Nothing Can be Reduced to a Single Cause & Effect be it Markets or Nature

Posted Jan 31, 2019 by Martin Armstrong

QUESTION: Dear Mr. Armstrong,

Thanks for the Socrates forecast.

Just a question. What will possibly happen to existing Tropic Belt countries like my region South East Asia when the world is turning into global cooling? Any forecast?

Regards,

SS

ANSWER: I am awaiting their data to run it through and see what comes out. This is what I mean about opinion. How can anyone forecast something without the data? What we do know is also that the Jet Stream moves up and down, so it would make sense that the Tropic Belt would also do the same. The Jet Stream has been dipping as well and creating a very diverse curve pattern. So this produced the COLDEST New Year’s Eve on record last year. This is also why you have people who want to claim it is irrelevant if people die of cold in Wales. They argue that since it is warm where they are in Canada, it must prove that Global Warming is real. They are not the brightest bulb in the box.

Then we have the Pacific Jet Stream. These people who always try to reduce any effect to a single cause should be barred from any research EVER!!! If you want to understand how interconnected our planet is then you also need to look at and study El Niño. The interconnectivity is similar to all the world financial markets, which create a level of complexity beyond most human’s ability to rationalize. Both the weather system and the financial system function on an extremely high level of complexity. The patterns and events in one place can affect life on the other side of the planet in both systems.

Hence, one person will argue it is Global Warming because they happen to be in a hot spot and others are dying in blizzard conditions. I moved to the Tampa area where hopefully the Jet Stream does not bring ice on my windshield. Nevertheless, it has been unseasonably cold here as well and it has even dipped into the 30s at night as far south as Miami.

Then we have the real simple minded people who actually believe we would drown if all the ice melted in the Arctic. They have completely forgotten about EVAPORATION. If the ice melted, that water would mix with the Atlantic and Pacific, causing them to become colder. But then the Arctic would be able to evaporate. This is how Ice Ages take place for a very long time because the water returns as snow and that is how the glaciers build.

There have been at least five major ice ages in the Earth’s history (the Huronian, Cryogenian, Andean-Saharan, Karoo Ice Age, and the current Quaternary Ice Age). Aside from these ages, the Earth seems to have been ice-free even in high latitudes. This is a historical fact that the Global Warming people ignore. Based upon the data we have gathered, there appears to be a cycle of 430 million years. This agrees with the 8.6-year frequency. The last Ice Age was the Quaternary glaciation, which was actually a series of glacial events separated by interglacial events. This began 2.58 million years ago, so at least according to our models, we have plenty of spare time left in this cycle. However, the ice caps today that the Global Warming people are screaming about are the remnants of that period. There is a bottom to the Arctic ice cap. The Antarctic ice sheet actually began to form earlier (about 34 million years ago) in the mid-Cenozoic to late Cenozoic Ice Age period. That means there have been periods that existed without ANY ice caps. We cannot blame even Egyptians for climate change since civilization did not exist back in those days.

This is my problem with the whole Global Warming nonsense being attributed to humans. I would agree if they could show me evidence that such a condition NEVER existed previously before the Industrial Revolution. To me, this is just a cycle and we should respect that the planet if a far more complex system than these idiots put out. NOTHING can ever be reduced to a single cause and effect

Flat Tax

Internal Migration – The Cycle or City States

Posted Jan 28, 2019 by Martin Armstrong

There is an interesting book entitled The Chinese Exodus. This work explores the sociological and theological discussion going on concerning China’s internal migration since the marketization reform in 1978. While the book documents the social and political processes impacting the experiences of internal migrants from the countryside to the city within China, the attempt is to reconstruct the political, economic, social and spiritual dimensions of this urban underclass in China who made up the economic backbone of the Asian superpower.

History repeats BECAUSE human nature never changes. Humans will ALWAYS act in the same manner to the same set of circumstances no matter what culture or century. Yet what is more interesting to me is the pattern. As taxes are low and the economy booms in the city, the youth are attracted to the city and leave their parents in the farms or suburbs and head off to make their fortune in the world. Rome became the largest city in history reaching a population in excess of 1 million by its peak in 180AD. It had crossed that 1 million mark in 133AD during the reign of Hadrian (117-138AD). With the death of Marcus Aurelius in 180AD, the decline and fall began. Gradually the population declined until it fell to just 15,000 during the middle ages. The city of London, England reached the 1 million mark in 1810 during the reign of George III (1760-1820) and New York City finally reached that level in 1875.

