FROM MARTIN ARMSTRONG'S BLOG

The Jobless Recovery

Posted on March 7, 2013

I have received a lot of inquiries about the jobless recovery. Some questions ranging from what is going on to others asking advice to give children for a career. The economy is evolving like a child. People do not understand the evolutionary process nor does government. The economy is never stagnant albeit unions have tried to arrest its progress, but instead they have accelerated the migration of skilled manufacturing jobs. Illustrated here is a chart of the changes in the civil work force from 1900 to 1980. I have mentioned before that every event has a benefit no matter how bad it appears – the plus & minus. The Great Depression with the dust bowl killed agriculture and it forced people off the farm and to become skilled labor. The technology advance replaced the workers as farm equipment displaced workers. This completed the last phase of the industrial revolution that began during the previous century.

http://www.cbsnews.com/video/watch/?id=50138922n

Today, we have rising productivity with the largest economy yet employing only about 5% of the world’s civil work force. We are in reality the most productive economy in the world per person. There are three major trends impacting simultaneously that are still changing the future employment world and formal education is falling behind failing utterly to prepare the youth for the real world that lies ahead.

FIRST: Government is way too costly and we will see a shrinking of government employment especially in state and local government.

SECONDLY: Unions are a dying breed and serve only to promote stagnation trying to force higher wages for the same job without increasing skills. They are ensuring their own demise since unions have priced themselves out of jobs only to be replaced by robots.

THIRDLY: Technology is now replacing the skilled worker with robots in the manufacturing world, but we have also displaced low end service jobs from answering phones to bank tellers, ticket agents, and attendants in parking garages. A typical robot can do the job of generally two people, never grow tired, and costs nothing in taxes.

https://www.youtube.com/watch?v=cZzLAsHiGHU

On the one hand we have the increasing use of robots not merely in manufacture and industry, but also militarily with drones. The future of robot technology becomes mind-blowing. But is is far more than robots doing just human tasks. It is entirely possible to create thinking robots that will react to situations and can even be programmed to survive at all costs.

What we have been able to accomplish with programming is so far ahead of the curve it takes a real programmer to appreciate the advancement. Our model does what thousands of analysts would be able to accomplish in a single day. Monitoring so many variables is revealing the true hidden nature behind the global economy. We have been able to deconstruct the inherent nature that has revealed that Adam Smith was correct after all. What we have accomplished in awaiting every field. The future is always in the field of engineering because unlike other areas of study, it teaches you to solve problems that are yet to be defined.

https://www.youtube.com/watch?v=f0DIAXJrqjo

The future lies in engineering and learning programming. Forget MBAs and trying to get into the big banks. They are a dying breed and once government cuts the umbilical cord to debt and also makes that next step in evolution to a new form of government in a completely new world of monetary systems that will be inevitable, the banks will be dead and no longer will they be able to claim too big to fail. Even within my lifetime they will be broken up, dissolved, and any hint of proprietary trading as a bank will go the way of the Dodo bird.

Learning programming will be like learning to read and write. This is the next generation. Free your mind to see the possibilities. Once you know HOW to write a program, then once you understand a subject matter, you can write a program to do anything. This will be the future. This is the field that the youth should move into – engineering. This above all else teaches you HOW to think globally and outside of the box. It is the way of the future that we must embrace in order to stay competitive. What our computer can do could not be matched in any short-term period using humans. And if you could, the cost would be in the hundreds of millions of dollars. Maintaining that many people monitoring the entire world efficiently is really a human impossibility.

So yes, government is seeking to employ this technology to control us and even kill us if we get out of hand. Drones are here to stay and that provides way too much sophistication placing way too much control into the hands of too few, with everything we do being recorded for those watching from the skies. Scientists Warn of Killer Robots under development.

http://www.youtube.com/watch_popup?v=QGxNyaXfJsA&feature=player_embedded

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FROM MARTIN ARMSTRONG'S BLOG

Republicans Extend Gov’t Budget

Posted on March 6, 2013

The Republican-controlled House today approved legislation that will prevent a government shutdown on March 27 and blunt the impact of newly imposed spending cuts on the Defense Department. The vote was 267-151 and the Senate Democrats now hope to give additional Cabinet agencies similar flexibility in implementing their shares of the $85 billion in spending cuts required to take effect by the end of the budget year.

