Corruption inspired by subsidizing from government

Education – The Greatest Fraud Exempt from Law

Posted Jan 22, 2017 by Martin Armstrong

QUESTION: Trump seems to be interested in changing education. This seems to be really controversial. What are your thoughts on this subject.

ANSWER: Yes, there are people yelling about reducing or gutting public education. Let’s get real about this. The two WORST areas of abuse have been medical care and education. Both are increasing at costs way ahead of anything else in the economy. Why? Corruption inspired by subsidizing from government. Trump has been talking about:

• Consolidate ALL current repayment plans into a single Income-Based Repayment program (IBR) where students pay 12.5% of their income toward their loans each month and receive total loan forgiveness after 15 years
• Plans to cover increased forgiveness amounts (and the higher cost to taxpayers) due to shorter repayment terms by lowering federal spending accordingly
• Promises to scale back funding significantly for the Department of Education

 There is a test in economics known as the Baumol’s cost disease, or the Baumol effect. The assumption is a free market study whereas a rise of salaries in jobs that have experienced no actual increase in the labor productivity is a response to rising salaries in other jobs where there has been an increase in labor productivity growth. This Baumol effect operated counter to the classical economic theory which assumed real wage growth is closely tied to labor productivity changes.

In other words, let’s say the average wage is $10,000 annually. There is a shortage in IT developers. Suddenly they now pay $20,000 annually. The rise of wages in other jobs without any productivity gains whatsoever takes place as other jobs now have to compete with rising wages in an unrelated field. How many student have gone to school for medicine or law simply because they were the higher paying jobs.

There are quantitative studies that have shown that there are significant rises in tuition for college that is disproportionate to the rise in potential income one would earn (see Tuition-Study). The Federal Student Loan Program (FSLP) has fuel the increases in the costs exponentially because the colleges know they will get paid. They do not have to compete so the costs have increased beyond the increase in wages. Forbes Magazine showed that 60% of students cannot find a job in what they paid for in college. If this was finance, they would be in prison for 25 years calling in fraud. We have consumer fraud laws, but none of this applies to education. Students are burdened with loans that are for degrees that are totally worthless.

College tuition rose 106% between 1987 and 2010, which was far more than the 78% increase salaries. Tuition studies have shown that the FSLP alone generate a 102% tuition increase. Such studies have stated that their findings “cast doubt on Baumol’s cost disease as a driver of higher tuition.”

This is the greatest of all frauds because the Clintons handed to the banks to exempt students from the bankruptcy laws. They go into debt to pay loans for degrees that are worthless. Then, the bankers are clever. They won that exemption from the Clintons, which Larry Summers supported, under the pretense that these students had no collateral and were thus risky warranting that they could not go bankrupt. Then the bankers would demand the parents cosign. Hence, they played fast and loose with the laws and managed to get collateralize loans exempt from bankruptcy.

The State of New Jersey refused to forgive a student loan co-signed by a mother after her son was murdered. This was not unique. A mother from Michigan ended up in the same position. “That’s when American Education Services (AES) and National Collegiate Trust (NCT) turned my son’s dream into a nightmare for me and the two year old son he left behind.”

MY RECOMMENDATION TO TRUMP:

If a student cannot find employment with a degree after 3 years, then the loan should be forgiven COMPLETELY and the college will have to reduce what it received by 50%. End exceptions to the bankruptcy law NOW and state publicly that the Clinton laws for the bankers are being REPEALED.

“The Congress shall have Power To…establish…uniform Laws on the subject of Bankruptcies throughout the United States….”

ARTICLE I, SECTION 8, CLAUSE 4

The Bankruptcy Clause was to prevent a debtor who won a discharge of a debt in his state being prosecuted by a creditor trying to collect the debt in another state. That was the original intent and implicit within that clause is Equal Protection of the law. Therefore, I contend that the Clintons violated the Constitution by exempting student loans from the bankruptcy law.

EQUAL PROTECTION CLAUSE

No State shall…deny to any person within its jurisdiction the equal protection of the laws.

