Abrupt Swings in Weather from Cold to Heat


QUESTION: Does your computer show that the major trend is down toward cooling and in the process were are getting these wild swings from new record golds to one day wonders of hot?

Thank you

‘DK

ANSWER: Yes, the broader trend is cooling thanks to the solar minimum. But there are also wild swings from new record lows to a single day of record high temperatures. This is similar to what was taking place during the 1930s. There was the dust bowl with drought and heat in the summer, and the winters were still the coldest on record which we have not yet reached on a sustained basis. It is just nonsense to claim that the violent swings from cold to heat are caused by us driving cars around when that pattern has taken place throughout history.

Storms are also not an indication of CO2 levels as they are claiming. There was the famous Spanish Treasure Ship fleet where all 11 ships were sunk in the Hurricane of 1715. The list of the worst storms from the 19th century forward is 1804, 1806, 1821, 1900, 1903, 1938, 1944, 1955, 1960, 1999, 2011, and 2012. The worst hurricane was 1900 insofar if the measurement is the number of people dead which reached 12,000 in Galveston, Texas.

1938 Hiricane New England

The 1938 New England Hurricane pictured here was far worse than anything we have seen in my lifetime. Computer models rooted in cyclical analysis with a long database simply reveal that there is really nothing new in weather that we have not seen before.

The bottom line is rather clear. The broader trend is moving colder. That does not mean that there will be days where the temperature will swing abruptly to a record high. We are looking at sustained trends, not a single day that makes a record low or high. It is sustained trends, not just the volatility.

FOREX & the Wild West Days of the ’80s


QUESTION: Mr. Armstrong; I was told that you were indeed the largest forecaster in foreign exchange. The story in London is you advised nearly all the Middle East and were the most important adviser on currency to BCCI, the bank the governments took down back in 1991 along with Salomon Brothers. They made a movie about BCCI. Is it true that you were an adviser to BCCI?

HS

ANSWER: The ’80s were the wild west in finance. I have told the story of how many banks operated back then. I would be called in and told someone wanted to give me $1 billion to manage back then when $1 billion was a lot of money (now it’s trillions). I would go to various banks and there would be a curtain between me and the potential client. I was not allowed to know who they were. I was turning down that business because it was just too wild for me.

Yes, we were advising BCCI on foreign exchange. They were passing it on to specific clients who at the time I did not know. I became concerned when I accepted an account for who I believed was a Saudi individual. The account was opened at Rudolf Wolf in London and after a few months of tracing all the various layers of corporations, it turned out I was managing money for none other than Muammar Mohammed Abu Minyar al-Gaddafi. I closed the account and within a matter of weeks, he was back through a completely different channel.

Perhaps one day I will write a book about those days. I ended up managing money for even Mr. Khashoggi once owned one of the world’s largest yachts, the 86-meter Nabila, which appeared in the James Bond film “Never Say Never Again,” which was later bought by Donald Trump. On top of that, what I thought was a company turned out to be a secret partnership between Gaddafi, Khashoggi, and Ferdinand Marcus of the Philippines.

The Floating Foreign Exchange Rate system had just begun in 1971. This was not a subject you could go get a degree in. This was a field built from scratch and it took a trader’s understanding of the world economy to cope with the events of the 70s and 80s. I was the leading adviser in FX because there really were no others with any track record. When I say I was called into just about every crisis from 1973 onward, it is not an exaggeration.

I was advising BCCI on currency globally. I was advising a company called GRANEDEX which turned out to be a front for Russia. I could never tell who was who. I had even the counter-revolutionary army in Iran coming to me for they were trading to make money to overthrow the religious government in Iran. I would be on a phone call with a client from Saudi Arabia who asked about gold and I said it depended on what OPEC would say that day. He put me on hold and dialed into the OPEC meeting and they put me on speakerphone. Those days taught me about war and how capital flows could be used to forecast war and geopolitical events. It cut my teeth of those wild west days.

I have handled some of the biggest projects ever and advised globally. To this day, we have people attending the World Economic Conference from 137 different countries. Because the world was such a crazy wild west sort of atmosphere, I turned to be just an institutional adviser of public corporations because I gave up on trying to figure out who the clients really were at times.

 

Can Central Banks Ever Control Long-Term Rates?


QUESTION: Marty, you said that central banks can only control short-term rates not long-term. Do you see a scenario where they could control the long-term rates?

