QUESTION: Do you think Bitcoin can survive? Or has it been a passing fad?

MT

ANSWER: Bitcoin rose because 70% of the miners were in China. It was NOT simply because energy was cheap. Bitcoin became the LEADING means of money laundering and movement of cash out of China, circumventing their rule of law and currency controls. So do not think for one minute that Bitcoin rose because it was really a wonderful idea. It was a means to get money out of China when you could not wire money out. In Australia, they have adopted the slogan that “CASH IS FOR CRIMINALS.” They will do the same to cryptocurrencies. All they need to do is declare a law that it is illegal for a business to accept cryptocurrency under the excuse that it is money laundering. You just killed the entire industry. The government has the army, tanks, and the guns. Until the army is willing to turn against the hand that feeds them, you cannot stand with cryptocurrency and claim some magical right to suppress government. You need the power grid!

Video streaming today is because of the online porn industry (I won’t post a picture of that).  They needed to sell their product and they invented video streaming. It has since expanded to everything. Blockchain can be used in many other contexts just a video streaming was not restricted to just por

QUESTION: Mr. Armstrong; You said that the emerging markets are a huge problem that will lead to a Sovereign Debt Default. Can you elaborate on that statement?

Thank you for your insight

VU

ANSWER: The emerging markets are in far worse shape today than they were even back in 2008. They have issued heaps of dollar-denominated debt to sell particularly to US pension funds seeking higher yield. Some of the buyers have been state-run pension funds. The outstanding Emerging Market debt has exploded by 50%. The majority of the increase in emerging market indebtedness has been in local currency, which was more than $48.5 trillion as of the end of 2016 from around $43 trillion in 2015 and is pressing $50 trillion for 2017.

We passed $200 trillion in global sovereign debt back in 2016. All of these dollar bears that yell about the USA at $20 trillion, ignore where the world stands at and the fact the USA is still the only economy holding everything up. Both the Emerging Market and EU countries have used the cheap interest rates to just pile on more debt – not reform. This is why central banks have lost all capability of manipulating interest rates to direct the economy. All of those theories are entirely dependent upon DEMAND management. They may, in theory, be able to manage the “demand” of the consumer, but they have zero influence over government spending. They lower rates to stimulate private demand and simply underwrite government debt.

The world comes unglued ONLY with a dollar rally – not a decline. A drop in the dollar would be cheered by governments who would then issue even more debt. A dollar rally will cause the Sovereign Debt Crisis – not a dollar decline. Emerging Market defaults are once again on the timeline. They are economically in far worse shape today than they were in 2008. As interest rates rise, they will blow their budget out and they do NOT have the economies to support the debt repayments (excluding China).

COMMENT: You were here in Brussels a few weeks ago. Suddenly, the ECB is talking about the need to merge the debts to prevent a crisis. So your lobbying here seems to work.

RGV, Brussels

REPLY: I do not lobby. It is rather common knowledge I have made those proposals since the EU commission attended our World Economic Conference held back in 1998 in London. I focused on the reason the Euro would fail if the debts were not consolidated. So it is not a fair statement to say I meet in Brussels to lobby for anything. I meet with people who call me in because of a crisis brewing.

So everyone else understands what this is about, the ECB President Mario Draghi has come out and proposed interlocking the euro countries to create a “stronger” and “new vehicle” as a “crisis instrument” to save Europe. He is arguing that this should prevent countries from drifting apart in the event of severe economic shocks. Draghi has said it provides “an extra layer of stabilization” which is a code phrase for the coming bond crash. He has conceded that the legal structure is difficult because what he is really talking about is the consolidation of national debts into a single Eurobond market. There is no bond market that is viable in Europe after the end of Quantitative Easing. There will be NO BID.

There is no viable bond market left in Europe. The worst debt is below US rates only because the ECB is the buyer. Stop the buying and the ceiling comes crashing down. This is why what he is saying is just using a different label. He is not calling it debt consolidation, just an extra layer of stabilization to bind the members closer together.

It will be a hard sell and it may take the crisis before anyone looks at this. You have “bail-in” policies because of the same problem. If the banks in Italy need a bailout from Brussels, then other members will look at it as a subsidization for Italy which is unfair. There is no real EU unity behind the curtain which is when the debt was NEVER consolidated from day one. They wanted a single currency, but not a single responsibility for the debt.

