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The Central Bank Crisis on the Immediate Horizon

While the majority keep bashing the Federal Reserve, other central banks seem to escape any criticism. The European Central Bank under Mario Draghi has engaged in what history will call the Great Monetary Experiment of the 21st Century – the daring experiment of negative interest rates. A look behind the scenes reveals that this experiment has been not just a failure, it has undermined the entire global economic structure. We are looking at pension funds being driven into insolvency as the traditional asset allocation model of 60% equity 40% bonds has failed to secure the future with negative interest rates. Then, the ECB has exceeded 40% ownership of Eurozone government debt. The ECB realizes it can not only sell any of its holdings ever again, it cannot even refuse to reinvest what it has already bought when those bonds expire. The Fed has announced it will not reinvest anything. Draghi is trapped. He cannot stop buying government debt for if he does, interest rates will soar. He cannot escape this crisis and it is not going to end nicely.

When this policy collapses, forced by the free markets (no bid), CONFIDENCE will collapse rapidly. Once people no longer believe the central banks can control anything, the end has arrived. We will be looking at the time at the WEC. We will be answering the question – Can a central bank actually fail?

The Atlantic Current if Slowing Down = Global Cooling

 

The Atlantic current is slowing down dramatically

A team of scientists says it is the weakest in 1600 years. Naturally, they attribute it to humans who are driving their cars and heating their homes which is melting the ice in Greenland and that is fresh water which is lighter than seawater. They are predicting, of course, it could stop altogether in a few decades. The only problem is the classic one. They ignore cycles and assume whatever trend is in motion will stay in motion to the point it will stop completely. If that were the case, then we would probably go into a White Earth Effect and we should be all dead anyhow so perhaps the planet will heal itself when we are all gone. So they are predicting something that has no historical foundation since it has never happened before.

There is a cycle to this as well and, BTW, they are in fact saying that since this is the worst in 1600 years, are they not implicitly stating that there must be a cycle, to begin with?  Our models indicate that there should be an 1800 year cycle (+-3%) and this is indeed also linked to the energy output of the sun, which all these people amazingly ignore and prefer to blame humans for everything.

We are headed into a new Mini Ice Age and it will continue to get colder and colder, Europe, Japan, China, Canada, and the United States. Our models confirm it is GLOBAL COOLING we must be concerned about for that brings disease and famine. So while governments are just exploiting the global warming nonsense to impose carbon taxes, the real risk to our survival lies in the opposite direction.

…click on the above link to read the rest of the article…

Trump Lays the Seeds to World War III

Konstantin Kosachev, the head of International Affairs for Russia’s Federal Assembly, publicly stated: “There can be only one political assessment: It is a blatant violation of international law and it is an attack on a sovereign state without proper grounds.” Strangely, he is correct. International Law under agreements in the United Nations does not justify an attack upon any nation for its actions domestically. Can Russia or China justify invading the United States because of the use of military weapons on unarmed citizens as in Ferguson? It certainly did not appear like a police action dealing with a riot but more like a military assault and a war zone back in Ferguson. No nation has any legal standing to invade another because of an internal conflict.

debriefing-presidentWe must also realize that there would be no Syrian “Civil” War if there had not been an attack upon Iraq with the removal of Saddam Hussein. Indeed, Saddam thought America wouldsupport him because he kept the Islamic terrorists in check. But Dick Chaney saw dollars and handed the Iraq invasion to his former company Halliburton. Trump said now he relied upon the media reports, which he has consistently called fake news.

The Spanish American war was instigated by fake news of Pulitzer v Hearst. There is something more at stake than just a pipeline. There is a new oil deposit which is in the Israeli occupied part of Syria. The overthrow of Syria would legally justify this investment scheme. Cheney’s company, Halliburton, even pleaded guilty to covering up evidence of their involvement in the BP oil spill in the Gulf of Mexico.

…click on the above link to read the rest of the article…

The Right to Privacy Means Nothing

QUESTION: Has the world lost sight of what is a Protection Priority??
Equifax CEO Richard Smith Resigns after Backlash Over Massive Data Breach Equifax that compromised the PERMANENT data (SOCIAL SECURITY NUMBERS ) of 143 million Americans. AND IS REWARDED $18.4 million. (including a $7.6 million bonus.)
Facebook CEO Mark Zuckerberg has to testify next week on Capitol Hill regarding recent revelations about uses of people’s data (where they shop, eat, play) that they made public in the first place.
What are our security priorities??

