Tag Archives: Hyperinflation

Jul 14 2017

True AI and Fake Neural Net Forecasting Programs


Armstrong Economics Blog/AI Computers

Re-Posted Jul 14, 2017 by Martin Armstrong

QUESTION: Hello Marty,just came across an interesting project called Numerai

with the ambitious goal of creating a hedge fund to manage ALL the money in world(!) in an efficient manner using AI (machine learning, neural networks and whatever the data scientists can come up with).

At the core of this project is the historical data made accessible for free to the data scientists in encrypted form, but still usable since the structure is still there. The data scientists then compete with their AI methods against each other in auctions when evaluating their methods on a to them at auction time unknown validation set (latest data set).

The hedge fund will be the combination of the best AI methods driven in a purely evolutionary fashion with the purpose to allocate the money to where it is needed best. A nice feature is that the AI methods developed and put to use by a data scientist can be kept secret from the other data scientists and the hedge fund itself, The data scientist only needs to make the output of the AI algorithm available, pretty much like you do with Socrates :-).

The data scientist can always take his/her algorithm elsewhere if not happy with the hedge fund.

I think this sounds like a really innovative idea, but there might be some pitfalls that you would be able to highlight. For example I would expect your Socrates database to bigger than the Numerais at the moment.

Best Regards

/M

ANSWER: The problem with such a project is that the best of genius will fail. The complexity of the markets globally is far beyond description. Even the Global Market Watch is best in the financial main markets and less in agriculture and individual stocks. Why? It is all complexity. The GMW has now exceeded 150,000 possible patterns each day and counting. I just uploaded the latest 6 months of creation of patterns. It has blown my mind looking at what it has done. Moves greater than 40% on the upside it reclassified as phase transitions.
I have experimented with Neural Nets and other interesting attempts to recreate the structure of the human mind. Neural Nets are notoriously subject to complete failures. There is no such program that has been able to demonstrate consistency. This is all due to complexity.
The effort to create option models known as Black–Scholes completely broken down and resulted in the Long-Term Capital Management debacle. That was covered in the book – When Genius Failed. The failure took place because they did not have the database. They only tested the algorithm back to 1971.
There is no such computer model that can possible accomplish that and quite frankly anyone claiming to have some Neural Net Artificial Intelligence you should beware because it is just a sales pitch. Ask who wrote the code. You will find no real system other than a simple expert system based upon IF this THEN that ELSE expect this.
I was recently approached with a plea to buy into our technology by a very major company offering unlimited resources to help expand it to all sectors. I must admit, that is an interesting concept.
Anyone who claims to have such a system is pulling a sales promotion. You cannot rely upon a program to forecast the future on the cheap without a profound and in-depth database. The British Pound for example, all the data even in major data banks go back to 1971 and many only on a monthly closing basis. You cannot forecast trends without the full picture. A computer will not be able to learn all scenarios if the data does not cover all scenarios. Plain and simple. Just ask – SHOW ME THE DATA and WHERE DID YOU GET IT? 
Jul 14 2017

The Dow & the Future


Armstrong Economics Blog/Dow Jones

Re-Posted Jul 14, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong,

I am fascinated by what you have accomplished in this model. You mentioned in your post about the Orlando conference a sling shot and phase transition, and I am trying to comprehend what that would look like exactly. Is that to say the DJIA wont complete its advance from 2015.75 to 2018,but that the cycle inversion underlying this market and the ECM will extend the high into 2020? When will the special report on these issues be released?

Thank you for the invaluable education,

NE

 

ANSWER: Yes. We can see from the Global Market Watch that the current year if it closed right here would imply a temporary high. That can change since it is based upon a dynamic view assuming each day that passes were the last trading day of the year. Nevertheless, it warns that we must stay on point.

There are two separate objectives – TIME and PRICE. With regard to PRICE, our three targets given back in 2011 were 18500, 23000, and 40,000. The minimum TIME objective was 2016/2017. Our next target in TIME becomes 2020 followed by 2022. This appears to be setting up for a major vertical move. This is why we will be reviewing how to trade a vertical market.

