When empire begins to die, the capital flow reverses and then moves back toward the core economy

How Capital Moves – Outward then Inward

Posted Mar 22, 2017 by Martin Armstrong

QUESTION: Hello Martin, In your ‘Why the Crash & Burn is Public not Private’ post of 18 March, you have an image showing World Capital Investment. Is that the sequence money usually follows at this time? And, what exactly is the ‘alignment’ you mention towards the end of the post as well as elsewhere? Best Regards and my condolences on the loss of your friend, Mr. Edelson.

BH

ANSWER: Historically, capital tends to flow first from the financial capital of the world to the outer provinces or state. This was how it functioned in the Roman times as was the case for postwar when US capital flowed outward to rebuild the rest of the world. Then what happens is as an empire begins to die (in this case Western Culture), the capital flow reverses and then moves back toward the core economy which is the financial capital of the world.

Here is a chart of all the bonds listed on the New York Stock Exchange. When the Sovereign Debt Crisis hit in 1931, government simply defaulted. The bonds were then delisted never to come back again.

What transpires at that moment when government moves into a Crash & Burn, is that all tangible assets rise together, albeit at different rates of advance. This is what I call the Great Alignment. Therefore, we will see gold rise WITH the stock market – not counter-trend. Likewise, real estate survives provided you do not enter into a Dark Age when not even gold survives – only food.

If we look at the German Hyperinflation caused by the Communist Revolution in Germany in 1918 inviting the Communists of Russia to take Germany and the formation of the Weimar Republic, all of this political-economic chaos ended with a new currency being issued following the fall of the Weimar Republic. That currency was not backed by gold, but instead real estate.

Serious economic decline for mainstream media - 2023

It’s Confirmed – Trump was Spied On During Transition

Posted Mar 22, 2017 by Martin Armstrong

This is a press conference in its entirety from the committee investigating everything. Yes, there was no “wiretap” of Trump Tower. As I reported previously, that is old-school. So while the New York Times and the Washington Post are desperate to cover everything up and focus only on that single word to claim Trump has no proof,  behind the curtain everyone knows that Trump was spied on because that’s just what is going on. The same as the NSA has all the emails Hillary erased and every phone call. Nobody in Congress dared to subpoena the NSA for that info because it would set a precedent that would one day come back and bite them.

What is going on is the committee “invited” people with information within government to come clean and present info directly to the committee. To the shock of everyone, that is happening. So people do not want to go down with the ship and they will give up others who have been leaking info to the New York Times and the Washington Post, which have been the two mouthpieces for the Democrats and the anti-Trump movement. This will get much more interesting as we move forward.

Keep in mind that more confidence in government is undermined, including the mainstream media, the more likely we will see the bonds collapse of all governments and private sectors rise. Politics is the driving force in this cycle. The New York Times was founded September 18th, 1851. Cyclically, the New York Time will be in trouble economically starting in 2023. Its abandonment of reporting the news and trying to create news, as is the Washington Post and CNN, ABC and NBC, will result in a serious economic decline for mainstream media. CNN may be entering a serious crisis reflection point. It was founded in 1980 and 2017/2018 is a serious turning point for CNN. Best to avoid shares in these entities going forward.

Socialism is the code word for total government control and the diminishing world of human rights

Posted Mar 21, 2017 by Martin Armstrong

What’s Collapsing? Socialism or capitalism

QUESTION: Many people argue it is capitalism which is collapsing not socialism. How would your respond?

ANSWER: Those people who say this is a failure of capitalism and not socialism simply are trying to come up with an excuse as to why their dreams are not coming true. Democrats champion the poor and middle class but run to the rich for money. Why would bankers and hedge funds as well as Hollywood support Democrats if they are really hated so much? The answer is rather simple. They can bribe them for loopholes and favors.

The monetary and banking problems in the world today arise NOT so much from the failure of specific economic policies, but from deep-seated corruption and problems in institutional structures that have been created in response to socialism, which includes excessive regulation. Individuals clearly make mistakes in business but legislatures make bad laws and career politicians become detached from society, which is no different than any monarch. However, the institutions from which decisions and laws emanate are the core that determines the effectiveness of social operations and the value of social decisions. The more they create laws to solve an issue, they create other problems in the process.

