Your blog, “Model & the 1991 Collapse of the USSR” for me was a major thought process change. I believed in the Random Walk down Wallstreet, not any more.
The chaos model example of the Dow Jones reminds me of the migration of the starlings – link attached.
I had a pet Starling, a very smart bird, who loved my computer and even pecked on my keyboard and accidentally sent an email one time.
I have even observed butterflies flying against the wind on a windy day by navigating within the calm currents of the wind.
Thank you for showing the pattern of the market.
Ernie
REPLY: It is truly amazing but there are so many aspects within nature that confirm NOTHING is random – there is a cyclical nature to everything thing. Here are the five Brain Wave patterns. If there is no cycle in your brain – you are dead. So I am always astonished by people who do not believe in cycles and think there really is such a thing as random walks. We need those people because they are the fools who are easier to separate from their money. They love to buy the high and sell the low. Thank you very much. Keep believing it’s random and the government is really Santa Claus.
And for those flat-word folks who didn’t believe that the earth actually was in a cyclical orbit around the sun, how absurd, don’t forget to put a mask on when you drive alone or when you sleep alone make sure you also put on a condom just to be really safe.
COMMENT: Marty, I remember your 1991 conference when you said Russia looked like it would collapse by the end of the year. I think it was December 31st when Gorbachev resigned. But I also remember how we were talking about how key reversals were still reappearing but migrating to different time levels. You never talk about that today. You had said that the migration of reversals would often hint at the next crash or slingshot. That was what we got in 1991 when Russia collapsed. Do you see anything like that again?
I am glad you are still at this. You have great insight as a trader.
If Scotty wants to beam you up, please say not yet!
DZ
ANSWER: Only for you Dave. Your memory is better than an elephant’s. OMG, how black was my beard. I also had some hair back then. Yes, you are right. I probably have not written here about the strange manner in which markets do move. Yes, the USSR collapse by the end of that year. There was the August 1991 coup against Gorbachev.
The Quarterly Array back then picked the 4th quarter of 1991 and the 4th quarter of 1992. The first was a Panic breakout to the upside and the second was a Panic to the downside making the reaction low the week of October 10th, 1992. The reversals were clearly fractal in nature and key reversals will reappear and migrate through the various time levels. That was something which was very fascinating. I promise I will find the time to express more detail on that phenomenon. It was indeed another aspect that the model revealed that I never expected. There is such a hidden order that lies behind the mask of randomness.
People who talk about random walks are simply incapable of forecasting for they cannot see the order behind what they think is chaos. Just as Einstein said, he cannot believe that God plays dice with the universe. I discovered the same thing when it comes to market activity. There is no such thing as random walks. There is a secret order to everything.
When I went to economics class, they said there was a business cycle but it is not regular and cannot be predicted because it was random. Then I went to physics class and they said nothing is random. I came to the conclusion someone was lying. It turned out to be the economics professor. Larry Summers still maintains that view. Hence, economists can manipulate society if it is random – not predetermined.
In plotting what Lorenz thought was random weather data, what emerged was a hidden order that we could not see otherwise. This even disproves the entire nonsense of Climate Change. It has always changed and there is a pattern to the movement – it is not random and we have not altered the climate cycle. Again, it is the same type of people who cannot see the patterns in markets so they say it is a random walk.
I ran markets through our Chaos models and patterns of regularity emerged – not random walks. Again, there is far more order to markets and that is why personal opinions will never cut it when we are trying to forecast the future.
I have on my bucket list to do the next book on the ECM – my gift to posterity. Hopefully, one-day people will wake up and understand that there is a hidden order to everything – NOTHING is ever random. When the USSR collapsed, the capital again fled to the USA in the face of a new level of uncertainty. The New Yorker ran the article on me in 2009 and called it – The Secret Cycle.
