The Economic Confidence Model


From Armstrong Economics Models

ECM-Wave-2011-2020The business Cycle is something everyone admits exists, yet they refuse to accept that it can be defined and forecast with accuracy.  The future to most seems to be an intangible part of time itself.  It has no shape, no definition, no substance, yet politicians claim vote for them and they will force the future to comply with your desires. Nonetheless, simultaneously they argue that the future cannot be measured for we do not know its limitations or its boundaries. The future is very much an intangible, yet not when it comes to soliciting votes.

Fortuna-2Yet is it true that we do not know whether there lies ahead thousands of years or if tomorrow may exhaust the supply of time held within future’s grasp. The Roman goddess Fortuna was pictured holding a cornucopia in one arm with the other on the rudder of ship symbolizing she could change the course of your future any time she so pleased. Only the past and the present are tangible. They can be measured, studied, written about, philosophized about or even ignored for that matter. Yet the past and present remain the quantified tangible part of time itself for they are the only surviving evidence that time even exists.

Burns Arthur

Nevertheless, there were two former Federal Reserve Chairmen Arthur Burns and Paul Volcker have concede that the business has defeated all attempt to manipulate society. Paul Volcker even called it the Rediscovery of the Business Cycle The entire theory that government can steer the economy has been proven to be so wrong it is no longer funny.

Throughout recorded time, man has pursued an unrelenting search of some method, some scheme that would steal the very secrets held captive by the future. Mankind’s pursuit of the future has not only caused him to search the far corners of the world, but that of the universe as well.

Delphi-5
In ancient times, men of celebrated wisdom and stature would go to great lengths to travel from the remotest parts of the Hellenistic world to listen to the riddles spoken by a virgin in the lofty mountain tops at Delphi. The tradition of consulting the oracle at Delphi persisted throughout the centuries. The oracle of Delphi compelled even the emperors of Rome hundreds of years later to embark on that very same pilgrimage in search of the answers to the future.

Within every society, man has sought after the illusive secrets that he has envisioned being held captive in a golden cage by the future. Human kind has sought not merely oracles, but fortune tellers, sibyls, soothsayers, seers, mystics, and some noted charlatans and has listened to the interpretations of everything from tarot cards, the entrails of animals they kill, the flight of an owl, to the path of a comet in the night sky. The secrets of the future have forged the human soul into the supernatural.

From a purely objective viewpoint, humankind has stumbled upon curious means that have had some success. Astrology has divided man and his very personality into twelve sun signs. Upon close inspection, although this science is far from being completely accurate, one will notice a sense of striking reality. Parts of this are amazingly accurate in assigning traits and even predicting the future in regards to an individual’s emotions.

Too often we are compelled to make fun of or shun new concepts. Many people believe completely in the occult and will testify to the accuracy of tarot cards and astrological charts. It is said that Napoleon and Hitler both directed their many battles in coordination with the readings and predictions derived from the stars. Such methods obviously are not completely accurate or today we would have been ruled by Adolph Hitler, Jr. or Napoleon X.

 

But nevertheless, there is some sense of truth that lies hidden within the stars. Is it possible that man did indeed stumble gracefully upon some mystical force? The universe itself was, after all, conceived upon a pattern of cycle. If it were not for this cyclical pattern, we would be unable to predict such common place events as winter, summer, spring and fall. Even everyday events such as watching the weather on television comes from a a study of its past or cyclical movements. With the study of the past, man has attained some success in forecasting the future.

The key to comprehending the Global Economy lies in the realization that we are not alone. Everything is connected in an intricate dynamic nonlinear network where the slightest change in one region can set in motion a ripple effect of dramatic proportions around the world. Understanding this dynamic nonlinear global network is the first step in restructuring government and our idea of managing our political-social-economy.

The primary mistake many make with the Economic Confidence Model (ECM) is assuming it should be a perfect model for the stock market, gold, or some other market. It is a global model and does not track any individual market. It is tracking the phenomenon of international capital flows. There is a shift back and forth between PUBLIC and PRIVATE investment trends. For example, the wave that peaked in 1929 was a PRIVATE wave where people had great confidence in the private sector. When the crash came, we turned toward the government creating a more conservative wave of PUBLIC investment where bonds do better than stocks.

