Debt Forgiveness / Cancellations
QUESTION: Mr. Armstrong; What do you think of the Biblical forgiveness of debt which this time was due with the turn of your model?
ANSWER: Debt cancellation or forgiveness actually was a tradition that began under Sumerian rule in Mesopotamia. The Jewish tradition appears to have been adopted from the Sumerian. Do not forget that Abraham came from the Sumerian city of Ur located in southern Iraq today. Therefore, he would have grown up with that tradition.
Consequently, the debt cancellation practice began in Mesopotamia and can be traced back to 2400 BC extending into 1400 BC. The noted historian on this subject, Michael Hudson, I believe is absolutely correct when he states that general debt cancellation was one of the principal characteristics of Bronze Age societies in Mesopotamia. There were numerous debt cancellations in the Mesopotamian cities which used the words for these debt forgiveness decrees or cancellations such as amargi in Lagash (Sumer), nig-sisa in Ur, andurarum in Ashur, misharum in Babylon, shudutu in Nuzi.
(See:Michael Hudson’s Debt Cancellations)
However, we are way beyond such a solution thanks to SOCIALISM. Countless people now rely entirely upon pensions and social security type systems for their retirement. Many such programs by decree must invest “conservatively” in government debt. To default will set off a blood-bath if not a Mad Max event. During the Bronze Age, debts were private and did not tend to be expectation that you would be taken care of for life. So the debt structure was entirely different. Today, such a debt forgiveness would cause total economic meltdown. This is why we have proposed the Solution we have. There is no option to cancel of default without major civil unrest if not revolution.
The debt cancellations of the Bronze Age can be distinguished as PRIVATE. They were not PUBLIC debts borrowed from the people that they just never paid back. This was a debt forgiveness within the private sector. I might add that during the civil war that ended the Republic of Rome, the people cheered Julius Caesar and assumed he too would cancel all private debts. He adopted a different resolution forgiving all past interest applying that to capital with revaluing property and money to the same purchasing power parity. Clearly, the people were aware of the debt forgiveness ideas in that region. (See Anatomy of a Debt Crisis).
(Note: We have collected economic text from Mesopotamia as part of our research project in reconstructing the historical economic history of civilization. Here I hold one Sumerian cone from our collection. I funded archaeological digs that would further our knowledge of the past in order to reconstruct the history of the world, much of which the academics will not explain for reasons it will contradict prior theories. Then there is their communistic approach to knowledge.
I was asked to fund the dig at the House of the Papyri near Pompey in Herculaneum.
Half of this villa has still not been excavated. This was a villa of a
book collector and the Greek part of the collection is still buried.
Here is all the lost books of Greek historians waiting to to uncovered.
The Italian government lacks the money so 20 years after I was asked to
fund this project, it still remains undone.Additionally, the latest issue concerns material that arises on the black market rather than from an archaeological dig. For example, during the first Gulf War in Iraq, the bombing uncovered a city previously unknown. The archives of all the text appeared on the black market. Academics boycott such things rather than trying to save them. They object to private people using private funds for research and treat the subject as if it were a communistic state that only they should have such cache to play with. Something I seriously disagree with for there is never always public funds available for such projects.
In this particular case, thousands of tablets were on the black market. I bid to get the entire collection. There was a Norwegian collector of documents, Martin Schoyen. I do not recall what my bid was but it was many millions of dollars. Martin and I met in Zurich for dinner. Since he was a specialist in documents, we reached an agreement that my interest was economic. Martin even had an original Magna Carta. So the deal we struck was that I could use the economic text in return for bowing out of the bidding.
What
made this find so valuable was it contained legal code predating
Hammurabi who academics teach was the first legal code. Here we have the
Legal Code of (ca. 2100BC) which is the
oldest known, written law code that predates Hammurabi’s law code by
about 300 years. The translation of this legal code was provided by Martin Schøyen, a
Norwegian collector of manuscripts containing over 13,000 documents.
His private efforts have contributed greatly to our knowledge base when
government funding for translation is lacking and academics lack the
funds to save material on the black market. When the Legal Code of Hammurabi
(1792-1750BC) was first discovered in 1901, his laws were heralded as
the earliest known examples. Subsequent to that discovery, older
collections of legal codes have been unearthed. There are even older
Babylonian copies of the Legal Code of Ur-Nammu (ca. 1900-1700 BC).When I say we have THE largest database known to humankind, I am not exaggerating. You cannot create models if you lack the data to input. How can you forecast a debt crisis or list the possible outcomes without understanding how such a crisis has been resolved throughout history or how they appeared in the first place. People can pretend to do what we do, but how is that possible without the data?
