben Matitiyahu, as well as subdued Tarichaea, which brought an end to the war in Galilee.

With the death of Nero in 68AD, Rome moved into a Civil War. Vespasian became the rival general to ain over Otho and Vitellius. Now the Judea situation was a matter of critical importance. Vespasian became emperor in 69AD and the defeat of the Jewish Revolt was critical for if they succeeded, then other provinces would rally against Rome as well.

The first Jewish coins boasted the slogan: “For the Freedom of Zion.” The Jewish War for Independence last 4 years covering the period of 66-70AD until the conquest of Jerusalem. Recently, a bronze coin was discovered in Israel from the fourth year of the failed rebellion against Rome which reflected the change in attitudes. The coins of Year 4 saw a change in the slogan to “For the Redemption of Zion.” The Temple was sacked in 70AD and the clean-up skirmishes followed which took several years. The historian Josephus tells us of the last stand at Masada which took place around 73-74 AD.

Year 1 (66/67 CE) Jewish shekels and half shekels are scarce, year 2 (67/68 CE) shekels and half shekels and year 3 (68/69 CE) shekels and half shekels are relatively common, year 4 (69/70 CE) shekels and half shekels and year 5 (70 CE) shekels are extremely rare.

Virtually EVERY revolution throughout history appears to emerge from a tax rebellion. It will often expand into ethnic or religious slogans, but at the core, it is always taxation. The American revolution was the class – No Taxation Without Representation. Yet the greed of politicians inevitably leads to their own destruction for they cannot resist spending other people’s money.

QUESTION: Mr. Armstrong; You said that over 60% of graduates cannot find a job on what they have a degree in. Is there any recommendation you would care to make on how to advise one’s children on what subject to pursue a degree?

Thank you

DF

ANSWER: Engineering and Programming. I have NEVER met a CFO yet who had a degree in economics. The overwhelming degree I encounter as a CFO is usually engineering. The reason this seems to be the best degree is it teaches you HOW to solve a problem whereas economics tells you the solution, which has never worked anyhow. Then take programming. This will be the essential skill in the future. Not that you write code for generic apps. But if you understand a subject matter, then you will have the skill to write a program to accomplish that objective. I have the programming skills. However, no matter if I am the best programmer in the world, I still could not write a program like Socrates without the ability to trade.

Programs that have blown up like the Black & Scholes that ended up winning the Noble Prize just before blowing up the world economy in Long-Term Capital Management Crisis of 1998, took place because you had two math geniuses who lacked trading skills. The formula that blew up the Real Estate models in 2007 made the same mistake. You cannot reduce the market to a single formula. That is a fool’s quest. As soon as you think you created the best model since sliced bread, it will blow up because those people cannot understand how to trade. There is no shortcut using math to generate the best model that ever existed. Even the high-frequency trading systems immediate shut down when volatility rises.

QUESTION: Martin, I have been reading about machine learning recently and have come across a concept that I believe you might have figured out that no one else has. To quote Max Welling “The information we receive from the world has two components to it: there is the part of the information which does not carry over to the future, the unpredictable information. We call this “noise”. And then there is the information that is predictable, the learnable part of the information stream.” Have you through Socrates figured out a way to filter noise entirely from the system or something of this nature?

Kind regards,

Andrew

ANSWER: No. That statement is based upon the idea that the “noise” is just chaos. They cannot see behind the surface and look deep within. There is ALWAYS order to the “noise” and 99.9999% of the problem is that people do not understand how to deal with chaos. Here is a plot of a daily file of closing in the Dow Jones Industrial Index from 1918 to 1991, which we published long ago. There is a hidden order within that “noise” if you understand how to extract it

How bad did it get in some segments of the population during the Great Depression? Actually, during the Great Depression, women began reusing the fabric from flour sacks to make dresses. When the flour companies woke up and suddenly realized the purpose their flour bags were providing, they began to print their bags with various floral and other designs to make them more attractive to consumers who would buy flour to be able to use the cloth for clothing. Interesting way to increase your sales.

QUESTION: Do you think that the central bankers influence has triggered a massive shift in the world order? Do you think the IMF and the BIS have gone beyond their mandates? Are central bankers directing the flow of money without any checks or balances? Do you also think that there is an open door between private and central banking that creates endless manipulation of the economy with government support?

These are some big questions. Do you care to tackle them?

PV

ANSWER: At the base of all your questions is the ASSUMPTION that they know what they are doing and that they conspire to create a specific outcome. With that assumption, I disagree. If that were true, nobody would ever want to talk to me. The mere fact that they do demonstrates that they are NOT in absolute control. They say if God did not exist, man would create him. This applies to markets as well. They assume that there is some dark force that lurks behind every event with the intent to create it. They would rather believe that this is the product of an intentional design for that means they can also intentionally reverse it. The far worse reality is that NOBODY is in control and this is simply the product of reaction and counter-reaction.

I have stated before that every crisis is met with an immediate solution which sets the stage for creating the next crisis. There is no master plan, for if there was then the USA would remain the Financial Capital of the World. Nobody has ever accomplished that feat permanently. The existence of a business cycle clearly establishes that the best plans will never conquer reality. Socialism is dying BECAUSE they made promises they cannot keep and they will default in the end. That was never the intent from the outset. It is simply that in a representative form of government as a Republic, politicians will say whatever it takes to win the next election. There is NO LONG-TERM plan and that proves there is also no such dark force lurking behind events in absolute control.

