Obamacare Sucking up to 10% of People’s Income
The latest studies show that Obamacare is sucking up to 10% of people’s income. This is just not sustainable long-term and may not even be sustainable past 2017.
Tag Archives: Monetary Policy
I still can’t believe they got away with this!
Clinton’s Gift to Bankers Made Student Loans the ONLY exception to Bankruptcy along side taxes
QUESTION: Dear Mr. Armstrong,
Since watching ‘The Forecaster’ I read your blog daily: thank you for all you have done to make sense out of the current phase of the economic cycle we are in. Some call it the fourth turning or winter and it helps to see the bigger picture.
About the loans: how do we go about reversing this “…standard consumer fraud since Hillary is the one who supported the bankers in making student loans non-dischargeable in bankruptcy.” How do we undo this new ruling? Will we have to wait until the economy stops functioning, or is there a legal process to undo it.
Respectfully,
Laura
ANSWER: Excluding student loans from bankruptcy was the Clinton gift to the bankers. It was very detrimental for it encourages education to expand prices dramatically knowing there was now no practical check and balance. so it made education far worse.
The end-result will be a default, but it is unlikely that politicians will rise up in favor of students. The bankers pay for their elections so do not count on government for or by the people. That does not exist.
History says this will end very badly. We will see a rise in civil unrest and this can be the seed to a major political revolution down the road. The bankers converted student loans into debtor’s prison, which was outlawed because it was so abusive. There is no reasonable way out of this mess because the bankers bought Washington and if Clinton were to get in, forget it. She will NEVER admit the Clintons ever did anything wrong.
Do not invest in any hedge funds!
Hedge Funds Get It Wrong with Sovereign Loans & Puerto Rico
The seriousness that is emerging in the hedge fund community is their tendency to become VULTURE FUNDS who look to lend money to sovereigns at excessively high rates of return that become no different than the carpetbaggers who sought to exploit the South following the Civil War. As an investor, you should stay away from hedge funds who think they can exploit various governments rather than invest. If they do not know how to invest to expand the economy, then they have no business handling anybody’s money to ruin the reputation of the industry. They will turn investors into the hated carpetbaggers and they risk turning society into the arms of authoritarian government justified in defaulting on such funds.
The hedge fund industry really began in 1985. The biggest hedge fund back then was $100 million. Unfortunately, too many hedge funds have lost their way and are becoming VULTURE FUNDS that risk the entire industry. We have to realize that 1985 was the start of the movement to create hedge funds for that was the year when everyone (myself included) returned all money to U.S. citizens and moved offshore. A normal pi cycle brings us to 2017, a year that is starting to look very bad. Hedge funds who have become VULTURE FUNDS will be defaulted upon by their clever antics of lending to governments. They falsely believe they have courts to back them up as they did in Argentina. What they fail to see is that they are playing with fire while running with scissors.
Puerto Rico is yet another example of hedge funds out of control. The cash-starved island managed to persuade some of the country’s biggest hedge funds to lend them more than $3 billion to keep the government afloat. They assumed they would get a great deal since they would be earning, in effect, a 20% return. Relying on the island’s Constitution, Puerto Rico was required to pay back its debt BEFORE almost any other bills, whether it was for employee salaries or retirees’ health care benefits. They assumed the law would be on their side and they could crush the island to extract a 20% annual return.
This sort of deal would have been criminal before 1980 when usury was capped below 10%; that was removed so Volcker could raise interest rates to stop an inflation he did not understand. Within just months of making this deal with the devil in the form of hedge funds, Puerto Rico ran out of money. The deal they cut with the hedge funds began to fall apart and has now set the stage for what is becoming an extraordinary political and financial fight over Puerto Rico’s future.
The question arising is whether Puerto Rico should be granted bankruptcy protection in a battle with VULTURE FUNDS who have done far more damage to further the image of the hated rich by supporting a return toward Marxism. Some of the people involved are the very people who lend money to Hillary and Bush, assuming they are buying the politicians as security for their exploits. The hedge funds have banned together and hired lobbyists to try to create laws to screw Puerto Rico for their gain. This is the very method they used against Argentina and Greece to exploit high-yielding returns in billions from the hardships they impose upon the people of those countries.
I highly advise anyone investing in these type of hedge funds to exit. This model will fail for the sovereign debt crisis will expand rapidly over the next two years and these funds will lose a fortune. They probably would love to see Donald Trump assassinated for his election would spell disaster for this business model when they cannot buy him.
A Fundamental Truth is that no government ever tells the truth!
What Is Said Publicly & Privately Differ – Here Comes 2017
QUESTION: Marty, you know which bank I am at. You also know the Fed has been going around warning banks that their models are wrong and they will not see a flight to quality being the 30 year bonds. Yet Yellen seems to also say she does not believe in inevitable cycles. They are saying one thing publicly and another behind the curtain. Are you sure they are not attending your conferences covertly?
