Tag Archives: Economics Confidence Model

Jan 10 2024

NY Fed Survey: Americans Optimistic on Inflation


Posted originally on Jan 10, 2024 By Martin Armstrong 

Inflation up

According to a recent survey by the New York Federal Reserve, Americans’ inflation expectations have dropped to the lowest level in three years. “How much worse could it get?” the average person assumes. The median expectation is that the inflation rate will be up 3% one year from now, down from a high of 7.1% recorded in June 2022. The survey found that Americans anticipate wages rising by 3% to meet their inflation expectations. Consumers have not been this optimistic since January 2021.

However, the people still anticipate that inflation will remain above the Fed’s 2% target in the longer term, with projections of around 2.6% three years from now and 2.5% five years from now. The Federal Reserve’s last forecast states inflation will decline to 2.2% in 2025 before reaching its lofty 2% target in 2026.

Inflation.Expectations.NYFED2024

The year began with a massive disruption in the global supply chain and increased cargo costs. There are countless protests occurring among farmers across the world who disagree about the future of crops and food price stability. The leading driver that is not discussed – WAR! America is funding two major conflicts at the moment and sinking deeper into debt. The extreme geopolitical uncertainty and risks associated with war always lead to higher energy prices, increased production costs, and massive government spending, further fueling inflation.

Dec 27 2023

Intel Invests $25 Billion in Israeli Manufacturing


Posted originally on Dec 27, 2023 By Martin Armstrong 

Israel Jerusalem

Israel cannot lose the war. It is a vassal state created and funded by the West. Palestine’s allies simply cannot defeat the nations who have big plans for the future of Israel. We know about the nuclear power plant in Israel installed by the West to gain a stronghold on the Middle East. We know about the plans for an alternative canal that will rival the Suez and permit the West to gain control over trade in the region.

Now, independent companies are also investing in Israel. The Israeli government recently issued the largest grant in the nation’s history to Intel Corp for $3.2 billion. In exchange, the company plans to build a $25 billion chip plant in the southern region. Intel shares rose when the news was first released.

The Kiryat Gat site selected for the manufacturing plant is a mere 26 miles from Gaza. Israeli Finance Minister Bezalel Smotrich said, “This investment, at a time when Israel wages war against utter wickedness, a war in which good must defeat evil, is an investment in the right and righteous values that spell progress for humanity.” According to Smotrich, investing in Israel is the best way to defeat evil.

The plant is expected to open in 2028. Companies are betting on a clear victory for Israel. Intel is one of many companies with plans to expand in Israel in the coming years. The semiconductor chip industry is extremely competitive as every manufacturer began investing heavily in expansion amid the chip shortage that began a few years ago.

Now, Intel would not spend $25 billion on a manufacturing plant next door to Hamas if they were not confident that Israel would win the war. Israel would not be funding 12.8% of Intel’s project if their leaders were not confident that their allies would continue to protect the nation for however long it may take.

Dec 12 2023

The Second-Largest Contributor to US Private Debt


Posted originally on Dec 12, 2023 By Martin Armstrong 

Car in Driveway

The Federal Reserve Bank of New York’s data shows that auto loans have surpassed student loans, becoming the second-largest debt burden for U.S. consumers. Auto loan debt has reached $1.582 trillion, exceeding the $1.569 trillion in student loan debt. This surge in auto loan debt is attributed to rising vehicle prices, leading consumers to take out larger loans at higher rates.

Lenders have responded to this trend by tightening restrictions on auto financing, with approximately 30% of lenders reporting significantly tighter lending standards. The pressure for companies to switch to EVs and inventory shortages have contributed to the increase in vehicle pricing, resulting in consumers financing more expensive vehicles.

At the same time, the government is moving full speed ahead to reach their target of 50%+ EVs by 2030. Thousands of auto dealers have penned the Biden Administration to explain how this policy is significantly hurting their business. The public is drowning in debt over mostly gas-powered purchases, and EVs are significantly more expensive to purchase and maintain. Car manufacturers are focused on producing cars of the future rather than autos that fit the budget and lifestyle of the middle class.

Bidenomics believes student debt should be waived for those who knowingly took on the debt. Will those supporting Bidenomics also push to forgive this mounting auto debt? Like diplomas, people may realize their EVs cost more than they’re worth and they cannot keep up the payments. Perhaps the public, including those who do not own cars, should subsidize these car purchases through taxes since that is the same premise as student loan forgiveness.

