Tag Archives: Student Loans

May 27 2017

Schiller Cyclically Adjusted PE Ratio (CAPE) – Real or Mislead?


Armstrong Economics Blog/Press

RE-Posted May 27, 2017 by Martin Armstrong

QUESTION: Hi Martin,

Long time… perhaps you can reflect on the indicator of the Shiller CAPE ratio?
Not that it is a predictive sell/buy signal in itself, but it is an indicator showing history
R

ANSWER: The Shiller Cyclically Adjusted PE Ratio known as CAPE,  is a particular PE ratio invented by Robert Shiller of Yale University. Unlike his index on real estate, this one tracking the period of 1870 to date is not very good. True, on will arrive at one of two conclusions that either the CAPE today is near the same level as in 1929, or it is higher today than it was just before the Panic of 2008. Does this really mean anything? Absolutely not!

When we filter this purely domestic view through the currency and capital flows, these two events are exactly opposite of each other. In 1929, the capital inflows were pouring into the USA whereas in 2008 then were exiting. The 2000 Dot.COM Bubble took place with a capital inflow.

The important difference is always the currency. Great bubbles unfold only when foreign capital is pouring into a domestic market. This is when the Japanese Nikkei Bubble took place in 1989. The capital left the USA as the Plaza Accord was pronouncing they wanted the dollar down by 40% to help trade. The swing in capital back to Japan looks like the brain wave of a real crazy person.

There is a risk of correction in the US Share Market after May. But this has nothing to do with the PE Ratio. We are looking at capital flows and that is the real key. The attempt by the Washington Post and New York Times to stir up a coup to oust Donald Trump will have far greater impact on the dollar and US assets than the PE Ratio, which is a very myopic domestic view.

May 27 2017

Research – Where to find it


Armstrong Economics Blog/Press

RE-Posted May 27, 2017 by Martin Armstrong

QUESTION: Mr, Armstrong; I read the research you provided for the Hong Kong WEC. I tried to see if I could find some of the Harper’s Weekly articles you photographed and perhaps others. They are not on line. May I ask, where do you get access to such material?

ANSWER: I have a very extensive library of bound volumes of newspapers from the USA as well as Britain. This has enabled me to conduct real research and see the thinking process and how it has evolved with the markets. First of all, I have to use the original source. Far too often when you dive into it, you find that people have made up quotes to support a predetermined agenda. This way, I can quote directly and not rely upon others.

Categories: Press
May 26 2017

Interest Rates Up & Bonds Up?


Armstrong Economics Blog/Central Banks

Re-Posted May 26, 2017 by Martin Armstrong

While the Fed may be raising rates, there is still a flight to quality underway that is giving a bid to US Treasury issues. Low Treasury yields may remain the norm even if the Federal Reserve raises rates again. At about 2.25%, 10-year yields have dropped to 2017 lows, even with the central bank signaling an imminent rate hike. Many still see the stock market crash and that also supplies a bit of an underlying bid right now. However, The Fed has also made it clear it will maintain a gradual approach to shrinking its massive bond portfolio thereby reversing the Quantitative Easing. We are in never-never-land where the Fed tightening will not yet have a direct impact upon the bonds on a one-for-one relationship.

When we compare the 10-year to the 30-year, we see strikingly different patterns. The high on the 30 year is 2016 in price (low in yield), whereas the high on the 10-year in price (low in yield) remains 2012.

Now look at the 2-year rate bottomed in September 2011 (high in price). Clearly, 2-year rates have been rising gradually for 6 years already.

Now when we look at the 30-year on our Proprietary Perpetual 30 Year Contract back to 1798, we gain true perspective in how rates have performed in the long-term. We are clearly looking at a bond bubble, but the breaking point appears to be 2018. Because of the extreme flight to quality, we can still see a pop up in the 10-year before this is all over. This depends entirely upon the capital flows.

May 26 2017

Obama Administration Intervened in Canadian, British, and French elections


Armstrong Economics Blog/Politics

Re-Posted May 26, 2017 by Martin Armstrong

There is a very serious hypocrisy over this whole issue of Russia trying to influence the 2016 election when the Obama Administration directly intervened in Canada, Britain, and France and is expected to do so again in Britain and Germany. The New York Times, Washington Post, and just about every other mainstream media, are biased and are NOT REPORTING THE TRUTH. They act as if this is something unusual and sinister yet Obama has continued in this very posture even after leaving office with respect to the French elections. Obama also intervened to overthrow Israeli Prime Minister Benjamin Netanyahu and failed as he did in BREXIT. The United States routinely interferes in foreign elections. So what is the big deal with Russia? Mainstream Media is not telling the truth that this is standard operational procedure. The United States has far too over stages coups to overthrow leaders they dislike. The propaganda about Iran and weapons of mass destruction is but a recent example. The Vietnam War was also a hoax with President Johnson is famous for saying in 1965: “For all I know, our Navy was shooting at whales out there.” There never was any attack to start that war and Johnson made a very deceitful speech of August 4th, 1964, while New York Times editorial writers cheered and proclaimed that Johnson “went to the American people last night with the somber facts.” The recorded American soldier deaths for the Vietnam War was 58,220 U.S. military fatal casualties.