30 Facts On The Coming Water Crisis That Will Change Everything

http://www.zerohedge.com/news/2013-03-06/guest-post-30-facts-coming-water-crisis-will-change-everything

The world is rapidly running out of clean water. Some of the largest lakes and rivers on the globe are being depleted at a very frightening pace, and many of the most important underground aquifers that we depend on to irrigate our crops will soon be gone. At this point, approximately 40 percent of the entire population of the planet has little or no access to clean water, and it is being projected that by 2025 two-thirds of humanity will live in "water-stressed" areas. But most Americans are not too concerned about all of this because they assume that North America has more fresh water than anyone else does. And actually they would be right about that, but the truth is that even North America is rapidly running out of water and it is going to change all of our lives.

One Hundred And Eighteen Million Dollars An Hour

http://www.zerohedge.com/news/2013-03-06/one-hundred-and-eighteen-million-dollars-hour

That is how much money the Federal Reserve Bank of the United States is creating as you wake, work or sleep. That is $85 billion a month and the stuff must go somewhere. It pours out like sugar upon the markets, each market, every market and it is no wonder that the American stock markets are hitting new highs. 

James H. Kunstler: Why Our Current Way of Living Has No Future

http://www.peakprosperity.com/blog/81081/current-way-living-no-future

http://www.zerohedge.com/news/2013-03-06/guest-post-why-our-current-way-living-has-no-future

Rampant malinvestment is creating scarcity of capital, energy & justice

25% of Americans, in dire straits, raided their 401(k)s

http://www.nypost.com/p/news/business/nest_eggs_poached_eGV8KOHFGaYXWj3crbIcoJ

High unemployment and underemployment forced one in four Americans to pull money out of a retirement plan to make ends meet.

Not even the high penalties that make it prohibitive to tap into 401(k) accounts were a deterrent as a record $60 billion was yanked from nest eggs to pay for mortgages, car loans and credit card debts.

FROM MARTIN ARMSTRONG'S BLOG

Gold Backwardation – The Real Story

Posted on March 6, 2013

The Gold backwardation has been distorted as all sorts of reasons for everything. Normally, this is the market condition wherein the price of a forward or futures contract is trading below the expected spot price at contract maturity. Consequently, the resulting futures or forward curve is “inverted” whereby it is negative because gold is trading at even lower prices. This is simply driven by interest rates.

The typical explanation for the backwardation that is given states that it is normally a signal of a shortage in a commodity. They claim that anyone holding the commodity could make a risk-free profit by delivering it and getting it back later at a cheaper price because of the inverted yield curve. The theory is that as people put on the trade this would push down the bid in the spot market and lift up the asking price in the futures market until the backwardation disappeared. This process is called arbitraging that spread. Consequently, since the backwardation is simply a shortage in the immediate supply, the arbitrage stimulates production and the shortage is corrected.

Gold is by no means in shortage. Its primary use is investment and jewelry. Gold has historically been a glut on the market and at times it has been scarce. During the 19^th century, gold became very common with the California, Australian, and Alaska discoveries. The US$20 gold coin production began with the California discover in 1849. This is why the silver-gold ratio fluctuates. Toward the fall of Rome, silver was scarce and the only coinage produced in quantity was gold. Then gold vanishes in the 7^th century and does not appear again until the 13^th century. The Spanish discovery of America brought back so much gold and silver, Europe went into a major inflationary period and the two metals declined with inflation insofar as purchasing power was concerned. Hence, comments that claim the price of gold does not decline, no matter how much of the stuff is produced, is just not true.

The story told is by definition assumes that gold delivered to the market must be in short supply. Therefore, they argue that such a situation is resolved only by higher prices. The assumption is that gold will rise in price because of this backwardation that took place for the first recent time in December 2008. They argue that Gold was $750 on December 5, but it rocketed to $920 – a gain of 23% – by the end of January. This was simply a flight to quality that saw money also pour into government paper. It was not a collapse in the faith of money or government. It was uncertainty.

