Till the Last Ukrainian – A Must See

Armstrong Economics Blog/Ukraine Re-Posted Mar 26, 2023 by Martin Armstrong

Why Bank Bailout of Depositos is Critical

Armstrong Economics Blog/Banking Crisis Re-Posted Mar 26, 2023 by Martin Armstrong

QUESTION: Hi. I do not understand why you keep advocating over and over how the depositors should be bailed out over 250k. It makes no sense from a moral hazard perspective. It is fact that should they do that, in spite of depositors signing agreements acknowledging that deposits over 250k would not be guaranteed, the Fed will also need to cancel all outstanding debt instruments, whose borrowers also signed an agreement that if they don’t pay they lose the asset. The moral hazard is so severe as to bloody the eyes. Why do you keep endorsing the bailout which will have to be at least initially funded by taxpayers even if they get the money back? The money to shore up bank reserves in exchange for collateral has to come from somewhere. What is the real fear, that people will move deposits direct to T-bills and in so doing, set up funding for a US CBDC? Please address the moral hazard aspect of your position. So far, I’ve heard nothing to defend the immorality of it.

ANSWER: Do not confuse a bank depositor with (1) an investor in a fund, or (2) bank shareholders & Management. A bank depositor is NOT an investor. The $250k is by NO MEANS sufficient for small businesses. They need to keep large amounts on hand for payroll etc. You do business and accept credit cards and they deposit that into your bank account.

Bank depositors are unsophisticated average people. The sophisticated investor moves their, money to a hedge fund or money market fund and fully understands that there is a risk associated with that investment. The bank depositor accepts no risk on any investment the bank makes. It does not give them, a piece of their profits. That goes to shareholders. It is a bailout of the entity and thus the shareholders which presents the moral hazard perspective.

If deposits in excess of $250 are NOT covered, you wipe out small businesses, they cannot pay employees and the ripple effect will be the total destruction of the entire economy. Your house will become worthless for its value will drop to only what someone can pay in cash.

There is a HUGE difference between investing and losing and simply depositing your money in a bank because we are moving to an electronic monetary system that there will be no way for a depositor to even demand money from a bank. Some are restricting wires to $3,000 and limiting the amount of cash one can withdraw. There is also not enough paper currency to facilitate bank withdrawal on a grand scale. Bank robbery will come to an end without cash.

None of that will unfold if a hedge fund fails. We must look deeper into this entire question.

Interview: The Perfect Storm

Armstrong Economic Blog/Armstrong in the Media Re-Posted Mar 26, 2023 by Martin Armstrong

To Check out the video click here to view my most recent interview with Outer Limits: “The Perfect Storm.”

Commentary from Ryan McCormick:

Legendary economic forecaster and pro-freedom advocate Martin Armstrong once again appears on the Outer Limits of Inner Truth Podcast to discuss: The neoconservative agenda and the likelihood for war with Russia, Political corruption in Ukraine and the impact on global perception of the United States, And why the 2023 Financial Crisis is colliding with important cyclical targets regarding war, which may result in a two-prong panic of unprecedented significance. Marin also shares his perspective on Alan Turing's groundbreaking work on the mathematical order behind Morphogenesis and offers an updated outlook on how the US will breakup.

Are Brenner & Kondratieff Waves Valid in Commodities?

Armstrong Economics Blog/Understanding Cycles Re-Posted Mar 25, 2023 by Martin Armstrong

QUESTION: Hello Martin,
I have been reading you since your handwritten and from memory letters were getting out from your incarceration. You are truly an amazing man sir.
I realize that both the Kondratieff and the Brenner cycles are mostly just coincidental to market cycles today but my question is are both the Kondratieff and the Brenner cycles still accurate for agriculture goods and the farm economy to this day?
Thank you for your consideration of this question as well as for all the good you have done for mankind.
Thank you.


ANSWER: I think your question is very important. I have in my library Brenner’s actual publication. They are very rare, to say the least. Overlaying Brenner onto Wheat, we can see that during the 20th century, they did not work. The question then became why?

People are far too often confused when observing a market. They think that that instrument itself possesses some inherent trading character all by itself. I have often said that when I went to Economics class, the professor said there is no definable business cycle because everything is random. Then I went to Physics class and was told that nothing is random. I came to the conclusion that it was the economics professor who was wrong.

