Erdogan has asked all the Turkish people to convert their dollars to Turkish Lira. This is a desperate act. The rumors behind the curtain are running wild. Many are concerned that Erdogan’s policies have just destroyed the confidence in his government both internally and externally. Turkey is now on watch for a possible monetary collapse. The key monthly closing resistance stands at 42425.
QUESTION: Martin
Thanks again for all you do.
The subtext of most of what you talk about is overwhelmingly negative. Inflation, deflation, earthquakes, disease, government default, over taxation….. etc. Am I correct in thinking that despite your advice you anticipate most of your readers, even the most wealthy, will be left with little to hand over to their children and grandchildren by the time we get through to 2032 +/- ?
Regards
P
ANSWER: If someone stands in front of you and says they are going to punch you in the face, do you
Yes, the climate is turning back to cold. Yes, a single volcano can result in worldwide famine if it is big enough to block the sun for a few months as was the case with Huaynaputina which is a stratovolcano in Peru that erupted in 1600. Then there was the Year without a Summer when it was snowing in New York City during July. This may sound horrible, but it is also an OPPORTUNITY to shift investment money at the right time into commodities to survive. That is aside from the fact that you should be wise and stock up on some supplies and canned food in case that event unfolds. Just look at it as buying fire insurance just in case.
A disease is often a lifeform. Viruses mutate and we can think we are clever and create drugs to kill them, but then they mutate and defend themselves against our defenses with the object of infecting humans or killing us. That is their role in nature and we all have our purpose in this environment. There is the Nipah virus so far confined to southern India for which there is no cure and it kills 75% of the people infected. This is nature out to get us. That is simply who the workd works. We cannot pretend it does not exit. It’s just best we know where it is and stay out of that region.
Sweden has issued a booklet to its people telling them what to do in a crisis or in war comes with Russia. An economic crisis is coming and the question becomes do you only want to hear the nice things and then find out your pension is gone as they are in Illinois, or do you want to prepare for the worst (buying life insurance) but hoping for the best (not collecting on it)? The government employees in Decatur, Illinois may soon find that they have no jobs because the town can’t pay those on pensions sucking up the money that prevents current employees from earning a living.
To me, this like more like Joseph warning the Pharaoh that there is a cycle of 7 years of plenty followed by 7 years of drought. If you know what is coming and prepare for it, you survive. It is as simple as that. We can hide our head in the sand and pretend nothing will every happen or go wong. Then we are unprepared and we will fail. I get called into crisis management problems because the people so close to it are emotionally blinded and cannot see the solution.
What is left at the end of 2032? The British Empire fell but Britain is still there. The fall of the United States may end in the breakup of the country into regions based upon huge cultural differences. One example that illustrated the vast differences in culture between regions of the United States is when California agreed to pay for a sex change of a convicted murderer who is serving a life sentence no less. It is hard to imagine any state in the South or Mid-West agreeing to such a procedure. California is raising taxes because its state employee pensions are underfunded. They have the money to pay for sex changes for people they have no intention of ever releasing? Many in the USA regard California as being just so far left, it should indeed just separate and become its own country.
The monetary system will change. That is beyond question. It is also beyond question that the dollar will rise and the rest of the world begins to crumble from its economic mismanagement of government. That dollar rise will break the back of the monetary system and the NUMBER one thing to survive will be tangible assets – stay away from government bonds. So will you have something left at the end of the day to leave your grandchildren? Yes, if you listen and understand the shifts underway and realize that there is a difference between assets and cash.
The system will break. I am doing what I can for my grandchildren. I have an expiration date so I will not have to be here after 2032. By exposing the problems and showing what the solutions are, just maybe when the money tree comes crashing down, we can all speak up and be heard to make sure what comes thereafter will be a reset in the proper direction compared to totalitarianism. EVERY Republic and Democracy has collapsed because of corruption. If you really care about your grandchildren, then understanding which direction we have to push this falling money tree to create an OPPORTUNITY for them will be extremely important.
This is WHY I have continued to do the WEC events. We have to stay on top of what is happening globally to survive the future. If there is an urgent change in anything discussed at these events I will send an email notifying attendees of what has taken place. These events are never about my OPINION. They are about reviewing the entire world to enable us to see the trend and have CONFIDENCE in acting accordingly.
