Armstrong Economics Blog
Re-Posted Mar 20, 2016 by Martin Armstrong
This is happened all over Europe. The “refugee” crisis is getting completely out of control. The attempt by Brussels to pretend this is not happening is just insane.
Tag Archives: sustainability
Inflexion Point – Bill Still: Trump Is For Real…
Very good presentation my Still on Jones this is a must watch and go along what A post I did a few weeks ago on Trump with the same
them. A link to my post is here.
How did we get from the world of the early 60’s to where we are now?
On Pi Day Hungary PM Says Europe is Dying
Armstrong Economics Blog
Re-Posted Mar 19, 2016 by Martin Armstrong
This came precisely on our target. This past week was the tipping point for Europe. The start of the real decline in the euro where mainstream capital begins to question when negative rates can really reverse or stimulate the economy unfolds after 2016.202. This comes into play March 13/14, 2016. This is not my personal opinion. This is just the modeling. From this target onward, we will begin to see a crisis in confidence. Part of this will no doubt be the BREXIT vote in June. It is curious that the Prime Minister of Hungary Viktor Orbán chose our precise target to effective thrown the gauntlet down against Brussels. He states bluntly, that there is no freedom in Europe if we can’t speak the truth that this is not a refugee crisis, but a migration crisis.
The Ides of March – Pi Marked the End of the Roman Republic
Armstrong Economics Blog
Re-Posted Mar 18, 2016 by Martin Armstrong
COMMENT: Marty, I figured out why you bought the bust of Julius Caesar commissioned by Cleopatra. He was assassinated on the ides of march and that is effectively about Pi day.
…
REPLY: Very good. Yes, even Brutus issued a coin which he proudly declared he killed Caesar of the Ides of March – “EID MAR”. I never noticed before that the entire revolution and the end of the Roman Republic began on Pi day. I must confess, I missed that one. As for the bust, yes it is probably the most important piece of sculpture in existence. It is very interesting that our models also targeted this mid March target for the start of the decline in CONFIDENCE in the EU. Coincidence? We will find out I suppose.
We Want Free trade, but what is it?
The concept of Free Trade is very simple but it is found nowhere on the planet today and for most of the past as well; and a hard fact is that if a federal government is involved even a little bit you can bet your bottom dollar there is no Free Trade. Free Trade means that ever transaction is a negotiation between the two parties which are the buyer and the seller for a greed to price in some currency for a good or service in a different country.
So let’s set up a two country world model country A the USA and country B China. The buyer in country A gets the goods and the seller in country B gets the currency. Where things get sticky is what does the seller do with the currency he gets, dollars in this case, since he can’t spend it in his country? Well you say he takes it to the bank and converts it into the currency the seller uses, Yuan in this case, at some specified exchange rate; but that doesn’t solve the problem it just transfer it to the bank. The bank will hold the dollars for a time as the bank knows that a buyer in the banks country will need the Dollars they are holding to buy something in the USA at some time in the near future. Now so long as the need for Dollars and Yuan are proportionally equal, say one Dollar for one Yuan the trading system is in balance and we have Free Trade; meaning at the end of the year the bank has no dollars or yuan in its trading account.
Now we add a complication to the analysis which is what does the bank do if at the end of the year it has a balance of dollars, a surplus, which were not needed? Well since we are still in a Free Trade situation the bank could reduce the exchange rate making the Dollars cheaper vis-a-vis the Yuan say two Dollars for one Yuan which makes the USA goods 50% cheaper. So the demand for dollars goes up and more USA goods are purchase and the system is back in balance. So there is a method to insure that the trade is in fact free; meaning free of government interference i.e. tariffs, customs inspections, fixed exchange rates and various standards and quotas.
What the cleaver Asians have figured out, first the Japanese, is that the American politicians are stupid and corrupt and like buying votes with free things to the poor. But to get the money for paying for the free things (someone does have to pay) they would need to tax the rich and since they are the rich that wouldn’t work so well so they needed another way to get the money that they could blame on others, evil companies. In the previous example we had a surplus of Dollars in China being held by the bank and so in this example the Chinese government took the Dollars from the banks at the previous rate of one Dollar per one Yuan so they now had the dollars. Now the cleaver part was that they didn’t buy goods in the USA they bought US Treasuries, basically they were leading their Dollars to the US Government. And our government was glad to get them as it gave them more money to buy free things for the masses. However there was a price this system made it almost impossible for the US companies to compete in China; and worse it made the Chinese goods so cheap that they had to start buying their parts from China. This system is not sustainable as there are only so many jobs that can be shipped to China and at that point they will have trillions of Dollars in their hands and they will end up buying the country with it.