In Physics, we have two separate principles that are far too often confused as the same. The Uncertainty Principle was articulated by the German physicist Werner Heisenberg (1901-1976). It states that the position and the velocity of an object cannot both be measured exactly at the same time, even in theory. The very concepts of exact position and exact velocity together, in fact, have no meaning in nature. Effectively, if we increase the precision in measuring one quantity, we are forced to lose precision in measuring the other.

The Uncertainty Principle has been frequently confused with the Observer Effect whereby the disturbance of an observed system by the act of observation takes place as the result of utilizing instruments that alter the state of what is being measured. To put this in common terms, let’s say you take a gauge to test the tire pressure on your car. The very act of measuring the air pressure results in some air escaping. Hence, the act of observing changes the actual pressure in the tire even minutely.

This is one of the most fascinating aspects of Physics. Here is my favorite cartoon explaining an important aspect of cyclical analysis as well.

So what does this have to do with analysis in markets? What are we actually observing? The innate object be it gold, wheat, or the stock market. If a tree falls in a forest and nobody is around, does it make a sound? That all depends on your definition of a sound. If you define “sound” as requiring it to be heard by a person or animal, the answer is no. Yet is that the proper definition?

This brings us to Kondratieff and Benner waves. Were they actually measuring commodities, or were they measuring the cyclical interference of climate, war, and 70% of the GDP being confined to agriculture? We clearly have a problem with the human interpretation of an observation. We are then confined by our own prejudices formed in life. If we have NEVER read about war or experienced war, then is it possible to look at the 19th century and realize that there was an interference in the market behavior by war?

This is why fundamental analysis always fails. Claims that this is the guy who forecasts whatever based upon his opinion or fundamental analysis is simply nothing more than a broken clock is also correct twice a day. The vast array of fundamentals that are taking place simultaneously can never be sorted out by any human being. It depends upon the experience of the observer. I have often explained that people focus only domestically and often on whatever the Federal Reserve wants us to do. They do not see that in turn the Federal Reserve is influenced by international events. Thus, those who focus domestically, are blind to global trends. This is primarily why I developed Socrates for it is humanly impossible to monitor absolutely everything. No human being can do this and then it is impossible to sort out the fundamentals in advance – only hindsight. Many have ignored the fundamental approach and turned to Technical Analysis. Then the third branch is cyclical analysis focused on TIME.


Cyclical Analysis must also incorporate physics to achieve accuracy. Otherwise, someone who then identifies some cycle of 25 units and says see, it worked 5 times in a row, will lose the house for that relationship will change. This is the question of the Kondratieff and Brenner cycles. Kondratief saw broad cyclical trends throughout history. But they were averages and he did not seek a definitive time frequency. Brenner focused on sunspots and agriculture for he was a farmer and saw the cyclical patterns unfolding before him.

However, the complexity of the market and economic behavior is much like the double-slit realization. A single particle moving through a single slit produces a linear output. But when a second slit is introduced, then cyclical waves emerge. This illustrates the complexity. Each market is like a separate particle in that cartoon. By itself with a single slit, the outcome tends to be linear as expected. But adding that second slit produces complexity and cyclical wave interference. Thus, in analysis, we must consider the entire global basket of particles to approach the cyclical waves and interference.

There are so many layers to price activity each displaying a unique frequency. This once again comes down to human interpretation and can the analyst even see the complexity. Our arrays are the best shot at accurate cyclical forecasting and there are 72 models inside that – not a simple one-time frequency of a linear cycle. It is the computer that projects the outcome, not any human interpretation. Then you have to have a database that is unprecedented to back-test the entire analysis. Without recreating the monetary system of the world, it would be impossible for the computer to forecast war, the collapse of communism, or the 1929-style even in Tokyo in 1989.

Fundamental analysis can ONLY be used to explain AFTER the fact – not to forecast the future. Consequently, the Kondratieff and Brenner cyclical waves are not accurate in trying to predict the economy or the next great crash in markets. We must respect that they observed the top layer of cyclical activity, but behind that mask was climate change coming out of the last ice age, the wave of innovation that brought the Industrial Revolution which diminished the commodity influence, and war.

It is not that their work was wrong. They were the leaders in cyclical analysis and pointed the way. It simply required more exploration to understand the complexity and wave interference from the impact of everything, everywhere. The analysis of Benner failed during the 20th century because what he was observing was the complexity of the times and one really needed to sort out each and every component that produced the wave structure during the 19th century to be able to accurately forecast the 20th century.