ANSWER: Other central banks are open as to who they are when they attend, which did surprise me. I believe that there are people within the central banks who are looking at our work, especially since the Bank of China came out publicly and stated they are using capital flow analysis which we invented. Yellen’s statement is political:
I think it’s a myth that expansions die of old age. I do not think that they die of old age. So the fact that this has been quite a long expansion doesn’t lead me to believe that it’s one that has, that its days are numbered. But the economy does get hit by shocks, and they were both positive shocks and negative shocks.
She will not come out and say there is a business cycle for it is a presumption, as Larry Summers noted, that if you admit there is a cycle it creates one. People who have no trading experience cannot see the real forces behind the business cycle. Nevertheless, I would not take what she says publicly seriously. Just in October, the IMF began warning that the core G7 economies had experienced a very weak recovery which risked turning into near stagnation after cutting its global economic growth forecast for the fourth successive year, as reported in the Guardian. The IMF is warning that if the Fed raised rates, they will set off a new financial crisis because of other indebted countries.
Yellen’s statement is a public one and not one which should be taken seriously. Summers’ simply admits he is incapable of doing any forecasting. His original proposal to move interest rates negative demonstrates that the guy knows nothing about how the economy functions for all he looks at is the bankers. What about the savers or the elderly whose retirement he has destroyed? What about the pension funds he has wiped out? The high-yield hedge funds going belly-up is all part of this inability to forecast. They assume that the trend in motion will remain in motion and not die of old age.
Paul Volcker wrote:
The Rediscovery of the Business Cycle – is a sign of the times. Not much more than a decade ago, in what now seems a more innocent age, the ‘New Economics’ had become orthodoxy. Its basic tenet, repeated in similar words in speech after speech, in article after article, was described by one of its leaders as ‘the conviction that business cycles were not inevitable, that government policy could and should keep the economy close to a path of steady real growth at a constant target rate of unemployment.
So do not take whatever Yellen says publicly very seriously. She cannot speak freely any more than you can (working for a bank). If you work in a bank or government, you cannot speak freely for whatever statement you make is attributed to the whole.
The recovery is extremely weak. The Fed had to raise rates because Larry Summers is dead wrong. The Fed can see that negative interest rates have FAILED to work. Even QE has not worked in Japan or Europe. This alone proved that the idea of increasing money supply will cause hyperinflation. This totally misread what took place during the German hyperinflation. They failed to realize the new government previously defaulted of all debt which wiped out savings, banks, and pensions. They printed money because that was all that was left. It was the symptom rather than the cause.
There is no CONFIDENCE and it is being killed with taxes. As we approach 2017, those in power have only sought to maintain their power. They are raising taxes and enforcing taxes to the point where they are reversing everything that made the world economy function post-World War II. It was the free flow of capital that reconstructed the world. This is the very thing that governments are shutting down for taxes. We are now officially driving in reverse.
This is the government’s own forecast for the budget crisis. 2017 will be the year from hell all around the globe.
Alternative money an interesting concept!
Alternative Currencies of the Great Depression
QUESTION: Mr. Armstrong, have you ever heard of a short lived Wörgl Experiment in Austria? It was shut down by the Austrian Central Bank they say because it was successful. Have you looked into this experiment they claim defied deflation and inflation?
ANSWER: Yes. This was by no means an isolated instance. True, it was touted as the “Miracle of Wörgl” during the Great Depression. The very similar “experiment” took place in the United States with over 200 cities also issuing their own currency. You have to understand the dynamics of the period. This was the very age of AUSTERITY where the assumption was the collapse was a lack of confidence in government so they increased tax collection and cut spending unleashing both deflation and a dwindling money supply. This led many cities to create their own money due to the lack of money in circulation also impacted by hoarding.
The Wörgl Experiment began on July 31, 1932, the very month that the Dow Jones bottomed. The experiment involved issuing of “Certified Compensation Bills”, which was a form of local currency known as Scrip generally, or Freigeld. The monetary theories of the economist Silvio Gesell were applied by the town’s then-mayor, Michael Unterguggenberger. What differed with Gesell’s idea was that the currency would expire. Believe it or not, there are some government’s looking into currency which expires. Europe since World War II issued currency which expired roughly every 10 years. This forced people to bring out the old currency to be swapped and thus prevent hoarding.
The central part of Gesell’s idea was how to stop HOARDING of money. This is why FDR also confiscated gold. He too saw the problem of people hoarding money and not spending it. This is part of every economic decline. If there is no CONFIDENCE in the future, people save more. This is simply human.
Nevertheless, the Wörgl Experiment resulted in a growth in employment largely because you had to use the money. This allowed the local government projects could all be completed, which many called a miracle for it appeared to defy the depression in the rest of the country. Inflation and deflation are also reputed to have been non-existent for the duration of the experiment. But this was simply the result of money expiring so there was no purpose in hoarding “money” shifting it back to “asset” appreciation as in a hyperinflation.
