DEFLATION comes as governments try to collect more and more taxes. This shrinks the economy and makes it vulnerable it collapses. INFLATION comes when CONFIDENCE is lost in government. Then money declines in value and assets rise. It is always a confidence game.


The Real Reason Inflation Unfolds

Confidence-wide

QUESTION: Dear Mr Armstrong,

Thank you EVER SO MUCH for everything that you do even for ordinary folks like me who are not traders but just want to have a good grasp of where to put their money. I have already learnt a great deal by merely following your blog throughout the last two years, and I’m eagerly anticipating the investor level of Socrates. Merely from looking at how it’s supposed to work on your website is mind-blowing! Thanks for the incredible work that must go into this amazing project.

Concerning the pressure exerted by banks on Romanian politicians I find it really intriguing that these days banks usually (at least, here in Germany) may put stipulations in their mortgage contracts giving them the right, under certain circumstances, to re-evaluate the value of your property, if this has increased in terms of your currency, and to adjust your mortgage accordingly. Interestingly, they weren’t allowed to put in such stipulations before the Euro was introduced. Clearly, the banks want to have it both ways, so I agree with you when you say: “The bankers want no risk and will screw the people every time. This law is fair as the banks sold mortgages without guidance.”

What still confuses me sometimes is that assets may rise even in a deflation, but I suppose that’s due to an asset inflation then which is to do with the political climate calling for a flight to assets, correct?

Yours sincerely,
TN (Germany)

ANSWER: Correct. The banks did not believe in the euro. Even the German Central Bank was against the euro. They could not speak out back then so there were people inside who were feeding us all the inside info to get it out. We published a lot back then and the commission even attended our conference in London in 1997. This was, in part, the primary reason for that hidden clause which never got much press. Trying to cope with pricing cross currency has always been a huge problem for corporations as well as banks. Not every mortgage has such a clause. However, if a country were to exit the euro, the mortgages would most likely be revalued by political dictate rather than a free market.

We can still experience “asset inflation” during a deflationary move for one of two reasons. First are commodities that can rise due to a sudden shortage in supply, such as in an agricultural produce when a crop is destroyed for some reason. Second, asset prices can rise during a deflationary wave because taxes are rising and banks become untrustworthy. Then money seeks merely to park. It is not a speculative boom whereby people are expecting to make money on a rise. This is the typical capital flight to quality where assets replace government bonds.

declsilv-ma-waterfall

3-Hoard

The typical assumption is that Rome went through hyperinflation during the 3rd century simply because the coinage was debased. Yet, hoards of the debased coinage are common during this period. We rarely see hoards of the debased mixed with the old silver coinage. The hoard we purchased covered the period of 250 AD up to 285 AD. We bought this hoard for study because it was perhaps the widest span of time of any hoard. Most seem to be 270-285 AD period. This demonstrates that they hoarded even the debased coinage. Therefore, it was beyond merely debasement. This was the massive invasions of barbarians at the gates.

Aurelian-Wall-1R

If you travel to Rome, you will see its walls are largely intact in many areas. They were constructed by the Emperor Aurelian (270-275 AD). Banks could not be trusted and there was a question of whether government could even defend its people. It was not merely the debasement. The debasement became necessary because of massive hoarding which created deflation. The inflationary wave came AFTER the contraction bottomed. This is when we see the wage and price controls of Diocletian (284-305 AD) issued in 301 AD. This curiously was 51.6 years after Trajan Decius (249-251 AD) came to power. Decius was the first Roman Emperor to be killed in battle by the Goths. This was the start of the decline in CONFIDENCE of Roman society when they realized they were vulnerable for the first time.

Confidence-2

The deflation comes as governments try to collect more and more taxes. This shrinks the economy and makes it vulnerable long-term until it collapses. The inflation comes when CONFIDENCE is lost in government. Then money declines in value and assets rise. It is always a confidence game.

The Obama administration has started a death spiral of sucking the life blood out of the economy though more and more taxes which will not stop until they have 100% og everything!


The Solution – Debt & Taxes

US Debt 2015 Int Expenditures

QUESTION: Mr. Armstrong; I was given your Solution DVD for Christmas by my son. I just began reading your blog for days. This has been an eye opening experience and it has even opened a dialog with my son. So you can teach old dogs new tricks. So my conclusion is that we can step ahead and that we may not overcome death, but taxes do seem to lead nowhere but more taxes. Do you think they will adopt your solution?

ANSWER: We have sold many SOLUTION DVDs on Amazon. It seems to be a great gift to get others to pay attention. Glad that worked with you. The more people who  watch this and at least enter the debate, the more likely we can see this solution take hold. But keep in mind, this solution would ONLY emerge after we crash and burn and the current system becomes unsustainable.

