Real Estate v Quantitative Easing


QUESTION: Hi Martin,
I just finished your new NYSE Boom/Busty report. This is excellent work and as always extremely fascinating. Thank you for continuing to share these profound views with us.
My question relates to your view that we are looking at a complete collapse of Quantitative Easing and that will likely see a massive capital flight to the dollar and the major safe haven will be EQUITIES. In the context of this possibility, are you able to comment on how this may relate to Real Estate. Your ECM seems to be calling for Real Estate to top out and structurally fall in 2032. Is it not possible that with the collapse of QE and potentially economies that we will see more negative rates in the short end and with the government powers to seize assets in bank accounts, would it not be prudent to have zero cash in hand and hence we see a massive capital flight to Real Estate too? Or will the collapse of QE lead to significantly higher rates across the curve and hence blow all leveraged exposure sky high?

Many thanks as always,

David

ANSWER: The problem with real estate has been that its value depends upon lending. This was what the government did as part of the New Deal by creating 30-year mortgages. This was a scheme to get prices up by extending the period people could pay off the loan. Typically, the duration was 5 years previously.

The collapse in Quantitative Easing will have the effect of causing rates to rise on the long-term. However, there will be a shift toward private assets and this will help to a large extent. However, keep in mind that many institutions will be trapped and unable to shift to private assets. Many boards will not understand the shift and still believe, wrongly, that unsecured government debt is best.

Prices of real estate will decline in proportion to the decline in mortgage availability. We are already witnessing banks beginning to withdraw from lending on real estate.

I have provided the guide-posts for what is to come. This will be an interesting future.

What is it like to be Wounded in Combat?


While in Vietnam in a Special Forces Camp A-341 near the Cambodian Border in 1967 I was the team XO and a 1st Lieutenant and this is my story

The Camp had been under attack for several weeks by VC/NVA units to our north and east when we came under attack for the third time and over the next several hours we continued to receive sporadic incoming mortar rounds from the Northeast. There was also some small arms fire but no signs of any kind of ground assault like we had beaten off previously. It appeared that this time we were just being harassed or probed and not attacked. As I remember it about 20 or 30 mortar rounds were fired at Bu Dop and the a joining 1-28th infantry positions during the night, more to keep us from sleeping than to inflict major damage. The 1-28th infantry was taking some casualties from shrapnel but I don’t think they had any KIA’s during this mortar bombardment. We fired counter mortar fire as did the 1-28th infantry but I don’t think any of us hit the VC/NVA mortar positions. They were probably just moving around firing a few rounds from one position and then a few rounds from another nearby position.

However, early in the morning at about 0300 hours one of these incoming rounds landed either: near the 4.2″ pit sending hot shrapnel into the ammo bunker; or it landed directly on the ammo bunker itself penetrating it with flash or hot shrapnel. In either case it didn’t matter for it ignited the propellant charges on the staged illumination rounds which are what propels the round to the target. Maybe even some of the illumination rounds themselves that we were getting ready to fire were set off. I do remember that there was a dull explosion and then several very intense waves of heat that went through the position igniting everything that could burn. Fortunately we had used up all the HE rounds that night and only a few illumination rounds were left unfired. If there had been any HE rounds in the pit and they had gone off when the incoming round hit they wouldn’t have found much if any of us. Just a few pieces and parts here and there scattered around the camp. For sure I wouldn’t be here talking to you.

I had on a standard issue steel pot, a nylon flack vest, jungle fatigue pants and jungle boots, your basic standard uniform for combat in Vietnam. Because we were in camp I did not have on any web my CAR-15 was in the pit with me but I did not have it in my actual possession. Most of us didn’t wear socks or underwear to try and prevent getting fungus infections from the heat and moisture that was always present. The heat from the blast hit me from the right rear while I was talking on the PRC-25 radio. I remember being engulfed by the flames as the fire ball rolled past me and several intense waves (I could feel the pressure as they hit me) of heat hitting me on the back and right side. These blasts or waves of heat were extremely hot such that the intensity of them melted the nylon flak vest completely off me as well as instantly setting fire to my pants and jungle boots. I must have instinctively closed my eyes as the fireball engulfed me and then there were a few seconds where I don’t remember what happened. The blast either blew me out of the pit or I crawled out (I’m not sure which), the next thing I do remember a few seconds later was that I was laying on the ground just outside the pit and seeing that I was on fire.

