Neofeudalism v Socialism
QUESTION:
Martin,
Your grasp (and evidently the computer’s) of historical forces–the Shakespearen drama of it all–is awesome.
But you seem more worried about possible socialism than neofeudalism, in which he rich take us back to the Middle Ages.
Why? And which way do you think it will go, or a third way?
Cheers,
EM
EM
ANSWER: Feudalism did not take place because of the greedy rich. Government collapsed with the Roman Empire following Romulus Augustus. People abandoned their property in Rome and fled away from taxation to the suburbs. With no government, there was no rule of law. People thereby agreed to be serfs to work the land in return for security. This system lasted until the Black Death of the 14th century.
So it was not the “rich” that created the system or the collapse of government? The rich have no power or desire to compel society to accept such a system. For that to emerge, we need a Dark Age, loss of probably 50% of the population through disease/plague, and in turn the collapse of government. Then the landscape would break up into small units for safety. Major corporations would collapse for they need a coherent society to sell products.
The “socialism” danger is the step in the direction communism where it is the government that consumes everything for they have the army, guns, police, whatever. Government seeks to sustain itself and thus consumes everything ultimately leading to revolution. The police are already moving toward being the enemy against the people supporting the state rather than protecting the population. This was the same PRECISE complaint Thomas Jefferson included in the Declaration of Independence – protecting the agents of the king with mock trials.
So the danger (ABSENT A DARK AGE) is we move toward a totalitarian state, and we ultimately move toward revolution and create a real democracy for once rather than a republic which devolves always into an oligarchy with career politicians. NO REPUBLIC has ever resisted the path to oligarchy and that is the real danger we face. The question becomes how far down this historical path do we go? The path is well worn. The markers are clear and never change.
A Dark Age is a control-alt-delete – the reboot and start all over again. The problem: Dark Ages have existed numerous times and they tend to last 600 years. When we look at such things, it is important to dig to the foundation to reveal how such trends emerge.
Why the Euro Must Collapse – There is No Prayer in Hell of Saving It
Yanis Varoufakis is on the one hand a left-leaning economist, but he also see the the truth about debt and how Greece cannot possibly recover. For the most part, I agree with him in general principle as to the crisis. Where I disagree is that Capitalism will devour democracy. I think he has not looked closely enough for we have no democracy – only a republic and in that context, his perspective of Capitalism devouring “democracy” needs to be qualified. The true statement is that all REPUBLICS are devoured by money which becomes corruption so the actual process is that all REPUBLICS devolve into an OLIGARCHY. That difference aside, what he describes in this interview with Bloomberg is absolutely correct.
The Establishment Is Beside Itself Over Trump
Next week can be a real watershed event. If Trump beats Cruz in Iowa, look out! Iowa is the heart of the Evangelical community, and if Cruz cannot win there then he will most likely not win the election. The establishment Republicans are really out to defeat Trump for their worst fears may happen — OMG! What if politics were not rigged? Trump knows the reason he is rising in the polls is that the people sense that there is a huge problem. ANY career politicians is a rigged game. The only way to change the game MUST come from the outside. There is no difference between Hillary, Cruz, Perry, or any politician for they are all taking money from the bankers. Trump is blasting them by reminding everyone that he is accepting no money from anyone, and thus, they will not own the White House if he gets in. This statement is resonating very well with the people of the United States.
Plague Cycle: Moving into Peak 2017-2020
In the “Cycle of War” report, we mentioned in passing our models on plagues. We reported that this cycle nearly matched the war cycle coming in at 25.15 years. Unfortunately, this has turned up also in 2014. We warned that the Ebola viruswas in a bullish trend and should reach a major event in 2019. Interestingly enough, the places with the least impact should be New Zealand and Scotland.
We certainly seem due for a pandemic, which likely will occur between 2017 and 2020 thanks to the abuse of antibiotics. There has been an evolution in disease and superbugs are emerging. Now there is Zika, the mosquito-borne virus sweeping Latin America and impacting 22 countries. The Center for Disease Control (CDC) has issued a level two travel warning for Central America, the Caribbean, South America, Puerto Rico, and Mexico.