COMMENT: Marty, it has become obvious that the media promotes everyone but you. I have attended your WEC events and have met central bankers and people from all the major investment banks both in Hong Kong and at your Berlin Conference. The media avoids you like the plague. But everyone of any substance attends your events. Obviously, the media avoids you to suppress the truth when those in power listen to you. Very interesting.
Can’t wait for Dubai
FW
ANSWER: What I do know is that the major media needs its talking heads. It is irrelevant if what they say is right or wrong. It is only the content they need. They do not want someone like me telling the world what you preach about interest rates is not just wrong, it hurts a lot of people.
I was doing a TV spot I think in 1983. It was FNN that became CNBC. I was doing an interview with Walter Bressert. I gave our forecast that the British pound would fall to par by 1985. The pound was near the $2 level at the time so it was a 50% drop. The host was shocked. He turned to Walt and asked – “What do you think about that forecast?” Walt and I were good friends. He replied, “I would not bet against his computer.”
That was the last time I was on FNN. They want the standard BS. They do not want real analysis, especially long-term which our computer has been the best at compared to anyone. So, I’m not sure it is some conspiracy plot. I think it’s just self-interest. Major media will occasionally cover our forecasts, but generally only after the events.
Barrons had reported our forecast from 2010 that the stock market would make new highs, only when they thought it was a joke. When it happened, they never reported that we were the only ones with that forecast.
Major media is not interested in actual forecasting. They only fill content. They just need the talking heads. They do not care if they are ever right. They are selling content – not real analysis. Even the BBC wrote about the economic forecast at DAVOS on how they are always just wrong. They wrote: “There is just one problem: economists have a poor track record for getting it right.” Why? Simply. When people forecast they are expressing an opinion. They are influenced by the current trend and as such, they can never see in advance the change in that trend.
Our computer is usually correct on the long-term trends. It has never missed a shift in the business cycle that I can recall. The media is just not interested in something like that. They want the controversy and personal opinions for they themselves form personal opinions just as they have bought into Climate Change and now they are promoting World War III.
QUESTION: Do you think that Socrates will ever achieve infallibility?
KJ
ANSWER: I have only shown our Global Market Watch model at conferences. It is a pattern recognition model that is learning every day. I have pointed out that nothing is infallible but if anything can achieve that, it will be this model. Right now, it’s not too bad, but it is still in its infancy. What has shocked me more than anything is that it has identified over 80,000 patterns. This is incredible to me. However, it explains why it is impossible for a person to actually forecast correctly. There are so many subtle variances that something may not be what we think is unfolding.
Eventually, it is theoretically possible that we reach some limitations of the pattern variances. If that can be achieved, then and only then would you be able to forecast infallibly.
Yet there is something else of tremendous importance. Socrates has been virtually infallible on the long-term trends and events. What I have come to understand is that there are so many possible variations in the day-to-day trends, but it does not alter the long-term. It projected a financial panic in 2008 10 years in advance. How do so many events unfold to the very day of the Economic Confidence Model? All I can say is that these events, which have nothing to do with my personal opinion, confirm that there is a hidden order of complexity that the make human eye cannot possibly see. There are just way too many events that unfold precisely on the very day of a target to be just coincidence. There is a far greater order that exists and people will disparage these forecasts because they think they only work because we have a huge client base.
QUESTION: So if I read you right, you never anticipated that your computer would also forecast war and geopolitical events. ChatGPT seems to be able to find things and answer questions. But it cannot forecast the future by itself. So what did you do that is even more impressive than ChatGPT?
DW
ANSWER: Being a programmer since my teens, was the key. Being a trader, I had experience in both fields, which enabled me to TEACH my system how to analyze. So Socrates is not going out to the web and collecting what everyone has to say. It is analyzing the data all on its own.
Because I was also a history buff, I saw how civilization rose and fell. There was obviously a cycle to absolutely everything. Since even taking energy, we use to just burn wood, then oils, then whale oil, and then oil. There is a cycle to innovation. Not personally knowing if that will change to something else, I had to construct my system with my experience and then allow it to discover entirely on its own.
