Capital Flow Analysis


The clarify, in the Gulf War the USA was the aggressor and thus the capital flows moved away from the dollar. This was contrary to World War I & II and other Middle East events where the USA was not the aggressor. In the current situation, provided the USA does not engage an invasion of Iran, then the risk may lie initially more with Europe given that the Iranian cell groups have infiltrated Europe and are already there. A decline in the dollar appears more likely post-2022.

Iran!


The latest fireworks in the Middle East involved an Iranian-led attack on our embassy in Iraq.

 

Our military took out their leader shortly thereafter. I’ve heard some say Trump is keeping Americans safe. That’s great, but why are so many Americans still in Iraq after all these years? Why are we in Syria? Why are we allies with a backward kingdom named Saudi Arabia?

That country beheads people for merely questioning their government. They use their oil money to spread Wahhabism, a radical form of Islam that breeds terrorism.

Iran is our enemy because they practice a different form of Islam and they hate us because our CIA conducted a coup against their Prime Minister. Mosaddegh wanted to nationalize the oil companies operating in his country, so he had to go. He was replaced with the Shah, and his brutality led to a revolution in the late 1970s. Iran has been run by Islamic fanatics who hate America since then.

President H. W. Bush and his son W. were both Skull and Bones men and war criminals. They got American troops in the Middle East using false flags and blatant lies. Millions of lives and trillions of dollars lost later—we’re still there—and in Afghanistan as well.

Iranian citizens suffer from a poor economy and harsh repression. They are not happy, and so the ruling Mullahs keep the fires of hate against America burning as a distraction. They must also think America is weak. After all, Obama gave them billions of dollars and John Kerry was happy to genuflect to Iran’s rulers. They made a ridiculous deal in the hopes they could keep Iran’s nuclear ambitions in check. Of course Iran kept right on going with their nuclear weapons program—just like the North Koreans did after cutting a sweetheart deal with the Clinton administration.

Our founding fathers wanted us to avoid foreign entanglements. Leaders such as the Bushes ignored their advice and so now we have permanent war in an area with a history of tribal warfare going back centuries. Those conflicts will never end. We should not be in the middle of it all—we are supposedly energy independent now. It’s time to let the countries in the Middle East battle it out on their own without us paying for it with American dollars and lives.

Bring the troops home!

—Ben Garrison

Understand What is the Repo Market


QUESTION: Mr. Armstrong and thank you for what you are doing for us regular people. For my first ever question for you, would you please explain as simply as possible exactly what the REPO market is and how it works and how it affects our multi-faceted financial world.
I am truly grateful for your work and communication.
GLH

ANSWER: The REPo Market is where banks will post AAA securities and borrow against them for the night. Normally, the big banks like J.P. Morgan provide over $300 billion in liquidity daily which allows banks, hedge funds, and institutions to raise cash for the night. When the banks withdrew from lending into the Repo Market, the Fed was compelled to inject cash and thereby lending into the Repo market to prevent the short-term interest rate from rising as it did to 10% on September 17th, 2019.

A Reverse Repo (RRP) injects the purchase of securities with the agreement to sell them at a higher price at a specific future date. The party selling the security to raise cash in the market agrees to repurchase the securities (repo) from the lender at a future point in time which is known as a Repurchase Agreement (RP). Repos are classified as a money-market instrument, and they are usually used to raise short-term capital.

This is not a market that is open to the public. However, it is the basic market where everything else is factored on top of this rate. If the Fed did not intervene, then short-term rates would rise and instead of the consumer paying even 20% on a credit card, it would have jumped as must as 10%.

QE was where the Fed was trying to lower long-term rates after the mortgage-backed crisis hit in 2007 so they were buying 30-year bonds. This is the short-term which has nothing to do with QE. Here the Fed is trying to prevent short-term rates from rising rather than lowering long-term rates which they can only “influence” since the Fed posts only short-term rates like the discount rate (wholesale rate) which banks can borrow at.

Here the economy is not declining and unemployment is back to the 1960s. All the talk about QE makes zero sense for these people do not understand what is taking place and it takes professionals in the field to grasp this issue and they cannot speak since they are under confidentiality agreements.

Gold & the Future


QUESTION: Marty, you laid out gold’s forecast back in October 2018 which has been amazing long-term. While you said if gold would rally after the Pi turning point from a bounce off the downtrend line, then it should rally into the bottom of the ECM. Will you now publish the gold report? I know you have been really busy. But it would be nice to hear from you. Socrates has been bullish since that turn back in 2018. That has been great. It would be nice to see a report with gold in all the currencies.

Happy New Year
LM

ANSWER: Yes it is getting time to do the Gold report. Let us see if that forecast proves correct since we are approaching the target.

