Fox News – “ominous Great Depression warning”

Armstrong Economics Blog/Economics Re-Posted Feb 1, 2023 by Martin Armstrong

Fox Business is reporting that economic conditions are much worse than you are being told.  Unfortunately, this is the conclusion when you have ZERO understanding of the historical trends and economic conditions. It is true that the shortages of COVID have caused prices to rise faster than economic growth and most incomes.  Therefore, they conclude that our standard of living has been rapidly declining.  The number reveals that more than one-third of all U.S. young adults are being supported in part by their parents. Thanks to COVID, this disrupted society far greater than anyone is reporting. In addition to the shortages because of the lockdowns, by the end of 2020, more than half of young adults in America were living with one or both parents. That statistic actually exceeded the record high of the Great Depression.

Here is the worst part of this analysis. Many are jumping on the bandwagon claiming that the decline in real disposable income has been the largest since 1932 and therefore, this is a warning sign of a Great Depression is coming. They seem to be focused on the fact that the GDP report showed a significant decline in real disposable income, which fell over $1 trillion in 2022. Now let’s look closer!

First of all, the entire reason why unemployment rise to 25% during the latter part of the Great Depression was the Dust Bowl. Why? At that time, about 40% of the civil workforce was still agrarian. The Dust Bowl meant job loss. If you could not even plant crops, there was no need for people to pick crops.

Service during the Great Depression accounted for 17% of the workforce compared to 44%+ today. Government, federal, state, and local, was 22% of the civil workforce during the Great Depression compared to 33% by 1980. Things have continued to evolve and by 2019, services represent 79.41%. Agriculture is now a tiny fraction of what it once was – 1.41%.

In the USA, at the state level, their share of the civil workforce varies greatly. Florida is at about 11.3% compared to New Mexico which is 22.5% – a government employee’s paradise. The lowest is Michigan at 10.1%.

During the Great Depression, the entire reason for the collapse in disposable income was the collapse in agriculture which created a collapse in income due to massive unemployment. That is totally different from the crisis we have today.

Here we have rising prices due to shortages and then central banks raising interest rates in a fool’s quest to stop inflation when it is not based on speculation. Moreover, the biggest borrower is the government, and rising interest rates will only increase their exposure to keep rolling over the debt. Therefore, governments have been borrowing year after year. What happens when the public no longer buys their debt? Real disposable income has been collapsing for completely different reasons since 1932. Here we have the costs of everything rising and then these people want war with Russia and China. Every war since the start of recorded history has resulted in inflation. Add to this, the total insanity of trying to end climate change by outlawing fossil fuels at a time when the climate is prone to getting colder.

We are already witnessing riots around the world BECAUSE of inflation. During the Great Depression, people were suffering from DEFLATION. So comparing just that statistic of a decline in personal income and projecting we now face a Great Depression, does not even qualify to be classified as analysis. That is no different from someone warning that carrots must be lethal because everyone who has ever eaten a carrot has obviously died.

Job Posting for New Head of Digital Currency UK Government

Armstrong Economics Blog/Cryptocurrency Re-Posted Jan 31, 2023 by Martin Armstrong

Head of Central Bank Digital Currency
HM Treasury
Apply before 11:55 pm on Tuesday 7th February 2023
Key Accountabilities

The successful candidate will be responsible for leadership of HM Treasury’s work on a potential digital pound – a UK central bank digital currency (CBDC). This work is important, complex and cross-cutting, and the leadership will involve extensive engagement across and beyond HM Treasury.
Digital innovation is changing the landscape for payments and money. The use of physical money is declining while new forms of private sector digital money are emerging. These changes offer exciting opportunities for UK businesses and consumers, but also present new challenges and risks. This has motivated countries around the world to explore digital versions of central bank money.

Today, the Bank of England issues only physical bank notes. A digital pound would be a new form of digital money for use by households and businesses issued directly by the Bank of England.

Treasury and the Bank of England are working together through the CBDC Taskforce to explore the case for a digital pound. Treasury and the Bank of England have committed to consult jointly on a potential digital pound, and the successful candidate will lead the Treasury team in the wake of the consultation’s issuance, including working with the Bank of England to consider consultation responses. The forward timeline for the work has been set out by Ministers and the Bank of England, and the successful candidate will be responsible for setting strategic direction within Treasury to deliver on that plan.

