The Debt Ceiling Hits Pi – $31.4 Trillion


Armstrong Economics Blog/Sovereign Debt Crisis Re-Posted Jan 24, 2023 by Martin Armstrong

The debt ceiling has currently hit $31.4 trillion (Pi), representing borrowing that the Treasury undertakes to fund its financial obligations, ranging from safety-net benefits such as Social Security. Is this coincidence, or is the magic number where the government starts to lose control? As Socrates has been forecasting, this is the end of the road for our Republican forms of government. They are irresponsible, show no form of fiscal management, and exploit every possible means to sustain their power. The problem has been that they never see the end of the road. They think they can keep borrowing year after year and the public will keep buying.

The real crisis is the amount of new debt that the government needs to issue, is exceeding the balance sheet of the Primary Dealers. If they must buy the debt to retain their status, then if they cannot sell the debt, that is when you are looking at a major banking crisis. It is actually cheaper at this point to simply print the money and stop this fool’s game of pretending to be running the system responsibly.

It is time to turn out the lights on the stupid game of running endless deficits and borrowing when there is NEVER any intention to ever pay off the debt. Let’s stop the nonsense for this cannot continue indefinitely.

From the birth of the US paper dollar in 1861, it will be 19 intervals of 8.6 years in 2024. We have reached the Rubicon. It is almost time to celebrate a new beginning is on the horizon.

Reader Feedback Request – How Much Have Your Electricity, Gas and Heating Oil Costs Increased?


Posted originally on the CTH on January 24, 2023

There is a pending energy issue looming just beyond the horizon that is going to become a major issue very soon.   Electricity rates, natural gas costs and home heating oil prices increased massively due to Joe Biden energy policy.  However, things are likely to get much worse in a few months.

On the issue of oil and gasoline prices, the U.S. Strategic Petroleum Reserve (SPR) has dropped 40% since Joe Biden began using it to offset massive global prices increases in oil.  However, Biden is doing nothing to increase production and has not engaged energy producers in conversation to expand domestic production. Non pretending warning HERE.

Ultimately what this means is another wave of sicky price increases for gasoline are coming fast.

Additionally, Mark Wolfe, director of the National Energy Assistance Directors Association (NEADA), is warning that continued pressure on natural gas supplies by exporting U.S. production to Europe is going to make our electricity rates go even higher as more than 40% of U.S. electricity generated comes from the use of natural gas.  Wolfe wrote a letter in October to Energy Secretary Granholm [SEE HERE], and the situation is unfolding exactly as he warned.

Electricity rates have jumped massively in the past year, and it looks like they are going to continue to rise.  The spring and summer of 2023 looks to deliver another round of higher oil prices, higher natural gas prices, higher electricity prices and higher gasoline prices.   Which brings me to the question…

It is challenging to find solid data (without noise) on regional electricity, home heating and natural gas prices. However, Treehouse readers consistently provide the most accurate assessments of reality on the ground.  You guys are the experts in checkbook economics. So, I ask you the question:

How much have your electricity, natural gas and/or home heating costs increased in the past year?

Why do Neocons Want War with Russia?


Armstrong Economics Blog/War Re-Posted Jan 24, 2023 by Martin Armstrong

Lindsey Graham is the twin brother of John McCain. I had asked John McCain once why he hated Russia so much. He never responded with any reason. It was always the same nonsense he always spread before Putin and after. It has baffled me as to what the difference is between Germany and Russia. We do not belittle Germany or hate its people solely because of Hitler. When it comes to Russia, it does not matter who is president, nothing ever changes. Graham said:

“If Putin gets away with this, there goes Taiwan. If Putin’s successful in Ukraine and isn’t prosecuted under international law, everything we’ve said since WWII becomes a joke. He will continue beyond Ukraine.” 