Suffer any Wrong Rather than Go to Court


COMMENT: Judge Jackson & the Lack of Judicial Impartiality
Martin in this very illuminating post you say:
“Clearly, the most dangerous flaw appears to be intentional – Congress appoints judges not lawyers”.
You’ve missed an important point here.
At the time of the founding most judges were “appointed” by the people; through elections!
Yes, with the federal courts it doesn’t work that way. But, with the inferior courts at the state and local level it still does; though the right has been assailed and so somewhat curtailed.
Still, it is estimated some 50,000 judge-ships are subject to the ballot; a power, like so many others, fully squandered by the American people.
The implications of an electorate organized to exercise these powers would have serious implications at the federal level just the same and these facts should not be forgotten or dismissed.

H

REPLY: Yes, the state and local levels are varied. My discussion was confined to federal, which is what Ben Franklin was opposed to. There are many regions in the state and local level where the judges are elected by the people. This too I see as wrong for they are still being sponsored by the Republican or Democratic Party and are declared as members. This still intertwines politics and does not eliminate the problem of bias.

I believe that Franklin was correct. The judges should NOT stand for election for that will transform the law into just the will of the majority. There was a case Nix v. Williams, 467 U.S. 431 (1984) which resulted in changing our constitutional rights because politically they demanded that a black guy be found guilty for killing a white 10-year-old girl. The police could not simply transport him after his lawyer got him to self-surrender. The lawyer warned the police not to question him on the way to the jail. They did any way. The officers began a conversation with respondent that ultimately resulted in his making incriminating statements and directing the officers to the child’s body.

A federal court in a habeas corpus proceeding found that the police had obtained respondent’s incriminating statements through interrogation in violation of his Sixth Amendment right to counsel. Brewer v. Williams, 430 U. S. 387. They had to put him on trial again using evidence concerning the body’s location. Legally, that should have never been allowed. But because this was a black man who had mental problems and a 10-year-old white girl, the thought of letting him walk was just politically unacceptable. The court thus created a rule known as the Inevitable Discovery Rule meaning that it was irrelevant that he showed the police where the body was buried, because the court ruled that they would have eventually found the body.

The impact of that political decision is that police really do not need a search warrant today, they merely have to sweep an unconstitutional illegal search and seizure under the table and rule that had they obtained a search warrant, they would have inevitably found the same evidence.

This is the problem when you mix politics with law. In order to make sure that this one black guy was punished, the entire society had to be stripped of our absolute right against illegal search and seizure. If the government wants you, you have no Constitutional rights whatsoever. Law has become the justification for legal persecution. Sir William Blackstone, upon whose seminal legal work was to found the foundation of American law, wrote:  It is better that ten guilty persons escape than that one innocent suffer. That is the way the law is supposed to work. When you mix politics with judges, there is no rule of law that remains. The statue of justice is supposed to be blind symbolizing impartiality. That is merely fiction – like once upon a time.

The corruption of the Rule of Law was always an English past time, which the Americans inherited and greatly improved upon. The idea of justice is merely a fictional dream. Charles Dickens wrote in his introduction to Bleak House;

This is the Court of Chancery ..• Suffer any wrong that can be done you, rather than come here!

 

Gold & Socrates


COMMENT: Marty, just wanted to say thank you for Socrates. It has been great on gold and even in the miners it has distinguished the lagers like Barrick from Newmont without worry of who is getting paid to pitch what stock.

Can’t wait for the sector overviews.

Happy New Year

PB

REPLY: It is tracking over 1,000 instruments each day. I do not have the time to write about everything. I am working on the sector overview. That should be ready with the turn in the ECM. I am so glad people are getting the hang of Socrates. I do have an expiration date and have no desire to write forever.

HAPPY New Year to All.

Pelosi’s New Years Eve Party!


PARTYING WITH PELOSI

Speaker of the House Nancy Pelosi loves money. That’s why she spends so much of her time fundraising. She is good at hitting up large corporations and wealthy donors.

As for her constituents? She spouts off the usual blue city leftist rhetoric to keep them placated. She represents California’s 12th congressional district, which mostly consists of the city of San Francisco. That city has degenerated under her rule. Its streets are littered with human feces and drug needles. The homeless don’t have money, so they don’t appear on Nancy’s radar.

Pelosi caters to the rich, limousine liberals who can afford to live there. She knows money is power and her wealth bought her a lot of influence in the Democratic Party. Just like Hillary did with her corrupt Clinton Foundation, Pelosi has amassed vast wealth as a politician—she’s worth well over $100 million. Some estimate her wealth is much greater than that. She made sure her son, Paul Pelosi Jr., got paid off, too. Like Hunter Biden, he was involved in kickbacks and Ukraine corruption.

It remains to be seen what Pelosi will do in 2020 to help thwart Trump’s reelection. Her Trump Derangement Syndrome will not be cured any time soon and her endless thirst for money will remain unquenched.

Happy New Year!

—Ben Garrison