Blog/America's Economic History
Posted Apr 11, 2016 by Martin Armstrong
Those in Washington like to blow their own horn by claiming the American president is the “leader of the free world,“ but all they do is talk among themselves and the journalists covering politics in Washington who do not actually investigate anything. Let’s just look at this chart as if it were a market. Notice that the Democrats (blue line) peaked with FDR and the Great Depression. They have been making lower highs and have actually made new lows. If this were a market, we would call this a bear market for a bull market requires making higher highs and higher lows. The Republicans crashed and burned into the Great Depression. They have made a reaction high, which is defined as trending higher, but have not made new highs.
The lack of a bull market since 1933 is significant for it shows the gradual decline in the confidence of government. Look closely; the Democrats actually peaked in a failed attempt to rally with Jimmy Carter going into 1980. This is when Reagan came to power. The Economic Confidence Model turned in 1985 and the Democrats have been declining ever since, despite Clinton and Obama.
As part of the accusation that I manipulated the world economy, the government blamed me for the takeover boom because I advised many of the takeover guys. Back then, people thought our forecast that the Dow would rise to 6,000 from 1,000 was nuts. Yet, look at the chart on book value. This bottomed in 1977 with the shift starting in 1985 from public to private; the Dow finally broke through the quadruple top at the 1,000 area and it was off and running. They attributed this to the takeover boom and the government blamed me while ignoring the fact that all I was doing was pointing out that the market was UNDERVALUED because you could buy a company, sell its assets, and double or even triple your money.
This breakout in 1985 was clear evidence of a public v private wave shift where people ignored the private sector for 51.6 years until the public wave peaked on 1981.35. When we correlate everything, notice the shift in politics that has taken place since 1985. Neither party has scored a bull market type of trend; both are dying by slow torture but the majority is not looking at this closely. They do not even realize that this is by no means a bull market for the two-party system.
1964 Lyndon Johnson Democratic…… 61.05%
1936 Franklin Roosevelt Democratic.. 60.80%
1972 Richard Nixon Republican………. 60.67%
1920 Warren Harding Republican…… 60.32%
Above are the elections that scored over 60% of the popular vote victories. We have never seen a real landslide (defined as 75%+). The Democrats and the Republicans have their core constituents who will vote for them because they lack any objective reasoning. Less than 10% of the voting public THINKS before they vote. The rest pretty much regurgitate whatever they are told.
The demographics are obviously changing. Less of the younger generation act without thinking. Just as newspapers and mainstream press are dying, we are witnessing the same trend among voters. The elderly are beginning to die off and the core of indoctrinated believers of party politics are diminishing with their exit.
Sanders and Trump are demonstrating this shift but the establishment does not get it. They say Trump is bringing in new people, but he is not so popular among real Republicans. This demonstrates their ignorance of what this trend is all about and how the two-party system is dying from old ideas and too much corruption. The establishment blames individual candidates like Sanders and Trump and never themselves. They are incapable of looking in the mirror. They cannot see the trend and always see themselves as far more intelligent than the stupid, Great Unwashed.
What is unfolding here is terribly important for in order to have a phase transition, a slingshot move (as we did with the beginning of this private wave in 1985), or even a rally in gold, the key is the collapse in confidence among the MAJORITY; not just the core believers in something like gold. This is the shift from public to private, and as it unfolds, you can see the trend before your eyes if you are unbiased. I have constantly stated that if you just step back and look objectively, the markets reveal the future. Despite all the nonsense, neither the Republicans nor the Democrats have scored any new highs post-Great Depression. Hence, the phase transition in politics and the crash and burn for Republicans in 1932 came precisely at the turning point between the previous private wave and the new public wave that peaked into 1981.35. We saw a phase transition in 1985 with the beginning of that wave and the breakout of private assets.
When we look at the Senate, the Democrats crashed and burned into the Civil War since they were the slave owners. They then became cross dressers and amazingly became the party for Socialists after peaking with FDR. The former slave owner party then changed dresses again and became the champion of minorities. The Republicans were the religious right in the Civil War, became anti-socialist party into the Great Depression, and then became a confused coalition of everything from the religious right to Libertarians.