AMENDMENT 14, SECTION 1

Mexico recover from this political mismanagement? appears to be due in 22 years — 2038

From Behind the Wall – Mexico

Posted Jan 20, 2017 by Martin Armstrong

US-Mexico Border in Arizona

COMMENT: Greetings from the other side of the Wall (i.e. Mexico)

Mr Armstrong! First, I would like to thank you for what you do, as a young person committed with helping the world thrive I cannot tell you how empowering it was to discover your work and get to know your story, and how inspiring it is to see upright people like yourself and your team take on the biggest challenges we face today as a planet, being consistent with what you say and actually doing something! That been said I wanted to share something that’s happening here in Mexico City, and because it is related to one of the main topics of your blog, i.e. the hunt for taxes I thought it would be worth sharing. Right now, Mexico City is going through some administrative changes. Beginning in 2018 Mexico D.F. (D.F. stands for Federal District) will no longer be the center of the powers of the federation but the 32nd federal entity of the union. That doesn’t only mean that Mexico D.F. will officially change its name to Ciudad de Mexico (CDMX) but that by the end of this month (January, 2017) CDMX will have its own Constitution. It is here that it gets interesting. In its 21st article, the draft proposed that “the increase in the value of the land derived from the process of urbanization, will be considered part of the public wealth of the city” that effectively meant that all the capital gains of a property will be taxed!! This resulted in a strong opposition specially from groups, associations and businesses concerned with the real estate business. The mayor of the city, surprised and pressured, answered that he would veto any new tax that comes into his desk and proposed an immediate modification of this article, which makes you wonder if he read the draft of the constitution in the first place! After the announcement, the commission in charge of the ruling of that article said it would be revised and modified so that a tax of this nature would not be allowed.

Fiufff!! That was close and everybody went home or headed out to the beach for some sunny winter holidays. Oh wait, except that our “public servants” being the way they are, apparently removed the provision from the draft of the constitution but still added it to the Housing Act which authorizes the administration to “implement mechanisms to capture capital gains, generated form urban development actions”. The Act was passed a nd approved the 26th of December!! The press reported this until the 28th which in Mexico is our April fool’s day, making us wish it was a terrible “December fool’s day” joke. I guess you have to have a sense of humour. I mean this guys are relentless when it comes to making a dishonest buck. I don’t know what Socrates says about Mexico but from my biased point of view it doesn’t look pretty. Higher prices, higher taxes, insecurity, a higher dollar, a debt worth almost 50% of GDP and growing, which at least I think it’s in pesos so I guess it could be worse. I was not alive then but there was a time when the peso fell greatly against the dollar maybe Mexico’s cycle is back down but I’m sure you know that. But there was also a time when the peso was close at par with the dollar, which makes me wonder when does the cycle turn up. Anyway, I guess by that time it’s either a strong peso or a worthless dollar!

Again, thank you and your team for all your work. Have a wonderful and spectacular year!

XA

REPLY: Hello from the other side of the wall. Most people do not realize that the Mexican 8 reales silver coin was commonly known as the “pillar dollar,” and cutting it up into pieces like a pie is what we hear in pirate moves — a piece of eight, meaning a piece of this coin. Here is a piece of eight stamped “St Lucia” for a Caribbean island.

These pillar dollars or Spanish dollars as they were known, were widely used by many countries as an international currency in modern times because of its uniformity. Some countries countersigned the Spanish dollar so it could be used as their local currency, as did even Britain during the shortage of currency under George III. In fact, these pillar/Spanish dollars were the coin upon which they originally constituted the United States “dollar” as they refused to adopt the British system of pounds. In fact, pillar/Spanish dollars were actually considered to be legal tender in the United States up until the Coinage Act of 1857.

Most people have no idea that the Mexican peso (8 reales ceased to be issued in 1897 after it was replaced by the peso) was on par with the dollar, and in fact, the US dollar was based upon the peso. The debasement of the 8 reales (peso) began slightly in 1729 when it was reduced to .7972 of a troy ounce down from .8102. It was debased slightly again in 1772, dropping to .7858 oz followed by another slight debasement to .7797 in 1791.

