The New Age of Virtual Protectionism & the US Virtual Oligarchy
McDonald’s has announced it has closed its stores in Crimea, given that prominent Moscow politicians are calling for all the expulsion of U.S. fast food chain outlets from Russia. There is a call to close all 400 stores of McDonald’s in Russia. This is demonstrating that not merely is the Cold War back, we are looking at the contraction in the world economy that seems to be unprecedented since the days of Protectionism during the 1930s.
We have a convergence of two trends. The US hunting of Americans doing any business offshore and in the process they are destroying economic expansion to the point only the big multinationals can go offshore. This is having the de facto impact of a virtual oligarchy in the USA since only the big multinationals can operate. Small business is being destroyed by the IRS policies and the greed of Congress seeking more taxes rather than reform is contracting international trade that can ONLY fuel the coming economic collapse. Add to this trend the Cold War and the net outcome is the same result that spiraled during the Great Depression – PROTECTIONISM.
The entire ideas of Free Trade Agreements and the EU itself are being undermined by the greed for taxes and the rising Cold War fueling the brain-dead idea of economic sanctions that can only hurt both sides.
Influence v Discovery
COMMENT: Mr. Armstrong; I was at that London Conference when you forecast that Russia would collapse in a matter of weeks based upon your model showing $100 billion inflow but $150 billion outflow. Whilst the heads of the major money center banks always assumed you were just too influential, for I worked in …. at that time, those of us on the trading side began to see the light after 1998. Your forecast on Russia shocked so many and the debate was influence or discovery in the local pub. They had to take down PEI because they were convinced it was influence not discovery. Yet they cannot keep you down because it is discovery and you have proven that to the world.
You have shown the world the path, but that path diminishes their power right down to manipulating markets if it is not influence. They hand out the Noble Prize like candy to so many theories that are proven wrong a few years later. The assumption has always been you are influential rather than the discoverer of the truth with regard to how the economy and markets function. Your day will come, but sadly only when the West collapses. They cannot give you the Noble Prize for that would confirm the heads of the banks, regulators, and politicians are all wrong and influence cannot win the day right down to the economic sanctions they toy with.
Keep up the good fight;
Cheers
AM
REPLY: Thank you very much. It is a battle for you are correct – it is all about their power (influence) and retaining that rather than going with the flow. The statement that seems to have surprised many that China is using our global approach to the economy and capital flow analysis is amazing. China gets it. That is why I was invited after 1997 and they stated then they saw the birth of the Euro as drawing in capital from Asia that set off the crisis. They acknowledged our capital flow models then, but said they could not politically state that was the cause of the Currency Crisis of 1997.
I think Bloomberg had reported we were entering into a contract with China to do all the economic forecasting for them. Many in the West did not like that and they always preferred to just claim I manipulated the world by influence rather than discovering anything that confirmed they were wrong. It is NOT that I am so influential, it is not my opinion that matters, it is the model analysis. All these people will do is lead us into war. They did not understand the capital flows during the Great Depression and turned to protectionism to battle capital flows making everything worse.
It is shameful that the West is convoluted (invegalled) in such political corruption that they will destroy what we have before they will ever consider their approach is dead wrong. The so-called analytic community does not help matters by blaming their failures on conspiracies predicated upon influence. That merely blinds everyone from seeing the truth and perpetuates investigations by the very people who create the mess since they never investigate themselves as having any wrongful influence.
It is always a battle against the self-interest of government because they THINK influence is the key. They accused me of being TOO influential for their own failures. They only pray in silence for my death in hopes that will end my influence and then they will be right at last. They are just fools standing before a mirror and looking upon themselves as king. Our problem, we remain the victim of their delusions of greatness. The object that must endure their folly.
The statement in the central bank of China’s report that is making people realize they are looking at the world differently from the West understanding the interconnected global economy makes it very clear. This is the way to the future. A new dawn in economics really does await if we just open our eyes:
“The meeting stressed the need to conscientiously implement the party’s 18, the spirit of the Third Plenary Session of the eighth and the Central Economic Work Conference. Pay close attention to changes in the international and domestic economic and financial latest trends and international capital flows, insisted Wenzhongqiujin, innovation, continue to implement prudent monetary policy and maintain moderate liquidity, to achieve a reasonable growth of money and credit and financing social scale. Improve and optimize the financing structure and credit structure. Continue to deepen financial reform, enhance operational efficiency and financial capacity of the service of the real economy. Further promote the interest rate market and the reform of the RMB exchange rate formation mechanism and keep the RMB exchange rate basically stable at a reasonable and balanced level.”