COMMENT: Hi Martin, I really love your work. You are the only one financial guy I follow. Your power is obviously your prediction computer program Socrates which I use every day. I understand that your other posts are just your opinions and I would like to point out some of the flawed arguments you make about Cryptocurrencies( in my humble opinion) as I would really like to see you put a little more effort to study them if you are interested in this field
1) As you said many times. The majority must be wrong in order for big moves to happen. Well, I can see that this might be the case for cryptos.
2) Government can just kill Cryptos by banning them. Well, they can but they would have to do it simultaneously. Which will never happen. If US ban cryptos, all that will happen is that ale IT specialist and all money created in this new industry will shift elsewhere. There is no benefit at doing this. It is the same if any state would ban Internet back at 90ies. They would get isolated. Also, keep in mind that law which is not enforceable is not a law. People will just ignore it. You cannot ban cryptos, same as you cannot ban torrents or internet.
3) Bitcoin cannot be used as currency because the economy needs fractional lending to create money and elastic money supply. That is true. Number of Bitcoins is fixed. That is why Bitcoin in the crypto world is called digital gold.
However, there are other cryptos which can fulfill this role easily. That is why we have hundreds of them and each is experimenting with different branches of society. For example, there are cryptos which have steady inflation mechanics build into them. And suddenly there you have predictable inflationary money supply which everyone can predict. I can remember you actually rooted for this idea – Why do we have taxes after all? The more easy way would be if the state just prints its money it wants to spend, for example, it will say that it will print 30% of GDP each year. Well, this is easily achievable by cryptocurrencies.
You can do ANYTHING with them. They are protocols, programs and they can take a shape of whatever you like. Their common trait is that they do not need a central authority to operate, they do not need hierarchy, they use flat hierarchy. That is the 1st time on this planet we can do this kind of stuff without hierarchy. I hope this message will get to you. Please do more research on cryptos.
Do not get obsessed with bitcoin. It is just one of the players. It is pain for me too see your posts which lacks more insight into this subject as I know you are a brilliant mind.
Best, Jan
REPLY: My skepticism of cryptos becoming the world monetary system is a question of political power, not technology. You also have to understand the law and how they use it to manipulate events. Let’s look at how they broke up the South and segregation. Each state passed its own laws and dealt with segregation in their own way. Then in Washington, the question was State Rights v Federalism. Then a brilliant idea popped into their heads. Hey – there are no State Rights! They suddenly used the Supremacy Clause in the Constitution to nullify anything a state does.
The Supremacy Clause of the United States Constitution (Article VI, Clause 2) establishes that the Constitution, federal laws made pursuant to it, and treaties made under its authority, constitute the supreme law of the land. … Even state constitutions are subordinate to federal law.
Once they discovered that power, they have used it ever since. Take marijuana. The Feds put people in prison for selling it. Some are there for life no less. Then the reality is that marijuana is by no means dangerous and is even beneficial in certain medical conditions. Cocaine used to be the ingredient in Coka Cola which was named back in 1885 for its two “medicinal” ingredients. These secret ingredients were an extract of coca leaves and kola nuts. The original drink formula was a secret. Consequently, the drink unquestionably contained some cocaine in its early days. There were taxes on opium, cocaine, and marijuana. The Marihuana Tax Act of 1937 was overturned by Congress in 1970. From that period on, after the Fed used the Supremacy Clause against segregation in the South, they then applied to drugs.
I don’t think you appreciate that when it comes to revenue, the governments will get very aggressive. I have stated before I was one of the three largest market makers in gold – perhaps the biggest. The IRS walked into my office and simply said that they classified me as a bank because gold was not officially demonetized. Therefore, I had to comply with the same reporting as a bank and tell the IRS every client who bought or sold more than $10,000. They said the fine was $50,000 per transaction I had failed to report up to the full amount of the transaction. I asked did they just want the keys to the business? They then said they understood I did not realize I was a bank so they would forego the penalties if I let them in to audit all my customers. I decided to retire. It was a joke.
They have already done the same thing to Coinbase. They have declared Bitcoin miners to be financial institutions the same as they did with me. They have focused on requiring you to declare if you have more than $10,000 in cryptocurrencies when traveling as if you had that cash in your pocket. If you fail to tell them you have that and they discovered you failed to report it, that will be jail-time and they confiscate everything you have. The crime will be a failure to report the same as it is in income tax. The crime is not PAYING taxes, the crime is FAILURE TO FILE. This is the same. It is not a crime to “own” cryptocurrencies, the crime will be a failure to declare you have them when traveling.
