Why Governments Expand the Gap Between Rich and Poor


QUESTION: Mr. Armstrong; You said at your Frankfurt the ECB policy of negative interest rates is actually creating a wider gap between the poor and the rich. Could you elaborate on that comment?

Thank you. Hop you come back to Frankfurt. You do realize that you get twice the crowds here than anyone.

OT

ANSWER: Lowering interest rates to negative was really brain-dead. The rich can move their move and export it to the USA. The poor, lack the sophistication and cannot export their labor no less their meager savings. The people who drive the economy have different roles. The rich provide the capital and create jobs. The middle class to poor are the people who form the foundation and it is their consumer spending that create the underlying economic growth. Attacking the rich always reduces investment and jobs, but lowering the interest rates to negative causes the rich to leave and the poor to middle class suffer lacking the sophistication export both their labor and savings.

The key message from President Mario Draghi’s press conference of the ECB was ro say he was getting ready to slow its QE stimulus, but he’s not in a rush.

Draghi tried to be as vague as possible, because he is trapped. He knows this cannot go on forever. He realizes that once he stops, the bond market crash and there is a risk that the Eurozone government are forced to pay real interest rates and that will blow out the entire EU budget system. Draghi does not know what to do. He confirmed that the governing council had begun ‘very preliminary’ talks about how the quantitative easing might be changed; how much longer it might run, and how much it might pump into the euro economy. He actually said:

“We will announce when we are ready. We think we are going to be ready for much of what we have to decide in October … if we are not then we postpone.”

This idea of lowering interest rates envisioned by Larry Summers, demonstrates that he knows absolutely nothing about economics. He has only read books and never rolled up his sleaves and had to work in the real world to be able to see what I am writing about. Why economic professors are ever allowed to play with the economy is beyond me. You would not ask someone to operate on your brain if they have never practiced surgery.

Trump Acts Like Businessman At Last


There is no doubt that the feud between Donald Trump and Republicans in Congress has been astonishing. Even some Republicans support trying to impeach him thinking he will be a liability in 2018. Trump is responding like a businessman and not a politician, Many of his supporters hoped for this and voted for him to drain the swamp.

The elite Republicans remain anti-Trump because they too like the swamp the way it is. However, the elite Republicans may find that turning their back on Trump may find things get crazier in 2018. Senate Majority Leader Mitch McConnell, said that Trump doesn’t understand how Washington works. What McConnell does not understand is the people are fed up with the way Washington works.

This all out war against Trump has been waged for months. Trump was clearly annoyed that the Senate failed to pass any Obamacare repeal  in any shape or form. While Trump and the elite Republicans were working from the same political play-book of Republican v Democrats, That suddenly changed. Trump is nowhere close to pushing through tax reform so here you have the two cornerstones of repealling Obamacare and Tax Reform that with a major majority, the elite Republicans cannot deliver either promise.

Trump did what he said he really was – a businessman who makes things happen. When it came time to choose sides between Democrats and Republican leaders in Congress concerning the debt ceiling and relief for Hurricane Harvey, Trump sided with the Democrats, which blind-sided the Republicans who had hoped to tie the emergency funding to an extension of the debt limit for more than a year, taking away a key bit of Democratic leverage until after the 2018 mid-term elections.

Trump was not about to let people suffer for political games. House Speaker Paul Ryan had already shepherded a “clean” version of hurricane relief through the chamber on Wednesday morning. He was running things his way and did not want the debt ceiling tied to the relief. Ryan blasted the Democrats for trying to link the two. But Trump looked at the hard-line Republicans and their total failure on the repeal of Obamacare while frozen in their tracks with tax reform. It has been the elite Republicans who have prevented Trump from achieving what he promised. That is highly unusual and one would expect that to be the Democrats not members of his own party.

 

You Have A Due Process Right to be heard – Not that Judges Must Listen


QUESTION: Is there anyway the People have a remedy when the court is corrupt?

