QUESTION:  Dear Martin,

ANSWER: There is little doubt that we stand at the threshold to some chaotic period ahead. I have warned governments behind the curtain of what is to come. It seems as if at times I am the only person who has ever read a history book. I point out that 99% of all revolutions begin with the abuse of taxes. No matter how many times I show this is the trend and all the countless rebellions in ancient, medieval, and modern times (within the last 309 years) such as the American Revolution (no taxation without representation) or France (let them eat cake), I am just one person and I cannot move a mountain. So I do this blog as a public service realizing that we must crash and burn and thus it is up to us at that brief opening in the clouds to push for the freedom we deserve for our posterity.

We know where the trend changes from gold at 1362 to the Dow at 23,000. We have not yet missed anything. The boat has not left the dock. Patience is required along with a clear head. Never act emotionally. Be clam and poised. Remember there must always be the false move before the slingshot move.

It is the fool who rushes in assuming he will miss the move before key points are exceeded. That is when losses are always the greatest. Rallies in gold are up to the next bank of Reversals as is support in the Dow. Keep in mind that September is a turning point in gold and August was key for the Dow. The two are not yet aligned. That may not unfold until next year.

According to the new draft law proposal, all persons who enter the US will have to declare their holdings in crypto currencies with a value over 10,000 dollars. This is the case with larger quantities of cash or precious metals. Naturally, they are calling this money laundering and possible funding of terrorism. It’s really about taxes. 

I have been warning that this would be the next step in government regulation. They are hunting money everywhere. There is no possible way they will allow crypto currencies to beat them. The stories that they cannot stop them are really nonsense. Income taxes are not illegal if you cannot pay, but if you fail to tell them what you made, that is criminal. Applying this same legal approach to crypto currencies is inevitable.

This will apply to Americans returning from overseas. If you fail to report it, they can jail you and confiscate everything you have. It will be the failure to declare.

The only way to be off the grid is still tangible assets and that will be non-real estate limiting this to simply movable assets. Even cash they can simply cancel as was the case in India. They are out for everything for we are the problem not their mismanagement from their perspective. This is also why they are in an all out war against Trump.  They will not tolerate anyone who is not a career politician regardless of what they say.

All we have been hearing since 2011 is how the stock market is going to crash and then there will be hyperinflation and all sorts of strange relationships that never materialize. They simply focus on the level of the stock market in nominal terms without adjusting it for inflation or showing how it has performed relative to the rest of the economy. Here is a chart of the stock market expressed as the total value of shares traded annually as a percent of GDP. Sorry, this illustrates that the retail market is not in crash mode just yet and it is still nowhere near the overbought levels of 2007.

This chart also reflects the crisis we have in liquidity. The more government tries to also regulate banks, they have been withdrawing from proprietary trading and we find the trading volume has been shrinking.

Government manipulates the statistics to always try to reflect that everything is OK and they are doing a fantastic job. Here is the ECB’s assessment of liquidity trying to pretend it’s back to normal. Real liquidity is HALF that of 2008 yet the ECB’s the Financial Market Liquidity Index is a complete fraud for it simply measures the spread between bid and ask and not the volume traded. The Index combines eight individual “liquidity” measures based upon their definition. Three of them cover bid-ask spreads: (1) on the EUR/USD, EUR/JPY and EUR/GBP exchange rates; (2) on the 50 individual stocks which form the Dow Jones EURO STOXX 50 index and; (3) on EONIA one month and 3 month swap rates. Three others are return-to-turnover ratios calculated for: (4) the 50 individual stocks which make up the Dow Jones EURO STOXX 50 index; (5)

Honestly, the bid ask spread can narrow and let a panic start and that will quickly vanish as market-makers withdraw. There is far less depth to the markets today than before back in 2007. A return on investment also means nothing with respect to liquidity.

So as long as we have analysts relying upon government statistics without thinking about their construction, this is really the blind trying to lead the blind. What a joke!

It is becoming painfully obvious that the amount of sheer theft of our forecasts right down to names of publications is escalating unbelievably. I personally fear that these charlatans are only looking to exploit people and could care less what is really at stake. From outright just stealing our track record and claiming they called markets to the day of the 1987 Crash to taking the title of the Great Bull Market in History and calling it their own, are confirmations that they really cannot stand on their own.