MG

ANSWER: Our entire loss of privacy rights should be a major class action lawsuit. To sign up for anything, they have tremendous detailed legal agreements where effectively you waive all your rights to privacy. It is a situation where UNLESS you waive your rights, you cannot participate in the digital world. My personal legal theory is straightforward. I will be glad to help any law firm that wishes to bring such an action. You CANNOT possibly waive any Constitutional right whatsoever BECAUSEsuch an act of waiver means that every person in this country, even if not a citizen, can constructively amend the Constitution. That means the Constitution is a scrap of paper with no substance. The only authority to amend anything in the Constitution remains Article Five and that requires two-thirds of Congress to vote for such a change.

Constitution Article Five

The Congress, whenever two thirds of both houses shall deem it necessary, shall propose amendments to this Constitution, or, on the application of the legislatures of two thirds of the several states, shall call a convention for proposing amendments, which, in either case, shall be valid to all intents and purposes, as part of this Constitution, when ratified by the legislatures of three fourths of the several states, or by conventions in three fourths thereof, as the one or the other mode of ratification may be proposed by the Congress; provided that no amendment which may be made prior to the year one thousand eight hundred and eight shall in any manner affect the first and fourth clauses in the ninth section of the first article; and that no state, without its consent, shall be deprived of its equal suffrage in the Senate.

…click on the above link to read the rest of the article…

Dollar Hegemony – Real or Sophistry?

QUESTION: Mr. Armstrong; I really wish I found you sooner. A friend of mine has been telling me to listen. He bought the Dow at 17,000 and sold it 26,000 on your advice. He paid off his house and has told me – see, I told you so. I get these emails from the gold community who seem to never give up of every day will be the start of a new rally. This latest one is that also paint the United States as “dollar hegemony” and they claim that the US expanded greatly following the fall of the Soviet Union. They say China has woken up making money on trade with America. They now say the dollar will collapse and China will be the new world order so buy gold and sell the dollar.

These people seem to have no morals. They sleep perfectly fine raking in the money from people like me robbing us of our savings and preventing us from participating in the real economy as we should. Is there any real dollar hegemony or is this also just hot air?

WH

ANSWER: No, it is total nonsense and you are correct – it is designed to rob people of their life savings. There is no “dollar hegemony” for that assumes that the USA is somehow imposing the dollar upon the entire world by sheer will. History shops that the USA has pursued a policy of lowering the value of the dollar for trade purposes. Even the Plaza Accord in 1985 was a deliberate attempt to lower the dollar and it was at that meeting when the USA argued that Europe needed to create a single currency to compete with the dollar.

…click on the above link to read the rest of the article…

Monetary Policy is a Complete Failure? Will Shutting Down the Fed Solve All the Problems?

I recently did an interview and was asked about the Federal Reserve. There is so much absolute nonsense sophistry that circulates where people think that ending the central bank will somehow cure everything. I really just laid it out plain and simple. The Fed’s balance sheet is a tiny fraction of the economy or the real money supply. Everyone blames the Fed for everything and they NEVER bother to look at (1) the fiscal policy of Congress, and (2) the banking system as a whole.

Even if you want to scream from the top of every hill that $4 trillion worth of Fed’s Quantitative Easing was pure evil and should have created hyperinflation (which it did not), the deficits created by Obama topped $1 trillion per year and those never die whereas the Fed’s QE evaporates as they do let the debt they bought mature and expire without rebuying it again, whereas Draghi and the ECB have conceded they will reinvest their holdings. Look at 2009-2012. Obama created $5.4 trillion that will never expire but will be rolled until there are no more buyers.

So let’s do the math. The entire Federal Reserve QE program was equal to 1/5th of the national debt. The ECB bought 40% of all public debt and the Bank of Japan bought 75% of new debt coming to the market. Yet all we get is dollar bashing and people actually have called the yen the safe-haven play. I really do not know if I am arguing is drunks, people with dementia, or just con-artists. All these people pushing the end of central banks because they are clueless about how the real world functions.