The peak of that PUBLIC wave was marketed by the peak in interest rates during March 1981. Confidence shifted back to the PRIVATE sector and the Dow Jones finally broke through the 1,000 barrier. The takeover boom began as stocks had been ignored during the PUBLIC wave and actually bottomed in 1977 from a book value perspective. The takeover boom was caused by the realization that you could buy companies, sell there assets, and double your money. Stocks were seriously undervalued.

Capital concentrates into a single region and then into a single market. There is a cycle to this as well from within a region such as the hot market will be real estate, bonds, stocks, commodities, and then back to real estate. What makes a bubble is this concentration of capital. However, every market retains its own cycle and it is when that cycle lines up with the ECM that we get the big booms and busts. Gold has a 8 year cycle that is fractal building into a 64 year cycle. It peaked in 1980 and declined for 19 years until its model turned in 1998. Because gold has been used as money periodically, you must understand that in a gold standard, inflation means gold declines, whereas it is the opposite during a free market. Therefore, while the 64 year model shows an idealized peak for 1998, it is a turning point rather than a particular high of low. The low in gold at that time sets it up for its ultimate high against government 64 years later.

The key to understanding the ECM is this global capital concentration. Hence, 1929 was a concentration of capital in the USA as money fled Europe and correctly so since they by and large defaulted on their national debts in 1931. This drove the dollar to historic highs, confused politicians who then adopted protectionism, all because capital was fleeing. Today, capital is fleeing Europe in fear of defaults once again.

Its proper use of the ECM is to understand that it is NOT a model based upon a single market and it should not be attempted to force fit this model to any individual market. The key is to watch the individual market that is lining up with the ECM and that is where the most intense capital flow will be moving.

This is why there was a bubble top in US in 1929 and 1989 in Japan. It is global capital flows. Each market has its own cycle that is separate and unique. It is when that individual market lines up with the ECM that you get the big moves.


The 2007.15 turning point picked precisely to the day the peak in the real estate indexes. That was the real turning point. The pressed called it Armstrong’s Revenge. But this is simply how these function. Capital concentrates into a single sector within a single region. It is that concentration of capital that makes that market explode.

The 8.6 year frequency is fractal in nature and it may indeed work from different dates other than the formal dates we show on the ECM. This is a frequency that is inherent in everything and is fractal in nature. Its proper use is determining the shifts in capital flows to yield the boom bust cycle in the economy (global investment). It is by no means a universal model for every market. Cycle duration in Agriculture tend to be shorter and more volatile because they are also lined up with weather. The markets in financials (stocks & bonds) tend to be the longer than commodities, with the longest cycle duration being real estate.

This cycle has been present even in ancient data. So it is by no means geared to a single market nor should it be presumed to be a perfect model for an individual market. Each market has its own cycle. These are what we show in the Forecast Arrays which are not based on the ECM. It is the correlation of the individual market cycles to the ECM that we discovery where capital will flow to next.

By no means try to use this for a individual market unless that market lines up with the ECM. As you can see, all the things that turn with the ECM over years is based upon capital concentration. It is inherent within the economic structure that we live.

Bitcoin v Gold


QUESTION: Do you think that Bitcoin will replace gold as some people claim it is some new reserve asset?

Thank you for being the voice of reason in the middle of all these people p[reaching their own position.

GD

ANSWER: That is really a bizarre question. I do not see how that is possible. As far as it becoming a reserve asset that surpasses everything else, I would have to say that is not plausible. These are proposals propagated clearly by retail people involved in the conspiracy world. Even if we look at the German hyperinflation, the PRIMARY assets to survive was real estate. That became the backing of the replacement currency.

