Hold on tight. This may even hurt a bit.

Central Banks Selling US Treasuries As Fight Over Debt Looms

Posted on October 7, 2015 by Martin Armstrong

Central banks have been dumping US Treasury bonds because of the debt ceiling problem and the Tea Party will shut down the funding if they have their way. This is illustrating the entire problem. The debt ceiling only ever rises. We will see a rise in taxation and this will help to collapse the US economy and thus the world. These people we call “representative” only represent themselves and they have no solution to this Sovereign Debt Crisis. It certainly looks like we will be seeing that blast to new highs next year. So hold on tight. This may even hurt a bit.

The timing of the ECM in waves of 51.6 years has existed from ancient times

Punic Wars & the Economic Confidence Model

Posted on October 6, 2015 by Martin Armstrong

QUESTION:  Mr Armstrong,
How does the ECM stack up against The Punic Wars which left the victor, Rome,the Mediterranean superpower and on the road to Empire?
Many thanks for sharing your historical knowledge.

JR

ANSWER: When I back tested the Economic Confidence Model, this frequency appeared over and over again throughout history in all cultures. Even the great reforms of Diocletian (284-305AD) saw a 52-year decline in the coinage in weight before another reform took place.

The sharp decline in the Roman monetary system during the 3rd century accelerated once Valerian I (253-260AD) was captured by the Persians. It took just 8.6 years to collapse in silver content from 55% to virtually zero. The overall decline from the peak of the Roman Empire under Marcus Aurelius to the bottom was 86 years. From the start of the post-Depression socialistic/Marxist era that began in 1934, interestingly enough that is the bottom of the current wave in the ECM – 2020.

What caused the total collapse in the Roman Monetary System? Was it inflation or lack of confidence? It was the fact that Valerian was the first Roman Emperor to ever be captured. This sent a shock wave through the empire where people hoarded money, the economy contracted, and that resulted in the government having to debase the money to pay its bills. As always, the CONFIDENCE evaporates FIRST and then the hyper-inflationary outcome results. It has NEVER been the other way around.

Looking back during the Republican era, we see that in 270 BC, the confrontation between Rome and Carthage began and lead to the outbreak of a trade war in 264 BC, known as the First Punic War. Rome succeeded in subjugating Italy in 270 BC when it recaptured Rhegium (southern Italy) from the Mamertines and defeated the Brutians, Lucanians, Calabrians and Samnites. Southern Italy was a trade link for Carthage. The Romans restored the town of Rhegium to its original Greek inhabitants. Carthage actually controlled Sardinia, southern Spain, and Numidia along with Sicily. Carthage inherited their naval strength and experience from their fore-bearers, the Phoenicians, and became a powerful seafaring entity who really clashed with the Greeks for the Mediterranean. Carthage was ruled by an oligarchy of merchants who relied upon mercenaries for its soldiers.

The Sicilian Wars (Greek-Punic Wars) were a series of confrontations between the Carthaginians and the Greek city-states, which at the time were led by Syracuse. They were a contest for control of Sicily and the western Mediterranean between 600 BC and 265 BC. Therefore, the Sicilian Wars were fought on the island of Sicily but did not involve Rome.

After Agathocles of Syracuse sued for peace, Carthage enjoyed a brief and unchallenged period of control over Sicily. However, Carthage’s control of most of Sicily came to an end with the Pyrrhic War. This was the second phase of Pyrrhic War (280–265 BC), which eventually led to the Roman-Punic Wars. Pyrrhus of Epirus arrived in Sicily to rescue the island from Carthaginians but was only partially successful and returned to Italy. Only when Rome became involved in Sicily did the reign of the Carthaginians come to an end in Sicily. Thus, the First Punic War (264–241 BC) began in 264 BC after Pyrrhus retreated from Sicily.

Trade effectively emerged as a major economic means of increasing the national wealth in North Africa. The Punic Wars between Rome and Carthage (known today as the suburb of Tunis, Tunisia) and the ancient center of the Carthaginian Empire are indicative of this lucrative trade based on the acquisition of wealth following the Minoan model. Even after Rome soundly defeated Carthage during the First Punic War (264–241 BC), the city rose again because of trade. The First Punic War (264–241 BC) was a battle to control Sicily and Corsica. To defeat Carthage, the Romans had to create a navy, and finally with a fleet of 200 ships they compelled Carthage to yield.

During the Second Punic War (218 –201 BC), Carthage gained land in Spain and Hannibal led an ambitious campaign to defeat Rome. The Punic Carthaginian military commander renewed the war by invading Italy by land from the north over the Alps. This invasion caused Rome to issue its first gold coins in an effort to convince the rest of Italy to resist Hannibal. These were stated to conform to the Greek monetary standard.