 

 

The markets are far more precise than anyone could have ever imagined. It is unfortunate that the analytical field is plagued by people pretending to be prophets or gurus like the old snake-oil medicine salesmen of the 19th century. Nobody can forecast anything from as personal opinion perspective on a consistent basis. Sure, everyone can make a single forecasting call based upon a gut feeling. But they cannot accomplish that on any consistent basis. This is all about a journey into a world of hidden order – the chaos theory. It is not being a prophet, guru or physic. Such titles reduce the analyst to a snake-oil salesman.

Jul 13 2017

Illinois Should Just Be Dissolved as the Solution


Armstrong Economics Blog/Sovereign Debt Crisis

Re-Posted Jul 13, 2017 by Martin Armstrong

John Kass of the Chicago Tribune has come out with a blunt article, yet it is the only possible solution since the government is effectively just bankrupt with no hope of recovery. He writes:

“Illinois is like Venezuela now, a fiscally broken state that has lost its will to live, although for the moment, we still have enough toilet paper.

But before we run out of the essentials, let’s finally admit that after decade upon decade of taxing and spending and borrowing, Illinois has finally run out of other people’s money.”

To comprehend what is happening, all we need do is understand that socialism has really been about government helping themselves to other people’s money for their personal benefit. Their constitution set that government pensions come before everything else. How is that helping the poor to paying their debts? The greed of the employees of Illinois has pushed the State to beyond the point of no return. The constitution can only be amended to deny future employees pension. It cannot be altered to deal with the quarter-trillion owed to state employee pension funds. There really is no way out and it because questionable if Illinois can even simply go bankrupt when it is constitutionally owed. So Kass’ solution may sound insane, but it is probably the only way to deal with the crisis – tear-up the state as a state and dissolve it entirely. Krass wrote:

Dissolve Illinois. Decommission the state, tear up the charter, whatever the legal mumbo-jumbo, just end the whole dang thing.

We just disappear. With no pain. That’s right. You heard me.

The best thing to do is to break Illinois into pieces right now. Just wipe us off the map. Cut us out of America’s heartland and let neighboring states carve us up and take the best chunks for themselves.

The group that will scream the loudest is the state’s political class, who did this to us, and the big bond creditors, who are whispering talk of bankruptcy and asset forfeiture to save their own skins.

This is the reality we face going forward. I have stressed get out of all government debt in the state and local level and buy NO MORE!!!!! The party is over!

Jul 13 2017

City of Seattle Runs Out of Things to Tax – Now Wants to Impose Income Tax


Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Jul 13, 2017 by Martin Armstrong

The Seattle City Council has run out of things to tax so they have unanimously voted to impose an income tax upon the “rich”, and of course we all know that will eventually move to include everyone. The city claims it will raise $140 million and it will cost $10-13 million to set up, and you can bet that does not include pensions for the new employees. The slogan is “Time for the rich to pay their fair share.” Of course, what is fair? If someone does not use any public services, then paying incomes tax is still fair? Americans have to pay income taxes if they live overseas and use nothing. Fairness is never judges upon what someone uses from the government, but when other people want to rob those who have more then it is suddenly fair. To a homeless person, someone earning just $25,000 a year is rich. It is always relative.

Jul 11 2017

Gold


Armstrong Economics Blog/Gold

Re-Posted Jul 11, 2017 by Martin Armstrong

We have not yet broken gold for all the people writing in. So far we have elected three Weekly Bearish Reversals from the July 2016 high in gold and three Monthly Bearish Reversals. We have elected two Weekly Bearish Reversals from the high in June and fallen into the target week of July 10th and last week was the Panic Cycle. We now look to the week of July 24th for the next turning point.