Dick Morris, The Machinery of the Deep Administrative State is Trying to Bait Trump and the MAGA Movement into an Angered Reaction

Posted originally on the CTH on March 25, 2023 | Sundance

Dick Morris is a man who knows the machinery of the leftist state.  As a life-long democrat operative, control agent and emissary of the Clinton machine, he is fully aware of the scheming and conniving ways of the Alinsky tribe.

Morris accurately encapsulates the leftist motive in their targeting of President Trump {Direct Rumble Link}.  The accusations, charges, indictments and full-throated targeted efforts are intended to create a weaponized self-fulfilling prophecy.  The abusers shout incessantly and condescendingly at the target, trying to provoke a reaction so that as soon as the angered response is delivered, they can say “see, we told you how violent and threatening you are“…  WATCH:


Neil Oliver – The Answer to Who Watches the Guards, Is Not Within The Question

For his weekly monologue, Neil Oliver ponders the collapse of checks and balances. The framework of new democratic norms where the government ruling elite police themselves and their conscripts for violations created by their own conduct.

Encapsulated within the question, “Who guards the guards,” Oliver outlines the answer is not within the question.  It is not a matter of watching the guards, it is now time for people throughout the west to change the guards and throw out the self-policing bums.  WATCH:

[Transcript] – Who watches the watchers? Who guards the guards?

The question was posed by the Roman satirist Juvenal 2,000 years ago, but it has never been more relevant. It’s applied now to remind us of the need to keep a watchful eye on those in power.

This should be our paramount concern now, when lies and liars are everywhere.

This week, former PM Boris Johnson told the House of Commons privileges committee he had not lied when he told the House that his own Covid guidance was being followed in No.10.

Note the word guidance – made especially interesting by the fact ordinary members of the public were, as I seem to recall, arrested, charged and fined for sitting together on park benches or on the beach. I’m not sure that’s how guidance normally works.

In any event, I honestly don’t care whether he lied or not to parliament. I don’t care if they were having cake or coke. This is a red herring, a sleight of hand, a tactic to distract the gullible. The point that must neither be overlooked nor forgotten is that neither Johnson nor anyone else at those gatherings was demonstrably afraid of Covid.

We know that because we have seen the photos of them standing together without masks. Standing apart and wearing masks was for the little people. We might also assume that we were being laughed at by those who knew there was nothing to fear and therefore no reason not to party.

Keir Starmer’s Labour party was the same – we saw those pictures too. He and they called for earlier, longer, harder lockdowns and all the rest, and then met for curry and beer and cosy chats.

Fear was for the little people and so Left and Right, Blue and Red and all positions and team colours in between laughed up their sleeves as the nudge units and the paid propagandists told us anyone breaching the regulations – sorry, I mean guidance – was a granny killing Covidiot and Pandemic Denier.

Look me in the eye and tell me it wasn’t so.

So, who guards the guards, who watches the watchers?

Let’s notice, among much else, that this is the Commons sitting in judgment on the Commons, which is to say politicians sitting in judgement on politicians. This is the guards, judging the guards. This is the same Commons whose inhabitants worked together in unquestioning lockstep to impose policies that ruined lives, wrecked livelihoods and upended the economy. This is the same Commons that, far from accepting responsibility for the carnage, is actively seeking to have us look the other way while they get about the business of doing nothing more than playing politics, all they’re fit for, fiddling while Rome burns. The is the same Commons that empties when one of their own stands to speak up on behalf of people killed or harmed by medical products pushed as vaccines. And trust me, I’ll get back to that safe and effective nonsense they pushed in a moment.

We never quite got to mandated jabs for all, but people all over the world were sacked for opting to live by the ideal of my body my choice, the notion enshrined in the Nuremberg Code that states that a person should at all times: “Have legal capacity to give consent; should be so situated as to be able to exercise free power of choice, without the intervention of any element of force, fraud, deceit, duress, overreaching or other forms of constraint or coercion …”

We didn’t quite get to mandates for the jabs for the general population, but I say it was a damned close-run thing. I say they were itching to mandate the vaccines. I say mandates weren’t pushed across the line in the end because enough of us made plain it would mean civil disobedience if not full-on civil war. I maintain that while they’ve gone quiet about lockdowns and face-masks, it can only be a matter of time before that playbook is brought out for the next crisis they can cook up. More and more are queuing up to distance themselves from the harms done during the last three years, while still priapic on account of all that unbridled power over the everyday lives of the tax-paying public.

