China – A Different Central Bank Altogether


QUESTION: Mr. Armstrong; I believe you once said at your conference that you were surprised when you were asked to fly to Beijing to meet with the central bank because you were not an academic, but a trader. I think you said when you got there they were traders working in the bank, not academics. Did I recall that story correctly?

ANSWER: Yes. The central bank had sent staff to work on trading desks around the world in Tokyo, New York, and London. They then returned to run the bank. When the 1997 Asian Currency Crisis hit, I was very surprised that they asked me to come and not some academic. When I got there, I discovered that they were traders and we spoke the same language.

When I returned to the States, people I knew in the Fed and in Treasury called to ask me my opinion after these meetings with the Chinese government. I responded: It was great. They only hired people with experience!

I understand so many people think China does whatever I say. I think the real story is they may take what I say, but they see it through the eyes of a trader rather than an academic. Hence, they adopt it quickly but never blindly. They have a good nose for trends themselves.

Google’s Antitrust Case in Europe


QUESTION: Mr. Armstrong; Is Google really violating European antitrust laws to warrant such a huge fine or is this really a trade war?

KQ

ANSWER: It’s a trade war. Granted, the EU hit Google with a record-breaking fine of €2.4 billion ($2.7 billion, £2.1 billion) by European regulators who accused the California-based technology giant of abusing its dominant position and promoting its own shopping service in its search results over those of its competitors.

The European Union Commission claims this is the culmination of a multiyear investigation into Google’s business practices dating back nearly a decade. This in itself proves this is nonsense for the past decade has witnessed a dramatic change in how products are being sold. Amazon has been growing tremendously in sales putting many stores out of business like Sears.

Things are changing. The beginning of this whole antitrust violation took place with the Sherman Antitrust Act passed in the USA back in 1890. The theory was you had all these small railroad companies and they were merging into large regional railroads. The politicians called this a monopoly that put people out of jobs as companies merged and eliminate duplication.

Once again we have dramatic changes to the retail industry. The politicians behind this nonsense of fining Google are just (1) greedy and (2) ignorant. Amazon is already starting to create showrooms where you can go at look at products and then it will be delivered to you in days. This is the way retail is changing. Here is a search I entered for a Sony Laptop. Yes at the top it come up with Google shopping and it says sponsored. However, it shows competitive brands. At the bottom of the page is Amazon. Yes they are competing against Amazon. Does that warrant a huge fine or are politicians just trying to come up with creative means to get more money because they are dead broke?

Multinational Corporations and The Export of American Wealth…


To understand the larger objectives of the global and financial elite it is important to understand the three-decade global financial construct they seek to protect. Global financial exploitation of national markets:

♦Multinational corporations purchase controlling interests in various national elements of developed industrial western nations.
♦The Multinational Corporations making the purchases are underwritten by massive global financial institutions, multinational banks.
♦The Multinational Banks and the Multinational Corporations then utilize lobbying interests to manipulate the internal political policy of the targeted nation state(s).
♦With control over the targeted national industry or interest, the multinationals then leverage export of the national asset (exfiltration) through trade agreements structured to the benefit of lesser developed nation states – where they have previously established a proactive financial footprint.

Since initially explaining this modern import/export dynamic some have asked for specific examples in order to gain a better understanding.  There are a myriad of interests within each sector that make specific explanation very challenging.  However, here’s an attempt.

For three decades economic “globalism” has advanced, quickly.  Everyone accepts this statement, yet few actually stop to ask who and what are behind this – and why?

People with vested financial interests in the process have sold a narrative that global manufacturing, global sourcing, and global production was the inherent way of the future.  But what’s brutally missed in the discussions is the fundamental truth that advocates selling this “global” message have a vested financial and ideological interest in convincing the information consumer it’s just a natural outcome of progress.

It’s not.

It’s not natural at all.  It is a process that is entirely controlled, promoted and utilized by large conglomerates and massive financial corporations.

Again, I’ll try to retain the larger altitude without falling prey to the esoteric weeds.  I freely admit this is tough to explain and I may not be successful.

Bulletpoint #1: ♦ Multinational corporations purchase controlling interests in various national elements of developed industrial western nations.