None of these forecasts we have made for the past near 40 years was  possible without the largest database ever assembled covering the entire world. Our initial Socrates launch covers about 500 instruments around the world. No individual analyst is capable of forecasting the world without such a database and computer systems designed to do so. There is just far too much for any analyst to watch every single day. And as for forecasting things to the precise day, only the Economic Confidence Model has accomplished that and I myself remain in awe of how the world is so precise. The complexity simply masks the hidden order. This was never my theory that I set out to prove, it is something that I bumped into along the way of just trying to forecast markets for my own trading.

I have advised more governments and been called into more crisis events than anyone I know of. That does not happen out of thin air. Such levels are achieved only with long standing track records that are know to be true over the course of decades.

Anyone taking our targets to stealing our track record claiming they accomplished the same, I warn that such conduct is not that of anyone you should trust. They are simply  charlatans  looking to exploit you for money and when crisis does come, they will be clueless what to advise. This not a game. This is reality. Such people are parasites looking simply to mislead you for profit.

The head of the Federal Reserve, Janet Yellen, has warned politicians against turning back financial market regulation. She has warned that any adjustments to the framework should be discreet. The Jackson Hole gathering turned out to be financially tense. Yellen admonished politicians stating bluntly that this is a question of preserving the “increased resilience of the financial system” through the course of reforms. Some were expecting Yellen to point the finger at lower interest rate monetary policy of past Chairmen, but she did not. She was addressing the issues of regulation reform being suggested by Trump’s people. Indeed, Trump has ordered that the Wall Street reforms of 2010 be reviewed.

Many suspect that Yellen’s speech will be her last. She essentially disagreed with the position of Trump and Congressional Republicans that the regulatory burden is strangling lending and has hamstrung the economy under Dodd-Frank, which gave the financial supervision far greater power, yet remain bewildered and in the dark concerning the causes of the 2007-2010 crash. Trump is absolutely correct that Dodd-Frank cannot truly function properly and it is so far off the mark, it is simply slowing down the economy. Yellen also said in Jackson Hole that some people were obviously forgetting how expensive the crisis had been.

The entire regulation took aim at only the results and not the cause of the crash. Nobody seems to really understand just how significant the entire economy was altered when Clinton who was in the pocket of the bakers. By the time Clinton signed the Financial Services Modernization Act, commonly known as Gramm-Leach-Bliley, repealing the key components of Glass–Steagall in 1999, nobody on Capitol Hill not even understood Larry Summers, the father of negative interest rates, really understood what he was supporting.

I wrote a full report on how they altered the economy forever changing our banking system from Relationship Banking to Transactional Banking. The arguments how this would reduce risk for banks overturning the regulation of the Great Depression, Glass-Steagall, have gone over the heads of everyone on Capitol Hill and I suspect Donald Trump as well.

There is precious little that anyone seems to comprehend about the core structural changes the Clinton put in place. Even Yellen is operating from an assumption that Dodd-Frank  is good regulation. What it did was put the burden on the people once again and never addressed the structural changes of the Clintons.

There are no mirrors in Washington. If Congress ever dared to look into a mirror they would see what they really are – a bunch of idiots and fools seeking to regulate the economy over which they never comprehend and they lack personal experience to even understand the subject matter.

The bankers argued that Glass-Steagall was holding them back. They were like a child who was asking their parent can they only eat cookies for dinner. The politicians had no idea they were altering the banking system for thousands of years ending Relationship Banking where a bank lent you money for a small business and then they reviewed you quarterly and you handed in your financial statements. The banker kept an eye on you because your loan was on his books.

Clinton changes 5,000 years of banks and gave birth of Transactional Banking where the bank suddenly didn’t care if you would repay your loan because they were selling it to someone else. They should show the movie the Big Short on Capitol Hill and then do a slide show geared for the 3 grade and force ALL politicians, and Yellen, to watch it. Maybe then they might understand what they have really done to the world economy and why economic growth today at 2% is considered a wild boom compared to 8% during the 1980s