Any trade agreement is by definition anti- free trade. The true definition of free Trade is transaction between parties where there is zero influence by anyone else. Pegged exchange rates and monetary policy and the IMF and ANY government based agreement regarding the movement of goods and services between counties is by definition something that prevents free trade. If we really wanted free trade the best way would be to ban the sale of treasury bonds of any kind to anyone not a US citizen or a US based corporation; to band the transfer of any such instruments to anyone not entitled to buy them directly from the Treasury. This action would force currency exchange rates to move more in line with free market principles. I would also make it harder for the federal government to finance debt but that would be a very good thing.
Tag Archives: sustainability
Ayn Rand’s Definition of When a Nation is Doomed
Armstrong Economics Blog
Re-Posted May 2, 2016 by Martin Armstrong
“When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you. . . you may know that your society is doomed.”
Atlas Shrugged – Ayn Rand
- p. 413 ; Francisco d’Anconia to Bertram Scudder
The Pension Crisis is Starting
Armstrong Economics Blog
Re-Posted May 2, 2016 by Martin Armstrong
The pension crisis set in motion by negative interest rates will be a major issue in the years ahead. Central banks have really screwed the entire social system and now everyone’s future is at risk. You cannot maintain negative to exceptionally low interest rates to help the bankers and claim it will ignite inflation and reverse the economy when you are wiping out the disposable income of the elderly. The elderly used to be the foundation of the economy for they always would spend when others feared to do so because they did not have to worry about future income.
Keeping interest rates this low is insane. Interest is the cost of money and takes into account the future expectation of inflation. The central bankers cannot inflate the economy when people simply hoard cash in fear of what lies ahead. This is why Trump and Sanders have done so well.
State pension funds, such as in Illinois, are bankrupting governments. One of the first lawsuits was filed by a private group alleging that their pension fund is underfunded and mismanaged as a result. Creating pension funds and then assuming the duty to manage them by a company is a lethal combination with negative interest rates. This will become a major crisis come next year. Trump better pray Hillary wins. The people will probably begin a revolution against her since she is owned by Goldman Sachs.
Candidate Trump’s “America First” Economic Solutions…
This is a well thought out post and right one! I have a degree in economics received prior to the shift that embraced John Maynard Keynes’s view on economics as presented in his Book “The General Theory.” In general this view which every school now teaches is that Government can control the economy though monetary policy and regulation. This shift to service from manufacturing which Sundance talks about was just starting to be taught in the early 60’s when I was in school and since it had not been fully adopted and since I had the pleasure of reading to works of Milton Friedman who back then had already broken from the Keynesian view I was not corrupted by the government centric view. My military career and business career after college allowed me to experience the real world and also experience the full effect of the policy’s that moved so much of American might out of the country. Being retired now I write on how insane this view is and so I instantly became a Trump fan within days of his announcement. This is no place for a full debate on the merits or demerits of a service based economy but I can tell you with a high degree of certainty that this concept is fundamentally flawed and is at the very core of the problems that we now have. There is no doubt that Trump has it right my only fear is that we elected him too late to stop the train wreck.
Judge Jeanine: What’s wrong with putting America first?
Published on May 1, 2016
Reaction to Donald Trump’s foreign policy address
Is Saudi Arabia on the Ropes?
Armstrong Economics Blog
Re-Posted May 1, 2016 by Martin Armstrong
There is serious trouble brewing in Saudi Arabia. They have been dumping oil increasing their output by 3.5%. However, the cash is being kept offshore. Rumors have been flight that members of the Royal family may be creating a stash just in case there is major civil unrest which forces them to flee into exile. Obama on his recent trip told the Saudis they should adopt democratic reform. Make no mistake about it. There is trouble brewing in the Middle East. There is no way Obama would have made such a statement publicly if the situation were not grave.
May – August – October are being highlighted as key periods ahead.
Confused Confidence
Armstrong Economics Blog
Re-Posted May 1, 2016 by Martin Armstrong
QUESTION:
Hi Marty!
I am reading and studying your blogs and Socrates for quite some time and I would really like to thank you for all the insights!
Some days I listen to bloomberg radio for knowing what ‘they’ are saying about the market developments. As I am not an experienced trader as you are, I must admit I don’t understand the ‘collective market behaviours’ e.g. besides all the traps the central banks got themselves into, my normal logical mind tells me that whenever interest rates rise, money gets more expensive, so consequently the only true reason for doing so would be that underlying economic data shows the economy is doing well and can do without ‘help’.
A simple mind like I am tells me that a stock index should rise in case of a well doing economy. Instead I only hear markets fear a interest rate hike. Seems to me that the collective wants interest rates remain low, so stockindex growth driven higher by debt.
The same for example in the case of oil. With my simple mind global economies aren’t as healthy as the financial markets might imply. So in short lower demand and risk of even demand lowering. Instead of a lower price eg. crude oil futures, the futures contract keeps on rising. I am wondering what the fundamentals are that drive up these prices?
Could you give some insights on the real fundamentals that drive markets as from a real- economic perspective I can’t figure it out!
Thnx Marty!
