QUESTION: Do you see the Fed moving to digital currency and perpetual bonds simultaneously with other nations? I think it would be harder to pull off here, but then again, they may have no choice. I guess they have a lot of reasons to get rid of Trump, but there’s more on the side of rejecting it, at least for now.
Interesting that a few analysts, websites, newsletters… have been calling for a Fed move to digital, as soon as November 5th or January 2021. Seems optimistic. However, I haven’t heard anyone mention bond default through the transition to perpetual.
E
ANSWER: No. First of all, the US debt market is the only game in town. Europe has destroyed its bond market as has Japan. That is why they are trying to get rid of Trump to further their globalist agenda. However, the conservative Democrats will also reject it as well. Our political report will be up for sale on Monday which is not just 2020, but the next 12 years, The arrays are shocking when we run them on politics. There is an increasing risk that the Democratic Party will split just as the Republicans did in 1912 when Teddy Roosevelt started his Progressive Party. The Democrats face the same crisis – conservative (middle of the road) v extreme socialist left.
There are a host of problems. They cannot move to digital so easily because over 60% of paper dollars are outside USA used globally as the alternative. Today, the Treasury and Board of Governors staffs estimate that about 60% of all U.S. banknotes in circulation, or around $500 billion and growing, is held outside the United States. U.S. banknotes are the #1 hedge against the currencies in Europe and Asia because the USA has never canceled its currency so a $100 bill from 1934 is still valid which is not the case for any nation in Europe. The US printed $1,000, $5,000, and $10,000 notes in 1934 which are still legal tender.
It is not so easy for the USA to move digital and at best, it would have to be a two-tier system without canceling the paper money.
QUESTION: Interest on savings instruments (i.e. CD) for 1 yr terms is non-existent at <= 1.0%. Why would interest rates increase in a digital currency system/world?
IS
ANSWER: The only reason rates would rise is by simultaneously converting the debt to perpetual. They have to end Keynesian Economics. They cannot raise rates as long as they have to buy the debt as in Europe. Therefore, we see most countries preparing for the real BIG BANG which is the default on dent by converting outstanding debt to perpetual, then they no longer need to artificially suppress interest rates they cannot raise if the debt is still issued.
I tend to get called in because they know I will say the truth. I do not take funds from any group and we pride ourselves on independence. It is a club because unless you have been called in by one government you will not get into others. Very interesting criteria. Nevertheless, I believe you will see this simultaneously. A digital currency swap will allow then the perfect excuse to change the debt structure and then they do not have to outright default.
Big Bang began in 2015.75 within about one year of them moving to negative interest rates in 2014. The next crack is due 2021 and the big break post-2024. We are now entering the next phase and we are running out of time. That is what these lockdowns are really about. They know civil unrest will rise when the public realizes that the old financial systems are collapsing.Categories:Bonds
QUESTION: Marty, you mentioned several times now, that the ECB MUST convert to a digital Euro. I have done speeches about that based on a paper from the IMF (Christine Lagarde) last year, in which they too discuss how to do it. But I have a serious question regarding timing.
I live in Germany and I would say that WE (the country) are not ready for such a move yet. Let alone many people. I have people in my family who still don’t have smartphones (just plain mobile).
I am completely with you that this move is coming (I am also part of a crypto community but as a critical member (I am the party spoiler there)).
But how can they move to a digital Euro to prevent bank runs, when I can’t see the infrastructure in place to do so.
Especially in such a short amount of time rg. the date you mentioned. They can eliminate cash withdrawals, yes, but paying with my smartphone reguires technology .. ?
Thanks a lot,
A
ANSWER: We are talking about bureaucrats. They only think in concepts much like Klaus Schwab’s Great Reset. The practical application of what they are doing is not there. They lack even the infrastructure, as in California, to force all cars to be electric. They do not have the power grid to support that.