They further claim that the Gold backwardation has become permanent and therefore the “trust” in the gold futures market will have collapsed. The reason they claim there is a significant backwardation shows that people did not believe in paper gold. This has been turned into people don’t believe that paper futures will be honored in gold. Further proof they claim is that backwardation should not be able to happen at all as gold is so abundant. Therefore, it must be the erosion of faith in paper money. Sorry! this is a lot of assumption that amounts to sophistry.

Now let’s talk reality. The Gold backwardation is simply nothing more than the collapse in interest rates as capital lost faith in banks and then the Sovereign Debt Crisis began with Greece in 2010. Much of the liquidity that came to gold in the early years was OPEC money. It had absolutely nothing to do with gold. The problem was OPEC was getting all this cash, but religiously they could not earn interest. Thus, I took clients and showed them if we bought gold and sold it forward we were earning the effective interest rate but it was called the “carrying cost”. Backwardation in this case is not indicative of any shortage whatsoever or a collapse in “trust” of the dollar. The dollar has been rising! Just look at German interest rates on short-term paper went negative by 0.6%. This has NOTHING to do with fiat and people losing faith in paper money –yada, yada, yada. If that were true, interest rates would not COLLAPSE, they would SOAR because people would not trust government bonds and they would have to pay up. The flight to quality would reverse into PRIVATE assets as it did even during the German Hyperinflation.

Backwardation in gold is a money issue and it is simply the yield curve – nothing more. It has gone negative just as US government T-Bills went negative. If the “carrying cost” of gold was 500% higher than the 90 day paper interest rates, then you have a guaranteed trade by selling the forward and collecting that premium over the 90 day rate. Professionals arbitraged that and thus the “carrying cost” must collapse to be even with interest rates or there would be a endless guaranteed trade.

This has absolutely nothing to do with anything. The stories posted are astonishing. If they were remotely true, then you would see the same trend emerge everywhere and interest rates would rise if people did not “trust” paper dollars and government debt. There are many people pontificating nonsense that is just gibberish. This sophistry is getting people to buy gold for the wrong reason and risks only their sale when they figure out the story is just bullshit.

Gold is a tangible store of wealth to make the transition from the present to the future monetary system. It is not going to $30,000 creating false images of getting rich quick. It is not that “fiat” money always collapses – it does not. If you were waiting for the end of the dollar since 1971, that is more than half your lifetime. Asia has had nothing but fiat monetary systems where the emperor, the hand of God on earth, simply issued a bronze or iron coin and said this is valued at – w,y,z. Regardless of what money has been, it is ALWAYS a confidence game.

Buy gold because it is an INSURANCE policy against the transition. It is distinguished because it is MOVABLE, from classes such as real estate that are IMMOVABLE. The problem emerging with gold is government is out to track every ounce and tax any sale. They are trying to eradicate the underground economy. That does not mean they will succeed. It also means they will try.

You will NOT trust gold if you are lied to. This has become a used car salesman spinning all sorts of nonsense just to make the sale. We all know something is wrong. It has nothing to do with what is money. It is all about fiscal mismanagement.

(1) Gold declined from 1980 into 1999 and all these fundamental stories were still there. (2) Gold rose into 1980 without backwardation. (3) We had a Gold Standard under Bretton Woods in 1945 and it collapsed in 1971 precisely in 26 years as always! It was the fiscal mismanagement and the fact money was backed by gold then meant absolutely nothing.

The Human Cost Of Fiscal Mismanagement of Government

During the Great Depression, there were countless suicides. People jumping out of buildings because they lost everything and could not face a future that was destitute. The photographs of such scenes will live forever.

The same is taking place throughout Southern Europe today and it is a cry for fiscal responsibility upon government. In Italy, just since the start of the year, 23 entrepreneurs have committed suicide. Politicians are responsible for these economic declines. It was their corruption allowing NY bankers to do whatever they feel like as long as they fund their elections. These are people you would not give a $20 bill to and send to the store for an errand to by $5 of something because they sure as hell would not return with any change. Yet we elect these people who have NO experience whatsoever, make promises they have no intention to keep, and then they always blame us for their mess.

http://www.hurriyetdailynews.com/italian-sme-group-points-to-suicides.aspx?pageID=238&nID=18476&NewsCatID=344

They will say anything to get bills passed, pretend they would never do anything unconstitutional, and then when asked does the President have the authority to just kill Americans on the street, he and his staff refuse to respond. This is all about fiscal mismanagement. We are always attacked so they retain the power over us. It matters not what form of government – it is always the same ending. As Adam Smith wrote:

“It is the highest impertinence of kings and ministers to pretend to watch over the economy of private people and to restrain their expense, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without exception, the greatest spend thrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.”