Only one in five people affected with Zika will become ill, and many remain unaware that they carry the virus. The disease appears as a mild case of the flu with headaches, muscle and joint pain, mild fever, and a rash. However, the virus holds serious implications for pregnant women as it can transfer to the unborn child and cause serious, life-threatening, developmental issues. Governments are warning women not to get pregnant as there is no known treatment for the Zika virus.
The virus is spreading rapidly and scientists are trying to determine whether the disease can be transmitted sexually as well. In fact, Zika is spreading so rapidly that 20 travel-based cases have already appeared in the U.S. One such case appeared right here in New Jersey when a woman visiting from Colombia fell ill.
We are in a very strong upward cycle for disease. This will get worse as we enter the 2017 to 2020 timeframe.
Market Talk – January 26th, 2016
It was all too weary early this morning with Asian markets collapsing as Oil prices were hitting session lows of $29.25 (WTI) and the Shanghai Index closing down 6.4%. News intraday that the PBOC had conducted its biggest daily open market operation in three years (360bn Yuan) still could not turn the mood. The majority of the day we traded around 2% lower but it was the final 90 minutes that shook dealers. With the Nikkei and Hang Seng both recording losses of around 2.5% even the Philippine Peso was trading at a six year low (48.08); it really was no surprise that European markets opened weaker. All Indices opened around 1.5% down but by lunchtime most had regained losses and were bouncing with the oil price.
Rumors that OPEC producers and non-producer (Russia) are concerned about the glut and are therefore showing “signs” of addressing the issue. We have to wait and see if this consideration is taken any further but it certainly aided not just oil (+6% move from the intraday lows) but also global equity markets. Dealers wanted to forget about the morning session and just talk about the afternoon. Top performers were miners (Glencore and Rio +7.7 and +5% respectively) but also with strong showing from Anglo American (+12%), Tullow Oil (+11.2%) and BP (6.35%). IBEX, CAC and DAX all closing around 1% higher whilst FTSE managed just 0.6% but we did see an impressive bounce in the GBP (+1%).
US stocks futures spent the majority of the time in negative territory early in the day but recovered with oil around mid-session in Europe producing a healthy bounce for when cash opened. Tuesday has produced some much needed encouragement but it is worth remembering the major Indices are still down around 7% for the year but a healthy bounce will go a long way aiding much needed sentiment. The DOW added 285 points, the S+P +1.4% and NASDAQ 1% all closing close to the days highs.
US stocks futures spent the majority of the time in negative territory early in the day but recovered with oil around mid-session in Europe producing a healthy bounce for when cash opened. Tuesday has produced some much needed encouragement but it is worth remembering the major Indices are still down around 7% for the year but a healthy bounce will go a long way aiding much needed sentiment. The DOW added 285 points, the S+P +1.4% and NASDAQ 1% all closing close to the days highs.
What was interesting today was the US Treasury markets performance with 10’s actually unchanged on the day; closing at 2%. It was commonly thought the bond market should have sold-off today given the performance in stock markets but this failed to materialize. German Bunds closed 10yr at 0.445 (+155bp US/DBR spread). 10yr Italy closed 1.5% (-6bp); Greece 9.29% (+25bp); Turkey 10.79% (+4bp) and finally UK 1.69% (+1bp).
Finally, a great day for Gold with a $16 rally and prices last seen trading $1122. Silver, Copper and Platinum also performed well gaining 2% a piece. Short-covering, anticipation of a friendly nod by the Fed kept markets bid along with rumors of continued Russian and Chinese Central Bank replenishment of supplies helped momentum.
Elastic Money
QUESTION: Mr. Armstrong; I have not read anywhere else how the money created by the Fed you call elastic will evaporate when the bonds they bought mature. You seem to do much more in-depth research than anyone else who just spins conspiracy theories leaving one question what is real or not. Can you elaborate on this topic a bit more?
Thank you for a most fascinating blog I recommend now to everyone.
UT
ANSWER: Perhaps you are right. Sometimes when you know the topic, you do not explain it in detail because you assume everyone knows the facts as well. Elastic money was a brilliant idea that, if implemented properly, would help to stabilize the economy during economic declines. The problem is that Congress usurped and transformed it into buying government bonds that do not help the economy at all. The original design was to “stimulate” by directly buying corporate paper. The Fed would create money to stimulate, and when the short-term paper was repaid, the “elastic money would expire. Targeting corporate paper funded corporations when banks were not lending, and thus prevented excessive unemployment.