ANSWER: No. The only remedy historically becomes a revolution. This is by no means restricted to the West. In China, the Judicial minister Chao Cuo (? – 154BC) who served under the previous emperor Ching-ti (Liu Ch’i)(157-141BC), earned the hatred of other ministers and the people after he introduced 30 new laws that were draconian. The outrage become so intense, he was dragged out and executed in his judicial robes in the town marketplace.

Ben Franklin proposed that judges should only be nominated by the private sector. His proposal was rejected only because even those who were framing the Constitution wanted government to still control the people. Had we listened to Ben Franklin, then the Judiciary would be a real check against abusive government. Lacking that, we have no rights whatsoever for any judge can sweep the Constitution aside with some novel new interpretation. You have a Due Process Right to be heard, but not a Due Process Right that they must listen.

Judges should NEVER be part of the government. If they are, politics intervenes and there never can be justice for all.

The Euro & the Dollar


Nothing has yet changed. We are still 500 points away from the start of important resistance. Keep in mind that the ONLY way to break the bank of the monetary system will be a STRONG DOLLAR – not a weaker on. People far too often make a serious mistake and believe that a strong currency reflects a strong economy. Trump wants a lower dollar to reduce the trade deficit, increase sales of US products, and hence create more jobs.

Europe remains caught up in the postwar thinking when the higher the currency the more they were recovering from World War II. A rising Euro is deflationary – not inflationary. It reduces the price of imports from energy to manufactured goods and food.

The counter-trend rally should have been in play going into the German elections due September 24th, 2017. Keep in mind that the Monetary Crisis Cycle begins NEXT YEAR not now. We have the correction in the dollar and the potential pull back in the Dow in dollar terms.

When we look at the Dow in terms of Euros, the peak was the week of 02/27 and we have not yet reached out target to retest the key technical support. This just takes some patience, but we MUST suck everyone in on these counter-trend moves in order to set everything up for the slingshot in the opposite direction next year.

U.S. Virgin Islands Authorizes to Seize All Guns Due to Hurricane


The U.S. Virgin Islands Governor Kenneth Mapp  of the Virgin Islands has just issued an order allowing the National Guard and the local government to seize any privately owned guns, ammunition and private property necessary to protect the island due to Hurricane Irma. Of course, there is no definition of what may constitute property that is necessary to “protect” the island.

The National Guard is not considered to be military by definition so there is no argument that he is authorizing a military takeover. I am assuming that is because the National Guard are regarded as a state agency, but they get 99% of their annual budget from the Federal Government and the patches on their uniforms say U. S. Army, not National Guard. This gives many a reason not to register their guns and ammunition with your local government.

DACA – one-size fits all?


COMMENT: I understand what you are saying about lumping everyone together under this DACA program. It looks like Trump heeded your warning despite the fact you say you do not advise Trump. Curious how this time seems he is listening to you as does China. What would you do if you were President?

JH

REPLY: If I was elected President, they would assassinate me before my hand hit the book. I do not advise Trump. If he listened to what I wrote or never read it, who knows. Indeed, President Trump scrapped Obama’s program sparing younger illegal immigrants from deportation on the grounds that a president does not have the power to take such action by himself. He then shifted the burden to Congress by giving it a six-month deadline to “fix” the program before it would expire. Then there is a Tweet, he wrote “Congress now has 6 months to legalize DACA” which Obama could never accomplish.  He then wrote: “If they can’t, I will revisit this issue!”

Nothing is ever one dimension. There are three main categories that should be distinguished.

(1) the children that were just pushed across the border alone to get under Obama’s regs. This is the group that has the far-right most upset. They should be returned. They were not brought here by parents but pushed across the border. Granted, most parents want a better life for their children. But this is not the way.

(2) students often come here for school and then get jobs and stay. This is typically those in their 20’s and they are not the ones normally sucking up tax dollars since they have to get a job to stay. This is a big segment of the group in question. They did not come illegally but had visas to enter. They then stay beyond their visa making them illegal.

(3) is the “children” who came here with their parents typically under 10 years-old and grew up here all their remaining lives. This is the group I am concerned about because this is the group that has often married Americans and had children. They have typically paid into Social Security their whole lives but never went down to swear in to get a citizenship when they often were entitled to one. Returning these people is disruptive for you are tearing apart families. Nobody considered the right of the other family members who cannot be deported.

