The Way to Survive Hyperinflation

Posted Mar 22, 2018 by Martin Armstrong

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 the 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 deflation always reducing their debts. Suddenly, their debts doubled. And people cannot figure out why the Euro is in such trouble?

I do like your saying though. It is spot on

Maya will reclaim their independence and that may come by 2029

Mexico & the 112 Year Cycle

Posted Mar 21, 2018 by Martin Armstrong

QUESTION: Dear Martin

As usual, I have no words to thank the sincere and incomparable work that you did for us, and almost for free. People like you should be a reference for future generations. You really are a Punk, in the best sense of the word [anti-autoritaritharism, DIY, direct action..].

I’m writing you because the last events in Spain are terrifying me.
You were writing a lot about it when the Catalonian Issue happened. I did not support it because it is creating strong division among the population for a bargain, and the leaders were (as demonstrated now) completely fake.

However, let me enumerate the latest news:

– A Satiric magazine publishes a picture of a bullfighter with an ‘alien’ body and is fined with 40keur.
– A rap singer is going to jail for 2.5 years for criticizing the power and political classes in a song.
– In a national art expo a picture showing catalan politicians in jail is banned.
– A book explaining with names demonstrated cases of contacts of politicians in Galicia with narcos has been forbidden.

All this in the last 1.5 months

Uncountable cases of journalists fired from TVE (Spanish public television) for giving a different point of view as stated by the gov.

I live in Switzerland and I love my country but I’m afraid that I will not be back soon because of the high taxes and all these issues. However, Switzerland is not a better case. The police control is really intense also here.

I use to go to Mexico very often, and besides the critical situation, I work with really intelligent and courageous people.

Sometimes I’m thinking in abandon Europe and going to Mexico. I would like to think that they are bottoming and they will take off soon.

What do you think, cyclically speaking?

Sorry for such a lo email, and thank you very much again.

Sincere Salutations

Francisco

ANSWER: The next major upheaval in Mexico appears to be on schedule for around 2029. There is a 112-year cycle perfectly in sync with the 224-year Cycle of Political Change. Nevertheless, Europe probably faces a greater risk of political upheaval than what you will see in North America. There are separatist movements everywhere from Canada and USA down into Mexico. Most people do not realize that Greenland is geographically part of North America, but is politically connected to Europe and here too there is a separatist movement to split from Europe.

We rarely hear about the internal struggle for independence within Mexico. I have visited the areaChiapas and engaged in political discussions to seek a better understanding of the issues. This is the home of the ancient Maya. Effectively, this is the home to one of the largest indigenous populations in the country with twelve federally recognized ethnicities. What was explained to me is very interesting. When the Spanis came to South America, they were interested in the lands of gold. Since there was no famed gold in that region, the Spanish never invaded that part. Therefore, you still have the indigenous Maya living there and you can distinctly tell the difference just looking at them. I was told that marriages are normally arranged by parents and Maya marry only Maya.

The Zapatista Army of National Liberation, commonly known as Zapatistas, has been a left-wing revolutionary political and militant group based in Chiapas. This is the southernmost state of Mexico. They are an armed group, formed by a large majority of Southern Mexican natives in Chiapas, who rebelled in 1994 claiming their territory in what has been called the “war against the forgotten” by the Zapatistas.

Once again, we have a line of demarcation between ethnic differences that even include language. Therefore, the position I explained about Catalonia falls in a distinct global trend. Catalonia also is distinct and have their own language. We see the same trend in Ukraine – east v west based upon ethnic differences and language. Politicians may view their countries as fiefdoms, but society moves through a grand cycle like Big Bang and the universe, There is a central point altogether and an event takes place and everything separates and moves apart. Then, gravity will overtake the movement and pull it all back inward to a central core. This is how human society has always worked throughout history. There are the separate states that they ban together typically against a foreign enemy, and then there is a union and a larger consolidated state. This pattern is true for the United States, Canada, Mexico and it has been the ides behind the European Project to federalize Europe.

The Delian League (or Athenian League) was an alliance of Greek city-states led by Athens and formed in 478 BC to liberate eastern Greek cities from Persian rule. It was to also be a defense against any possible revenge attacks from Persia after the Greek victories at Marathon, Salamis, and Plataea in the early 5th century BC. This unification of Greek city-states under Athenian rule led to resentment and finally the Peloponnesian war where Athens was defeated by Sparta and rebelling Delian League members. The number of members of the League changed over time but around 330 are recorded in tribute lists who had to pay into the central treasury much like the EU structure today. Initially, members swore to hold the same enemies and allies by taking an oath.