Thank you for your insight

DH

ANSWER: If you ASSUME that there is a free market, then the answer is no possible way. Under a hybrid market, a central bank can split between public and private debt as is taking place in Japan. The Bank of Japan has announced it will buy unlimited amounts of government bonds to prevent interest rates from rising.

Under this hybrid market, a central bank can simply buy all government debt but this results in the total destruction of any free market in government debt. The government should at that point just print money and not even bother to issue any debt.

This results in a divergence between the fake government bond rates and the free market private interest rates. The spread will widen dramatically. Even during the Great Depression the spread between AAA corporate debt and government debt fluctuated according to where the confidence resided. As the sovereign debt crisis took place in 1931 with governments defaulting on their debts, the spread diminished as people began to trust corporate debt more so than government debt.

The third possibility is a closed market which means that the government can fix long-term rates that were done with usury laws. Even in Roman times,  Cicero tells us how the cap on interest rates existed only in Italy. This led to excessive interest rates being charged by Brutus in Cappadocia of 40% compared to 10% in Rome.

Paul Volcker had to have the usury rates raised in order to raise interest rates to 14% to fight inflation back in 1981. It was also illegal for a Catholic to charge interest in loans so the Jews were the first bankers coming out of the Dark Ages. The Catholics got around that by stacking the interest costs into the price.

The final type of system that would control long-term rates would be Communism where everything is just outlawed and the economy is entirely closed.

Under a free market, the central bank sets the wholesale short-term rates which is why it has been focused in the repo market. If it attempts to just buy in all government debt, then private rates will rise and that is what is taking place right now. The Fed can peg long-term rates as they did during World War II, but that applied only to government debt. To prevent prices from rising the political legislature imposed wage and price controls.

So there are ways to fix the long-term, but at the cost of a free market.

The Fate of Europe


This is a special report entitled “The Fate of Europe” which dives into the shocking reality behind the curtain of the Euro and why it has failed to become a major reserve currency. The Fate of Europe is a very important report to understand the backdrop to what we face going forward and the risks both for European readers as well as for the rest of the world in light of the risks of global contagions. Like the Great Depression, the crisis we face will begin in Europe once again and spread like a contagion eventually engulfing the world economy.

Nigel Farage delivered the keynote speech at the Rome WEC. He called the World Economic Conferences we have been holding since 1985 – the “alternative to Davos.” This report is unique for two reasons. First, when the Euro was being formed, the commission attended our WEC in London in 1997. I discussed directly on how the create the euro from scratch. We published detailed recommendations back then.

  

This report exposes the reality behind the curtain. The entire design of the EU is to deliberately deny any right of the people to ever vote on their own future. The politicians have assumed that the people are TOO STUPID to know what is best for them. In fact, Germany, the foundation of the entire European economy, was NEVER given the right to vote to join the Euro. Chancellor Kohl admitted that he acted as a dictator because he said if he ever allowed the German people to vote, he would have lost 7 to 3.

This report is essential to understand the risks in Europe. Most people have no clue because the second reason this report is unique is that no European analyst working in any of big financial institutions are ever allowed to criticize the EU or speak negatively about the Euro.

The Fate of Europe … $295

 

Understanding the Global Economy from the Dollar to the Euro


Many people continually talk about the dollar crashing. They say the dollar is supposed to crumble to dust and be dispersed into the wind. The bias against the dollar has been turned into a religion primarily propagated by the gold promoters. Unfortunately, they fail to understand the relationship of the dollar to the world economy. Additionally, they only look at the United States and ignore the economic trends outside the USA.

 

This report deals with the next monetary reform that many will call Bretton Woods II. What is the future for the dollar? Contrary to what many have been preaching since 1971, the dollar has survived. Right now there remains a dollar shortage, which is one reason the dollar has been rising since 2008 when the euro once stood at $1.60. The report also discusses the transition to digital currencies.

Hoarding Dollars ….. $295

Netherlands Supreme Court Rules They Must Reduce CO2 by 25% by end of 2020!


QUESTION: Marty, I just read that in the Dutch so-called climate Justice case the supreme court has upheld the original 2015 ruling, legally requiring the government to reduce emissions by 25%. This appears to be the first successful such case, and it might be a precedent for the others.

What about the separation of powers if the judicial power is used as a political tool to force the hand of the executive power? Wasn’t it rather meant to be a check and balance?