It was restored back to .7859 oz in 1811 where it remained until the 8 reales was called the peso with .786 oz. It returned to .7859 oz in 1910, which lasted only until 1917. As silver rose in value during the Panic of 1919, and European demand rose for reestablishing a monetary system, the Peso was sharply debased to .4663 oz before it dropped further two years later in 1920 to .3857 oz where it remained until the end of World War II.

In 1947, the peso was debased to .2251 oz and then the financial crisis of 1949, which saw the sharp collapse in the British pound, impacted the peso by dropping it further to .1286 oz in 1950. The crisis hit again in 1957, and the peso was debased to .0514 oz where it remained until 1967. The rising US dollar postwar was critical worldwide and Mexico was not exempt. That was the Recession of 1958, also known as the Eisenhower Recession, which began in 1957 and lasted for eight months. That led to a sharp worldwide economic downturn in 1958, aided by the Fed raising interest rates to try to fight postwar inflation. Then in 1967, silver vanished from the monetary system with the birth of the two-tier gold market in London during 1968.

The answer to the question, “When will Mexico recover from this political mismanagement?” appears to be due in 22 years — 2038. This is most likely reflecting the younger generation really taking charge.

The Reversals give us the signal and objectives

Understanding Global Market Watch

Posted Jan 14, 2017 by Martin Armstrong

QUESTION: Good afternoon,

I have a quick question regarding the GLOBAL MARKET WATCH. Are the results updated only at the end of each time period (day, week, month, quarter or year) or are they updated constantly throughout the time period?

For example: I have noticed that the monthly trend on gold started January with a bearish comment and now it suddenly changed to “rally under way”.  Or does this mean that since January 12, 2107 the tone will be bullish (rally under way) for the next 30 days until February 12, 2017? Thank you in advance for your help in understanding how the Global Market Watch works.

ANSWER: The Daily is based upon the end of each session. The Weekly to Yearly are progressive or dynamic. In other words, the comment it comes up with is based upon the data up to that point as if that level closed that instant. So a monthly will change as the month unfolds and as the month closes it is then fixed. So if gold closed that day, then the final comment for January would be as it appears. The “tone” would be bullish going into the next presumed “month” at that instant, which would begin the very next day. It does not indicate that it will be up for 30 days. Each is still forecast just the one day.

Keep in mind this can change and you can make a high and suddenly it will then say it is a knee jerk (1 unit wonder), reaction, temp high, or major high. In this case, gold elected a Monthly Bullish at the end of December so this signaled we should see a bounce up to the Reversals, particularly since it held above the 2015 closing for 2016. 

1. The Reversals give us the signal and objectives, 

2. technical analysis provides objectives,

3. and the cycle arrays provide the time. 

The GMW is purely pattern recognition. Using a combination of methods, on all markets globally, we get to see the world as it unfolds. Forecasting just cannot be done focusing on a single market. You must see the whole as everything is interconnected. What this demonstrates above all is simply there is no such thing as randomness.

California will separate into its own country after 2032

Currency v Language

Posted Jan 12, 2017 by Martin Armstrong

QUESTION: Do language and currencies move in line with each other? Is language a leading indicator to currency i.e. Spanish in California. Will they create their own currency if they separate from the states?

ANSWER: There is a direct link between currency and language. When I was doing interviews in Europe, I explained the euro would fail because Europe lacked a single language. I laid out the example of the United States, for it became the melting pot in all reality. The key was not a single currency in the USA that made the dollar dominant, but a single language. The same was true of the Roman Empire. It was the language that created the empire because everyone could intermarry and communicate, which resulted in an economic boom.