This is perhaps the most challenging to understand.  In essence, national companies expanded their influence into multiple nations, across a myriad of industries and economic sectors (energy, agriculture, raw earth minerals, etc.).

Think of these multinational corporations as global entities now powerful enough to reach into multiple nations -simultaneously- and purchase controlling interests in a single economic commodity.

A historic reference point might be the original multinational enterprise, energy via oil production.  (Exxon, Mobil, BP, etc.)

However, in the modern global world, it’s not just oil; the procurement extends to virtually every possible commodity and industry.  From the very visible (wheat/corn) to the obscure (small minerals, and even flowers).

Bulletpoint #2 ♦ The Multinational Corporations making the purchases are underwritten by massive global financial institutions, multinational banks.

During the past several decades national companies merged.  The largest lemon producer company in Brazil, merges with the largest lemon company in Mexico, merges with the largest lemon company in Argentina, merges with the largest lemon company in the U.S., etc. etc.  National companies, formerly of one nation, become “continental” companies with control over an entire continent of nations.

…. or it could be over several continents or even the entire world market of Lemon/Widget production.  These are now multinational corporations.   They hold interests in specific segments (this example lemons) across a broad variety of individual nations.

National laws on Monopoly building are not the same in all nations.  But most are not as structured as the U.S.A or other more developed nations (with more laws).  During the acquisition phase, when encountering a highly developed nation with monopoly laws, the process of an umbrella corporation might be needed to purchase the interests within a specific nation.  The example of Monsanto applies here.

Bulletpoint #3  ♦The Multinational Banks and the Multinational Corporations then utilize lobbying interests to manipulate the internal political policy of the targeted nation state(s).

With control of the majority of actual lemons the multinational corporation now holds a different set of financial values than a local farmer or national market.  This is why commodities exchanges are essentially dead.  In the aggregate the mercantile exchange is no longer a free or supply-based market; it’s now a controlled market exploited by mega-sized multinational corporations.

Instead of the traditional ‘supply/demand’ equation determining prices, the corporations look to see what nations can afford what prices.  The supply of the controlled product is then distributed to the country according to their ability to afford the price.  This is how the corporation maximizes it’s profits.

Back to the lemons.  A corporation might hold the rights to the majority of the lemon production in Brazil, Argentina and California/Florida.   The price the U.S. consumer pays for the lemons is directed by the amount of inventory (distribution) the controlling corporation allows in the U.S.

If the U.S. harvest is abundant, they will export the product to keep the U.S. consumer spending at peak or optimal price.  A U.S. customer might pay $2 for a lemon, a Mexican customer might pay .50¢, and a Canadian $1.25.

The bottom line issue is the national supply (in this example ‘harvest/yield’) is not driving the national price because the supply is now controlled by massive multinational corporations.

The mistake people often make is calling this a “global commodity” process.  In the modern era this “global commodity” phrase is particularly BS.

A true global commodity is a process of individual nations harvesting/creating a similar product and bringing that product to a global market.   Individual nations each independently engaged in creating a similar product.

Under modern globalism this process no longer takes place. It’s a complete fraud.  Currently, massive multinational corporations control the majority of product inside each nation and therefore control the entire global product market and price.

In highly developed nations this multinational corporate process requires the corporation to purchase the domestic political process, the approval, within individual nations allowing the exploitation.  As such, their lobbyists pay hundreds of millions to politicians for changes in policies and regulations one sector or industry at a time.

EXAMPLE:  The Committee on Foreign Investment in the United States (CFIUS)

CFIUS is an inter-agency committee authorized to review transactions that could result in control of a U.S. business by a foreign person (“covered transactions”), in order to determine the effect of such transactions on the national security of the United States.

CFIUS operates pursuant to section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment and National Security Act of 2007 (FINSA) (section 721) and as implemented by Executive Order 11858, as amended, and regulations at 31 C.F.R. Part 800.

The CFIUS process has been the subject of significant reforms over the past several years.  These include numerous improvements in internal CFIUS procedures, enactment of FINSA in July 2007, amendment of Executive Order 11858 in January 2008, revision of the CFIUS regulations in November 2008, and publication of guidance on CFIUS’s national security considerations in December 2008 (more)

Bulletpoint #4With control over the targeted national industry or interest, the multinationals then leverage export of the national asset (exfiltration) through trade agreements structured to the benefit of lesser developed nation states – where they have previously established a proactive financial footprint.