My first action was to put out the flames that were still consuming what was left of my clothes and flack vest. That probably took 20 or 30 seconds and while I was doing that I also saw there was an intense fire still burning in the 4.2″ mortar pit. After I put out the flames with dirt I got up and saw that SFC Broom and SP4 Schroeder were down on the ground in the pit and still burning, I think they were both unconscious. They were behind me, closer to the explosion, when the blast hit and so this was the first I saw of them after the fireballs rolled over us. I was in the process of climbing into the pit to help them when some of the other team members showed up. They stopped me and took care of the other two guys in the pit. I don’t remember which team members helped me besides that being a long time ago I probably wasn’t in the best state of mind.

I knew I was injured and burned but I had no sense that I might be seriously wounded. I was placed on a stretcher and I do remember getting a shot of morphine. A dust off was called and by 0400 hours we were loaded in it and we left Bu Dop for the last time. It was still dark and as we left I could see the camp and 1-28th positions dropping away as the chopper rose into the dark night sky. Still, not realizing the extent of my injuries I was concerned over my team and that I needed to get back right away, they needed my experience. I was thinking that I’d be gone for a few days, get some rest and then join my team in a week or so. I was very wrong in this assessment of the situation.

We were all medevacked to the 24th Evacuation Hospital in Long Binh for emergency treatment. I can remember going into the triage room and answering a few questions but then my memory starts to get fuzzy. Probably by that time shock was setting in as the next several days were disjoined and what I can remember is only a few images and feelings. At some point I remember being loaded on a medical transport and then being moved to the 106th army hospital in Japan I spent several days in Japan, of which I remember almost nothing but a few images of being in a hospital ward that I remember as being dark However, I was experiencing shock by this time and so I can’t really rely on anything I remember as being absolutely true. Then all three of us were placed on a military hospital plane and flown back to the states along with a lot of others. The ride back was one of constantly dropping in and out of consciousness and blurred images of patients, nurses IV’s and being very cold. I think there was a plane transfer somewhere in this process and then the three of us from Bu Dop were taken to the Brooke Army Medical Center in San Antonio, Texas. I remember very little of that plane ride from Japan but I do remember the airfield in the states and the ambulance ride to the hospital.

Brooke Medical Center was then the premier center, in the world, for treatment of burns, so if you were going to be burned this was where to be. I had 3rd degree burns on my legs and 2nd degree burns on my arms, back, neck and face for a total of 67% of body area). I had also inhaled hot burning gases in the pit when the fire balls rolled over me which had burned the inside of my mouth, tongue and my lungs. Besides that I had some shrapnel wounds and was experiencing a sever loss of body fluids. In general I was in very, very bad shape Later, when I was discharged from Brooke Medical Center, the Doctors told me that when I reached the hospital in December they had given me only a 10% chance of living through this trauma. There had been so much physical damage to my body that they just didn’t think I would be strong enough to make it. However, I’m certainly glad they didn’t give up and that they did still tried to save me despite their doubts. As I contemplated this brush with death a few years later I came to the conclusion that my life after this was a gift and that since I should have died then, but instead I had lived, that I would do something before I died to justify my existence. As a result I have been driven to accomplish something ever since and what I’ll do if I’m ever successful I don’t know.

Being burned extensively is not pleasant and the burned person’s body reacts to this, in part, by allowing the mind to hallucinate. I guess the hallucinations allow time to pass without direct knowledge of the pain the body is going through. I was no exception to this developing situation even when I knew what was happening to me. However, to me going into the hallucinatory state was a very frightening situation, much more so than the burns and associated pain. The pain, I could control mentally to the point of being the only patient in the ward that didn’t scream or in any way get violent during the treatments. That’s not to say that I in any way enjoyed it but only that between the two at least the pain was real. The real I could deal with but the loss of reality was frightening to me.

I had always prided myself in being in control of my internal self as I recognized that I could not control the external world in any way. However the pain and shock I experienced induced a hallucinatory state in me that I would go in and out of, a dream world and that I could not stop from happening nor recognize that I was in this state after it happened. While in these dream states I actually “believed” that what was happening to me was real no matter how bizarre the situation I was experiencing was. Many of these dream states involved some kind of fight with a tiger which made no sense to me at the time. After this hallucinatory state happened to me a few times I could sense it coming on but it was way too powerful a force to fight and no matter how much as I tried to stop it from happening, it would take control of me and I would be in another world.