If we put religion aside and take the story of the Tower of Babel at face value as a parable rather than history, we still see the core as a lesson. This story is about the unity that emerges with a single language. There were two instances in my personal life where I encountered this. First was in Paris. I was a keynote speaker at a BIS conference. I sat at the head table with all the heads of central banks in Europe. The Italian could not speak German, the German could not speak Italian, and ultimately, the table began to speak English to the dismay of the French host. English was the common language everyone knew. When I was invited to China by the central bank with the Asian Currency Crisis in 1997, the same thing happened. I took some people from our Tokyo office and what happened there was the same thing. The Chinese could not speak Japanese and the Japanese could not speak Mandarin. Once again, the meetings took place in English. English became the world language because the US economy was the core economy. The language is clearly tied to the currency as it was in ancient Rome.

1.Now the whole world had one language and a common speech. As people moved eastward, they found a plain in Shinar and settled there.

2.They said to each other, “Come, let’s make bricks and bake them thoroughly.” They used brick instead of stone, and tar for mortar.

3 And they said, “Come, let us build ourselves a city, and a tower whose top is in the heavens; let us make a name for ourselves, lest we be scattered abroad over the face of the whole earth.”

4 But the Lord came down to see the city and the tower which the sons of men had built.

5 And the Lord said, “Indeed the people are one and they all have one language, and this is what they begin to do; now nothing that they propose to do will be withheld from them.

6 Come, let Us go down and there confuse their language, that they may not understand one another’s speech.”

7 So the Lord scattered them abroad from there over the face of all the earth, and they ceased building the city.

8 Therefore its name is called Babel, because there the Lord confused the language of all the earth; and from there the Lord scattered them abroad over the face of all the earth.

— Genesis 11:4–9

In the USA, if you ask an America what are they, they will respond, “Half Irish and half German” or whatever. All the Europeans intermarried in the USA because they spoke the same language. In Europe, an intermarriage between a German and Irish is the exception — not common in the least. Europe could not be united simply by a currency.

Hispanics have migrated to the USA from Latin America, but the majority have retained their language. That has defeated the melting pot. In California, 44% of the population over five years of age speak something other than English, and therein lies the demise of California. Refusing to adopt the language of the nation you migrate to ultimately means you are refusing to adopt that culture. If that subculture then becomes the majority, the culture of the state will change and therein lies the seed to breaking the bonds that would link California to the rest of the nation.

California became a state on September 9, 1850. The very latest California would separate and become its own country would be in 2074. The beginning of separation was targeted for 2004, which was 50% of the 309.6-year ECM cycle. Right on target, following the 2003 gubernatorial recall, Tim Holt and Martin Hutchinson proposed in newspaper op-eds that the state should split into as many as four new states. They argued for dividing California into distinct geographically and politically defined regions as the Bay Area, North Coast, and Central Valley, as well as the historic Shasta/Jefferson region. Each proposed they should be separate states due to culture. Then on  December 19, 2013, venture capitalist Tim Draper submitted a six-page proposal calling for California to be broken up into six new states. The California secession movement has picked up steam with the election of Donald Trump.

California will separate into its own country after 2032. However, the pressure to split the state itself is also on the rise. This is certainly being fueled by the language differences that go hand-in-hand with culture.

Minoan collapse was instigated by one of the largest volcanic eruptions in history — Thera (Santorini)

Bonds & Climate Change

Posted Jan 5, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong; Your Global Market Watch picked the high in bonds perfectly and called it a major high. I have to say, the system you have created monitoring everything is an incredible teaching tool. I can see what you are saying. There is a major global trend that politicians cannot alter and that is why communism fell and socialism is falling now. Do you believe we can advance this time around when it crashes and burns?

Thanks

BM

ANSWER: Believe it or not, I am an eternal optimist; foolish at times. I gave up trying to help behind the curtain because I came to witness how politics works. You can tell a politicians to do this or there will be a crash. They will not listen for a simple reason. No politician can run for office saying, “Vote for me, I saved your job.” You would ask, “How do I know I would have lost it?” Politics is about winning. It is far better to run for office by promising change but never delivering. The political situation is simple. They like the crisis for then they launch investigations to get the guy who caused it. They will never prevent it, for that does not have the same impact at the polls.