The actions we saw with Spain invading Catalonia were the very same reactions that Athens took against Naxos who sought to leave the Delian League in 467BC when it became obvious that the purposed to defend against the Persians no longer made sense. The League and its requirement of tribute/taxes was a major factor behind separatist movements. An example of the refusal to relinquish power can be seen when Naxos who sought to secede around 467 BC. Athens responded in dramatic fashion by attacking the island and making it a semi-dependency, albeit with a lower tribute.

I have stated many times that History is a roadmap to the future because the human response will ALWAYS be the same given the same set of circumstances. Therefore, Mexico will also split and the indigenous Maya will reclaim their independence and that may come by 2029. The Mexican Revolution began in 1910 led by Emiliano Zapata. Then in 1911, President Porfirio Diaz, who ruled as a dictator for 35 years, was overthrown and replaced with revolutionary Francisco Madero. The last major event was the adoption of the Constitution in 1917

The Unsound Theory of Inflation

Posted Mar 19, 2018 by Martin Armstrong

QUESTION: You defend central banks yet the Rothschilds when clearly Mayer Amschel Bauer Rothschild said: “Give me control of a nation’s money and I care not who makes it’s laws.”  Any comment?

SL

ANSWER: No problem. He never said any such thing it was completely made up. It was attributed to him in 1838 when he was already dead for 26 years. Besides that, what is very clear is that this is based on the assumption that money is fiat. The USA began to issue paper money in 1861. During the period that Mayer lived, the money supply was primarily coined.  The only plausible reference would be implied that he debased them. He was a banker and never produced the coinage.

It would be nice just for once that you bothered to actually understand the role of central banks as originally set forth. What they do today with Quantitative Easing has proven that the entire theory of an increase in money supply will be inflationary is outright BOGUS.

In every case of HYPERINFLATION, not even once did inflation ever begin by increasing the money supply. Inflation begins when PEOPLE lose CONFIDENCE in the government and they spend the currency as fast as they can or outright refuse to accept it. I have explained that the Japanese Emperor used a different approach. He DEVALUED all outstanding money to 10% of his new coinage. That led to the collapse in CONFIDENCE to the point that the people never trusted the government and as a result, the Japanese lost the ability to produce money for 600 years.

The definition of what creates inflation is entirely wrong. Even Gresham’s Law needs to be placed in context. Gresham worked in the foreign exchange markets in Amsterdam. Henry VIII debased the English coinage. But coinage traded on foreign exchange markets according to its metal content. The inflation Gresham referred to was experienced in the foreign exchange markets so what he truly observed was the decline in the British coinage value on international markets. Don’t forget, this predates the central Bank of England which was established in 1694.

The entire observation of inflation began with Gresham. However, it was extended by David Hume (1711-1776) who made observations BEFORE paper money began. This observation is not respected even today. David Hume showed why net exporting in exchange for gold currency, which then increased the domestic money supply and was hoarded by Britain, could not actually enhance wealth. Hume’s argument was essentially the monetarist quantity theory of money which would influence others over time. Prices in a country would change directly with changes in the money supply. Hume explained that as net exports increased and more gold flowed into a country to pay for them, the prices of goods in that country would rise with the economic boom. The USA saw this through the course of World War I and World War II ending up with 76% of the world’s official gold reserves. Consequently, an increased flow of gold into England would not necessarily increase England’s wealth substantially was Hume’s argument because the increase in domestic prices due to the gold inflow would discourage exports and encourage imports. Hence, this trend then counter-reacts with trade and automatically this will start limiting the amount by which exports would exceed imports. The more money that flowed into a country, like the USA, the higher the prices and this would then reduce exports. Adam Smith’s attack on mercantilism and argument for free trade, strangely ignored Hume’s argument. Hume’s view of capital flows can be verified throughout history and is really the underlying foundation of the balance-of-payments issues that Trump fails to understand. Hume also advanced the idea of “creeping inflation” that takes placed with a gradual increase in the money supply that would lead to economic growth. This is largely correct, but money supply growth must also keep place with population growth or you will produce deflation – more people and less money to go around.