Unless we change the immediate institutional structure of how government is designed, trying to impose centralized planning, we are not likely to get stable solutions to today’s economic-social problems. We exist between brief periods of economic stability and total government ineptitude resulting in erratic inflation and serious banking instability. The history of modern monetary and banking arrangements and government’s complete failure to manage society begs for meaningful reform. However, the likelihood of such reform is zero without the Crash & Burn, for he who holds the power in his hand will never let it go willingly.

The rhetoric against central banks clouds the issue. Government wants to spend other people’s money all the time, be they left or right. They only differance is on what to spend it on. However, they look to central banks to control the economy when they can only impact interest rates while money supply expands with velocity and contract when people lack confidence. The central bank has no possible power over fiscal spending and until the people stop complaining about central bankers and look at the whole problem, politicians will never be blamed for anything.

The impact of political interference on the workings of monetary and financial institutions is great under socialism implemented by people who have no experience whatsoever. Not surprisingly, many of our modern problems arise because politically generated structures are inappropriate to the real world. The hunt for money by government has cost billions in the private sector trying to cope with regulations to the point that the back offices in banks and risk management outnumber the the front offices actually doing business. This is only slowing down the economy and raising costs to the consumer who in turn only sees his living standard decline year after year.

Socialism is the code word for total government control and the diminishing world of human rights. People look at labels but are blind to the reality of what is being labeled. Is LIFE INSURANCE the same as FIRE INSURANCE that covers you in case of a fire? So LIFE INSURANCE is covering you in case you live forever or is it really death insurance? The nature of anything can be distorted by its label

Without mortgages available, real estate falls further than other tangible assets because it has been LEVERAGED

Are Cycles Universal or Regional?

Posted Mar 20, 2017 by Martin Armstrong

QUESTION:  I have a question regarding cycles. You provide some very detailed, historic references showing why certain events are occurring now (again). Is there a disposition for something that occurred in the past to be destined re-occur for a particular region/country (i.e. Greeks abandoning property due to excessive taxation) because it happened once and now the propensity to repeat that causal action again is “in their DNA”. Is that something we as Americans do not yet possess because we have not been around long enough to experience a “fall of Rome” type event?

SM

ANSWER: Cycles are based upon two element – (1) nature and (2) human nature. Some regions will be prone to natural disasters while others are not. Ironically, many of the best ports where cities grew such as Tokyo and San Francisco just as examples, were great harbors because of earthquakes. The landscape in California is strikingly beautiful compared ot the flat plain in Oklahoma, again because of earthquakes. The rocks that appear in Central Park in New York City are there because an earthquake fault runs through New York City making the harbor what it was. Hence, there are cycles that impact only on a regional basis due to nature.

With regard to Greeks walking away from inheritance because they cannot pay the tax, this is inherent to all societies when government goes too far. They imposed harsh laws in Vancouver against foreign real estate buyers and the market crashed. Because it was a local law, they moved to Victoria and Toronto. In Australia, they are seizing properties own by foreigners and selling them off. All of these types of interventions are reactions to events set in motion externally.

That said, this is the US cycle for real estate as a national whole. I just bought a house in Florida at about 50% of its 2007 high value. Trophy spots for the high end where people are just parking money we warned would make new highs going into 2015.75 – but that is not the bulk of the market. Why is the US market (minus trophies) down hard when that is not the case in other countries? The difference is the regional issue. In the USA, many people have 30 year mortgages. In Canada, the best you can get is a 10-year fixed mortgage. In Germany, you can get up to a 15-year fixed mortgage.

We must understand that property values are LEVERAGED, so if the money for fixed rate loans dries up because of interest rate hikes and political uncertainty, then real estate prices MUST fall. This is all because of the leverage that was deliberately injected into the real estate market during the Great Depression for property fell  in value so far, only cash buyers could buy anything. Farm land fell in value to below what it was sold for by the government more than 80 years before.