I was in meetings where they actually told me with a straight face that they had to take trading the Euro away from Britain. I asked if they were going to take it away from the USA, Japan, Hong Kong, Singapore, etc? They looked at me puzzled, and said no! Just Britain. I asked if they really wanted to control the Euro just convert it into the old Soviet Union ruble. No free market at all.
Then there was all the rage that in London the big banks all threatened that they would move their trading to Frankfurt if BREXIT took place. But again, neither Frankfurt nor Paris has the telecommunication capacity of London. They could not possibly set up shop in Europe. There is no infrastructure to match London.
The problem that is the hidden crisis is that they have DESTROYED their own bond market. The ECB cannot even allow its balance sheet to shrink as debt matures. The Federal Reserve was not rolling over the debt they bought back in the 2007-2009 crisis. As it matured, they cashed it in.
The ECB is trapped. It cannot shrink its balance sheet for there is no market for the debt. They have finally agreed to fund this Coronavirus destruction they organized by creating combined Euro Debt for the first time. That is because nation-states cannot raise the capital.
They lack the infrastructure on every front. That does not mean they will not try. They have run out of opinions. They are desperately trying to revive their debt market, but they have wiped it out with negative interest rates since 2014.
This is what I keep warning about. INFLATION has nothing to do with the money supply any longer. Those are an old idea from the time of Gresham’s Law in advising Queen Elizabeth not to debase the currency as her father did.
We must understand that the exchange value between the various currencies back then was the metal content. Therefore, inflation was a factor of the exchange rate rather than the money supply. The more the coinage was debased, the more people hoarded the old currency. Hence, Gresham’s Law became that bad money drives out good. As this process takes place, the money supply DECLINES because of hoarding. This forces the state to debase even more to create money to pay its expenses. Roosevelt confiscated gold in 1934 for the same reason – people were hoarding gold. The German hyperinflation was the result of the 1918 Communist Revolution which scared people and they converted their money to foreign currencies and hoarded precious metals. The greater the hoarding, the more the money supply shrank, which in turn forced the government to print more.
We find hoards of Roman coins during the 3rd century in particular after Valerian I (253-260AD) was captured by the Persians. That broke the confidence of the Roman people and other barbarian tribes in the north saw the weakness and began to invade.
The coinage collapsed in metal content in just 8,6 years. We find hoards of even the debased coinage because people lost confidence in the government. We see the very same patterns in human behavior over and over again.
This is a hoard of Arab gold dinars. We see always the same pattern of hoarding when there is a decline in the confidence of the government in power at that time.
The ECB can cut rates to try to stimulate and that failed. People are hoarding cash in Europe and that creates deflation. There is NO AMOUNT of money that can be created to offset the DEFLATION when people lack any confidence in the future. Then they are imposing this “New Norm” of lockdowns and destroying jobs and they actually expect to sell debt and keep interest rates at negative and somehow this will stimulate the economy they have worked so hard at destroying? The increase in the money supply of all these central banks is still less than 20% of the economic contraction globally.
QUESTION: Hi, Mr. Armstrong I noticed that the national news agency in my country had an article about a local digital currency in Maricá, Brazil. It is called Mumbuca. What I read about Mumbuca sounds good and all that, but I am curious if the news is just conditioning people to a new age of digital currency. Do you have any comments about Mumbuca? Thank you for your time and what you stand for. Best Regards AA
ANSWER: It is important to highlight that Mumbuca is a local digital currency whose name is a reference to the main river and to one of the native peoples of the city. A unit of Mumbuca is equivalent to R$ 1.00 (US$ 0.19). What is interesting is that this is a local city currency much like the Depression Scrip of the 1930s. This is really an experiment of guaranteed basic income. Increasingly, customers in the city don’t pay with cash but with this digital currency. They receive it as part of the town’s basic income program. They pay with a quick scan of a QR code, using their phones. So far, just over 42,000 inhabitants can pay local merchants with Mumbuca.