Society goes through these convulsions roughly every 309 years or so. They build in intensity and that is what we now face — the Sixth Wave. On the cyclical time line, we are at the point where the collapse of Rome came about with the Sixth Wave back then.

Before that, there was the Minoan Collapse.

This is the third major wave. Either we go into a Dark Age, as took place after the last two groups, or we advance. I would like to think we can do this and reform the way things work. Maybe I am just wrong and we will fail. I realize the only way to take that one giant leap for humankind is if the PEOPLE understand why we never advance and say enough is enough.

So the more people we can move to understand the business cycle and DEMAND change, the better chance we have of taking a leap forward instead of backwards.

The ECM will still exist. We cannot alter that. The volatility (intensity) we can influence perhaps. Of course, the Minoan collapse was instigated by one of the largest volcanic eruptions in history — Thera (Santorini). The fall of Rome came with climate change when everything turned down much colder and resulted in the invasions of the barbarians who were migrating South.

These groups of Six Waves tend to coincide with the collapse in the energy output of the sun. The climate change we are heading into is by no means global warming, it is back down to record cold. That is not good in the least for civilization.

The top export market for Scotland is not Europe, but the USA.

Sturgeon Incompetent to Lead Scotland?

Posted Jan 4, 2017 by Martin Armstrong

Nicola Sturgeon, the  First Minister of Scotland and the leader of the Scottish National Party (SNP), has said she is determined for Scotland to respect the decision to remain in the EU in 2017. Unionist party leaders urged her to abandon threats of a second independence referendum. Sturgeon is clearly uninformed and will lead Scotland to total economic disaster. She stupidly believes that the EU is somehow fantastic.

The top export market for Scotland is not Europe, but the USA. Sturgeon, like many other career politicians, is clueless when it comes to economics. She is just incompetent in this respect and will lead Scotland to an economic abyss all because she want to separate from England. That single issue, she fails to understand, does not mean you stay in the EU.

California will become a Spanish-speaking state, not English, in just a few more decades.

Yes, More Electors Abandoned Hillary in the Electoral College

Posted Jan 2, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong; I really do not understand this electoral college in the United States. Why does the popular vote not count? Then I heard that more electors abandoned Hillary rather than Trump.

Thank You from European Disneyland

JH

ANSWER: It is very simple. The EU has member states and each is really its own sovereign. The United States means what it says; it too is a union of independent sovereign states. The EU is an attempt to federalize Europe on this very model.

If we look at the popular vote and subtract California where Hillary reportedly had 3.5 million more moves than Trump, then the fact that she won the popular vote by 2 million means that Trump actually won the popular vote in the balance of the country. Now, what if all the European member states voted to leave the EU but one state did not and it had the largest population? Would it be fair for that one state to overrule all others?

The constitutional structure is a UNION. The only possible way to preserve that union and prevent the tyranny, in this case of California where already 44% of people over the age of 5 speak a language other than English, is the electoral college. That way, the majority of states are on equal footing. This election showed that Trump won a landslide and he had about 1.5 million+ more votes that Hillary outside of California. What happens when the majority of people in California no longer speak English? This is part of the breakup of the United States. California will become a Spanish-speaking state, not English, in just a few more decades.

Hillary’s effort to steal the election, and John Podesta trying to sway the electors to abandon Trump, was disgraceful and a desperate move to say the least. It backfired with four Democratic electors in Washington state casting votes for candidates other than Hillary who carried the state. Democratic electors in Maine, Minnesota, and Colorado separately tried to cast votes for different candidates, but saw their ballots barred. Clinton carried all three states there as well. The Clinton effort to steal the election saw a backlash where four electors turned their votes from her while only two Republican electors in Texas chose alternatives to Trump. One, who had said weeks earlier he would switch is vote, chose Ohio Republican Gov. John Kasich. The other chose former Texas Republican Rep. Ron Paul.

The electors should not be allowed to switch votes. That should be made a criminal act. This is not their personal election. They are to be bound by the popular vote in their state.