Thanks for what you do.
KR

 

ANSWER: The judges in the Supreme Court of Netherlands have made one of the worst decisions possible. In hindsight, the ruling will be the straw that broke the back of the European economy. The judges made their decision based solely on the international human rights law. This absurd ruling fails to consider that even if the Netherlands outlawed cars, manufacture, heating of homes, and the production of electricity from anything but wind or hydroelectric, it will not change the climate of the entire planet. The only outcome is to destroy the economy of the Netherlands.

There was no proof presented which established beyond reasonable doubt that there is any connection between CO2 and climate change. Nevertheless, on the 20th of December 2019,  the Dutch Supreme Court upheld the previous decisions in the Urgenda Climate Case, which held that the Dutch government has obligations to urgently and significantly reduce emissions in line with its human rights obligations.

The judges ruled against the Dutch government, which was the first in the world in which citizens established that their government has a legal duty to prevent dangerous climate change. The ruling was based on the fact that the government has established a policy claiming it would target a reduction by 2020 from 1990 levels. The court ruled the government must cut its greenhouse gas emissions by at least 25% by the end of 2020 (compared to 1990 levels). The ruling required the government to immediately take more effective action on climate change, and in the short time span, may seriously disrupt the entire European economy.

The United Nations rejoiced in slapping down the Netherlands government as the UN High Commissioner for Human Rights has also published a news release about the decision in which she notes that “the decision confirms that the Government of the Netherlands and, by implication, other governments have binding legal obligations, based on international human rights law, to undertake strong reductions in emissions of greenhouse gases.”

The question whether the court has abandoned the separation of powers and is engaging in dictatorial powers is an interesting one. The court alluded to a very serious breach of democratic powers of government in confining the judicial role in cases of alleged state negligence. What if someone killed a member of your family. Is the state negligent because it failed to protect your family? The issue of protecting citizens raises the question of whether there is a duty imposed upon government and how can they achieve that protection if it exists.

The court looked at this issue and WRONGLY entered something which can lead to the collapse of the rule of law. Where the issues can be spliced and a minimum standard of protection can be reduced to quantifiable terms such as a percentage reduction. The court viewed it can dive into this question by separating the directive of ordering a reduction in CO2 from HOW that reduction is to be achieved. The court created a fictional Chinese Wall where the HOW is a policy issue not to be decided by courts. This raises the appearance that it is permissible for the courts to establish that standard but not the policy. In doing so, the court WRONGLY assumes it will remain within the correct confines of their judicial role, protecting rights rather than creating policy.

The court was well aware that it was crossing the line separating the judiciary from the legislative. Under a sub-heading entitled, “The Separation of Powers,” the court explained why the decision did not qualify as something beyond its constitutional powers. Under Dutch law, there is no true and complete separation of state powers. Instead, the Dutch system is not a democratic system which most people do not realize. As the court explained, in the Netherlands the judiciary has a “balance” of power rather than a separation of power within the constitution. They argue citizens require legal protection from the state, and created that with the power of adjudicating over those disputes.

The court reasons that the judiciary has “democratic legitimacy,” yet it is not democratically elected. Justices of the Supreme Court are appointed by royal decree, chosen from a list of three, advised by the House of Representatives on the advice of the court itself. The justices are, like every other judge in the Netherlands, appointed for life, until they retire at their own will or after reaching the age of 70. Therefore, despite its reasoning, it is outside any democratic process.

Then the court reasoned it cannot refuse to decide matters within its jurisdiction simply because there may be political ramifications. Interestingly, the fact that the multiplicity of the very nature of the debate over climate change was disregarded by the court and was never fully addressed. The court simply said it did “not have a clear picture of the magnitude and meaning of … [all] consequences,” and there was a need for some restraint in what the court should order.

What is clear is that the judges WANTED to rule most likely because they believe in climate change being humanly induced. There is no other explanation for delivering such an unbalanced decision that has the risk of destroying the economy of Netherlands for it cannot order the climate change be reversed solely upon the actions taken in the Netherlands.

The court rooted its decision, claiming that the state was in breach of its duty of care to Dutch society by failing to take sufficient mitigation measures to prevent dangerous climate change. That argument can be applied to any citizen who is harmed even by being raped by a refugee or robbed on the street at gun point. Granted, up until 2010, the government had a national target for reducing emissions by 30% by 2020 compared to 1990 levels. The government continually ascribed to make reductions of 25-40% by 2020. The reductions were only 17%, which was used as evidence showing that the government had previously agreed to this 25%-40% reduction. Therefore, the case DID NOT settle the question that climate change was actually caused by humans.