Socrates: Political Unrest & Economic Financial Trends
QUESTION:
Hello Mr Armstrong,
I see that you’re about to launch Socrates, which seems to be a lifetime achievement. Congratulations.
I’m a blogger and spend great deal of time to inform my fellow
countrymen. Having acces to such forecasts would definitely be a game
changer.
Regards.
ANSWER: Yes. We are beginning with the
investor level of the service, which is geared toward the general
public. Socrates will keep you posted on the trend on any particular
market or stock. We will be adding all global and political economic
statistics as well.
Next year, we will allow access to political trends, and yes, there will be regional trends as well. I am well aware that those in Bavaria regard themselves as Bavarian first before German. This is part of the rising trend globally, which we have called the International Separatist Movement.
The investor level of Socrates will provide access to the world to see how trends materialize from a neutral non-biased perspective. This is critical for the greatest downfall in forecasting is human reasoning, which is extremely difficult to remove, for we all have a tendency to prejudge as we are ingrained with various cultural biases.
We will be releasing videos shortly on how to sign up and what it will look like. This will be extremely important for politics since it will call the shots simply from the data. It is the data that moves the polls, not the other way around.
Next year, we will allow access to political trends, and yes, there will be regional trends as well. I am well aware that those in Bavaria regard themselves as Bavarian first before German. This is part of the rising trend globally, which we have called the International Separatist Movement.
The investor level of Socrates will provide access to the world to see how trends materialize from a neutral non-biased perspective. This is critical for the greatest downfall in forecasting is human reasoning, which is extremely difficult to remove, for we all have a tendency to prejudge as we are ingrained with various cultural biases.
We will be releasing videos shortly on how to sign up and what it will look like. This will be extremely important for politics since it will call the shots simply from the data. It is the data that moves the polls, not the other way around.
Artificial Intelligence & Neural Nets – Sorting out Truth from Fraud
QUESTION: Mr. Armstrong, it seems many people are starting to pretend they have artificial intelligence systems and neural nets. It seems that they are using these terms very loosely. Can you explain the real difference? Everyone I have spoken to says you are the father of AI in finance.
Thank you for all you contribute
Cheers
CW
ANSWER: Yes, 99% of what people pretend is Artificial Intelligence is nothing but an Expert System, which amounts to a look-up table. An Expert System is simply a list of, let’s say, diseases with their symptoms. You ask questions and it looks up predefined conclusions and says – wow, you have this disease. There is nothing to it. Real markets are nonlinear and the process by which they move appears to be random on the surface and that causes tremendous problems in modeling for if you cannot see the hidden patterns, you cannot achieve
Real Artificial Intelligence is something that learns and analyzes on its own to create its own conclusion. The countless claims of using AI to forecast markets can be distinguished rather easily from rule-based systems. You can take a chart, calculate the cycles, and then project the potential future pattern. Looks nice, but that is just making a calculation that can be done with a pocket calculator. There is nothing original in this process.
Then we have claims of using neural nets to predict the future. They can predict words and what you are looking for in Google or Apple’s Siri. Yet these are fairly rudimentary and far from the complexity of predicting the world economy. Neural Nets have outperformed subjective analysis like fundamentals. Nevertheless, attempts to forecast the future of markets has a dismal success rate of far less than 50% if not 33%. They have been flat models attempting to forecast a single market.
The problem with forecasting is human bias. This is the number one problem as to why forecasts fail. Take the goldbugs, they will never admit they were wrong even though gold declined for 19 years and this current decline is headed into a 5 year decline. They make excuses that are endless and will never revise their thought process. This is the human error caused by bias.
Then the next greatest failure in forecasting is attempting to predict the outcome of a single market in total isolation. Everything is connected. If you cannot grasp that concept then you are waiting in line to lose your shirt, pants, house, wife, kids, and the dog.
So
how do we circumvent these two major problems? Devoted investigations,
exploration of knowledge, and how it is attained in relation to the
information process boils down to data processing in all systems of all
kinds, regardless of whether we are talking about a human, animal, or
machine based knowledge acquisition. True AI must
acquire knowledge, remember that knowledge, and deploy it in the future
without predetermined rules (e.g. if interest rates rise sell stocks)
and without human bias. That creates an in-your-face confrontation with people clinging to their biases swearing you are evil and wrong.
