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What Happens When the Financial Capital of the World Moves?

What Happens When the Financial Capital of the World Moves? 

QUESTION:

Hi Marty,

Knowing that the financial capital will likely move to China after 2032, since that would be the peak of the public wave, where will someone in the US put their capital?

Usually, the move from public to private would result in a move into sovereign debt and cash, but will the move after 2032 be different given the sovereign debt and monetary crisis we will be going through these next few years.

Thanks!

SB

ANSWER: Britain was the Financial Capital of the World until World War I. This chart illustrates what happened to Britain and how it lost that stature of being the Financial Capital of the World — it was debt. The people in Britain did not lose everything. What really happened was that the separatist movement emerged and the British Empire began to break up.

Look at the British pound during the American Civil War. It was the rally in the pound that began the breakup of the British Empire, as I have warned will happen to the US dollar. That rise in the pound exported DEFLATION to the British Empire and the economic conditions led to the start of separatist movements. Canada won its independence on July 1, 1867. The second major wave of separatist movements came with the end of World War II. India won its independence on August 15, 1947.

The United States will be at risk of also breaking apart under economic conditions, which will fuel both the religious and political battles between left and right. There will be a high probability that the United States will break into regional groups, probably four major regions in general. It does not mean life will come to an end or that we all have to run and hide in a cave. The British survived as will Americans. If we understand the cycle, we will be better positioned to survive with security.

Public v Private Interest Rates & Sovereign Debt Crisis

Public v Private Interest Rates & Sovereign Debt Crisis 

QUESTION: Dear Martin I have a question for the blog. There has been forecasts for a sovereign debt crisis but recently you have discussed how various governments may manipulate govt bond interest rates down as has happened in Europe and Japan. If Europe and Japan are anything to go by then this could go on for some time. If govts are successful in this, does this mean that there may not be a sovereign debt crisis?

ANSWER: The Sovereign Debt Crisis involves crossing the line where the private sector no longer trusts government debt. We have begun to cross that line in Europe and Japan where the central banks are buying the debt in bulk. There have even been German auctions of bonds where there was no bid.

Yes, the central banks can artificially keep government interest rates low, but that is only possible when they are the buyers.

We are already experiencing rising interest rates in the peripheral governments where their central banks do not engage in QE — namely emerging markets. We will witness private rates rise for that is a free market. However, from the government side of the table, the Sovereign Debt Crisis is among the developed countries engaging in QE that has unfolded as there is NO BID. They can artificially keep rates low ONLY because the central banks buy the debt. Nobody in the private sector would buy 10 years paper at 1% to 3% when they need 8% to break even in pension funds.

Also, pay attention to the state/provincial debt where they do not have the ability to buy their own nonsense. The manipulation of rates will be at the federal level, not in the state/provincial and municipal levels of government.

So, pay attention to the bifurcation in rates that is unfolding between PUBLIC v PRIVATE.

What were Roman Taxes v Modern Taxes?

What were Roman Taxes v Modern Taxes? 

QUESTION: You do a lot of comparison to the Roman Empire. What was the size of the government relative to GDP? Can you estimate that?

GY

ANSWER: The Roman economy was more like the USA during the mid-19th century in that it was pre-industrial. About 80% of its inhabitants worked in agriculture, which was about where we were in 1840. There was no social agenda of trying to redistribute wealth from one class to the other. Still, there were social programs. But the socialistic agenda that was adopted by modern governments has sought not merely to redistribute wealth among the classes, but it has justified bigger government on a grand scale never before witnessed in history. The tax rate in the ancient Roman Empire was about 5% with some paying as little as 2%. The actual cost of government during the Roman Empire was minimal compared to the modern standard. The Roman Emperor Trajan (98-117 AD) formalized the alimenta, which was a welfare program that helped orphans and poor children throughout Italy. It provided general funds as well as food and subsidized education. The program was supported initially out of Dacian War booty, and then later by a combination of estate taxes and philanthropy. So there were programs to take care of people who needed help.