We are spending per month, even at these low interest rates, over $20 billion in interest per month on average. What happens when rate rise? The system starts to exponentially collapse. Our problem will be that they are increasing taxes and becoming abusively aggressive in tax enforcement, they they are destroying exactly what made the world economy flourish.   But all they care about is holding on to power so they will continue to screw down on society in their own self-interest.

german-debt-int

USIntAsPTotal

It does not really matter looking at debt as a percent of GDP for the GDP includes government expenditures and fails to realize that it is extracting a portion from society to fund itself which wastes productivity since government does not create anything. Therefore, if government is 100% of GDP as in communism, 33% to 50% in socialism, then the debt to GDP ratio becomes delusional. All countries are in trouble because they are operating on a system that is unsustainable.

Full Story on What’s Going on In Oregon – Militia Take Over Malheur National Wildlife Refuge In Protest to Hammond Family Persecution…


Obviously this is a travesty and against all principles of the government of a free people. There will be more and more of this kind of take over of all the private property of the country in support of the implementation of UN Agenda 21 approved by G.H. W. Bush and implemented by Clinton. Sadly, this will not be the last of these actions taken!

Freedom verses Tyranny


In the book The Five Thousand Year Leap written by W. Cleon Skousen we are shown how there are really only two forms of government — Total Freedom (Anarchy) and Slavery (Tyranny) and for thousands of years we experienced both in more forms than ever thought possible. These experiments in rule spanned every race, culture and continent on the planet and have been written about and theorized about by the best of our intellects thousands of times such that we know all the variations all the plus all the minus and all the ways that they can go very bad — the bottom line is that men are corrupt and will always find a way to enslave us; if we let them.

Tranny or Anarchy

On the left is The Choice Between a Female Slave or a Vase’, 1902-1903. From Penrose’s Pictorial Annual 1902-1903, An Illustrated Review of the Graphic Arts, volume 8, edited by William Gamble and published by AW Penrose (London, 1902-1903). On the right the other picture is of a woman, living in a hut in the woods, who is outside of any political system and therefore totally free.

The Protestant Reformation in Europe in the 16th Century opened up the path to alternatives to slavery or anarchy and 200 year later in England and France philosophers such a John Locke, Adam Smith, Jean-Jacques Rousseau, and Montesquieu developed principles that lead to the ‘founders’ of the United States to develop a unique series of documents; The Declaration of Independence, The Articles of Confederation, the U.S. Constitution and the Bill of Rights. The purpose of these documents was to try and find a point somewhere between anarchy and tyranny that would give the citizens both a lot of personal freedom and a governmental system that was made hard to take that freedom away.

The first U.S. Congress started its first 2 year term in 1789 and that system worked so well that 180 years later American Astronauts walked on the moon and not all that many years later American probes were on Mars had visited Jupiter and Saturn and left the solar system to visit interstellar space. Fifty six year later no one else has been able to duplicate that accomplishment. No country in history and had ever made so much progress so quickly than America. But after creating the good life we forgot how we got there and we allowed the dark side to creep in and steel our hearts and minds and drive us back from whence we came.

Moon and Mars

But we were warned as Alexis De Tocqueville told us in Democracy in America published in 1835 if we were not careful those that desire the power would find a way to take it back as they were very cleaver and had all the time in the world to accomplish their goal. And sure enough by 2010 in his book The Ruling Class Angelo M. Codevilla told us about what was happening in America and how the wantabe ruling class was taking away our freedoms by nullifying the U.S. Constitution though judicial and legislation manipulation. The following painting by Jon McNaughton The Forgotten Man shows this.

the_forgotten_man

Now at the end of 2015 what we have is the Republican Progressive (GOPe) faction and the Democrat Progressive faction both being for the same things as their donor base is almost the same. The two together are the Washington establishment which together with their donors is now forming into the American Ruling Class; that has no use for the Constitution or the common man (vulgarians). Some also call this the New World Order (NOW) and if you throw in the like minded leaders for the European Union yes that is what this movement is. Whey these wantabe rulers have tried this again is a surprise as it has never worked before and better men then those now in power have always failed in the end.

The GOPe did not really want to win the presidential election in 2008 or they would not have run John McCain and they did not expect to get control of the Congress two years later and so after 2010 and 2014 they didn’t know what to do as they wanted the same things as the Progressive Democrat’s did even though their base didn’t. Prior to being forced into having a majority in the Senate the GOPe excuse for not doing anything was that they didn’t have control of the Senate; with that changed in 2014 their excuse changed to Obama would veto reforms so why bother. The 2014 election really worried the GOPe because if they ran a good candidate in 2016 they could win the U.S. Presidency and that would be a really big problem for the GOPe and their friends the Progressive Democrat’s because there would then be no possible excuses for not making changes, so a plan was need to prevent that from happening.