Lindsey Graham is an outright neocon who will say anything to achieve his dream – the destruction of Russia even though it is not communist. There is absolutely ZERO evidence since the fall of the USSR that anyone has sought to conquer Europe. Both Hitler and Napoleon were seeking to re-establish the old Roman Empire and rule over all of Europe. Both attempted to take Egypt to relive the glory of Rome. Some say to fulfill the prophecy that the end will come when the Holy Roman Empire Rises for that will be the time when we die. Don’t worry, Putin does not aspire to that dream. I’m not so sure about the American Neocons.

To even say if Putin wins in Ukraine, “there goes Taiwan” is an absolutely delusional statement. If anything, China would be better off taking Taiwan as the US foolishly keeps sending military arms to Ukraine. The US has already transferred thousands of artillery shells from a military weapons stockpile in Israel to Ukraine. They did the same sending weapons from South Korea to Ukraine. It was reported back in March of 2022 that planes take off almost daily from Dover Air Force Base in Delaware filled with Javelins, Stingers, howitzers, and everything else they can fit. Likewise, Germany began the same in February 2022.

Just this past week, the US military warned Biden that Is the U.S. Running Out of Weapons to even send to Ukraine. The EU foreign policy chief  also warned that “the military stocks of most [EU] member states has been, I wouldn’t say exhausted, but depleted in a high proportion, because we have been providing a lot of capacity to the Ukrainians.”

While the US aid to Ukraine came in at $113 billion far greater than Russia’s budget of 65.9 billion, it is double the military budgets of both France and Germany. It is approaching 50% of the annual budget of China. Just looking at the military spending, Russia has not been preparing to invade Europe. This is absolutely an absurd argument.

John McCain has never changed his view of Russia regardless of who is at the helm. Politico called him the “American antagonist of Russia.” It was McCain who kept pushing NATO Eastward up to the border of Russia all on his claims that if the West does not expand NATO, then Russia will. He proclaimed that those in power did not want to restore the “Soviet Union, but the Russian empire.” There was NEVER a single move that Russia ever made to imply that theory was remotely correct post-1991 and the fall of the USSR.

Lindsey Graham is carrying the banner of hatred for all Russians. It does not matter if Russia overthrows Putin, he dies, or retires. He will still hate Russia and want an all-out war to destroy Russia wiping it off the map once and for all.

The Russian people like Europeans and Americans, do not want war. Like everyone else they just want to enjoy life and take care of their families. It is always the leaders who create all the wars. We are just the dirt beneath their feet – the great unwashed who are always expendable because there are too many of us anyway.

This hatred of Russia is a strategic psychological tactic to sell the idea of war to the common people so they are willing to die for something they think is noble. Not much different from the young arab terrorists who are told this is a holy war and God will reward them if they blow themselves up. The leaders there too will never blow themselves up either.

So why do people like Lindsey Graham just hate Russians and wants war at all cost? It is hard to say. We do not hate Germans today because of Hitler. So why do we hate Russians because of Stalin? One thing is for sure, this hatred of Russia is exhausting our own conventional military supplies so while we cheer claiming Ukraine is winning, we will not be in a position to defend even ourselves if China and North Korea, as well as Iran, decide to join the party.

Here We Go Again – Altering the Formula for CPI


Armstrong Economics Blog/Inflation Re-Posted Jan 24, 2023 by Martin Armstrong

There are some who are claiming that the revision of the CPI is to help the Federal Reserve stop fighting inflation. This is typical for Americans who only watch the Fed and nothing else. The formula for the CPI has been routinely altered. Real Estate used to be included but when that was rising too much, they replaced that with rents. When rents started rising, they replaced them with controlled rents.

This is NOT about helping the Fed to lower rates or stop raising rates as the majority seem to be touting. Powell is not that stupid and this will have ZERO impact on Fed decisions going forward. This is all about government spending which is a far greater problem than worrying about the pressure on the Fed. Virtually EVERY government program is automatically INDEXED to CPI. Thus, agencies’ budgets are automatically increased each year based on the CPI. Your taxes are indexed to the CPI. By reducing the CPI, they collect more taxes! There is NOBODY in Congress or at the Bureau of Labor Statistics that gives the Fed a second thought.