Despite the appearance of success, the Wörgl Experiment was terminated by the Austrian National Bank on the September 1, 1933.
Capital flows into the US are Coming!
The Move to America — the Great Capital Migration
Something very interesting is unfolding. Included in the new year-end spending bill was a waiver of the Foreign Investment in Real Property Tax Act (FIRPTA), which had been implemented during the late 1980s when the Japanese were buying everything. They claimed to have focused on buying U.S. farmland, but it also applied to buying trophy U.S. property like Rockefeller Center in New York City.
This position has been reversed in the new year-end spending package. While some attribute this to a grand conspiracy, giving far more credit to those in Congress and in the White House than they deserve, our sources simply tell the plain story of lobbying to allow foreign buyers, who are supporting the real estate market in key areas, to purchase properties. Especially after London basically kicked every foreigner out of town by telling them their money was not welcomed, and with lightning speed they instantly turned to New York City.
High properties, even in Florida, are being sold to the Chinese largely in cash deals whereas Canadians are buying the greatest number of properties. The lobbying has been from the real estate and banking industry who see a market they want to service. Slipped into the $1.1 trillion spending measure, which was passed to avoid a government shutdown, were tax breaks for Americans that simultaneously treats foreign pension funds the same as Americans. There has been lobbying from foreign pension funds because they see no hope in Europe and have been pleading for permission to enter the U.S. market in a big way. For the first time this provision waives the tax imposed on foreign investors under FIRPTA.
This is perfectly in line with our cyclical models because the DOLLAR has become the world reserve currency for real and by default. The dollar bears, who keep claiming it will crash, are looking only domestically. They have no peripheral vision and thus remain blind to the trend globally. They may sell stocks, assuming lower oil means more deflation. What if they are wrong?
A “collapse” in the asset markets is likely in the first quarter of 2016.
Commodity-Based Countries to Liquidate Wealth Funds & Gold
QUESTION: Marty, at the Berlin cocktail party you said we may yet see gold sales from oil producing countries if oil breaks your yearly number of $35 for year end and gold closes below 1044 or so I think. You said gold could then reach that $——- level you mentioned in the conference. It looks like that is happening. Socrates on the monthly level is now warning of a possible Waterfall Event in gold. Are we seeing the risk of official gold sales from Russia, Norway and Saudi Arabia?
Thanks for a spectacular conference.
PD
ANSWER: Yes. We got the rate hike. A stronger dollar is still on the agenda, and yes, I warned we could get that waterfall in commodities for the first quarter, particularly in oil. The continuing collapse of oil prices under $35 for year-end will bring tremendous distress to several countries. Cash-strapped governments are looking at substantially lower revenue from oil and they are likely to liquidate positions in gold and in their sovereign wealth funds. They will draw down cash from gold and a portion of their funds to close budget gaps.
Gold produces zero income and costs money to store while the yields on wealth funds currently produce way too little to compensate for the deficits. This crisis, in turn, could cause several nations to liquidate portions of their funds to sell off gold to raise cash. It would appear that the selling will be in debt markets more so than stocks. They will focus on declining asset values like gold and bonds more so than U.S. equities. When they get into a real jam, it becomes whatever they can sell to raise cash irrespective of the fundamentals.
This problem will affect all of the EU and America!
Romanian Private Debt Crisis Erupting
COMMENT: Dear Mr. Armstrong,
Dear Mr. Armstrong,
What you wrote concerning the possible repeated start of the banks collapse from Austria, once again, is right. The biggest lenders in Romania are some Austrian banks, among some Greek ones which are already in a coma.
A new law has been passed and violent attack started from banks, including the National Bank of Romania. Today, 4 European mother-banks having subsidiary in Romania appealed an threaten with lawsuits in a letter addressed to the Romanian President, asking/demanding him not to endorse this law. My guess is they are Erste, Raiffeisen, Societe Generale (French) and either Alpha Bank (Greek) or UniCredit.
One IMF Director met one week ago with the Romanian President but agenda was not disclosed – guess what…
Pressure and lobby is huge. If this law is promoulged, banks are quite in shit, cause the estimated no of families who’ll give back homes to banks is 30 -100 000.
If not, President’s career and image goes in the toilet – so it comes political instability and next year are scheduled local and general elections.
Best Regards,
AI
REPLY: The crisis throughout Eastern Europe has been selling mortgages in Swiss francs without disclosing the currency risk. This law, passed by the Romanian Parliament, is actually fair. The banks would have to take back the property and end the debt. That is how Caesar resolved the debt crisis, for then too the bankers would not accept property and would take the borrower’s children and sell them into slavery to pay off the debt.