As announced at the conference, we will begin to publish maps showing the global capital flows so the entire world can see this is a whole new way of looking at everything. It has been tested my entire life live and back tested to the beginning of the rise and fall of empires.
China Adopted our Capital Flow Models
COMMENT: The conference must have been exhausting, I know there is so much work and preparation that these events require. A lot to catch up on but firstly; I saw this headline yesterday and thought I would forward to you! If you ever needed assurance that China were following the model (which I know you don’t as knew anyway) here they openly declare following capital flows.
Thoroughly enjoyed [Conference] and actually find myself using it as reference material time and time again. Also, I liked the link into Merkel article and how Europe could reflect in the future.
PBOC to Monitor New Global, Domestic Economic Development
2014-04-03 09:36:58.190 GMT
2014-04-03 09:36:58.190 GMT
By Bloomberg News
April 3 (Bloomberg) — People’s Bank of China will
“closely monitor” new global and domestic economic and
financial development, as well as changes in international
capital flows, according to a statement on monetary policy
committee meeting posted on PBOC website.
* China’s current economic operations are “within reasonable
range,” PBOC says
* PBOC says China to continue prudent monetary policy
* PBOC says China to keep “appropriate” liquidity
* PBOC says China to deepen financial reform
* PBOC reiterates promoting interest rate liberalization and
yuan exchange rate mechanism reform
* PBOC reiterates keeping yuan basically stable
* China’s consumer prices are “basically stable,” PBOC says
* China’s financial operations are stable, PBOC says
Link to statement: http://tinyurl.com/p895s2f
April 3 (Bloomberg) — People’s Bank of China will
“closely monitor” new global and domestic economic and
financial development, as well as changes in international
capital flows, according to a statement on monetary policy
committee meeting posted on PBOC website.
* China’s current economic operations are “within reasonable
range,” PBOC says
* PBOC says China to continue prudent monetary policy
* PBOC says China to keep “appropriate” liquidity
* PBOC says China to deepen financial reform
* PBOC reiterates promoting interest rate liberalization and
yuan exchange rate mechanism reform
* PBOC reiterates keeping yuan basically stable
* China’s consumer prices are “basically stable,” PBOC says
* China’s financial operations are stable, PBOC says
Link to statement: http://tinyurl.com/p895s2f
REPLY: Virtually every major government is following our models. Yes, I met with China directly and they had a printed copy of everything I ever wrote and read it. This is why they also came out and stated “we need each other” to the USA. That is a reflection of understanding capital flows and China will be the next financial capital of the world because the West is still defending Marxism. Many representatives from major governments attend our conferences and some reveal who they are while others choose to say nothing. We have even had members of the Royal Family from the Middle East fly in this time. The CIA acknowledged we were the inventor of capital flow analysis. Here is the 1987 Crash from a capital flow analysis perspective.
I have spent untold amounts of money building this analysis back for thousands of years to see HOW everything functions over time and if it has ever changed. This demonstrates you cannot manage the economy domestically in isolation – we do need each other as China has come out an publicly stated and we are ALL connected. Imposing economic sanctions on Iran alters the flows of gold and imposing sanctions on Russia is causing the USA to export energy to Europe. Every single action has a series of reactions that ripple through the entire global economy.
Politicians know nothing about what they are doing. Why did the S&L Crisis unfold? Because Democrats came in and altered the tax codes to get more money as always and impacted the write off in real estate creating a one way market – SELL. Then they blamed S&Ls when they were regulated and told to invest in real estate. Every single economic collapse is set in motion by GOVERNMENT. Never has any investigation ever turned up a single private cause.
The Plaza accord starting the G5 (now G20) to manipulate the dollar down by 40% in order to reduce the US trade deficit, created the 1987 Crash and sent capital rushing back to Japan that they did not understand creating the 1989 Bubble. Now Europe is trying to outlaw short-selling thinking that will stop the collapse. That will accelerate the fall.
Here is my letter to Rubin in 1997 when he was starting the same stupid stuff trying to talk the yen up for trade. After I sent this letter, he shut up. Someone has to remind these clowns about reality. It was Geithner who had to reply. Nonetheless, the 1997 Currency Crisis unfolded.