Even if we look at inflation using the pre-1980 formulas, the CPI is approaching 10%! When we calculate inflation by eliminating everything that is really irrelevant and focusing on food, energy, transportation, and taxation, which they do not consider at all, the reality of our number came in at 32% for 2022. That is a far cry from the official number. This is simply calculated by Socrates from an unbiased perspective.

What a new wonderful world the Biden Administration has created. Thank you, COVID & the Russian Sanctions. The largest increase we found was obvious fuel between gasoline and diesel used in trucking and homes averaging 65%+ Turning to basic food, eggs were up nearly 50%, flour rose by 25%, cooking oil 23%, butter was up 35%, Chicken by 14%, and Rice by 18%. If we throw in toothpicks, paperclips, etc, then the more we can include the lower the inflation rate. We do not include rent or real estate. Our number is far more accurate to the daily living expenses than the near 10% level of the government. They also do not include sales taxes. The national average rise in rental rates was 7.8%, in Florida it was 8.5%, and in NYC 1.5% when controlled.

When I would buy a desktop IBM XT during the 1980s, it was always about $7,000 for a top-of-the-line. Today, that cost has come down significantly. Obviously, we do not buy computers every week. Should that really be part of a formula? The BLS has made so many revisions to the CPI over the decades it is really a political tool these days.

Back in the ’90s, our staff was dissecting every statistic. We discovered that they were overstating economic growth because they counted government employees twice. The total all personal income, and then government spending. I called the head of the BLS and asked surely this had to be backed out somewhere for hiring government employees to increase GDP rather than the private sector. They reviewed it and finally just said – no comment.

The idea that this latest revision of using one year as a weight instead of two will allow the Fed to stop tightening is really the rantings of people who only look at the Fed for everything as their guidance. There is a lot more incentive behind this revision and the Fed was not a consideration.

The Good News Nuclear War Will Save the Planet


Armstrong Economics Blog/Energy

Posted Jan 24, 2023 by Martin Armstrong

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Most of these people like Al Gore, Kerry, the mainstream media, Rhinos, democrats, and Bill Gates seem to actually believe in climate change for they are displaying the most stupid form of analysis invented by the lowest possible intelligence level of society. Hey, it’s warmer today than when I was a kid so we must be causing it. There has been ZERO research into climate on any of their parts to even test their theory. They all project that we are headed toward an environmental Armageddon if mankind does not immediately end fossil fuels. Not a single one has bothered to even consider that switching to electricity curiously makes society extremely vulnerable. If I were China looking to take down the West, I would be pushing this agenda at light speed. The first thing you do is take down the power grid and society will crumble in less than 72 hours. Using digital currency would mean you could not buy anything. Without an electric car you would be forced to walk to a store that then could not sell you anything without electricity and no new supply of anything would be able to move so there goes the supply chain – again.

The GOOD NEWS is you can then just nuke your opponent and actually save the planet all at the same time. Without electricity, your opponent could not even make a phone call to launch a response. But if we look at Chornobyl, the nuclear disaster restored the region which became a sanctuary for animals void of humans.

Bikini Atoll 70 years after nuclear tests is thriving. On July 24, 1946, Baker Test shrouded its formidable height over the U.S. Navy’s test fleet. The United States dropped 23 nuclear bombs on the island, including a device in 1954 that was 1,100 times larger than the Hiroshima atom bomb. Now a team of scientists from Stanford University has been stunned. They discovered an abundance of marine life apparently thriving in the crater of Bikini Atoll, which was declared a nuclear wasteland after the bombings.

Strangely enough, the same has been found at Chernobyl in Ukraine. It is starting to emerge that even setting off every nuclear bomb will not destroy the planet or turn Earth into space rocks. We can alter our environment by doing so and ridding the planet of humanity as the dominant species, but Earth will heal itself and life will adapt exactly as scientists have discovered in Ukraine at the site of Chernobyl. Wildlife has thrived because it sent humans running.