Therefore, group (1) I have no problem deporting. That was usually the scam. We are not here to raise people’s children. The only exception should be orphans with nothing to return to. Group (2) is debatable since they are typically not children and are in their 20’s who typically found employment. Their employers should then sponsor them. Lastly, we have group (3) which should not be deported on the grounds that government has no moral right to split up families any more than they should be allowed to force a child to testify against a parent or a brother against a brother. If family does NOT come before the State, then we are no different from the Communism created by Stalin.

As I said, you can pass a law and say anyone who kills another should be sentenced to death. You can be blind and refuse to listen and determine that even killing someone who breaks into your home and threatens your family is no exception to the rule should you kill them. This is simply what I had to say about equity v law. There are exceptions.

It is NOT the right of the person being caught up in this, but the rights of their family members. We must be consistent. God and family come BEFORE Washington – PERIOD! If an American marries a person from overseas, then what happens especially if they had children? What about the human right to maintaining your family? You certainly cannot morally pass a law declaring that no American may marry someone from another country. If you simply marry a foreigner, that does NOT make them an American citizen. They may get a Green Card, but they are not automatically a citizen and that holds true for most countries including China.

 

 

The Guess Who, released their hit single, American Woman. In it, they warned fellow Canadians, “American woman, stay away from me.” Despite their song warning Canadians not to marry Americans, countless Canadian citizens have found love across the Southern border. Each year, large numbers of Canadians marry U.S. citizens and a significant portion of these cross-border couples opt to build their lives in the United States rather than Canada. When it comes to taxes, the government has no problem going after Canadians who had one American parent and demanding they owe taxes to the USA despite the fact they do not live in the United States. There are known as “accidental Americans” to the IRS tax boys.

Canadians are also considered illegal aliens unless they apply for a K-1 visa if they want to marry an American. The period from initial filing of the K-1 petition to issuance of the K-1 visa at the U.S. Embassy in Montreal (which processes all K-1 visas in Canada) often ranges from five-to-nine months and can take a year. Worse still, your fiancé cannot visit you in the USA while the petition is pending! A pending K-1 petition shifts the scales against an applicant for entry because the government now gets the right to determine if you are allowed to marry her. If she gets caught visiting you – marriage is forbidden unless you move to Canada and she will NEVER be allow to visit again.

A friend in Montreal sent his daughter to Philadelphia with her girlfriend to visit the Liberty Bell and such. He asked me if I would meet her at the airport and make sure she made it to the hotel he booked. Of course I said yes. She spoke primarily French. When she arrived in the States, she did not know the address she would be staying. She gave them my phone number and said I was there to meet her. Amazingly, they called my cell. They said oh you are here? I said of course. What’s the problem. He then grilled me and asked how was I going to communicate with her. Do you speak French? he asked. I responded: Parlez-vous français?

Of course he could not speak French. So just saying that shut him up. I then asked what’s the problem. I told them the hotel I was taking her to. I then commented, she’s Canadian! He responded: “She still an alien.”

Those against DACA should really look closer and define what is it you are disagreeing with? Is it all “aliens” even Canadians, just Mexicans, or those from Europe, Asia, Middle East? Are you really against everyone? It might help to just narrow your focus. Define the objective? The immigration issue in the USA is totally different from the Immigration Crisis in Europe claiming refugee status without proof and looking for hand outs – not work.

It’s not a question of being a liberal bleeding heart – it one of looking at the issue in detail rather than creating a policy of one-size fits all the same as if you killed an intruder into your home in the middle of the night. It is a matter of being ethically consistent that family should come before the state. As it now stands, the government can throw your children in contempt of court for life claiming they must testify against a parent regarding even taxes.

I am not a follower of Stalin – sorry! Family MUST come before the government

It’s the Gov’t I’m Afraid of – Not Nature or God


QUESTION: Martin,

 With Irma on the way, if it swings North by North/West you’ll be right in it’s path.

Are you leaving heading to high ground, with your Elderly Mom???