We are getting ready to relaunch Socrates. This is what it wrote for the Detailed Analysis today:

“Focusing on a trading perspective, the market has declined after making its high back in July 2016 at 137750. We did elect 3 Monthly Bearish Reversals warning that we have a more serious bearish shift in trend in play. Subsequently, we have formed a low at 112430 during December 2016 from which we have seen a bounce for the past 6 months. We have also elected 2 Monthly Bullish Reversals from the reaction low of December 2016 and we have now dropped back penetrating last month’s low implying we will retest support. A month-end closing below last month’s low of 123650 will be a technical warning of weakness ahead. Any long position should use a protective sell stop on a monthly closing basis at 121420. Keep in mind this is just a trading suggestion given it is merely a trading observation rule. Buy or sell signals take place on Reversals and Cycles. “

Categories: Gold
Jul 11 2017

The Pension Crisis – & – The Crash & Burn


Armstrong Economics Blog/Pension Crisis

Re-Posted Jul 11, 2017 by Martin Armstrong

QUESTION: 

Hi Marty –

Question:

You have blogged about the pension crisis

and how Illinois and California on the brink of bamkruptcy.

Does this mean that other states which you don’t
mention, like Florida, Texas, and New York, are financially
sound and are going to be able to pay out pensions to their
retirees for the next 20 -30 years?

Thanks for being the main source of “real” information.

Sincerely….Paul

ANSWER: By no means are other states safe. The problem has been that government pretends that socialism is to take care of the poor when in fact they have their hand in the cookie jar before anyone else. The crisis stems from the fact that they have been giving themselves pensions with outrageous benefits like healthcare for life in many states which often includes their family.

The way states have operated (internationally) is that they simply assumed that there was a never-ending bucket of taxpayers to squeeze for money. The problem is that the population growth has declined, the pensions systems have been a Ponzi schemes from day-one, and they are running out of other people’s money.

All the studies show that the Baby Boomers counted upon government and do not have enough saved for retirement. The average person has just $300,000 tucked away. The low interest rates have killed their profits and most have not yet returned to the stock market after losses from 2007-2009. Everything has been destroyed by low interest rates to save banks at the expense of pension funds and private investment. The public has been brainwashed to think that government debt is “safe” when it is the most risky in the field. They have not invested wisely because most remain ignorant of how markets even function. Nothing can be sustained going forward under this model. Even Draghi in Europe now realizez that there is a pension crisis and he is really to blame for 10 years of low to zero interest rates that have utterly failed to save the economy.

This is the Sovereign Debt Crisis. It is inevitable and irreversible. The Solution I have put forth is really the only way out to prevent complete civil meltdown.  But it is unlikely that any such Solution will be adopted until we actually experience the Crash and Burn. That seems to be starting in 2018.

The Best advice is to prepare for the worst and hope for the best. Under no circumstances ASSUME that any government pension will actually be paid

Jul 10 2017

Germany Pensions System Crisis


Armstrong Economics Blog/Germany

Re-Posted Jul 10, 2017 by Martin Armstrong

The pension system in Germany has serious shortcomings. (Photo: dpa)

The German publication DWN has come out and warned that the German Pensions system is collapsing. They wrote:

The core problem of the German economy and society is miserable demography. A positive development, namely the increasing longevity of the population, is an extremely negative groundbreaking, namely a small number of children. This is reflected in one of the lowest birth rates in the world – and this has been the case for decades. The record-breaking birth rate is by no means rooted in a biological, but in deeper social causes and inadequate policies at different stages. One consequence is a pension system that is not sustainably financed , because the ratio of contributors and receivers will drastically deteriorate. 

The very design of pensions has been universal. They assumed that population would always increase and thus pensions would be funded by taxing the current generation to pay for the previous. The declining birthrate and the increase in longevity has blown out the pensions systems on a global scale. In the case of Germany, this is a primary reason behind accepting refugees with hopes of making up the decline in the birth rate. The problem has been the lack of a desire to assimilate when we are looking at 70% of refugees are males and are really just economic migrants lacking skills and language.

