California has beaten Illinois for net outmigration from the state. California has become one state that there are more people trying to get out than moving into it. So while California wants to protect illegal aliens and fight with the Federal government over sanctuary cities contrary to the Constitutional Supremacy Clause, according to a November report from the U.S Census Bureau, the Golden State has had 142,932 residents exit the state. This domestic outmigration has been the second largest outflow in the USA behind only New York and New Jersey. The net outmigration from California jumped up 11% compared to 2015

QUESTION:  Hi Marty,

Two questions:

1. When the Canadians said they never look at “those things,” what “things” are they talking about?

2. I always like lowering taxes, if the remaining revenue will be spent wisely. (In our dreams). But as a lawyer in the Austin area, I can assure you that manufacturing by some of my high tech clients has been outsourced to Asia on several occasions, when I gave them the 30 minute presentation on the regulatory crap they would need to grind through before hiring even one worker, or even breaking ground on a facility. “Or”, as I have told them for decades, “You can go through your “Rolodex”, and call somebody you know in [Asia]. In six weeks product will be on the way, and you know it.”

It isn’t just taxing, Marty. We have desirable pollution control laws, worker safety laws, safer roads, safer water and food, cleaner air, more health care, (which may not mean “better health care”,) better housing, more cars, consumer protection, rule of law, sometimes, etc. These things cost money, and since we are stuck with dollars, politicians and industrialists have sold our future overseas, for short-term gains.

It is a familiar issue in Texas, where Mexican and other illegal workers rent cheap houses and hot bunk up to 30 people in a three bedroom modest house, sending most of their pay home, until they can get an anchor baby and go on the free-stuff-for-kids rides our governments have created. Meanwhile, working-class Texans can’t afford a tiny house in a bad neighborhood, in Austin Metro and other areas. Much less health care, insurance etc. They compete, head to head with the aforesaid illegals.

On the macro scale, how does say, Dell, return manufacturing to America, when they are paying 10% of the labor cost, probably 20% of the regulatory cost, almost no legal costs, de minimus pollution abatement costs and no workers’ compensation, by comparison, etc.? I don’t see how tax cuts can stop that imbalance. Yet we have hundreds of millions of fellow citizens who are over a barrel and need more and higher paying jobs. I know a guy with a wife and two kids who were supporting them on one wage and good money management but left the St. Louis area due to social meltdown. Came to a suburb of Austin, got a job at a grocery store, living with parents, and then realized, after saving a grubstake, that his wages cannot rent a crappy 2 bedroom house in a bad neighborhood, with more than $200 a month left over.

Their solution? Move to an even cheaper state – Florida. We’ll see.

ANSWER: The scenarios that people make up as to what central banks make their decisions on are the headlines in the press – inflation & jobs normally. The inflation indexes have been so manipulated that they will NEVER reach the 15-20% level of the 1980s. Back then, they included real estate which was 40%. That was removed because they determined it was an “asset” and not really cost of living so it was replaced with rents and then they more often used urban rents that were controlled. You have to understand that the entire budget and social programs were indexed to the CPI. So, the NUMBER ONE way to reduce deficits was to reduce the CPI index so politicians did not have to vote to cut programs and suffer the arrows launched by the public.

The Federal Reserve is prone to raise interest rates regardless of the economic data because they have been manipulated too low and has set in motion a crisis in pensions. On the other hand, raising rates too fast blows the deficits out since governments are the relentless and biggest borrowing in the economy. It is just not plain-vanilla management as people portray. There are far more serious issues including capital flows which they are all now finally beginning to take notice.

On Part-II, you are absolutely correct. The biggest cost of labor is NOT the actual wage paid to an employee. It is the benefits, taxes, and regulatory costs. As I said before, when I was restructuring major multinational companies to cope with the birth of the Euro, those who needed skilled labor I place in Britain, not Germany. The cost that an employee never sees was 40% less in Britain compared to Germany. I was called in urgently by a major company who had a branch in Germany. I was asked to come to the board meeting the next day and was not even briefed in advance what was the crisis. When I got there, they appoint me advisor to the pension fund and then most of the board resigned. I asked what was going on? They wanted to lay-off 25% of the workforce and the Germany government finally agreed. At the last minute, they instructed the company that they COULD NOT pick and choose who to lay-off. They had to offer 100,000 to give up their job “willing” no less. Everyone who knew they could get another job took the 100k and left. The very people they wanted to get rid of stayed. That was how regulators screwed up companies. I encountered the same stupid policy in Grece.