Our understanding of the economy is incredibly important, yet it is completely ignored by those in power. Nothing is possible without a properly functioning economy for the very existence of civilization depends entirely upon the function of the economy. People come together from the suburbs to form great societies in a trend of urbanization only when it is to the advantage. Historically, when the government loses sight of their purpose and sees itself as the embodiment of sovereignty instead of the people, then it begins to abuse the people with regulation and taxation. Once that takes place, the trend of coming together is reversed.

Edward Gibbon wrote in his Decline and Fall of the Roman Empire about the son of Marcus Aurelius and how he set in motion the collapse of Rome. He wrote of Commodus (177-192AD):

“distinction of every kind soon became criminal. The possession of wealth stimulated the diligence of the informers; rigid virtue implied a tacit censure of the irregularities of Commodus; important services implied a dangerous superiority of merit; and the friendship of the father always insured the aversion of the son. Suspicion was equivalent to proof; trial to condemnation. The execution of a considerable senator was attended with the death of all who might lament or revenge his fate; and when Commodus had once tasted human blood, he became incapable of pity or remorse”

(Book 1, Chapter 4).

When the people begin to flee the cities because of corruption and taxation, the Romans had a word for it “suburbium” meaning the people began fleeing from the cities to what we call today suburbia. The population of Rome itself just collapsed. This is how empires die. The cost of government always rises to oppress the private sector since the public sector becomes addicted to revenue. The people either leave or revolt in their struggle to cope with the persistent unpredictable demands of the government that historically NEVER lives within its means.

In the earliest days of the Republic, Rome’s taxes were quite modest, and were not direct, but were a property tax or a wealth tax on all forms of property, including land, houses, slaves, animals, money and personal effects. The basic rate was just 1% and sometimes it would occasionally rise to 3%. This was to fund the pay for the army during the war. The tax would often be rebated to the people out of the spoils of war. It was levied directly upon individuals, which required the government to conduct a census.

The flat tax of Augustus (27BC-14AD) created the biggest economic boom in Roman history. Augustus once said, “I found Rome a city of bricks and left it a city of marble.” Indeed, Augustuscommissioned several large marble structures, some of which took 40 years to complete. There was evidence that massive marble blocks were constantly being moved through the city, causing congestion in the streets.  Marble-paved public spaces began to appear where marble was previously reserved for sacred temples and houses of the elite. The flat tax system really did create the economic boom as people turned to peace and business – Pax Romano.

Rome became prosperous because it began with the conquest model whereby it consumed the wealth of the nations it conquered. Once Rome had expanded and there was no longer anything worthwhile to bring home wealth, then the cost of maintaining its borders and security became unsustainable. The pension system it had created which we still use in government to this day where 20 years of service gets you a pension, acted like cancer which devoured the Empire from within. As this weakened its defenses, then the barbarians were able to invade.

Consequently, the fiscal mismanagement of Rome and its economic model of conquest failed. This led the government to turn inward against its own people that resulted in not merely the collapse of the Rule of Law, but that opened the door ‘for wider demands for taxation and the confiscation of property under the pretense of some offense. The over taxation of the people caused the suburbanization of Roman culture as they fled the cities. As the government tried to stretch its grasp of taxation, they were, in fact, planting to the seed of its own destruction. Taxation is not a divine right of government. It is to be limited to the voluntary contribution from the people to share the benefits of communal living. Once taxation is seen as a divine right of government this will lead to the diminished rights of the people and then the rise of economic tyranny.

Historically, this has been the difference between movable and immovable assets, such as real estate. Collectibles, stocks, and precious metals are in the moveable category. Of course, this is what governments are now attempting to seize. If we look at the fall of Rome, the first asset class to decline was real estate, as you cannot take it with you when you leave town. Thus, the population of Rome collapsed from 1 million to 15,000 by the Middle Ages. People had no choice and just walked away, unable to pay the taxes demanded.