The plan of the Ruling Class after 2014 was first they would run Hillary for President and she would complete the fundamental transformation (the De-facto elimination of the US Constitution) that Obama started. The GOPe would run Jeb Bush who was not expected to win as the GOPe would run a campaign much like Mitt Romney did in 2012. That way the Congress could be neutralize as Hillary could veto any real change and it would be very unlikely that the Tea Party faction could get the GOPe up to 60 votes in the Senate, in fact the GOPe would work to make sure that didn’t happen. This deadlock would then be used to not being able to change anything and therefore their plan would be complete by 2020 and it would be impossible to change; so their transformation would be complete and the republic would be gone.

When Trump entered the race for the Republican Party and started to win in the polls everyone in the Ruling Class went into a panic and an all out attack was started to stop him. Karl Rove’s operation hummingbird, Super PACs adds, rule changes in the primaries, manipulated polls – where possible, and control of the moderators in the debates as we have seen were focused on all the outsiders: Trump, Carson and Cruz in their attempt to eliminate them. Bush was left aside and/or given soft ball questions so he wouldn’t be hurt and could therefore come back later after the outsiders were eliminated. The plan of the GOPe has not worked for the citizens have woken up and can see though the manipulation of the wantabe rulers.

So far the vulgarians have been able to keep the Ruling Class at bay but that is only through to use of the web and talk radio, if that gets shut down it will be hard to communicate and The Ruling Class could win. Trump does have a lot of money and he could counter this free speech blocking but at that level it would be borderline revolution so let’s hope we don’t go there.

Trump make americ great

Donald J. Trump has tapped into the anger of the American people, the vulgarians, who know and feel that all they have fought and died for will soon be gone. A Grassroots movement by the vulgarians has started with signs of protest appearing in public in support of Trump.

This is the way that non-violent change is made — the people will be allowed to have their say or there will be hell to pay.

trump signtrump road sign

trump truckers

White House Leaks Obama Intents For “Executive Action” Firearm Restrictions…


The final “transformation” of the “OLD” US into the “NEW” US required that the 1 amendment be nullified and to achieve that the and prevent civil war the 2nd amendment ‘MUST” be eliminated and “ALL” the guns confiscated! Only then will the the merger of the COPe and the RNC be completed and we will have a system almost identical to that of China which is what they want.

How you lose money in the market


False Moves & the Force Behind Them

bulls-bears

QUESTION : Mr. Armstrong,
I’ve heard you refer to “the false move”, and have witnessed it myself. I know there is no conspiracy to ruin my day nor deter me from trading. I was just curious, what causes this?

Thank you,
H

PS-Merry Christmas!

ANSWER: The real energy within a market is always to trap the majority for then they lose money and it forces them to cover their position. If 90% of the people are long, then any news can set off the collapse. If you scare the majority, there will be no bid when you try to sell, which results in a flash crash.

Likewise, the lows are made by excessive short positions. Again, something takes place and then the news sparks a short-cover panic. Likewise, because the majority are actually short, they are forced to cover and reverse the position which creates an abrupt swing to the upside.

DJ2731-W False Move

Therefore, markets always make the false move for that is the sling-shot that propels the market in the opposite direction. This is simply the REQUIRED movement of markets to further an important directional change.

We may see that FALSE MOVE yet with a sling-shot on a very major scale. This is the BIG SHIFT that will set the stage for markets to align in order to prepare for what is looking to be the collapse of Western Governments & their Monetary System that is now way out of control. The closings today are an omen of what is to come.

Clinton Email Release – George Soros Regrets Not Supporting Her Over Barack Obama…


The Dark side hasn’t won yet, And there are a lot of us that will not let them win against what they want with total world control bu the likes of the most evil among us like Soros.!

OBAMA’S EXECUTIVE ACTION DESIGNED TO OVERRIDE VISA CAPS


Obama maybe the 21st Century Hitler but the worst of it is that the GOPe are Obama’s Brown Shirts.

Trey Gowdy Endorsement of Marco Rubio Highlights The GOPe “Amnesty Masks” in Congress…


Gowdy showed his true colors as a RINO when he didn’t take down Clinton in the Hearings. There was enough out there to do a much better job than what was done and the reason that it wasn’t is the GOPe wants Hillary to win. They know Jebb can’t beat Hillary and they, the GOPe, DO NOT WANT TO WIN THE PRESIDENCY! The reason is that if they did there would be no excuse to fixing things, with Hillary in things will be the same as they are now and that means they (the power elites) have destroyed the republic and achieved their objective of total power over the country!

Obama Executive Action on Guns 12/31/15 Obama to announce new executive action on guns


The Government is afraid of its citizens and so it must try to take the guns: the issue is will the citizens give them up knowing what is coming? Given the number of guns that there are its unlikely and could trigger a civil war which is exactly what Obama wants. The military could stop all this if they wanted to and it would be legal! I know what I would do if I had stayed in and made general, but them I’m old school and we are a dying breed.