The Fed would expand the money supply during periods of economic decline and it would contract the money supply as the corporate paper was repaid. There was no such authority to perpetually create money at will on some covert perpetual basis. A banking crisis, as we have now in Europe, occurs when banks cannot meet the demand for withdrawals because they lent the money long-term. They would have to sell their portfolios at discounts to raise cash to meet the demands of depositors. Elastic money would meet the demands of depositors without having to liquidate the portfolios.
Elastic money was not some evil conspiracy. It was to keep money flowing when banks were contracting. Keep in mind there was also limitations on banks to regions. The Clintons removed all restraints and allowed interstate banking which siphons money from local regions and deploys it someplace else. If we returned the central bank to perform its original function, then the economy would be much more stable. Our problem is we live in a political economy where politicians just cannot keep their fingers out of everyone’s pockets.
Australian Property in Crash Mode? Is It a Crime to Buy Australian Property?
The Australian government has now ordered the sale of residential properties bought in breach of foreign ownership laws. The anti-foreign investor property laws reflect the very high Marxist influence in Australia. The general perception was that offshore buyers were driving housing prices higher.
Interestingly enough, our real estate models on Australia peaked in April and entered a 3 quarter crash mode into the first quarter 2016. There should be a little bounce, but this will probably be just a sideways pause.
The interesting part is, again, that this illustrates that absolutely everything is interconnected. The attack on foreign investors as the sole cause of property rising demonstrates that people are blind to the collapse in confidence in government as capital tries to get off the grid with dangerous banks and tax-hungry politicians.
However, the share market has elected THREE MONTHLY BEARISH REVERSALS from the April high of 2015. Note that the Australian government announced it would attack foreign investors in a full-blown Marxist spirit in May 2015. That is when the government announced an amnesty of sorts for foreign investors who had breached Australia’s residential property rules. They gave them seven months (until December 1) to voluntarily come forward and disclose ownership. In return, foreign investors were allowed a prolonged 12 months to sell their property and were protected from criminal prosecution — yes, that isCRIMINAL! They would actually imprison a foreigner for daring to buy property in Australia. Unimaginable!
This anti-foreign capital position adopted in Australia is precisely in the opposite direction of the United States who just revoked all restrictions on foreigners buying U.S. properties. Additionally, Australia’s anti-foreign capital investment in real estate is having an impact on its stock market as well. Major investors from Asia are simply turning to the USA and some have commented to us that they are writing off Australia as a very anti-capitalist country that cannot be trusted as it panders to leftists. It is interesting how Australia and Britain are suffering from very strong leftist movements. In the States, we are seeing it to a lesser degree with Bernie Sanders. This is the danger we face globally. The tree is cut, but which way does it fall? Freedom or communism? With so many people claiming the problem is the rich, that leads us to a total loss of freedom.
Clinton Speaking Fees Since 2001 Total $125 Million
Hillary will not release transcripts of her speeches at Goldman Sachs for which she was paid $675,000. The New York Times has reported that she has racked up $30 million in speaking fees in just 16 months. However, the total amount Clinton received in speaking fees since 2001 has reached $125 million. It seems to be a fair issue that she should release the transcripts of those speeches so you can see how she kisses the asses of the bankers behind closed doors and then pretends she will be independent as president.
This issue could be her undoing. It will not impact those who would vote for her just because she is a Clinton or a woman. If 5% turn against her, it will be the end of her campaign.
Behind the curtain she has had a reputation of being a greedy foul-mouth person who is very dictatorial. When it comes to money, she has always jumped through hoops. Remember her magical cattle trades in futures while she was in a meeting? That was just another money-laundering scheme. The lawyer and her had accounts at the same firm. The trades were allocated at the end of the day. The win placed in her account and the loss in the lawyer’s. It was out-right laundering a bribe.
The Calais Refugee Camp Known as the Jungle
Aerial view of a makeshift camp as containers (rear) are put into place to house several hundred migrants living in what is known as the “Jungle”, a squalid sprawling camp in Calais, northern France, January 17, 2016. REUTERS/Pascal Rossignol
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