Euro- biggest turning point will be May and we have a Directional Change in April.

Le Pen in First Place So Far

Posted Feb 7, 2017 by Martin Armstrong

With the election coming up in France, Le Pen is praising Donald Trump for putting his people first. “The European Union has failed,” she declared. She vows to return control of France also back to the people. Le Pen promises to exit the EU, saying it has utterly failed, and place a strict limitation upon immigration to fight “Islamic fundamentalism.” She is being presented as a patriot. “I will return the voice of the people!” She also vows “to always think of the national interest.” Len Pen continued, “My promise is to restore France within five years.”

Le Pen’s program has listed 144 electoral promises and she has adopted Donald Trump’s position saying “France First” vowing to end “mass immigration,” take protectionist measures for the French economy, and within six months move for a referendum on the withdrawal of France from the EU (“Frexit”).

Le Pen argue that the promises of the euro have failed. The French want to be “free” again. She also vows to end the Schengen area, introduce a national currency, and lead France from the NATO commando structure. She has vowed a “zero-tolerance policy” against crime and terrorists. She will impose higher taxes for foreign workers and imports and will slash bureaucratic requirements for smaller enterprises following Trump. She realizes that Trump won because the vast majority of voters feel themselves to be the losers of globalization. The protests are coming from the youth who primarily are professional students who have not yet entered the real world.

The polls right now show Le Pen currently at 25% in first place. The first round of the presidential election will be on April 23rd. The pundits are saying that it is unlikely that she will be able to win the election on May 7th when she will face the independent presidential candidate Macron.

The conservative is François Fillon. However, Fillon has been under a lot of pressure after a pseudo-employment affair with his wife who he paid €500,000 to be his assistant, but nobody can really verify she works. Since this scandal, behind the scenes the conservatives are searching for a “plan B.” The latest polls show he may be eliminated in the first round. This will benefit Le Pen tremendously. A video has emerged from 2007 where Fillon’s British wife Penelope admits, “I have never actually been his assistant or anything like that.” Plus, she is not French.

When we look at the euro monthly array, we can see that the biggest turning point will be May and we have a Directional Change in April. Clearly, the capital flows are already targeting the French election. We must respect that if Le Pen wins, the euro is most likely dead on arrival. The German election in the fall will be the final straw. A Le Pen win would really illustrate the silent majority’s battle with the left-wing socialists who do not subscribe to live and let live, but need to subjugate everyone else so they can have their perfect utopia — the bubble.

When we run our what-if models on the French franc, clearly we are entering a major turning point which is 2017-2018.

Le Pen’s main points:

1. Referendum of EU Membership
2. Restore French franc
3. End Schengen area
4. End Refugee migration
5. Public contracts awarded only to French firms
6. International trade agreements are to be canceled.
7. The income tax for low-income earners is to be reduced by 10%
8. Small business are to be relieved of their wage costs.
9. The retirement age to be lowered to 60 from 62 years.
10. Child benefit regardless of income
11. Reduce gas and electricity costs by 5%
12. Maintenance of the 35-hour week.
13. Employers should pay a 10% tax on foreigners’ wages.
14. Free education will be only for the French
15. Illegal immigrants are to be deprived of free health care.
16. Immigrants without papers have no chance of legal residence status.
17. Asylum can only be applied for in French consulates abroad.
18. French citizenship not to be based solely upon birth in France
19. Increase domestic police by 15,000
20. Build new prisons with space for 40,000 prisoners.
21. Condemned foreigners are immediately deported
22. All foreigners who are connected with Islamism under the supervision of the secret services.
23. All radical mosques are to be closed.
24. Withdrawal from the joint NATO.

European Central Bank holds more than 40% of the government debt for the whole of Europe

The Coming Crisis in Central Banking

Posted Feb 2, 2017 by Martin Armstrong

The question of when will central banks fail is a popular one that comes in. Suffice it to say, the turmoil will hit Europe first. While so many people blame the Fed for all sorts of things, you must realize that Roosevelt usurped the Fed during the Great Depression and imposed a single interest rate administered from Washington. It was during April 1942, when the Department of the Treasury requested the Federal Reserve formally to commit to maintaining a low interest-rate peg of 3/8% on short-term Treasury bills. The Fed also implicitly capped the rate on long-term Treasury bonds at 2.5%. This became the known as the “peg” with the express goal to stabilize the securities market and allow the federal government to engage in cheaper debt financing of World War II, which the United States had entered in December 1941. Today, we have extraordinary low rates of interest that have funded government, but has wiped out the real bond markets insofar as being a viable market long-term. The World War II accord to maintain low rates was followed by a collapse in bonds after 1951 once the accord ended. We will see the same outcome moving forward.