Military Script – Has it Been Used for Centuries?

Armstrong Economics Blog/Ancient Economies Re-Posted Jan 30, 2023 by Martin Armstrong

Limes denarius (Lim-ace) or coins of the borders, may be another example of coins of necessity issued because of a shortage of silver in the border regions. It has also been suggested that they may also be officially sanctioned issues for use in regions where political unrest made it hazardous to ship large amounts of silver. Others have suggested that they were used to pay barbarians on the fringes of the empire for local work.

The most likely reason for their issue is based upon history repeats because human nature and its decision process will lead to the same conclusion no matter what the century. Therefore, it also remains possible that these were military scripts paid to soldiers on the front lines just as they did during World Wars I and II to pay locals. They would have reduced the need for vast amounts of precious metals on the front line. These bronze issues of denarii could have served troops on the front and been redeemable for good coinage when they returned to the stable regions. Whatever the reason, many of these coins exist. They have been often viewed as possibly “coins of necessity” issued during periods of a lack of silver. Some examples may still bear traces of a very thin silver wash.

A “Limes Denarius” were struck from official dies. Thus, these AE denarii official issues use the same dies as those intended for the silver denarii. However, there are also some that appear to be cast from typical clay forgers’ dies and sometimes may have been cast in molds. There are no written accounts of this practice within the official monetary system. However, if troops are paid with real money and they lose a battle, the opponent will then seize whatever money they had and use it to further fund their operations. If the soldiers only have a military script, then there is no financial benefit to the opponent if they should defeat your troops.

The Coming Great Global Default

Armstrong Economics Blog/Economics Re-Posted Jan 25, 2023 by Martin Armstrong

QUESTION: Dear Martin
Could you please describe more in detail what you are expecting when talking about the breakdown of the monetary system?
Will there be differences between countries like Germany and Switzerland for example? Especially regarding pension systems.
I assume, there might be big differences between countries.
Many thanks and best regards,

ANSWER: The monetary system collapsed with the winning of the American Revolution. The state currencies and the federal Continental Currency were all exchangeable to the new currency which became the U.S. dollar. There was a great disparity among the states with each being rated by the marketplace for the swap. Even when they created the Euro, there were differences between each currency.

The IMF right now is pushing very hard behind the curtain to replace the dollar with an IMF digital currency that they want to become the reserve currency. This would be EXTREMELY dangerous for the IMF is deep in corruption. The complaint of China, for example, is that the dollar is the reserve currency and they see that as a dangerous power in the hands of an adversary.

I have written much on the real problem of the dollar acting as the reserve currency and that this has thrust the Federal Reserve into the default role of the central bank of the world. The problem is all the propaganda against the Fed that is spun by the goldbugs which totally distorts the real crisis. They try to sell gold only on the quantity theory of money which dates back to the 17th century. It is so antiquated it is laughable. It is entirely domestic-focused to the exclusion of the world economy and international capital flows. Unfortunately, the Federal Reserve is also living in the past and only sees the economy in domestic terms making it Fed Policy v Fiscal Policy, over which they have no control.

Only when you understand international capital flow movement will you ever even catch a glimpse of the real world. World War I sent the capital fleeing Europe and rushing to America. Because that capital was here, it increased the domestic buying power and the Europeans made the 1920s ROAR. They were participating in the Auto-Stock-Boom.

The first G4 took place in 1927 when the other central banks argued that the US had to lower its interest rates to deflect international capital which was needed in Europe to rebuild. Indeed, the capital inflows peaked in 1927 and began to decline. But it was the Sovereign Debt Crisis of 1931 that compelled major capital outflows to cover losses at home.

Hoover explained the crisis in 1931 in his Memoirs. So to answer your question will take a major report which I intend to publish. The subject is highly complicated and there will be major divergences that people must be aware of. The bottom line is that all governments intend to default on their prior debts. That is what unfolded even with the collapse of the Continental Government after winning the American Revolution.

We see similar outcomes also in France with their Revolution. We are staring into the eyes of a major global default in debt and we are on schedule cyclically for the next sovereign default period.