 

Money itself is NEVER a store of wealth. It rises and falls against tangible assets. I have stated plenty of times that Bitcoin is a trading vehicle — nothing more. Just look at the chart. This fluctuates like everything else. That alone proves it will never be some mythical store of value or reserve assets. Our Energy Models have turned negative so it has squeezed out most of the excess which would allow it to make a rally if it exceeds the Weekly Bullish Reversals (see Socrates report for further details — available to subscribers only).

It does not matter what you are talking about. ABSOLUTELY NO instrument will ever be the main “reserve asset” for people will always disagree. There will be people who cling to gold, others to stocks or real estate, and then we have the sublime fools who will hold government debt. You will never convince everyone to create a single reserve asset.

These are usually the rantings of people unfamiliar with how the world economy really functions. Even central banks hold dollars but in bonds to earn interest. They do not hold physical paper dollars. When they were leasing out gold to earn some income, these same people accused them of suppressing the market in a conspiracy.

Institutions need to earn some income. This is why they do not hold gold. Gold shares they can’t hold but bullion must be lent out to earn income. How are they going to hold Bitcoin that pays no interest and fluctuates like any other commodity?

What these people preach sounds great to the retail market who is just looking to make capital gains. But institutions cannot function that way. Pension funds need income to make payments. They can no more hold Bitcoin than gold bullion in a vault without income.

 

Sketchy Cesar Sayoc Pleads Guilty to Federal Charges of Mailing “pipe bombs”…


Everything about last year’s headline story just two-weeks before the mid-term election was weird; including the refusal of the FBI to state what ‘specifically’ was the material suspect Cesar Sayoc was accused of using to create his Acme looking pipe bombs.

[Full Indictment Here]

You might remember: FBI Director Christopher Wray outlined during his remarks that the devices consisted of PVC pipe, clocks, batteries, wiring and “energetic material that can become combustible when subjected to heat or friction”.

The FBI director went out of his way to state: “these were not hoax devices.”  The DOJ then moved to seal all court filings and the case against the nut continued behind the curtain of ‘national security’.  Suspect Cesar Sayoc was scheduled to go on trial this summer on charges relating to the pipe bombs.  However, today he entered a guilty plea before a federal judge in New York.

(Via Washington Post) Cesar Sayoc, the Florida man accused of mailing explosive devices to more than a dozen politicians and media figures who have been critical of President Trump, pleaded guilty Thursday in federal court.

Sayoc, 57, was arrested and charged in October after a series of possible explosive devices were sent to former president Barack Obama, former secretary of state Hillary Clinton and the news network CNN, among others. Officials said he sent a total of 16 devices to 13 people across the country.

On Thursday, he appeared in a Manhattan court room and read from a brief written statement in a quiet, raspy voice. Sayoc acknowledging that he created the devices and sent them in the mail.

“I knew these actions were wrong. I’m extremely sorry,” Sayoc said. He briefly lost his composure at one point while speaking, prompting his attorneys to rub his back.

Responding to a question from U.S. District Judge Jed S. Rakoff, Sayoc said: “I was aware of the risk that they would explode.”

Sayoc’s guilty plea had been anticipated since his court docket showed last week that a pretrial conference scheduled for Thursday had been changed to a “plea” hearing. He had previously pleaded not guilty. (read more)

 

Thoroughly-Modern Bernie: Sanders Campaign Hires Women…in 2019!


Published on Mar 21, 2019

SUBSCRIBED 122K

Bernie Sanders’ presidential campaign crowed this week about hiring women for 10 of 15 newly-announced staff positions. You recall that presidential candidate Mitt Romney got roasted in the Left-wing media when he said his staff had received “binders full of women” as candidates to staff the executive office when he was governor in Massachusetts. Why would Democrats even need to brag about this in 2019? Shouldn’t they have been doing this since they aligned with feminists in the 1970s? Right Angle is a production of the Members at http://BillWhittle.com

 

How All-Powerful Captain Marvel Disempowers Women for Feminism


Published on Mar 21, 2019

SUBSCRIBED 122K

An all-powerful female character, Captain Marvel, actually disempowers women when the writers were hoping to strike a blow for feminism. Bill Whittle, Scott Ott and Stephen Green, explore the importance of weakness and struggle in the hero’s journey. Having a “Mary Sue” character — like Capt. Marvel or Rey in Star Wars — provides precisely the wrong inspiration for young women. Right Angle is a production of the Members at http://BillWhittle.com