During the initial period of my treatment at Brooke I dropped from over 180 pounds to under 100 pounds (98 pounds if I remember correctly). As I started my recover I started to gain weight back and also to have fewer and fewer hallucinatory states. After getting skin grafts from by chest to my legs where the skin had been completely burned off and healing from those operations began I had to learn to walk again. That was a task, as the grafted areas would quickly swell up when standing as well as being very uncomfortable. It was probably five or six years later before I really felt comfortable walking and I was never able to run again for any length of time.

While I was in the hospital I received several operations and skin grafts to repair the massive burn and shrapnel damage I had received in Vietnam. Unfortunately, both SFC Broom and SP4 Schroeder died at Brook Army Medical Center while I was there. I was therefore the only one of the three wounded in the mortar pit at Bu Dop that made it. SFC Broom was very severally burned and there was probably never any chance that he could be saved. I was bad but he was even worse as he was the closest to the explosion when it when off. He may even have shielded Schroeder and I from some of the blast. SP4 Schroeder was only slightly burned and was actually on his way to being released. He had been transferred to a different, non-critical, ward and then he developed an infection which ravaged his body with extremely high temperatures eventually killing him. Fortunately for me I was not that aware of what was happening and so I didn’t really comprehend that they were both gone until later when I was out of immediate danger.

The following paragraph was something I wrote to summarize what happened to me after that night in Vietnam over 30 years later when I decided to write about my experiences. By then I realized it was a major turning point in my life that was actually beneficial to me as it showed me how vulnerable we all are to what we think we know, rather than knowing what the truth is and what we don’t know.

On that night in Vietnam I was mortally wounded (all mortal wounds don’t kill you immediately). I was medevacked and sent to a hospital in Texas where I meet the grim reaper soon after arriving. He told me he was coming for me but I told him I wasn’t ready; he laughed at me and said he was going to come anyway. I told him it didn’t matter whether he came or not I just wasn’t going with him. But he wasn’t to be denied and so he visited me every night in the form of a large Bengal tiger and we battled all night for the rights to my soul. He was a very vicious and determined tiger and he tried his best to rip my soul from my body with his sharp teeth and claws but I was strong and stubborn and I would not let go. This battle lasted for two months and he chewed me down to 98 pounds but in the end I prevailed and he disappeared and I was not dead and he had to settle for taking the souls of the two men who were standing next to me in Vietnam.

The lesson I learned was that we are a creation of our teaching and experiences, but and this is a big but, how do we know what we are taught is the truth? Vietnam killed almost 60,000 boys and men and a few women as well plus wounding another 300,000. The war was a pack of lies from our government from the start to the end from both political parties. I did not realize this until the 90’s when I started to write about my Vietnam experiences. I realized at that point why I had lived and not died — it was to write my story about what happened to America after Vietnam so that others in the future would understand what happened and why. That will only happen after I and all the other boomers are mostly gone after 2040 or 2050. In summation my research can summed up in the following nine words.

Passion of purpose does not constitute correctness of thought!

 Then from Sir Karl Raimund Popper (28 July 1902 – 17 September 1994) was an Austrian and British philosopher and a professor at the London School of Economics. He is considered one of the most influential philosophers for science of the 20th century, and he also wrote extensively on social and political philosophy. The following quotes of his apply to the subject of research.

If we are uncritical we shall always find what we want: we shall look for, and find, confirmations, and we shall look away from, and not see, whatever might be dangerous to our pet theories.

Whenever a theory appears to you as the only possible one, take this as a sign that you have neither understood the theory nor the problem which it was intended to solve.

… (S)cience is one of the very few human activities — perhaps the only one — in which errors are systematically criticized and fairly often, in time, corrected

The Story of Drew Ferguson, a Special Forces Trooper


I belong to the Special Forces Association (Green Beret’s) and last year we, in north east Ohio, were notified that one of our brothers had died and we were invited to the ceremony to be held on August 5, 2017 at 10 AM at the Veterans Memorial Park in Avon Lake Ohio. We always go when possible to these events as is it is a very small and close group. Most NCO’s and all commissioned officers are college grads and of course are in top physical shape. The 5th Special Forces Group “The Legion” is I believe the most highly decorated united in the Army (I was in the 5th in Nam). And we have almost all seen combat and lost good friends. About half on my local chapter made it to the service.

Drew was a very unique individual (most of the Green Berets are but he was the ultimate and I wish I had known him we had much in common) and, as proof there were hundreds there from his high school class in Avon Lake including teachers, to college friends from Ohio University, to active duty Green Berets and retired Green Berets. The speakers told of story of his life which was in summary: top of his class academically, an accomplished artist and musician, a top notch athlete. He went to Ohio University and while there it was much the same except he was also in ROTC and graduated with honors including being number 13 out of over 4,000 ROTC grads the year he graduated (I’m not positive on the exact numbers).

