US v Europe
COMMENT:
Dear Marty,
My favorite part of The Solution is that it is so logical. If something can move us forward from this mess in which we are that is logical thinking, it has always been and will always be our specie’s best resource.It has taken me days to digest the information, not because I didn’t believe The Solution was right but because in order to really get it I needed to be able to explain it to others and even adapt it to different scenarios. The Debt to Equity Swap is such a good move that even a ruined economy like Venezuela’s, could make this step and re-start our dead economy. With a different government if we would dismount the price controls and currency pegs, a Debt to Equity Swap could even bring back to life the almost inexistent Caracas Stock Exchange, and this would generate new confidence which we sadly have none now. However, the idea is great, and so logical! As you say it’s perhaps our only choice as a society if we intend to carry on. The actual concept of money was totally mind blowing as well.
As always thanks a lot Marty for using your brain for the Good. I’m trying to share with friends as much as I can but it’s incredible how hard it is for people to think out of the box, even people I consider pretty smart react reluctantly to the no tax and no federal debt approach, like they can’t conceive the world without those. Socialism is very deeply melted in our collective conscience, it looks like as you say it will take major pain for the majority to react to the facts. But I believe that this new era of hyper fast information flow will allow the data to reach the collective in less time, soyes, there’s optimism among the disaster. Big thanks for sharing all this, congrats on the conference being a success and Huge Congratulations on what the movie is achieving so far. Take good care my friend.
Blessings and Happiness.
J
REPLY: Yes we are a curious species prejudiced and fixed in our ways. We see the technology advances in everything even the NSA, yet we cannot take a single step forward in economics because we still see the world as flat. The response seems to take a few days to settle in. The response from Europe is amazing and far more rapid that in the States. That is because they are living the pain. However, the first country to take it up will most likely also come from outside the USA. That is where any reform will begin.
The New Economy on the Horizon
There is a significant problem insofar as people do not comprehend how the economy evolves. We move through these waves of Creative Destruction and the skill sets change entirely. The Great Depression was such a wave that forced people off the farms and to become skilled labor.
This time technology is rapidly underway in changing our lives as well. Back 25 years ago, we had a staff of 240 people around the world. We began as the most expensive analysis in the world because our reports were delivered via telex. A client in the Middle East paid $150 per market per day just for delivery costs. This was why we began opening offices around the world to reduce the price of delivery. Then came fax, and that $150 per day dropped to $9. Now we have email and the costs have dropped to virtually nothing to deliver the analysis. Technology has changed our firm.
We now have the largest taxicab company that has no taxicabs, Alibaba is a hugely valued retail operation that has no inventory, Google produces a form of paying with your cell phone and PayPal becomes an international banking system while then you have operations like Facebook which has no original content or staff writers. Then you park your car and nobody is there for you take your ticket and then insert a credit card to leave.
If you cannot read between the lines you are in trouble. Forget sending your kids to be doctors and lawyers. The future is technology which will eventually replace both. We are close to starting Socrates. The Beta Testers have spent more than a year working on this project from around the world. This will replace human analysis. To program, is learning how to read and write. But you still have to comprehend the subject matter. This is a blend of both field to press forward in time.
Capital Flows Are Obviously Not Understood By Many
The capital flows have already shifted. It is amazing that people remain trapped in their little world of nominal terms. One comment“The US economy has clearly stalled, while the $DAX and the $SSEC have broken out. This is interesting because I know you were expecting a huge capital shift FROM Asia and Europe, but that doesn’t seem to be happening right now.”Truly amazing that they look at the Dax and the Dow and conclude capital flows are to Europe. The Dow to a European has been in a bull market. In fact, it has been the capital inflows which have caused it to hold up when domestic people keep claiming the end is here. At the beginning of this year it was stated that the Dow would not breakout to the upside before May and that was this very battle taking place in the currency – the decline in the Euro would provide support against domestic selling.
Even in Canadian Dollars, the DAX is just getting back to the former high. The DAX rally in nominal terms is internal with people moving cash within Europe to the DAX.
The big shift will not unfold until the crisis becomes more acuteafter 2015.75. As far as the US economy booming, no sorry, even with the capital inflows it will not reverse the gradual economic decline. This is a dead cat bounce for the economy on this rally. Plus we have a shift in technology that reduces costs for companies but results in rising unemployment in various sectors.
Here are the capital flows currently tracked by our computer with data from around the world. I find it amazing how people try so hard to prove me wrong and revert to the same opinions that have dominated the markets for decades. It’s OK. We need people on the other side to trade against to make any money.
Sorry – the crack in Global confidence is not NOW – that starts from October for the next 4 years. It will not even be a one day event so the haters will instantly say you are wrong for the world did not end October 1st. This is a bubble in government – NOT the markets. So we should NOT see a profound event in market to that day alone.
Comment from Iceland
QUESTION: Mr. Armstrong; Thank you for paying attention to Iceland. You are absolutely correct. The banks failed because of Lehman paper. The bankers harmed the people by selling mortgages in foreign currency because the local money supply was insufficient. I have read much about Iceland and it appears that those who preach against banks outside the country are [clueless] as to the reality.
The word is you are coming to Iceland for meetings and to lecture. Do you have any dates yet?
Thank you so much
guð vera með þér
M
ANSWER: Yes I am aware of the problems in Iceland. This has been the same issue constantly that I have run into for decades around the world. Ironically, it was not the creation of money, but the misappropriation of money investing in paper that did not benefit Iceland domestically and selling foreign loans to citizens. It stems from the simple fact that not even the bankers understand foreign exchange. They sold these mortgages not understanding the risks they are selling to people who are unaware of the market movements and capital flows.
It is beyond me when government is so corrupt and police even in London and France are now robbing people for profit that you really think handing the decision to lend someone money to more bureaucrats will prevent the business cycle? When will people ever learn.
Yes, I have been asked to appear in Iceland. Nothing is final yet.