…click on the above link to read the rest of the article…

 

Wheat & the Drought Cycle

QUESTION: Interesting that $1.3T US spending bill was enacted on March 23, 2018, exactly 31.459 years after passage of US Tax Reform Act of 1986:

Also, the 86 year cycle in drought conditions in the midwest US seems to approach – is this why Marty thinks wheat will bottom this year?

The below Wikipedia link mentions a “short drought” in 1890 in the US Great Plains, and then a dust storm on November 11, 1933, in South Dakota (43 years later). Wikipedia also mentions that the US Great Plains entered an unusually dry era in the summer of 1930 (a little more than 86 years ago), with droughts coming in 1934, 1936 and 1939-1940.

Kansas is having drought conditions currently:

Poor winter wheat condition worrying Kansas farmers

I wonder if this is the year to go long wheat, especially since Marty forecast a bottom for this year?

Best,
J

ANSWER: Here is a chart of Wheat from 1259 to 2017 with the currency converted to dollars from British pounds using the conversion rate at the beginning of the US dollar extending it back in time. Here we can see the overall trend. Yes, there is an influence with respect to weather. However, the Dust Bowl was a local event.

What our computer is warning about begins next year with a Directional Change in Wheat. This cycle appears to be impacted by (1) significant climate change, and (2) the War Cycle. The combination of both is pointing to a bull market in nominal dollar terms.

 

The Great Flood

There is little doubt that the amount of water on earth really does not change. There is simply what is known as the Water Cycle whereby evaporation moves water to the sky and then it is redistributed as rain elsewhere. Therefore, the likelihood of an actual flood in Biblical terms that covered the entire world is unlikely. What we do know is that there is a wealth of evidence that the movement of the plates clearly resulted in the great flood that created the Mediterranean sea and there is also evidence that there are cities under the Black Sea no less the Mediterranean.

There is evidence that there was a tremendous flood when there was a break in the land at the Straits of Gibralter. What has surfaced is evidence that when that breach took place, the water rushed into the basin at probably around 100 mph. This is certainly something that would be remembered and probably handed down from generation to generation. (see Scientific American)

Nevertheless, it is also obvious that the sea level has risen in the Mediterranean even since the time of Julius Caesar (100-44BC).  The city of ancient Alexandria in Egypt lies below the sea. Obviously, even in relatively modern times, the sea level has risen flooding communities. So actually stating definitively when did the Biblical Event of the flood take place is difficult to pinpoint because there have been great floods from 3 million years ago to 2,000 years ago.  What is certain is that the sea levels have risen and fallen and this is part of nature – not instigated by humans.

How Do We Really Forecast the Future?

QUESTION: Mr. Armstrong; It is obvious that you have indeed been behind the curtain for your knowledge of even global politics is amazing. Kim Jong Un is here in Beijing. You said he would back down. You said the risk of war lies in the Middle East, not Korea. Your model calls the markets. You said the Dow would bounce for two days and then turn down. Even that took place today. Where do you begin and the computer ends?

UGH

ANSWER: That is a hard question to answer. The computer can show me the region for conflict. That is determined by cyclical trends for each region yet at times it is augmented by a combination of capital flows. Picking things like the fall of communism back in 1989 and picking when the Berlin Wall would fall were based cyclically on the outcome of that trend. That was 72 years from the Russian Revolution of 1917. That was the perfect target for the volatility models within the ECM. Both converged so it made it really a piece of cake.

The collapse of the Soviet Union came in 1991, that was a simple 2-year reactionary process all within a cyclical forecast. Now, the collapse of the Russian bond market which set in motion a major contagion and the Long-Term Capital Management debacle was determined from a capital flow and cyclical perspective. That came 8.6 years following the fall of the Berlin Wall. When that forecast made the front page of the second section of the FT, that is when even the CIA came. They suddenly realized that our model could forecast the rise and fall of nations. But that is also when the bankers began to complain to the CFTC and SEC that I was “manipulating” the world economy because they were all long Russian bonds and blamed me for their losses using the FT article as proof. They said I had too much “influence” rather than consider the possibility that just maybe we were able to forecast events that they thought bribing politicians would prevent.

…click on the above link to read the rest of the article…

Will the Euro Survive by 2021?

The results of the Italian election is just starting to sink in. The rise of comedian Beppo Grillo to Italy’s most successful politician, who won 32.7% of the popular voted compared to Merkel winning 32.8% in the German election.  Following the election on March 4th, Grillo’s “five-star” party took by far the first place. Brussels is still in shock and trembling as its mood has changed from he is just a joke to “OMG! This threatens the very existence of the EU”.