Virtually all the taxes and rents raised by the imperial government were spent on the military, which came out to be about 80% of the imperial budget in 150 AD. This military spending constituted about 2.5% of the empire’s GDP. Obviously, we do not really see separatists movement until the mid-3rd century when Valerian I (253-260 AD) was captured by the Persians. With the cost of the military coming in about 2.5%, this explains the lack of tax rebellions.

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

Failure to Plant Crops

Failure to Plant Crops 

COMMENT: Good day from Chatham, Ontario Canada (50 miles east of Detroit 42.4048° N, 82.1910° W);
Interesting your models are warning of the next year’s results in climate change.

Our location is always the first to plant in Canada as it is the same latitude as northern California.
A few climate tidbits;

– As of today, May 18th, 2019, no farmers (zero) have started planting.
– In 3 years the percentage of April planting starts has decreased to 0% from 70% just 4 years ago. Typically planting was completed by mid to end of May.
– Flooding this year from Ottawa to Detroit along with cooler temperatures can wreak havoc on winter wheat crops which are planted in the fall and has germinated. But if the heat doesn’t come to dry up the land then the wheat crop is susceptible to rot.
– soil temperatures are below the 25-year average by 23 degrees.
– more rain means less sunshine.
– Songbirds in our area are unusual for May. Makes for a very noisy morning coffee.

Bird watchers reporting many species have not finished their normal migration north. Somehow they have stalled in lower latitudes knowing the northern food sources are not ready.
The birds singing is nice, but I would like to eat.
Best to you;

RH

REPLY: Others are reporting the same general trends. Some people write in and try to disagree with the forecasts. What they fail to understand is this is BY NO MEANS my “opinion” or what “I think,” for I do not see myself as qualified on such a personal level to forecast such events since I am not a farmer and have never been. My grandfather had maybe an acre where he grew grapes, fruit trees, and some other things like tomatoes. He was not a professional farmer.

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

Using Events to Further Power

Using Events to Further Power 

QUESTION: Hi Martin,
I appreciate everything you do to clear away the mist and show what is truly happening in the world. You are one of the few voices of reason out there.

In New Zealand, since the mosque shootings in Christchurch, things have become very tense and this is due, in large part, to the way the government and police have responded and behaved since then.
Ordinary New Zealanders, kiwis, who are among the most accepting and laid back people on earth, are becoming anxious and angry at the way they are being treated. This is highlighted in particular be the heavy-handed way the police are undertaking gun confiscation in the wake of recent law changes to control firearms.

How quickly a country can change. Is this the kind of pivot you foresee as we approach 2032? With governments and their law enforcement becoming more and more oppressive to the point where ordinary people will say enough!
P

ANSWER: Governments know there is a massive problem on the horizon. They let Bitcoin trade to familiarize people with cryptocurrency. There is an agenda to eliminate cash, and we may see that hit in Europe and Australia before anywhere else. The raids on gun collectors in New Zealand are the excuse for violent acts.

The US used 9/11 to further the power of government. All the constitutional rights we had and the generations who fought and died to preserve our freedom were usurped, not by an invading army, but by our own government. This is a standard operational tactic that is by no means new. Ben Franklin addressed this issue. The people are given the picture of an omnipotent, unslayable hydra of destruction unless they surrender their individual liberties in pursuit of safety.

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

The Drastic Alteration of QE that is About to be Unleashed

The Drastic Alteration of QE that is About to be Unleashed 

QUESTION #1: Sir,

You stated in your blog that Fed may fix 2 and 10 year bond rates. Doesn’t this negate the yield curve concept/ credit theory? Won’t this accelerate the distrust for government? Wont this further accelerate/aggravate the pension crisis?

Appreciate you teaching the little guys

See you in Oct

DK

QUESTION #2: Marty; What you are describing with the change in QE is clearly coming from your contacts behind the curtain. How do you think this will play out?