The government did not even try to argue that the scientific consensus had changed or that climate change was not proven to be caused by CO2. They government’s argument was  or that the original target was economically impossible. Indeed, a reduction of 25% by the end of 2020 will destroy the economy and cause unemployment to rise. That argument did not matter to the judges. Therefore, they did engage in a usurpation of dictatorial power.

Therefore, this decision in the Netherlands is not likely to prevail in most other jurisdictions. There is certainly no basis for this to be even made in the United States. This merely appears to be another nail in the coffin of the dying European economy.

Exploitation of Greta – Greenpeace & Al Gore


COMMENT: So it seems that Greta Thunberg was not a true believer in climate change, but that her parents got her involved in the movement so as to help with her Aspergers and severe depression. Unbelievable–no wonder she seemed so unstable during her speeches.

MHB

REPLY: It has been well known that Greta Thunberg had severe depression issues. Her parents supported her activism as “medicine” for her depression. The Telegraph has revealed that this child has been really abused and exploited by Greenpeace’s Jennifer Morgan and Al Gore. Her father, Svante Thunberg, publicly acknowledges that he and his wife were “not climate activists” but made radical green changes to their lives as they saw the impact it had on their daughter’s mental health.

It is a real shame that this child has been exposed internationally. As the climate change agenda is exposed for the abuse that has taken place for a long time, Greta will suddenly be exposed to declining attention. What sort of  depression withdraw will she go through then? Such things can be dramatic and often lead to suicide in some situations. The exploitation of Greta should be a serious offense

How Will Europe Respond to Being the Source of the Crisis?


QUESTION: Dear Martin,
You have discussed the structural design flaw in the euro being due to the lack of consolidation of EU countries’ debt, as well as, EU policies that prohibit bank bailouts. Why could EU policies regarding the prohibition of bank bailouts just not be changed to allow for bailouts? If I understand correctly, wasn’t it also the case that the ECB was not legally allowed to buy EU country sovereign debt? That law was either changed or ignored (I’m not sure which) during the European sovereign debt crisis earlier this decade to allow for the ECB to buy sovereign bonds, which then brought down sovereign debt yields.

Correct?
Thank you for helping us all to grow in our understanding of what confronts us.
Sincerely,
WJ

ANSWER: Everything would function so much better if we had rational leadership. The problem is simply that government will NEVER avert a crisis. They must first experience the crisis before they will ever consider changing the policy. Yes, it seems easy to just fix the problem now. However, I can talk face-to-face until my face turns blue. They will NEVER prevent a crisis. Politicians know that they ONLY look authoritative when they respond to a crisis. Nobody will listen if they say they just prevent a crisis. People assume it is just BS.

Add to this reality the problem between domestic and international policy objectives. Politicians run for election, promising to do this or that, which all seems nice for it is presented to be within their power. That is what is under siege. The Federal Reserve has suddenly realized that it has become the central bank of the world. They were intending to lower rates to help emerging markets, Europe, and Japan. Then the Repo Crisis hit and the Fed was compelled to address the liquidity crisis. This was not about “stimulating” the economy, it was about preventing short-term interest rates from rising. In other words, the QE of 2008-2009 was about buying in long-term debt to try to lower long-term interest rates. Here the short-term rates were rising. Traditionally, the only thing a central bank can control is the short-term. The Repo Crisis exposed the fact that central banks are losing control of even the short-term.

 

Remember the inverted yield curve in the summer of 2019 that everyone said was a precursor to a recession? Ever since the Repo Crisis, the yield curve has steepened dramatically. This is confirming what I have been saying. This was never about stimulation, it was an attempt to prevent short-term rates from rising.

Therefore, the questions become: (1) Will Europe respond and realize that their no-bailout policy will create a worldwide banking contagion and crisis? (2) If they do recognize that they are the source of a worldwide crisis, how long will it take them to respond and reverse their policy? (3) Will they accept responsibility or blame the rest of the world?

Rational people respond completely differently than politicians who cannot publicly admit they were wrong.

Climate Change & Swiss Alps & Glacier Analysis


COMMENT: Mr. Armstrong, the data used by the climate change movement only dates back to 1850. Here in Switzerland, they state that the Alps Glacier peaked with Tambora in 1815 and has been retreating ever since. If the last Little Ice Age ended in 1850, the climate should have been warming naturally from that period. It is indeed getting colder with each year since 2015 as you have warned. It seems as though independently they confirm your forecast yet strangely claim there is global warming due to humans. One only has to scratch the surface to see these claims do not add up.