Adam Smith Wealth of Nations 1776, Book II, Chapter III,

Of the Accumulation of Capital, or of Productive and Unproductive Labour 

They are NEVER held responsible for the own mismanagement. Somehow, we always have to pay for their frauds. The price is often way too high.

New T.S.A. Rules Draw Praise of National Arbitrariness Association

WASHINGTON (The Borowitz Report)—Under fire from flight attendants and others, the Transportation Safety Administration’s new rules allowing air passengers to carry small knives, baseball bats, golf clubs, and other sporting goods onto airplanes got a vote of confidence today from the National Arbitrariness Association.

The N.A.A., whose stated mission is to “enhance the randomness, disorder, and confusion of American life,” called the new list of approved items “just what the doctor ordered.”

“We love that the list appears to have been put together with no organizing principal or logical system,” said N.A.A. executive director Carol Foyler. “It combines the virtues of making no sense and being impossible to remember. Knives, bats, golf clubs, billiard cues—it’s like they made this list using refrigerator-poetry magnets.”

Ms. Foyler’s only criticism of the list, she said, was that she “would have replaced billiard cues with fencing foils. That would have been even more random, in my opinion.”

On the whole, though, she called the list “very solid, from an arbitrariness point of view—especially when you consider that they are still banning bottled water.”

John S. Pistole, the administrator of the T.S.A., denied that the list of approved items was arbitrary, telling reporters, “This agency is committed to redoubling our efforts in the war on water.”

Mr. Pistole said that thanks to the ban on bottled water, the T.S.A. had foiled over seven hundred Evian-based terror plots last year alone

Read more: http://www.newyorker.com/online/blogs/borowitzreport/2013/03/new-tsa-rules-draw-praise-of-national-arbitrariness-association.html#ixzz2Mmm7SY1P

New York's Homelessness Worst Since The Great Depression

http://www.zerohedge.com/news/2013-03-05/new-yorks-homelessness-worst-great-depression

The Moral Decoding of 9-11: Beyond the U.S. Criminal State, The Grand Plan for a New World Order

http://www.globalresearch.ca/the-moral-decoding-of-9-11-beyond-the-u-s-criminal-state-the-grand-plan-for-a-new-world-order/5323300

MARTIN ARMSTRONG'S LATEST BLOG POST

The Dow High Nobody Believes

Posted on March 5, 2013

The Dow Jones Industrials has rallied in the face of incredible skepticism with a litany of reasons why it shouldn’t be happening, that are of course all domestic oriented. This is fantastic for it shows the market is NOT historically at a high. Bubbles come when the vast majority claim the rally will never end. What is happening here is a lot of clever people keep selling and getting stopped out. They are fueling the rise and that is VERY GOOD for the long-term.

GOLDEN RULE #2

The market gods are NEVER generous. They give you one chance only to sell theALL-TIME HIGH OF HIGHS or buy the HISTORIC MAJOR LOW. The more a market keeps knocking on the same door, the chances are that door will open.The curious aspect is the overwhelming news coverage is saying this is a top that could begrudgingly go a little higher. The likelihood is clear – by NO MEAN are we dealing with a major high. We should see a temporary high ideally form by next week with the market falling back to retest support with a lot of I told you so’s. Nevertheless, we are in a serious global meltdown and people just do not understand what we are facing. This was the purpose of trying to do a public service with the Sovereign Debt Crisis Conference on March 16th. Unless you grasp the true nature of what is happening, you are just going to get lost in the woods bombarded with opinions that mean NOTHING. No market is ever moving in isolation. The overall trend is ALWAYS, and without exception, verified continually by the dance of many markets collectively as they gyrate to a single theme.

While everyone is excited about the Dow scoring new highs, in Euros, we are not there yet. To the Europeans, the Dow can provide an explosive investment opportunity. Keep in mind that when the Euro breaks, that capital will flee by the boat-load and the domestic pundits as always will be clueless. The talking head will be babbling to each other ignorant that we live in a world economy.

