Are Cycle Inversions a Precursor to a Change in Trend

QUESTION: Dear Martin

In my own study of cycles, I have observed that cycle inversions occur more often than not at a time when the trend in that time frame is starting to change.

Have you observed the same?

I look forward to your trader service.

Best Regards

ANSWER: Correct. Cycle Inversions unfold routinely when trends are shifting. The fact that we are getting these cycle inversion now is definitely a precursor of what is coming between 2018 moving into 2021. When the same cycle has been producing alternate events and suddenly it begins to produce just highs, look out – for it is warning that the foundations are changing. This is what we are witnessing currently. We can taste it. With interest rates at historic lows, and you have the Japanese central bank buying 75% of the government bond market and the ECB owning 40%+ of all government debt, an uptick in interest rates is going to make the world economy simply go completely nuts

Is their a Social Cycle in Attitudes?

QUESTION: Mr. Armstrong; I read your article of the whole issue of prostitution. The entire problem is that some western women assume that all prostitutes engage in the profession unwillingly. That is just so biased. What about the women who marry not for love but for money. They are not forced. When the Iron Curtain fell, many Western European men married Eastern Europeans. They were shocked to realize that Eastern women saw life in a different culture. They looked for men who could support them and they saw this as a tradition they stayed home and raised the children. Their attitudes were pre-sixties. You are correct, culture is different around the world. It is stupid to judge everything by only your own standards. Indian and Thai food is spicier than European, American, and certainly Italian. Even food differs greatly around the world as do attitudes and culture. To a West European or American woman, staying at home is subservient. They have not been to the Middle East. I just read that Saudi Arabia is allowing women to drive for the first time.

I recall you even showing a Roman prostitute token used to circumvent laws back then. Have you ever investigated a cycle in attitudes in the battle of the sexes? It appears we seem to have emerged from the sixties with hippies, free love, and some women who just hate men blaming them for everything. I am not even sure where the whole virgin thing came from but assume that is probably in there as well. That was so obvious with Hillary thinking all women should vote for her just because she was a woman. That really offended the younger girls in our office. If there is a cycle in everything, then is there one in this battle as well?


Pompei-Lupanar Brothel

ANSWER: Yes there is a cycle to everything. Yes, the Emperor Tiberius (14-37AD) attempted to ban prostitution by making it illegal to pay a prostitute with a coin that had the emperor’s portrait of which they all did. The solution was to issue tokens (pictured above) you bought and paid the prostitute and she would redeem them later. These were widespread throughout the empire – not just Rome. One was recently found in the Thames River in London back in 2012. Here is a picture of the brothel in Pompeii. There were various prices that depended upon the sex act, but then there was also a two-tier price level over privacy. If you wanted a private room, that was the most expensive. If you wanted to save money, then you could have the room at street level where people could watch.

The Roman post-Civil War promiscuous period is very reminiscent of the 1960s with the whole free love and the women’s liberation movement. This trend in attitudes also appears throughout history on a cyclical basis. It is linked to the business cycle and as the economy booms, this trend will emerge coinciding with a decline in the birth rate. Perhaps the most famous period was the economic boom during the reign of Augustus (27BC-14AD) following the civil war that ended in 30BC with the deaths of Marc Antony and Cleopatra.

It was Augustus who passed his famous family laws that were designed to (1) ban intermarriages with none Latins, (2) compel men to be married. Augustus banished of Ovid (43 BC–17/18 AD) because he believed that his writings were creating an age of immorality. Augustus had his own daughter, Julia, banished for adultery. While her husband Tiberius was often away, Julia searched for love and sexual gratification outside her marriage and sex parties. Augustus heard of her infidelities, and he threatened her with death. Instead, he sent her to an island prison from which she was never to return, and he spoke of her as a disease of his flesh.