PN

REPLY: The current glacier retreat in the Alps, which is due to an instrumentally documented temperature increase, constitutes the
most recent phase of a retreat period that started after the last Little Ice Age maximum around 1855. Since that date, about half of
the Alps’ glacier area has been lost. This is by no means due to humans. It grew during the Little Ice Age and it indeed reached its peak during 1815/1816, which was “The Year Without a Summer” due to the volcanic eruption of Tambora that created a volcanic winter.

You cannot analyze all glaciers with the same criteria. Steep smaller glaciers change length more quickly (whether in advance or retreat) subsequent to climate forcing than large and relatively flat glaciers do. Consequently, the Great Aletsch, which is the Alps’ largest glacier, has continuously retreated since its last Little Ice Age maximum about 1850. However, other Alpine glaciers (Gepatschferner, Lower  Grindelwald, and Suldenferner) have re-advanced two or three times during the same period, especially around 1920 and 1980.

Anyone who looks closely at the data from glaciers will see the stark differences affect comparisons of the length change history of different glaciers. Short but strong mass gains during the volcanic “Year Without a Summer” in 1816 have also greatly resulted in dynamic reactions with fast and very rapid advances that a few Alpine glaciers have undergone. One example is the Suldenferner in very short time periods of just a year or two.

It is obvious that very specific topographical situations allow for such sensitive reactions to massive snow/ice mass gains which are dependent upon the dimensions of individual glaciers (1). Comparisons of the Holocene length-change history of Alpine glaciers are
usually based on the relative extents of the same glacier observed for the past 150 years. Therefore, the shape of a retreating glacier’s tongue, as they call it, can differ greatly from that of an advancing glacier and influence the interpretation of a glacier tongue’s relative position.

It is interesting to see how poorly the analysis has been put forth with the claims of shrinking glaciers attributed all to humans. They ignore the fact that not all glaciers are the same and begin with the assumption that the peak of the Little Ice Age in 1850 should be the norm. That is no different than trying to claim the stock market ONLY advances based upon looking at the data only since 2009. They clearly have a hidden agenda and pretend to be putting forth scientific proof which is skewed and manipulated.

Gold, War, & the ECM


QUESTION: Marty, Do you think it will be time to short the bonds with the ECM? Gold had bounced off the Downtrend line instead of electing the bearish reversals and it rallied after the Pi turning point. You said if gold peaked with the bottom of the ECM it could then fall back to retest support. It looks as if that happens, the Fed will lose the battle and interest rates will rise after the ECM. Is this all a set up like the gold rally back in 1979 following the Afghan invasion? It looks too familiar.

HB

ANSWER: Ah, you have a good memory. It would have been much better had gold made a new low, held the 1980 high, and then rallied with the ECM turn in 2020. That would have clearly been a long-term sustainable trend. Bouncing off of the Bear Reversals & Downtrend Line and then rallying with the Pi turning point 2018.89, pointed to a rally into the next ECM (2020.05). I warned that given that pattern we would rally to test the Yearly Bullish at 1432 and at the WEC I warned that a close above that pointed to a rally into the January 18th turning point with the next resistance at the 1585 level.

The spike up in gold is clearly reminiscent of the Russian invasion of Afghanistan on December 24, 1979. That was under the pretext of upholding the Soviet-Afghan Friendship Treaty of 1978. As midnight approached, the Soviets organized a massive military airlift into Kabul, involving an estimated 280 transport aircraft and three divisions of almost 8,500 men each.

Currently, our system resistance has stood at 1585 followed by 1620 with technical resistance in the 1575-1595 level. We most certainly have to be concerned if gold peaks with the ECM. This will not be a good omen and I agree it is reminiscent of the pattern of 1980. The interest rates the exploded and peaked in May 1981 with the top of the ECM back then.

With the Repo Crisis and the Fed desperately trying to prevent interest rates from rising, which was opposite back in 1979-1981, we still have to be very cautious about how all the markets line up on our model for this turning point. Back then, gold peaked on its own cycle on January 21, 1980, while the interest rates rallied further peaking with the top of the ECM precisely – 1981.35.

We will do the gold report after the ECM turn.