The New York Times has deliberately misled everyone with its latest story once again: “Top Russian Officials Discussed How to Influence Trump Aides Last Summer”. They wrote that two of Trump’s people “had indirect ties to Russian officials” and after all the ifs, possibilities, and perhaps, they conclude “It is unclear, however, whether Russian officials actually tried to directly influence Mr. Manafort and Mr. Flynn.”

We all know that Obama sought to influence the British BREXIT vote telling the British if they voted for BREXIT, they would have to get queque . We all have watched the video intervening in the French Election for Macron. However, what has not been widely know is that the Obama Administration intervened in Canada with operative and money to overthrow the conservatives.

The real question is what is going on with the New York Times and the Washington Post? They both endorsed Hillary and this seems like a desperate act to claim that Trump is not a legitimate president and he should be overthrown. In the years of research studying the economy and the press accounts over the centuries, I have never seen such a totally dishonest level of reporting than we see today. They have devolved into a biased media that withholding the truth to shape opinions as they desire. This, in my view, is the ultimate treason against the sovereignty of the people. The Washington Post boldly claims as their motto: “Democracy Dies in Darkness” which is exactly what they are doing. PRINT THE TRUTH!

May 25 2017

US Pension Crisis Picking Up Full Speed


Armstrong Economics Blog/Pension Crisis

Re-Posted May 25, 2017 by Martin Armstrong

The Pension Crisis is serious and is the catalyst that will bring everything down. Nearly 600 State & Local governments are now in the hole and has reached nearly $1.2 trillion of unfunded pension liabilities in FY 2014. This reflects total pension liabilities of $4.798 trillion and total pension assets (or fiduciary net position) of $3.607 trillion. This staggering number is nearly 25% of the annual GDP and accounts for roughly 97% of all public pension funds in the United States. California is raising taxes to cover the short-fall for now, but this is going nowhere fast. Government pensions are what destroyed the Roman Empire and history is going to repeat.

I have stated before that there are people on Capitol Hill who support confiscating all private 401K plans in the country and replacing them with an allotment monthly. We know what will happen to that one, so you better have something else besides cash. The government cannot meet the promises for its own employees and they will turn to increasing taxes and confiscating private property.

May 25 2017

Fed Rates & Minutes


Armstrong Economics Blog/Central Banks

Re-Posted May 25, 2017 by Martin Armstrong

Minutes from the Fed’s May policy meeting showed board members thought that if jobs growth remains healthy with a rebound in investment and consumer spending then rates could rise “soon”, which many took to mean June. The economy has shown some signs of weakness, the Fed still thinks its broad strength would justify winding down its balance sheet, essentially sucking cash out of the system and putting upward pressure on borrowing costs. As long as rates rise, it shows the economy is still holding.

The Fed is more concerned about the stock market. A correction would help ease the upward pressure, but the Fed also realizes that it has to get rates back up because of the looming crisis in State *& Local pension funds.

Keep in mind that as rates rise, so will the problems with fiscal budgets both on the Federal and States levels within the United States and externally it will hurt emerging markets and Europ

May 24 2017

New Argument to Raise Rates – Rent Inflation!


Armstrong Economics Blog/Interest Rates

Re-Posted May 24, 2017 by Martin Armstrong

There are those in the Fed who are desperate to find an excuse to raise interest rates. The one being bantered about is the Fed needs to raise rates to help the poor. Yes – you heard correctly. To protect the poorest Americans, the argument is that the Fed needs to raise interest rates faster according to Federal Reserve Bank of Kansas City President, Esther George. She said “inflation is a tax and those least able to afford it generally suffer the most.” Her twist is focused narrowly on just rental inflation, which she said will continue to rise if the Fed doesn’t take steps to tighten monetary conditions.

The idea of inflation as a tax that hits the poor the hardest is by no means a new theory. Of course you must ignore the fact that interest the poor pay on just about everything is far higher because the Fed wanted to fight inflation back in 1980 and had to abandon the usury laws in order to raise rate to 14%. As always, they never put back whatever it is they suspect for some solution. The Fed is responsible for the poor paying interest rates at over 20% to live on credit cards.

If the Fed really cares about the poor, knock off the BS and restore the usury laws. Oops! The banks would like that now would they!

May 23 2017

Fines – Civil Asset Forfeitures – Taxes


Armstrong Economic Blog/Corruption

Re-Posted May 23, 2017 by Martin Armstrong

When I was a kid, most police were kind, respectful, and actually there to protect society. Sure, there was some towns that were just greedy. My father took a local post as a judge in Cinnaminson, New Jersey. It was the politicians who told him they want the maximum fine for everything. My father refused and quit. It is not even the police who are ticketing people just for fun. There are quotas and pressure to raise money for the politicians. Governments are just going broke. Many of the police they bring in today are not like they use to be. They are much more nasty and aggressive.