Romania’s National Bank (BNR) has asked President Klaus Iohannis to send back to the Parliament the recently approved law, which defines making payment on a mortgage by allowing the mortgage debtors to hand back to banks the mortgaged assets to terminate the debt. The bankers want no risk and will screw the people every time. This law is fair as the banks sold mortgages without guidance.
The bankers are demanding that Parliament amend the bill based on a financial, legal, and ethical perspective to their benefit without acknowledging the issue. What is not understood here is that at the moment a loan is given, the bank values the property to be in balance with the value of money. When the value of money rises (DEFLATION) then assets decline. The same amount of money might even buy two houses. This is an economic gain for the lender and a loss for the debtor.
The bankers warn that this will affect even local banks’ financial stability. Local bankers say that the law violates the constitution and that it will bring them big losses and limit access to financing. The rumor is that Parliament will review the law and limit it to loans under €250,000, according to political sources.
This is the paradox of the business cycle. It needs to be examined and understood for this has often resulted in civil unrest and revolution.
Everything has cycles!
Economists do not Try to Forecast the Business Cycle
QUESTION: Marty, it was fantastic to meet you in Berlin and the conference really opened my eyes. Can’t wait for the sneak preview of the Trader level in Socrates. The Investor level is amazing providing a long-term outlook written by the computer. Your staff said the computer was writing daily trading reports in the Eighties, but you never told people it was the computer back then.
This brings me to the Bloomberg interview of Larry Summers who was still arguing against a rate hike before yesterday. The interesting point was his admission that economists cannot forecast the business cycle as you said at the conference. Why do they not even try and then hold up the silver cross and hope you go away?
BR
ANSWER: Traditional Economics is incapable of forecasting for to start with, economists have no real world experience. It takes a trader to even see that there are patterns with markets and by no means are they some random walk if you use technical analysis, Elliott Wave, Gann, or whatever. Each type of analysis, other than fundamental, begins with the realization that this is not some random walk of a drug through the park. That theory of Random Walk was developed to explain their inability to forecast. You might as well say who knows if the sun will appear tomorrow, it is too complex to try to figure out how the havens move. There are too many planets and stars to track.
All the turning points in the Economic Confidence Model which it has forecast in my lifetime alone, even to the precise day, demonstrates that there is no such thing as a random walk. Yes there is complexity masquerading as chaos within which there are definitive patterns. Even the Maya discovered time. They studied the heavens as did the Babylonians. Economists seems to be unable to observe patterns and then claim anyone who does must be the devil. This is illustrating that social sciences, even if you dare call them a science, are living in the Dark Ages and you burn at the stake alive anyone who disagrees.
Keep in mind that if you can forecast the economy, then you alter politics. How can politicians run for office vowing to alter the future if they cannot manipulate the business cycle? Communism and socialism have failed because they attempted to alter human nature to manipulate the business cycle. Most modern Economists all accept as a general rule that they can manipulate society and the economy. Therein lies their self-interest and this is why they do not even want to examine what we have revealed exists. I do not care if we are not 100% correct. Being better than 50/50 consistently is impossible as pure luck or coincidence..
As for the pretense that 100% of the people would make reality take place if you could forecast is absurd because they would all act the same. The evidence of proper management is the story of Joseph from the Bible warning the Pharaoh there will be 7 years of plenty and 7 years of drought.There will always be two forces as in politics. This is an excuse why not to try. If we assume there will always be plenty and no cycle, then we are plain stupid as a society.
Some schools are starting to teach the Economic Confidence Model. It is the way to the future.
The FED has created another bubble and its … YUGE
Financial Instability & the Fed
The argument that the Fed should do nothing for it will be harder to correct a rate rise than to do nothing because there is no bubble anywhere, demonstrates that we have the most serious BUBBLE in history. Retail participation in markets is still off by 50% from 2007 highs. People have invested in fixed income and now there is a crisis is fixed income hedge funds. The BUBBLE is is low interest rates (GOVERNMENT) rather than the markets. This is what our computer has been projecting for 2015.75. It is right before everyone’s eyes, yet they cannot articulate what they cannot see.
The crisis has been created by the ZERO interest rates. This has wiped out the elderly and destroyed the so called American Dream. The middle class has been collapsing for government taxes them under the pretense that Social Security is a savings for their future. when in fact it is just a tax. If that money had been invested in equities when the down was 1,000, there would be no crisis today. Pension have have chased long-term rates driving them lower and lower trying to meet their future obligations.
China poured more concrete in 3 years than the USA did in nearly a century. This has driven the commodity markets and that has come to an end. China thus is blamed for the slow down and for the decline in its currency they call a war and manipulation. The trend has simply changed.
Combining these elements does not speak well of the future. The FED is between a rock and a hard place. It will be blamed no matter it does. Nobody seems to understand the dynamics of the trend in motion.
Centinel2012 