The World Economic Forum is in partnership with global governments to end private car ownership by 2050. Owning a car is becoming an increasing luxury. Insurance costs could be a topic for another time as most states have seen their premiums skyrocket. Major cities around the globe like London and New York City are implementing congestion and traffic taxes as well.

Decades ago, someone could purchase a nice car with less than a month’s pay. Kelly Blue Book states that the average price of a new car was $48,008 as of March 2023, which is 27.8% more than pre-COVID pricing. The average cost of a crossover or SUV now ranges between $30,353 and $74,502, with costs rising by over 6% every year since 2020. We will see car ownership become an increasing luxury.

Dec 7 2023

Cost Of Living Outpaces Wage Increases


Posted originally on Dec 7, 2023 By Martin Armstrong 

Powell Fed Got Inflation Wrong Nov 2021

A recent study by Achieve revealed that despite a 37% increase in income, many Americans are facing financial challenges due to rising costs and high interest rates, leading to a surge in personal debt. The average monthly participation in debt resolution programs increased by 119% in the first nine months of 2023 compared to 2020. Wages are rising but they simply cannot keep up with the growing cost of living.

The typical household income of individuals enrolled in debt resolution programs was $59,900 in 2023, a notable increase from $43,598 three years prior. The study’s findings reflect the impact of inflation, a challenging interest rate environment, and the winding down of government stimulus on consumer debt levels. The report underscores the need for measures to address the rising debt burden and its potential impact on income growth.

The study also found that people are facing financial hardship significantly earlier in life. The average age of someone facing debt resolution was 52 in 2020, but that age has since decreased to 44 in 2023. Nearly 40% of people entering debt resolution programs are Millennials, which is also the age demographic of those with the sharpest increase of credit card delinquencies. Nearly everyone is living on credit as balances rose $154 billion YoY, marking the most significant increase since 1999.

No one feels relieves when new inflation reports are released. Governments can release whatever data they like but the fact remains that the price of EVERYTHING has become too much to maintain. Inflation allegedly peaked in June 2022 at 9.1% but I cannot think of anything that has dramatically decreased in price since then.

Dec 7 2023

Should Argentina Peg its Currency to the Dollar?


Posted originally on Dec 6, 2023 By Martin Armstrong 

Monetary System 2

QUESTION: What about Argentina willing to peg pesos to USD? THANKS for all you are doing for us! ALL THE BEST TO YOU AND FAMILY

TD

ANSWER: First and foremost, what collapsed Bretton Woods and the gold standard was persistent deficit spending. They fixed the price of gold to $35 but then spent recklessly every year. you CANNOT have a fixed exchange rate, a pegged exchange rate, or any sort of a gold standard as long as you retain a Marxist/Socialist agenda where you spend more than you have.

In addition, any Pegging of a currency is significantly different than a Fixed Exchange Rate. Under a Fixed Exchange Rate, the main purpose is to facilitate trade. However, you are not expressly subordinating your economy to the economic trend of everyone else in the system. Each nation is still independent, and if their balance of payments falls out of line, then they alone have a monetary crisis.

Henry VIII Debased Groats

Sir Thomas Gresham was the agent for the English Crown in Amsterdam, the Wall Street of Europe at that time. Henry VIII was debasing the currency, and nobody wanted to lend money to him, fearing that what they would be repaid with was debased. Hence, Gresham’s law.

Pegging to the dollar Pegged

A Pegged currency is far worse for the host currency’s economic conditions are imported. If Argentina pegs to the USD, then raising or lowering interest rates by the Fed and the boom-bust business cycle are automatically exported to Argentina. It would be better to peg to a basket of currencies that would be a hybrid system closer to a fixed currency regime for trade.

Napoleon Single Currency 1024x675
970 Nero

Napoleon had actually summoned the best minds and talents from all over Europe into his service. His court was deliberately filled with able men from all over Europe: Dutch, German, Italian, and even Polish. These foreigners worked in the highest offices of his imperial civil service – not exclusively French.

It was Napoleon who created the first single currency in Europe following the Roman Empire. He standardized the weight of the coins so that 40 francs equaled 40 Lire in Italy and 320 Reales in Spain. This was really Napoleon’s idea of resurrecting the Roman empire. Please take note of his coinage. He is pictured wearing a laurel wreath as a Roman emperor. He was far more than just a general. The new movie was interesting, but they overlooked his economic decisions, which were decades ahead of anyone else in Europe.

