Crisis in Socialism or Capitalism
There is a debate going on that tries to paint the economic crashes as due to capitalism and we should all follow Marx and eliminate wealth handing 100% of all power to government. There are really a lot of people who think communism was correct and the problem is capitalism thanks to greedy bankers. To make it perfectly clear, we are not facing just another cyclical slump that will be overcome with some new legislation. Many are welcoming this crisis of European capitalism as an opportunity to replace it with a better system of more socialism and communism by sheer force.
This is why I am doing the Solution Conference NOW. We are going to turn down hard this time and there will be a huge demand to hunt down who done it as if this were some mystery movie with Agatha Christie. This is more than trying to survive with gold coins. Everything could be thrown in the air as the table is just overturned.
This economic crisis we face centers upon the question of money. Marx argued it was labor. The Physiocrats argued it was land and agriculture. Smith argued it was the total productive forces of society. This is critical, for the difference between Marxism and Smith revolves around what is money and who produces it. IF it is the state, then Marx wins. However, IF money is created by society, then Smith wins with a hidden element. he implies that government is not a producer of wealth but a consumer – the black hole that sucks in everything until society exists no more.
If everyone worked for government, then there would be no international capital flows for there would be no reason to invest in a land where there is no ownership – i.e. German Hyperinflation amid Communist German Revolution of 1918. Money became worthless because there would be no private property. There was no confidence in Communism and people watched in horror what unfolded in Russia the year before. The simplistic sales-promoters use the German hyperinflation to mislead people into thinking the USA will end up there by simply printing money. They do not comprehend it was a collapse in CONFIDENCE – not simply printing money. The money supply expanded as a RESULT of the collapse in confidence – not the other way around.
We are not headed to a hyperinflation nor a gold standard – we are headed into electronic money because these people are dead broke. They BELIEVE their fiscal mismanagement has nothing to do with our economic crisis – it is all our fault because we do not pay enough in taxes. This is the way all governments historically destroy themselves through massive deflation and we are plagued by lawyers who think all they have to do is write laws without any comprehension of how society functions.
A lot of readers have been sending in emails quoting various officials among central bankers who appear to be quoting me such as Yellen just stating that there will be deflation before inflation. True, central bankers have attended our World Economic Conferences. They are more likely to see the handwriting on the wall than politicians.
There are a lot of people blaming central banks as if they are the sole problem. These people are caught up in this crazy theory that inflation is linked to money supply and expect that to function on some mythical one-to-one relationship. What they fail to grasp is the economy creates its own money through lending and the velocity of money, which truly drives inflation. The amount of money need not increase but if everyone spent whatever money they get the same day, theVELOCITY of money would rise and that would be inflationary. This one-dimensional idea of inflation and money supply being tied together cannot be supported by any study whatsoever excluding everything else. There is also a lag so QE1-3 failed to produce inflation just as the expansion of money supply in Europe will NOT stop the deflation. The contraction in the real world is far more than the amoung of money being created.
It was not that the supply of money increased that broke Bretton Woods, it was the fact that the money left the domestic economy and then foreign holders tried to redeem it. Increasing the money supply domestically where it could not be redeemed for gold would have had no impact upon Bretton Woods. It was the fixing of gold to dollars under Bretton Woods and then the exportation of dollars to pay for the military expansion that broke the back of Bretton Woods.
So at the Solution Conference, we will look at critical issues and are there solutions from history that worked. We FIRST must understand the problem for if we cannot grasp the driving mechanism, we stand zero chance of coming up with a Solution to save our children from what will be a far more darker world of authoritarianism.
It is one thing to survive and make money. But what if your gold coins can buy nothing in a land totally controlled by government where any wealth is hunted and taken over your dead body as Stalin did to the Russian people?
The World Economic Conference will be about trading in what. The Solution Conference is about saving our future. We have to havePlan B.
Real Estate & The Business Cycle
QUESTION: Hi Martin,
I live here in Fairfax County, VA. Wow! The government largesse almost feels like 2006 again. Real estate values have almost climbed back to 2005 levels. I cannot believe that people here are paying 600k for 15-year-old townhomes under high tension wires. I guess it is the low interest rates. Those units can rent for about 2500/month. All the traditional investment ratios are screaming code red. Ratios like Price/Rent. GRM, Cap Rate, etc, indicate extremely overbought again. However, the rents are higher than in 2005-06, so prices are not as overbought as back then – though they are getting there.
The anecdotal evidence for a top keep piling up. I know of a few couples who are buying bigger homes and keeping the older homes, and using them as rentals.
This brings me to a paper I read that you wrote back in November, 2009, while you were in prison. It seems so prescient. You stated that 2015 would be the high, as you stated 2015.75 would be for the debt bubble.
From this paper you wrote over five years ago, you predicted a bump up into 2015 with a drop thereafter for years. It worked out perfectly so far – a 2012 low to a 2015 high.
How bad will it get for the average mortgage payer? How bad will it get for residential real estate? I own several paid down/paid off rental houses in Maryland, across the Potomac that generate a ton of cash flow. What should I do? I kind of have become dependent on the free cash flow. What will happen with rents? They have gone way up over the past several years, as the foreclosures have displaced (continue to displace) so many wage earners.