The Dow Jones Industrials on the spot in dollars shows resistance during March standing at 14349 followed by 14961. The timing models have not changed and we still see the week of 3/11 where the high should form. Keep in mind that the Dow tested the 1,000 level four times before it blasted through to the upside. They blamed me for that one too because we advised a lot of the takeover guys back then but the Dow had traded at below book value in 1985. It was not what I said, it was the fact you could buy a company, sell all its assets, and at least double your money. The financial stocks are up sharply but they too were often trading BELOWbook value at the start of the year.

The broader resistance stands at 16727 followed by 24275. Once we break above the 15000 level, we should then start a decent run that most analysts will keep trying to pick the high. However, our minimum targets for a high in 2015.75 would be 16990 to 20966.The extreme target objective will be 23388 to 25127.

We will be address the pull back at the conferences for the optimum buying opportunity. This World Economic Conference was moved up to March 18th-19th for this very reason. Things are starting to cook and the good news is the amazing bearishness that the market is going to crash shows just the reason why it will not. The majority will be trying to sell and that provides the energy for the rally to press high in the years ahead until they are finally convinced the Dow is going then to 40,000.

The Dow reached 14,286 intraday closing at 14253. Corporate profits have about doubled.Even the Dow Transports made a new high. The bank stocks are still suspect and people are not looking to the banks since they have been the problem. Keep in mind what I have been warning about – yields of solid stocks is far better than what you can earn in banks or bonds and are much safer.

The forecasting array has targeted next week as the turning point 03/11. If by chance that were a low, then the next target would be the high 03/25. Otherwise, a high next week should be followed by a pull back, a buying opportunity, and then wild and crazy times ahead. Expect some wild price moves coming in April. This will indeed be the times that try men’s souls. Volatility will also pic up next week.

Forecasting has been a chest beating PERSONAL OPINION game of I told you so. That is just stupid because everyone has an opinion and nobody can forecast based upon opinion on a consistent basis. The ONLY way to learn is toOBSERVE, and let the markets TELL you what they are doing. They do speak in tongues, so that means you must watch the entire world to understand and in all currencies.

Please keep in mind that our computer is correlating everything globally and then runs it all again in every currency. This leads us to:

GOLDEN RULE #3

Bull Markets and Bear Markets take place ONLY when that trend is reflected inEVERY currency not just the local currency.

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George Carlin: how does our economic system work?

http://www.youtube.com/watch?v=PYZpWTvre9c

bill maher on The Wealth Gap in America and the World 12-03-2011

http://www.youtube.com/watch?v=90RzlUjE_Lo

Wealth Inequality in America

http://www.youtube.com/watch?feature=player_embedded&v=QPKKQnijnsM

Russia Moves To Label US As Plutocracy, Warns Of War

http://www.whatdoesitmean.com/index1663.htm

With Western bankers recently admitting at a UK conference that they “engineered the 2008 global financial crisis”, Minister Gatilov further warns in this report that the ratio of US insider selling to buying of stocks is now 50-to-1 - a monthly record – shows that a new economic collapse is “clearly” being planned by these plutocrats as a further means to consolidate their power over the American people, and, according to a recently released US Department of Justice memo, includes the outright confiscation of all the American peoples guns.

With other new warnings coming from US warning that the Obama regime is planning for “Soviet style purges of the American people”, and the US Supreme Court this past week putting the Obama regimes expanded terror surveillance program beyond legal challenge, and the Obama regime imprisoning a number of activists in Seattle for refusing to answer questions about the political activities of people they know, Minister Gatilov ironically notes in his reports summation that the present day United States is “more plutocratic than even the Soviets even tried to be.”

With many prominent American journalists now openly questioning if the Obama regime is able to kill them on American soil with drone strikes, and their “mainstream” media accused of acting not as conduits of information for the American people, but rather adjuncts of the state, censoring and vetting information in order to shape public opinion, it stands to reason that the masses of these people remain totally ignorant as the cruel fate that awaits them….but one which they will see evidenced much sooner than later.

Pentagon: Cuts Could Hamper Ability To Invade Countries For No Reason

WASHINGTON (The Borowitz Report)—The spending cuts mandated by the sequester may hamper the United States’s ability to invade countries for absolutely no reason, a Pentagon spokesman warned today.