In the end, Rome prevailed and the famous Roman statesman and General, Scipio the Great (236–183 BC) took the war to Carthage. Scipio defeated Hannibal and demanded an indemnity and the surrender of their entire fleet. Coins were issued in the denomination of the Shekel of Northern Africa with his portrait proudly displayed.

Nevertheless, the Carthaginians quickly recovered since their talent was trade. The sheer ability of trade to rebuild the economy was an example to all nations. This created the envy of Rome’s imitative merchant class who could not yet compete in international trade. This envy is what sparked the Third Punic War. Amazingly, the Third Punic War (149–146 BC) was 51.6 years from the defeat in 201 BC. The Second Punic War (218 –201 BC) was 51.6 years from the conquest of Italy in 270 BC.

The timing of the ECM in waves of 51.6 years has existed from ancient times into the present. This has been a very interesting discovery, rather than a theory.

So has Europe imported a civil war?

Hamburg Is First European City to Authorize the Seizure of Private Vacant Buildings to House Migrants

Posted on October 6, 2015 by Martin Armstrong

In response to the refugee crisis, the German city of Hamburg has enacted a new law that will enable the government to seize vacant commercial properties to provide temporary housing for refugees. The law will go into effect next and will last until March 2017. Despite the additional measures, many refugees will die of exposure during the cold German winter

The migration of refugees to Europe is part of a long historical trend. The last invasion ended with the Battle of Vienna, which took place in Vienna on September 11, 1683, and concluded on the following day. The battle caused the first financial panic on that list of panics I stumbled upon which led to the discovery of the Economic Confidence Model.

This current migration, which some are calling an invasion, appears to be on time no matter what we call it. Whether it is a real invasion or fleeing from another Islamic civil war the results, to a large extent, are the same.

The attempts of the Muslim world to invade Europe go back to the Battle of Tours in October 732 AD (also known as the Battle of Poitiers) led by Charles Martel (688-741 AD), the grandfather of Charlemagne. During the Battle of Tours, Martel stopped an invasion led by the Umayyad Caliphate, the second of four major Islamic caliphates established after the death of Muhammad. This particular caliphate was centered on the Umayyad dynasty rising directly from Mecca.

 

For those unfamiliar with the history of Islam, there were rivalries between the Arab tribes that caused civil unrest in the provinces outside Syria. The Second Muslim Civil War (680–692 AD) occurred when the leadership of the Umayyad clan shifted from the Sufyanid branch of the family to the Marwanid branch. The failed invasion of Europe in 732 AD during the Battle of Tours led to a decline in confidence of the leadership. The Berber Revolt of 740–743 AD closely followed this period. As a direct result of all this warfare, the resources of government were exhausted. The Umayyads were further weakened by the Third Muslim Civil War (744–747 AD) and were finally defeated by the Abbasid Revolution in (750 BC–132 AD). One branch of the family fled across North Africa to Al-Andalus and established the Caliphate of Córdoba, which lasted until 1031 AD in Spain.

So has Europe imported a civil war? Clearly, the Western powers do not understand history or the fact that the attempt to topple the Syrian government will lead to total chaos. This is by no means in the best interest of national security for Europe or the United States. This is a braindead war game with very serious consequences for it is not over territory; it involves religion with no borders.

Sorry – It’s Just Time.

Dow - uptrend above 17762. We still see the markets focused on the first week of November. Resistance -17340

Gold & the Dow – Looking Ahead

Posted on October 6, 2015 by Martin Armstrong

QUESTION: Mr. Armstrong; So many people have tried to copy what you do and in the process expose themselves as having nothing original to offer. They pretend to have models that pinpoint dates like October 7th and claim they are using the K-Wave to cover up their theft. Still they fail to understand what you have been forecasting and that I find really interesting.

Your revelation of gold and the stock market and how they often trade together was amazing. So if I am correct, gold is indeed a commodity and will rise against a currency along with other tangible assets including stocks because it is really a contest between money and assets. I get it. You cannot have gold as money act as a store of value and make money on everything else since any rise in assets including wages means money must decline in value. That is so basic, I feel really stupid for listening to these people for so long.

So gold will rise because it is not money and with the stock market. Correct?

EF

ANSWER: Yes. This is the peak in government rather than the private sector market be it stocks or commodities. Gold is rising right now along with the Dow. The oscillators are bullish on both at the same time. These market are not trading opposite as the promoters chant. This is indeed demonstrating the alignment that must become dominant moving ahead. These markets will blast off only when we see the overall CONFIDENCE in government collapse. It is not your confidence, but that of the general public.