At the time, in order for the Fed to maintain the peg, it was ordered to give up control of the size of its portfolio as well as the money stock. That is also what has happened today with Quantitative Easing among all central banks. Frankly, the Fed back then maintained the low interest rate by buying large amounts of government securities, which also increased the money supply domestically at the time. Because the Fed was committed to a specific rate by the peg, it was compelled to keep buying securities even if the members of the Federal Open Market Committee (FOMC) disagreed.

After the war, politicians were afraid of a new depression would emerge as they always fight the last war. They ordered the Fed to maintain the peg even after 1945. The United States entered the Korean War in June 1950. The problem was inflation not deflation. The FOMC of the Fed argued strongly that the continuation of the peg would lead to excessive inflation. A real confrontation with the politicians was brewing all year and they opposed by the Treasury who naturally wanted to keep borrowing at cheap rates.

Everything exploded by February 1951. In inflation had soared reaching 21%. As the Korean War intensified, the Fed faced the possibility of having to monetize a substantial issuance of new government debt coming out to fund that war. This only intensified inflation. Nevertheless, Harry S. Truman became president in 1945 and it was his administration that continued to urge the Fed to maintain the peg.

The financial crisis erupted into a major conflict when Truman invited the entire FOMC to a meeting at the White House. Truman then issued a statement saying that the FOMC had “pledged its support to President Truman to maintain the stability of Government securities as long as the emergency lasts.” In reality, the FOMC had made no such pledge. Conflicting stories began to appear about the dispute in the press. The Fed then made an unprecedented move – they release the minutes of the FOMC’s meeting with the president.

The conflict erupted in full view. The Fed revolted against the politicians. Shortly thereafter, the Fed informed the Treasury that as of February 19th, 1951, it would no longer “maintain the existing situation.” The Treasury was caught in a crisis for it needed to refund existing debt and issue new debt, a situation governments are still in today. They never pay off debt, they simple roll forever.

The government had no choice but to negotiate a compromise under which the Fed would continue to support the price of five-year notes for a short time, but after that the bond market would be on its own. It was on March 4, 1951, when the Treasury and the Fed issued a statement saying they had “reached full accord with respect to debt management and monetary policies to be pursued in furthering their common purpose and to assure the successful financing of the government’s requirements and, at the same time, to minimize monetization of the public debt.”

It was this accord that created a free market in government securities. The likelihood that government debt becomes extinct will appear by 2023. We can see that the bond market began to crash as interest rates were at last free to move. This is the most likely outcome of the voluntary Quantitative Easing that is really a critical issue. This time, the central banks have gone and done this themselves and they are trapped. They cannot sell the debt they have bought and therefore, we are looking at a crisis when that debt has to roll. The European Central Bank holds more than 40% of the government debt for the whole of Europe. Once that matures, who will buy the new debt the next time around? We are looking at a deflationary impact by default.

Idea of federalizing Europe came, not from the United States, but from France.

Is the CIA Responsible for Creating the EU?

Posted Jan 31, 2017 by Martin Armstrong

The new conspiracy theory running around claims that the European Union was a CIA project. This serious misconception misses the entire point. It is very true that the idea of the EU was supported by the United States since World War II. However, the U.S. supported the idea of the EU as a trade union that could support NATO during the Cold War. However, the idea of federalizing Europe came, not from the United States, but from France. It was de Gaulle who blocked Britain from joining the EU because he wanted France to dominate Europe. It was de Gaulle who broke Bretton Woods by buying up dollars and redeeming them for gold to make France the economic power of Europe. Britain was only allowed to join the EU upon de Gaulle’s death.

The idea of federalizing Europe was a dream inspired by de Gaulle. This is the origin of the idea that war could be eliminated if there were only one government. That never could have been spoken in real public settings because the differences within Europe ran deep and bitter following two world wars. The Treaty of Rome was to prevent a third European war.

The idea of transforming the EU from a trade union to an economic union was given birth at the Plaza Accord in 1985. That was the brainchild of James Baker to create a viable alternative to the US dollar. That is when the euro was born. The commission attended our WEC in London and I spoke directly with them at the time. I warned this would result in the collapse of the euro system unless they consolidated the debts. I was told they could not sell that to the European people so they would push for the currency first and later deal with the debt problem. Of course, phase two never came. The euro cannot survive with such a structure. You have people like Martin Schultz now pleading that the problem is not a central power, but Europe needs to surrender all sovereignty to Brussels.

By 1990, Maggie Thatcher was warning that “a single currency is about the politics of Europe. It is about a federal Europe by the back door.” (November 22, 1990). As everyone knows, I was friends with Maggie. I was there through all these machinations. This was BY NO MEANS a CIA plot. The desire for NATO and an EU was in the interests of the United States following World War II — absolutely! But do not mix that with the state of the EU today and the attempt to federalized Europe. That is exactly the opposite of U.S. interests for it will lead to the risk of another European war.