If you’re staying, Do you have enough water, fuel, food, generator/fuel???

all the necessities???

Just thinking.

from La

sh

 

ANSWER: Socrates is not located in Florida. Neither is the Blog site. Of course it is possible that communications will be disrupted. We will have to see. My mother is not here in Florida. We just celebrated her birthday on September 3rd. She just began her 100th year. I can only assume the government is jumping for joy and see me producing taxable income for more than the next 30 years.

 

As for me, I have plenty of supplies. I do not anticipate fleeing. I have survived whatever government has thrown at me. Someone gave me the strength to stand my ground. I do not think I have a confrontation with nature. But we will see. A reader sent me a T-Shirt. I would add It’s the government I’m afraid of, not Nature or God. If I can volunteer, I will if it gets bad.

“Uncle” – Russia’s Vladimir Putin Calls For “Talks” With North Korea…


More Bigly winning.  This announcement must be contextualized with timing and prior knowledge of discussions between Vladimir Putin and Xi Jinping.   Remember, the BRICS group (Brazil, Russia, India, China and South Africa) just held their economic meeting.

(link) 

Russian President Vladimir Putin has called for talks with North Korea, saying sanctions are not a solution.

Putin made the remarks Wednesday after meeting with South Korean President Moon Jae-in in Vladivostok, Russia.  North Korea says it detonated a hydrogen bomb in its sixth nuclear test on Sunday.

Putin, speaking in China on Tuesday, had condemned the nuclear test as provocative, but said that Russia views sanctions on North Korea as “useless and ineffective.” (link)

During last week’s BRICS forum, Xi Jinping and Vladimir Putin agreed with the larger principle that “denuclearization” of the Korean Peninsular was now an acceptable goal for China and Russia.  However, the U.S. didn’t flinch on announcing the possibility of UN Security Council sanctions beyond the DPRK, specifically targeted toward North Korea’s economic enablers (Russia and China).

That Trump administration approach puts Xi Jinping and Vladimir Putin in a precarious position on the world stage.  They don’t want to be seen voting against sanctions placed upon North Korea – it would remove their enabler masks.  They cried “unfair”.

Adding to the economic pressure, after the BRICS meeting India’s Prime Minister Modi essentially stated he was exiting the assembly due to significant geopolitical conflicts with China.  President Trump and PM Modi have been forming an economic alliance as the U.S. looks to leverage India as a possible economic replacement trade partner for China.

Again, the request by Xi Jinping for “six party talks” (China, Russia, N-Korea, Japan, S-Korea and the U.S.) is the signal everyone should be looking for to determine when China finally acquiesces to the geopolitical economic pressure President Trump has artfully assigned.

This announcement today by Russia’s Vladimir Putin, after meeting with South Korea’s Moon Jae-in, is a strong indication Putin and Xi Jinping have discussed and are likely to make that announcement.  Beijing knows such a call by their President would indicate weakness, and it makes sense China would utilize Russia to break the ice and allow the appearance of their failed economic strategy to fall under the guise of diplomacy.

Accept this call by Russia for what it is, Russia and China crying “uncle”.

President Trump winning.

Remember, China is seeking conquest through economic power. China must be confronted economically. China must be defeated economically. The moment China sees economic defeat, it will act differently. China will eventually call for six party talks.

Communist Beijing has boxed themselves into this inescapable trap.  The reason they keep authorizing Kim Jong-un to take action is simply because China has no alternative leverage to use against President Trump.  China has nothing in their economic arsenal they can use to hit back against President Trump, so Beijing keeps using North Korea in an attempt to create leverage.

However, President Trump doesn’t play along with the bluff, he knows every card China is holding. Trump knows China has no substantive economic leverage against the U.S., and Trump also knows China has boxed themselves into this cycle.  It’s a ridiculous three step process.

¹China tells DPRK to do stupid thing.  ²DPRK does stupid thing.  ³Trump hits China with economic punishment for stupid thing.