Taxes are the great destroyer. You are an economic slave if you simply cannot retire without having to pay taxes. Taxes reduce economic growth and lower productivity for they are no different, economically speaking, from some gangster demanding “protection” money to operate a business. Rome prospered as long as it had a minimal flat tax. The Democrats preach they want to tax the rich, but what they actually do is create higher tax rates with all sorts of deductions they sell to lobbyists for big campaign donations. A flat tax is far more economically more of an incentive and it will be closer to the indirect taxation that the Founding Fathers incorporated into the Constitution until the Marxists alter everything.

The cycle is very clear. First, we have the attraction of the city with low taxes and regulation where people come together to create economic booms. Governments will then become greedy with taxes and over-regulation. This will then lead to the downside of the Bell Curve and result in the death of the empire, nation, or city-state. It is always the same pattern no matter what century or culture.

Wealth Tax - perfect recipe to destroy investment

Elizabeth Warren’s Wealth Tax – How to Destroy the United States in Less than 10 years

Posted Jan 28, 2019 by Martin Armstrong

QUESTION: Mr. Armstrong; I have been reading your blog for years now. It is obvious that you are well connected behind the curtain. It did not take but perhaps a day or two after you explain the difference between wealth and income to suddenly see Elizabeth Warren adopting the position to impose a wealth tax of two percent on people with assets of 50 million or more. Will this not cause the rich to leave as they did in France?

Thank you for the enlightenment

HT

ANSWER: Warren’s proposal is not only going to be the final nail in the coffin of capitalism and the United States but indeed, investors will migrate to China. The danger is clear. The famous legal case that led to the Supreme Court’s Right to Privacy was Griswold v Connecticut. It involved a doctor who was criminally convicted for giving married persons information and medical advice on how to prevent conception with a condom. The religious extremist took the view that the Bible said go forth and propagate and thus they imposed their religious beliefs upon the majority by criminal law. The Supreme Court correctly created the Right to Privacy out of a simple logical conclusion. How would the state outlaw the use of a condom in marriage? How could it be enforced? Would a state policeman have to inspect before you had intercourse? Would you then have to apply for a license to have intercourse so the state would then know to send the policeman into your bedroom?

In order to impose a Wealth Tax, that means that absolutely EVERYONE would then by law be compelled to list everything they own right down to your wedding rings so the state could then calculate your wealth to impose a tax. You will have to prove you are under the $50 million limit to qualify for an exception. This type of tax would absolutely destroy the Right to Privacy. It does not matter if it starts at $50 million. How do they know you have less than $50 million unless you still report all your assets to says you are exempt. They government needs to know everything you own. This is different from a property tax that only focuses on your home. This is everything from equities and bonds to jewelry that the Italians will weigh if it looks like you have a lot when you are trying to leave the country.

Putting the Right to Privacy aside, the government can NEVER be held to whatever it promises today. The government will always introduce a tax and claim it will only apply to the “super-rich” as she is doing – $50 million will pay 2% annually on the value government claims your assets are worth and $1 billion+ will pay 3% annually. At 8%, you will confiscate all of a person’s assets in less than 10 years. They have constantly altered even the definition of who are these “rich” people they hate so much. It inspires a feeling that you are just an economic slave and we are to be exploited and threatened with prison if we do not comply with their demands. This begs the question – Do you want to live where they hate you so much? Trust me, the hate emails I get from the Democrats for writing something like this reveals a nature that is no different from how the Jews were treated in Germany under Hitler. They hate others simply because you have something they want.

Elizabeth Warren is the new Karl Marx advocating communism in slow motion. To sell the income tax in 1913, it was to be just 1% and ONLY on the rich just as she is claiming today with her Wealth Tax. Ever since, the income tax has risen to 94%, dropped to 35%, rallied back to 91% and then eventually fell to 31% to rise again to 39.6%. This is why companies left the USA. Not to pay a worker $5 instead of $10, but to seek some consistent level of taxation. Now the Democrats once again want to raise the income tax to 70%. No matter what rate they say today, they will always change it. The USA is economically a disaster because the tax rate fluctuates depending on who wins the election. This is what is wrong with Democracy insofar as it allows the majority to exploit the minority be it in taxes or even religion crafting criminal laws to enforce religious beliefs.

Those below that $50 million thresholds will cheer – go get em. They did precisely that in 1913. To sell the introduction of the income tax, they drew the line at $3,000 when a good job paid $0.30 per hour or $18 a week which was just under $1,000 a year. So to get a new tax in, they will ALWAYS place it above the majority of people and pretend they will never be impacted. This is the luxury tax I saw in Australia pitching they would tax their Ferraris, Fur Coats & French Wines. They cheered. When the tax was imposed, it included all electrical products.