This is Brazil’s first big experiment with digital currency. Those without smartphones can pay using a card, which has a scannable barcode. They are way ahead of the game and, actually, it is being followed closely internationally.
QUESTION: I thought big police forces are malinvestment just like big government. doesn’t returning to hard money reduce malinvestments?
BF
ANSWER: These people can no longer fund themselves by borrowing. I have been advising in Europe that the Euro could never become a major reserve currency without a single debt. They are now looking at that option and the European Commission is expected to sell consolidated debt into the bond market this month for the first time on a large scale to fund its coronavirus-relief programs. Meanwhile, the European Central Bank on Friday took a step closer to issuing a digital version of the euro. Even Goldman Sachs admits that Biden’s tax plan will hurt the economy. We already have the IRS being investigated for using your location data to tack you for possible hidden assets. Do you really think these people would EVER return to hard money that they cannot spend whatever they want? Socialism would have to end under hard money. This is not a rational expectation from people embracing MMT because they are running out of other people’s money to spend.
We have run out of other people’s money. They are hunting money like a starving animal. They see Modern Monetary Theory as the answer – create money at will under the new theory that there will never be inflation.
The central banks have been digging deeper and deeper into their monetary toolboxes in a vain hope of cushioning the COVID-19-induced shock, which has been orchestrated by this global effort to CRUSH the economy and redesign it in their image of a fossil-free world. The fake pandemic aside, the notion that the banks were already beyond hope since the ECB lowered rates to NEGATIVE back in 2014 and Keynesian Economics has failed. What has emerged is that the central banks have accelerated their transformation of monetary policy, which was once focused on defending and controlling inflation, into “Guardians of the Galaxy” combating inequality, climate change, inflation, and anything else they can think of. This decreases the possibility of ever returning to the existence of central banks pre-2007.
For the first time in post-1916 history, the US Federal Reserve has bought a wide variety of corporate debt issued by blue-chip borrowers such as Apple Inc., as well as junk bonds from riskier companies. As I have stated before, when the Fed was originally designed, its elastic money creation made sense because they bought private debt, which is paid off compared to government debt which never ends. The Bank of Japan has been what some call the petri dish for central banking since after more than two decades of expanding the money supply with no inflation, this has added to the rise of Modern Monetary Theory where these people assume that they can print money with no end and no inflation.
The central banks have lost control of the economy and the markets. There is no return to normal – they have now become the Guardians of the Galaxy.
QUESTION: Mr. Armstrong,
If this “Great Reset” movement pushes gold underground, what would that mean for gold producers? I recall reading on your blog that when gold was confiscated in the United States to devalue the Dollar, gold producers were happy because governments started buying their product at a fixed price which allowed the producers to avoid market risk. Do you see a similar pattern emerge from those wishing to enforce a digital currency? Is there a risk that producers would be forced to shut down? Certainly, the closely-linked copper production industry is too valuable for them to sabotage?
Thank you as always for the great insight that you provide. Looking forward to the full gold report.
JR
ANSWER: This time it will be different for they have no intention of backing any currency with gold. To do so means they cannot enjoy the objective of this New Green Socialist World Order. They need to be able to create money as needed, hence MMT. They are doing this because of (1) the Sovereign Debt Crisis since they can no longer borrow at absurdly low rates which means there is a threat where they will be unable to roll the debt perpetually as they have been doing, (2) there is the Monetary Crisis Cycle also coming into play.
They believe that if they cancel all currency and force everyone into digital, then that will not only end bank runs, but it will end the black market from working under the table, tips that are not declared, to drug dealing and prostitution. As I have reported before, in Rome, they passed a law that said you could not pay a prostitute with a coin that had the image of the emperor – which they all did. The solution was to create prostitute tokens. You bought the token, paid the prostitute with that, and later she redeemed the token for coins.
There is always going to be some black market. I would suspect it will be primarily built on barter. There is also the possibility that private money will emerge as it did during the American Civil War, German hyperinflation, and during the Great Depression known as Depression Scrip.