This idea that we can overpower governments and eliminate central banks may sound great to some and no central ledger. What you are really advocating is a single currency for the entire world that eliminates governments. Do you really think they will just stand down quiet?
This is why I say they are an ASSET CLASS. Calling them a “currency” will only bring them down against everyone using laws to devastate whatever you are doing. You cannot win that battle. They own the judges as well.
None of the big IT firms are backing blockchain. This is the reason. You cannot dance with the devil and expect to win – IMPOSSIBLE!
Cryptocurrencies are an asset class and should remain in that category. You can trade them and make money. That’s all good. Will one emerge and overturn the world? Not without blood in the streets. You are taking on the most ruthless opponent that exists. There is no rule of law that will save you. You have ZERO rights. Everyone thinks you have the 5th Amendment right to remain silent. It does not exist whenever they want to ignore it. They put me in contempt under the theory that a corporation has no such right and thus me PERSONALLY was never in prison on contempt, it was the corporate officer. They play with legal fictions to accomplish whatever they desire. I released ONLY because it made it to the Supreme Court. Without that, they would have killed me in the blink of an eye. You have NEVER faced such evil people as you will in the Department of Just Us.
Your cryptocurrency is whatever they declare it. There are people in prison for “money laundering” they defined a (1) hiding cash from the government, and (2) paying off one credit card with another. Look at the fine print on a safe deposit box in a bank. You are not allowed to put cash in there or gold – only documents. They can confiscate cash or gold because it is now considered to be “money laundering” to hide money from the government. This is why I also say if you buy gold, make it $20 gold pieces so you can claim you are a coin collector and it is not bullion. That gets around most of the safe deposit rules.
I fully understand that many as desperate to cryptocurrency will overturn the financial system. It is just not going to be so easy or without blood in the streets. If a guy comes up to you walking down the street and sticks a gun in your face and says give me your money, do you really think lecturing him on the robbery is illegal as well as unregistered guns? You are facing the worst of the worst for the government is the court system and they will NEVER rule in your favor on an issue that brings down the government and the judge will be out of a job
The Hunt for Taxes has now led to criminal charges for manipulating stock ownership to avoid the tax on dividends. There German Attorney General has filed criminal charges against a number of traders for the first time in what is called Cum-Ex transactions. The name seems a bit strange but it involves shifting the ownership of shares around between various people on the dividend record date (Latin: “cum”) and without dividend taxes applying (“ex”). The German Federal Ministry of Finance has said that banks and other suspects have avoided taxes by more than five billion euros.
These type of transactions have been going on since the 1970s. Honestly, the one you heard of was concerning the French. They would sell their shares to a Brit who would be exempt from the tax and then the following day buys them back splitting the tax savings. Not the Germans are licking their lips at how much money they can now fine banks for helping these type of transactions while they are threatening the traders with ten years imprisonment.
Of course, there is no specific law against this practice. It has been a loophole for decades. This attempt to use the criminal proceedings in Germany is by no means a solid case. There is such a thing as Ex Post Facto, which means you cannot declare something to be a crime after the fact. It appears that ten years in prison is the favorite means to extort money from people against the law over controversial share transactions, that are retroactively applied when they were not before. They will challenge this is the Wiesbaden district court which will decide by the end of August. If that court rules for the government, as far too often is the case when taxes are involved, then it will go up to the Federal Court or even all the way to the Federal Constitutional Court
The outrageous tax of $275 per employee for companies that do more than $20 million in business annually by the city of Seatle for the claimed housing of homeless people is really over the top. It’s not just Amazon, there are a number of businesses being hit. Cities are becoming the place to avoid. This is how they die. They just keep imposing more and more taxes without end so it simply becomes less burdensome to pick up and leave. You typically have parking fees, aggressive tickets by police, and fines of every sort possible all as a means to raise revenue. Then, because of the tax, Amazon put a hold on its development of offices there. Because they were considering not opening up in Seatle, some called this extortion and called for criminally charging Amazon. So if you object to new taxes, that is now a criminal offense? That really want you to move to such a place!
