The Millennial Crisis

Posted Sep 25, 2018 by Martin Armstrong

There is a serious economic crisis brewing that few seem to be paying attention. According to a new survey from Zillow Group Inc. (ZG – Get Report), approximately 22.5% of millennials ages 24 through 36 are living at home with their moms or both parents, up nine percentage points since 2005  which was 13.5% and the most in any year in the last decade. Between the student loans which cannot be discharged thanks to the Clintons (to get the support of bankers) even after they find that degrees are worthless when 60% of graduates cannot find employment with such a degree and the fact that taxes have escalated to nearly doubling over the last 20 years that is predominantly state and local, the affordability of buying a home has been fading fast. Despite the fact that millennials are eager to enter the real estate market, they’re bearing the brunt of the challenge directly caused by the combination of taxes and nondischargeable student loans.

Now 63% of millennials under the age of 29 cannot even afford the cost of homeownership, according to a CoreLogic and RTi Research study. The expense, in fact, is their number one reason for remaining a renter. In their research, they concluded that one-third of millennial renters reported feeling they cannot afford a down payment to buy a home. This is a sad response that is not being taken into consideration by governments.

Where home prices have not risen sharply, taxes have. First-time homebuyers face ever-growing challenges to find and buy affordable entry-level homes as the economics of inefficient governments at the state and local levels have refused to reform and raise taxes to meet pension costs they promised themselves. Politicians from London to Vancouver have increased taxes to try to bring home prices down rather than looking at the problem objectively. All they are accomplishing is punishing people who have owned homes and destroying their future when home values were their retirement savings.

California and Illinois are just two major examples at the top of the list of grossly mismanaged state governments. It is this net affordability factor that has begun to encumber sales of real estate softening prices and turning many millennials into renters rather than home buyers. Then add the rise of interest rates and we have an economic cocktail of taxes that is beginning to kill the real estate market in a slow death drip by drip. Depressions take place when the debt and real estate markets collapse – not equities and commodities. The amount of money invested in debt markets dwarfs equities, It is ALWAYS the debt market that you undermine when you want to destroy an economy.

Taxes and the rise in interest rates will further erode affordability and is beginning to slow existing-home sales in many markets already. As this trend continues, home prices and mortgage rates over the next couple of years will likely dampen sales and home price growth. There was another study conducted by Freddie Mac which also found that affordability challenges are contributing to a downtrend in young adult home ownership. Long-term, real estate prices will decline as taxes rise and interest rates. The next crop of buyers is being culled and as that unfolds, real estate cannot rise when banks also begin to curtail the availability of mortgages

Trump could be the last democratically elected president

Deep State is just getting deeper & Rosenstein is a member of a coup to overthrow an elected official destroying the Constitution ending Democracy

Posted Sep 24, 2018 by Martin Armstrong

The Deep State is just getting deeper. Member of Congress filed impeachment motions against Deputy Attorney General Rod Rosenstein and now many are calling Trump to fire him after reports surfaced that he discussed invoking the 25th Amendment and suggested wearing a wire during encounters with the president. That is a direct violation of National Security. Rosenstein, who oversees the special counsel investigation into Russian interference in the 2016 election, has become the target of House Republicans who filed articles of impeachment against him in July.

Rosenstein is clearly becoming a major player in the Deep State behind the coup targeting Trump. The New York Times report that Rosenstein called for wearing wires to meet with Trump has been met with an unusual degree of people on the Hill beginning to understand that there is really a coup underway by the Deep State. AT this point, Rosenstein should be immediately suspected at the very least and a special prosecutor should be appointed who was NOT a former employee of the Department of Justice, FBI, CIA, or NSA or any other capacity whatsoever. This is a serious development for it really does not matter who is president. If this is allowed to become precedent, then the Deep State can remove ANY president who they personally dislike. That is an overthrow of the Constitution and the end of democracy altogether.

Of course, there are people who just hate Trump and want him gone at any cost. They cannot separate the person from the position. They think this is a popularity contest with all smiles like Miss America who prays for world peace. What they fail to comprehend is that to stand by and allow this to take place means that Trump may, in fact, be the very last President to be elected – end of story! ANy president who dares to offend the Deep States will be gone. This is looking more and more like the last days of Rome with puppet emperors. Many people write in and say they cannot support Trump publicly since they are immediately attacked by others. A policewoman in Massassachusets rammed into the back of a car because the driver had a Trump sticker on the back. This has been going for since 2016. People with Trump stickers have been harassed on the road in many parts of the country. The hatred is just unprecedented and it will lead to major civil unrest in the years ahead. This will be why the computer will be correct forecasting the break up of the United States.

Trump is the 45th President, however. he is the president during the 57th term rather than counting people. We will reach term 62, twice Pi, in 2032. Trump could be the last democratically elected president. From here on out, it could be more what Joseph Stalin boasted – elections are not decided by the votes, but who counts the votes.