Who watches the watchers, who guards the guards?

There are calls for a war crimes trial for Putin. What about a war crimes trial for Tony Blair while we’re at it? We hit the 20th anniversary of his unlawful war in Iraq last week – that unlawful war that led to over a million deaths, that destabilised the entire region to this day and gave birth to Isis. Wouldn’t the moral way to mark that birthday be a war crimes trial for all the people who took us there? And while we’re considering war crimes trials, shouldn’t we look again at precisely what successive United States administrations did in Korea, in Vietnam, and more recently in Libya, and in Syria and in Afghanistan and other sovereign nation-states too numerous to mention? Shouldn’t we look at what was done, and by whom?

US libertarian think tank the Cato Institute recently looked again at the behaviour of successive US presidents in relation to the Saudi Arabian horror show in Yemen. They reported, and suggested the appropriateness of war crimes trials for Barack Obama, Donald Trump and Joe Biden:

“Whose administrations serviced the US-provided warplanes, supplied munitions used to bomb weddings, funerals, schools.

“Whose administrations serviced the US-provided warplanes, supplied munitions used to bomb weddings, funerals, school buses and other civilian targets, gave intelligence used for targeting and for a time refuelled Saudi and Emirati aircraft.”

“US officials could not claim to be surprised at their culpability,” they added. “The state department warned that they could be held responsible for war crimes.”

“George W Bush is another good candidate for a trial on his aggressive unjustified attack on Iraq based on manipulated and fabricated intelligence. His war ended up killing hundreds of thousands of civilians as well as triggering years more of conflict. Former UK Prime Minister Tony Blair today spending his golden years profiting after acting as Bush’s poodle would be an appropriate co-conspirator.”

Who watches the watchers, who guards the guards?

We are trained to fear Global warming … the warming of the planet … while that world burns still on account of the fire Tony Blair helped light in the Middle East with UK taxpayer-funded missiles and bombs.

Who watches the watchers, who guards the guards?

Let’s look again at the banks and the simmering chaos there … in that world in which banks are secretive, privately owned businesses, in which central banks have the power to create money out of thin air and lend the same sums over and over and over again while growing fatter and fatter on more and more interest and debt. Another former PM, Gordon Brown traded on and perpetuated a myth of being a safe pair of hands when it came to money matters. This is the same Gordon Brown who sold off half of the UK’s gold reserves at a knockdown price so low it was remembered ever after as the Brown Bottom and one of the worst deals in recorded history.

In 2008 Brown bailed out the banks with billions and billions of pounds worth of our money and those banks duly stayed open, the bankers kept getting their bonuses and nothing changed when it came to stopping their reckless games with fantasy money. We were sold down the river and now the banks are shaking on their fantasy foundations once again and for more of the same reasons.

Who watches the watchers, who guards the guards?

The MHRA – the Medicines and Healthcare products Regulatory Agency is supposed to monitor the information we get about health and the safety and effectiveness of the drugs we are offered. But the MHRA gets 86 percent of its funding from the pharmaceuticals industry. Is that the recipe for unbiased behaviour always and only in the interests of the people? I’m only asking.

It’s the same the world over: 65 percent of the US Federal Drugs Administration comes from Big Pharma. Between 2006 and 2019, nine out of 10 FDA Commissioners went on to secure jobs with pharmaceutical companies. 89 percent of the European Medicines Agency funding comes from Big Pharma. 96 percent of the funding for the Therapeutic Goods Administration in Australia comes from Big Pharma. In Japan, the relevant agency gets 85 percent of its funding from Big Pharma.

No lesser publication than the British Medical Journal asked, in a headline over a recent article:

“From FDA to MHRA – are drug regulators for hire?’

Obviously, I couldn’t possibly say one way or the other. A recent report from Australia’s TGA – the Therapeutic Goods Administration – equivalent to our MHRA – a report made available only by a Freedom of Information Request – makes plain that in January 2021 it was known to anyone privy to Pfizer’s own data that the lipid nanoparticle was widely distributed all around the body.

All of this was known before the so-called vaccines were approved for injection into billions of human beings, from babies up. Those entrusted with our health care knew, in advance, that the tiny oily bubbles carrying the making of the toxic spike protein could and would go to brains, hearts, livers, ovaries, testes, everywhere, and they went right ahead and did it anyway.

Safe and effective they said, over and over and over. Misinformation, anyone?

