QUESTION: Hi Mr. Armstrong,

Quick question for you, as someone who grew up in Quebec in the 90’s, when Quebec was voting to separate. And now living in Alberta, and seeing the sheer anger here towards Canada, is there a legitimate chance Alberta moves towards the path of separation and actually brings it to a vote?
Thanks again

Mike

(as a kid growing up in Montreal, I wanted nothing to do with separation. If the vote was held today in Alberta, I would highly consider voting to leave Canada)

ANSWER: Alberta joined Canada in 1905. This separatist movement began precisely on the half-cycle of 112 years – 2017. What we are dealing with here is that when the Federal Reserve was formed in 1913, it was established with 12 branches. When the Fed was created, it was the solution to the Panic of 1907, which was set in motion by the disruption of the internal domestic capital flows caused by the San Francisco earthquake of 1906. The insurance companies were in New York. Consequently, the cash flowed to the West and a shortage developed in the East.

The original structural design of the Fed was to establish 12 branches to manage the capital flows domestically. Interest rates would decline where there was an excess of cash and rise where there was a shortage. This, they believed, would cause capital to move between the branches to balance the national capital flows and economy. Each branch acted independently to manage the capital flows. When crops would come to market, then Kansas would have an excess of cash and rates would decline as we can see from the table showing the rates set by each branch in August 1927.

When Roosevelt comes to power in 1933, he wanted to control the economy for his socialist agenda. He usurped the power of interest rates from the various branches of the Fed and consolidated then into Washington DC making it one-size-fits-all. He, therefore, abandoned the structural design of the Fed and ever since the capital flow focus has been international, not domestic.

This is the problem in Alberta. Governments have all followed Roosevelt post-World War II. In doing so, they have completely abandoned the proper management of their domestic economies and everyone is always focused on international capital flows and currency values with respect to trade. They have COMPLETELY ignored the fact that their domestic economies are not the same from one state or province to the next.

The commodity-producing states are booming when the financial states and at their lows. Our own model is warning that we have a commodity boom coming for the NEXT 8.6-year wave on the Economic Confidence Model. Right now, the stock market rallies and commodities linger. Central Banks will raise rates in the stock market booms to prevent inflation and that is when they put farmers and miners into bankruptcy.

I have called this the Texas-New York arbitrage. Here is a chart showing when oil peaks in price, it is typically counter-trend to the financial markets. Oil peaked in 2008 when the stock market was crashing. Once again, oil prices are down and Alberta suffers while the financial markets are booming in Toronto.

What is resurfacing is the regional differences within Canada as well as the United States. The one-size-fits-all policy of central banks with regard to interest rates pits East v West in both Canada and the United States. Farmers, oil producers, and miners are forced to pay higher interest rates when their economies are declining because of speculative booms in Toronto or New York.

This is the root cause of the regional separatist movements we are witnessing in Canada. The structure of the central banks was originally intended to manage the domestic capital flows. That has been part of the whole socialist agenda to abandon that policy and create the one-size-fits-allpolicy of Marxism. This is why Alberta SHOULD move to separate. The very economic survival is critical unless the central banks open their eyes and STOP this Keynesian manipulation of interest rates attempting to manage DEMAND which they fail to even understand. It is this Socialist philosophy which is destroying governments and reducing our standard of living to support a theory of Marx which resulted in the collapse of China and Russia. You cannot be just a little-bit pregnant.

QUESTION: Marty, your account of Carausius and Postumus being the ancient Brexit is really interesting. Am I correct that whilst this separatist movement failed, it was this Brexit that forced Rome to reintroduce silver?

HM

ANSWER: Correct.  Diocletian introduced the silver Argenteus in 294AD after the defeat of Carausius’ separatist movement. It is highly likely that old silver denarii were still being used at a huge premium. We do find many denarii worn rather extensively indicating that they did see a lot of circulation.

Here is a coin of Postumus (260-268AD) and the reverse is a political statement. The reverse side states “RESTITVTOR GALLIAR” with Postumus standing left with foot on the captive barbarian, resting on his spear and raising a kneeling figure of Gallia holding a cornucopia. This is portraying him as the great restorer of order and savior of Gaul. This goes directly to the political instability emerging. His rebellion was by no means an attempt to seize the empire but to split from Rome and establish the Gallic Empire.

This is where the coinage PROVES a very important point. The debasement we see in the coinage of Rome clearly created a CONTAGION. Even though Postumus split creating a separatist movement with the Gallic Empire, he could not maintain a silver standard for the coinage he would strike simply vanished from circulation as was the case in Rome proper.

Consequently, we find that the coinage of Postumus shows that he too had to debase the coinage keeping in line with the debasement in Rome under Gallienus. The silver was being hoarded even within this new separatist movement. However, when we look at the second Ancient BREXIT movement 14 years later, things did calm down and confidence was beginning to return for Carausius issues a silver denarius and then Diocletian is compelled to follow in 294AD with the re-introduction of silver coinage known as the Argentius.

The most interesting aspect of this is that here the Second Ancient BREXIT influenced monetary reform in the Roman Empire working in reverse. The first reign under Postumus separated when the coinage was still silver. So the debasement in Rome compelled the same response in the Gallic Empire. The Second Ancient BREXIT takes place post-debasement and it issues a silver denarius to prove it is prosperous there in Britain. Thus, the influence moves back the other way. Thus, the sequence matters.

What this demonstrates is that if Europe cancels the currency and moves to its own cryptocurrency as the IMF is suggesting, people will then immediately begin to hoard the paper currency of the USA, Scandinavia, Switzerland, and perhaps even China. This could result in forcing other countries to move to cryptocurrencies to control capital flows. This is what I hope for. If we can get just one country to adopt our solution, this will put pressure on everyone else to follow. The danger cryptocurrency introduces is OFF THE CHARTS!. The sales pitch has been that they will bypass central banks. In reality, when government outlaws private cryptocurrencies and compels people to use the official cryptocurrency, then the global capital flows will be threatened profoundly.

All I can do is understand the economics of the situation and hope for the best.

QUESTION: Mr. Armstrong; Do you agree with Bloomberg that the yield on German bunds has declined in anticipation of the Fed lowering rates?

JV

ANSWER: No  The falling yields on German government debt is simply intensifying the trade to buy German and short everything in the South in anticipation of a failed Euro. It really a stretch to claim yields are declining in Germany because the expect lower rates at the Fed. This is purely a speculative punter’s play – not a shift in strategic portfolios. Italy’s budget battle with Brussels remains a concern as is the case with BREXIT. There is just a growing lack of confidence in Europe. I do not believe that even the technical pattern implies such a shift at the Federal Reserve as the reason for capital movement within the Eurozone market.

The system we have is totally corrupt and it outright UNSUSTAINABLE!!!! In Illinois, the city of Peoria has been forced to eliminate 22 firefighter and 16 police positions even after they made 27 layoffs earlier this year. Besides eliminating employees, they are now looking at adding a tax of $50-$300 to try to cover their own pension schemes as pension spending consuming everything. Pension costs are forcing Peoria to cut 38 emergency worker positions and to raise property taxes further. Peoria joins the south Chicago suburb of Harvey which is yet another warning of what is coming over the next three years into 2021.