Real estate is different from stocks and gold. Yes it is a place to park money. However, be careful because without mortgages available, it falls further than other tangible assets because it has been LEVERAGED! Moreover, it is a fixed asset meaning you cannot leave with it. Therefore, people are forced to simply walk away when (1) the tax burden is too high and (2) there is war and the region is being invaded

The political system is such that the “free market” means they can bribe people

Why Removing Trump Will Lead to Civil War

Posted Mar 17, 2017 by Martin Armstrong

QUESTION: Marty; It seems that the left is winning in preventing Trump from really reforming anything and the Republicans themselves are divided over Obamacare. Do you see this change?

Thank you for what you do. It is striking how on point you have been.

LE

ANSWER: The Democrats led by Summer and Pelosi are fighting tooth & nail to save socialism. They always preach that they stand for the poor, but they take money from the rich. Hillary’s comment that you have to have a public and private agenda is no joke. This is standard operational procedure for ALL politicians in Washington. This was not just Hillary’s scheme – they all do this. The Democrats are tearing the country apart and in their quest to stop Trump at all costs. That cost will be the United States as we have known it. They are going way too far this time.

Obamacare has hopelessly screwed the country. It is the exploitation of the youth to fund health care costs for the older generations after the Clintons screwed them and made their student loans non-dischargeable in bankruptcy after getting a degree that is proving valueless. This is like in law. I ask you when was the last time you beat your wife. Now, you are on the defensive side to prove you did not beat your wife. You call your wife to the stand and she testifies you never beat her. I turn to the jury and say, she only said that because she feared you would beat her again. A false charge dominates everything and you spend all of your time trying to prove you never beat your wife. This is Obamacare.

The Republicans are hopelessly lost. They cannot fix the system. The only way to do this is to the scrap the entire mess. Anyone who could not obtain insurance should simply be put on Medicare. Nancy Pelosi is just a worthless politician hell bent of maintaining a corrupt system that is doomed. She said: “The Republican bill is one of the largest transfers of wealth from working families to the richest people in our country — Robin Hood in reverse.” 

This is the greatest transfer of wealth from the younger generation into the pockets of insurance companies who lobby and give her money. Insurance company PACs always donate directly to Pelosi. Here is a list of the Insurance companies donating to the Democrats to keep Obamacare rolling and Starr Insurance is at the top. There is no money going to the “rich”; it goes to insurance companies. My personal insurance doubled as did my deductible and then I have coverage for young children I do not have but it’s there by law and I have to pay for it. The joke has become that you can just walk into a bar and tell the girls to line up, no worries, you are covered for unlimited maternity leave and children and there is no marriage requirement or age limit. That may be the only way to your money’s worth out of Obamacare.

If I were Trump, I would mandate all insurance policies must be reinstated pre-Obamacare. I would NATIONALIZE health insurance and make them function the same as Utilities. Yes, it would be an anti-free market, but the political system is such that the “free market” means they can bribe people like Pelosi to keep the money rolling in. Impose term limits, and then this measure would not be needed. But I do not see how this can be accomplished without a revolution.

Insurance companies must be compelled to apply for any rate increase whatsoever. They should not be allowed to cancel your insurance either. That is like going to a casino to play poker and they remove all the aces from the deck to make sure you cannot have 4 aces.

I would also impose Tort reform and provide a specific table of what you get for what type of injury. In law, it is cheaper to kill someone than it is to injure someone because you will have to pay all sorts of legal fees and an award that can be greatly exaggerated. Kill someone in an accident and it’s a flat award far less than injury in most cases.

Then you have the Democrats and the left, allegedly funded now by Soros, deliberately creating civil unrest to keep the socialist system intact. However, we have crossed that point of no return. The silent majority who voted for Trump have been pushed as far as they can go. Remove Trump, and we will descend into civil war. There will be no other democratic process to save the future left for these people who see things always getting worse and a future that holds nothing but declining living standards.

We have crossed that point of no return and this is really a battle for the very freedom of civilization. The left is never satisfied with allowing people to make their own decisions. I have been in discussions and the undertone is always the same. They hate anyone who makes more than they do and they covet whatever anyone else has and feel wronged that they are being cheated out of the same thing, but never wish to work for the same goals. The bottom line has always been that whatever society earns, belongs to the state and the state decides how much they are allowed to keep.