QUESTION: You chart on the Roman money supply shows a huge spike going into 87BC.  Was that just because of the Social War?

GS

ANSWER: No. During the autumn of 88 BC, there was a massacre of more than 80,000 unsuspecting Roman civilians which took place in Anatolia (western Turkey). The victims were Roman and Italian merchants, slave-traders, and tax collectors. The Romans had conquered that region and many went there to colonize the new province. They were deeply hated by the local population. There was a revolution so to speak that unfolded in 88 BC. The Roman migrants were all massacred right down to the women and children. It was carried out by the local Anatolians, who were composed of both Greeks and Jews. It was well organized for it took place in more than a dozen cities all simultaneously. They exterminated the Roman presence in the region.

The massacre sent a shock wave into the Roman financial system. An economic crisis unfolded in the Roman Republic, which came at the worst time for this is when there was a slave uprising and escalating violence. This was NOT the more famous slave uprising led by Spartacus. That comes into play about 10 years later. They took advantage of the fact that the Roman legions were occupied with the war in Asia.

With this massacre, the Roman Senate declared the perpetrators as Rome’s ‘most wanted enemy’ and dispatched the famous Consul Lucius Cornelius Sulla having received the mandate by lot. He was given several legions fresh from the Social War to implement the mandate — a search and destroy mission. The ensuing wars would drag on for decades, spanning two continents and became known as the First Mithridatic War (88–84 BC) began with a declaration of war by the Senate.

As we can see, when war breaks out, the need for governments to spend more has always unfolded since the dawn of recorded time.

COMMENT: Hello.

I know that although the current level of Socrates is not designed for day trading, but as a professional daytrader even this level is still amazing for that. I simply plot out the numbers that Socrates gives (made an important high at X, resistance forming at Z, etc.) for all three of the major U.S indices. Even when there are not enough points for a certain index, all three tend to generally move at the same times, thus giving most stocks the same pattern for that day. I have been longing and shorting on those numbers and it’s amazing how accurate its been, even with such limited functionality. It’s done far better than any other daytrading system I know.

It has only been a week since I’ve been using it this way. So my question is, how long is a level valid when Socrates says something that may just be a daily level? For example, for the NASDAQ: “The Daily level of this market is currently in a full bullish immediate tone with support at 729174”. I have noticed that the support or resistance levels still bounce from those points even after a day.

It was amazing as there were some people who had been accusing me for quite some time of drawing the lines in advance and that it was impossible to predict beforehand, (I am a member of an online trading forum or reddit.) so I made sure to post them as it happened later.

REPLY: The numbers are the numbers. They are generated by a mathematical formula based upon physics and cyclical movements. No, it is not intended for day trading. However, it provides a road map to any market so you can easily see where it is going. Keep in mind that the most money to be made is in position trading. It may appear that day trading is less risky, but far too often your focus is just the intraday action. You lose sight of the big movements coming in like a wave that is bigger than the rest crashing into the shore.

If you stand at the beach and look at the waves closely, you will notice that one wave is larger than the rest. This is constructive inference. When several waves align in sync, suddenly the wave that is produced is larger than the rest.

This is a fundamental basis of cyclical activity that applies to everything in the universe. It is why the sun beats like your heart. There is a cycle of absolutely everything, which is why we are born, mature, and then die. There are some people who are so afraid of dying, that the sacrifice their life living in fear only to die in the end anyhow.

So never take your eye off the Weekly level at the very least. If you do, the day trading will wipe you out for you will never see that big wave about to hit the market and devastate everyone in its path.

QUESTION:  Hi Marty,

QUESTION: Hello Marty

I am hoping you will print this in your blog.

Everyone knows that Govt’s/Banks print money out of thin air and then “owe interest” to this invented money. To avoid an interest payment death spiral why can’t all the Govt’s in the world just tell the banks to pound sand? Why can’t we tell them “Sorry….we are no longer going to make interest payments on money you invented out of nothing”.