The Debt Ceiling Hits Pi – $31.4 Trillion

Armstrong Economics Blog/Sovereign Debt Crisis Re-Posted Jan 24, 2023 by Martin Armstrong

The debt ceiling has currently hit $31.4 trillion (Pi), representing borrowing that the Treasury undertakes to fund its financial obligations, ranging from safety-net benefits such as Social Security. Is this coincidence, or is the magic number where the government starts to lose control? As Socrates has been forecasting, this is the end of the road for our Republican forms of government. They are irresponsible, show no form of fiscal management, and exploit every possible means to sustain their power. The problem has been that they never see the end of the road. They think they can keep borrowing year after year and the public will keep buying.

The real crisis is the amount of new debt that the government needs to issue, is exceeding the balance sheet of the Primary Dealers. If they must buy the debt to retain their status, then if they cannot sell the debt, that is when you are looking at a major banking crisis. It is actually cheaper at this point to simply print the money and stop this fool’s game of pretending to be running the system responsibly.

It is time to turn out the lights on the stupid game of running endless deficits and borrowing when there is NEVER any intention to ever pay off the debt. Let’s stop the nonsense for this cannot continue indefinitely.

From the birth of the US paper dollar in 1861, it will be 19 intervals of 8.6 years in 2024. We have reached the Rubicon. It is almost time to celebrate a new beginning is on the horizon.

Reader Feedback Request – How Much Have Your Electricity, Gas and Heating Oil Costs Increased?

Posted originally on the CTH on January 24, 2023

There is a pending energy issue looming just beyond the horizon that is going to become a major issue very soon.   Electricity rates, natural gas costs and home heating oil prices increased massively due to Joe Biden energy policy.  However, things are likely to get much worse in a few months.

On the issue of oil and gasoline prices, the U.S. Strategic Petroleum Reserve (SPR) has dropped 40% since Joe Biden began using it to offset massive global prices increases in oil.  However, Biden is doing nothing to increase production and has not engaged energy producers in conversation to expand domestic production. Non pretending warning HERE.

Ultimately what this means is another wave of sicky price increases for gasoline are coming fast.

Additionally, Mark Wolfe, director of the National Energy Assistance Directors Association (NEADA), is warning that continued pressure on natural gas supplies by exporting U.S. production to Europe is going to make our electricity rates go even higher as more than 40% of U.S. electricity generated comes from the use of natural gas.  Wolfe wrote a letter in October to Energy Secretary Granholm [SEE HERE], and the situation is unfolding exactly as he warned.

Electricity rates have jumped massively in the past year, and it looks like they are going to continue to rise.  The spring and summer of 2023 looks to deliver another round of higher oil prices, higher natural gas prices, higher electricity prices and higher gasoline prices.   Which brings me to the question…

It is challenging to find solid data (without noise) on regional electricity, home heating and natural gas prices. However, Treehouse readers consistently provide the most accurate assessments of reality on the ground.  You guys are the experts in checkbook economics. So, I ask you the question:

How much have your electricity, natural gas and/or home heating costs increased in the past year?

Here We Go Again – Altering the Formula for CPI

Armstrong Economics Blog/Inflation Re-Posted Jan 24, 2023 by Martin Armstrong

There are some who are claiming that the revision of the CPI is to help the Federal Reserve stop fighting inflation. This is typical for Americans who only watch the Fed and nothing else. The formula for the CPI has been routinely altered. Real Estate used to be included but when that was rising too much, they replaced that with rents. When rents started rising, they replaced them with controlled rents.

This is NOT about helping the Fed to lower rates or stop raising rates as the majority seem to be touting. Powell is not that stupid and this will have ZERO impact on Fed decisions going forward. This is all about government spending which is a far greater problem than worrying about the pressure on the Fed. Virtually EVERY government program is automatically INDEXED to CPI. Thus, agencies’ budgets are automatically increased each year based on the CPI. Your taxes are indexed to the CPI. By reducing the CPI, they collect more taxes! There is NOBODY in Congress or at the Bureau of Labor Statistics that gives the Fed a second thought.

Even if we look at inflation using the pre-1980 formulas, the CPI is approaching 10%! When we calculate inflation by eliminating everything that is really irrelevant and focusing on food, energy, transportation, and taxation, which they do not consider at all, the reality of our number came in at 32% for 2022. That is a far cry from the official number. This is simply calculated by Socrates from an unbiased perspective.