Latin Monetary Union

The unification of Europe was the accomplishment of Julius Caesar. However, it was Napoleon who standardized the monetary system post-Rome after the Dark Age, which became the inspiration for the Latin Monetary Union by 1865 and later the Gold Standard post World War II.

EuropeanGoldCoinage 1803 1947 R

Even the United States’ $5 gold coinage was equivalent to the standardization of world coinage during the 19th century.

Nov 24 2023

Black Friday – A Key Weekend for Retailers


Posted originally on Nov 24, 2023 By Martin Armstrong 

Recession

Retailers have been preparing for Black Friday and Cyber Monday all year. The tradition of post-Thanksgiving shopping has spread internationally with companies throughout the world promoting special sales. The National Federation of Retailers in America predicts that 2023 will be one of the busiest shopping holidays in the nation’s history.

Around 182 million shoppers are expected to make purchases from Thanksgiving Day through Cyber Monday, marking a 15.7 million uptick from 2022. This also marks the highest estimate since the organization began compiling data in 2017. Despite inflation, 61% of 8,424 respondents to a poll said the deals presented are too good to pass on.

The bulk of spending is expected to occur on Black Friday with 130.7 million participants, followed by Cyber Monday which is expected to attract 71.1 million shoppers. Half of shoppers will be searching for presents for the upcoming holidays. In total, retail spending in November and December will reach up to $966.6 billion.

“The Thanksgiving holiday weekend marks some of the busiest shopping days of the year, as consumers enjoy the tradition of shopping for the perfect gifts for friends and loved ones,” NRF President and CEO Matthew Shay said. “Retailers have been preparing for months for this occasion. They are stocked and ready to help customers find the gifts and other items they want at great prices during the entire holiday season.”

Although consumer spending accounts for 2/3 of GDP, the majority of Americans are living off of credit due to record inflation. So while people are spending during this 5-day holiday in anticipation of tomorrow’s price being higher, consumer spending at this point in time merely adds to the private debt crisis sweeping the nation.

Nov 10 2023

The Ben Gurion Canal Project – Declassified Documents Reveal Truth Re-Posted Nov 10, 2023 By Martin Armstrong 


Ben Gurion Canal Project R

The US and Israel have been discussing plans to build a canal to rival the Suez Canal for over 50 years. We must look at recent history to see the motives for the war occurring today. Around 20% of all world trade moves through the Suez Canal, which is controlled by Egypt. The Suez Canal was initially jointly controlled by French investors and Egypt. Isma’il Pasha was forced to sell Egypt’s shares to Britain amid a liquidity crisis in Egypt. Former Egyptian President Gamal Abdel Nasser reclaimed the lucrative trade route in 1956, sparking the second Arab-Israeli war also known as the Suez Crisis.

The West does not want to rely on Egypt, a close ally of Russia, for world trade. The Ben Gurion Canal Project, or Israeli Canal, has been the proposed solution since the 60s. Where would this canal be located? Part of it would flow precisely through the Gaza Strip. The passage would start by the port city of Eilat in Israel through the Gulf of Aqaba, crossing the Jordanian border and flowing through the Arabah Valley before entering the Dead Sea before heading north around the Gaza Strip.

Declassified documents reveal that the US Department of Energy was planning to take extreme measures to make this canal possible. On July 1, 1963, a plan was outlined to create the Israeli Canal by detonating 520 underground nuclear explosions throughout the Negev Desert. “Such a canal would be a strategically valuable alternate to the present Suez Canal and would probably contribute greatly to the economic development of the surrounding area,” the declassified document stated.

The document notes that 130 of the 160 miles dedicated to the canal are “virtually unpopulated desert wasteland,” but the primary issue would be relocating those from the Gaza Strip. “Another problem which has not been considered is that of political feasibility, as it is likely that the Arab countries surrounding Israel would object strongly to the construction of such a canal,” the declassified papers show.

Follow the money, always. The West does not want Egypt and, therefore, Russia to have control over world trade and the movement of goods. The plan was never executed because they knew no Arab nation would agree to such a power grab, and those 30 pesky miles of densely populated land mostly belonged to Palestine. This is all because the Neocons are hell-bent on isolating Russia but at the expense of dividing the world. Is this why Blinken is saying there will be no peace in Israel and Ukraine?

This is all tied in with Yemen, and there is so much more going on behind the curtain that would shock people on all sides. We will deal with the real complexity in a Special Report for the WEC Nov 17-19.