The higher the tax burden, the lower the standard of living. The tithe was an obligatory offering from the law of Moses requiring 10 percent of an Israelite’s firstfruits. We are so far beyond that it is destroying our civilization. As you can see we take the total consumption of government as a percent of GDP. There is just no end in sight. The USA economy is doing far better than Europe as a whole simply because we are at 37.6% of GDP compared to the insanity of France where Communism began – 56.7%. Among the states in the USA, we are witnessing major migration from New Yor, New Jersey, California, Illinois, and Connecticut just to mention the top contenders. The people are burdened by the taxes and they do not stop if you try to retire. They want income tax and property taxes when you retire and many people simply cannot afford to live in those states anymore. The tax burden never ends and when you die, they want to pick over your bones.

The development of robots is to simply eliminate the benefits and regulatory costs. The worker sees this as just his hourly wage. But the real costs in far too often 50% of the wage or higher from the company’s perspective. Even the Post Office is hiring part-time to avoid pensions and benefits.

As for shipping off programming to foreign lands, it still requires staff here to monitor them and the end product is rarely 100% acceptable. The communication problems also impact that situation and make it less attractive than what it appears on the surface. It just takes a lot more management from afar.

COMMENT: Usury, first the Fed starves we savers for return for 18 years with their zero percent interest rates and gave us two giant stock market crashes in that intervening period.
The lack of return caused us to cannibalize our savings and trillions of savings lost thru the stock market crashes and ditto home equity. Then property taxes explode.
Now even the cost of funds is still at historic lows credit card rates move from 8/9% to 12% in a matter of months.

What are Grandma and Grandpa to do? Knowing what the Feds original charter was is not an answer because they have become the master manipulator for the wealth transfer from the people to their greedy cohorts.

Have followed your public work since well before your legal problems and greatly appreciate your cycle work but the wealth transfer must stop and some jail sentences applied and claw back enacted.

Or is the wealth transfer already accomplished and the taxpayer/consumer left holding the bag?
Martin, thank you for your efforts.

LL

REPLY: I fully agree. This is the battle between Demand v Supply-side Economics. This age of “New Economics” that was ushered in by Marx and Keynes, justified that government had the power to manipulate society to achieve their goals. The idea of raising and lowering interest rates to influence demand has utterly failed. The 800-pound gorilla in the room is the $200 trillion+ of sovereign debt around the world. Demand-Side Economics cannot possibly work when the biggest debtor is government and the raising of interest rates only increases their deficits that come back as tax increases reducing the net wealth of the people and lowering economic growth.

This is why we are headed into a Crash & Burn. There is no other outcome possible. Government is crowding out the private sector so the annual rate of economic growth has steadily declined. The transfer of wealth is not between the RICH v the POOR. It is between Government v the People. They point the finger at the inequality of income is growing. But this is not wages, it is that assets will always rise against the currency in progressive economic declines. They will point to that gap as the problem. But states like Illinois and California have net migrations outward because of the tax burden – not because some CEOs make too much.

It would help to stop blaming the central bankers and let’s look at the problem from both sides.

QUESTION: the ECB is arguing that given the low free float of EU bonds (especially German), bonds not owned by the ECB or other central banks, the impact of an end to APP purchases will be nowhere comparable to the tapering sell-off in the US in 2013. Bank research teams are hanging on to this idea to make positive forecasts in the EUR exchange rate versus the USD. They say an end-date for the APP programme may not result in a higher risk/term premium in the European government bond market.
Could you comment on this, please? Many thanks for all your work,
GM

ANSWER: The ECB knows it has to stop the QE program. They also know that Yellen was correct in lecturing them that interest rates had to be “normalized” so they know there is a real meltdown coming. That is inevitable. Pension funds cannot buy 10-year bonds at 1.5% or even 3% locking in losses for 10 years. I really fail to see that claiming there is such a small float, because the ECB has been the 800-pound gorilla buying everything, that interest rates will not rise. That is just complete fallacy. There is a small float because they have DESTROYED the bond market in Europe.