 

The $20 Gold Coins Walmart Refused to Accept as $20


As time passes, the newer generations lack any understanding of gold standards or even the events of 1971. There are many people who judge the future of gold based upon their belief that it is money. However, like religion, human society is fragmented and certainly neither of one faith nor one political party. While there are YouTube videos showing people preferred a chocolate bar to a bar of silver, it always comes down to what we believe. The younger generations do not even remember silver coins no less the role of gold. This is producing some interesting events.

A woman took a handful of $20 gold coins to pay for groceries at Walmart. They would not accept them, even at $20. She was told to take them to a bank to exchange them for real money. She did and the teller gave her the face value. The incident sparked a hunt for the woman since a $20 gold coin was worth about $1,000 instead of $20. Here we have a woman who had no idea that the gold coins were worth more, a Walmart clerk who refused to accept them for $20, and a bank teller who at least gave her $20 each. A very interesting problem which would have been much worse if it involved bullion bars.

Are Bonds Preferable to Stocks in a Crisis?


QUESTION: There are a few people coming out claiming the stock market will crash so buy bonds even though you will lose money. How can people keep calling for a mega-crash so long with constantly being wrong since 2010?

Thank you for your reason

NR

ANSWER: These people are still living in a world that is defined by the event of the Great Depression. Even Germany forces austerity upon Europe because they do not understand the events behind their own hyperinflation and stupidly assume it was merely an increase in the supply of money that caused the event. Nobody seems to be bothered to ask which comes first – the chicken or the egg?

Here is a chart of the stock market with the US Long Bond. Andrew Jackson paid off the national debt in 1835. President Jackson also shut down the Second Bank of the United States on Sept. 10th, 1833. Jackson announced that the government would no longer deposit federal funds in the Second Bank of the United States, which was a quasi-governmental national bank. The stock market peaked in 1835 and began its decline without a central bank. Then during July 1836, Jackson issued the Specie Circular. Under this act, the government would only accept gold or silver in payment for federal land.

Jackson’s Bank War closing down the Bank of the United States was personal because they funded his opposition. By shifting deposits to state banks, Jackson set off a major crisis undermining the entire monetary system. He effectively devalued all the circulating currency in the country with one law – the Specie Circular. Suddenly, there was a run on gold. The Panic of 1837 unfolds as New York banks suspended all withdrawals of gold. Jackson created massive austerity, but he had shut down the national debt as well. This was a very complicated financial crisis with an interesting mix of events combining together.

There were NO federal issues of paper money and the first paper dollar to be issued by the government did not unfold until 1860 to fund the Civil War. Therefore, Jackson effectively canceled all paper money by refusing to accept it and this resulted in a gold panic forcing the banks to suspend all payments. People were rushing to banks to exchange their paper currency for gold and banks could not meet the demand and suspended all demands for gold.

When federal bonds resumed in 1842, they had declined in value as interest rates rose. There was no flight to quality, only to gold given there were no federal bonds. This is when several states moved into default permanently upon their debt. Therefore, the Monetary Crisis Cycle that hit then was felt in the state and local levels – not federal. The Monetary Crisis Cycle that hit in 1931 resulted in widespread sovereign defaults outside the USA.

Each cycle that hits is slightly different characters and reasons. I highly warn against buying any sovereign debt whatsoever. Any federal debt to hold must be short-term no more than 90-day paper. In the case of the Hard Times of 1837-1842, the stock market crashed in terms of gold because all money was effectively canceled. Paper money collapsed as notes lost their legal-tender value. Thus, only gold rose in value as the medium of exchange thanks to Jackson refusing to accept anything but gold.

This time around, bonds are legal tender so that is the money that will decline in value far more than anyone expects. Both the Bank of Japan and the ECB in Europe have wiped out their bonds markets for they have been the primary buyer of government debt which they cannot now resell.