Tag Archives: The Forecaster

May 15 2018

The Dollar High – Real or Adjusted?


Armstrong Economics Blog/USD $

Re-Posted May 15, 2018 by Martin Armstrong

QUESTION:  Hi Marty,

you said that the Dollar will make a major high going into 2020/21 and that will bring on the break in the monetary system. will the Dollar make new all-time high in nominal (165) terms or will it take an inflation-adjusted high to break the system?

thanks for the education.

JP

ANSWER: Here is a chart on our Dollar Index back to 1900. We can see how the dollar rallied for World War I and the Great Depression as everyone defaulted in 1931. Then there was the Plaza Accord high in 1985, which was followed by a 10-year decline. This projects out to a 26-year rally into 2020/2021 and should be a nominal new high. That will break the back of emerging market debt, and probably the European banking system.

Keep in mind that the USA took the bad loans out of the banks and stuffed them in Freddie and Fannie. In Europe, the bad loans are still on the books of the banks because everyone fears that a bailout would result in money flowing from the north to the south. This is why Draghi is keeping QE in place and buying debt that matures. The banking crisis just never ends. That combined with Draghi leaving next year means that and any halt to QE by the ECB will leave marginal governments unable to sell their new debt. The whole thing gets very dicey very fast.

I am continually called throughout Europe because they know this is just a waiting game. I do not think the solution will be one that anyone is willing to talk about without blood pouring from the ticker-tape. We may be doing another documentary on this very subject in advance to hopefully educate people as to what, why, and how we move beyond this. That is in the preliminary stages. If I know for sure, I will let everyone know. It will probably be filmed at a university in Europe.

May 15 2018

What If We Just Wiped Out All Debt?


Armstrong Economics Blog/Banking Crisis

Re-Posted May 15, 2018 by Martin Armstrong

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.

May 15 2018

Jared Kushner Full Speech During U.S. Jerusalem Embassy Dedication…


Re-Posted from The Conservative Tree House on May 14, 2018 by

Senior Advisor to President Trump, Jared Kushner was given the distinction of representing the President of the United States Donald J Trump at the U.S. Embassy Dedication in Jerusalem, Israel.

Mr. Kushner is the husband of First-Daughter Ivanka Trump and a key emissary of the Trump administration. As the foremost trusted adviser within a very tight circle, Jared Kushner conducts key diplomatic engagements on behalf of President Trump and carries direct personal messages to each of the foreign leaders on behalf of the Office of The President.

May 15 2018

President Donald Trump Message During Embassy Dedication….


Re-Posted from The Conservative Tree House on May 14, 2018 by

A message from President Donald Trump as broadcast during the U.S. Embassy dedication ceremony in Jerusalem, Israel.

May 15 2018

Promise Made, Promise Kept – U.S. Embassy Jerusalem Dedication Ceremony (Video)…


Re-Posted from The Conservative Tree House on May 14, 2018 by

Today the official dedication ceremony for the U.S. embassy in Jerusalem.

May 14 2018

Can We Just Use Cryptocurrencies, stop Bank Lending & end Central Banks & Survive?


Armstrong Economics Blog/Cryptocurrency

Re-Posted May 14, 2018 by Martin Armstrong

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.

May 14 2018

Malaysian Election Demonstrates the Wave of Political Change of Trump, BREXIT, Italy, Spain, etc is still in motion


Armstrong Economics Blog/Politics

Re-Posted May 14, 2018 by Martin Armstrong

COMMENT #1: You were right. You said there would be a political change here in Malaysia in 2018 at your Bangkok conference. How do you do this? I am coming to Singapore.

COMMENT#2: Wind of change has swept through Malaysia on May 9th as incumbent Barisan Nasional (BN) coalition 61-year rule since 1957 Independence was ended after people rose up to reject a super corrupt and tyranny regime. An opposition coalition called Pakatan Harapan (PH) form a new federal govt, the first time in our history we have a peaceful transition of power.

People are fed up with BN blatant corruption like 1MDB scandal, abuse of power whereby cases of whistleblowers that expose politicians corruption are charge and sentenced to jail while the perpetrators still walk free and holding senior govt positions!

But the hard work has just begun as the new govt inherit a mess from decades of mismanagement, corruption, and abuse of power. Reform in judicial, executive and legislative branches are badly needed. Also, our country is facing a severe debt crisis due to our corrupt politician’s insatiable appetite to borrow.