The
true scope of the subject spans the entire range of interests from
classical problems in the philosophy of the mind and psychology into
issues in cognitive psychology and sociobiology. This involves the
actual mental capabilities of a particular species. Ideas that are
related to the Artificial Intelligence field and computer science reveal, not so much the answer of how to create AI, but how to distinguish what is NOT AI.
The primary emphasis is traditionally placed upon theoretical,
conceptual, and epistemological aspects of acquiring knowledge. Then we
turn to reasoning which many expect will emerge from that data set. This
introduces a very fine line, which distinguishes problems that are
empirical, experimental, and methodological over time. We need to employ
imagination, but it must be tempered and controlled within reality.
Otherwise, we can or cannot achieve our aspirations.
There are many aspects to Artificial Intelligence that
distinguish both input and output. The output must reach something
that, at the very least, matches the human ability to reason without
the expert system structure of a predetermined result. Then the input
must be broad enough to cope with humans in order to communicate. So
there must be an ability to determine what you are feeding into the
system as information to acquire knowledge and experience in order to
comprehend the result reached. To achieve this, interaction must
be comprehensible and that also requires introducing language to be able
to communicate but the system must understand what words really mean.
You cannot accomplish these tasks with a simple downloadable program to pretend that you are employing Artificial Intelligence or have a program that makes billions of calculations and call that AI.
These are concepts that by no means are easy tasks to create in
programming code, no less comprehend. It has taken me my whole life to
develop what we have achieved and there is nothing like this. You cannot
even create a random number generator for in programming there is the
simple fact that it will become too repetitive and thus unable to learn.
To accomplish real Artificial Intelligence, it was possible ONLY
because I have the skill set as a programmer and the knowledge base of a
trader. Without such a combination, that list of accomplishments
becomes impossible and cannot be brought into focus. Programming is
understanding how to read and write in many respects. That does not mean
you can write a book on how it feels to give birth if you have never
gone through such a process. The programming is the skill, but then
whatever field you may be in provides the knowledge and experience that
can then be captured in code.
Notice We are Not in Affiliation with ANY other Analyst
Please note that we are NOT in any way affiliated with any other analyst whatsoever. Everything we do is original, we have the databases nobody else has, and the only real artificial intelligence system that has broken beyond mimicking human reasoning and bias. You cannot accomplish these forecasts alone without global contacts and offices everywhere. This sets the record clear that we do not provide info to any other analyst to make forecasts nor do we allow others to use our databases. We have on a case by case basis allowed some publications to show our monetary system charts of Rome, Greece, Venice etc.. We allow others on a case by case basis to reprint our charts or to link to our sites for particular pieces for educational purposes. We are not participate of any such promotions to raise money nor charge for personal guided advice.
Market Talk October 23, 2015
By the end of the day despite a mid-morning dip back to unchanged US equities (DOW)continued the march and closed up +157 points (+0.90%) on the day. S+P and NASDAQ performed even better at +1.10% and +2.27% respectively. Gold had seen a similar pattern having made the days highs ($1180) upon the announcement then spent the rest of the day around the lows unable to follow the stock markets performance. Oil (TWI) lost 1.63% having lost $1.10 whilst Nat Gas closed at 2.29 (down 4%).
US Treasuries were hit on the PBoC news, as were European bonds, but unlike Europe, the US market did not recover. Todays price action took the TY/RX 10yr spread out to +155bp. The belly of the curve took the brunt of the pain with 5’s and 10’s out 6bp whilst 2’s and 30’s lost 4bp a piece. Dealers were saying that the credit market trades by appointment but the concerns are that when the European Government fills the main buyer who will be around to support it!
Given the events of the past 24 hours we have seen money rushing into the US Dollar. The DXY closed up 0.8% at 97.22. Obviously, the Euro was responsible for the bulk of that move but we also saw GBP and JPY give-up 0.55% each on the day. We also saw 1% USD appreciation against PLZ, DDK, NOK and Turkish Lira.
Quantitative Easing & the Nightmare It Has Created
While
so many people claimed that Quantitative Easing (QE) would produce
inflation since it was the creation of money, the truth is very far from
this simplistic idea. The theory used by the central banks is seriously
flawed and a throwback to ancient times before 1971. There used to be a
difference between debt and cash where you could not use debt as cash
to borrow on. Then it was less inflationary to borrow than to print, but
that changed post-1971. If you want to trade today, you post T-bills as
cash. The REPO market has emerged where AAA securities can be borrowed
against for the night.