You ask if the central bankers triggered a massive shift in the world order. That is kind of ambiguous. Have they disrupted the world order? That is probably a better question. The answer to that must be yes because the European Central Bank (ECB) has created an absolute nightmare that endangers the entire world economy. Yellen was, in fact, yelling at Draghi for his stupidity in moving to negative interest rates. He assumed it would force people to spend and reinflate the economy. It backfired and furthered deflation, causing people to hoard their money. The ECB has not stimulated the economy, but instead it has kept governments on life support. Eventually, interest rates will rise exponentially because the ECB has destroyed the European bond market. No private investor will buy 10-year bonds at under 3%. Pension funds need 8% to break-even.

You then ask, “Do you think the IMF and the BIS have gone beyond their mandates?” The IMF has overstepped its authority and has interjected itself into the economic policies of Europe. This had made the IMF part of the unelected Troika. This is directly beyond its mandate and it has become an unelected entity that has influential power over policy – not dictatorial. The IMF disagreed with the actions of the EU against Greece. It did not have the power to overrule Brussels.

Your next question: “Are central bankers directing the flow of money without any checks or balances?” Central banks have been trying to accomplish that since 1927. They have utterly failed in actually altering the capital flows on any permanent basis. Their influence has been fleeting at best and only temporary.

There was the attempt to alter the capital flows back in 1927 to deflect the capital back to Europe. The USA lowered it interest rates hoping that would send capital migrating back to Europe. It actually had the opposite effect and from that period onward, the US share market doubled in value and capital poured into the USA. Europe eventually defaulted on most of its national debts in 1931. Clearly, the attempt to influence the capital flows failed and it did not prevent the shortage of capital in Europe which resulted in the Sovereign Debt defaults of 1931.

Your last question:  “Do you also think that there is an open door between private and central banking that creates endless manipulation of the economy with government support?” No, that is absurd. Just look at the LIBOR scandal and huge fines for allegedly manipulating interest rates by the private banks v central banks which is their power wirth short-term rates. The central banks at best try to prevent bank failures, but that has never succeeeded long-term.

QUESTION: Mr. Armstrong, I thought you would be wrong on the pound. I will yield to your forecasts. I do not know how you do it forecasting so many things around the world and getting them right no less. Reading between the lines who have written, on the one hand, you have said that Brexit was critical to save Britain, yet at the same time you said the pound would drop sharply. It seems as though you were forecasting the collapse of Brexit. My question now is, will the Tory Party even survive?

PF

ANSWER: The first thing you have to come to grips with is a computer is VOID of human emotion. Virtually all human forecasting has an inherent bias, for people will forecast what they want to see even if they do not realize they are doing so. To be correct, it requires extracting ALL human judgment and emotion from the subject matter. This is why I say people ask me what SOCRATES has to say – NOT me! That is the way it should be.

I have to say that Boris Johnson’s comment that Britain is headed for the status of a “colony” is absolutely correct. There are “remainers” who have simply ignore ALL the economic data and will seriously end Britain as any sort of viable economy. Britain has ALWAYS been treated as a second-class European culture and it will end up subservient to that of the EU. It may simply be too much to expect rational political leadership any more from Britain. Instead of the cabinet stabbling the PM in the back as they did with Thatcher to also try to join the euro, this time it is the PM who is stabbing her cabinet and the people in the back trying to keep in by pretending she is leaving.

It may be just time to play the traditional funeral song and remove our hats.

Let us look at the arrays. Here we can see that July has been the target in the pound. The next one will be in September. Now look at the Weekly Array – it picked this week. So how does the computer pinpoint these political events that align with the top people in BREXIT resigning? I “think” we have to flip the question. In other words, it is not the computer forecasting the resignation of David Davis, who was the top negotiator for BREXIT, and  Boris Johnson. There are people now calling for Nigel Farage to return. Quite frankly, Nigel is probably the ONLY hope for Britain. Unless they cut the umbilical cord to the EU, Britain cannot possibly survive.

This is the government’s own data. The economic growth of Britain peaked before it joined the EU and has declined steadily ever since. Britain loses EVERY trade argument in the EU Court. It is baffling how and why anyone would still think that staying in the EU is better. Since 1832, the two major parties have been the Conservatives (Tory) and the Liberals/Liberal Democrats. The Labour government emerged in the 1890s following Karl Marx. James Ramsay MacDonald (1866–1937) was the first British statesman to found the Labour Party, preaching Marxism, and he eventually became Prime Minister. His appointment lead to minority Labour governments in 1924 and in 1929–31. MacDonald then headed a National Government from 1931 to 1935 that was dominated by the Conservative Party which was supported by only a few Labour members.

MacDonald presided at the world economic conference in London in June 1933. Nearly every nation was represented, but no agreement was possible. American President Franklin D. Roosevelt refused to stabilize the depreciating dollar. The failure marked the end of international economic co-operation for another decade. MacDonald was deeply impacted by the rising anger and bitterness caused by the fall of the Labour government during the 1935 election. He increasingly became an isolated figure. The collapse of free trade initiatives led to the resignation of a leading Labour figure, Philip Snowden, in 1932 following the introduction of tariffs after the Ottawa agreement. MacDonald was later expelled from the party he had helped to found.

Since 1918, British elections have been dominated by the Conservatives and Labour. In 16 out of 26 general elections since 1918, the Conservative Party won most seats, while Labour won most seats on the other ten occasions. In all general elections between 1918 and 1945, the Conservatives received more votes than any other party (only in 1997 did they get less than 35% of the vote).

Yes, there has been a conflict whereby the political models have shown that support for the Conservatives was beginning to decline. While Labour was rising, it appeared to be more of a reactionary trend. Even technically speaking, Labour retests the Downtrend Line whereas the Conservatives appeared to rally after the coup against Margaret Thatcher to take the pound into the euro. This is not the END of the Conservatives, but the PM has to realize that any concern about leaving the EU is absolutely stupid. Europe is tearing itself apart. Nigel Farage should step back in, but he has paid a high price personally for trying to save his own country.