With the introduction of paper money during the mid to late 18th century, the relationship between the over-supply of banknotes and a resulting depreciation in their value was noted by earlier classical economists such as David Ricardo (1772-1823). However, the issue of paper money during the American Colonial period must also take into consideration two factors: (1) England starved America and extracted money assuming they were using Spanish coinage, and (2) the American Revolution which was funded by creating paper money. There was again a lack of CONFIDENCE to the extent that when the American Revolution ended, the Constitution prohibited States from issuing money again and federally no paper money was issued again until the American Civil War in 1861.

Therefore, most HYPERINFLATION periods are associated with war like the American and French experiences. However, in Lydia, the very first government to issue coins, we see the debasement unfold as a direct result of war. Therefore, there is no evidence of hyperinflation unfolding absent a collapse in the CONFIDENCE of the people in that government.

In the case of Venezuela, obviously there has been a collapse in CONFIDENCE. The same was true in Zimbabwe after it seized all the property of white farmers. Foreign investors refused to ever participate again.

The German HYPERINFLATION came with the Communist Revolution in 1918. That sent capital into hiding and fled overseas, primarily to the United States

GDP peaked in 1973. We are looking for the final low to form during 2035.8. The next low will be in 2025

Left v Right – Why the Western Society is Really Collapsing

Posted Mar 16, 2018 by Martin Armstrong

 

QUESTION: Hi Marty,
we just saw the German elections play out. For Germany, this is a huge move to the left – at least in government. They also say that Europe will be strongly supported. I guess that means shoveling money to Brussels and raising it via more and more taxes. Now, I researched everything you wrote about the ride of the right-wing parties in Europe and the separatist movements. I would be interested in your thought on how this plays out. E.g. Germany with its left-wing government. It rather seems to be the case that government will become more and more left-wing. Just as in the Weimar Republic. So I do not think that a right-wing could have enough political force to take power, also since Antifa is MUCH more violent and also more powerful than the right. Politicians blame the right for many things, violent events etc, while in fact, it is a rather docile movement with very little power and if so, only in the hands of individuals who do hardly organize since it really is the promotion of individualism vs group-think (left) and group movements. So from a logical standpoint, it seems rather likely to have the socialist agenda gain power. I know you say it is coming to an end. I trust you are correct. Socialism does not work and people might notice at some point. But it seems to be in a quite distant future still. Could you elaborate on that? Will Immigration finally win and move Europe and Germany into a new societal form? Finally, the European left-wingers are actually importing authoritarianism. Which very ironic since they probably think they are importing voters.

Thanks, Marty.

Best, SP.

ANSWER: Oh yes. I do not think most people outside of Germany understand that. Merkel lost control. To keep power, she had to create a Grand Coalition with the SPD, which has been the Northern socialists with origins that go back to the Weimer Republic and the Communist Revolution. The SPD took power for both they and the CDU of Merkel realized that going back to the people would result in both parties losing even more ground. This is highlighted particularly after the Italian election. I have NEVER been asked for a meeting by anyone in the SPD. They have always fundamentally been opponents of anything my computer has forecast. They have NEVER been interested in what is economically best for the people – they are only interested in imposing their will upon the people because they do not see the same light they do.

Most people have no idea that Lenin was more of a dreamer who at least thought he was benefiting the people. It was Lenin who warned not to allow Stalin to take power after him. He said: “Comrade Stalin, having become Secretary-General, has unlimited authority concentrated in his hands, and I am not sure whether he will always be capable of using that authority with sufficient caution.” Stalin did everything he could to take power. This has been the curse of the left. They see themselves in a war against the producers and whatever action they take, it is always for the good of the people. This attitude marks the left who always seek to subjugate the right. They never believe in human rights other than their own and have historically always taken an authoritarian position painting themselves as the victim being exploited by the right. The official state records showed that Stalin killed about 2.9 million people. However, this does not include those who died from famine in places like Ukraine for example, which stand at about 7 to 10 million. In Ukrainian, they coined a term for what Stain did – Holodomor (Голодомо́р) meaning “to kill by starvation” has remained at the core of why Ukrainians want independence from Russia.

Nymphenburg Palace Home of Bavarian Monarchy

When you look around the globe, what you see is a rising intense fight building between the left v right, i.e. Thieves v Producers in terms of Ann Rand. Simultaneously, we are witnessing the rise of separatism. We see this everywhere. We see in Europe Scotland, Catalonia, Bavaria, Sicily and others. Even in Canada, I wrote about the move of Alberta to secede from Canada. British Columbia is left-wing and environmentalists so they are blocking a pipeline from Alberta through their province. What you see is a trade war within Canada between two provinces. In Germany, we see this sentiment starting to rise in Bavaria which has long retained an underlying sense of nationalism ever since Bavaria was incorporated into the state of Germany in 1871. The old Bavarian palace of the Monarch remains a symbol of Bavarian Nationalism. I remember being in Bavaria when they were celebrating winning the war over the Prussians in the north.