This new evidence emerging from Chernobyl and Bikini Atoll is demonstrating that we just may not be as smart as we think we are no less all-powerful. Obviously, the WEF and world leaders who are all pushing for World War III, are obvious far smarter than we are. They are really trying to save the planet from us. Exterminate humanity and we can save the bugs and crickets from becoming our next food source.

The Last Days of Japan


Armstrong Economics Blog/Japan Re-Posted Jan 23, 2023 by Martin Armstrong

We have been forecasting for several years now that those who have been focused on the demise of the dollar to the exclusion of everything else would be wrong because of what must fall first is both Europe and Japan. It is an all-out race to see who will be the first to collapse.

This special report on Japan is very critical for it provides a view of Asia v Europe. This is the prelude to the fall of socialism in the West. Communism collapsed in 1989. Now 34 years later, it is just our turn. It does not mean the end of the world. It simply means the end of the present monetary system as we have known it.

The Report covers the Japanese Yen spot and futures, the Nikkei 225 Cash Index, and the Japanese JGB Futures.

Soros Owns Mainstream Press?


Armstrong Blog/Tyranny Re-Posted Jan 23, 2023 by Martin Armstrong

COMMENT: Marty, As you know I worked for _____________ in NYC. We all know you were innocent back then. I have followed you for probably 30 years. Everyone knew that the bankers told the CFTC that you had to be silenced. Your forecast cost them a lot of money when they assumed they could control the market.

It is no longer a mystery why the mainstream press refuses to ever even talk about your Economic Confidence Model and how it has always been right. The press is on the payroll of George Soros who hates your guts for his biggest losses were always against you.

I am passing this article on because I think it sheds light on who is on Soros’ payroll.

Cheers

All the best

WH

REPLY: Thank you. I have heard that from many sources. The CFTC wanted to stop our forecasting at the request of the bankers. They thought they could manipulate markets for “the” perfect trade. They always blew up and blamed me because we had more than $3 trillion under contract back in the ’90s – the equivalent of 50% of the US National debt at the time.

Soros is manipulating the press to press for the destruction of Russia to further his one-world government. Perhaps making that much money causes mental illness whereby you become a demigod to redesign the world. I have ZERO respect for Soros, Gates, or Schwab. They should all be thrown into a padded cell, handed a game of monopoly, and let them try to manipulate each other.

The Petrodollar – Another Fake News Invention?


Armstrong Economics Blog/Gold Re-Posted Jan 23, 2023 by Martin Armstrong

The entire theory of the Petrodollar dares back to the collapse of Bretton Woods and the subsequent oil embargo protesting US support for Israel and the price shock of raising prices. Those were the days when everyone was obsessed with gold and the whole idea of a floating currency that was popular to say will crash and burn for money had to be backed but some commodity. Those were indeed the days when that theory was very popular and it dominated the thinking process of the 1970s.

Here is an advertisement from my past days as a market maker in gold during 1970s to about 1983. I too believed in all those theories until the crash came in 1975. I too had bought into all that nonsense. Gold was going to be legalized in the United States in 1975 for the first time since 1934. Being a very large dealer domestically and internationally, all my European clients were talking up the scenario that gold was going to $500 if not $1000 once Americans could buy.

Because Teddy Roosevelt was an ancient coin collector, when Franklin Roosevelt, who was a stamp collector, recognized that gold coins existed from ancient times thanks to Teddy, he confiscated gold on deposit at the banks but exempted collector coins. That was the reason why we have rolls of $20 gold coins trading to this day.

As a result, those who were really believers in gold would buy common date American $20 gold coins by the roll in those days. So when the Europeans were talking themselves into gold was going to explode in 1975 as soon as it was legalized in the United States, as a dealer, I never got a single call about buying gold from anyone other than those who already owned it. The gold crowd was only looking at gold and had no idea that any American who wanted gold bought it in coin form. They were cheering gold without understanding the reality of the marketplace.