Why war is meaningless anymore.

Beware the Common Thread that runs through War

Posted Sep 24, 2018 by Martin Armstrong

QUESTION: Mr. Armstrong; You seem to argue that the sanctions against Russia are unjustified with respect to their invasion of Ukraine. I understand that Kiev was the original capital of the Rus. You do not agree with the sanctions I assume because you argue they are pointless and will not work. Can you elaborate on that view?

Thank you for your insights.

VP

ANSWER: I look for patterns and when you see the same pattern time and time again, history becomes merely a Shakespear play performed for centuries where the plot remains the same and the only difference is the actors in the performance. So let us look at this objectively and without bias. There was the famous parting speech of President Eisenhower who warned about the risk of the growing military establishment. Most people do not know that in December 1897, Otto von Bismarck met with the last Emperor of Germany Wilhelm II. It was then when Bismarck had warned Wilhelm about the rising influence of military establishment just as Eisenhower warned the American people. He warned that especially of the admirals were pushing to construct of a battle fleet. They even named a ship after the man who warned against their aggression. In reality, you cannot have a standing army always training for a war that never comes. They get their toys and they historically always want to use them to the detriment of the people and the nation.

What does Japan, German and Austria-Hungarian Empire all have in common? In the case of Japan, World War II was instigated by its military and the Emperor was subservient to the military class. In Germany, Emperor Wilhelm II was not the instigator of World War I. Wilhelm was on a cruise and upon his return to Berlin on the 28th of July in 1914 he eagerly read a copy of the Serbian reply to Austria-Hungary following the assassination of the Archduke. Wilhelm wrote his comment on it:

“A brilliant solution—and in barely 48 hours! This is more than could have been expected. A great moral victory for Vienna; but with it every pretext for war falls to the ground, and [the Ambassador] Giesl had better have stayed quietly at Belgrade. On this document, I should never have given orders for mobilization.”

What he did not know was that the military general had already convinced Emperor Franz Joseph who was rather old and feeble to declare war. Wilhelm was disturbed and wrote a lengthy commentary containing his observations of the situation:

“… For I no longer have any doubt that England, Russia and France have agreed among themselves—knowing that our treaty obligations compel us to support Austria—to use the Austro-Serb conflict as a pretext for waging a war of annihilation against us … Our dilemma over keeping faith with the old and honourable Emperor has been exploited to create a situation which gives England the excuse she has been seeking to annihilate us with a spurious appearance of justice on the pretext that she is helping France and maintaining the well-known Balance of Power in Europe.”

In each of these cases, the common thread is that the military establishment pushed for war and took advantage of weak political governments. Baron de Montesquieu, was a tremendous influence on the Founding Fathers in creating the Constitution. Montesquieu met the political leader and soldier known as the Prince Eugene of Savoy (1663-1736). The political discussions between these two men helped Montesquieu understand the evils of government and forged the Second Amendment of the United States Constitution and the right to bear arms. The Prince of Savoy was considered, even by Napoleon, as one of the seven greatest strategists in military history. He fought against the Turks (1683-1688, 1697, 1715-1718) and he fought against the French in the War of the Grand Alliance (1689-1691). He was also the teacher of Frederick the Great of Prussia (b 1712; 1740–1786) who he shaped into a brilliant military strategist.

The Prince of Savoy also fought in the War of the Spanish Succession (1701-1714). Nonetheless, jealousy attached to his accomplishments and he was plagued by a rumor that he was really the illegitimate son of King Louis XIV of France, which he perpetually denied. Yet, Louis XIV was always ashamed of such offspring and he restrained the prince’s ambitions as if he was perhaps his son. So after 20 years of living in Paris and Versailles, he left France and offered his talent to Holy Roman Emperor Leopold I (1640-1705) who was fighting the Turks. He distinguished himself in the siege of Vienna in 1683 and his military career was born.

The Prince of Savoy acquired brilliant skill and wisdom that allowed him to see that military victory was merely an instrument for achieving political ends. He was Europe’s most formidable general who was wounded 13 times, yet always faced a world of cunning foes with conspirators at his back, which he regarded as the “hereditary curse” of Austria. He served three emperors: Leopold I, Joseph I, and Charles VI. Of these three men, Prince of Savoy considered that the first had been a father, the second a brother, but with the third, he was just the hired help.

He was a truly brilliant man of many talents. The Prince of Savory came to see standing armies as evil, for they were easily used because of the expense of keeping them. He came to see that there should be NO armies and that was the only way to reduce the risk of war. The brilliant insight of the Prince of Savoy greatly influenced Montesquieu, for this was his source that it laid the foundation for the right to bear arms, as the Second Amendment to the United States Constitution. The underlying idea was to eliminate standing armies that feed the cycle of war.