We are now in a political a system, not an economic system, where we get cheap goods and in return we ship them our jobs. No sane government would ever do this as it can’t last very long and at some point there is no returning to the old system, and we are almost there.
Will Gold and Silver Become the Underground Currencies of the Future?
Armstrong Economics Blog
Re-Posted Mar 14, 2016 by Martin Armstrong
QUESTION: Martin … the reasoning behind goldbugs … advising people to buy gold to thwart the cashless society that govts will soon impose on us all. Do you think gold and silver will become the underground currency of the alternative economy as people try to get around the official cashless economy or not?
thanks
Regards
P
ANSWER:They probably will to some extent, but it will be very limited. Gold and silver have lost their mobility. You can no longer hop on a plane with a briefcase full of metal. The more likely outcome is that gold and silver will simply be a hedge against government. It is unlikely that everyone will simply be using them at the local Starbucks.
Government will make transactions in gold or silver illegal and equivalent to money laundering. These people are not about to let anything circumvent their dreams. Nevertheless, their plans are by no means sustainable. The more likely outcome will be that they collapse and we move to some new political system. However, keep in mind that this could take until 2032 for a complete reboot.
In France, a train that passes through Switzerland and Liechtenstein is routinely stopped. The French financial police enter and search bags and luggage for valuables. You cannot travel with valuables worth more than $10,000. They will confiscate whatever they can. In Italy, if you look like you have a lot of gold chains on they will pull you over and weigh them.
The likelihood that you will be able to travel with gold is about zero. The likelihood that you will be able to go to the local grocery store and buy food with silver or gold coins is also zero. The more probable outcome is that this will provide a hedge against government to make the transition to the next monetary system. These people are fighting for dominance over society. Do you really think it will be that easy that everyone will be using gold and silver coins? They will not go down without a fight and the first blood draw will be on our side — not theirs.
4 Elections Away from 2017 the Year from Political Hell
Armstrong Economics Blog
Re-Posted Mar 13, 2016 by Martin Armstrong
There has been a major political uprising in Germany. For the first time, the Green Party has beaten the establishment in Baden-Württemberg. I have been warning that Trump is not some freak show. This is a global uprising we are watching in politics as we head into 2017 – the year from Political Hell. We are indeed, only three major elections away from perhaps the revision of NATO, the fall of the European Union, and the end of the socialist world order as we have know it. We have not just the US election, we have Germany, France.
Then we have this June and the British Exit vote which is actually the first. If Britain votes to leave, the EU is finished. If they vote to stay, Britain is finished and going down with the EU as the Muslim refugees pour in for free healthcare and welfare, and perhaps a few good looking girls as a bonus. This is like two guys walking in the field in Rockies. Suddenly they see a mountain lion. One quietly slips on his running shoes. The other looks at him and asks: “Do you really think you can out run him?” His friend replies: “No. I just have to outrun you.”
The Central Bankers Are Crazy & Public is Out Of Its Mind – Where’s the Beef?
Armstrong Economics Blog
Re-Posted Mar 12, 2016 by Martin Armstrong
The central bankers are simply crazy, not evil. They are trying to steer the economy by utilizing this simpleton theory that if you make something cheaper, someone will buy it. Japanese and German cars managed to get a major foothold in the U.S. because the quality of U.S. manufacturers collapsed, thanks to unions. The socialist battle against corporations forgot something important – the ultimate decision maker is the consumer. The last American car I bought in the 1970s simply caught on fire while parked in my driveway. Another friend bought a brand-new American car and there was a terrible rattle. When they took the door panel off, there was an empty bottle of Coke inside. Cheaper does not always cut it. Gee, shall we cheer if the stock market goes down by 90%? It would be a lot cheaper. Why does the same theory not apply?
