QUESTION: Mr. Armstrong, there appears to be a dispute between what is money and what is a currency. Can you define each easily?

Thank you

LW

ANSWER: “Currency” is an official monetary instrument used in commerce. Currency must be “legal tender,” which means the government will accept it in payment for taxes. “Money” is a much more questionable element for it is different things to different people. The goldbugs would kill you if you dared to say gold and silver were not money. But go to Starbucks and try to explain that a silver dollar should buy you two coffees. Good luck! They will look at you as a con artist.

Money has traditionally been some commodity, be it gold, silver, bronze, seashells, cattle or sheepskins. You certainly cannot historically declare anything to be money for its changes with cultures and time.

As the legend goes, the Gauls attempted to invade the city of Rome quietly but had frightened the sacred flock of geese who made a lot of noise at the Temple of Juno. This alerted the Romans to the surprise attack giving us the word “monere,“ meaning “to warn” in Latin. The Temple of Juno then became popularly known as the Temple of Juno Moneta. Since this is where the coins were minted, we now arrive at the word “money” that springs from the origin of this legend and place that was an ancient mint. Our terms, such as capital flow, arrives from the Latin word “currere” meaning “to run” or “to flow.” This is where the money flowed from, and gives us the word “currency” meaning the “flow of money.” This is why Juno Moneta is pictured on Roman coins as holding the balance scales in one hand and a cornucopia in the other symbolizing endless bounty or wealth. This is the birth of the terms “money” and “currency.”

You can argue with Internal Revenue Service that gold and silver are “money” all you want, but they do not have to accept it in payment of your taxes. The paper dollar is the currency and duly states “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE.” The Supreme Court nullified all gold clauses in private contracts (PERRY v. UNITED STATES, 294 U.S. 330 (1935)), so legally only paper dollars are “currency” for they are accepted by law publicly or privately.

Of course, the markets have been causing losses among the bulls as well as the bears. This is what they do and MUST do before they can actually make a decisive move of the nature we are looking at ahead. It becomes rather amusing to watch the so called professionals end up constantly wrong so they start bruding and proclaiming this feels like 2000 or 2007 before the crash. Are they right? Or are they just angry because they lack the skills to forecast?

Nevertheless, our proprietary Golden Rule of the 3 Attempts (TM) is a very important tool to comprehend. (details will be at the Technical Training Course).

Well, let’s look at 2000 from the Dow perspective. The 2000 high was a Phase Transition in the NASDAQ DOT.COM Bubble. When we look at the Dow, we still see a high, but it is more of a declining sideways pattern. There were three failed attempts to make new highs but each was lower than the previous in compliance with our Golden Rule of the 3 Attempts (TM). This by no means appears even similar to the current pattern.

When we compare this to the current pattern pictured here, we see that the third thrust broke through the channel and made a higher high. This is not showing long-term weakness. We have a different trading pattern going on here one designed to create confusion and get the MAJORITY on the wrong side to enable a Phase Transition to even unfold. To revisit key support, the Dow must now close back below 17120 and then we will get a correction.

Here is the 2007 high. Again we see our Golden Rule of the 3 Attempts (TM) to rally but each one was significantly lower with new lows each time. This patterns warned of C R A S H & WATERFALL EVENT was in motion. This reflects a clear bearish pattern with lower highs and lower lows.

Now, look at how a market knocks on the door three times before it breaks out. This is just one of our technical rules we call the Golden Rule of the 3 Attempts (TM). No doubt other analysts will quickly plagiarize this and call it their own and you will then see who is a real analyst and who is fake. Still, even the 1966 rally, which was the Mutual Fund Bubble, and the 1968 rally when Bretton Woods started to crack, were the initial attempts to break 1,000. Then we had the 3 attempts which did exceed 1,000 before the breakout began with the beginning of this Private Wave. Note also that while gold rallied from $34 in 1970 to almost $200 by 1974, the Dow rallied and broke through the 1,000 level for the first time. They did not move in opposite directions.

So to those who keep yelling the market will crash to 10 cents on the dollar, all I can say is I suppose that means people will buy bonds at -10% interest rates just to park money? If what they are yelling is even possible, then interest rates must move lower and big money is willing to lose it all just to park money. I am sorry. I just do not understand such logic. This is normally the type of nonsense you get from people who want to pretend to be an analyst but have no experience in the field so they lack any comprehension of the moving parts. To create a stock market crash we need confidence to rise in government. Excuse me. Anyone hear of Donald Trump? Confidence in government is declining rapidly, not rising.

And as for the dire prognostications that the stock market will crash because the Fed will raise rates, this only once again demonstrates such people are not analysts at all for they have nothing original to add to the debate. I traded that rate hike under Paul Volcker into 1981. With each rate hike the market declined true, then rebound. The final hike in 1981 was a real lesson for the market rallied. It did not even decline. When they took place, I knew the ECM was correct and we peaked in rates right then and there.

So sure, we should expect the market will drop when the Fed raises rates. Fools will be easily separated from their money. This is why there are fools in the world. Every species is serves a purpose as energy in the food chain for the next one up in the food chain. Trading markets amounts to the same process. We always need the person on the opposite side.

Rising US rates will be inevitable. This will drive the dollar higher, fuel the debt meltdown, and when the capital inflows push US assets higher, the Fed will be compelled to raise rates further to stop the speculation because that is pure Keynesianism that does not work, but hey, what else do they have to do.