He was commissioned a 2nd Lieutenant and severed in the 10th Mountain Division we he got jump wings (Paratrooper) and a Ranger Tab. He did two tours in Iraq. After making 1st Lieutenant and being on the way to Captain he applied for and was accepted to undergo Special Operations training and of course became a Green Beret and did one or two tours in Afghanistan. I may not have this exactly right but its close enough since they didn’t give all the dates.

While he was doing service to his country he continued to work on his art, poetry and music; I’ll type in a sample at the end of this. Needless to say he was good at that as well. I would guess Drew was born ~1984, graduated from HS in ~2002 (after 9/11), graduated from college ~2006 and left the service in ~2016 after 10 years; making him ~33 when he died.

After getting out he turned back to is art and was in the process of setting up a website for artists called Lifeblood Art when he committed suicide; the exact date was not given so I would guess it was sometime in late July.  The family continued that work he started and The Cleveland Foundation set up the “Lifeblood Art Fund” How the hell could this happen and then I read his poetry.

 

Drew’s Song, I Know A Place

I know a place, I know a place where we can go, to pass the time
Pass. pass, pass the time

I know some friends, I know some friends, we can call, to share our night
Share, share, share our night

I know a drink, I know a drink, we can drink, to warm our bones
Warm, warm, warm our bones

I know a song, I know a song, we can sing to lift our souls
Lift, lift, lift our souls

I know a dance, I know a dance, we can dance, to fill our hearts
Fill, fill, fill our hearts

I know a bed, I know a bed, where we can go, to rest our heads
Rest, rest, rest our head

I know a dream, I know a dream, we can dream to change our lives
Change, change, change our lives

I know a song, I know a song, we can sing to lift our souls
Lift, lift, lift our souls

I know a song, I know a song, we can sing to lift our souls
Lift, lift, lift our souls

I know a song, I know a song, we can sing to lift our souls
Lift, lift, lift our souls
Lift, lift, lift our souls
Lift, lift, lift our souls

When I read this I know what happened since I had just finished ready CG Jung’s The Archetypes and the Collective Unconscious (as an artist I think you would appreciate his writing) and based on his work, which I agree with, we all have the male Yin and female Yang in us which leads to conflicts in some cases. Drew had both the warrior and the artist in him. What was bad was he was strong in both and so when he went in the army after 9/11 he was driven to be the best a Green Beret when then that put him in direct conflict with his artist side. Based on his rank and accomplishments there is no doubt that if he would have stayed in he would have made general so why did he get out? And why did he committee suicide right after getting out?

The 10 years of being in the military and being deployed 3 or 4 times where he was there to destroy things ripped his soul apart I know for I felt some of that after I got out; obviously not to the same degree, but I could see the conflict in that poem. After I got out I was working with a bunch of engineers at GE in New York and a lot of them hunted deer. I went out with them a couple of times after buying a rifle and I found I could not shoot a deer.

Right Angle: A Real Black Panther


Meet Robert Smalls, a swashbuckling hero of the Civil War, whose story has been lost to history. Unfortunately, he’ll stay there unless we’re willing to admit the real history of our political parties.

Short v Long-Term Rates


QUESTION: Hi Mr Armstrong, I have read somewhere that you think that interest rates will go up higher than expected and at faster pace. I don’t understand its relations with bonds. Also your opinion seems to be in clear contrast to everyone else who thinks it will go up slowly over the next few years. If this happened this year, this would be one of your many landmark predictions.
thanks

HH

ANSWER: To some extent, you are mixing short v long-term. The short-term is set by the rates the central banks set. Even this will rise beyond what the central bank desires because of demand.

The long-term is set by the market. That is why the central banks tried Quantitative Easing buying in long-term bonds hoping that would lower the long-term rates which are set by the auction process.

I am not forecasting that the central banks will rapidly raise rate all on their own. They will be forced to follow long-term rates and as Quantitative Easing is reduced, rates will rise when government deficits expand because the fiscal side of the balance sheet has been on life-support by the monetary policy

What Did James Comey Tell President Trump About Clinton-Steele Dossier…


Andrew McCarthy has an excellent must-read review of how the Susan Rice email paints a clear picture of James Comey’s instructions -from President Obama- to obfuscate the intent of the FBI counterintelligence operation during the early days of the Trump administration.

