Armstrong Economics Blog/Banking Crisis Re-Posted Mar 16, 2021 by Martin Armstrong

There seems to be a HUGE gap in what people think about cryptocurrency. The European Central Bank (ECB) is working on a scheme to launch “digital euro central bank money” as soon as possible. Many economists praise the project as an “innovation,” as an important and indispensable step in an increasingly digitized world. But economists typically always advocate socialism without ever actually contemplating what is its final destination. The socialist press which has engulfed most of the mainstream is also obvious to what is the final destination.

The ECB has made its intentions known, as has the Federal Reserve, that in declaring a digital currency, both have stated it will be a currency accessible for everyone, robust, secure, efficient, and compliant with the new agenda. What is overlooked is this is to be a central bank currency and they have been quietly suggesting that they will even take direct depositions from non-banks. Nobody seems to really understand what that means. As usual, they simply glass over the statements. In truth, it is circumventing the banking system for they are also not about to bail out the banks in this new world because they are also contemplating the end of government debt. If the government does not borrow, then who needs the bakers?

Mainstream media also refuses to address privacy concerns. To be very clear, the path to digital currency is also one to total surveillance by a state regime that will accelerate considerably in this world where they can pick your face out of a crowd of a thousand.

Anyone who thinks a digital euro is somehow better because it is not fiat money, well it is simply fiat money on steroids. The ECB will not surrender its monopoly of euro production. However, what is being talked about behind the curtain is that a digital euro can either be “account-based” meaning you will keep it in an account held with the ECB directly, or it can be “token-based” where banks receive a “token” that can be transferred from smartphone to smartphone via an app.

The ECB says the digital euro is a “compliment” to cash and bank balances. Clearly, that is like saying the lockdown will be just three weeks when they never had any such intention. Obviously, those who pay in cash find it convenient and want to ensure their anonymity. That will become a thing of the past which is their intention. The objective is to force everyone into paying electronically, i.e., transfer balances through PayPal, Apple Pay, or debit or credit cards.

Back in May/June 1992, we put out a report on the long-term implications of what our computer was projecting. The year 1998 marked the Russian default which sparked the Long-Term Capital Management Crisis and the first time the Federal Reserve had to bail out a hedge fund. Heading into the end of this cycle in 2032, we would see the extinction of 30-year bonds and the demise of the floating exchange rate system. This time what comes after 2032 will be indeed a new world order for what appears on the horizon is the collapse of our present system which is being accelerated by Klaus Schwab and his World Economic Forum. These forecasts, along with 2016 being the first time a non-politicians would win, sounded far-fetched back then. But this is simply how economies and societies unfold. It was not some premanitio9n. It was just history repeating itself.

“Since 1985 we have been warning that the Nineties would be a period of turmoil marked by greater volatility and a major crisis in world debt. We have also stated time and again that our computer models were forecasting the extinction of 30-year bonds along with the collapse of the floating exchange rate system. While these forecasts may appear bleak, this does not necessarily signify the end of civilization. A similar crisis involving these issues along with war were also the hallmark of the final years during the 18th century. The new world order that emerged thereafter brought forth an era in democracy and capitalism not only in Europe, but also in the birth of the United States.

While many will laugh at these forecasts or attempt to simply dismiss them as too far-fetched to be considered seriously, they merely display their own weakness of a closed mind.”

Armstrong Economics Blog/Foreign Exchange Re-Posted Mar 15, 2021 by Martin Armstrong

QUESTION:   Hi Martin
Thanks for all the work you do, my day always starts with reading your take on things. I was a member until recently as I am out of a Job. I Live in Toronto, where lockdowns have been the worst and longest in North America. Presently looking to relocate out of the city. I am a Contractor and it seems most of the work in the coming years will be outside the city, as everyone is selling and moving to small towns or their cottages and now want them upgraded for year-round living.

Question: Bitcoin and Crypto. It seems to me that they are using Crypto and pushing it mainstream for a reason. Is it may be a way of increasing the fiat. What I mean is every time someone Buys a Bitcoin they are purchasing with Fiat, so the $10,000.00 someone buys in incremental Bitcoin automatically doubles that Fiat, as the person selling now, has the equivalent of $10 k to purchase something using Bitcoin and the Seller now has $10 k to purchase an item with the Fiat. Could this be another way of getting money into the market without having to Create it at the Fed?

What do you Think
CB

ANSWER: No I believe they are allowing it to trade for the sole purpose to mislead people into thinking cryptocurrency is somehow better than cash. Governments are planning to swap all physical money for 100% digital to end hoarding of cash and to be able to increase tax enforcement as well as to reduce the underground economy – i.e. drugs to prostitution. They always blame the people for not paying all the taxes they think they are entitled to rather than realize that no matter how much taxes they collect – it will never be enough.

By allowing Bitcoin to rally, they are creating the image that cryptocurrency is better than cash. It is psychological and the average person is easily fooled. The 911 Porsche came out in 1964 and changed little for the rest of the decade. There was less variation in the 911’s early years as well. The high-performance 911S came out in 1967, as did the famous Targa body style with its removable roof panel. I bought one in 1970 for just slightly under $10,000. By 1980, they were starting at $35,000 and over $50,000 by 1985. The Deutschemark rallied 140% during the 1970s and the German manufacturers priced their cars in marks – not dollars. So the value of the German cars kept rising in dollar terms during the 1970s all because primarily due to the currency, which also led to higher prices for commodities caused by OPEC. This created the image that German cars were better than American. I bought foreign sportscars during the 1970s and would drive them around for 2 years and would get my money back so cars never cost me a dime.

I have told the story before that I bought a 328 Ferrari in London for about £30,000 when the pound fell to $1.03 when it was a $50,000-$60,000 car in the USA. The pound had been over $2 when Ferrari priced what they would sell that car for to Brits. Since the pound fell so hard, the Italians raised the price to £45,000 or maybe £60,000. Then the pound rallied back to almost $2. I drove the car in London for about two years and then sold it used about doubling my money.

This example of the sharp rise in the price of a Ferarri created the false assumption that they were a great investment and people began buying and storing them. It was just the currency — not the car. Once you understand how the FX markets create different impressions of domestic markets, you can suddenly see the world through a whole new set of lenses.

Cryptocurrencies are going through the very same phase.  They are creating the illusion that they are somehow better than cash. Even the name “cryptocurrency” is misleading for they are not a currency at all – they are merely a trading vehicle. Do not get all stary-eyed and look at them as better than cash for that is looking at a Ferrari as an investment rather than a car to drive.

I understood the rise in the value of the Ferarri was currency so I also knew when to sell. It is critical to look behind the facade to see what is the true nature of what you are dealing with. Bitcoin is no more a store of wealth than any stock because it rises and falls. Anything that fluctuates cannot be a store of wealth – it is simply an investment vehicle.