They always impose a tax with some noble label. New York City originally imposed taxes on cigarettes because they really wanted to help people quit. When they did quit and switched to electronic cigarettes, the tax revenue decline and so they looked at then taxes electronic cigarettes. Once they get their hands on revenue, they use it for whatever they desire and they never give it back.
QUESTION: Hi there Mr. Armstrong
In attempting to synthesize some of your past comments, I wonder if it is accurate to conclude that rate hikes are the lesser of two evils between collapsing pension funds and higher debt servicing costs? If so, the implication is that budgets don’t matter, since it appears you can add another 200B to 400B dollars to your running costs each year, not including higher military spending, new infrastructure investment, trade protection costs etc… without any consequence to the demand for dollars. This is a hard concept for the average person to grasp since, in his/her world, budgets DO matter.
But why do pension managers not buy equity if they want higher returns? Surely this would resolve the problem since western central banks, who appear to deem it their responsibility to protect pensions, could embolden primary brokers, hedge funds, and UHNW investors to produce the concentration needed to raise stock markets into the future, thus securing pension returns.
It also seems that from what you have said, whilst markets are overvalued compared to previous years, they appear not to be overvalued in the present, relative to other asset classes. Investors who have been reading banking commentaries over the last 20 years must feel that valuation guidelines should now be taken with a pinch of salt.
Thanks for your efforts and for keeping the conversation going.
Best regards
CA, Switzerland
ANSWER: We have a number of major pension funds who follow our computer and have outperformed everyone else on the block. However, the problem is not pension funds lacking the desire to move to equities, but many have their hands tied and are restricted to government bonds. Then we have state pension funds like CalPERS in California, who was a big investor in US equities, and was directed by politicians to be politically correct by investing in environmentally pro-active companies. That has been a huge bust.
Some pension funds have followed the 60% equity and 40% bonds rule, but others, most state pensions, made it 80% bonds and 20% equity. Then they ran off into emerging market debt to get the high yield. The Swiss Federal Office for Social Insurance posted 57% of pension funds were underfunded at the start of 2009. Take Belgium where the maximum limit for investment by pension funds into equity is 10%. The bias for government debt in pensions is illustrated by Germany where the maximum investment into any single issuer is set at 5%, but they can invest 30% of the fund in a single government issuer.
We have been creating some clever packages to help some pension get around those limitations. I am not at liberty to discuss the matter.
In Illinois is a State that should just commit suicide and be emerged into surrounding states. It is following the EXACT pattern as the fall of the city of Rome itself. Constantine the Great moved the Roman capital from Rome to Constantinople around 330AD. Rome lost its status as corruption and taxes rose. More and more people just walked away from their property for there was NO BID.
Property values are already collapsing in Illinois. The Pension Crisis is worldwide, but Illinois is leading the charge. The words of Edward Gibbon from his Decline & Fall of the Roman Empire are very applicable to Chicago. This is how empires, nations, and city-states die. It is always the abuse of taxation that drives people from their homes. Illinois is the NUMBER ONE state that now has a NET loss of citizens and people are fleeing that state. Bureaucrats cannot see the trend any more than they can see their own nose. They only see raising taxes. To them there is just no other way. They come first. Gibbon wrote:
“Her primeval state, such as she -might–appear in a remote age, when Evander entertained the stranger of Troy, has been delineated by the fancy of Virgil. This Tarpeian rock was then a savage and solitary thicket; in the time of the poet, it was crowned with the golden roofs of a temple, the temple is overthrown, the gold has been pillaged, the wheel of Fortune has accomplished her revolution, and the sacred ground is again disfigured with thorns and brambles. The hill of the Capitol, on which we sit, was formerly the head of the Roman Empire, the citadel of the earth, the terror of kings; illustrated by the footsteps of so many triumphs, enriched with the spoils and tributes of so many nations. This spectacle of the world, how is it fallen! how changed! how defaced! The path of victory is obliterated by vines, and the benches of the senators are concealed by a dunghill. Cast your eyes on the Palatine hill, and seek among the shapeless and enormous fragments the marble theatre, the obelisks, the colossal statues, the porticos of Nero’s palace: survey the other hills of the city, the vacant space is interrupted only by ruins and gardens. The forum of the Roman people where they assembled to enact their laws and elect their magistrates, is now enclosed for the cultivation of pot-herbs, or thrown open for the reception of swine and buffaloes. The public and private edifices that were founded for eternity lie prostrate, naked, and broken, like the limbs of a mighty giant, and the ruin is the more visible from the stupendous relics that have survived the injuries of time and fortune.”