Andrew McCarthy – On her way out the White House door and out of her job as national-security adviser, Susan Rice writes an email-to-self. Except it’s not really an email-to-self. It is quite consciously an email for the record.

Her term having ended 15 minutes before, Rice was technically back in private life, where private people have private email accounts — even notepads if they want to scratch out a reminder the old-fashioned way. Yet, for at least a few more minutes, Rice still had access to her government email account. She could still generate an official record. That’s what she wanted her brief email to be: the dispositive memorialization of a meeting she was worried about — a meeting that had happened over two weeks earlier, at which, of course, President Obama insisted that everything be done “by the book.”  (continue reading)

 

President Trump Delivers Remarks on Tragedy in Parkland Florida…


Earlier today President Trump delivered remarks about the tragic school shooting in Broward County Florida in the community of Parkland.

[Transcript]  THE PRESIDENT: My fellow Americans, today I speak to a nation in grief. Yesterday, a school filled with innocent children and caring teachers became the scene of terrible violence, hatred, and evil.

Around 2:30 yesterday afternoon, police responded to reports of gunfire at Marjory Stoneman Douglas High School in Parkland, Florida — a great and safe community. There, a shooter, who is now in custody, opened fire on defenseless students and teachers. He murdered 17 people and badly wounded at least 14 others.

Our entire nation, with one heavy heart, is praying for the victims and their families. To every parent, teacher, and child who is hurting so badly, we are here for you — whatever you need, whatever we can do, to ease your pain. We are all joined together as one American family, and your suffering is our burden also.

No child, no teacher, should ever be in danger in an American school. No parent should ever have to fear for their sons and daughters when they kiss them goodbye in the morning.

Each person who was stolen from us yesterday had a full life ahead of them — a life filled with wondrous beauty and unlimited potential and promise. Each one had dreams to pursue, love to give, and talents to share with the world. And each one had a family to whom they meant everything in the world.

Today, we mourn for all of those who lost their lives. We comfort the grieving and the wounded. And we hurt for the entire community of Parkland, Florida that is now in shock, in pain, and searching for answers.

To law enforcement, first responders, and teachers who responded so bravely in the face of danger: We thank you for your courage. Soon after the shooting, I spoke with Governor Scott to convey our deepest sympathies to the people of Florida and our determination to assist in any way that we can. I also spoke with Florida Attorney General Pam Bondi and Broward County Sheriff Scott Israel.
I’m making plans to visit Parkland to meet with families and local officials, and to continue coordinating the federal response.

In these moments of heartache and darkness, we hold on to God’s word in scripture: “I have heard your prayer and seen your tears. I will heal you.”
We trust in that promise, and we hold fast to our fellow Americans in their time of sorrow.

I want to speak now directly to America’s children, especially those who feel lost, alone, confused or even scared: I want you to know that you are never alone and you never will be. You have people who care about you, who love you, and who will do anything at all to protect you. If you need help, turn to a teacher, a family member, a local police officer, or a faith leader. Answer hate with love; answer cruelty with kindness.

We must also work together to create a culture in our country that embraces the dignity of life, that creates deep and meaningful human connections, and that turns classmates and colleagues into friends and neighbors.

Our administration is working closely with local authorities to investigate the shooting and learn everything we can. We are committed to working with state and local leaders to help secure our schools, and tackle the difficult issue of mental health.

Later this month, I will be meeting with the nation’s governors and attorney generals, where making our schools and our children safer will be our top priority. It is not enough to simply take actions that make us feel like we are making a difference. We must actually make that difference.

In times of tragedy, the bonds that sustain us are those of family, faith, community, and country. These bonds are stronger than the forces of hatred and evil, and these bonds grow even stronger in the hours of our greatest need.

And so always, but especially today, let us hold our loved ones close, let us pray for healing and for peace, and let us come together as one nation to wipe away the tears and strive for a much better tomorrow.

Thank you. And God Bless you all. Thank you very much.

END

Understanding the Reversals


QUESTION: Martin,

Last week, we had elected the weekly reversals at 24741.6 and 24395. Yesterday, we briefly recaptured, then re-lost those levels again.

Do weekly reversals expire at the end of the week, expire once they are elected, or do they remain active from week to week?

As always, thanks for all you do with your blog and with Socrates.

DB

P. S. – Do you prefer “Martin” or “Marty”? Many address you as “Marty”, but I don’t know if you reserve that name for your close friends. I certainly do not want to offend you.