Israel Its Future
Nov 6 2023

Israel Shoots Down the First Missile in Space Re-Posted Nov 5, 2023 By Martin Armstrong


2023_11_05_19_45_35_In_a_first_Israel_shoots_down_a_ballistic_missile_in_space

Israel has just made an important step in warfare. Their Arrow missile-defense system has shot down a ballistic missile outside of Earth’s atmosphere, which is the first time warfare has taken place in space. This was an Iranian missile launched from Yemen by the Iran-backed Houthis, who have declared war on Israel.  This missile traveled out of the Earth’s atmosphere in hopes of avoiding all radar, and this would be a surprise attack. This flew nearly 1000 miles (1600km) over the Arabian peninsula outside the atmosphere and would then turn down targeting the Israeli port city of Eilat.

This was not one of those propaganda stories from Ukraine how they shot down six unstoppable Russian missiles in a single day. Nothing that comes from Ukraine is ever trustworthy, and certainly not from the Institute for the Study of War – Victoria Nuland’s sister-in-law who always says Russia is about to collapse..

This is the first missile to be shot down outside the atmosphere and has ushered in a new level of warfare.

Nov 5 2023

Interview: Gold and the Dollar will Rise Together Re-Posted Nov 5, 2023 By Martin Armstrong 


Watch the video above or click here to watch my latest interview with Goldseek Radio.

Head of Armstrong Economics, Martin Armstrong, outlines his gold market projections in lieu of unraveling geopolitical conditions.

Armstrong says, “You have a lot of uncertainty and confusing trends developing. When this materializes in people understanding what’s happening…the dollar and gold would go up together. Because you are looking at a flight of capital. Some people want to buy gold, some people want to get out of Europe, etc. Not everybody does the same thing. The two trends will come together. That’s what our computer is projecting, and it’s happened many times in history.”

– Epic gold breakout ahead!
– Convergence of economic themes – recession next year and escalating conflicts?
– Comments on crude oil.
– On the cusp of WWIII by 2025?
– How to foment de-escalation within the ranks of the power-hungry elite.
– Might societal decay accelerate?
– Tangible assets are key to surviving collapse.
– 90% silver coins remain an ideal survival investment.

Nov 1 2023

Iran Demands the Removal of Starlink – Could Governments Repel These Satellites? Re-Posted Nov 1, 2023 By Martin Armstrong



We know why Israel is upset with Elon Musk for sending Starlink services to Palestine, but now Iran is also demanding that he remove the satellites. Truth is always the first casualty in war. Governments are censoring absolutely everything to prevent the truth from spreading. Iranian journalism is non-existent and people rely on social media to receive their information through the use of VPNs. Iran has previously shutdown internet access for its own people and disabled VPN servers to prevent people from seeking the truth.

Reporters Without Borders (RSF) believes the Islamic Republic “enslaved Iran’s internet.” “The Islamic Republic’s strategy is cruel – locking its people into an empty information space and blocking all escape routes,” said Vincent Berthier, the head of RSF’s Tech Desk. “Internet shutdowns form the main barrier to information, and when the network comes back online, the government obstructs access in another way, by preventing access to VPNs. We call on the Iranian authorities to lift these oppressive constraints. Iranians have the right to access news and information freely.”

Iran has blocked the Apple App Store and Google Play to deter people from downloading a VPN to bypass censorship. WhatsApp and Signal have been blocked as they do not allow people to communicate. Internet shutdowns often occur regionally as the Iranian government will simply revoke all internet communications at whim. A company called Arvan Cloud has assisted Iran’s Information and Communications Technology Ministry in developing the National Information Network (NIN) to block the people from free communication. Ironically, the US placed sanctions on the company in June 2023. The US government prefers to discreetly block information rather than turning off the internet entirely.

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Now in comes Elon Musk. He recently said he plans to make X (formerly Twitter) an all-purpose app that allows calls and messaging. He is permitting everyone to post to his social media channel and it has become the top spot for government officials to send the public instant alerts. His Starlink technology will ensure that people can access X and the internet. Starlink satellites operate at an altitude of 340 miles and would be extremely costly to shoot down and only a few countries have anti-satellite technology. It’s also not like Musk is sending one satellite as they launch a stack of them at once.

There is a reason Putin did not attempt to shoot down Starlink over Ukraine. First of all, it is extremely costly and a waste of resources. Secondly, these devices are technically American assets and attempting to remove them could be seen as an act of war. Third, they could not shoot these down without causing orbital debris and angering the international community. Russia or China could spend countless resources on anti-satellite technology, but Musk could simply send more. The only way to close them would be to attack the ground station, a move that could only be done by the West.