Global Trends By Martin Armstrong : ‘It’s Being Driven Largely By Underlying Economics’
Exclusive interview with Martin A. Armstrong by Matt Ehret, Piero Messina and Lorenzo Maria Pacini.
Economist Martin Armstrong speaks again with SouthFront. In his interview, Armstrong offers some insights into the main issues of the geopolitical and economic agenda…
QUESTION: Dear Mr. Martin Armstrong:
I hope you are well and enjoying your front-beach house, in the Sunshine State. I ask you:
1. What is better for U.S.A., right now?
2. Is a strong U.S. Dollar or is a weak U.S. Dollar?
I look forward to hearing from you as soon as possible.
Sincerely,
Juan
Santiago of Chile.
ANSWER: Potential risks in Chile include a global recession reducing demand for copper into 2026, political instability in Chile, and eventually, a stronger US dollar, making emerging market assets less attractive. While Trump wants a lower dollar to sell more widgets, the problem remains that the push for war in Europe provides an underlying demand for dollars. In addition, the EU is rushing to cancel the paper currency and move to digital as part of the capital controls that have been put on the plate. It does not matter what Trump wants for the dollar; neither he nor any country can alter the fate of the currencies, which are set in motion by many things, especially war.
In Europe, they are not about to suddenly surrender to their Marxist socialist agendas. “A New World Order With European Values” adorned the banners and signs at the World Forum meeting in Berlin. They have declared that the greatest threats facing humanity are the resurgence of populism and free speech. They are advocating silencing anyone who disagrees with them. Just amazing.
The LEFT is losing ground, so this is when they become more authoritarian. They justify themselves by saying that populist movements have victimized the people, so this also leads them to conclude that free speech must end.
This trend is dominant in Canada and Europe, and the countertrend has been Argentina and Trump in the USA. Despite Trump’s idea of a weaker dollar, the lack of common that has engulfed the LEFT, where they refuse to admit that they are ever wrong, will have a profound. impact on the next two years.
Chile’s politics will hinge on the constitutional process, economic management, and societal demands. President Boric faces a critical window to deliver reforms, but polarization and external pressures pose risks. The right could capitalize on setbacks, setting the stage for a contentious 2025 presidential election.
President Gabriel Boric (left-wing coalition Apruebo Dignidad) has been in office since March 2022. His administration focuses on social reforms, environmental policies, and reducing inequality. Challenges include managing economic stagnation, inflation, and public security concerns. The success in Argentina has the potential to become a contagion, and South America could rise as a restored economic land if it finally sheds the LEFTIST agenda that has stagnated the economy overall.
At this stage in this game of warmongering, the British press not only keeps saying that Russia trembles less at the thought of their nuclear power but is pushing the image that Britain is invincible. The latest is the electrical fire that shut down Heathrow Airport for 24 hours. There are openly speculating that this was an act of war by Putin. So, I supposed that justifies World War III and nuking Moscow. The Telegraph wrote:
But as the West has expelled so many Russian spies in the years since then, Putin now relies on unprofessional foreign gangsters to carry out sabotage attacks across Europe. Some are Bulgarian spies, as The Telegraph reported in late 2024. Others are British nationals, such as 20-year-old Dylan Earl, who admitted to burning down a Ukrainian-owned business in west London.
Perfectly reasonable. Let’s torch all of the world for an electrical fire that shut down the airport for 24 hours. Starmer can destroy Russia in seconds, so no worries; Putin is terrified of Starmer and will not be able to retaliate. Hence, the Telegraph will sell heaps of more newspapers since the British Empire will rise again.
President Donald Trump is urging the Fed to cut interest rates to offset the inflation that will be caused by tariffs. “The Fed would be MUCH better off CUTTING RATES as U.S.Tariffs start to transition (ease!) their way into the economy,” Trump wrote. “Do the right thing. April 2nd is Liberation Day in America!!!” Reducing interest rates will NOT offset inflation caused by tariffs because the two variables are not directly related.
Tariffs increase costs due to supply, while interest rates influence demand. When tariffs are imposed, the cost of imported goods rise, increasing prices for consumers and businesses. This cannot be offset by lowering interest rates, as rate cuts stimulate borrowing and investment rather than addressing price increases caused by trade barriers. In fact, lower interest rates can exacerbate the problem by weakening the currency, making imports even more expensive, further fueling inflation.
Historically, tariffs have led to stagflation—rising prices combined with economic stagnation—rather than the demand-driven inflation central banks typically target. The Smoot-Hawley Tariff of the 1930s, for example, severely disrupted global trade and worsened the Great Depression. Similarly, Trump’s trade war with China during his first term did not lead to any economic boom but instead forced businesses to adjust supply chains, raising costs for consumers.
Lowering interest rates in this environment offsets capital flows, decreasing confidence and weakening the purchasing power of the currency. The result is a cycle in which consumers face higher costs while the central bank loses the little control it has to manage inflation. The idea that the Fed could actually control inflation is based on outdated Keynesian economics concepts that were drafted when the US had a balanced budget. Now, most demand comes from the government itself, the largest borrower and creator of debt. This is why Jerome Powell spoke out against Joe Biden for creating the largest spending package in US history and multiplying the public sector. The government will never pay off its debts, and the interest payments on that debt alone have been astronomical.
Relying on rate cuts to counter tariff inflation ignores the root cause of the issue. The real solution lies in reducing trade barriers and not relying on tariffs to increase the demand for domestically made goods.
Fed Chair Jerome Powell said he expects inflation to be “transitory,” a word reminiscent of America’s situation three years ago when the Fed repeatedly urged the public to underplay inflation as it would improve. Conditions did not improve, as we later learned, and the Fed will have a hard time convincing the markets that this time is different.