The Prince of Savoy was also a student of history. He understood that the early days of Rome were based upon citizen militias. The story of Lucius Quinctius Cincinnatus reflected him coming from his farm to lead the army defending Rome and then returning to his land. This was such a profound story that even George Washington was part of the Order of the Cincinnati.

Indeed, there is a tremendous risk of standing armies and building huge defense systems. These people naturally want to play with the toys they create. It would give them such pleasure as if this were some video game for children. My concern looks at patterns. I believe the military establishment is moving us closer and closer to war and their target seems to be Russia.

I do not see why war is even feasible anymore. Nobody wants to actually occupy other countries. The military establishment does not want to occupy Russia. So what is really the objective here? It just seems as if war has been reduced to two drunks in a bar who end up fighting because one looked at him strangely. There is nothing to be gained anymore other than standing on a hill and pounding your chest that you won a victory over absolutely nothing. So beware of the common thread. It is typically the military who desires war so they get to do what they have been training for all these years

What Kind of System is Better? Parliaments or Fixed Term Republics?

Posted Sep 21, 2018 by Martin Armstrong

QUESTION: hi martin just a quick question about government systems. Do you think the USA would be better served by adopting a parliamentary system of governance( like for example the UK) or do think it is better served by a presidential system?

Love to know your opinions

all the best a

ANSWER: Now. The Parliamentary System is inherently far more anti-democratic. It promotes small minorities to impose their will upon the majority in order to form governments. For example, while Angela Merkel has been the Chancellor of Germany and the real power behind Brussels for whatever Germany says, the rest of Europe must jump, when you look at who actually votes for Merkel you will notice that she draws well below 40% of the vote. That means she then remains Chancellor by cutting deals with minority parties to retain personal power. Hence, you have no idea what you are voting for because even if she told the truth about what she stands for, she will have to compromise that position to hold on to power.

The French system is better insofar as you can start with 10 different parties but there are run-offs until you get down to two. The people have to vote for one or the other.

The American system was based upon the Roman Republic, which collapsed because of pervasive internal corruption by career politicians. The office of Dictator would be a person appointed to simply cut through that inability to make decisions as we see today in the US Congress because each side will oppose the other to deprive them of any credit. A Roman dictator was a magistrate of the Roman Republic, to whom they entrusted the full authority of the state to deal with some emergency or to undertake a specific duty. Every other magistrate were subordinate to his rule. Even the right of the plebeian tribunes, who no one could touch and had the power to charge politicians, could not veto his actions and any right to appeal was extremely limited.

Nonetheless, they respected that there could be an inherent danger to take over the state. Therefore, to prevent the dictatorship from threatening the state, his powers were limited.  For example, a dictator could only act within his intended sphere of authority. This is something that Mueller is in serious violation of as Special Prosecutor. A Roman dictation could never roam freely and charge people with crimes outside of the purpose for which he was appointed. Additionally, a Roman dictator was obligated to resign his office once his appointed task had been completed. This too is something completely out of control today as with Mueller. He can remain in that position for 8 years as long as Trump could possibly be in office. A Roman dictator’s terms would require renewal every six months. There is no review of Mueller allowed.

The American system is far the superior political system. However, it lacks limitations to prevent oligarchies. There should be term limits for all politicians to prevent careers which lead to corruption and tyranny.

The term of office should be limited to ONE YEAR and out. They should serve as the supervisors of the bureaucracy. The power to indict must be taken away from the Department of Justice and that decision should be also presented to a panel of independent lawyers who make that decision, not a prosecutor. There should also be no prosecutorial immunity. I for want would require that everyone votes from a computer on each bill and the bill cannot be greater than two pages in length and it may not involve more than one subject matter.

Any law must be FIRST ruled on if it is Constitutional BEFORE it is enacted. Judges should be appointed by lawyers, not politicians, and they should serve for no more than two years. No criminal offenses should involve jail or prison EXCEPT for violence and political corruption. I am sure there are a few other safeguards we can add. This is not my manifest in total.

Printing versus debt

Who is the Fool? Trump or Woodward?

Posted Sep 13, 2018 by Martin Armstrong

According to CNBC, Bob Woodward reported that Trump told Gary Cohn, the former Goldman Sachs/director of the National Economic Council to just print more money to reduce the national debt. Woodward reports this discussion:

Trump: “Just run the presses—print money.”

Cohn: “You don’t get to do it that way. We have huge deficits and they matter. The government doesn’t keep a balance sheet like that.”