The origins of the rise of Bavarian nationalism as a strong political movement emerged from the Austro-Prussian War and its aftermath. Bavaria had always been both politically and culturally closer to Catholic Austria than Protestant Prussia. We see the similar religious strains in Britain as we do in Germany – Protestants in the North v Catholics in the South. Martin Luther nailed his  Ninety-five Theses to the church door at Wittenberg. The Bavarians shared with the Austrians a common contempt towards the Prussians, leading Bavaria to ally with Austria in the war.

After World War I, in 1923, Bavarian monarchists of the Bavarian People’s Party attempted to seize control of the Bavarian government and declare Bavaria independent of Germany and the Weimar Republic restoring the Bavarian monarchy wherein 1918 the north wanted a Communist Revolution and even asked Russia to come take Germany. This Bavarian separatist coup attempt was then preempted by the then-small Nazi Party which itself attempted to take over the Bavarian government. Bavarian nationalists and the Nazi Party competed for a support base. Finally, the 1932 election saw the Nazi Party won a major victory nationally, yet the Nazis did not surpass the Catholic Bavarian People’s Party in southern Bavaria. The Nazis won only the Protestant areas of northern Bavaria. The underlying resentment remains deep in the heart of Bavaria.

In 2013, the Bavaria Party still won 2.1% of the total vote in state elections so they have not faded away. Top officials in the Bavarian sister party of Chancellor Angela Merkel’s conservatives have warned the center-left Social Democrats (SPD) that failure to stick to agreements on migrants could cause the collapse of the potential new German government. Once more, we still see the tensions between Bavaria v the North. Merkel’s Christian Democratic Union (CDU) needs the Christian Social Union (CSU) of Bavaria to even rule. The CSU was formerly the most right-wing party in Germany. But its rubber-stamp of Merkel and the open-door policy to refugees cost them dearly. The AfD won 19.17% of the popular vote in the September 24th, 2017 national election. This was the highest level of support in the former West German states.

Here we have a rising new party, Alternative for Deutschland (AfD), which really began in the East and took 12.6% of the national vote. Once again, we see the inner tension between the socialists (SPD) of the North and their quest to forcibly impose their will upon the South. This is the tension of centuries that goes back to the Prussian v Bavaria confrontations that began in religion.

The left will make a major stand to seize control globally. They will be VERY OPPRESSIVE and this is what will end up destroying the West as we see the economic epic center move to Asia with China becoming the dominant financial capital of the world.

World economic growth (GDP) peaked in 1973.  We are looking for the final low to form during 2035.8. The next low will be in 2025 and this will be a Cycle Inversion from a high producing a low. However, you can easily see from this chart of world GDP, socialism is dying. The Pension Crisis will be a major event and the failure of that system will spark not just civil unrest, but the left assaulting the right. The left will look to plunder the wealth of the right and justify it in their minds as they are entitled to this because the right got rich by exploiting the left. This may become excessive between 2029 and 2032.

When Rome turned against the producers under Maximinus, this is what really began to destroy the Roman Empire. Informants were rewarded to turn in anyone with assets they believed was hoarding wealth. They turned everyone against everyone else and that broke the bonds of civilization. Even after Maximinus was killed by his own troops and his head was sent to the Roman Senate, capital investment NEVER returned. The producers began to invest less and continued to hoard more. Confidence was simply lost and people did not trust one another anymore.

This is simply how human nature responds given the same set of circumstances. The more the left seeks to raise taxes and punish the producers, the greater the producers will hoard and not invest and we will see a continued decline in economic growth rates. We can see that we really cannot get world GDP above the 3% level. The decline post-2007 has been profound and 10 years of Quantitative Easing has only caused wealth to contract. Negative interest rates sparked more hoarding of cash even among the middle class.

Draghi is holding on for dear life. He has no prayer in hell to restore the economy of Europe. All he has done is kept the governments on life-support. When they cannot sell their bonds, they will raise taxes drastically to try to stay afloat. This is how history repeats. The same circumstances will emerge, but like a Shakespeare play, it can be acted out over the centuries with the only change being the actors.