As far as the subject of virgins, in Western culture, this too can be traced to Rome. In ancient Rome, the Vestals or Vestal Virgins were priestesses of Vesta, goddess of the hearth. The historians Livy, Plutarch, and Aulus Gellius, all attribute the creation of the Vestals as a state-supported priestesshood to the beginning of the Roman Republic. The Vestals were regarded as fundamental to the continuance and security of Rome. They maintained the sacred fire that was not allowed to go out. This tradition to this day can be seen as the eternal flame at the grave of John F. Kenney. The Vestals were to take a vow of chastity in order to devote themselves to the study and correct observance of state rituals that were off-limits to the male colleges of priests. When Christianity began, the role of women serving God was taken from this Roman religious position and they too were to take a vow of chastity but were married to God.

The Romans were shocked by the roles of women outside their culture. When they were fighting the British, their leader was a woman named BoudicaIn the East, women were also rulers not just in Egypt. Septimia Zenobia (240–274AD) was Queen of Palmyria who rebelled and split the Roman Empire.

Romans definately held their women in high regard. The various Roman Emperors would routinely show their wives on coinage and some would even show their fathers, sons, daughters, as well as family portraits as did Septimius Severus.

The family seems to be sacred to the Romans. This idea of virgins in the West clearly shows the link back to ancient Roman. Where exactly it traces to in Asia culture I have not investigated. Nonetheless, there are distinct cycles in social attitude throughout time. Promiscuity rises with economic booms and declines with economic hard times. It seems to be linked in that manner to when you have no economic concerns about the future, then anything goes. When economic hard times take place, then the family unit returns and the birth rates rise because children are your retirement. When you think the state will take care of you, you need fewer children.

Why Are Dollar Bulls Almost Extinct?

Bloomberg has reported that dollar bulls are nearly extinct down to just 2.3 %. The majority, which is always wrong, are all focused on the nonsense of the budget and the current account deficits. The record high for the dollar was 1985 when even the British pound fell to $1.03. So the balance of payments went negative from 1980 to 1986 and the dollar rose. OMG! How was that possible? When you actually correlate the Balance of Payments with the dollar, something amazing emerged. The dollar rises with the balance of payments going negative. Gee whiz! That is against all perpetual bear’s reasoning.

Perhaps this magical logic is just sophistry because they use their theory and don’t bother to check if it holds up over the course of time. I have been warning countless times that the Balance of Payments is by no means simply TRADE. It includes all flows of capital outward. That includes interest. The biggest trade deficit of the USA is not with Europe, but China, who just so happens to be the LARGEST investor in US government bonds. That means they collect the lion share of interest expenditures. The days of buying just pick umbrella for your cocktail are long gone.

The Balance of Payments bottomed in 2006 and began to rise from that 3rd quarter low. When did the dollar bottom? In 2008 as the Balance of Payments was improving. Strange! Guess that logic does not hold up.

Most people look at the Dollar Index for a guide as to being bullish or bearish. What they do not realize is how it is constructed is not really relevant. Currently, the index is calculated by taking the exchange rates of six major world currencies the Euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc. Then they apply a weight which is arbitrary. The Euro, for example, has a weight factor of 58%. The Japanese yen has a weight of about 14%. From a trade flow and capital flow perspective China is at the top of the list. The trade deficit with China (with includes interest expenditures that flow to China) stands at 123,676 billion compared to 343,078 billion for the entire European Union with Germany coming in at 49,363 billion. Japan now is still more in capital flows than Germany coming in at 67,117 billion. The weights that make up the Dollar Index are not truly reflected in either trade or capital flows. Furthermore, the index was created only in 1973. It shows the high in 1985 and the low in 2008, which really does reflect Europe rather than trade or even capital investment flows.

When Timing is Everything – The Failed Graf Zeppelin Venture

Timing is everything. When an economy turns, big projects that looked like they were going to be winners suddenly lose big time. That was the case when a world tour had been planned for the world’s biggest airship, the Graf Zeppelin, in 1930 just months after the 1929 Crash. In May 1930, the Graf Zeppelin floated over the Cape Verde Islands and slowed down stopping at the Porto Praia post office. When the ship had maneuvered to just the right spot, its crew threw a big sack of mail. To fund the voyage, they struck a deal to carry mail around the world which would be the first international air mail.

