QUESTION: Hi Martin,

QUESTION: You originally said back at the 2015 WEC the first window for the monetary crisis and the collapse of the Euro could arrive by 2018 and then the cycle was extended into 2021 when the Euro finally elected a weekly bullish. So it appears correct that 2018 is the start as the Euro never reached your target but came close and the EU seems to be coming apart at the seams. Gold could never get through your 1362 number either so that too seems to have confirmed a false move extending your cycle into 2021. I understand that cryptocurrencies are really an asset class and not really a currency. Nevertheless, do you think that cryptocurrencies can survive a monetary crisis?

WN

ANSWER: The year 2018 was the start of the Monetary Crisis. We had a shot that this could all come undone in 2018. However, you are correct. All we achieved was a false rally with the Euro stopping just shy of our number and gold struggled admirably but could not get through 1362. There were many other markets also confirming that we are dealing with only the beginning of the crisis here in 2018 rather than the conclusion including the consolidation in the stock market without election any monthly bearish reversals. The monetary reset can arrive during the next window in time come 2021 if we get the dollar at new highs. Then the monetary system will crack. However, this could drag out to the third window which is of course 2032. That appears to be more the shift of the Financial Capital of the World to China at that time.

These are the turning points. The Reversals are the key which confirms or denies the trend. My opinion as to the future is still an opinion. I will say this. As long as cryptocurrencies are an asset class, then they will survive a monetary crisis along with all other assets. Assets are the ONLY thing that survives the collapse of a currency. So be careful of what you wish for.

The new currency issued after the German Hyperinflation, Rentenmark, was backed by real estate. Tangible assets are on the opposite side of whatever the currency is in use. When the stock market rises, the purchasing power of the currency declines. When the stock market crashes, then the purchasing power of the currency rises. They are on OPPOSITE sides. Do you really want a cryptocurrency to be a currency or asset? Most people pitching them are really explaining an alternative asset – not a currency.

Cryptocurrencies are a new asset class. Just look at them from that perspective. You are asking a lot if we are talking about replacing the monetary system with private money. That is just not likely in the cards. Nonetheless, we will probably end up with a new RESERVE currency used among nations. That is still unlikely going to be a world currency used by the people in every country. What we use for currency can be cryptocurrencies of some sort ONLY if we see the political powers crumble and fall.

None of the big IT companies are doing anything with Blockchain. That may change in the future and it may even be replaced by something even better. I draw the line between an asset class and a replacement currency for the dollar with a very thick marker. You would have to completely destroy the system as is for that to even come into play. Is that what people are praying for? All pensions gone, banks destroyed and you think this cryptocurrency will be the only thing to survive? You go that far the ONLY money becomes FOOD! We are still in mid-game and we are not yet close to the end-zone.

For now, cryptocurrencies are not a currency at all, they are a new asset class. Just because they are called “currency” does not make them an actual currency. If they are not widely accepted in payment as legal tender, then they are not yet ready for prime time. When you go online to buy anything, they display the standard payment methods – not BitCoin.

You buy insurance for healthcare, fire, accident, but when it comes to death insurance, they flipped the name to life insurance. They could not sell “Death Insurance” for people would respond that they were not ready to die and it was seen as bad luck to buy death insurance because you may invite such an event.  To sell “Death Insurance” they called it “Life Insurance” and then everyone would buy it and brag how much they had. Calling BitCoin a “currency” does not make it one. It is still an asset class and for it to be a currency, it would have to respond OPPOSITE of assets, not trade with them.

Cryptocurrencies are an ASSET CLASS for trading. Do not marry the trade. Treat them as any stock and you will be fine.

COMMENT: I think I now see the light. It has been my linear thinking that has blinded me. Gold rallied and failed as was the case with the euro, British pound and so on. Putting them all together is why who said that the euro would rally because they all were indicating a pause in the trend of the dollar. If they all crash together, I can see the dollar rally easier for they are all lined up the same way on your model looking at the reversals. I hope you elaborate on this in Singapore.

SHV

REPLY: Yes you are starting to see the light. You cannot have just one market rallying beyond the reversals without the others. Everything is linked. You have to begin to look at the world as a hedge fund manager to see what others cannot. You did not elect a key Monthly Bullish in any of these markets. That is the key. The same model allows us to see the critical point across the financial spectrum and in that instant we can listen to the markets telling us the future.

Opinion means nothing, including mine. ONLY the model allows us to see everything in a black & white manner without prejudice. This is how we avoid Marrying the Trade!