There is absolutely no hope whatsoever of fixing this problem of a pension crisis in Illinois and every solution, like the current one from the Chicago Federal Reserve and its proposed 1% on property annually for the next 30 years, will fail in the end. The state has COLAs which insanely increase state employees’ yearly pensions by an automatic 3% annually, regardless of the inflation rate. Because Illinois does not have its own currency, it is then bound by the national value and international value of the dollar. Like Greece, as the dollar rises, Illinois is thrown into deflation. Its institutions are broken, and they will be remembered only by history.
These annual increases of state employees pensions negotiated with other state employees to line their pockets forever are simply driving up the costs of pensions every year. Illinois’ COLAs are killing the state and the future is ABSOLUTELY hopeless. Any reader in that state or who has family in that state had better put your property up for sale NOW and get out of town while you still can. Hopefully, a fool has just entered the housing market and its time to get out if you can get a bid.
The Chicago Fed published its proposal formally. As always, it assumes that we the people are an endless supply of revenue with no end. We are the economic slaves to serve the people who are supposed to be serving us. The Fed is proposing a 1% annual tax be imposed already on top of the highest property taxes in the country. They propose that will stay in place for the next 30 years. What they fail to recognize is that property taxes are a net loser for they are never considered as a cost when you sell your home. If you paid $100,000 in 1968 and sell it for $200,000 today and paid $2,500 on average per year for the past 50 years, you paid $125,000 in property taxes. Then the State and the Feds want their tax on the $100,000 profit since they do not count the taxes paid. This is not a very good deal.
For now, the Fed’s proposal is that homeowners with houses worth $250,000 would pay an additional $2,500 per year in property taxes. Illinois already has a net migration out of the state. That means property values will DECLINE and the tax burden will increase on those left behind. Property taxes in the 3.5-5% level will devastate home values. The average person cannot afford those types of taxes on top of sales taxes, incomes taxes (state & federal) and expect to have any kind of reasonable life.
If you can’t pay the property tax, then they confiscate your home and sell it for taxes at whatever price it brings. Just have a friend who bought two houses that were valued at $70,000 each for tax records for $7,000 for BOTH! They do not care what property brings as long as they get their tax.
History repeats because human nature never changes. Rome fell, we all know that. However, when you plot the actual population of Rome, what emerges is a very interesting and a stark reality that applies to Illinois. As taxes and corruption expanded, people could no longer afford to live there and they were forced to just walk away from their homes.
The value of real estate went to ZERO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Beware!!!!!!!!!!!!!!!!!!!! History repeats!!!!!!!!!!!!!!!!!!
It was only a question of when, but now those investors who lost 100% of their money in Banco Popular in Spain are filing a lawsuit demanding answers in a court filing in New York seeking information from the purchaser of the stricken bank – Banco Santander who paid just €1 to take over troubled rival Banco Popular. This entire affair demonstrates why European bank shares and bonds are FAR TOO RISKY to own. The government demands that European banks raise capital. However, if you invest in a European bank and there is a problem with more bad loans than expected, they can seize the bank and sell it for even €1 and you have lost all rights to your investment.
I have warned many times, you cannot play around with governments. They can change the law retroactively, do whatever they desire and will NEVER be prosecuted for even outright fraud. They are the Devil and you just cannot reason with power gone crazy.
The Greek tax authorities are really destroying any semblance of a free society all to satisfy the EU. Tax agents have been pretending to rent houses for a vacation and then monitoring if the people pay taxes. The government is pro-actively sending out people to do business and they are looking to see what you do. God help you if you do not report finding €10 in the parking lot. The Greek people have gotten NOTHING out of the Euro. Had they stayed out of the Euro, tourism would be up for it would be the cheap place to go, although it has finally risen 8% in 2017 as the cold weather in the north has sent Europeans fleeing to the sun. As tourism hit a record high, the tax man wants their action.
I have created this site to help people have fun in the kitchen. I write about enjoying life both in and out of my kitchen. Life is short! Make the most of it and enjoy!
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