The process of charging the U.S. consumer more for a product, that under normal national market conditions would cost less, is a process called exfiltration of wealth.

It is never discussed.

To control the market price some contracted product may even be secured and shipped with the intent to allow it to sit idle (or rot).   It’s all about controlling the price and maximizing the profit equation.   To gain the same $1 profit a widget multinational might have to sell 20 widgets in El-Salvador (.25¢ each), or two widgets in the U.S. ($2.50/each).

Think of the process like the historic reference of OPEC (Oil Producing Economic Countries).  Only in the modern era massive corporations are playing the role of OPEC and it’s not oil being controlled, it’s almost everything.

Individual flower growers in Florida out of business because they didn’t join the global market of flower growers (controlled market) by multinational corporate flower growers in Columbia and South America, who have an umbrella company registered in Mexico allowing virtually unrestricted access to the U.S. market under NAFTA.

Agriculturally, multinational corporate Monsanto says: ‘all your harvests are belong to us‘.  Contract with us, or you lose because we can control the market price of your end product.  Downside is that once you sign that contract, you agree to terms that are entirely created by the financial interests of the larger corporation; not your farm.

The multinational agriculture lobby is massive.  We willingly feed the world as part of the system; but you as a grocery customer pay more per unit at the grocery store because domestic supply no longer determines domestic price.

Within the agriculture community the (feed-the-world) production export factor also drives the need for labor.  Labor is a cost. The multinational corps have a vested interest in low labor costs. Ergo, open border policies.  (ie. willingly purchased republicans not supporting border wall etc.).

This corrupt economic manipulation/exploitation applies over multiple sectors, and even in the sub-sector of an industry like steel.   China/India purchases the raw material, ore, then sells the finished good back to the global market at a discount.  Or it could be rubber, or concrete, or plastic, or frozen chicken parts etc.

The ‘America First’ Trump-Trade Doctrine upsets the entire construct of this multinational export/control dynamic.  Team Trump focus exclusively on bilateral trade deals, with specific trade agreements targeted toward individual nations (not national corporations).  ‘America-First’ is also specific policy at a granular product level looking out for the national interests of the United States, U.S. workers, U.S. companies and U.S. consumers.

Under President Trump’s Trade positions, balanced and fair trade with strong regulatory control over national assets, exfiltration of U.S. national wealth is essentially stopped.

This puts many current multinational corporations, globalists who previously took a stake-hold in the U.S. economy with intention to export the wealth, in a position of holding contracted interest of an asset they can no longer exploit.

RELATED:

♦The Modern Third Dimension in American Economics – HERE

♦The “Fed” Can’t Figure out the New Economics – HERE

♦Proof “America-First” has disconnected Main Street from Wall Street – HERE

Next up: How the Stock Market is disconnected and why that matters.

The Hunt for Money – “the more things change, the more they stay the same.”


 

QUESTION: 

Dear Mr Armstrong, with great compliments on your work I now see a chance to do something back. …
On the topic of government hunger for money, they are now using speedtraps for boats here in Amsterdam. Just 2 miles over the limit will cost already cost you €90. Yes they have laserguns for such low speeds… This only a few years after they tripled the tax on boats. There is also a raging debate on “erfpacht”, the soil many houses here are built on is owned by the city – you can imagine how potentially disastrous that can be if you’re an owner.
I would be interested if you see governments around the world not practicing this, or not so much. Or are they all the same?
Thank you.
Sincerely,
DvdP
ANSWER: Unfortunately, the problem we have with government is historic and of epic proportions. They always abuse their power of taxation and consequently, governments always fall by their own hand. They will never reform and constantly raise taxes because they are incapable of restraint. It is just the way everything functions throughout history. There is NOTHING we can do. This must simply run its course. When the crash comes, then perhaps we can offer real reform. The question becomes – how long can that survive before it starts all over again?
There has never been a revolution that ever resulted in true change. Even Napoleon crowned himself “Emperor” rather than “King” so you just change the title but you end up with the same thing. It was Jean-Baptiste Alphonse Karr (1808 – 1890) the French critic who said: “the more things change, the more they stay the same.”