This cycle has been ongoing for months now, yet the media apparently doesn’t notice it. Each time Kim Jong-un does a stupid, Donald Trump slaps Xi Jinping.  The only way out of this cycle is for Beijing to concede and lay the DPRK defeat at the feet of Kim Jong-un.  The conceding will evidence itself when Beijing inevitably calls for ‘Six Party Talks‘.

President Trump can play out this action/response dynamic as long as it takes to reach economic victory. There is no substantive downside in the economic battle for the U.S.

Everything is proceeding according to the intensely predictable plan:

AUGUST 13th […]  So we can safely predict that sometime in late fall, most likely before the ASEAN visit timeline in November, President Trump and Rex Tillerson will be engaged in a new round of Six Party Talks, initiated by request of the increasingly desperate China.

China will structure the DPRK talking points to set up the meetings.  This is a part of how China is allowed to save face and sets up the magnanimous Panda narrative.

The six party talks will be essentially a Marshal Plan of sorts for North Korea.  Japan, South Korea, The United States, China, Russia and North Korea will enter into a set of negotiations publicly sold as engaging in diplomacy and reducing tension.

President Trump is going to win this geopolitical battle against China/N-Korea through the effective use of economics as geopolitical leverage to ensure national security objectives.  Trump will also position Xi Jinping as magnanimous panda as part of the plan.

However, the funny thing is, the media, having paid no attention to how President Trump has utilized economic leverage for months, will be oblivious to how this victory was actually achieved.

The Rising Tone of Private Equity v Public


QUESTION: Dear Martin,

With the U.S. stock market hits all-time highs, some sources say a lot of smart money is pulling out of the stock market and piling into private equity. One of the reasons being increased regulation making many companies choose to avoid the hassle to go public and stay private.
The thing is, very few small investors have access to private equity. Could the remainder of the Private Wave develop in private equity rather than in stocks?
Thanks for all the advise,
ANSWER: There is a major thrust toward private equity. We have been getting serious offers to come in now asking to hold off on going public. The amount of money in cash looking to go someplace is really staggering to put it mildly. If it were just a question of money, yes it would be tempting. But personally it would require a good fit – not simply money.
With all the buy-backs over the years, there is also a growing shortage of stock. This is one reason why the market has a lot more to go on the upside broader-term, with the near-term correction put aside.
There is no question that we suffer from serious over-regulation and if we were to go public it will be in Asia – not the USA. From a personal perspective, I see where you are coming from. Even the Hollywood movie seems to be a vehicle that is best to open up to investors to finance and many people want to join in for the profits and tax-credits.
Things are changing, indeed. Private equity is rising. Even a friend just sold his small business to a public company who sought to raise funds for the purchase and they were shocked to receive 3 times what they sought to raise in offers. It clearly seems that those who are first get in.

Opening the Door to September


QUESTION: Mr. Armstrong; I have followed you for many years. I have to say, I am truly amazed at what your computer projects. You have never missed a move yet. Here we have the rally in gold into September, yet the August high stands in the market, and even Korea went nuts on your target date and your next target for the 11th concerning Korea I do not want to think what is going on.

I understand you say you never pursued this research based upon a preconclusion but bumped into this in the middle of the night. My question is this. Do you think what you have discovered is somehow a mysterious force that just compels things to happen on target? It’s hard for me to put into words. Do you have any idea why all these things happen when you forecast they will happen?

Definitely see you in Orlando.

PH

ANSWER: I get this question a lot. I really do not know what is the answer. We clearly respond to events the same today as humans did in Roman times. Politicians never change and are always greedy and will exploit the people. If this was not true, then we should all be speaking Babylonian.

I can see that is you do X then Y will always follow. But this is some strange complexity that is far beyond what people are willing to expect. The government simply said I manipulated the world economy. Now that’s really nuts. All I have done is comprehend the inter-connectivity and mapped it out with TIME.

There is a very interesting regularity to everything and it is truly predictable. Yet the majority still prefer to blame me (messenger) rather than stop and explore that there is a mysterious order of complexity far beyond comprehension. The consequence of that (Invisible Hand) runs contrary to politicians who try to manipulate society in the spirit of Karl Marx. So if I am right, that means a politicians can not keep their promises for they cannot control the world economy.