What a new wonderful world the Biden Administration has created. Thank you, COVID & the Russian Sanctions. The largest increase we found was obvious fuel between gasoline and diesel used in trucking and homes averaging 65%+ Turning to basic food, eggs were up nearly 50%, flour rose by 25%, cooking oil 23%, butter was up 35%, Chicken by 14%, and Rice by 18%. If we throw in toothpicks, paperclips, etc, then the more we can include the lower the inflation rate. We do not include rent or real estate. Our number is far more accurate to the daily living expenses than the near 10% level of the government. They also do not include sales taxes. The national average rise in rental rates was 7.8%, in Florida it was 8.5%, and in NYC 1.5% when controlled.

When I would buy a desktop IBM XT during the 1980s, it was always about $7,000 for a top-of-the-line. Today, that cost has come down significantly. Obviously, we do not buy computers every week. Should that really be part of a formula? The BLS has made so many revisions to the CPI over the decades it is really a political tool these days.

Back in the ’90s, our staff was dissecting every statistic. We discovered that they were overstating economic growth because they counted government employees twice. The total all personal income, and then government spending. I called the head of the BLS and asked surely this had to be backed out somewhere for hiring government employees to increase GDP rather than the private sector. They reviewed it and finally just said – no comment.

The idea that this latest revision of using one year as a weight instead of two will allow the Fed to stop tightening is really the rantings of people who only look at the Fed for everything as their guidance. There is a lot more incentive behind this revision and the Fed was not a consideration.

The Petrodollar – Another Fake News Invention?

Armstrong Economics Blog/Gold Re-Posted Jan 23, 2023 by Martin Armstrong

The entire theory of the Petrodollar dares back to the collapse of Bretton Woods and the subsequent oil embargo protesting US support for Israel and the price shock of raising prices. Those were the days when everyone was obsessed with gold and the whole idea of a floating currency that was popular to say will crash and burn for money had to be backed but some commodity. Those were indeed the days when that theory was very popular and it dominated the thinking process of the 1970s.

Here is an advertisement from my past days as a market maker in gold during 1970s to about 1983. I too believed in all those theories until the crash came in 1975. I too had bought into all that nonsense. Gold was going to be legalized in the United States in 1975 for the first time since 1934. Being a very large dealer domestically and internationally, all my European clients were talking up the scenario that gold was going to $500 if not $1000 once Americans could buy.

Because Teddy Roosevelt was an ancient coin collector, when Franklin Roosevelt, who was a stamp collector, recognized that gold coins existed from ancient times thanks to Teddy, he confiscated gold on deposit at the banks but exempted collector coins. That was the reason why we have rolls of $20 gold coins trading to this day.

As a result, those who were really believers in gold would buy common date American $20 gold coins by the roll in those days. So when the Europeans were talking themselves into gold was going to explode in 1975 as soon as it was legalized in the United States, as a dealer, I never got a single call about buying gold from anyone other than those who already owned it. The gold crowd was only looking at gold and had no idea that any American who wanted gold bought it in coin form. They were cheering gold without understanding the reality of the marketplace.

I went short gold in January 1975 not using even technical analysis. The hype was so much and I knew that there was no line standing at the door to buy gold. My gut feeling was that gold was going to decline – not rally. I saw that in 1970 when the two-tier gold market they created in 1968 saw gold drop below the official price of $35 in 1970 – something that was not supposed to happen.

Even the Senate of New Jersey came to me and I wrote the law on sales tax regarding gold in 1974. Gold peaked in December 1974 at $197.50. It fell to $97.70 while inflation continued but economic growth declined and they called it STAGFLATION. I learned back then that all the scenarios and theories that gold rises with inflation and the dollar would not survive without some backing. I was confronted by the reality that exposes all these theories to be a throwback to times long since passed. This all only inspired me, even more, to investigate everything in detail. By 1979, I published what I called the WHY REPORT. I later republished this in 1981 and again in 1983.

To explain the survivability of the dollar since it rose between 1972 and 1976 against the British pound, with the collapse of Bretton Woods, the rise in gold, and the entire oil embargo, that is when they came up with this idea that the dollar was backed by oil. They had to explain why their theories were wrong just as they changed global warming to climate change to explain away global cooling.