All of these trends are alarming from civil asset forfeitures and tickets for everything in Europe where speeding tickets are fined a proportion of your net worth. All of this is seriously wrong and when government turned against the people, this identifies the trend at hand. This is part of the shift from Public to Private and with only 52% of Americans who now trust the police, this reflects how serious this shift on confidence has become. Gallup Polls have been asking this confidence question about trusting the police and the response has ranged fairly narrowly between 52% and 64% since 1993. Now, it is at historic lows of 1993.

red-light-cameraThe attempt to raise revenue with red light cameras has exposed unbelievable corruption. Private companies pay to install the cameras for a cut of the fines. Florida Supreme Court ruled that it is NOT legal for the cities to continue to issue Red Light Camera Tickets in the manner in which they have been issuing them. In the Ohio hamlet of New Miami, the town was ordered to pay back $3 million in automated traffic fines levied against drivers along the stretch of highway the town straddles.

The former chief executive of Chicago’s first red-light camera vendor was sentenced to 30 months in federal prison and over $2 million in restitution for paying bribes to a city official to help procure the contracts.

New Jersey has the strictest yellow timing provisions in the country as a result of concerns that cameras would be used to generate revenue; they have a statute specifying that the yellow time for an intersection that has a red light camera must be based on the speed at which 85% of the road’s traffic moves rather than be based on the road’s actual speed limit.

Fremont, California is proposing to reimburse drivers who collectively received more than 1,000 red-light camera tickets during a period when it inadvertently shortened the time they could cross on yellow signal lights through a couple of  intersections.

The list of states going after red-light cameras is indicative of the entire problem that as government go broke, they fine people, raise taxes, and confiscate property. This is all part of the shift from Public to Private Confidence

May 21 2017

BitCoin – Criminals – Authorities


Armstrong Economics Blog/Politics

Posted May 21, 2017 by Martin Armstrong

QUESTION: Marty,

In light of the recent ransomware attacks where individuals/companies are being held hostage until they pay the criminals in bitcoins, why wouldn’t governments around the globe step in and just shut down Bitcoin.   It amazes me.  Bitcoin allows people to sell everything from drugs to trade secrets on Wall Street  and they do this without having to even pay taxes on it!    What’s going on behind the scene that allows this operation to continue?

MM

ANSWER: My guess is they are doing the same as tax straddles during the 70s. They knew what was going on and let it run and then fined everybody with interest and penalties. Incidents like this do not bode well for BitCoin and authorities going forward. Way too easy for a politicians to make a big issue out of it. They are already coining the phrase “cash is for criminals” so it would be easy to swap out a word here and ther

May 21 2017

Asset v Money


Armstrong Economics Blog/Economics

Posted May 21, 2017 by Martin Armstrong

QUESTION: Hi Martin, I am a long time reader and so appreciate your daily blogs, You have taught me so much about the global interconnectivity of markets and human nature of the “herd”.Thank you for your life dedication to the pursuit of Truth and justice. You are appreciated more than you know.

My question is that many other economists disagree with you, in particularly —– —-, who believes fervently that Gold is something that will wipe all of us small people out in the coming crash. Can you please explain to us small people who have nothing to hang onto but your words of wisdom and your life long experience of what we need to do as this all reveals itself, with the EU et al, and Debt servicing unwinding worldwide.

Thank you, so much Martin for all your knowledge and your life’s dedication to life, liberty, and justice. I hope to attend your next seminar for the first time ever. I am saving to attend as I like others cannot afford to be caught on the wrong side of what is unfolding and must learn from the ONLY person in the world I trust that is telling us the truth about what is unfolding and how we small people must protect ourselves.

I wish you the best in Health peace and happiness

A

ANSWER: I really do not see where such analysis comes from. If the stock market crash, gold crashes, and everything turns to dust, what goes up? Dollars?

The problem lies in the fact that they are all following Karl Marx. Not that they are communists or even socialists. Marx changed economics. He fought against Laissez–faire and won. It is like putting someone on the witness stand. You then ask the question: “So when was the last time did you beat your wife?” That now sets the agenda. You will respond swearing you never beat your wife and your wife will say no he never did. The cunning lawyer will tell the jury she is not to be believed because she would lie fearing she will only be beaten again.

This is what Marx did. He said government has the right and the power to control the economy to eliminate the Business Cycle. Every economic theory ever since including Keynesian Economics, has all continued down that path. Government is the 800 pound gorilla in the room. It can be omnipotent and rule the world.

I have produced a major report, which traces how gold responded through all sorts of events. Sometimes it has rallied, and other times it has failed. The underlying facts are important. During the Civil War, year gold rallied sharply into 1864. However, when the war was over, gold fell, but the stock market then took off big time.

I can find no instance in history where the combination of events of the stock market and gold crashing within everything turning to dust ever existed for a brief time, but that is when cash rises in value and you get deflation – money up assets down. But given the Sovereign Debt Crisis we face, I really see nothing like that on the horizon.

This will be put online next week. It was included in the Hong Kong Conference.