Over the next several weeks, the 775 feet from nose to tail Graf Zeppelin completed its first Pan-American tour stopping in New Jersey, Ohio and flying to Rio de Janeiro and then back over the Atlantic to Spain and its home country, Germany. A lot of publicity and fanfare accompanied the airship’s journey which was funded by carrying sacks of mail. This was the largest flying machine the world had ever seen. Its operating costs were proportionate, clocking at about $4 per mile back then which was a lot of money. Passengers paid very high ticket prices, but the ship could only hold about 20 people at a time. Passenger travel was not a lucrative venture. The Hindenburg ticket prices across the Atlantic was the price of a car about US$400.00 one-way and a round trip was US$720.00.

They also tried to charge admission fees to view it on the ground. That did not prove to be a winner either. The timing was very bad for the Great Depression was just getting started.

Instead, the Graf’s parent company, German Zeppelin Airship Works, decided to recoup costs by commissioning special stamps from the countries on the tour route. Only letters with these stamps on them would be accepted onto the airship, or so they announced. They promised to deliver these letters to their destinations around the world.

This was the only commercial transatlantic airmail option available at the time and was days faster than sending a letter by boat. Brazil, Bolivia, Germany, and Spain all made the Zeppelin stamps, and 93% of the proceeds from each stamp was funneled back into German Zeppelin Airship Works. Finally, after considerable debate, the U.S. Post Office decided to get in on the hype. They assumed that stamp collectors would want the stamps and they would never be used so they would pocket a fortune. The agreed to proceed and they went to designing and printing a run of Graf Zeppelin stamps all in a matter of just weeks. They called this a gesture of goodwill toward Germany, which was the new Nazi government. The pledged to also contribute 93% of all the revenue collected on stamps “used” on the flight to the Airship Works. They cleverly qualified the agreement expecting American stamp collectors would buy up most of the stamps for collections and that would go to the Post Office.


So on April 19, 1930, the Post Office issued three stamps, The  65-cent stamp covered the cost of a postcard one-way. The $1.30 stamp covered the cost of a letter one-way. The final stamp, the $2.60, it covered the cost of a letter being postmark over to Europe and then back again. However, because of the deepening Great Depression, collectors could not afford the $4.55 when a loaf of bread sold for just 9 cents. The Post Office printed 1,000,000 sets of stamps expecting a mad rush. They sold only about 227,000 zeppelin stamps total, and most of that actually did end up on mail delivered by the Graf Zeppelin and the lost an expected big windfall.

The worsening Great Depression undermined the entire trip of the Graf Zeppelin. It was a fantastic idea and it was a show of power for Germany after the hyperinflation of the ’20s and losing World War I. Timing is everything. A great idea foiled by the business cycle.


Noah Ark Commemorated on Roman Coins

QUESTION: I found your article on Noah and the flood interesting. However, are there any other sources in the West besides Gilgamesh that it seems many sites point to for the same reason?


ANSWER: This story of Noah even appears on a Roman coin struck by Septimus Severus (193-211AD) long before Christianity became really a growing religion in Rome. The story is illustrated and even the name Noah appears on the Roman coin. This tends to verify that the story was well known outside of the Bible

The Way to Survive Hyperinflation

COMMENT: Mr. Armstrong; I just wanted to comment that I am from Venezuela. My father came here to visit me in Florida where I live with a Green Card. Everything he saved in life for his retirement is now worthless and it does not even pay to travel back to collect his pension. The hyperinflation is a collapse in the confidence of government as you have explained. Those who saved for their retirement and had pensions, lose everything. They will be paid the amount that they were promised, but it will not even buy a single night’s dinner and soon a beer.

Thank you for your contribution to society. I wish more people would listen to you. Experience is the root of knowledge. Opinion is the root of bias. You have proven that


REPLY: To survive hyperinflation requires the holding of tangible assets and never cash or pensions. The way pensions can be devalued is through inflation over the course of time and circumstance. What I paid into Social Security will never come back to me in terms of real purchasing power and that is without hyperinflation. I have stated before, I met with the Treasury back during the Reagan Administration and said these insane levels of interest rates will triple the national debt in less than 10 years. They simply responded; Yes but we will be paying back with cheaper dollars.