The analytic community is in denial because they still try to make things personal and pretend that personal ability to reason is the the key and we can alter the future. I have tried hard to demonstrate that the key is being unbiased and just let the economy show you the answer. We have spent vast amounts of money to collect databases from ancient times to date to see how capital flows dictate war and even the rise and fall of nations. Some have tried to mock the idea that there can be a cycle to war, yet they have never attempted any such analysis demonstrating their bias that precludes any advancement. Yet they persist in trying to criticize what they do not understand nor have ever attempted to test.
Marx and Keynes I classify as the great interventionists because they did not try to discover HOW the economy functions, but tried to change it to function the way they THOUGHTwould be better. We cannot alter the entire world to do as we desire. That is just impossible. It is like Joesph in the Bible who warns the Pharaoh that there will be 7 years of plenty and 7 years of drought. If we understand and go with the flow, we will survive.
This is why economics is all wrong. It assumes the ability to change the economy from a domestic perspective exclusively. This is not a fish bowl where everything is controllable. Academics and politicians fail to grasp it is a global economy and that is beyond their manipulative power to control. Raising taxes reduces living standards and economic growth. But politicians love the power to say “vote for me and I will steal from the rich and give it to you to create “social justice”.” Sorry, but everyone is rewarded according to the God given gifts and what they produce. We are all not opera singers and just try to given everyone in a class the same grade and call that “social justice” and see what happens. Those who study will stop because they will get the same grade and someone who does nothing. Even the 10 Commandments states it is a sin to covet thy neighbor’s goods. Why? Obviously it leads to a collapse in the rule of law and the fragmentation of the economy.
As long as analysts are on ego trips, they will never discover HOW the world functions. Do you watch your opponent and pay attention to when he will throw the next punch or lecture him on how you think he should punch in the middle of a match? Let the markets speak for they hold all the answers. They are NEVER wrong. Theories people craft from random walks to what should be money only prevent people from learning the truth. The object is to go with the flow – do not try to change that flow for there is far more complexity involved than meets the eye.
Yes. China adopted our capital flow analysis.
Economic Sanctions – Do Not Move or We will Commit Suicide
Economic sanctions against Russia are really stupid. It is like the scene from Blazing Saddles where he points a gun at himself and says if anyone moves, then black guy gets it. The US is really delusional for Russia’s annexation of Crimea has heightened concerns in Asia about the possibility of China using force to pursue its claims. The US actually thinks imposing economic sanctions on Russia will be a deterrent to China is just amazing. If the USA imposes sanctions on both China and Russia, who is left to trade with? Europe where the cost of living is already 2x that of the USA and in decline? There is just no end game here. The guy with the biggest stick does not always win nor does the silent treatment.
Rising threat of International War
Russia conducted military exercises on borders with Latvia and Estonia. Putin believes that landmass is the nation’s greatness – not its economic ability. This is very old school and it seems to be everyone is trying to be the next Roman Empire. The problem is, Rome built roads, economies, and turned the lands it had conquered into emerging markets. They also made their captives Roman citizens and they shared on an equal basis with respect to rights. In other words, they constructed an economy, something nobody has done since. Russia can take Eastern Europe in a matter of days or weeks. Then what? Oppression is not power nor greatest and it will not bring peace as did Rome with its Pax Romana. The days of Empire are over and gone. Economic power is mightier than the sword.
The West is being outplayed by Russia on every front for the economy is declining and Russia can smell the blood. Then the likelihood of war in Asia cannot be ignored. As the economy turns down, we may yet see a war between China and Japan. As we pointed out in the Cycles of War report, that cycle of border clashes with China has also unfolded precisely on that cyclical study.
War correlates with the economy. WWI follows economic decline of Europe and the 26 year Long Depression just as WWII followed the Great Depression. When things are booming, there is no major international war. Turn the economy down and that is it and it becomes time to get even for old wounds. In China the dislike of Japan for previous history runs deep to the point you could not really find even a Japanese restaurant in Beijing. Likewise, in Europe, the resentment against Stalin runs extremely deep.
With the Western economies turning down and no hope in hell of surviving the pension crisis, war is needed to escape the broken economic promises. This is a sad statement to even have to make. But the majority are just a herd of sheep and cannot see past the rear-end of the lamb in front of them.
I have hoped that publishing these studies we could help mitigate the coming crisis, but as I have said previously, you cannot manipulate a trend. It looks like all we can do is prepare for own survival. This is just the way government escape its failures – thinning the herd.
We will leave up the Cycle of War Conference for another two weeks.
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