ANSWER: No worry. I answer to both. As far as the Reversal System is concerned, when you pass beyond Reversals electing them on the close by more than 1% away from the number, you will typically rally back to test them before proceeding. In this case, you went to the third one and bounced. You always generate counter-trend reversals when you are making a low. In most cases, they are above the market activity.

In this case, two Weekly Bullish Reversals were elected and that is why we bounced. It was also why I have warned that it appeared this was not a 1987 meltdown, but a consolidation and choppy period. There were no Double Weekly Bearish Reversals that would indicate a meltdown if elected as was the case from the 1987 and 1989 highs.

The two reversals 24741.6 and 24395 were elected and they will provide overhead resistance. In the case of 1987, you took out all four Weekly Bearish Reversals and there was a gap from 286 on the S&P500 to 181.

The great thing about the Reversal System is we eliminate human opinion. The numbers are very black and white. How they are laid-out in a given market identifies the potential for a meltdown or just a correction. Then our Timing Array showed turning points every two weeks indicating also a choppy pattern. In this way, we are able to eliminate the human subjectivity that is always hit or miss.

Merkel & Schulz Under Tremendous Pressure in Germany


The politics in Germany remain in turmoil. The CDU leader Angela Merkel is being attacked from within her own party. The dissatisfaction concerning Merkel has engulfed the CDU base. It has reached at times outright seething rejection of Merkel. The future of the Union really hangs in the balance. The CDU party congress takes place on February 26, and that will be when they vote on the coalition agreement.

Meanwhile, the SPD leader Martin Schulz has come under persistent criticism concerning his personal ambitions for the office of Foreign Minister. The view has been he was willing to enter a coalition to get that political position for himself. This is the problem with career politicians and now he has been forced to come out and stating that he would refuse that position in order to save the coalition agreement.

Keep in mind that political turmoil in Germany underpins the Euro.

Conflict between Fiscal & Monetary Policy


We are moving into a crisis of monumental proportions. There has been a serious fundamental problem infecting economic policy on a global scale. This conflict has been between monetary and fiscal policy. While central banks engaged in Quantitative Easing, governments have done nothing but reap the benefits of low-interest rates. This is the problem we have with career politicians who people vote for because they are a woman, black, or smile nicely. There is never any emphasis upon qualification. Every other job in life you must be qualified to get it. Would you put someone in charge of a hospital with life and death decisions because they smile nicely?

Economic growth has been declining year-over-year and we are in the middle of a situation involving low-productivity expansion with high and rapidly rising budget deficits that benefit nobody but government employees.  Once upon a time, 8% growth was average, then 6%, and 4% before 2015.75. Now 3% is considered to be fantastic. Private debt at least must be backed by something whereas escalating public debt is completely unsecured. The ECB wanted to increase the criteria for bad loans, yet if those same criteria were applied to government, nobody would lend them a dime.

Monetary policy, after too long a phase of low-interest rates and quantitative easing, has created governments addicted to low-interest rates. They have expanded their spending and deficits for the central banks were simply keeping the government on life-support – not actually stimulating the private sector. Governments have pursued higher taxes and more efficient tax collection. They have attacked the global economy assuming anyone doing business offshore was just an excuse to hide taxes.

The combination of fiscal policy and monetary policy around the world has produced historically the most irresponsible economic mismanagement in history. This assumption that government can manipulate the economy is extremely dangerous for we remain clueless about how the global economy even functions. This entire Marxist/Keynesian proposition that governments are capable of managing the economy has implemented various miserably conceived theories that will lead to a budget crash and a debt crisis for every reasonably rational contemporary society. Historically, there were debt jubilees mentioned in the Bible.

You shall then sound a ram’s horn abroad on the tenth day of the seventh month; on the day of atonement, you shall sound a horn all through your land. You shall thus consecrate the fiftieth year and proclaim a release through the land to all its inhabitants. It shall be a jubilee for you (Leviticus 25:1-4, 8-10, NASB).

Religion aside, was a debt forgiveness a way to prevent monument collapses of society? The Romans never even had a national debt. Today, we have government hawking 100-year bonds. We have pension funds that required 8% returns and then governments ordered that the bulk of such funds if not 100% should be “conservative” and invest in only government bonds. We are reaching a crisis point in longer-dated yields because investors are unwilling to lend money at low rates long-term. Smart money is beginning to wake up to the perpetual mismanagement of the long-term trend by the government. The central banks have been backing off of continually buying government debt and the Fed in the USA has announced it will not reinvest when its holdings of government debt mature.

This is the Sovereign Debt Crisis and Monetary Crises we face in the years ahead.