QUESTION: Martin; Why in the world anyone would invest in government debt when they all default in the end?

GH

ANSWER: Honestly, most people are oblivious to the fact that government always default in modern times. Jean Baptiste Say took the position that a rational businessman will never hoard money because of inflation and he will promptly spend any money he gets “for the value of money is also perishable.” (A Treatise on Political Economy, Book I Chapter XV; 1803 id/138–9). Before modern times, money was ALWAYS debased or devalued as a means of paying expenses. It was easier to do this even under using metal for coins than to tax or borrow.

In the modern era, the Princes of Europe began to borrow money and quickly learned to imprison and default on their bankers.It was Edward I of England who borrowed from the Jews and when he could not repay, he suddenly discovered they were Jewish and banned them from England while not allowing them to take property.

Honestly, it is just insane. They do not do their research and governments are always responsible for creating wars and destroying the savings of the people. Even Adam Smith in his 1776 Wealth of Nations expressed it best.

We are just fools. We insanely believe that we can replace one politicians with another and something will really change. The ONLY possible way to achieve change is to change the very system of how government functions. Until we are prepared to do that, suck it up for your future belongs to the madness and corruption of politicians.

QUESTION: Do you think the world is overpopulated and that is the problem?

ANSWER: Anyone who has flown around the world and looks out the window, knows that there are vast areas where humankind does not exist. We actually occupy about 3% of the landmass which is 29% and 40% of that is just wilderness. If you took the 7.2 billion people and put them in a pile, it would not even fill the Grand Canyon. Indeed, if we took everyone who ever existed and threw them into the pile (106 billion), it still would not come close to filling it

Throughout history, there has NEVER been a market manipulated TO ALTER its long-term trend – PERIOD. If this were remotely true, then communism would not have collapsed since that was the attempt to eliminate the business cycle. The Swiss peg would not have collapsed, nor would Bretton Woods have collapsed, or anything else in history that has attempt to eliminate the business cycle.

It is total nonsense that people even dare to entertain the idea that anything can be manipulated to alter its long-term trend. In the movie “The Forecaster”, a former employee said that before he joined the firm he did his due diligence and called the people at Goldman Sachs to ask about me. They said that they “thought” they could “crush” me but I “usually won.”

All the banks lined up to manipulate silver to the upside in March of 1997. My models clearly showed silver would decline, and their attempt to run it up would fail. I stood my ground and took on the whole group. Their attempt to manipulate the market failed. I believe this is when PhiBro ran to Warren Buffet and convinced him to hand them $1 billion to try to manipulate silver up.

PhiBro walked across the ring in September, and this time showed me their orders for Buffet to try to convince me to join them. My models showed that a pop was possible at that time. I did not join, and instead, stepped away. I warned our clients that the target was $7 by January. Their manipulation succeeded, but it forced Buffet to come out and admit he put in $1 billion to buy silver and then quietly sold out afterwards.

The evidence that was a SHORT-TERM manipulation that still could not alter the long-term trend is demonstrated by the charts below. Yes, silver rallied, but gold declined. Claims that silver is manipulated today because it has declined more than many other commodities are nonsense. Evidence of a manipulation must be a counter-trend move. Even the Japanese government lost $1.3 trillion trying to support the Nikkei. They failed. The Chinese government has tried to support their stock market. It has failed.

The amount of capital that will trade against anything that moves against its long-term trend is endless. If you really believe all this nonsense, then you better trade a different market. Why buy something that is manipulated and can never rally? It makes no sense.

There is no secret plot to keep gold down to pretend inflation is lower. Gold has NEVER correlated with inflation and it is such a tiny market that it has no relevance to concerns of inflation when we are in a massive deflationary mode. Just look at all commodities.

Get over it if you really want to survive the years ahead. If you do not invest on reality, you will never exit and will hold on to losing positions because people are swearing they are right; it’s someone else that makes the market decline. This is not the way to survive.

The Guardian has obtained documents showing that the Internal Revenue Service (IRS) is now listening to people’s phone calls and this is showing it has to do with money – not terrorism. The IRS is now also has sophisticated cellphone dragnet equipment known as Stingray, where without search warrants, they are targeting people to get them hiding money..

QUESTION: Mr. Armstrong; If I understand you correctly, should the IMF accept the yuan as a reserve currency, this will have zero impact other than political. Correct?

RH

ANSWER: Correct. The IMF will decide in November whether to expand the current composition (US dollar, euro, yen and British pound) of Special Drawing Rights (SDR) with another currency.Whether this takes place is really irrelevant. The Euro is already in there and that has done nothing to kill the dollar, the yen is not a viable place to park international capital and the pound is too small. The hype people are associating with this is really stupid. Whether the IMF includes the yuan in the SDR is meaningless for the reserve currency must bee deep and a place to park big money. That has not yet been established for the yuan. It should help to get the dollar bears all short so they can add the fuel for the next rally.

Eventually, the yuan will emerge as a real reserve currency. However, it is not yet ready for prime time. This is a political issue that is necessary right now because the Chinese economy is turning down and that is impact the emerging markets and will help to turn Europe into a real depression. So this is political at this time and it to try to help support the yuan which is under serious pressure with massive capital outflows.