All the theories were wrong. The dollar rose, and inflation soared, as did gold. None of this made sense under their theories. Something had to be done. It became obvious that it was impossible to make investment decisions based upon these theories that people just made up to sell gold which are still being used today. I also remembered that in January 1970, gold fell in the London market to $34.70. Gold was not supposed to sell below the Bretton Woods fixed exchange rate of dollars to gold. It was like being smacked in the face and told to wake up!

Without question, the dealers could not sell gold if it did not rise with inflation and against the dollar since it was no longer backed by anything. They had to invent something new. That is when the sophistry specialists stepped in and boy did they succeed in bullshitting everyone.

The explanation was ah ha – the dollar is really backed by oil because it is priced in dollars. That’s it. It is really the Petrodollar! Suddenly the dollar became de facto-backed by oil. They needed an explanation to explain why all the old theories were wrong. They sold this theory and it made the front cover of Newsweek. Everyone said YES! That must be the reason. OPEC priced oil in dollars! Naturally, everything was priced in dollars because, under the fixed exchange rate of Bretton Woods, everything from wheat and corn to copper and gold was all priced in dollars.

Many people are now calling for the collapse of the dollar all because Saudi Arabia has confirmed that they will be selling oil in various currencies. Hence, relying on this old fictitious their of the Petrodolarr from the ’70s, they are telling everyone the dollar will collapse and gold will soar. They never get tired of kicking the same theories down the road without EVER just once being honest and looking if they have any validity whatsoever.

The value of any currency is NOT some commodity. It is the people. You can have all the gold in the world, but if the people do not produce, it means nothing. Indeed, Russia had the largest gold reserve of any nation ahead of the Communist Revolution. They took the gold reserves and hid them so the communists would never find them. They are still missing to this very day. Likewise, Germany and Japan has no gold reserves post-WWII yet they rose to the strongest economies in their respective regions. How is that possible? It is very simple. The true backing of a currency is the total productive capacity of its people. The US became the largest economy in the world NOT  because of gold, but because the US had a consumer-based economy built of freedom rather than Marxism as the problem with Europe. China, Japan, and Germany, all focused on the old-world mercantile economic model. Produce to sell to someone else. They failed to follow the strength of the United States in building a consumer economy.

China understands the difference and has shifted to develop that type of economy whereas Germany oppresses its people with high taxes on its citizens to sell manufactured goods to everyone else. That is why they wanted the Euro to expand their European economic marketplace.  Germany’s high taxes have put it near the bottom insofar as the German people have less net worth than Italians. The more Marxist the country, the lower the economic standard of living.

The Coming Wealth Tax – Pocahontas’ Dream Come True

Armstrong Economics Blog/The Hunt for Taxes Re-Posted Jan 19, 2023 by Martin Armstrong

Elizabeth Warren’s Wealth Tax is now moving forward in the leftmost Democratic States – California, Connecticut, Hawaii, Illinois, Maryland, New York, and Washington state. Naturally, Pennsylvania, Delaware, and New Jersey are paying very close attention as they lick their lips at the thought of untold billions in new revenue to cover faltering government employee pension plans caused by artificially low interest rates. Even federally, the US has bumped its head on the debt ceiling. Without question, the ceiling will have to be raised again but with a lot of pomp and circumstance and perhaps a few fistfights on the floor. Yet the primary dealers cannot handle all the debt pouring out and there is a declining appetite for anything long-term as the Bide Administration wages direct proxy war against Russia until the last Ukrainian falls on the battlefield and NATO troops then revenge their deaths.

Socialism is collapsing and governments will fight to their last breath until the politicians are dragged out and hung on the streets as is typical in such cases of economic malfeasance. What is emerging at the state level is simply versions of Warren’s Wealth Tax which will be applied to WORLDWIDE assets. The hated rich policies, who have provided all the jobs over the centuries by creating industries, are to be stripped mined.


Once these Wealth Taxes enter the game in 2024, that will be the peak of the ECM and only a braindead person would want to buy your house in those states! The Year 2024 will be the Decline and Fall and you better pay heed to what is unfolding on this level. The Wealth Tax will be a permanent property tax you will pay even when you are losing money. It will NOT recognize a decline in the value of assets until they are sold.