All promises of government are simply eroded with inflation. That is why Southern Europe fell into such chaos. The currency doubled instead of declining when they joined the Euro. That is why Europe has been a failure under this political-economic philosophy. The Euro first crashed, and then doubled in value. Southern Europe was used to inflation always reducing their debts. Suddenly, their debts doubled and deflation ruled. And people cannot figure out why the Euro is in such trouble?

I do like your saying though. It is spot on.


Punishing Traders for What Central Bankers Do All the Time

Bloomberg is reporting the fate of Christian Bittar who was the top trader at Deutsche Bank AG. He earned a bonus of $126 million in 2008 for betting that as the economy would melt down, banks would refuse to lend to each other until the dust settled so short-term rates would soar. While he is sitting now in prison as the UK went to find the banks in the interest rate rigging scandal, they pursued criminal charges against high-profile traders, unlike the direction that was taken in the USA.

The irony of this entire affair is that the government are criminally charging traders for manipulating interest rates, which is PRECISELY what they do all the time. Let us not forget Mario Draghi who when history is written about how the West Fell, his name will rank very high on the list. It was Drahi who have sought to push rates NEGATIVE to try to manipulate the economy to create inflation.

While traders go to prison for rigging front-running and trying to push trading levels to kick off stops, they have NOT put at risk the ENTIRE financial system. They have not even altered the trend of interest rates or markets. Compared to the deliberate manipulations by central banks, what is at risk now is the entire pension system and European banks are still sitting on the edge of a cliff with no hope of recovery so Draghi simply postpones the accounting to that be that final push. Unfortunately, central banks do not share the same fate as traders.


Mexico & the 112 Year Cycle

QUESTION: Dear Martin

As usual, I have no words to thank the sincere and incomparable work that you did for us, and almost for free. People like you should be a reference for future generations. You really are a Punk, in the best sense of the word [anti-autoritaritharism, DIY, direct action..].

I’m writing you because the last events in Spain are terrifying me.
You were writing a lot about it when the Catalonian Issue happened. I did not support it because it is creating strong division among the population for a bargain, and the leaders were (as demonstrated now) completely fake.

However, let me enumerate the latest news:

A Satiric magazine publishes a picture of a bullfighter with an ‘alien’ body and is fined with 40keur.
A rap singer is going to jail for 2.5 years for criticizing the power and political classes in a song.
– In a national art expo a picture showing catalan politicians in jail is banned.
A book explaining with names demonstrated cases of contacts of politicians in Galicia with narcos has been forbidden.

All this in the last 1.5 months

Uncountable cases of journalists fired from TVE (Spanish public television) for giving a different point of view as stated by the gov.

I live in Switzerland and I love my country but I’m afraid that I will not be back soon because of the high taxes and all these issues. However, Switzerland is not a better case. The police control is really intense also here.

I use to go to Mexico very often, and besides the critical situation, I work with really intelligent and courageous people.

Sometimes I’m thinking in abandon Europe and going to Mexico. I would like to think that they are bottoming and they will take off soon.

What do you think, cyclically speaking?

Sorry for such a lo email, and thank you very much again.

Sincere Salutations



ANSWER: The next major upheaval in Mexico appears to be on schedule for around 2029. There is a 112-year cycle perfectly in sync with the 224-year Cycle of Political Change. Nevertheless, Europe probably faces a greater risk of political upheaval than what you will see in North America. There are separatist movements everywhere from Canada and USA down into Mexico. Most people do not realize that Greenland is geographically part of North America, but is politically connected to Europe and here too there is a separatist movement to split from Europe.