If they were doing their jobs and reading reports like this, then Chris Whitty would have known, Patrick Vallance would have known, Antony Fauci would have known.

This information is out there now, in the public domain, though heavily redacted – and God alone knows what remains redacted – and so why isn’t this front page and main TV news all around the world? Why not?

Who watches the watchers, who guards the guards?

The answer is as stark as it is depressing:

Westminster awards itself the power to make laws, enforce those laws and decree the punishment for any transgressions of those laws. This is a textbook definition of the tyranny that our constitution, enshrined in Magna Carta 1215, was specifically shaped to prevent. And yet here we are – with the watchers watching the watchers, the guards guarding the guards.

It is as obvious as Boris Johnson’s estrangement from the truth that this tyranny should never have been allowed to evolve and that, since it has, we must not tolerate it a moment longer.

Decisions of importance must be made by those with skin in the game, but with no means to profit either directly or indirectly from the decisions they come to.

Who guards the guards is a 2,000-year-old question. Older by 500 years is the Tao Te Ching, The Book of the Way, by Laozi, the Old Master.

Last week a friend reminded me of words that sound as though they might have been written this morning:

“When rich speculators prosper while farmers lose their land. When government officials spend money on weapons instead of cures. When the upper class is extravagant and irresponsible while the poor have nowhere to turn. All this is robbery and chaos.”

Robbery and chaos – that’s what our leaders and their little wizards have inflicted upon us. It was true two and a half thousand years ago and it’s still true now.

That old book also warns us about:

“Those who try to control, who use force to protect their power … They take from those who don’t have enough and give to those who have far too much.”

This is how we will beat them, how we will win – by remembering what our ancestors learned long ago and finally, finally doing something about it.

Here’s the thing: it’s long past time to watch the guards. What we need, all over the West and once and for all, is a changing of the guards.

[Transcript End]

March 25, 2023 | Sundance

Interview: The Financial Collapse is GUARANTEED – What Now?

Armstrong Economics Blog/Armstrong in the Media Re-Posted Mar 25, 2023 by Martin Armstrong

Watch the video above or click here to watch my latest interview with Maria Zeee: “The Financial Collapse is GUARANTEED – What Now?”

Brenner & Kondratieff Waves v Economic Confidence Model

Armstrong Economics Blog/Understanding Cycles Re-Posted Mar 25, 2023 by Martin Armstrong

COMMENT: Marty, I began following you in 1985. That is when everyone was using the Kondratieff Wave and admitted it averaged 45 to 60 years. They were all predicting another Great Depression. You were the only one right back then as well. I remember your advertisement in the Economist saying a new Private Wave was beginning. The ECM has called every turn ever since and even to the very day.

Now the Brenner Chart is floating around all because it points to 2023.  The 1999 turning point which was supposed to be the high, was not just off from the stock market and the 2000 Dot-Com Bubble, but 1999 was low in gold. The 2019 target was also off for it was 2020 which was a low.

I think both the Kondratieff and the Brenner cycles have caused more harm than good in furthering cyclical analysis. You are right. They were commodity based not economic-based.

I just wanted to share my observations because people need to understand the difference.


REPLY: Oh yes. I remember 1985. It was high in the dollar and the British pound hit nearly par dropping from $240. Yes, we took the back cover of the Economist for 3 weeks during July 1985 to announce the start of inflation and the Private Wave. I was shocked that people held on to those advertisements and we would get letters even 2 years later.

The Kondratieff and Benner cycles were constructed during the 19th century. You cannot create a model on Wheat and then try to use it to trade Copper. Sometimes it will line up, and other times it will not.

Both Kondratieff and Brenner waves were not just based on commodities/sunspots, but they were in turn influenced by war and climate, unbeknownst to either. Kondratieff and Brenner followed agriculture/commodity prices when agriculture accounted for 70% of the GDP pre-20th century. That only began to decline from 1850 forward, dropping to 40% by 1900 as the Industrial Revolution emerged with the invention of the steam engine. Then there was climate change. The Little Ice Age bottomed in the 1600s.