Spain & the Rise & Fall of Empires, Nations, City States & Feudalism


QUESTION: Mr. Armstrong; I suppose when you said that the marriage of Isabella and Ferdinand the the final stage of unifying Spain rather than the beginning. Correct?

ANSWER: Yes. The idea of a nation state began to emerge in Europe during the 10th century. This is reflected even in the coinage which to a large extent move from feudal to city state and then finally into nation states.

For example, the nation state concept was taking place in Scandinavia and in England before it really emerged in France and Spain. The first king in England to become dominant was Alfred the Great (871-899). Yet he was still really just the king of Wessex. In the early 10th century the Anglo-Saxon kingdoms, united by Æthelstan (927–939), but then England was conquered and became part of the North Sea Empire of Cnut the Great, a personal union between England, Denmark and Norway.

The Norman conquest of England in 1066 led to the transfer of the English capital city and chief royal residence from the Anglo-Saxon one at Winchester to Westminster, and the City of London was established as England’s largest and principal commercial centre. This was the beginning of England as a nation state.

During the 13th century, Aragon controlled Barcelona before there was a nation state. In the case of Spain, Ferdinand I was the first Castilian monarchs whose reign began in 1037. The list of separate regions and kingdoms of Spain were

Kings of the Visigoths
Kings of Asturias
Kings of Navarre
Kings of León
Kings of Galicia
Kings of Aragon
Kings of Castile

You must understand that we moved from Provinces under the Roman Empire, to feudalism, then city states, and then back to nation states. There is a cycle to everything.

Bankers Get Their Criminal Convictions Overturned


The Second Circuit Federal Court of Appeals overturned the convictions of two former Rabobank traders in the LIBOR London interbank market manipulation scandal saying the men’s Fifth Amendment right against self-incrimination had been violated. Former Rabobank traders Anthony Conti and Anthony Allen, was sentenced to a year and a day in prison by Judge Rakoff who said that he was “mystified” that prosecutors only went after institutions since punishing individuals has a deterrent effect on others in a profession.

Nevertheless, the three-judge panel of the Second Circuit U.S. Court of Appeals in New York dismissed the charges against the two former Rabobank traders who were convicted on conspiracy and wire-fraud charges in November 2015. In a unanimous 81-page ruling, the Second Circuit Judge Jose Cabranes wrote that the two men’s convictions were tainted because a witness against them had been aware of testimony authorities in the U.K. had forced them to provide.

Clearly, this was an excuse since what happens outside the USA is usually considered different since it is the law where the act takes place that determines its legality. Applying the 5th Amendment suddenly applied was not equal protection of the law so it obviously was necessary to protect the New York Bankers personally from any prosecution. The Court of Appeals wrote it was “not harmless beyond a reasonable doubt.”

The ruling is obviously to prevent prosecutions of bankers in New York on a personal level. Judge Rakoff’s observation that he was “mystified” that prosecutors only went after institutions rather than individuals has proven not to be a deterrent to unethical practices in New York, in which he hit the nail squarely on the head.

More than a dozen major banks allegedly rigged Libor to benefit themselves and have paid billions of dollars in fines and settlements. But these manipulations are not changing the trend, it is moving the market within a trend to clip people by electing stops. In this case, Rabobank agreed in 2013 to pay more than $1 billion in settlements to U.S., U.K. and Dutch authorities, including a $325 million settlement with the U.S. Justice Department. Individuals do not have these types of fines that the government can enrich itself. So the fines grow ever bigger and the individuals walk. If individuals are prosecuted, then the fines will decline and the banks can claim they were “rogue” traders to escape big fines.

The Second Circuit had to overturn these criminal prosecutions to maintain the policy of too-big-to-ja

Euro Rally


Once the Euro closed above the Weekly Bullish Reversal last week, we have rallied strongly simply on comments from Draghi that a strong Euro is good. It is hard to contemplate his reasoning since this increases the debt burden of Southern Europe and reduces German export competitiveness. His comments that changing police will come September. So we have the 99% bullish sentiment acting still in anticipation.

We have exceed the 2016 high of of 11616 intraday reaching 116574. The Quarterly Bullish Reversal stands at 11694 and this is the key area to watch. Exceeding that allows the rally to reach the Downtrend. With this middle target on our objective reached, technically we have an outside reversal to the upside which has cleaned out the stops. This is setting the stage for the Monetary Crisis that begins in 2018. The higher we move in one direction, the worse it swings in the opposite.