Here is a chart of the US CPI not seasonally adjusted. It has begun its sharp advance since the Floating Rate System was adopted in 1971 with the fall of Bretton Woods. In spite of borrowing, inflation over time has actually advanced more aggressively than if we had just printed instead of borrowed.  Cohn has said the book “does not accurately portray” his experience of the White House. This claimed quote demonstrates that someone is seriously out of touch with economics.  Actually, Trump is correct. Now we have Quartz joining the media calling Trump an idiot confirming they too are clueless about debt and printing. In fact, if you did just print the money and retired the debt, it would be DEFLATIONARY and not INFLATIONARY from the budget perspective because these people are clueless themselves about how the national debt works.

Before 1971, the debt could not be used as collateral for loans such as Savings Bonds. If you needed the money, you were forced to cash them in.  Under this system, it was logically less inflationary to borrow than to print. However, post-1971, you buy T-Bills and post them as collateral to trade futures. The distinction between borrowing and printing has been turned upside down. A national debt is now worse than printing because itis money that now pays interest forever. Then there is no intention of ever paying off the national debt.

The truth is had we printed since 1971 instead of borrowing, there would be far less of an economic crisis compared to what we face today. If we simply printed to pay off the national debt, Social Security would suddenly become a Wealth Fund that actually made money instead of a Slush Fund for politicians. Now, Social Security can only invest 100% in US government debt and then the Fed lowers the interest rate to “stimulate” the economy and Social Security goes broke forcing higher taxes. Up to 70% of the national debt at times has been purely accumulated interest which never benefited anyone.  It competes with the private sector in what we call the “flight to quality” and it forms the bank reserves. What is never discussed is the fact that US debt is also the reserve currency of nations – not paper dollars. That means that the interest we pay is exported and it stimulates foreign economies – not domestic.

So who is crazy here? Trump or Woodward? To keep borrowing year after year is insane. To monetize the debt will be DEFLATIONARY from the perspective of government expenditure. In 2019, interest expenditures even at this low level of interest rates will EXCEED military expenditure.

Woodward is by no means qualified to criticize Trump on such an issue he clearly does not even understand. Trump should really address the nation and explain this problem very simply. I will be glad to supply the charts.

The Russian Revolution of 1917

Caution – The Left Never Plays Nicely with Others

Posted Sep 7, 2018 by Martin Armstrong

COMMENT: I know a guy who just hates Trump and claims he hates Trump because he is a racist and incompetent and says I am a racist because I did not like Obama. But nobody that I ever knew hated Obama with such personal vindictiveness. These people would rather burn the house down and seem to refuse to live under any Republican. Just insane. I can see that we are definitely headed into a civil war. They are just hateful people.

HD

REPLY: Ironically, the left also accused the was the last Emperor of Russia a racist and hurled almost identical insults at him as well. They published anti-Semitic materials and the Emperor condemned that so they claimed he defended the Jews they portrayed as a separate race, which of course they are not. The left not merely staged a revolution seizing all the property of anyone who had it, but they then killed the Emperor and his entire family. The hatred is a pattern that will always manifest on the left. They are really blaming everyone else for their failures in life.

The Russian Revolution of 1917 involved the collapse of an empire under Tsar Nicholas II and the rise of Marxian socialism under Lenin and his Bolsheviks. This is really the goal here and the people who call Trump a racist are displaying the same patterns. They also simply hate the “rich” and you can guarantee this will eventually manifest into a rise in anti-Semitic movements they will justify by blaming the bankers during the next crisis. Tsar Nicholas II (r. 1894 – 1917) had complete control over the bureaucracy and the army refusing to share his power which led to people regarding him as incompetent as well. During the summer of 1915, the Duma (parliament), demanded a government with democratic values and which responded to the people’s needs. Later that year, however, Nicholas dissolved the Duma and went to the war front. His leaving was detrimental for there the opposition made its move.

We see the same insults hurled at Trump of being a racist and incompetent. It is a cyclical pattern that strangely emerges. As soon as someone calls Trump a racist you know they are blind with hate and are weak-minded spouting out propaganda they just regurgitate. Muslim is a religion, not a race and Mexican is also not a race. There are only four races and you will find them among all Mexicans as well as Muslims. Both the Russians and the Germans called Jews a separate race to really justify seizing their property.

So as soon as they call Trump a racist it demonstrates their lack of intelligence and their incompetence to have any sort of an independent mind. I too agree. I did not like Obama for the fact that he supported the NSA, installed Obamacare which failed to work but supported the insurance companies, and raised taxes. Nobody I ever heard called him vicious names. It was a disagreement with politics. The left is incapable of drawing such a line and their hatred is always personal. To call you a racist because you disagreed with those policies also demonstrates the lack of intelligence and the high probability that is some person who will eventually take out their hatred and support the civil war against anyone who disagrees with them. That is why all revolutions begin from the left. These are people who cannot sleep at night hating others who typically have more.

This is a shame, but it is what our future holds. The left should just put a bumper sticker on their cars – CAUTION – Do not Play Nicely with Others.