The scary thing is the Russia bombing in Syria began precisely the day of the model – September 30th. This means we also have the war cycle to contend with and governments NEED war during depressions. We are escalating dangerously toward world war. The bureaucrats in Washington who have decided to oppose Russia, will never now admit that they were WRONG. I am sorry, but Putin is taking steps that are vital in the Middle East because the war mongering bureaucrats in Washington will NEVER admit error. This is a very dangerous position they are creating and they should be stopped, but unfortunately, we have people like John McCain who are out of their minds and way too old to comprehend you cannot win a war as you did in the 1950s. McCain never encountered a country he would not advocating invasion if they dared to disagree with him.

In gold, there is nothing to get excited about until you see a weekly closing above 1210. In the Dow, that is 17762. Initial resistance in gold stands at 1188 whereas in the Dow it is 17340. We still see the markets focused on the first week of November. It is interesting that the debt ceiling was kicked down the road to December, but the Treasury warns they will run out of money by early November. So interesting times still await us.

ALWAYS austerity which has been the precursor to revolution.

Austerity or Hyperinflation. Which is the Precursor to Revolution?

Posted on October 5, 2015 by Martin Armstrong

QUESTION: Mr, Armstrong;

I recently read an article claiming to be a case study that it was somehow the French hyperinflation that led to the revolution. It seems that as you say they are again mixing facts to support a rise in gold with hyperinflation. I am a collector of French monetary history and the paper money came after the revolution not before. Unquestionably, there was austerity prior to the revolution and that seems to be repeating in Europe once again. Would you care to comment on this issue for it seems they are distorting history once again to sell gold.

Your debut here in Paris was super. It has really made some impact starting a discussion.

PV

ANSWER: Yes you are correct. The French hyperinflation came after the French Revolution for they defaulted on their national debts accumulated by the crown and then confiscated the property of the Catholic Church to try to back their post-revolutionary currency. The nation went into hyperinflation because the revolution defaulted on all prior debt and they were then hunting the rich, taking everything they had, and beheaded them. This was not an atmosphere that promotes CONFIDENCE.

These people try to claim the hyperinflation is caused by paper money rather than revolution which results in hunting the rich. The German hyperinflation was the same sequence. It was a communist revolution in 1918 which also defaulted on the national debt of the prior government. It is not the paper money, it is the default that distinguishes both hyperinflation events for CONFIDENCE simply collapses and the economy implodes. By attributing this to “fiat” paper they then assume that we must go into hyperinflation simply because we too have paper money. That is just an unsupported analysis which distorts the entire sequence of events. This analysis is highly dangerous and amounts to consumer fraud.

The French Revolution erupted not because of fiat money, but because of the debt default and hunting the rich which destroys the economy just as does communism. The hyperinflation began instantaneously. We have had a paper money system in the USA federally since 1863. There is no comparison. This is like saying do not eat a carrot since everyone who has ever eaten one has eventually died.

The Royal French debt rose due to war, that is true. It was Louis XIV who on his deathbed said he feared he loved war too much. We have the same problem today with the bureaucrats deeply involved in the military establishment who are bred with a single focus of war. All they do is see war behind everything. Every word is analyzed within the frame work of war.

What is typically overlooked has been the event of 1720 was the French Mississippi Bubble. It was this event that really sets the debt in motion that accumulates and leads to the French Revolution. This financial crisis of 1720 was one of the first major banking bailouts in history. A few months later, that financial crisis was a contagion and spreads to London unfolding there as the South Sea Bubble. The collapse of the Mississippi Bubble became a political event because it had attracted capital from around Europe. When the bank failed, the French government guaranteed all the losses. That set in motion the AUSTERITY that followed. It had nothing to do with fiat; it was a debt crisis that raised taxes to support the debt creating AUSTERITY and collapsing the French economy. The  Mississippi Bubble led to raising taxes to cover the cost of the bailout since the experiment that was set in motion by John Law was usurped by government and distorted by corrupt government officials necessitating the bailout.

The French Revolution was caused by AUSTERITY and tax increases that created a shrinking economy. Raising taxes to pay debts had always led to revolution. This is why the American Revolution prohibited direct taxation and Jefferson stood against a national debt.

The French hyperinflation was not the CAUSE, but the result of the revolution. The hyperinflation unfolds because of the collapse in CONFIDENCE in government. Unable to tax, unable to borrow, governments irresponsibly just printed money but it was the lack of CONFIDENCE (trust) that creates the hyperinflation. The rich hoard, do not invest, and withdraw all funds from banks sending unemployment soaring and the economy collapses. It is the collapse in CONFIDENCE that leads to the hyperinflation, not the mere fact that it is fiat money since all money is fiat.

In China and Japan, money was always fiat. There was no tangible value. The value was simply declared by the Emperor who was considered to be the hand of God. China issued the first formal paper money and even when the Mongols conquered China, they retained the paper money in circulation so it did not depreciate nor did it move into hyperinflation. Because the emperor was assumed to be God’s representative on Earth, that meant that God must have sanctioned the conquest by the Mongols and thus CONFIDENCE was not destroyed.