CB

ANSWER: It is clear QE is dead. However, at the same time it has trapped all central banks. I am preparing an important paper on this subject. It is complicated, but it is the very reason why the West will collapse and the financial capital of the world will move to China, who has come out and stated publicly that they will not engage in QE. As far as accelerating the distrust in government, this will be felt within the professional class. It will take time to filter into the general public and it will most likely take the form of another cause altogether. It is unlikely that the general media will even understand this subject matter.

As to how will this play out, I can only say get ready. This is most likely the last straw that will eventually break the back of the monetary system. The general press will not understand that this shift in policy was the last straw. They will not even understand the ramifications for probably two years.

The Next Major Shift in Society

The Next Major Shift in Society 

QUESTION: Do you see this new age of the internet destroying jobs that result in a Great Depression as you have illustrated with the advancement of the combustion engine in altering the agricultural economy as we move into the future? What is the future for our children?

Thank you

KL

ANSWER: Society historically moves through these great advancements. As an empire rises, civilization expands where coming together means the sum is greater than the individual or small bands of tribes. The oldest known city, discovered in Turkey, shows advanced houses with wall paintings and modern advancements. Coming together created more jobs where someone artistic could then create paintings in houses rather than tilling the soil. Civilization becomes the key to advancement.

What then happens is the government becomes corrupt and greedy. Once you reach that stage, people begin to leave the main centers. In the case of Rome, it peaked around 180 AD with a population of about 1 million and it collapsed to just 15,000. As people fled the cities due to corruption, society then moved back to fragmentation and into the feudal age. People then worked as serfs, tilling the soil for the landowner, and received free lodging along with 20% of the crop.

Then the Black Death came and wiped out 50% of the population during the 14th century. Suddenly, there was a shortage of labor so landlords began to pay wages on top of the free lodging and food deals. Government smelled the money and began to tax. This led to the first tax rebellions during the 1300s. The first peasant tax uprising over taxation was in France during 1358. This was followed by a similar uprising against taxation in England led by Wat Tyler in 1381 that was a bloody affair.

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

The Great Unknown

The Great Unknown 

QUESTION: Martin, if Europe and Japan have destroyed their bond markets, would it be a good idea for them to get the government out of the bond market and have short term rates be floating in the free market?  The free market would probably help since they don’t know how to move rates correctly.

RG

ANSWER: What will happen is that there is already unfolding a bifurcation in interest rates with a widening spread between real rates (Private Sector) and government. If they allow government rates to float, that means they must abandon QE.

Neither the BoJ nor the ECB is ready to admit total failure. This means that the entire Keynesian-Monetarist tools have failed and they have no economic theory upon which to manage the economy. That means the government cannot control the economy and therein lies the denial of power.

Welcome to the Great Unknown

Still Snowing in the Heart of America – The Longer Winter & Shorter Summer Cycle

Still Snowing in the Heart of America – The Longer Winter & Shorter Summer Cycle 

COMMENT: Well you said this winter would be long and the summer shorter. It is still snowing here in the heart of America. It looks like your computer is correct again. Instead of funding research for billion dollars to pretend there is global warming, they should just subscribe to Socrates. Would save a heap of money.

RG

REPLY: Of course you are right. However, the hand out billion grants so they can get studies to justify raising taxes to bring in $100 billion. They are not interested in the actual reliable forecast. There is no juice in that for them. They want more revenue. Unfortunately, if this summer is also short and winter returns rapidly in the fall, buy some electric-underwear. We are in for colder periods ahead into 2024.

Economic Iliad & Odyssey

Economic Iliad & Odyssey 

The term “iliad” in Greek mean a series of miseries or disastrous events and “Odyssey” meant a long wandering or voyage usually marked by many changes of fortune. Welcome to the Economic Iliad & Odyssey. What we are facing is truly extraordinary. There is absolutely NO economic theory from Adam Smith to Keynes that ever addressed negative interest rates no less sustaining such a trend. There have been four major players who ventured into the negative interest rates territory but the disasters of this policy in Europe and Japan were implemented in hopes to stimulating the economy. In the case of Switzerland, they were seeking to prevent capital flowing into the Swiss franc as a safe-haven.