“It can be the case that it’s appropriate sometimes to look through inflation, if it’s going to go away quickly, without action by us, if it’s transitory,” Powell said. “That can be the case in the case of tariff inflation. I think that would depend on the tariff inflation moving through fairly quickly and, critically, as well on inflation expectations being well anchored.”
Consumer spending is crucial to the US economy. Retail spending in February increased 0.2% after declining 1.2% in January, according to the Department of Commerce, but fell beneath predictions for a 0.6% monthly increase. Total sales from December 2024 to February 2025 rose 3.7% from the same period one year ago, but growth remains minimal.
People do not spend when confidence is low. The University of Michigan’s consumer sentiment survey indicated a 10% decline in consumer sentiment this March compared to February, citing a “high level of uncertainty.”
The National Federation of Retailers stated that February sales had slowed as a direct result of tariff threats. “Consumer spending dipped slightly again in February due to the combination of harsh winter weather and declining consumer confidence driven by tariffs, concerns about rising unemployment and policy uncertainty,” NRF President and CEO Matthew Shay said. “Unease about the probability of inflation and paying higher prices for non-discretionary goods has the value-conscious consumer spending less and saving more. But for the moment, year-over-year gains reflect an economy with strong fundamentals.”
Retail is America’s largest employer in the public sector, adding $5.3 trillion to annual GDP. One in four Americans, 55 million people, are employed through this crucial sector.
Naturally, the cost of living is causing much upheaval as people spend more on less and save what they can. It would be ignorant to say that tariff disputes do not have a direct negative impact on the economy. Powell likely coined a new term, “tariff inflation,” which I expect we will hear more frequently.
QUESTION: Mr. Armstrong, Thank you for speaking the truth about the timeline of this war with Ukraine. Every news story here in Europe says the same thing. Russia was unprovoked. Never in my entire life have I ever witnessed such outright lies by the press. I do not see the Europeans rising up to overthrow these governments. We are sheep being led to the slaughter. You have forecasted that the euro will no longer exist, and they are rapidly moving to digital currencies, which will be, as you say, for capital control. We will not be able to leave or get our money out. Will you do a special report on Europe? I think it is time to prepare for the future sooner than later.
I am a great admirer of your courage and endurance.
Hans
ANSWER: It gives me no pleasure to live through Socrates’s forecasts as we head into 2032 when even the euro has a Panic Cycle. I have done my best to try to defeat my own computer to no avail. Nobody will listen to me, and they certainly never listen to history, assuming this time is always different. That is just part of the cycle. Those of us who see the patterns are condemned to sit on the sidelines and watch everyone repeat history repeatedly.
The euro has broken last year’s low and is still trading below it. We have a very serious Panic Cycle for Europe next year, and they are pushing to cancel the currency’s move to digital ASAP. All they look at is capital controls, which will prevent bank runs and stop capital fleeing. They are trying to control their risk of the collapse of the EU.
Germany counterfeited the British pound during World War II to undermine their economy. However, with digital currencies, Russia has an EPM bomb. All they have to do is explode one over Europe, and you will fry the electric components and kill the digital euro altogether. This is how all governments work. They are entirely myopic, like climate change or COVID-19. In both cases, they never considered that this would drastically shrink the economy. Only afterward, behind the curtain, do I get the calls. Can you fix it?
When she was at the IMF, Christine Lagarde threatened tax havens to turn over all the people with accounts there or remove them from the SWIFT system. She even did that to the Vatican. She was the one who started this insane policy that her buddy, Obama, tried on Russia in 2014, and SWIFT refused to comply. So, they replaced the head of SWIFT in 2019, and he removed Russia from SWIFT, which set BRICS in motion. They are always myopic and never consider the counter-move in chess.
Now, Lagarde runs the ECB, pushing for the cancellation of the currency and moving to digital. This is about taxes all over again. She hates the rich, other than politicians, and is a pure socialist while prancing around as one of the best-dressed women in Europe in $10,000 designer attire.
Christine Lagarde, head of the IMF, could be charged with money laundering as she transported more than $10,000 worth of goods without declaring them. Lagarde appeared in New York City wearing French designs in a Chanel dress worth €3000, €6000 for her Hermès handbag, and at least €500 for her Christian Louboutin shoes, bringing the total to about €9500, not counting jewelry, of course.
This is like Biden’s Climate C zar, John Kerry, flying around in his private jets while telling us to ride a bicycle or walk to work in our 15-minute cities. Then he tells coal miners to get a real job learning how to make solar panels.
I am working on a detailed report covering the individual countries and the break up of the EU down the pike.
The German government, and newly elected German Chancellor Friedrich Merz, is warning its citizens that if they travel to the United States they should be careful not to break the law.
German Chancellor Friedrich Merz warns travelers that violating U.S. law while President Trump is in office, might get them removed from the U.S. or lose their visa entry privilege.
BERLIN — The German government has sharpened its travel advice for the United States.
According to its website, Berlin’s Foreign Office now warns its citizens that tougher immigration enforcement under U.S. President Donald Trump could land travelers in detention or see them face deportation.
It updated the guidance after several German nationals were detained at U.S. entry points, some held for days before being sent back. Officials now explicitly warn that even minor infractions — such as overstaying a visa or misstating travel plans — could trigger immediate deportation or a ban on future entry. (read more)
This is a major story throughout the EU gaining widespread attention. Yet, to be brutally honest I thought it was a spoof article at first. Apparently, most Germans believed they could break the law in the USA without any consequence.
This feels like some kind of ‘winning’, but I’m not exactly sure how to define it. 😂
I have created this site to help people have fun in the kitchen. I write about enjoying life both in and out of my kitchen. Life is short! Make the most of it and enjoy!
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