We times timed the Frankfurt seminar with this move as well as our meetings with institutions over the next two weeks.

Paris Climate Accord = Junk Science


QUESTION: Mr. Armstrong; I read a piece on the Paris Climate agreement that said climate experts now warn that an increase of more than 2 degrees Celsius could bring about irreversible consequences, including unpredictable superstorms and crippling heat waves. That seems to be anti-cyclical. How do they create such “science” without proof?

PL

ANSWER: They just make it up. Every long-term study I have looked at disagrees with this bogus claim. They have found the Romans made it to Canada because the sea was much warmer back then than it is even today. Even if we assume that if temperature rose 2 degrees that would create superstorms, which has never happened when there were periods when the Earth was much hotter, it would never be “irreversible” for the Earth does not function in a stagnant linear fashion. The only way the Earth would die is (1) the atmosphere burned off, or (2) the entire planet became snow covered reflecting sunlight and then it would never become warm again (White Earth Effect).

If there was more CO2, the planet would be greener and there would be more oxygen than CO2. The system would reverse.

800,000-year Ice-Core Records of Atmospheric Carbon Dioxide (CO2)

Sun Activity Has Collapsed to the Lowest in 9,300 years


THE sun is the source of all our warmth. Without it, we would not exist.  Like everything else, it is cyclical in nature. The term “lunatic” referred to people who seemed to go a bit strange when there was a full moon. Some people are perhaps susceptible to its gravitational forces. After all, it is the moon that lifts the entire oceans creating high and low tide. There are people who have varying mood swings and others who are a tad more steady. Yet we all have our ups and downs.

There is the Human Excitability Study where war was correlated to sunspot activity. The sunspot cycle is roughly every eleven years. However, this time it’s different. The sun is headed for a very rare, super-cooling period that threatens to topple civilization itself as it has throughout history roughly following a 300 year cycle.

For most of its history, science believed the sun’s output was constant. They finally realized that a thermal dynamic cycle beats like your heart so the sun could not exist if it was a steady outflow of energy. One degree less and it would blow itself out. Hence, it is cyclical rising and falling in intensity.

The eleven-year cycle in sunspots itself builds in intensity like the Economic Confidence Model (ECM) reaching “grand maxima” and “grand minima” over the course of 300 years. The last grand maximum peaked circa 1958, after which the sun has been steadily quieting down. Today, the drop in activity is at its steepest in 9,300 years, which is being ignored by the Global Warming propaganda.

The last Maunder Minimum, during which the sun languished for seventy years, took place from 1645 to 1715 when the sun’s brightness declined and the number of sunspots collapsed to almost zero.

A.L. Tchijevsky (1897-1964) did a study on sunspot and human activity. He found that humans responded even creating wars with the swings in sunspot activity.

Why Global Warming is Good


 

One of my greatest concerns with all this Global Warming nonsense is that nobody seems to ever plot weather against the rise and fall of civilization. When you do, you arrive at a strikingly different perspective of global warming. The greatest advancements in civilization have ALWAYS taken place during periods of global warming. When the temperatures drop, crops fail, death becomes widespread, and society seems to barricade itself in withdrawing from trade.

History is constantly being re-written as new discoveries are made, The global warming period that allowed the rise of Rome included the warming of the seas to the point that the Romans did sail to Canada where Roman swords have been discovered in addition to sending ambassadors to China.

The Minoan society began the Bronze Age. To make bronze, they needed tin. Low and behold, the Minoans traded with the British of Stonehenge Age period prior to 1650BC. They sailed into the Atlantic for trade giving birth to the Bronze Age. The money for trade consisted of bronze ingots cast into the shape of a sheep-skin with the four legs.

 

The fall of the Minoan Civilization coincided with the eruption of Thera (today known as Santorini). This destroyed their ships and commerce and allowed the barbarians, then the Greeks from Mycenae, to plunder their society and also that of Troy before collapsing into a Dark Age due to climate change and global cooling.

If the climate turns bitterly cold after 2032, there is not much we can do about it. The Earth will not obey any law passed by humankind. Global Warming is when civilization rises – it does not end.