We are now on the threshold of the most PROFOUND economic event which has never before in history ever taken place. This is where opinion becomes worthless. All we can do is approach this on a collective basis internationally and without bias.

There Are No Coincidences – Why History Repeats

There Are No Coincidences – Why History Repeats 

QUESTION: Martin Today is Palm Sunday. In mass, they said HE colluded with the Galilean’s. HE was found innocent by the Council. They said HE was a tax evader. HE was found innocent by new leadership. HE correctly predicted that HE would be denied by his own party 3 times. The corrupt crowd lobbied to release a murderer, and sentence an innocent man to his fate. My question is do cycles go beyond what is physical as with planets and the stars that wobble and rotate around our galaxy? Does it include emotional and human behavior cycles? Does history rhyme? If so, are we living in a matrix that has been programmed with numerous cycles? We can show that animal life is irreducibly complex and therefore predesigned. But, I am now wondering about if the psychic has been programmed with cycles too?

Do we truly have free will?

EM

ANSWER: Your question is interesting. I have usually explained that history repeats because human nature never changes. Only technology does. Given the same circumstances, humans will ALWAYSrespond in the same manner. Just examine the same facts and you will see how there is NEVER any rule of law. It does not matter what century, for it is always the same. It is all a joke. Whatever the desire of those in power, they will always manipulate the law to produce the desired outcome.

Right now, just look at the government throwing Chelsea Manning in prison on contempt indefinitely, the $4.2 billion handed to Ecuador for Assange by the IMF, and then his immediate indictment and move for extradition. This is all a coordinated attack to launch against Trump for the 2020 election after the Mueller Report failed. There are NO COINCIDENCES when it comes to political maneuvers. You are watching history in the making. The Deep State is determined to get rid of Trump. They desperately want one of their own in power — a team player.

Turkey & the Real Risk of a Debt Crisis

Turkey & the Real Risk of a Debt Crisis 

The Treasury and Finance Ministry of Turkey announced that the country’s net external debt stock totaled $286.2 billion going into the end of the 3rd quarter of 2018. The country’s net external debt stock to its gross domestic product (GDP) ratio was 34.4% at the end of the third quarter of 2018. However, Turkey’s gross external debt stock amounted to $448.4 billion at the end of the 3rd quarter, bringing the debt/GDP ratio to 53.8% according to the official figures.

Interestingly, because of the fear of the Turkish lira, Turkish corporations have been often compelled to borrow in dollars. Therefore, the private sector’s share in the country’s gross external debt stock was 68.2% ($305.9 billion), while some $215.9 billion of this amount consisted of long-term debts with a maturity of more than one year. The Turkish public sector’s share of this debt was 30.6% in the country’s total foreign debt, which is about $21.4 billion in short-term (under one year) with $115.7 billion in the long-term (over one year). The banking sector’s (lenders and the central bank) external debt stock was $176.99 billion at the end of the 3rd quarter.

When we break this down further, 58.5% of the total gross external debt is denominated in U.S. dollars with only 32.3% denominated in euros. The amount denominated in Turkish lira among the external debt stock was a trifling 5.9%. This illustrates the crisis that will emerge with a change in the currency values.

IMF Hands $4.2 billion in loans for Ecuador for Julian Assange

IMF Hands $4.2 billion in loans for Ecuador for Julian Assange 

The evidence of political pressure on Ecuador is surfacing. The IMF Executive Board Approved US$4.2 Billion  (435% of quota and SDR 3.035 billion) Extended Fund Facility for Ecuador. The Executive Board agreed to this arrangement with strings attached. The Board’s decision enables the immediate disbursement of US$652 million (equivalent to SDR 469,7 million, or 67.3 percent of Ecuador’s quota). This arrangement provides support for the Ecuadorean government’s economic policies over the next three years provided they gave up Julian Assange.