We rarely hear about the internal struggle for independence within Mexico. I have visited the area Chiapas and engaged in political discussions to seek a better understanding of the issues. This is the home of the ancient Maya. Effectively, this is the home to one of the largest indigenous populations in the country with twelve federally recognized ethnicities. What was explained to me is very interesting. When the Spanis came to South America, they were interested in the lands of gold. Since there was no famed gold in that region, the Spanish never invaded that part. Therefore, you still have the indigenous Maya living there and you can distinctly tell the difference just looking at them. I was told that marriages are normally arranged by parents and Maya marry only Maya.

The Zapatista Army of National Liberation, commonly known as Zapatistas, has been a left-wing revolutionary political and militant group based in Chiapas. This is the southernmost state of Mexico. They are an armed group, formed by a large majority of Southern Mexican natives in Chiapas, who rebelled in 1994 claiming their territory in what has been called the “war against the forgotten” by the Zapatistas.

Once again, we have a line of demarcation between ethnic differences that even include language. Therefore, the position I explained about Catalonia falls in a distinct global trend. Catalonia also is distinct and have their own language. We see the same trend in Ukraine – east v west based upon ethnic differences and language. Politicians may view their countries as fiefdoms, but society moves through a grand cycle like Big Bang and the universe, There is a central point altogether and an event takes place and everything separates and moves apart. Then, gravity will overtake the movement and pull it all back inward to a central core. This is how human society has always worked throughout history. There are the separate states that they ban together typically against a foreign enemy, and then there is a union and a larger consolidated state. This pattern is true for the United States, Canada, Mexico and it has been the ides behind the European Project to federalize Europe.

The Delian League (or Athenian League) was an alliance of Greek city-states led by Athens and formed in 478 BC to liberate eastern Greek cities from Persian rule. It was to also be a defense against any possible revenge attacks from Persia after the Greek victories at Marathon, Salamis, and Plataea in the early 5th century BC. This unification of Greek city-states under Athenian rule led to resentment and finally the Peloponnesian war where Athens was defeated by Sparta and rebelling Delian League members. The number of members of the League changed over time but around 330 are recorded in tribute lists who had to pay into the central treasury much like the EU structure today. Initially, members swore to hold the same enemies and allies by taking an oath.

The actions we saw with Spain invading Catalonia were the very same reactions that Athens took against Naxos who sought to leave the Delian League in 467BC when it became obvious that the purposed to defend against the Persians no longer made sense. The League and its requirement of tribute/taxes was a major factor behind separatist movements. An example of the refusal to relinquish power can be seen when Naxos who sought to secede around 467 BC. Athens responded in dramatic fashion by attacking the island and making it a semi-dependency, albeit with a lower tribute.

I have stated many times that History is a roadmap to the future because the human response will ALWAYS be the same given the same set of circumstances. Therefore, Mexico will also split and the indigenous Maya will reclaim their independence and that may come by 2029. The Mexican Revolution began in 1910 led by Emiliano Zapata. Then in 1911, President Porfirio Diaz, who ruled as a dictator for 35 years, was overthrown and replaced with revolutionary Francisco Madero. The last major event was the adoption of the Constitution in 1917.


How Can the Majority Be Wrong if they ALL Expect Interest Rates to Rise?

QUESTION: Today most analysts think higher interest rates are on the way. If the majority is always wrong how does that play into the expectations for higher interest rates?


ANSWER: With the Federal Reserve stating they must “normalize” interest rates since 2014, of course, the majority will view that will be the trend. We are at a 5,000 low in rates historically. Naturally, the only direction is now UP, UP, and AWAY! There are two ways that they will be wrong and that has to do with their interpretation.

First, they will not comprehend just HOW fast rates will rise of WHY!

Second, they will interpret higher rates as BEARISH for equities, as they traditionally do.

Therefore, the way the MAJORITY will be wrong is not in the mere fact that rates will rise, they read the statement of the central banks. It is the interpretation of what will follow from the simple trend.

The Unsound Theory of Inflation

QUESTION: You defend central banks yet the Rothschilds when clearly Mayer Amschel Bauer Rothschild said: “Give me control of a nation’s money and I care not who makes it’s laws.”  Any comment?