Therefore, buying in bonds
to inject cash into the system under the old way of running the
monetary system pre-1971 made sense. Today, it is proving to be a fool’s
game. Why? This is merely swapping debt for cash; the REAL money supply
has not increased when the true definition of the base in money supply
is debt + cash. Then you add the leverage from banking.
So what does this new reality mean? Under QE, the central banks are the bidders supporting the market in the same stupid manner as attempting to peg a currency. The ECB under Draghai has lost its mind. They keep increasing the percentage of bonds they buy in hopes of creating inflation, but nothing is working. The
bonds will not crash without a free market, but instead, they could
become extinct. In order for a crash to materialize, there has to be a
free market where the private sector bids. But what happens when the
private sector has no interest? Oops! Extinction.
In
the case of the central bank artificially supporting the bond market
during World War II, that decree was lifted in 1951. Our present
situation is different insofar as the central banks have bought all the
long-term debt so there is a shortage of debt in the short-term. This is
also why the Fed is accommodating the banks paying 0.25% on excess
reserves.
They are trying to figure out this Rubik Cube
mess that they have created by cunning and stalking the financial
market like a cat. The truth is rather scary. The rise in taxation is
destroying the economy. Ancient Egypt was perhaps the most heavily taxed
nation in history, and that was the primary reason it collapsed under
the weight of the levies imposed on the populace that destroyed the
economy by weakening the nation from the inside out.
Unlike
1951, we are now at the extreme in economic destruction by the state in
their hunt for taxes. Payroll taxes were introduced for the war; it was
postwar when taxes were reduced in 1951 and the economy began to take
off. We are exactly on the opposite side of the curve with rising taxes.
This warns that we are on the collapsing side of the bell curve.
It
is like alcohol. A little is good and too much kills you. Studies have
shown that people who drink a little are healthier than those who drink
too much or none at all. This time, with taxes rising, there is a
contracting global economy and we are in serious trouble. The central
banks have bought in the debt rather than declaring they will support
the market. This means that they will not have a market to reverse the
position and sell the debt they bought in. This means that a sovereign
default wipes out central banks as well. Hence, the long-end of the
market is being systematically rendered extinct.
We
may see the bonds crash in price to the extent that people are not
interested. However, the central banks will have to buy in more and more
debt. This raises the risk of “conversione forzosa”, whereby even if you bought 30-day government
paper, they simply decree that they will not repay that obligation for
10 years. They can simply convert short-term to long-term. We are more
likely to see this type of action before any real reform.
IMF Warns Saudi Arabia May Go Bankrupt by 2020
The IMF has come out and warned that Saudi Arabia may go bankrupt within the next five years if the government maintains its current spending habits. Some emails are asking
if the IMF is now copying our projections for they have the same
timing. Who knows. I would assume the economic numbers are the numbers,
but they do seems to be getting bolder in their forecasts.
There
are 30 million people living in Saudi Arabia, but only 5.5 million are
actually employed. Out of the 5.5 million people in the workforce, 3
million of them work for government, which is part of the problem. Most
financial jobs are given to imported foreign labor. The crisis in Saudi
Arabia long-term is that they are following the same model as Spain.
True, Spain and its treasure ships from America made it the wealthiest
nation in Europe. But they squandered their wealth and failed to invest
domestically to create an
economy. French were imported to unload ships and the Spanish simply
enjoyed life. In the end, their spending habits led to the country
defaulting on its debt seven times.
Things
have changed. In the Middle East, governments simply spent money for
there was no end in sight. Then oil prices dropped after they bumped up
their spending and now the revenues are collapsing.
Things
are changing out there on this cycle. The USA peaked softly in 2015.75,
but the rest of the world peaked in 2007 and has been declining
(including China). The USA recovery has been very shallow. We see
high-end real estate and the share market at new highs, but not wages or middle class housing in most areas. So the slide from here will be much different than anything we have experienced in our lifetimes.
Top Physicist Blasts Global Warming as an “Agenda-Driven” Issue
Freeman Dyson, one of the top theoretical physicists who was a contemporary of Einstein at Princeton, has come out to blast the global warming crowd, stating bluntly that this is simply what he describes as an “agenda-driven” perspective on global warming. ANYONE who has any integrity whatsoever knows that the laws of thermal dynamics dictate that there MUST be a cycle. This group is ignoring this fact because they have been intellectually dishonest and all about raising money for government.
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