The Dow Jones Industrials still remains in a bullish posture on a broader perspective. The real critical support will lie at 16500 and the Panic Support is well below the market at 13100. Panic Support is the level that if breached intraday, this is where a Panic Crash unfolds. That is the real important level for 2016, but it does not appear to be in the cards. Otherwise, a closing for 2015 above 16500 is still moderately bullish whereas the technical levels will be 17345 and 18879.

We will be issuing the World Share Market Review after the first of the year overing North & South America, Europe, Middle East, and AustralsAsia as well as Asia from India and China up to Japan. We will also discuss the prospect for a continued sideways market for 2016 with the potential for the Phase Transition unfolding 2017-2020.

Keep in mind that the Bail-In becomes a formal European position January 1st, 2016, and 2017 is when G20 begins swapping info on everyone everywhere. Capital is being herded with no doubt and the smart money will begin to position itself realize it is time to get off the GRID. We have the Presidential elections in the USA at year-end and this too will help keep the markets guessing – Trump v Hillary or will the Republicans split entirely as they desperately try to force their own pick as the Republican candidate in a dictatorial move as they have done before.

Yet 2017 will see elections in Europe both in France and Germany. Of course we will also have the British vote to leave the EU. So looking at this agenda of fundamental chaos, it is not that hard to see why the computer is showing it all goes nuts starting in 2017. The question we will address is shall 2017 be a REACTION LOW with the false move before the breakout or a high with the meltdown afterwards?

China is demonstrating it is more practical than anyone else in the industrialized world. They have announced that they will “reasonably” set limits on new local government debt in 2016. The Finance Minister Lou Jiwei said at a work conference in Beijing on Monday that they will actually limit local debt; something nobody else does. China will also adopt a much more flexible fiscal policy which shall include gradually increasing fiscal deficit ratio and expanding its budget deficit. So China will increase its debt in a gradual manner to try to stimulate the economic decline it is facing ahead.

These policies are to be supplemented by a cut in taxes to help companies reduce their burdens and thus help to prevent rising unemployment. While the Republicans effectively force tax reduction in the year-end budget, there is little doubt that the Democrats alone would never adopt such a measure. The idea of cutting taxes at all in Europe is up there with treason.

We can see that China is taking a far more practical approach to trying to manage its economy that we see in the West. Perhaps when they too come to realize that debt is not the answer and actually compete with money that would otherwise expand the economy, hopefully the day will come when public debt is just forbidden.be more

QUESTION: Mr. Armstrong, you have said that the Pi cycle shows up everywhere in finance. I have looked at the charts you posted in the Roman Empire. Has this had a major impact in modern times aside from your Economic Confidence Model?

ANSWER: Of course. Just look at Roosevelt’s 1934 confiscation of gold. Add 31.4 years and you get 1964, the last year silver appeared in the coinage. Add another 31.4 years and you come to 1995. That was the historic low in the dollar against the Japanese yen for example. Britain abandoned the gold standard in 1925. That was the last year they minted gold sovereigns. They resumed 31.4 years later – 1957.

This is but one derivative of time. There are over 40 tests the computer runs just on Pi alone with this forming just one model. This is why the Forecasting Arrays cannot be reversed engineered because there are 72 models all independent and this is the sum of all time models with numerous sub-models within each. The top row is the composite and is the most important reflecting turning points with the highest and lowest bars. The color changes to indicate direction blue rising pink declining. Panic Cycles are outside reversals or big moves in one direction (breakout/collapses) where as volatility is measure in three primary manners, internal (diff between high/ow of trading session), overnight (previous close to open), and general volatility (close to close).

The seriousness that is emerging in the hedge fund community is their tendency to become VULTURE FUNDS who look to lend money to sovereigns at excessively high rates of return that become no different than the carpetbaggers who sought to exploit the South following the Civil War. As an investor, you should stay away from hedge funds who think they can exploit various governments rather than invest. If they do not know how to invest to expand the economy, then they have no business handling anybody’s money to ruin the reputation of the industry. They will turn investors into the hated carpetbaggers and they risk turning society into the arms of authoritarian government justified in defaulting on such funds.