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2019 in Canada? France ? Germany?

A Sign of the Times

Posted Jan 27, 2017 by Martin Armstrong

QUESTION: First Brexit then Trump, do you see the same coming in 2019 in Canada? France ? Germany?

WB

ANSWER: Yes. This is a private wave. Unfortunately, this is where we will see the greatest confrontation between left and right. There will be rising civil unrest from the left that threatens civilization as we have known it. This is also the Sixth Wave, so we will see the collapse of Western government instigated by the left. What comes afterwards will be a new government and a new public wave.

As we move into this cycle that turned up in 2014, we will see civil unrest far greater than what existed to create the revolutions against monarchy during the 18th century. We can survive this if you understand the root causes. The primary cause is the corruption in government.

Brits acted to destroy the reputations of American isolationists who opposed helping British.

Foreign Governments Have Always Tried to Interfere With US Elections

Posted Jan 21, 2017 by Martin ArmstronG

Meddling  with public opinion is by no means altering the voting machines or vote tallies. Fake news statements can be countered with truth, but only when our own media is not part of a domestic propaganda action to benefit one side, as was the case with 77% of all news stories anti-Trump and pro-Hillary. The Democrats boycotting the inauguration today are pathetic hypocrites who are angry that their own propaganda conspiracy in mainstream media failed despite all the TV stations and newspapers they influences, such as the New York Times who admitted they were wrong. Words by themselves do not diminish the legitimacy of any election and what the domestic American press and the Democrats did by deliberately ensuring Trump would be the Republican candidate was far more direct manipulation than anything Russia may have done.

Let’s be real here. There is a long history of illegitimate election results. In 1940, Roosevelt wanted to get into the war but the majority of Americans were isolationists. The British intelligence officers in New York and Washington worked to elect candidates who favored U.S. intervention and even funded people domestically to defeat Republicans who were opposed to entering the war. FDR gave this campaign speech in Boston during 1940, promising no boys would defend Britain. You have to realize that Boston was predominantly Irish. Their view was that the British oppressed the Irish, so why should they go defend Britain. The isolationist view was dominant. The Brits acted to destroy the reputations of American isolationists who opposed helping British. They hired hundreds of Americans who supported entering the war and worked for British intelligence and/or cooperated with British efforts to influence the elections.

You can even go back to the very birth of the nation. During the 1787 Constitutional Convention, Elbridge Gerry of Massachusetts argued that only natives should be allowed into public office and not immigrants. He warned in discussing Art IV: “Foreign powers will intermeddle in our affairs, and spare no expense to influence them. Persons having foreign attachments will be sent among us & insinuated into our councils, in order to be made instruments for their purposes. Every one knows the vast sums laid out in Europe for secret services. He was not singular in these ideas. A great many of the most influencial men in Massts. reasoned in the same manner” (source Yale archieves).

The Clinton Foundation is closing as all their foreign donors stopped handing them hundreds of millions of dollars for influence. Hillary violated the Constitution and should be prosecuted for selling influence. The debates to create the Constitution show that there was considerable risk concerns that foreign governments would interfere in U.S. politics. For that very reason, they included under Article I, Section 9, Clause 8, the Emoluments Clause.

Emoluments Clause

“No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”

ARTICLE I, SECTION 9, CLAUSE 8

Hillary committed treason. I have stated that before. With all the hoopla and boycotts by the Democrats claiming that Trump is not a legitimate president, a special prosecutor should be appointed who is independent to prosecute her, not for emails, but for taking foreign money from foreign governments for influence.

During World War I and the election of 1916, the German press urged American Germans to support Charles Hughes against Woodrow Wilson to keep America neutral. A prominent government-backed newspaper in Germany urged German-Americans to support Hughes. Theodore Roosevelt commented on the effort by the Germans saying they wanted to “make the American President in effect  a viceroy of the German Emperor.”

Many considered that Iran deliberately interfered in the U.S. election of 1980 to defeat Jimmy Carter. Once Ronald Reagan won, Iran released the hostages. That led many Democrats to say similar things that the Iranians influenced the 1980 election. They didn’t like losing that one either.

Then there was the Kennedy-Nixon election when the main argument against Kennedy was that he was Catholic and that meant the Pope would be running the White House.

So historically, we have always had foreign governments attempting to influence elections. This is nothing different even if Russia hacked the Democratcs. If there was nothing there, then there would have been nothing to leak. Blaming Putin and saying Trump is not a legitimate president reveals the stupidity and bias of those who make such claims. The difference here is that the Clintons freely sold their influence for money. That is TREASON.

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