Socrates forecast of this global trend is indeed amazing. A new Malaysia is born.

REPLY:  Malaysia’s former leader Mahathir Mohamad, 92, won the election last week, which has shocked everyone for they said it could not be done. This election is part of the same movement globally where we are witnessing a rising up of the people against the corruption of governments that have been ruling in general since World War II. This wave of political change brought Trump to power, BRXIT, Hungary election against the EU, Catalonia rising up in Spain, and the Italian election just to mention a few.

This year, 2018, in the case of Malaysia, was 72 years from the April 1st, 1946 event when the Straits Settlements were dissolved and replaced by the Malayan Union, which was conceived to unify the Malay Peninsula under a single government. Then in 1956, a constitutional conference proposed the appointment of the Reid Commission to devise a constitution for a fully self-governing and independent Federation of Malaya. In February that year, talks between representatives of the government of Malaya and Malayan Communist Party sought to resolve the Malayan Emergency situation. Therefore, 2018 was on a very simplistic way, the convergence of two important cycles – the 72-year cycle and two Pi cycles of 62 years. However, we will see the culmination of the full political reform finally come to pass in 2043. Malaysia is still in the transition period. Do not expect the corruption to go quietly into the night.

The corruption in Malaysia was far deeper than anyone suspected. I explained that previously and the involvement of Goldman Sachs. True, this has been a political earthquake that toppled the scandal-plagued premier. Ousting his regime that has ruled for over six decades is easier said than done. Behind the curtain, there are way too many bureaucrats who benefit from the corruption. So while the people delivered a political triumph that, like Trump, almost no one had predicted, the end of the grip of the power of the Barisan Nasional party which has ruled Malaysia since its birth as an independent country will indeed be a struggle going forward.

Mahathir previously ruled the country with also an iron fist for 22 years. You can replace the head of state, but the corruption never ends there. It has infected every possible level of government. This is why revolution often ends up the only final recourse because the bureaucracy is far too often the real problem. So the final victory will come more likely in 2043.

May 14 2018

Sunday Talks: John Bolton -vs- Martha Raddatz on Iran Policy…


Re-Posted from The Conservative Tree House on May 13, 2018 by

It is interesting to watch the Trump Cabinet debate the Obama Cabinet (U.S. media). In this interview between White House National Security Advisor John Bolton and ABC’s Martha Raddatz the central topic is Iran; the detailed conversation is deep weeds therein.

After Bolton presents the administration position and reasoning for exiting the deeply flawed, unsigned and unenforceable Obama Iran “deal” (not treaty), essentially a JCPOA pathway to the land of broken promises, Ambassador Bolton then reaches the part of the discussion where sanctions against European companies come back into play.  This is the best part.  WATCH:

Massive U.S. economic leverage, and the strategic application therein, is an aspect that drives the left-wing Iranian apologists bananas.  A weaponized $20 trillion U.S. economy is the unavoidable atomic sledgehammer at the foundation of the Trump Doctrine.  It is far more powerful than a military weapon and drops all nations to their knees in compliance.

Everything is about the economics. E.V.E.R.Y.T.H.I.N.G. Every point of opposition; every forward MAGA policy; every initiative, including freedom; every move toward success; everything is about the economics.

Look at the immediate take-away published by Reuters.

There are trillions at stake.

Every issue surrounds those trillions.

All political ideology is only triumphed by threatened indulgences.

May 14 2018

Sunday Talks: Secretary of State Pompeo -vs- Chris Wallace…


Re-Posted from The Conservative Tree House on May 13, 2018 by

Secretary of State Mike Pompeo sits down for an interview with the Deep State toll booth operator Chris Wallace.  Customary cost of admission, five shillings.

Secretary Pompeo briefly discussed the ISIS terror attack in France yesterday and expands upon the upcoming summit with North Korean Chairman Kim Jong-un. Secretary Pompeo appears to have a more thorough understanding on the Trump Doctrine of using economics to achieve national security objectives than former Secretary Rex Tillerson.

The duplicitous toll booth operator won’t raise the barricade until Pompeo discusses the view of former CIA Director John Brennan.   Pompeo exits the narrative and beats Wallace over the head with MAGA common sense: “Brennan’s remarks are silly“, moving on…