The hedge fund industry really began in 1985. The biggest hedge fund back then was $100 million. Unfortunately, too many hedge funds have lost their way and are becoming VULTURE FUNDS that risk the entire industry. We have to realize that 1985 was the start of the movement to create hedge funds for that was the year when everyone (myself included) returned all money to U.S. citizens and moved offshore. A normal pi cycle brings us to 2017, a year that is starting to look very bad. Hedge funds who have become VULTURE FUNDS will be defaulted upon by their clever antics of lending to governments. They falsely believe they have courts to back them up as they did in Argentina. What they fail to see is that they are playing with fire while running with scissors.

Puerto Rico is yet another example of hedge funds out of control. The cash-starved island managed to persuade some of the country’s biggest hedge funds to lend them more than $3 billion to keep the government afloat. They assumed they would get a great deal since they would be earning, in effect, a 20% return. Relying on the island’s Constitution, Puerto Rico was required to pay back its debt BEFORE almost any other bills, whether it was for employee salaries or retirees’ health care benefits. They assumed the law would be on their side and they could crush the island to extract a 20% annual return.

This sort of deal would have been criminal before 1980 when usury was capped below 10%; that was removed so Volcker could raise interest rates to stop an inflation he did not understand. Within just months of making this deal with the devil in the form of hedge funds, Puerto Rico ran out of money. The deal they cut with the hedge funds began to fall apart and has now set the stage for what is becoming an extraordinary political and financial fight over Puerto Rico’s future.

The question arising is whether Puerto Rico should be granted bankruptcy protection in a battle with VULTURE FUNDS who have done far more damage to further the image of the hated rich by supporting a return toward Marxism. Some of the people involved are the very people who lend money to Hillary and Bush, assuming they are buying the politicians as security for their exploits. The hedge funds have banned together and hired lobbyists to try to create laws to screw Puerto Rico for their gain. This is the very method they used against Argentina and Greece to exploit high-yielding returns in billions from the hardships they impose upon the people of those countries.

I highly advise anyone investing in these type of hedge funds to exit. This model will fail for the sovereign debt crisis will expand rapidly over the next two years and these funds will lose a fortune. They probably would love to see Donald Trump assassinated for his election would spell disaster for this business model when they cannot buy him.

QUESTION: Mr. Armstrong, have you ever heard of a short lived Wörgl Experiment in Austria? It was shut down by the Austrian Central Bank they say because it was successful. Have you looked into this experiment they claim defied deflation and inflation?

ANSWER: Yes. This was by no means an isolated instance. True, it was touted as the “Miracle of Wörgl” during the Great Depression. The very similar “experiment” took place in the United States with over 200 cities also issuing their own currency. You have to understand the dynamics of the period. This was the very age of AUSTERITY where the assumption was the collapse was a lack of confidence in government so they increased tax collection and cut spending unleashing both deflation and a dwindling money supply. This led many cities to create their own money due to the lack of money in circulation also impacted by hoarding.

The Wörgl Experiment began on July 31, 1932, the very month that the Dow Jones bottomed. The experiment involved issuing of “Certified Compensation Bills”, which was a form of local currency known as Scrip generally, or Freigeld. The monetary theories of the economist Silvio Gesell were applied by the town’s then-mayor, Michael Unterguggenberger. What differed with Gesell’s idea was that the currency would expire. Believe it or not, there are some government’s looking into currency which expires. Europe since World War II issued currency which expired roughly every 10 years. This forced people to bring out the old currency to be swapped and thus prevent hoarding.

The central part of Gesell’s idea was how to stop HOARDING of money. This is why FDR also confiscated gold. He too saw the problem of people hoarding money and not spending it. This is part of every economic decline. If there is no CONFIDENCE in the future, people save more. This is simply human.

Nevertheless, the Wörgl Experiment resulted in a growth in employment largely because you had to use the money. This allowed the local government projects could all be completed, which many called a miracle for it appeared to defy the depression in the rest of the country. Inflation and deflation are also reputed to have been non-existent for the duration of the experiment. But this was simply the result of money expiring so there was no purpose in hoarding “money” shifting it back to “asset” appreciation as in a hyperinflation.

Despite the appearance of success, the Wörgl Experiment was terminated by the Austrian National Bank on the September 1, 1933.