I have explained at conferences that we had a client, the Universal Bank of Lebanon, who found a ledger recording the daily prices of their currency back decades. They asked if we could create a model. The data was input and the system forecasted that their country would go into chaos in 8 days. I thought something was wrong with the data. They calmly asked – What currency would be best? They saw themselves the crisis coming and in 8 days the civil war began. The same took place with a Sausi client who was a big shipper. He wanted to know what gold was going to do for Iran was going to start attacking shipping in the Gulf the next day. I asked: Are you telling me a war will start tomorrow? Oh yes, he replied. So by 1998, it was clear that the computer was capable of projecting wars. That is when I stood up in our London WEC in June 1998 and warned that Russia was about to collapse in 30 days. That became the Long-Term Capital Management collapse with the Russian bond market.
So ChatGPT is cool and it will dazzle everyone. I wrote such a program during the early ’80s to teach my computer how to use natural language to communicate. I used my children as the input. The program I wrote was designed to have a conversation. It would retain a database of who you were so if it asked if you had a dog and you said yes, it would ask you its name and remember that. So the next time you came back it would ask you how is your dog. It had so impressed my daughter should bring all her friends over. I was working with Dragon Systems back then when it was hardware. So the computer would talk verbally to them and they thought it was alive.
We will release a portal where you can ask Socrates questions and it will respond. But this is focused on the economy, not the name of Lady Gaga’s dog. Socrates is totally different from ChatGPT.
Mark 12:41-44: “And Jesus sat over against the treasury, and be beheld how the people cast money into the treasury:k and many that were rich cast in much. And there came a certain poor widow, and she threw in two mites, which make a farthing. And he called unto him his disciples, and saith unto them, Verily I say unto you, That this poor widow hath cast more in, than all they which have cast into the treasury: For all they did cast in of their abundance; but she of her want did cast in all that she had…”.
A lot of people are asking if I have any more biblical Widow Mites I could put together. The answer is yes, but I will have to see what I have left. For those who want the unusual showpiece, we can frame a Widow’s Mite with a Roman Nail documented from the 1st century at the time of the Crucifixion. While most of the nails were retained by the museums after the discovery, a small portion was allowed to be sold privately.
Roman nails were made of iron. This hoard was buried to prevent others from finding them from which they would make weapons and shields. Iron was a valuable metal to many of the barbarian tribes. Hence, this hoard was a remarkable find from the 1960s. They finally allowed some to be sold only in 1999.
Those interested in such a unique gift, send an email. Obviously, we would need to know how many people really want to have them framed up.
The price would be $125 for a Roman nail and a Widow Mite framed
SpaceX is targeting Thursday, January 19 for a Falcon 9 launch of 51 Starlink satellites to low-Earth orbit from Space Launch Complex 4 East at Vandenberg Space Force Base in California. The instantaneous launch window is at 7:43 a.m. PT. Following stage separation, Falcon 9’s first stage will return to Earth and land on the Of Course I Still Love You droneship stationed in the Pacific Ocean. We will go live ~10 minutes prior to liftoff.
QUESTION: Marty, I was there at your Berlin conference when one of the attendees openly admitted he was from the Bundesbank. He was very open about it. There have been other central bankers at your WEC. I suppose they have to attend just to get a whiff of the trend. Powell has come out and asserted the Fed’s independence and it will not make policy based on climate change. That was very refreshing. The bulk of analysts still cry about the creation of money at the Fed are insisting that a recession is coming because when the Fed stops printing, we will see a correction worse than 2008. Some call this a confetti party. Many claims to be fed watchers, but have never stepped inside their door. Meeting the people I have at your WEC events, you are always in the center and I can see it is not your opinion but Socrates that they want to listen to for an unbiased view. So will there be a huge correction when this party is over or have the fed watches been talking sophistry with no real insight?
HD
PS: What about a Dubai WEC because the world imposes vaccine passports?