Once they create a new tax under false promises, they ALWAYS change the specifics. Just as ONLYthe rich would pay income tax, then comes Roosevelt’s New Deal and morally the same claims were made but suddenly they introduce the Payroll Tax and not everyone pays income tax. They will do the very same thing with a Wealth Tax. You cannot hold the government to whatever it promises. They will constantly change the rates and to whom it applies based upon they need money. They have constantly changed the DEFINITION of the “rich” and now it begins at $500,000. As the pension crisis explodes, they will need money for their own pensions like California, Illinois, and New Jersey, just to name a few. They will drop the Wealth Tax to the same level of income tax. Regardless, EVERYONEwill have to report their total wealth in order to make sure you are paying your Wealth Tax.

The Democrats rely upon Marxism and always preach class warfare which denies the very foundation of the Constitution’s Equal Protection Clause and violates the Ten Commandments by coveting what others have materially. They always run on a platform of a vote for me and I will go get the rich bastards. Once any new form of taxation is introduced, then politicians will ALWAYS raise the rates and lower thresholds as they continually need a never-ending source of other people’s money. The $50 million thresholds will crash to normal levels and the criteria will change for everyone. Every person will have to report their entire wealth right down to inheritance or else the government will be unable to confirm you are under the $50 million entry level. There are a lot of “super-rich” kids who inherited companies rather than cash. If your father’s company was worth $1 billion, how do you get $30 million in cash to pay taxes without liquidating at least part of the company? Then you have to pay that EVERY year!

Warren’s tax will cause a collapse in investment which means that unemployment will only rise. When people appear to make a fortune because their company goes public, they have restrictions that prevent them from selling for a period. A wealth tax will be applied simply based upon values of shares they cannot sell. This would certainly lead to a mass exit of the upper-class the very same as what took place in France – they just left!

Like the income tax, Warren’s Wealth Tax will move to 100% application to everyone because of some new event or war. Since we are already in a collapsing state of socialism, they will argue to raise this new Wealth Tax to save government pensions. Effectively, we will have a NATIONAL property tax that will include your home and then you will have to pay income tax on top of that. The pension funds will become a national emergency and the shift to increasing taxes will take place exactly as we are witnessing in California – if it moves, tax it; it fails to move tax it; and if it has any use whatsoever (like water) tax it.

Back in the ’90s, I was working to trying to Privatize Social Security to invest in equities rather than 100% government bonds and reform taxes by moving to a national retail sales tax (indirect) and eliminating the income tax. I was shuttling back and forth between the Speaker of the House Dick Armey and Bill Archer who was Chairman of the House Ways & Means Committee. Dick served in Congress between January 3, 1995 – January 3, 2003. I was sitting in Dick’s office one day when he explained the futility of it all. He had his feet up on the desk with his cowboy boots while smoking a cigar. He said to me that he could not support a retail sales tax because he did not believe he would be able to terminate the income tax.

He then said to me that when the political cycle would change, as I told him our computer was projecting, then the Democrats would have both taxes. It was at that moment I saw the light and I agreed. I told Dick he was absolutely correct. Without restoring the Constitution to prohibit direct taxation, it was hopeless to save the future no less Social Security. I made my decision to stop the nonsense of thinking I could prevent the future economic disaster. All I could do was advise my clients to help them survive not the nation. I gave up that day on trying to ever help the country and I knew all the top power people as the press would portray them. It did not matter. There was no fixing the system. We would have to meet our fate as every empire, nation, and city state that went before us.

War is a great excuse, which is why politicians like war for it justifies raising taxes and introducing new powers like the Patriot Act. Make no mistake about it, when they introduced the income tax, the economy plunged into a steep recession in the face of the income tax. INVESTMENT dried up and the stock market shifted buyers. Americans were sellers and Europeans were the buyers as SMART money began to move out of Europe. It had been the assassination on June 28th, 1914, in Sarajevo, Bosnia and Herzegovina of the Austrian Arch Duke which began to increase the tensions.

