Governments create crashes !

China Adopted our Capital Flow Models

Posted on April 4, 2014 by Martin Armstrong

COMMENT: The conference must have been exhausting, I know there is so much work and preparation that these events require. A lot to catch up on but firstly; I saw this headline yesterday and thought I would forward to you! If you ever needed assurance that China were following the model (which I know you don’t as knew anyway) here they openly declare following capital flows.
Thoroughly enjoyed [Conference] and actually find myself using it as reference material time and time again. Also, I liked the link into Merkel article and how Europe could reflect in the future.

PBOC to Monitor New Global, Domestic Economic Development
2014-04-03 09:36:58.190 GMT

By Bloomberg News
April 3 (Bloomberg) — People’s Bank of China will
“closely monitor” new global and domestic economic and
financial development, as well as changes in international
capital flows, according to a statement on monetary policy
committee meeting posted on PBOC website.
* China’s current economic operations are “within reasonable
range,” PBOC says
* PBOC says China to continue prudent monetary policy
* PBOC says China to keep “appropriate” liquidity
* PBOC says China to deepen financial reform
* PBOC reiterates promoting interest rate liberalization and
yuan exchange rate mechanism reform
* PBOC reiterates keeping yuan basically stable
* China’s consumer prices are “basically stable,” PBOC says
* China’s financial operations are stable, PBOC says
Link to statement: http://tinyurl.com/p895s2f

REPLY: Virtually every major government is following our models. Yes, I met with China directly and they had a printed copy of everything I ever wrote and read it. This is why they also came out and stated “we need each other” to the USA. That is a reflection of understanding capital flows and China will be the next financial capital of the world because the West is still defending Marxism. Many representatives from major governments attend our conferences and some reveal who they are while others choose to say nothing. We have even had members of the Royal Family from the Middle East fly in this time. The CIA acknowledged we were the inventor of capital flow analysis. Here is the 1987 Crash from a capital flow analysis perspective.

I have spent untold amounts of money building this analysis back for thousands of years to see HOW everything functions over time and if it has ever changed. This demonstrates you cannot manage the economy domestically in isolation – we do need each other as China has come out an publicly stated and we are ALL connected. Imposing economic sanctions on Iran alters the flows of gold and imposing sanctions on Russia is causing the USA to export energy to Europe. Every single action has a series of reactions that ripple through the entire global economy.


Politicians know nothing about what they are doing. Why did the S&L Crisis unfold? Because Democrats came in and altered the tax codes to get more money as always and impacted the write off in real estate creating a one way market – SELL. Then they blamed S&Ls when they were regulated and told to invest in real estate. Every single economic collapse is set in motion by GOVERNMENT. Never has any investigation ever turned up a single private cause.

The Plaza accord starting the G5 (now G20) to manipulate the dollar down by 40% in order to reduce the US trade deficit, created the 1987 Crash and sent capital rushing back to Japan that they did not understand creating the 1989 Bubble. Now Europe is trying to outlaw short-selling thinking that will stop the collapse. That will accelerate the fall.



Here is my letter to Rubin in 1997 when he was starting the same stupid stuff trying to talk the yen up for trade. After I sent this letter, he shut up. Someone has to remind these clowns about reality. It was Geithner who had to reply. Nonetheless, the 1997 Currency Crisis unfolded.

The analytic community is in denial because they still try to make things personal and pretend that personal ability to reason is the key and we can alter the future. I have tried hard to demonstrate that the key is being unbiased and just let the economy show you the answer. We have spent vast amounts of money to collect databases from ancient times to date to see how capital flows dictate war and even the rise and fall of nations. Some have tried to mock the idea that there can be a cycle to war, yet they have never attempted any such analysis demonstrating their bias that precludes any advancement. Yet they persist in trying to criticize what they do not understand nor have ever attempted to test.

Marx and Keynes I classify as the great interventionists because they did not try to discover HOW the economy functions, but tried to change it to function the way they THOUGHT would be better. We cannot alter the entire world to do as we desire. That is just impossible. It is like Joseph in the Bible who warns the Pharaoh that there will be 7 years of plenty and 7 years of drought. If we understand and go with the flow, we will survive.

This is why economics is all wrong. It assumes the ability to change the economy from a domestic perspective exclusively. This is not a fish bowl where everything is controllable. Academics and politicians fail to grasp it is a global economy and that is beyond their manipulative power to control. Raising taxes reduces living standards and economic growth. But politicians love the power to say “vote for me and I will steal from the rich and give it to you to create “social justice”.” Sorry, but everyone is rewarded according to the God given gifts and what they produce. We are all not opera singers and just try to given everyone in a class the same grade and call that “social justice” and see what happens. Those who study will stop because they will get the same grade and someone who does nothing. Even the 10 Commandments states it is a sin to covet thy neighbor’s goods. Why? Obviously it leads to a collapse in the rule of law and the fragmentation of the economy.

As long as analysts are on ego trips, they will never discover HOW the world functions. Do you watch your opponent and pay attention to when he will throw the next punch or lecture him on how you think he should punch in the middle of a match? Let the markets speak for they hold all the answers. They are NEVER wrong. Theories people craft from random walks to what should be money only prevent people from learning the truth. The object is to go with the flow – do not try to change that flow for there is far more complexity involved than meets the eye.

Yes. China adopted our capital flow analysis.