The Pentagon made this gloomy assessment amid widespread fears that the nation’s ability to wage totally optional wars based on bogus pretexts may be in peril.

“Historically, the United States has stood ready and able to throw billions of dollars at a military campaign with no clear rationale or well-defined objective,” said spokesman Harland Dorrinson. “Our capacity to wage war willy-nilly is now in jeopardy.”

In the past, Mr. Dorrinson said, the Pentagon has had the resources to fight three meaningless and completely random wars at any given time, “but now in our planning meetings we are cutting that number back to two.”

Sen. Lindsey Graham (R—S.C.) agreed about the catastrophic effects of the Pentagon cuts, telling reporters, “The ability of the United States to project its military power in an arbitrary and totally capricious way must never be compromised.”

The cuts are already being felt in a tangible way at the Pentagon, which today cancelled an order for a nine-thousand-dollar pen.

Read more: http://www.newyorker.com/online/blogs/borowitzreport/2013/03/pentagon-cuts-could-hamper-ability-to-invade-countries-for-no-reason.html#ixzz2McAqwTLV

Playing Financial Chicken In Your Golden Years

http://www.zerohedge.com/news/2013-03-03/guest-post-playing-financial-chicken-your-golden-years

The tipping point that ensures another Great Depression has been passed. Continued interventions will only make matters worse. Economies, governments and perhaps societies are likely to fail if political meddling continues.

Our “Wizard of Oz” government has no intention of admitting their mistakes.They will continue to pretend that they are “fixing” matters as they pour more poison into the veins of economic activity. Whether they stop willingly or they are stopped by a market collapse, a Great Depression will ensue.

Paul Craig Roberts: The Missing Recovery

http://www.informationclearinghouse.info/article34157.htm

Officially, since June 2009 the US economy has been undergoing an economic recovery from the December 2007 recession. But where is this recovery? I cannot find it, and neither can millions of unemployed Americans.

How To Prepare For The Difficult Years Ahead

http://theeconomiccollapseblog.com/archives/how-to-prepare-for-the-difficult-years-ahead

16 Signs That The Middle Class Is Running Out Of Money

http://www.zerohedge.com/news/2013-03-02/guest-post-16-signs-middle-class-running-out-money

Is "discretionary income" rapidly becoming a thing of the past for most American families?  Right now, there are a lot of signs that we are on the verge of a nightmarish consumer spending drought.  Incomes are down, taxes are up, many large retail chains are deeply struggling because of the lack of customers, and at this point nearly a quarter of all Americans have more credit card debt than money in the bank.  Considering the fact that consumer spending is such a large percentage of the U.S. economy, that is very bad news.

How will we ever have a sustained economic recovery if consumers don't have much money to spend?  Well, the truth is that we aren't ever going to have a sustained economic recovery.  In fact, this debt-fueled bubble of false hope that we are experiencing right now is as good as things are going to get.  Things are going to go downhill from here, and if you think that consumer spending is bad now, just wait until you see what happens over the next several years.

How to Talk to a Policeman When You Are Stopped

http://www.ehow.com/how_2279439_talk-policeman-stopped.html

Jim Sinclair - Bulls & Bears To Be Wiped Out 3 Times In Gold

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/3/2_Jim_Sinclair_-_Bulls_%26_Bears_To_Be_Wiped_Out_3_Times_In_Gold.html

Today legendary trader Jim Sinclair spoke with King World News in what was most likely his greatest audio interview ever.  Below is a very small portion of what Sinclair, who has been actively trading the markets for over half a century and whose father was business partners with legendary trader Jesse Livermore, had to say about what has taken place in the gold market.