Then there was the volatility in weather that also impacted the commodity prices. This too has contributed to the inaccuracy of both waves.  During the late 18th to early 19th century, it was still very cold and the ground would freeze down a couple of feet preventing winter crops. The ground froze to a depth of 2 feet according to John Adams. When John Adams set out to travel to Philadelphia, it was bitterly cold and there was a foot or more of snow that covered the landscape that had blanketed Massachusetts from one end of the province to the other. Beneath the snow, after weeks of severe cold, the ground was frozen solid to a depth of two feet. I grew up near the Delaware River. NEVER in my lifetime did I ever see the river frozen as you see in paintings of Washington crossing the Delaware River. In a letter to his wife, John Adams wrote:

“Indeed I feel not a little out of Humour, from Indisposition of Body. You know, I cannot pass a Spring, or fall, without an ill Turn — and I have had one these four or five Weeks — a Cold, as usual. Warm Weather, and a little Exercise, with a little Medicine, I suppose will cure me as usual. … Posterity! You will never know, how much it cost the present Generation, to preserve your Freedom! I hope you will make a good Use of it. If you do not, I shall repent in Heaven, that I ever took half the Pains to preserve it.”

On September 8, 1816, Jefferson described the weather in a letter to Albert Gallatin:

“We have had the most extraordinary year of drought and cold ever known in the history of America. In June, instead of 3¾ inches, our average of rain for that month, we had only 1/3 of an inch; in August, instead of 9 1/6 inches our average, we had only 8/10 of an inch; and it still continues. The summer too has been as cold as a moderate winter. In every state North of this there has been frost in every month of the year; in this state we had none in June and July but those of August killed much corn over the mountains. The crop of corn through the Atlantic states will probably be less than 1/3 of an ordinary one, that of tobacco still less, and of mean quality.”

Obviously, the Kondratieff and Brenner Waves did not understand the external forces. The climate was impacting the food supply, there were also wars. This is why their waves have not been consistent. If we extend the K-Wave 54 years from the commodity high in 1919, that brings us to 1973 which missed the end of Bretton Woods in 1971 by 2 years, but it was near the OPEC Oil crisis, which was imposed in retaliation for helping Israel in war. The Dow Jones Industrials peaked in January 1973 and crashed into December 1974. The Brenner wave did not bottom until 1978.

Another 54 years from there will bring us to 2027 while the Brenner Wave targeted 2019 and projects the low in 2023. Wheat peaked in March 0f 2022. So you can see if any of these targets were to actually work on time, it tends to be more of a coincidence rather than an accurate forecast. So I can see what you say that they have perhaps led some to think cyclical research is snake oil. It is so important to understand that you cannot create a model on potatoes and then use it to trade the Dow. We must understand the nature of markets to comprehend what we are really looking at in the first place.

There is a cycle of industrialization as well. Rome began as an agrarian society and moved toward trade, which brought them into conflict with Carthage. We see this cycle even in their coinage. The first silver coins of Rome were struck using the monetary system that was Greek in origin from the days of Athens and Alexander the Great. Only after the Second Punic War did Rome create its own monetary unit which was a debasement (reduction in weight) from 6.5 grams to 4 grams. That reflected both the inflation due to war, but also the rise of Rome whereby they no longer cared about complying with the Greek standard but set out to establish the Roman standard. To this day, many denominations still retain derivatives of the word “denarius” such as in the Iraqi Dinar or the French denier. The Germans called it the pfennig and the English adopted that as the penny.

Rome itself became more like New York and grain was imported from Egypt. As agriculture became more of an import, Rome blossomed like New York in the arts and culture. It built the massive port of Ostia which was celebrated on the coinage of Nero (54-68AD) securing the food supply.

The shift toward industrialization in the Roman Empire also resulted in a decline in birth rates for children as we see in modern times. Large families were needed in an agrarian society, but not so much in a developed society – hence the family laws of Augustus. We see the same patterns repeat throughout history.

The first known Clean Air Act occurred in 535 AD by Emperor Justinian in Constantinople. He proclaimed the importance of clean air as a birthright. “By the law of nature these things are common to mankind—the air, running water, the sea.” Even Cicero wrote about pollution in the ancient city of Rome. This went hand and hand with developed societies and urbanization.

Joseph Mois Schumpeter (1883-1950) was an Austrian economist, educated in Vienna. He taught at Czernowitz, Graz and Bonn. In 1932, he moved to Harvard where he taught until his death. Among Schumpeter’s writings is Theory of Economic Development (1912), Business Cycles (1939), Capitalism, Socialism and Democracy (1942), and History of Economic Analysis (1954).