It is very interesting how corruption and bribes grease the world. Every person who ever becomes a whistleblower on government goes to prison.

The USA immediately unveiled its request for extradition on computer hacking charges that carry 5 years. Of course, the US must put on its case to get its hands around Julian’s neck. Once he is extradited to the USA, they will unleash a battery of other charges to ensure he does life.

The rumblings behind the curtain are that the Democrats in league with the Deep State are behind this, hoping to force Assange to say he got Hillary’s emails from Putin as part of a plea deal. The danger of all of this nonsense is simply the plain fact it will bring us one more step closer to world war. What is clearly involved here seems to be a highly coordinated scheme that links the IMF and throwing Chelsea Manning in prison who will conveniently have to testify against Assange who can be eventually charged as was Manning and face the death penalty. By linking this to Russia, they hope to also prevent Trump from granting him any pardons.

This is getting very deep. Tyranny under the Banner of Liberty & Human Rights.

Fear of Inflation & Sterilization

Fear of Inflation & Sterilization 

QUESTION: Mr. Armstrong; you were friends with Milton Friedman. Do you agree with his view that the Great Depression was caused in part by the Fed refusing to expand the money supply? Isn’t Quantitative Easing expanding the money supply yet it too has failed to create inflation. Would you comment on this paradox?

Thank you for your thoughtful insight.

P

ANSWER: Yes, this certainly appears to be a paradox. This results from the outdated theory of economics which completely fails to grasp the full scope of the economy and how it functions. This same mistake is leading many down the path of MMT (Modern Monetary Theory) which assumes we can just print without end and Quantitative Easing proves there will be no inflation. They are ignoring the clash between fiscal policy carried out by the government and monetary policy in the hand of the central banks. This is a major confrontation where central banks have expanded the money supply to “stimulate” inflation. Governments are obsessed with enforcing laws against tax evasion and it is destroying the world economy and creating massive deflation.

In 1920, Britain legislated a return to the gold standard at the prewar parity to take effect at the end of a five-year period. That took place in 1925. Britain based its decision in part on the assumption that gold flows to the United States would raise price levels in Britain and limit the domestic deflation needed to reestablish the pre-war parity. In fact, the United States sterilized gold inflows to prevent a rise in domestic prices. In the 1920s, the Federal Reserve held almost twice the amount of gold required to back its note issue. Britain then had to deflate to return to gold at the pre-war parity. Milton saw that the Fed failed to monetize the gold inflows, fearing it would lead to inflation.

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Why Has Everything Turned Sour? Is it the Press? Or is the Press Part of the Cycle?

Why Has Everything Turned Sour? Is it the Press? Or is the Press Part of the Cycle? 

QUESTION: Hello Mr. Armstrong,
I´d like your opinion on this,
During 7 Decades in which our lives got better, longer, richer, safer, healthier, better educated, more peaceful and more stimulating. Even World poverty has decreased in a rate never seen before, still, news coverage got increasingly negative

What explanation could there be for this? Is it excessive competition for attention as media sources multiply or an excessive any deeper reasons? I compare it to Markets, seems to be similar like trading on news, which is impossible because when the news is the worst, usually its the low and when everything and everyone is optimistic its the high.
regards

ESVideo Player00:0000:54

ANSWER: Coming out of World War II, society really advanced in many ways from technology to medicine. This is the part of the societal cycle that is best to live in. Then what happens is corruption. The news becomes corrupt in sync with politics. I believe this becomes the case because news becomes institutionalized as it is owned by big firms who then direct the news to slant to their personal benefit. This is a funny skit on British News. It is so true here in the States as well. The Democrats love CNN and the Republicans love Fox. The news gravitates to a political slant and is no longer about news – it is always about selling more ads and pushing their propaganda like some religion handing out flowers in airports.

Yellow journalism was created by the battle between Pulitzer and Hearst. They created the Spanish American War to sell papers. Pulitzer’s name was worthless. To rehabilitate it he donated money to create the Pulitzer Prize for good journalism, which he never practiced.

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

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