I will be detailing these changes in events in the upcoming Gold Report.
QUESTION: What did Martin mean by gold having a 21 year high. I simply can’t see how it is possible for it not to go up from here as sovereign debt collapses and printing presses are on turbo
I’ll be getting the gold report when it’s out but…. I’m about to get my hands on a few million pounds and I just want it to vanish into the ether so they don’t tax it, gold coins seemed the obvious option
Cheers B
REPLY: The major low was 1999. We have to be concerned that this agenda does not seek to also regulate gold once again. They are manipulating the currencies and several countries are starting to buck the trend. The question becomes this assumption that they are trying desperately to retain power using this fake virus to justify suppression
QUESTION: Marty, they do not call you the legend for nothing. You nailed the crash earlier in the year and the very day of the low on March 23. Now your call for the September 3 target was again to the day. In the middle of this chaos, gold has not performed well. Given this is 21 years up, that does not give a lot of confidence for a continued rally just yet. Will you be doing the gold report soon?
HD
ANSWER: This year was a Directional Change for gold and the next turning point in 2022. Most of the volatility on gold appears to be the first six months in 2021. You must understand that this is far more than just a war against Trump to conquer Capitalism and impose drastically higher taxes and this New Green World Order that Bill Gates wants to eliminate meat production along with fossil fuels. The number of active oil wells in Texas has fallen from the 400 level to about 100. This is creating a massive shortage in everything from food to energy.
The first sports arena to open in Las Vegas is making it very clear – NO CASH accepted. They are actively making money scarce and telling everyone cash is dirty and spreads this life-threatening virus. This hoax is being carried out to usher in the cashless society so they can collect their 70% tax rates by force.
In Thailand, there were 58 deaths from this virus, yet 2,551 suicides because of losing everything. This virus has impacted absolutely everybody. No politician in their right mind would do this unless they are being bribed.
There remains a serious risk to the gold market that they will once again make it illegal. You must realize if they are trying to eliminate cash to force everybody back into banks so they can tax you, why would they allow gold or private cryptocurrencies to compete? Pay attention! California is trying to create RETROACTIVELY a wealth tax proposed by Elizabeth Warren on the advice of the French Marxist economist – Thomas Piketty. A wealth tax FORCES you to tell them ALL your assets EVERYWHERE even if in storage offshore. These are policies that the Democrats are championing and it will drive gold underground.
So, the answer is YES! I am preparing a very important report on precious metals.
Anyone who thinks that this has not been orchestrated is delusional. I warned that our computer picked up this plot beginning in late August 2019. European politicians have gone along with Gates for one reason. The Repo Crisis began because Merkel publicly made it clear that there would be no bank bailouts in the Eurozone. That was because of the Italian banking system. But then Deutsche Bank was in trouble and she has to maintain that same policy.
Therein began the Repo Crisis. US banks would not lend in the REPO market to any European bank for fear if a collapse took place, they would be stuck with losses the Eurozone would not cover unlike the aftermath of the Lehman Brothers Crisis. Hence, the Fed had to step in and provide lending in the REPO for European central banks.
Consequently, creating this FAKE Pandemic has been the life-preserver for Europe. This has masked the banking crisis and justified now buying banking stocks, which is the indirect bailout, and the elimination of cash in Europe will force everyone to return to the banks. They need this HOAX to cover the banking crisis, but in the process, they have created a huge nightmare they did not foresee.
Suspending rents and preventing evictions while they imprison the population in lockdowns with no real pandemic which German Health Minister just had to admit, has undermined the banking system even further, Now they are talking behind closed doors about forgiving past rents for tenants. That does not address the collapse in commercial property. That is raising the Marxist issue of perhaps they should just confiscate those rental properties by nationalizing them.
The ideas being bounced off my ears are too absurd to think about. None of them propose a return to a gold standard – sorry!
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