Schumpeter developed a theory of trade cycles and growth; he argued that abnormal profit was the entrepreneur’s reward for innovation. He predicted, however, that the scope for innovation would be declining in the course of capitalist development as competitive market structures were replaced by monopolies. He believed that capitalism would gradually evolve into socialism. Like Malthus, he could not look into the future and see all the technological advancements that would constantly create waves of new innovation.

In 1939, it was actually Schumpeter who suggested naming the cycles “Kondratieff waves” in his honor. To explain the Kondratieff Wave, Schumpeter called them waves of innovation that result in waves of creative destruction. Each wave of some new innovation destroys the last. Cars wiped out horses & buggies. The internet is wiping out local stores, and the post office, as technology has introduced streaming that has wiped out VCRs and DVDs, and even movie theaters. The cryptocurrency advocates promote the end of central banks and paper currency.

There has always been a cycle of innovation. That was one of Joseph Schumpeter’s main theories to explain the business cycle. For example, first, there was the Canal Bubble that peaked during the Panic of 1825. There was the invention of the telegraph followed by the telephone. The ancient Romans had invented the first version of the Pony Express and could get a letter from Britain to Rome in about 7 days. That too was celebrated on the coinage of Emperor Nerva (96-98AD).

This age of communication with the Pony Express and stagecoach travel was followed by the invention of the steam engine. That gave birth to the railroad boom which lasted from the 1860s and peaked in 1907. It was on May 10th, 1869, when the Union Pacific and Central Pacific railroad lines joined 1776 miles of rail at Promontory Summit, Utah Territory connecting the East and West by rail. The Railroad Barrons became famous millionaires and that innovation boom peaked initially with the Panic of 1893, but the final rally in the railroads peaked in 1907. Thereafter, the combustion engine took over for the next wave of innovation giving birth to the automobile took over and peaked in 1929, tractors, and air travel.

On January 1, 1914, the world’s inaugural scheduled flight with a paying passenger hopped across the bay separating Tampa and St. Petersburg, Florida. Planes were used during World War I, but after the war, there were thousands of unemployed pilots and a surplus of aircraft along with an appreciation for the future significance of this new technology.

It was after World War I that civilian airliners began to emerge. The Fokker Trimotor built in Europe by the Dutch with an 8-12 passenger capacity was the most popular airliner in the 1920s. It had a range of about 600 miles. World War II was coming into play when the USA built Douglas DC-3 with a capacity of 28 passengers. It had a range of nearly 1500 miles. The DC-3 made its maiden commercial flight in 1936 between New York and Chicago and thus the airline stocks were the big innovation for the rally into 1937.

It was 1938 when televisions first began to be commercially available. It would be after World War II when this became the next real innovation boom. It was 1954 when color RCA TV C-100 systems were sold across America. By 1960, there were four debates between John F. Kennedy and Richard Nixon that were broadcast and changed the manner in which presidents would campaign. By 1969, Neil Armstrong walked on the moon for the first time as millions of American viewers watched live on network TV.

Of course, we have the internet boom in 2000, etc., and there is a clear cycle of innovation that Kondratieff and Brenner could not see before even the invention of the combustion engine that led to tractors changing agriculture forever. There is a difference between when something is invented and when it becomes commercially viable.

For example,  the FAX machine was actually invented by the Scottish inventor Alexander Bain (1811–1877) who was famous for being the first to patent the electric clock and was also involved in installing the telegraph lines between Edinburgh and Glasgow in Scotland. He could see in his mind’s eye that the Morse Code of dots and dashes invented several years earlier by Samuel Morse, could take an image and transmit it by reducing it to a binary image. He envisioned the first fax machine. In 1846, he was able to reproduce graphic signs in laboratory experiments. He applied and received a British patent #9745 on May 27, 1843, for his “Electric Printing Telegraph”, but it took more than 100 years to actually become usable. We have embarked on the next wave of innovation that includes quantum computers and Artificial Intelligence.

Consequently, when you are looking at long-term cycles, a few hundred years is not enough data. If Kondratieff were alive today and based his study on just the current system, he would be focusing on services rather than commodity-based economies. Agriculture has fallen to just 1.41% of the civil workforce.

It is simply vital to grasp the very nature of the data that you are intending to use to create models, which is itself in its own cycle of innovation. This is why the Economic Confidence Model is totally different. It is NOT panic on any single sector. It is based on the boom and bust movement irrespective of the sector and it embraces the entire world, not a single economy. Back-testing revealed that not only did the Roman Monetary System collapse in just 8.6 years, but this cyclical frequency appears throughout the ancient monetary systems globally.