The results of the Italian election is just starting to sink in. The rise of comedian Beppo Grillo to Italy’s most successful politician, who won 32.7% of the popular voted compared to Merkel winning 32.8% in the German election.  Following the election on March 4th, Grillo’s “five-star” party took by far the first place. Brussels is still in shock and trembling as its mood has changed from he is just a joke to “OMG! This threatens the very existence of the EU”.

Grillo’s party sharply criticizes the EU, and above all, it questions the very purpose of Euro. The skepticism in the EU’s founding country Italy where they signed the Treaty of Rome, is rather amazing that those still focused on domestic issues in the USA are clueless about the threat to the Euro.

The threat Italy poses to the Euro stems from Brussels’ refusal to aid Italy with the refugee crisis and the outrageous demands that the increased expenditure for the refugees must be deducted from other expenditures to stay within the EU demanded guidelines, This has maintained a serious deflationary atmosphere in Italy and Brussels simply ignores the economic impact of what their policies have imposed. Italy’s public debt amounts to €2.2 trillion, and the risk of this debt going into crisis undermines the entire existence of the Euro. This is the direct result of the failed structure of the Euro I have warned about from the outset. (see 1996 reports)

Brussels tries to blame the misconduct of banks and takes no responsibility for the failed design of the Euro or for EU legislators and the European Central Bank, which have also played a profound role is turning Italy against Brussels. Swapping the old debt into Euro that then doubled in value, created a massive wave of deflation that 10 years of flooding the economy with money by the central bank has produced nothing but undermined then the pension system throughout Europe.

…click on the above link to read the rest of the article…

The Fed is Raising Rates Because of the Pension Crisis

QUESTION: The Fed says it will raise rates two or three times more this year. My question is this: If the stock market is crashing, why are they still raising rates?

HW

ANSWER: The Fed is raising rates because they must be NORMALIZED given the pension crisis. They are trying to get then back up and if they could, they would jack them up to 8%. If you can imagine, a pension fund under normal conditions needs 8% annual. Even CalPERS came in at 7% and they were insolvent. Rates are rising because of the pension crisis, not because the economy is really heating up or the stock market is booming. The technical resistance stands at the Downtrend Line at the 3% level. Rates will double to reach that area faster than people suspect.

We have a Directional Change due in May and look at the August/September period where we also have a Panic Cycle. Things are not going to be as smooth-sailing as many believe. We have a very RARE Double Monthly Bullish Reversal at 2.25%. A monthly closing above that level and 5% will be seen in a matter of months.

Spain Arrests Leaders of Catalonia Independence Movement & They Dare to Claim Russia Does Not Respect Democracy?

The Spanish government has shown to the entire world that it denies human rights and has absolutely no democratic principles whatsoever. The next step is for the pretend elected government to declare a perpetual state of emergency and suspend all elections nationwide to complete what is rapidly becoming a dictatorship. Thousands in Catalonia have now risen up in protest against the Spanish government once again as they arrested the five leaders of the independence movement. The mood in Catalonia is turning more anti-Madrid and based upon the emails we are getting from Spain, many are now beginning to see that how the Spanish government is treating those in Catalonia means that the government views them as well as having no rights.

Clashes with police are being reported with at least 24 demonstrators injured, according to rescue workers. Independent journalists are reporting that policemen in Barcelona were using batons against demonstrators approaching the regional government building. Some demonstrators in Barcelona were even burning pictures of King Felipe VI, which is a crime in Spain. They were also burning photographs of judge Pablo Llarena, who ordered the arrests. The protesters waved Catalan flags and shouted “freedom for political prisoners”.

Spain refuses to respect human rights and Brussels has refused to defend the people because they too seek a dictatorship. The irony here is they have the guts to point the finger at Putin and China as suppressing democracy?

…click on the above link to read the rest of the article…

 

Is their a Social Cycle in Attitudes?