Yes, at the Singapore WEC I will cover this interlinking process so the future is revealed by the markets, not my opinion.

QUESTION: Do you think Bitcoin can survive? Or has it been a passing fad?

MT

ANSWER: Bitcoin rose because 70% of the miners were in China. It was NOT simply because energy was cheap. Bitcoin became the LEADING means of money laundering and movement of cash out of China, circumventing their rule of law and currency controls. So do not think for one minute that Bitcoin rose because it was really a wonderful idea. It was a means to get money out of China when you could not wire money out. In Australia, they have adopted the slogan that “CASH IS FOR CRIMINALS.” They will do the same to cryptocurrencies. All they need to do is declare a law that it is illegal for a business to accept cryptocurrency under the excuse that it is money laundering. You just killed the entire industry. The government has the army, tanks, and the guns. Until the army is willing to turn against the hand that feeds them, you cannot stand with cryptocurrency and claim some magical right to suppress government. You need the power grid!

Video streaming today is because of the online porn industry (I won’t post a picture of that).  They needed to sell their product and they invented video streaming. It has since expanded to everything. Blockchain can be used in many other contexts just a video streaming was not restricted to just por

QUESTION: Mr. Armstrong; You said that the emerging markets are a huge problem that will lead to a Sovereign Debt Default. Can you elaborate on that statement?

Thank you for your insight

VU

ANSWER: The emerging markets are in far worse shape today than they were even back in 2008. They have issued heaps of dollar-denominated debt to sell particularly to US pension funds seeking higher yield. Some of the buyers have been state-run pension funds. The outstanding Emerging Market debt has exploded by 50%. The majority of the increase in emerging market indebtedness has been in local currency, which was more than $48.5 trillion as of the end of 2016 from around $43 trillion in 2015 and is pressing $50 trillion for 2017.

We passed $200 trillion in global sovereign debt back in 2016. All of these dollar bears that yell about the USA at $20 trillion, ignore where the world stands at and the fact the USA is still the only economy holding everything up. Both the Emerging Market and EU countries have used the cheap interest rates to just pile on more debt – not reform. This is why central banks have lost all capability of manipulating interest rates to direct the economy. All of those theories are entirely dependent upon DEMAND management. They may, in theory, be able to manage the “demand” of the consumer, but they have zero influence over government spending. They lower rates to stimulate private demand and simply underwrite government debt.

The world comes unglued ONLY with a dollar rally – not a decline. A drop in the dollar would be cheered by governments who would then issue even more debt. A dollar rally will cause the Sovereign Debt Crisis – not a dollar decline. Emerging Market defaults are once again on the timeline. They are economically in far worse shape today than they were in 2008. As interest rates rise, they will blow their budget out and they do NOT have the economies to support the debt repayments (excluding China).

COMMENT: You were here in Brussels a few weeks ago. Suddenly, the ECB is talking about the need to merge the debts to prevent a crisis. So your lobbying here seems to work.

RGV, Brussels

REPLY: I do not lobby. It is rather common knowledge I have made those proposals since the EU commission attended our World Economic Conference held back in 1998 in London. I focused on the reason the Euro would fail if the debts were not consolidated. So it is not a fair statement to say I meet in Brussels to lobby for anything. I meet with people who call me in because of a crisis brewing.

So everyone else understands what this is about, the ECB President Mario Draghi has come out and proposed interlocking the euro countries to create a “stronger” and “new vehicle” as a “crisis instrument” to save Europe. He is arguing that this should prevent countries from drifting apart in the event of severe economic shocks. Draghi has said it provides “an extra layer of stabilization” which is a code phrase for the coming bond crash. He has conceded that the legal structure is difficult because what he is really talking about is the consolidation of national debts into a single Eurobond market. There is no bond market that is viable in Europe after the end of Quantitative Easing. There will be NO BID.

There is no viable bond market left in Europe. The worst debt is below US rates only because the ECB is the buyer. Stop the buying and the ceiling comes crashing down. This is why what he is saying is just using a different label. He is not calling it debt consolidation, just an extra layer of stabilization to bind the members closer together.

It will be a hard sell and it may take the crisis before anyone looks at this. You have “bail-in” policies because of the same problem. If the banks in Italy need a bailout from Brussels, then other members will look at it as a subsidization for Italy which is unfair. There is no real EU unity behind the curtain which is when the debt was NEVER consolidated from day one. They wanted a single currency, but not a single responsibility for the debt.