Draghi has proved something incredibly important – Demand-Side Economics has been a complete and utter failure. After 10 years of manipulating interest rates, that they want to put private bankers in prison for under the Libor Scandal, the ECB has failed completely. In just 7 days, the German bunds dropped from 16415 to 15939 – that was 5.9%. The 2013 decline in US 30-year Treasuries back in 2013 was 16%. So what the Bunds did in 7 days in their decline based upon events in Italy reflect that the ECB is trying to paint a picture that yes – rates will rise and bonds will decline. However, the decline will be less than the USA (in their biased opinion) so you will lose less money buying European debt than American.

A great sales pitch. There are people who just WANT to believe the Euro will defeat the dollar. They, therefore, look at anything to support only that view. Good luck on that one.

COMMENT:  If gravity is the most powerful force in the universe than the logic would collapse ECM to and that is not how reality is as you have discovered in the ECM.

Gravity / Government / the weakest force in the universe, Gravity is opposite Electromagnetic Majority people are opposite government
the more powerful Majority in the Market will always create the trend, not the weaker gravity / government that is the basic tenet of the ECM and the Electric Universe This is also why the Sovereign Debt Crisis will bring Gov. Deb to 0

It is then a Fallacy to Appeal to Authority of Relativity , You Marty have shown
Time is simply the observation of ratios between multiple series of events and is the only Constant, the past can not be changed or manipulated.

I can accurately predict future events, by observing past events, and noting the ratios of events in time 8.6(9) year frequency with the 1.075(1.3) year short leg and the 2.15(2.6) (1.3 +2.6=3.9) year Long leg to volatility wave/ change in trend PI 3.1415(3.2) This allows me to have confidence in where I am in time and to accurately predict future events with consistent success.

Tesla said “pay attention to the 3, 6, and 9 and think frequency, vibration, energy”. He saw the world as it was, rather than how he wanted it to be, he was aware of the principle of the ECM, as the maya and other ancient civilizations.

SA

REPLY: I believe you have expressed it very well from a physics perspective. Well done! I live on the beach and am in awe of the sunsets every day. This is one photo I took on one stunning day. Observing the universe and how everything functions in a choreographed play is amazing. I have often said that my physics teacher said nothing is random. God does not play dice with the universe. My economics professor emphasized that everything was random and therefore the government was needed to manipulate the chaos to smooth every out so we have a better life. I realized right then and there that one of my professors was lying. I followed the path of order; not the one of chaos and randomness

QUESTION: Mr. Armstrong; I was at the Treasury Management Association of Canada (TMAC) conference in Vancouver when you appeared as a speaker as well as Peter Detallis of the Bank of Canada if I remember his name correctly. I was there at the cocktail party when the Finance Minister of Nova Scotia said you diminished the central bankers. They were right there a well and he did not know it. You introduced him to them. He was upset. I laughed at that. My question is why are you the exception to meet with central banks?

HWF

ANSWER: It should come as no surprise that I routinely argue against “demand-side” economics which justifies central banks manipulating demand by raising and lowering interest rates. It has never worked. That said, the Democrats vilified “supply-side” economics when Reagan lowered taxes. They vilified it calling it “trickle-down Economics.” They never actually explain the difference because they want to do as they desire and then expect the central banks to clean-up their mess from the fiscal mismanagement of the economy. That said, the conspiracy theorists blame the central banks for absolutely everything and assign no blame to the politicians for the fiscal side.

That said, it still took me some time to understand why the central banks would talk to me. They clearly knew I understood the real dynamics of the system as a whole with both the fiscal and monetary side in addition to Demand v Supply-side economics. The also knew I lived in the real world community and was one of the few true international advisers. The difference is I really had some $3 trillion under contract which was about 50% of the US National Debt at the time. They knew I spoke with real-life experience – not theory. That was even part of the Congressional record when I testified before the House Ways & Means Committee. When the model called the 1987 Crash that was one thing. But the very day of the low it confirmed that was it and the low would hold and off we would go to new highs. I was called in by the White House that day and asked to confirm this would be it. There are simply times when they just really need to know what is happening and they need to rely on something that is NOT political or just the passing opinion of an analyst. Then the Tokyo Crash took place perfectly with the top of the ECM 1989.95 and again I had two central banks on the phone at the same time. The question was did the computer say they needed to intervene? I said no. It was confined to Japan.