QUESTION: Mr. Armstrong; I read your article of the whole issue of prostitution. The entire problem is that some western women assume that all prostitutes engage in the profession unwillingly. That is just so biased. What about the women who marry not for love but for money. They are not forced. When the Iron Curtain fell, many Western European men married Eastern Europeans. They were shocked to realize that Eastern women saw life in a different culture. They looked for men who could support them and they saw this as a tradition they stayed home and raised the children. Their attitudes were pre-sixties. You are correct, culture is different around the world. It is stupid to judge everything by only your own standards. Indian and Thai food is spicier than European, American, and certainly Italian. Even food differs greatly around the world as do attitudes and culture. To a West European or American woman, staying at home is subservient. They have not been to the Middle East. I just read that Saudi Arabia is allowing women to drive for the first time.

I recall you even showing a Roman prostitute token used to circumvent laws back then. Have you ever investigated a cycle in attitudes in the battle of the sexes? It appears we seem to have emerged from the sixties with hippies, free love, and some women who just hate men blaming them for everything. I am not even sure where the whole virgin thing came from but assume that is probably in there as well. That was so obvious with Hillary thinking all women should vote for her just because she was a woman. That really offended the younger girls in our office. If there is a cycle in everything, then is there one in this battle as well?

UT

Pompei-Lupanar Brothel

ANSWER: Yes there is a cycle to everything. Yes, the Emperor Tiberius (14-37AD) attempted to ban prostitution by making it illegal to pay a prostitute with a coin that had the emperor’s portrait of which they all did. The solution was to issue tokens (pictured above) you bought and paid the prostitute and she would redeem them later. These were widespread throughout the empire – not just Rome. One was recently found in the Thames Riverin London back in 2012. Here is a picture of the brothel in Pompeii. There were various prices that depended upon the sex act, but then there was also a two-tier price level over privacy. If you wanted a private room, that was the most expensive. If you wanted to save money, then you could have the room at street level where people could watch.

…click on the above link to read the rest of the article…

 

Is Goldman Sachs the new Rothschilds?

Many in Germany are up-in-arms over the appointed by Chancellor Angela Merkel of Jörg Kukies who will become deputy finance minister in her new coalition government. Kukies will take over the responsibilities for financial markets and European policies at the Finance Ministry. Virtually every position in the key financial markets in Europe and American are all coming from Goldman Sachs. There is something seriously wrong. Such people do not leave the highest paying jobs to work for peanuts.

There has NEVER been any investigation of former Goldman Sachs people who take strategic government positions and alter policy only to leave. Robert Rubin ushered through the repeal of Glass Steagall and the resigned. Hank Paulson saved AIG whose default would have taken down Goldman while he eliminated two top Goldman competitors over who there was the authority to bailout – Lehman and Bear. There was no authority to bailout an insurance company operating in London no less to skirt US regulation. Even the seizure of our company, Princeton Economics, was run by a court-appointed receiver who was a full-time board member of Goldman Sachs – Alan Cohen.

…click on the above link to read the rest of the article…

 

 

The Way to Survive Hyperinflation

COMMENT: Mr. Armstrong; I just wanted to comment that I am from Venezuela. My father came here to visit me in Florida where I live with a Green Card. Everything he saved in life for his retirement is now worthless and it does not even pay to travel back to collect his pension. The hyperinflation is a collapse in the confidence of government as you have explained. Those who saved for their retirement and had pensions, lose everything. They will be paid the amount that they were promised, but it will not even buy a single night’s dinner and soon a beer.

Thank you for your contribution to society. I wish more people would listen to you. Experience is the root of knowledge. Opinion is the root of bias. You have proven that

JE

REPLY: To survive hyperinflation requires the holding of tangible assets and never cash or pensions. The way pensions can be devalued is through inflation over the course of time and circumstance. What I paid into Social Security will never come back to me in terms of real purchasing power and that is without hyperinflation. I have stated before, I met with the Treasury back during the Reagan Administration and said these insane levels of interest rates will triple the national debt in less than 10 years. They simply responded; Yes but we will be paying back with cheaper dollars.

All promises of government are simply eroded with inflation. That is why Southern Europe fell into such chaos. The currency doubled instead of declining when they joined the Euro. That is why Europe has been a failure under this political-economic philosophy. The Euro first crashed, and then doubled in value. Southern Europe was used to inflation always reducing their debts. Suddenly, their debts doubled and deflation ruled. And people cannot figure out why the Euro is in such trouble?

I do like your saying though. It is spot on.

 

Olduvai II: Exodus
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Olduvai
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Olduvai II: Exodus
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Olduvai III: Cataclysm
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