Regards,

Julie

ANSWER: I actually get this question often. I understand that the sophistry out there makes it sound so easy. Unfortunately, this is nowhere near the mark. The bulk of the lending that leverages the money supply is involved in consumer loans. So this really would create a very unfair arrangement that reminds me of the incident with Mark Antony. Everyone talked about the bankers and assumed that Julius Caesar would rule that all debt was to be forgiven. Mark Anthony believed Caesar would do that so he ran out and bought Pompey estate assuming he would never have to pay for it (see Anatomy of a Debt Crisis it appears, only Julius Caesar ever understood).

To do what you suggest may sound simple but it would produce riots and blood in the streets. Your pension would be gone because most funds invest in debt. What if you were retiring and bought muni bonds to live on because you were told they were tax-free? Perhaps you could not sell your house to retire because the buyer could not get a mortgage so you took the mortgage. That would mean he now gets the house for free.

Trust me – it would be a bloodbath in the streets.

QUESTION: Socrates did an amazing job. It called the high in BitCoin right to the day. That makes me wonder. After thinking quietly about the claim that cryptocurrencies will replace everything as a new world monetary system because it will not be centralized and created by a central bank, this seems to be complete BS if the majority of money is created by lending banks. I asked a diehard proponent and he said we have to stop banks from doing that and suddenly the world will be a better place. I think that means no credit and everything would collapse. Am I far off here or are these people at least partially correct? Am I missing something?

DT

ANSWER:  No, you are correct. These people do not understand the monetary system and they take one simple fact and they blame everything on that and the solution is a cryptocurrency to eliminate central banks and the creation of money by lending. That is so impractical it just shows the lunacy of it all. If you stop the creation of money by lending, do you realize property values would crash? We would be back to the Dark Ages where if you wanted to sell your house, the price would be ONLY what cash someone has. That is why FDR created the 30-year mortgages. Real estate fell to virtually zero. It was being auctioned off at 10 cents on the dollar or less.

All pension funds would be wiped out. The savings accounts would not be there for probably 80%+ of banks would close if not 100%. To suggest that the solution is the end of central banks and bank lending, you are talking about blood in the streets. The riots would be incredible if not revolution. The Dark Age was a period where there was no banking and no trade. The Dark Ages was originally classified as the 10th and 11th centuries. There was no lending. People worked for food. They were given land to cultivate and the “landlord” took 80% of the production. They received no wages prior to the Black Death.

The coinage of this period reflects how the economy functioned. The coins are rarely found more than 30 miles away from where they were struck. This confirms that there was no trade. These castles were isolated economic systems with an economy that was 90% agrarian. Banking emerged only with merchants who began to travel selling spices that began to import from the east all over again. In Germany, the merchants who became the banker because they made so much money (merchant banking), were called “Peppermen” because pepper was worth more than gold by weight.

This is what we would return to with no bank lending and no central banking. It’s just not a practical solution. It does not matter what the money actually is. The banks that emerged took deposits and gyro banking was invented. Why? There were far too many clipped coins and counterfeits in circulation. You had to inspect each and every coin for every transaction. It was far more efficient to deposit the coins and the bank certified the coins. Thus, you wrote a check and transferred the funds from your account to another and nobody had to inspect every coin.

If we are going to look at solutions, you just throw these wild ideas out there. They are usually put out there by people who have absolutely no experience in the world economy and assume they know everything.

COMMENT: You always support the rich and never see what they do to the rest of us.

LW

ANSWER: You simply believe the propaganda of governments. The rich get richer by INVESTING in assets. They list Bill Gates among the top in the world. Do you really think one gets rich by making more per hour than the next guy? Wealth is created through assets – not wages. The NUMBER ONE suppressor of the people is all governments. I worked hard trying to get Social Security reformed and privatized when the Dow was 1,000 instead of 100% government bonds. I gave up. Ther are to many pension funds that are restricted to buying government bonds.

It is not the rich that prevent others from investing. It is always the government. If you really add up what you pay in property taxes each year and subtract that from the value, you will quickly see that you probably lost money. When you sell the house, they do not count the taxes paid for decades as part of the cost.

Wealth is created by INVESTMENT – not buying bonds. Who prevents the average person from investing? It’s not Bill Gates.