ANSWER: I know, This is the typical myopic domestic view that the Fed is in a very dangerous situation and a wrong move in any direction could cause a financial system meltdown worse than 2008. The argument is that since we have a debt-based monetary system if the Fed stops increasing the money supply this will lead to an economic withdrawal process that will be worse than 2008-2009. Once more, this is only looking at the domestic economy. They live with blinders on and do not see the world around us with respect to the globalization policies that are all in chaos.
Even at Davos in 2003, Alejandro Toledo, then President of Peru, urged the participants to listen to the voices of those protesting outside and to build a bridge with the participants of the Porto Alegre anti-globalization conference. “We must give a human face to the global economy and globalization,” he said. “Managing the economy is not an end in itself, but a means to improve the quality of life. Globalization is meaningless if it does not contribute to reducing poverty all over the world. “ Schwab preaches equality but at the price of Authoritarianism and the loss of individual rights.
The Fed is not between a rock and a hard place domestically. It just made it clear that it is not like the ECB and is not in the climate change business. The Fed is INDEPENDENT and will not be bullied by Biden. The Fed understands that it has become the world’s central bank and its actions in raising rates have had a far greater impact externally particularly in emerging markets because so many other nations issue their debt in US dollars.
The focus is not entirely on the nonsense of the domestic number of the money supply. If a foreigner buys property in the United States, they convert their currency to dollars, and in effect that increases the domestic money supply for that capital now free up cash domestically. The Fed has no control over that aspect and central banks have become aware of this effect which is not taught in economics class and not factored into the doomsday forecasts all based on the same reasoning forever.
All the analysis is constantly based on the Quantity Theory of Money which no longer works in our global economy. That was the foundation of the money theory that emerged with Sir Tomas Greshan who was the agent for the British crown. He saw that when Henry VIII debased the coinage, the value declined in Amsterdam when the exchange rate was solely based upon the metal content of the currency.
All we have ever heard is that the Fed has the power to create money out of thin air. They never explain why the Fed was given that power. You cannot have a fixed money supply as the population increases, then you end up with DEFLATION which is the rise in the value of money. They are married to the argument and nothing you can do will deter them from that saying. During the Great Depression, people hoard their money and do not spend it. That was why the ECB went to negative to try to force people to spend money. You can DOUBLE the money supply but if the people hoard it, you will never create inflation.
Because people hoard their cash, there was a huge contraction in the velocity of money. This resulted in massive shortages and it led to over 200 cities issuing their own money to try to enable a local economy to still function for there was not enough cash to even pay anyone for services.
INFLATION is actually the decline in the purchasing power of the currency as measured against assets. DEFLATION is the rise in the value of money and the decline in the value of assets. The way the term “inflation” is handled today, the government puts the blame on the private sector. During DEFLATION we are blamed for not spending our money.
All this talk about bail-ins and bail-outs misses the point. They act as if they in the end really matter. HYPERINFLATION will never arrive based on increasing the money supply. It arrives with the collapse of CONFIDENCE in the government. Germany imposed a forced loan and confiscated 10% of everyone’s assets in December 1922. Germany lost the war and in 1918 there was a Communist Revolution that led to the creation of the Weimar Republic. The money supply increased 10 fold during 1922 when they were struggling to meet the reparation payments. That undermined the confidence in the government. But it was December 1922 when they confiscated Note that the hyperinflation took off in 1923 after that forced loan. It was no longer safe to have assets in banks.
This idea that we are headed into so black hole all because the Fed creates money is insane. That misinformation that the German Hyperinflation was all because of printing money was totally absurd and a lie. Once the government stole 10% of everyone’s assets, that was the final straw. They then had to print just to try to cover costs and meet reparation payments.
The Lesson of Germany is seriously distorted and has inflected the view of money supply and inflation which ignores the actions of the government. That is the real issue.
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!
This is a library of News Events not reported by the Main Stream Media documenting & connecting the dots on How the Obama Marxist Liberal agenda is destroying America
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