R
ANSWER: The fundamentals flipped after the shift from a private to public wave following 1929. Under the pre-1929 economics of laissez-faire, the government did not attempt to manipulate society with monetary policy. They attempted to lower U.S. interest rates to deflect capital inflows back to Europe, but they did not practice manipulating interest rates domestically to try to manage the economy. Therefore, raising interest rates before 1929 was often seen as bullish because it showed there was a demand for borrowing money due to economic expansion.
Today, the fundamentals are interpreted through the eyes of Marxism. Raising interest rates is now considered a punishment to society intended to deter them from borrowing. Yet, deflation involves declining interest rates due to the lack of interest to borrow. Some say that higher rates are bad for stocks, but they are solely looking at it as a punitive measure that will cost people more to borrow. You even have people cheering gold with lower interest rates.
None of this makes any sense economically. Nonetheless, we are looking at a sharp rise in stocks and gold along with rising interest rates, which will confuse everyone. Interest rates are the manifestation of expected inflation. If you think inflation will be 10%, you will lose money if you lend it at 5%. Interest rates are the price of expected inflation alongside the perceived risk.
Therefore, everything will take off to the upside and the majority, whom will be following the Marxist version of fundamentals, will feed the rally because they will be short. This view of fundamentals will eventually flip back, but only when the public at large sees this flip and goes with it. That is the point of no return where confidence in government collapses.
I should point out that these fundamentals tend to apply only to the investing class. I remember 1981 when interest rates reached their peak. My mother and her sister went out and bought bank CDs at 20% for 10 years. They did not ask me. They made the decision on their own and said they would never see that much interest again. They are countless others changes the trend and made that peak in the Public Wave 1981.35. This class of people act out of common sense and do not listen to the fundamentals applied in the investing class. This is the real group of people who are the movers & shakers. The rest of us are trying to figure out what they are doing. Keep in mind that within the investing class, they always try to assign some fundamental to explain something. Everyone wants to know WHY. I named by debut report on the ECM back in 1979 – “WHY”.
Take gold for example. How long have they been saying the dollar is fiat yet gold has not advanced to the same degree as the Dow since 1970. It is one of those fundamentals they always throw at you which become sophistry. Sounds logical and they mix in Germany with wheelbarrows of money, but omit the fact it was a Communist Revolution in 1918 where Germany invited Russia to come take their country wanting to join the Russian Revolution of 1917. Who would keep money in a bank under such conditions? There was a collapse in confidence.
Economics, Modern Conservatives, The 2016 Election and The Import Export Bank…
The myth that we are being told is that we have Free trade now and that the problem is that US companies are just not competitive. Well the definition of Free Trade is trade without ANY GOVERNMENT intervention. That idea does not has has not existed for a long time. Everyone for the FED the IMF the ECB and everyone in Asia manipulated their currencies and policies to benefit them. The US government supports the export of US jobs to the rest of the world in return for those counties buy our debt. That gives the politicians more money for the programs of transforming the our country into a European style socialist big unelected government with total control of the people.
Current Desperation – There are Trillions of Dollars At Stake…
I agree 100% with Sundance! Further as a former US Army Special Forces officer (back in the day) who was trained to do what you now see happening I will tell you what you see is exactly what we were taught to do albeit with different methods as this was 50 years ago.
Are the Metals & Dow Aligning?
Armstrong Economics Blog
Re-Posted Apr 28, 2016 by Martin Armstrong
QUESTION: All three are moving together since mid-January. Does that mean all three are already aligned and a lift is now possible? Or do we go to retest the January lows first?
ANSWER: This is the preparation for the Sling-Shot Move which is coming. Everything is pushing it to the limit. We are carrying the weight of the world around on this move. This is how you will trap people buying highs or selling the lows. They will make their judgment based upon emotions. You will see extreme moves in both directions. Markets are NEVER that forgiving. They strive to wipe everyone out on both sides and the more arrogant they are, the bigger the loss.
We should see the metals push higher trying to get closer to their 2015 highs. The question becomes; can they exceed 18.50 in silver and 1307 in gold? If not, then they too have done what the Dow has done. The worst possible pattern would be a 2017 high, a profound thrust to a low in 2018, and then a Sling-Shot Move to the upside which could push this whole mess into 2024. We achieved a minor Daily Bullish Reversal in silver and gold today, but a sell signal in the Dow. They are trending together, but still in opposite directions. So we can see that they are starting to align. The process is not yet complete.
Just look at this logically. It appears to be the four major elections coming (BREXIT, US President, French President, & Germany) that hold the potential to turn this world we are carrying around completely upside down. If the British vote to exit, that can be devastating to the Euro and set off a wave of civil unrest demanding also to exit in other countries. That would benefit the dollar in a big way. What would that do to the metals? Would the Dow then recover from another retest of the support? The Euro begrudgingly holds on, but here too, trying to retest its 2015 high or at least the target reversal at the 11600 zone, is difficult to say the least.
We are getting there. There has to be a retest of the lows. Nothing moves in one direction. The question becomes; soon or later? That is determined if we fail at the 2015 highs or break through that ceiling. For lift-off, what it takes is that collapse in confidence and we can see that where Bernie is frustrating Hillary and Trump leads the pack no matter what they cry about or conspire. People are just losing it when it comes to government. Trump and Sanders are bringing more people out to vote than ever before. Why? They all know something is wrong. They may disagree at to what it is. But the universal knowledge here is that something is just not right. This is the seed we need to fertilize to get that Sling-Shot.
Centinel2012 