So no, I am not optimistic about the future. This will be the next great confrontation with not much difference from the Communist Revolutions of 1917-1918. What the Democrats did with Obamacare will only lower the living standards and the will premiums escalate out of control, consuming a larger part of personal disposable income. That lowers the economic growth consuming money people would be spending on other things. This is the GREED of insurance companies who are perhaps far worse than the bankers ever were. They own the Democrats and the press pretends this is a transfer of wealth from the poor to the rich when it is the exploitation of the youth and no money goes to the “rich”. It is going to the Insurance companies who have paid the Democrats to impose Obamacare on the nation.

While people like Whoopi Goldberg have now come out and denied that she said she would leave the country if Trump were elected, many people claimed they would leave but are still here. The Rev. Al Sharpton said: “If Donald Trump is the nominee … I’m also reserving my ticket to get out of here if he wins. Only because he’d probably have me deported anyhow.”

Because the Democrats under Obama have set in motion the greatest hunt for taxes in human history, it is becoming impossible to do business. We have three accounts at one bank. I walked in to open a fourth for the Florida operation. I was told since it was a Delaware corporation, I had to send myself a letter to Delaware, prove I received it, and then they would open the account. When I said I had three accounts with their bank, they responded: that does not matter. With every new account, we have to start from scratch. I walked out without opening the business account. If the Democrats force Trump out or tie the government in knots so nothing gets done, I may have no choice but to leave, just to do business. This is how insane everything has become. The same thing happened with our payroll company. I was told to set up another payroll account in Florida. They too had to proceed as if they did not know me when it was the same person I have spoken to for the last 5 years. The whole thing is just getting completely nuts – Papers Please!

All Republics historically collapse into oligarchies

The Meltdown in Politics

Posted Mar 8, 2017 by Martin Armstrong

The political world is melting down. The press is so bought and paid for and lost all sense of impartial reporting just the news, all I can say is this is beginning of the end. Rejoice – you have a front row seat to witness the decline and fall of the West. It’s only fair. All empires, nations, and city states die. One must consult the history books to gather the evidence of how such things unfold.

In the United States, the effort to prove there was some contact between Trump people and Russia is the great delusion. The left is desperate to use this issue to tie the Trump administration in knots. Exactly what the theory is seems even more outlandish but this is the focus of the press. The head of CNN, Jeff Zucker, is lashing out at politicians for not defending them and elevates John McCain and Lindsey Graham as great champions of the press when in fact they are the two worst Republicans I would hesitate to even shake their hands. Zucker’s son worked for Cory Booker and the Democrats when he was just 15 years old. Zucker is not unbiased when it comes to politics. He has a personal agenda stamped on CNN.

CNN has routinely cut off reporters when talking negative about Hillary and quickly changes the subject. There is a host of people they have cut off who have been critical of the Hillary/Obama/Democrats and they suddenly always lose the feed. The latest is cutting off a Congressman when they revealed:

“Just today, the FBI comes out and says that 30 percent, 30 percent, of their domestic terrorism cases that they’re investigating are from folks who are refugees. It’s important not to label all refugees bad people, that’s not why I’m here…”

The bias of the press is getting so bad, they are undermining everything they were supposed to stand for. This is a critical aspect in the decline and fall of an empire, nation, or city state. Once the news is compromised, confidence not just in the press, but in everything crumbles. The mainstream media are not honorable independent people. They are big business not much different from the banks. They lobby for their special deals and the support the status quo.

The New York Times at least admitted their coverage of the election was biased. They apologized, but nothing has really changed.

“As we reflect on the momentous result, and the months of reporting and polling that preceded it, we aim to rededicate ourselves to the fundamental mission of Times journalism. That is to report America and the world honestly, without fear or favor, striving always to understand and reflect all political perspectives and life experiences in the stories that we bring to you. It is also to hold power to account, impartially and unflinchingly.”