ANSWER: No problem. He never said any such thing it was completely made up. It was attributed to him in 1838 when he was already dead for 26 years. Besides that, what is very clear is that this is based on the assumption that money is fiat. The USA began to issue paper money in 1861. During the period that Mayer lived, the money supply was primarily coined.  The only plausible reference would be implied that he debased them. He was a banker and never produced the coinage.

It would be nice just for once that you bothered to actually understand the role of central banks as originally set forth. What they do today with Quantitative Easing has proven that the entire theory of an increase in money supply will be inflationary is outright BOGUS.

In every case of HYPERINFLATION, not even once did inflation ever begin by increasing the money supply. Inflation begins when PEOPLE lose CONFIDENCE in the government and they spend the currency as fast as they can or outright refuse to accept it. I have explained that the Japanese Emperor used a different approach. He DEVALUED all outstanding money to 10% of his new coinage. That led to the collapse in CONFIDENCE to the point that the people never trusted the government and as a result, the Japanese lost the ability to produce money for 600 years.

The definition of what creates inflation is entirely wrong. Even Gresham’s Law needs to be placed in context. Gresham worked in the foreign exchange markets in Amsterdam. Henry VIII debased the English coinage. But coinage traded on foreign exchange markets according to its metal content. The inflation Gresham referred to was experienced in the foreign exchange markets so what he truly observed was the decline in the British coinage value on international markets. Don’t forget, this predates the central Bank of England which was established in 1694.

The entire observation of inflation began with Gresham. However, it was extended by David Hume (1711-1776) who made observations BEFORE paper money began. This observation is not respected even today. David Hume showed why net exporting in exchange for gold currency, which then increased the domestic money supply and was hoarded by Britain, could not actually enhance wealth. Hume’s argument was essentially the monetarist quantity theory of money which would influence others over time. Prices in a country would change directly with changes in the money supply. Hume explained that as net exports increased and more gold flowed into a country to pay for them, the prices of goods in that country would rise with the economic boom. The USA saw this through the course of World War I and World War II ending up with 76% of the world’s official gold reserves. Consequently, an increased flow of gold into England would not necessarily increase England’s wealth substantially was Hume’s argument because the increase in domestic prices due to the gold inflow would discourage exports and encourage imports. Hence, this trend then counter-reacts with trade and automatically this will start limiting the amount by which exports would exceed imports. The more money that flowed into a country, like the USA, the higher the prices and this would then reduce exports. Adam Smith’s attack on mercantilism and argument for free trade, strangely ignored Hume’s argument. Hume’s view of capital flows can be verified throughout history and is really the underlying foundation of the balance-of-payments issues that Trump fails to understand. Hume also advanced the idea of “creeping inflation” that takes placed with a gradual increase in the money supply that would lead to economic growth. This is largely correct, but money supply growth must also keep place with population growth or you will produce deflation – more people and less money to go around.

With the introduction of paper money during the mid to late 18th century, the relationship between the over-supply of banknotes and a resulting depreciation in their value was noted by earlier classical economists such as David Ricardo (1772-1823). However, the issue of paper money during the American Colonial period must also take into consideration two factors: (1) England starved America and extracted money assuming they were using Spanish coinage, and (2) the American Revolution which was funded by creating paper money. There was again a lack of CONFIDENCE to the extent that when the American Revolution ended, the Constitution prohibited States from issuing money again and federally no paper money was issued again until the American Civil War in 1861.

Therefore, most HYPERINFLATION periods are associated with war like the American and French experiences. However, in Lydia, the very first government to issue coins, we see the debasement unfold as a direct result of war. Therefore, there is no evidence of hyperinflation unfolding absent a collapse in the CONFIDENCE of the people in that government.

In the case of Venezuela, obviously there has been a collapse in CONFIDENCE. The same was true in Zimbabwe after it seized all the property of white farmers. Foreign investors refused to ever participate again.

The German HYPERINFLATION came with the Communist Revolution in 1918. That sent capital into hiding and fled overseas, primarily to the United States.