But a 43-month economic boom ensued from February 1915 to 1918, first as Europeans began purchasing U.S. goods for the war and later as the United States itself joined the battle. It was February 1915 is when the Ottoman forces attacked the Suez Canal and Germany defeated a Russian army in Poland.  Eventually, the long period of U.S. neutrality made the ultimate conversion of the economy to a wartime base. The economic boom led to real plant and equipment expansion in response to the increased demand from both Europe and the United States.

Those who are in the “rich” category earn their money from INVESTMENT, not wages. This is what Elizabeth Warren is addressing for she wants a tax on wealth – not income. So if you owned $100 million of a stock that was valued at that level because of a bull market, you will then have to pay 2% – $2 million. The stock crashes by 50%. You now pay 2% again every year of the current value of $1 million even though you lost $50 million. This type of Wealth Tax will unquestionably destroy INVESTMENT. You can lose and get no credit for a loss.

What this will do is far worse than the proposed 70% income tax for the new “Green New Deal” of Alexandria Ocasio-Cortez. This dynamic-duo of Warren and Ocasio-Cortez will absolutely complete what our model is forecasting – the end of the United States. Both are completely ignorant of how the economy even functions. They lick their lips at other people’s wealth and just want to get their hands on it to fund their wild ideas of some Green New Deal.

“The Green New Deal we are proposing will be similar in scale to the mobilization efforts seen in World War II or the Marshall Plan… Half measures will not work… The time for slow and incremental efforts has long past [sic].” – Alexandria Ocasio-Cortez, then-candidate for the U.S. House of Representatives, Huffington Post, June 26, 2018

This manifesto is very serious for they reject gradual change but are demanding immediate change to the economy. What has taken place among the Democrats is a band of newly elected members of Congress is accepting the leadership of Alexandria Ocasio-Cortez to push forward for this Green New Deal by a sheer force of tyrannical power. She is calling her proposal the most significant blueprint for system change in 100 years. She will send the USA into civil war. Even I will be faced with the choice – shut down the company or leave.

The core idea demands the mass conversion to renewable energy and zero emissions of greenhouse gases in the U.S. by 2030. Yes – Global Warming is a great excuse to raise taxes. They argue that a transition is not acceptable for it must be immediate action by the elimination of greenhouse gas emissions from our multi-trillion-dollar food and farming system they claim is long overdue because farming and cows represent a degenerative food system generates that accounts for 44-57%  of all global greenhouse gases.

Warren’s proposal will destroy the economy and lower economic growth providing the strongest incentive for capital to migrate to China. As Europe and the United States spiral downward economically, this is how our model will be correct in the shift from the United States to China of the title – Financial Capital of the World. India and China were where all the wealth was which peaked during the early 19th century. After the fall of Rome and then Byzantium, the Financial Capital of the World began to migrate to India. That peaked by about the 14th century as India gradually declined and it moved to China.

Following the Great Monetary Crisis of 1092, the Financial Capital of the World migrated to India – the land of the Spice Trade. Southern India had long imitated Roman gold coins to facilitate the local economy. We begin to see actual Indian coins but only under the Kushan Empire. Southern India continued to mint Roman imitations until the mid 3rd century AD. After that period, we begin to see actual Indian gold coins being struck showing that governments began to win the confidence of the people.

India’s economic boom period lasted about two Pi Cycles of approximately 630 years. During that time period, India had captured the title of the Financial Capital of the World which it held for only about 224 years. China’s rise also lasted about 224 years. The rise of the United States has come into play for also about 224 years. EVERY country which has EVER engaged in socialism has injected the death of their own society by suicide. When law favors one group over another, the very purpose of coming together to form great societies ceases to exist.

It’s just time. So thank you Warren and Ocasio-Cortez for ensuring our model will be correct once again. What these people refuse to ever look at is that the government is incapable of ever managing anything. Economic growth declines with rising taxation and regulation. No matter how many examples there are of how socialism destroys economies right down to present day Venezuela, they just cannot help themselves trying to change the very nature of human behavior. Any one who believes this tax will stay at $50 million+ is an absolute fool. History would beg to differ.

Will this end up causing a mass exodus of Americans? Yes! It will simply be time to turn out the lights and leave. This is how the United States will be destroyed like every other empire. Far too often there ends up more people in government living off the tax collections disproportionately to the living standards of the people paying taxes.

Socialism MUST be prohibited by the Constitution and it MUST NOT be subject to revision. There can be no equal rights and equal protection of the law once socialism is introduced.