MARTIN ARMSTRONG'S LATEST BLOG POST

Understanding Inflation

Posted on March 2, 2013

We have defined inflation in our Glossary as:

Inflation  - Normally defined as the rate of percentage increase on an annual basis within the general price level.  Most often calculated from the rate of change in the CPI index. This is further defined by government as the rise in the price of goods and services. However, it is the inverse of the decline in the purchasing power of the currency. When inflation is across the board, then its root cause in normally government caused by the decline in the purchasing power of the currency. When it begins in a single sector due to a crop failure or things such as the oil price shock of OPEC that was instigated by the abandonment of the gold standard on August 15th, 1971, then it spreads from that epic center into other areas directly affected by that sector.

http://armstrongeconomics.com/models/glossary/

Asset-Class-Shift Deflation takes place when one earns say $1,000 and that remains unchanged, however taxes rise diminishing the available funds for discretionary spending producing a decline in economic activity that is deflationary based on the reduction in disposable income. The higher taxes move, rents, healthcare, or other non-discretionary spending, the lower the economic growth in proportion to the decline of discretionary spending.

Dah? Obama and the Democrats better learn this lesson.

GT sez:

Armstrong is making the same mistake here that is commonly made. He is describing the SYMPTOMS of inflation.
Inflation at its core is the increase in the amount of money created by the government (fiat money) without a corresponding increase in the amount of goods and services in the economy which causes the goods and services to be priced higher as the 'new money' devalues all other outstanding money units in the economy (putting too much water in the Kool-Aid).
If you had a good or service for sale and you knew the money units were worth less now, you would ask for more of them (the price of your good or service) to make up for the loss in value of the money units.

Hathaway - The Most Important Gold Chart You Will Ever See

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/3/1_Hathaway_-_The_Most_Important_Gold_Chart_You_Will_Ever_See.html

With incredible turbulence in the gold market, today King World News is pleased to share with you what is probably the most important gold chart you will ever see.  KWN was given exclusive distribution rights to this outstanding piece which has 2 excellent graphs by superstar John Hathaway of Tocqueville Asset Management L.P..  John is without question one of the most respected institutional minds in the world today regarding gold, and his fund was awarded a coveted 5-star rating by Morningstar.

Killer robots must be stopped, say campaigners

http://www.japantimes.co.jp/news/2013/03/02/world/killer-robots-must-be-stopped-say-campaigners/#.UTGOajA3uz5

Robot warfare and autonomous weapons, the next step from unmanned drones, are already being worked on by scientists and will be available within the decade

MARTIN ARMSTRONG'S LATEST BLOG POST

The Real Story of What Went Down Today in DC

Posted on March 1, 2013

I just got off the phone with REAL contacts on Capitol Hill. John Boehner is a country-club-Republican who stands for nothing of any true substance. He will cut a deal for the sake of cutting deals and believes you can split the difference over golf. He was not a fan of the sequester. Nonetheless, he barely held the slot as Speaker of the House that he cherishes so much and there was nobody who was his opponent.

Under his mantle, the Republicans have won ABSOLUTELY nothing. Each time Obama pushes and Boehner has caved in extending debt ceilings and agreeing to raise taxes. There have been NO spending cuts under Boehner. If he agreed with Obama this time, he would have been tarred and feathered while the Republicans would have split in a real bonfire of the vanities.

That does not mean there are no sneaking back-room deals under the headlines. There is the continuing resolution to extend the debt ceiling that comes due at the end of the month. What will happen is they will hand Obama flexibility while most likely keeping the $85 billion number. Can you imagine the automatic cuts are to be $1.2 trillion. This is just $85 billion. Thus, some of the mitigating damage will be fixed through the continuing resolution. Nobody will pay much attention to that so Boehner will get his deals. He is really the Dean Martin of Republicans.

So the cuts will most likely remain. They will give Obama his flexibility. Keep in mind not ONE agency has EVER been closed. When they fail, they just add another on top – i.e. Homeland Security.

Russia In Shock After Obama OK’s Mass Execution Of Christians

http://www.whatdoesitmean.com/index1662.htm

THE TITLE IS A BIT EXTREME, BUT YOU SHOULD BE AWARE OF THIS SITUATION

Gov. Rick Snyder of Michigan Declares Fiscal Emergency in Detroit

BREAKING NEWS Friday, March 1, 2013 12:24 PM EST

Gov. Rick Snyder of Michigan Declares Fiscal Emergency in Detroit Gov. Rick Snyder of Michigan announced on Friday that the city of Detroit is so snarled in financial woes that the state must appoint an emergency manager to lead it out of disaster. “It’s time to say we should stop going downhill,” Mr. Snyder told Detroiters in a town-hall-style meeting that was broadcast live on local television stations across the city. He later added, “Today is a day to call all hands on deck.” The state-appointed manager, who could be selected later this month, would ultimately wield powers aimed at swiftly turning around the municipal government’s dire circumstances — powers to cut city spending, change contracts with labor unions, merge or eliminate city departments, urge the sale of city assets and even, if all else failed, to recommend bankruptcy proceedings. READ MORE » http://www.nytimes.com/2013/03/02/us/michigan-appoints-emergency-manager-for-detroit.html?emc=na