I ask, because you have mentioned real estate in passing, but I have not seen you directly address it like you did in that 2009 paper.
Anyway, I intend to come to Princeton this time around later in the year. I am a quiet person, so I will be the one keeping to himself.
Thank you so much for all that you have done. All these cycles make so much sense now that I have been studying your work for the past couple years. It answers the questions I have had, but couldn’t answer.
Best regards,
C
ANSWER: Yes, 2007 was the broad market peak. The 2015 high is the higher-end market that has been driven primarily by capital inflows which people trying to get off the grid. The concern here is that property taxes will now rise and the real net value of property may decline relative to everything else. Parking money in real estate at this time may produce the equivalent of negative interest rates when all is said and done. There are advertisements in Asia and Europe as well as Russia offering real estate in New York City for a little as $10,000. This is speculation once again.
The majority of mortgages are conventional with 20% down so this is not the same type of high as took place in 2007. Banks are transactional now so they will write the mortgage and resell it. With interest rates negative and mortgages at least offer collateral, they are still better to invest in compared to sovereign debt where you will get nothing.
Our problem is what Rome faced. The greater the economic turmoil in government, the more aggressive they become in taxation. In this regard, real estate is not a movable asset and it can cross the bell curve and decline due to taxation and the lack of mobility. Romans just began to walk away from their property. Therefore, property in North America will tend to be the safest only because it is extremely difficult to invade with troops and tanks. Blow it up with a nuke – sure, but then nothing matters anyway. So staying within the realm of reality, the greatest threat will be taxation.
Those interested in real estate, run out now and take the longest possible mortgage at a FIXED rate in the domestic currency of where the property is located and/or you wealth with rates this low. If you use a cross-currency, then you better pay attention to hedging. This is a hedge so if it ever gets that bad, you can just walk away as did the Romans. DO NOT assume real estate is a store of value. That depends on the taxation level of the local government and the location.
Supreme Court Justice WVa Found in Questionable Circumstances
In the real world, any possible question of impartiality DEMANDS recusal of a judge. Today, law firms are afraid to ask for recusal because Judges retaliate. If that is where they practice, well that comes before your best interest – their business. The degree of corruption in the American legal system is just off the charts from police who lie to protect one another to Judges on the take both federal and state.
ABC News exposed Supreme Court Justice of West Virginia Robin Davis who refused to recuse herself when the lawyer she handed $17 million in fees bought a PRIVATE JET from her husband for $1 million.
In my own case, the lawyers were talking how the receiver Alan Cohen was talking with Judge Richard Owen as was his subordinate Tancred Schiavoni on a regular basis off the record. I was in the Chrysler Building at the offices of Tenzer Greenblat when they were all talking about the case saying there was no way to win for this was being rigged as Judge Owen was communicating on the side with the government. When I told the lawyer to move for recusal, he responded his firm in New York City would NEVER move against any judge. From that moment on, I knew this was a hopeless cause to actually expect justice. The press in New York is also afraid to ever report the truth about judges so that leaves the country as a whole up to their throat burried in a pile of shit.
It became abundantly clear that lawyers from the same district were hopeless. Their business comes first before any client. So all the pretending of ethics is just that – one giant facade. Nothing is safe in America from your privacy to your liberty no less your property for judges are just not judges with very few exceptions today.
When I moved to go pro se with no choice when paid lawyers will not defend you before their own business, things really got out of hand. Getting rid of lawyers who would not defend me, I then moved for recusal of Judge Owen. He illegally closed the court and threw the press out – something which was totally unconstitutional since EVERY citizen is entitled to a OPEN COURT proceeding so that the people know justice is being done – another ethical fraud since they will close a court and change transcripts to remove whatever there is in your favor. Judge Owen ordered the court reporter to not record the events. Typically, every court transcript begins “in open court” except my transcript of April 24th, 2000.
Judge Owen had the Associated Press thrown out of court. The journalist reported that it was “In a closed hearing”. That was the only evidence I had to prove what he had done was entirely illegal for no lawyer would back me up against a judge. I appealed his refusal to recuse showing he even illegally altered the transcript to hide the fact he unconstitutionally threw out the press and closed the courtroom. You just can’t make up this stuff. The Second Circuit Court of appeals refused to even dock my appeal. This is the REAL America and we do not stand a prayer in hell of saving our country without profound change and reform. We have become the oppressed by a government that has transformed itself into the very same government we revolted against. The wheel of fortune has completed its revolution. We are now right back where it all began – corrupt judges who protect the kings agents, and writs of assistance to eliminate all rights to privacy. Nothing remains and this is what we are leaving our children.
US & UK Hacked SIM Card Manufacturer To Access all Phone Calls
US and British intelligence agencies have hacked into a major manufacturer of Sim cards in Netherlands to steal codes that allow them to listen in on your phone calls and to receive your data. Gemalto, the sim card manufacturer, says it is taking this very seriously.They provide sim cards in some 85 countries whose clients are AT&T, T-Mobile, Verizon, Sprint and another 450 wireless network providers globally. These people are totally out of control. Who will ever stop them? Certainly not our elected “representatives” when all they really care about is hunting loose change. Just what kind of a world are we leaving our children?