Then we have the trading public. If the central bankers have gone crazy with this whole negative interest rate theory, then the public is simply out of their minds. The euro rallied because Draghi cut rates further, extended the stimulus another year, increased the amount by another 33%, and then declared rates would stay there for years to come. And these insane traders cheer. Unbelievable! They are celebrating the public admission of Draghi that all his efforts to date have failed, so let’s do even more of the same. And they love this nonsense? Negative interest rates have become simply a tax on saving money and the stupid traders and media writers love it. The Fed tries to raise rates and they say – NO! This is a stunning combination of admission and stupidity that one would expect from a pretty but clueless girl and her drunk college boyfriend who can’t say no to any girl:
“I asked John if he slept with Karen and got his admittal!”
“Oh that’s cool, I think it’s probably about time you stopped drinking.”
All they see is that lower interest rates “should” stimulate but ignore the fact that they never do. They are too stupid to grasp the fact that raising taxes cannot be offset by lower interest rates. People judge everything by the bottom-line and not some crazy theory that just stupid. A simple correlation study by a high school student in math class would prove this theory does not correlate to expected outcome. And we cheer this insanity confirming our own overall stupidity and one is left wondering who is crazier? I suppose it is just that central bankers are crazy and the public, as well as the media, are just out of their minds.
It reminds me of the old TV commercial by Wendys:
The European Refugee Crisis is Destroying Europe
Armstrong Economics Blog
Re-Posted Mar 12, 2016 by Martin Armstrong
Ever since the Cologne sexual assaults by the refugees, things have gotten far worse in Germany. The press tends to still hide the crisis. Nevertheless, drawing only from German media reports which have made it to the public, a list documenting more than 160 instances of rape and sexual assault committed by refugees in train stations, swimming pools and other public places against victims as young as seven have been eye-opening to say the least. This is going to have a profound impact in the German elections next year but it is also tearing Europe apart and pressure builds to close borders to prevent these people from spreading out from Germany to the rest of Europe.
The New York-based conservative think tank Gatestone Institute has compiled a shocking list of sexual assaults and rapes by migrants in Germany in just the first two months of the year. This is stunning to put it mildly. Merkel does not appear to be able to survive this crisis.
Then nearly everyday some knife attacks among refugees are reported in the Austrian press. We have Africans against Arabs and those from Chechnya are against Afghanistan. In Austria, the general public is becoming terrified to even walk outside in many areas.
The ECB – A Victim of its own Ignorance?
Armstrong economics Blog
Re-Posted Mar 11, 2016 by Martin Armstrong
“Rates will stay low, very low, for a long period of time and well past the horizon of our purchases,” Draghi declared. “From today’s perspective and taking into account the support of our measures to growth and inflation, we don’t anticipate that it will be necessary to reduce rates further.” The ECB cut its main interest rates to new record lows on Thursday as they continue to move into negative territory without a clue as how to reverse the trend. Beginning in April, the ECB will buy €80 billion euros worth of bonds each month, which is an increase from the €60 billion euros presently. Draghi will keep the stimulus program running at least until March 2017. However, while he thinks simply lower interest rates will entice people to borrow, he fails to see the other side of the coin that is spinning.
Beginning in April, the ECB will buy €80 billion euros worth of bonds each month, which is an increase from the €60 billion euros presently. Draghi will keep the stimulus program running at least until March 2017. However, while he thinks simply lower interest rates will entice people to borrow, he fails to see the other side of the coin that is spinning.
Lower rates rob savers of income, destroy pension funds, and leverage the debt to a dangerous level when the trend changes. People will not borrow or spend when they have no confidence in the future and businesses will not hire or expand. You cannot stimulate the economy with lower rates while crushing it with taxes.
It is true that the economic community was expecting a rate cut and more asset purchases of government debt. However, the ECB went further this time by saying it will start buying debt issued by companies as well as governments. While that is an improvement for corporations, whom typically have to pay back their debt unlike government, there is a dark cloud behind this statement. The debt they will buy, according to reliable sources, will be riskier debt of entities (banks) that are in trouble.
Nothing these people can do will ever reverse the trend. They raise taxes to cover their fiscal mismanagement and then “stimulate” by employing monetary theory. They will never resolve the problem and this entire crisis will go into meltdown since governments only borrow more and never reduce debt. They have become victims of their own ignorance.
Centinel2012 