MARTIN ARMSTRONG'S LATEST BLOG POST

Economist – Send in the Clowns – Don’t Bother; They’re Here

Posted on March 1, 2013

Did Italy fail to see reality from the bondholder’s perspective, or the real reality from the long-term viability perspective? The latest article from the Economist says Italy is jeopardizing Europe and the Euro. Perhaps it is about time since the politicians spend without remorse and then the people are expected to sacrifice their entire future for the bondholders. The opening line of the Economist was:

“A SENSE of humour in adversity can be attractive, but it is not always useful. Confronted by the worst recession in their country since the 1930s and the possible implosion of Europe’s single currency, the people of Italy have decided to avoid reality. In this week’s election a quarter of the electorate—a post-war record—did not even bother to show up. Of those who did, almost 30% endorsed Silvio Berlusconi, whose ruinous policies as a clownish prime minister are a main cause of Italy’s economic woes. And a further 25% voted for the Five Star Movement, which is led by a genuine comedian, Beppe Grillo. By contrast, Mario Monti, the reform-minded technocrat who has led Italy for the past 15 months and restored much of its battered credibility, got a measly 10%”

http://www.economist.com/news/leaders/21572763-how-beppe-grillo-and-silvio-berlusconi-threaten-future-italy-and-euro-send

If you ask most people what was the first central bank, they will no doubt point to the Bank of England founded in 1694. However, the use of banks for the purpose of the government post-Dark Age truly begins with theWisselbank founded in 1609 in Amsterdam. While one paid a fee to have an account at the bank and there was to be no lending of money, what emerged behind the curtain was in fact the Wisselbank lent money undisclosed to both the government in the City of Amsterdam as well as to the government sponsored Dutch East India Company. This became public in 1790 causing a real panic that forced the bank to be taken over by the City of Amsterdam in 1791. Eventually, the bank was forced to close by 1819. Here we have what the Dutch paid for to have a safe place to keep your money. There was no moneylending – except government could NEVER keep their finger out of everyone else’s pockets.

History stands as witness that it should be AGAINST the law for politicians to everBORROW. This is the way ALL governments perish. It is the triumph of hope over experience. It is like the person who gets married after the 10th divorce. When will we ever learn – (1) term limits to restore real representation, and (2) no borrowing. Anyone who buys government debt deserves to lose everything. They are the ultimate fools. You do not even get a penny on the dollar when government goes broke. Even clients at M.F. Global got something back.

Italians have got it right. This is insane. DEFAULT and get it over with. It is inevitable anyway. NOBODY ever pays. Can anyone explain why governments borrow more every year and have no intent of paying anything back? This is the greatest transfer of wealth from the working class to the bondholders ever to take place in history. The money is not going to the poor to make life better. It is robbing the productive class that creates employment and transfers the wealth to bondholders. Almost 70% of outstanding national debts are accumulative interest payments. That is reality! You have to be completely in denial to think you can raise taxes and keep this game going. This is pure insanity. So sorry, Economist, perhaps the Italian’s got it right. This is just one giant comedy and the joke is on us. As Frank Sinatra ended that song – Send in the Clowns, Don’t bother! They’re here!

Four Reasons The Next Budget Crisis Will Be Even Worse

http://www.businessinsider.com/sequestration-cliff-government-shutdown-budget-march-27-congress-2013-2#ixzz2MDmXZmb3

Congress has not acted on the first of three "mini-cliffs" that resulted from January's fiscal cliff negotiation.

The next mini-cliff, scheduled to hit on March 27, will absolutely require action. If events in Congress remain at a stalemate, the effects for the U.S. could be devastating. 

Read more: http://www.businessinsider.com/sequestration-cliff-government-shutdown-budget-march-27-congress-2013-2#ixzz2MJaiCQ37