Even if Trump met with Putin, exactly what does that infer? Did it alter the election? No. Even Obama admitted that no hack altered the vote count. So what is the issue? The press aids the Democrats in trying to blame Putin for Hillary’s loss. But there is not a single shred of evidence that ANY of the leaked emails from the Democrats was ever altered or was fake. The Democrats simply got caught with their hand in the cookie jar and blame Putin. So what is all this Russia thing about? It seems to be just a diversion to discredit Trump and stop the agenda of any reform. A simple technical analysis of Democrat v Republican shows that the former is in a major decline and their agenda has been dying. In fact, look out for 2018-2019. Sheer chaos is coming.

In Europe, political forces are also in a state of denial. The EU is collapsing and the politicians refuse to surrender their goals. Instead, they lash out at what they are calling “populism” as with the election of Trump, BREXIT, and the developments in France. The will of the people is not worth anything when it goes against their dreams.

So in both cases, we are witnessing the demise of the West. All of this political fighting is setting the stage for the shift from the West to the East of financial power. The wheel of fortune spins. We lost. What is accomplished by overthrowing Trump? What is accomplished by forcing Europe to remain in the EU with unelected people controlling everything from Brussels? If the press succeeds in overturning Trump, what is accomplished? Do they really think everything can go back to the way it was before? Trump was elected because the silent majority have been silent and not heard and the standard of living always declines. The majority no longer believe that what we leave our children will be better than what we had. It only gets worse.

So what is the goal? It seems to be only to maintain the elite and keep things the way they are. So yes, the media in the USA has degenerated to fake news, but in Europe the very same trend has emerged. This is a serious nail in our coffin and mainstream media has indeed become the sword of our own destruction. Can we prevent this outcome? No. All we can do is hopefully learn from our mistakes and this time try to create a system that prevents such an oligarchy from rising. All Republics historically collapse into oligarchies. As we head into 2018, this is going to get really bad. This is going to be a turning point of great importance in the political world

STRICT CONSTRUCTION- restricted to Strict Construction, for otherwise, judges get to create laws based solely upon what they think.

Judicial Tyranny & Why We Need Strict Construction

Posted Mar 2, 2017 by Martin Armstrong

COMMENT:  The Insanity of the EU Bureaucrats and the European Court of Justice (ECJ – The Vnuk Case Summary: In August 2007 Slovenian Damijan Vnuk working on a farm was injured when the farmer who was parking his tractor and trailer in a barn accidentally reversed into the ladder Vnuk was up on. Vnuk sued for compensation to the amount of €15,944.10. Slovenian courts rejected his claims by saying that the tractor was at the time not being used as a method of transport but one of propulsion to manoeuvre the trailer attached. The case was then referred to the ECJ. In September 2014, the ECJ ruled in Vnuks favour interpreting the European Motor Insurance Directive to mean that any motor vehicle must have third party insurance regardless of whether they are on private or public land. In framing their judgment the ECJ (whose decision can not be appealed) extended the scope to the point where many other activities including motorcycle and motorsports are now affected, and because the ECJ is the highest court in the European Union there is no possibility of appeal. This now means in theory that any motorized vehicle used on any type of private or public land must be covered by third party insurance. As well as affecting all motorsport vehicles, it could affect electric bicycles, sit-on lawnmowers, golf buggies, mobility scooters, segways and even motorised ride-on children’s toys. The seriousness of the situation prompted the UK’s Motorcycle Industry Association (MCIA) in December 2016 to issue a stark warning that British motorsport could end due to the EU ruling.

KMS

REPLY: This is how judges seriously alter the entire economy. They make decisions that are then so broadly applied that they really change everything and defeat democracy. In the USA, Congress NEVER made taxes apply to worldwide income. That was simply the Supreme Court ruling that Congress did not exempt it so they must have included it. This type of interpretation seriously disrupts everything. This is what Justice Scalia was against and he employed what is called “STRICT CONSTRUCTION” meaning if it does not expressly authorize something, then the court has no power to expand the interpretation. This is what the ECJ has just done and it will drastically alter the European economy compelling everyone to get insurance on everything.

The judiciary MUST be stopped. It must be restricted to Strict Construction, for otherwise, judges get to create laws based solely upon what they think. This eliminates any possible democratic process. It is effectively Judicial Tyranny. If a law does not expressly apply to something, it should not be interpreted to apply by judges. Put this on the list of structural reforms we MUST incorporate after the Crash and Burn.