The stock market again peaked on the very day of the ECM July 20th, 1998. That was followed by the collapse of Russia and the Long-Term Capital Management Crisis. That is when the CIA called and wanted the model since it had political implications that became obvious. It has become obvious to those behind the curtain that our model is no joke. There have been WAY TOO may correct forecasts that have picked the turns and highlighted the crisis points.

Over time, I learned that the central bankers are no different from the rest of us. They do NOT know everything and they are NOT in control of the world as the conspiracy people paint it. In Canada, they filed a lawsuit against the Bank of Canada to demand it focus only on Canadians and ignore international bankers and the Bank of International Settlement (BIS) (see Press release: Ban of Canada Suit _CourtCasePressRelease). They do not grasp that we are ALL CONNECTED and central banks realize that they CANNOT manage the domestic economy by ignoring the international capital flows.

There is such a general misconception of central banks it is unbelievable. The first cooperation took place in July 1927. That was a meeting between USA, UK, France, and Germany.  They attempted to manipulate the capital flows by arguing the USA should lower interest rates and in theory, the capital would return to Europe. It failed and they could not prevent the Sovereign Debt Crisis that hit in 1931. It was Roosevelt who usurped all the power of the independent branches of the Federal Reserves and stuffed them all into one size fits all management under Marxist socialistic theory where Washington kept an eye on the Fed.

Yellen pleaded with Drahi to stop his insane negative interest rate policy. He would NOT listen. She hesitated in raising US interest rates back in 2014 hoping that Draghi would see the huge mistake he was making in creating the next crisis – the destruction of the European bond market and the pending Pension Crisis. When the ECM peaked 2015.75 and started to decline, the pressure on the Pension Funds began to escalate. The Fed broke FAITH with the rest of the central banks and began to raise rates during the last quarter 2015 after the ECM turned October 1st, 2015.

Our system is the ONLY mechanism that is tracking the entire world. It picks up everything. This is the chart of the capital flows for the 1987 Crash. How can any central bank ignore the capital flows and the international interconnectivity of the world economy and survive?

We have no conflict of interest and that is critical. We also have a track record from the early 1980s that is unbelievable on economic forecasts. In the middle of a crisis, we all need sometimes to call on someone or something. We try to contribute to society in hopes of one day perhaps AFTER the Crash & Burn, just maybe we can avoid a fall into totalitarianism. My time will be over here. My concern is for my family I will leave behind.

QUESTION:

Hi Marty,

I hope you’re keeping well? More news from the “EU beacon of light” for you. I’ve enclosed an article regarding Irish pension money in Italian bonds. This is very very scary if true and we really are heading for a disaster from which a little country like ours won’t recover if we ever did anyway! In the article Mercer says that “after the financial crisis the ECB put in place a system to limit a contagion”.

Is this just more whistling in the dark? I believe it is.

Kind regards,

E

ANSWER: The very design of the euro promotes contagions. Because there was no national debt, the “reserve” status for banks is the debt of all member states. In the United States, ONLY the national debt federally is acceptable. Therefore, if California or Illinois goes bust they do not create a contagion that brings down the whole. Even the government has come out and warned there may be a contagion will emerge if Italy fails and/or breaks with the EU.

The euro crashed BECAUSE there is no such prevention of a contagion. That is totally FALSE and a made up excuse. Fears of the new Italian government of the five-star movement and the right-wing populist Lega came into the markets and sent the euro crashing. A risk of contagion sparked by Italy infecting the entire Eurozone was “not yet completely off the table,” said ECB Vice President Vitor Constancio. This applies in particular if the sharp rise in Italian government bond yields. At the same time, Constancio came out and said that US Treasuries have the greatest risk because the Fed keeps raising interest rates. There is no such mechanism to prevent contagions – PERIOD! It is all smoke & mirrors.