I went short gold in January 1975 not using even technical analysis. The hype was so much and I knew that there was no line standing at the door to buy gold. My gut feeling was that gold was going to decline – not rally. I saw that in 1970 when the two-tier gold market they created in 1968 saw gold drop below the official price of $35 in 1970 – something that was not supposed to happen.

Even the Senate of New Jersey came to me and I wrote the law on sales tax regarding gold in 1974. Gold peaked in December 1974 at $197.50. It fell to $97.70 while inflation continued but economic growth declined and they called it STAGFLATION. I learned back then that all the scenarios and theories that gold rises with inflation and the dollar would not survive without some backing. I was confronted by the reality that exposes all these theories to be a throwback to times long since passed. This all only inspired me, even more, to investigate everything in detail. By 1979, I published what I called the WHY REPORT. I later republished this in 1981 and again in 1983.

To explain the survivability of the dollar since it rose between 1972 and 1976 against the British pound, with the collapse of Bretton Woods, the rise in gold, and the entire oil embargo, that is when they came up with this idea that the dollar was backed by oil. They had to explain why their theories were wrong just as they changed global warming to climate change to explain away global cooling.

All the theories were wrong. The dollar rose, and inflation soared, as did gold. None of this made sense under their theories. Something had to be done. It became obvious that it was impossible to make investment decisions based upon these theories that people just made up to sell gold which are still being used today. I also remembered that in January 1970, gold fell in the London market to $34.70. Gold was not supposed to sell below the Bretton Woods fixed exchange rate of dollars to gold. It was like being smacked in the face and told to wake up!

Without question, the dealers could not sell gold if it did not rise with inflation and against the dollar since it was no longer backed by anything. They had to invent something new. That is when the sophistry specialists stepped in and boy did they succeed in bullshitting everyone.

The explanation was ah ha – the dollar is really backed by oil because it is priced in dollars. That’s it. It is really the Petrodollar! Suddenly the dollar became de facto-backed by oil. They needed an explanation to explain why all the old theories were wrong. They sold this theory and it made the front cover of Newsweek. Everyone said YES! That must be the reason. OPEC priced oil in dollars! Naturally, everything was priced in dollars because, under the fixed exchange rate of Bretton Woods, everything from wheat and corn to copper and gold was all priced in dollars.

Many people are now calling for the collapse of the dollar all because Saudi Arabia has confirmed that they will be selling oil in various currencies. Hence, relying on this old fictitious their of the Petrodolarr from the ’70s, they are telling everyone the dollar will collapse and gold will soar. They never get tired of kicking the same theories down the road without EVER just once being honest and looking if they have any validity whatsoever.

The value of any currency is NOT some commodity. It is the people. You can have all the gold in the world, but if the people do not produce, it means nothing. Indeed, Russia had the largest gold reserve of any nation ahead of the Communist Revolution. They took the gold reserves and hid them so the communists would never find them. They are still missing to this very day. Likewise, Germany and Japan has no gold reserves post-WWII yet they rose to the strongest economies in their respective regions. How is that possible? It is very simple. The true backing of a currency is the total productive capacity of its people. The US became the largest economy in the world NOT  because of gold, but because the US had a consumer-based economy built of freedom rather than Marxism as the problem with Europe. China, Japan, and Germany, all focused on the old-world mercantile economic model. Produce to sell to someone else. They failed to follow the strength of the United States in building a consumer economy.

China understands the difference and has shifted to develop that type of economy whereas Germany oppresses its people with high taxes on its citizens to sell manufactured goods to everyone else. That is why they wanted the Euro to expand their European economic marketplace.  Germany’s high taxes have put it near the bottom insofar as the German people have less net worth than Italians. The more Marxist the country, the lower the economic standard of living.