Jul 10 2017

Merkel’s Failed G20 Summit


Armstrong Economics Blog/Politics

Re-Posted Jul 10, 2017 by Martin Armstrong

Merkel chaired the G20 summit and she completely and utterly failed to lead G20 to a successful conclusion. Well of course, Merkel lost control of the streets of Hamburg, which looked more like a civil war challenging even her authority. However, Merkel thought she could score a major diplomatic triumph be getting everyone together to gang-up on Trump over the climate accord. Her own industries are yelling she will cost a tremendous amount of jobs pushing her climate agenda forward. What took place was that not merely was she unable to intimidate Trump, but China also insisted on being able to expand its carbon energy use agreeing with Trump.

Merkel has been unable to win an election ever reaching a majority of the popular vote. She has been Chancellor only by forming a coalition government with the agreement pf the SPD. The upcoming election shows that Merkel will once again fail to win a majority vote.

Merkel’s primary policy of promoting an attack upon Global Warming is to eliminate carbon fuels altogether. Meanwhile, Europe is unable to achieve a trade deal with the USA while Trump is on fast track to cut a trade deal with the UK. All thinks considered, Merkel’s G20 has been a complete failure on every level.

Jul 10 2017

German Secretary Economics Warns Low Interest Rates Have Failed


Armstrong Economics Blog/Banking Crisis

Re-Posted Jul 10, 2017 by Martin Armstrong

The German Secretary General of the Economic Council of the CDU, Wolfgang Steiger,  has highlighted the growing economic crisis in Europe. The negative interest rates of Draghi and the ECB have totally failed. He has pointed out that despite various EU stress tests for banks, time and again they continue to fail. He has stress himself that this does not strengthen the confidence in the rules or Europe. He has come out and bluntly states that ONLY reforms will work, not low interest rates.

We are looking at a very serious crisis unfolding in 2018. So get ready to rock-and-roll. We will be addressing this upcoming crisis in the EU at the July 22nd, 2017 German Seminar.

Jul 7 2017

Country Risk & How it is Critical to Investment Flows


Armstrong Economics Blog/Rule of Law

Re-Posted Jul 7, 2017 by Martin Armstrong

QUESTION: Dear Martin:
How does this affect cash flow to and within the USA? (China Bond market)
Rich
ANSWER: It does not alter anything just yet. Most of the capital outflow from China has been its own people trying to get cash out. They were using BitCoin to accomplish that.
This is a first step in the process. It will take time to develop and the next step will be to maintain a stable and important rule of law. In order to attract capital, there must be a stable and honest rule of law. Once the rule of law crumbles into bias and corruption as we see today, this is part of the risk of investment. Edward Gibbon wrote in his classic, Decline and Fall of the Roman Empire:

“…the intolerable weight of taxes, rendered still more oppressive by the intricate or arbitrary modes of collection; the obscurity of numerous and contradictory laws; the tedious and expensive forms of judicial proceedings; the partial administration of justice; and the universal corruption, which increased the influence of the rich, and aggravated the misfortunes of the poor. “

Book III, Chapter 34

Country Risk is a critical part of international investment. In assisting international companies with decisions where to locate plants or open up operations, the first criteria is always “Country Risk” which is all about the stability of the Rule of Law. How can you invest in any country if there is no reliable legal system to secure contracts or property?

Contract Law began in Babylon. Hammurabi’s legal code required all agreements to be written down. This put an end to false claims. When we talk about investing in Europe, we do not even consider “Country Risk” because it is assumed the Rule of Law is stable.

Consequently, China will surpass the United States and the West because our Rule of Law is collapsing. Courts rule in favor of government routinely and once that happens, no property is secure any more. They are just confiscating cash presuming it is criminal in some way be it taxes or otherwise and they do not have to prove anything. This is demonstrating that the West will not be able to survive long-term without a security of property. Hence, you can see it coming. If China respects property rights, then capital will migrate to Asia and leave the West due to the lack of a Rule of Law