If it is fiat alone that causes the hyperinflation, then China as well as our own current monetary system should have collapse in 1971 and the world should not function at all. So there is something more to this simple one to one relationship.

Even ancient Egypt never used coins and money was effectively receipts for grain. They never issued coins until they were conquered by Alexander the Great. They had the longest paper money type system in history for more than a thousand years. It is unfortunate, but these people draw erroneous conclusions simple because of the existence of paper money which prevents them from understanding what really is money to begin with.

It seems that society cannot handle complexity and always tries to reduce it to a single cause and effect. Therein lies the confusion since nothing is a single cause but always complexity.

It is ALWAYS austerity which has been the precursor to revolution. Hyperinflation is the effect of revolution, not paper money. In America, King George III imposed taxation to pay for wars and demanded gold and silver in payment but whatever trade flows from Britain to America were paid in copper. The King knew that Americans could get silver and gold from trading with the Spanish. This extraction of taxation depleted the money supply and that led to the introduction of paper money – the shortage of coinage. During the 1930s, the austerity then nearly led to revolution for more than 200 cities began issuing their own paper money due to the lack of coinage. This did not lead to hyperinflation.

There is more to this than just blaming paper money and concluding that we will see hyperinflation without comprehending the real causes. It is the lack of in-depth research that produces this nonsense all because someone is trying to sell something who is biased and has a self-interest.

All the predictions that the ice cap would be gone by now have proven to be dead wrong

Global Warming & Climate Change – the Tax Agenda

Posted on October 5, 2015 by Martin Armstrong

They banned cars in Paris for the “Climate Change” conference and governments are behind this propaganda of climate change because they want to introduce a tax on all vehicles per mile you drive. There is a core group of academics who are on board for they get paid to put out studies that governments need to justify more taxes.

It would be nice to see these people giving up their cars and trying to ride their bikes in 1 meter high snow. But they believe in government as if these people ever tell the truth.

How the planet works or the cyclical nature of weather caused by the sun is a vast area that remains undisclosed because it does not justify more taxes. Buy a car and they want the odometer reading because behind the curtain everyone is preparing to tax how much you drive even if you have a fully electric car.

There has been a serious announcement issued by the German government’s Leibniz Institute for Tropospheric Research. It reads:

Atmospheric chemists from France and Germany, however, can now show that isoprene can also be formed without biological sources in the surface film of the oceans by sunlight and so explain the large discrepancy between field measurements and models. The new identified photochemical reaction is therefore important to improve the climate models.

In other words, they have discovered there is a natural counter-balance within our ecosystem that cools the planet. All the predictions that the ice cap would be gone by now have proven to be dead wrong. Then you have people claiming the rising water in the pacific means their islands will sink.Yet many parts of land today were once below the oceans. Limestone is created mostly in region formally below the sea and then marble is formed from limestone under a lot of pressure. Areas where marble exists today were generally one under the sea. This took place long before man invented the combustion engine.

The major hurricane which struck the US a few years ago named Sandy, altered the ocean floor so that Long Beach Island, New Jersey routinely now gets flooded ever since the storm. Is it sea levels rising or a change in ocean floor? Nearly a 20% of the State of NJ in the south is known as the Pine Lands. Why? It’s all sand and use to be under water.

Things change naturally. They are not all caused by human activity. But blame people and you justify government taxation. That is behind this movement. They do not profit by telling the truth. Just follow the money. If politicians lie about everything else, why should we believe them on this issue either?

War by itself is a non-event for gold.

Gold & War

Posted on October 3, 2015 by Martin Armstrong

QUESTION: Does war boost gold prices?

MM

ANSWER: No. The only impact that war will have on gold is confined to either prolonged inflation or the uncertainty of the victor — the hedge against government survival. War by itself is a non-event. Gold will rise ONLY when there is uncertainty because the currency of the government will not survive a loss or a win if it is Pyrrhic victory.

So be careful. The gold promoters will tout that gold will soar if a war takes place. They did that with Russia’s invasion of Afghanistan back in the 1980s. But war means nothing unless there is a rise in uncertainty as to who will win or the cost changes the economic trend in a Pyrrhic victory. The Romans closed or opened the door of the Temple of Janus for whom the month of January is named after based upon the existence of war. When the doors were closed, there was no war, so political uncertainty did not exist. When Rome was at war, the doors remained open as a symbol of political uncertainty. So this is a very familiar concept that has ancient roots.

Gold rose in value expressed within the local currency of any nation where its future existence came into question in both World War I and World War II. Capital will also attempt to move away from wherever the crisis might be. So war in Europe and the dollar rises. The Cuban Middle Crisis and the dollar declined as capital fled to Europe. Just because there is war somewhere, which there often is, has no impact upon gold unless your country is impacted with respect to confidence.