There is a lot more hidden behind the cloak of what people think is just chaos.

Credit Suisse Banking Crisis

Armstrong Economics Blog/Banking Crisis Re-Posted Mar 24, 2023 by Martin Armstrong

It is refreshing when you actually find a journalist who is honest and is not being included by the Neocons to put out their propaganda. Her review of Credit Suisse is a worthwhile read. Especially when this is not over yet and the winds of finance are now turning toward questioning Deutsche Bank.

Izabella Kaminska is senior finance editor at POLITICO Europe.

Over the span of 10 days, the global financial system was once again shaken.

The time frame between the collapse of Californian lender Silicon Valley Bank, America’s 16th largest bank, and that of the 167-year-old lender Credit Suisse was approximately just that — 10 days.

And as we witness the fallout, so far it appears contained. Stock markets are up, bank stocks seem stabilized and government bonds are in high demand. Officials reassure ad nauseam that the financial system remains strong and stable.

But the truth is, even if so, what happened in this period of time has changed the financial system forever — and worryingly, most people haven’t even noticed.

Governments and central banks would have you believe that in both cases, private sector solutions were found to resolve the failures. No taxpayer funds were used.

But that is likely not true.

In the United States, growing calls from the country’s top billionaires and hedge fund bosses to guarantee the full extent of customer deposits would, if acted on, deliver a backstop that must be underwritten by public funds. That’s the case even if costs are distributed among whatever healthy banks remain later. The sums involved are eye-watering — by some measures up to $17 trillion of unfunded liabilities.

If the rule is passed — and all indications are that it will be — this would finally make the implicit explicit: that the financial system was never really rescued following the 2008 financial crisis but merely put on life-support. And that has now failed, which means socialization of the losses beckons.

Over in Europe, things are potentially worse. This time, it wasn’t the storming of the Winter Palace Hotel in Gstadt that seized the means of financing but something far more mundane: an untidy bank resolution for Credit Suisse, which relies far too heavily for comfort on Swiss National Bank (SNB) guarantees.

As one former top British central banker told POLITICO, “They could have used bail-in; it would have worked; and banking would become part of a capitalist market economy” — a reference to the loss-absorbing processes regulators came up with after 2008 to ensure bank failures didn’t have to draw on public resources ever again. “The only stable equilibrium is one where bank resolution works, or socialism,” he added.

But the resolution didn’t work. And investors are belatedly realizing this.

Key to this reality is that Credit Suisse was a bank considered to be in good condition and solvent by all regulatory measures. As one bank analyst told POLITICO, going by the assets, you would never have seen the problem coming. Even the SNB and financial markets regulator FINMA said so as recently as last week.

The SVB Private logo is displayed on an ATM outside of a Silicon Valley Bank branch in Santa Monica, California | Patrick Fallon/AFP via Getty images

So were the regulators lying? Or is the accounting somehow fundamentally broken?

What we know for sure is that markets questioned the numbers, and this was evidenced by a run on the bank’s deposits, equity and bonds. And the discrepancy poses a big problem going forward, as it knocks trust in the accounting of all similarly assessed banks, which, thanks to international accounting standards, means pretty much all of them.

Credit Suisse’s sale to domestic rival UBS at cents on the dollar of what regulators claim the underlying assets are worth presents another problem too. If similar assets are lurking in UBS’ own balance sheet — and chances are that is the case, as the assets in question are probably government bonds — they might have to be written down to a similar degree. This is probably why UBS needed the guarantee from the SNB to be doubled to 100 billion Swiss francs to do the deal.

In light of this, Switzerland now faces an even larger issue: If UBS were to become stressed — and it very well could due to this discrepancy — there’s no private sector pathway for resolution left. The country now only has one major bank and, thus, only two possible pathways to deal with a failure — nationalization or acquisition by a foreign buyer with enough cash to keep the valuation of all the consolidated assets at a price that brings everything back to par. And there are few of those in the Western hemisphere.

With a full foreign acquisition off the table due to global discord, this leaves only an unthinkable solution for the home of Swiss private banking — the dawn of a type of finance more commonly seen in communist countries, where banks are directed by the state to allocate funds to activities they prioritize. Combined with a central bank digital currency, this would reduce banks to mere proxies of the state, with uncertain consequences for efficient capital allocation and inflation.

How things would unfold from then on is unclear. The only thing we can be sure of is that nothing in banking, or capitalism, may ever be the same again.