Posted Nov 14, 2014 by Martin Armstrong
QUESTION: Mr. Armstrong, I must say, you are the father of market analysis and I can see how the uninitiated are lost in their concept of fundamentals still see you are the person who manipulates the world economy. When they are totally lost in the cavities within their mind they cannot see beyond the linear version of events. I believe the light has gone on and I can see the golden thread that binds together your stories and dynamic thinking. What you just posted on Italy is part of a common theme you keep highlighting from Scotland and Spain to the losses in Switzerland for holding the Euro. Big Bang and the Bond Bubble bursting is all about what you have been targeting being Europe. You wrote concerning the Dow Jones Industrial Index:
“This is a question of TIME more so than price. Keep in mind that the amount of capital contained in the bond markets is at least 3 times that in equities. If we see the Bond Bubble in 2015.75, then the capital pouring out of bonds will be like the 1929 Stock Market Crash. That money will then flow outward. This is when we will see the greatest potential for a rise in equity and YES we should see the turn in all tangibles including gold.”
The Bond Bubble bursts in Europe first as it did in Austria setting in motion the Great Depression. If one country leaves the Euro and Britain leaves the EU, this will be checkmate. Government will then be in what you call crash mode and capital flees to the dollar private assets. Is this the proper scenario you are forecasting?
With the utmost respect for your work. History does produce the people we need in times of crisis. You are indeed Churchill coming back at the right moment. You are certainly one of them. I was fortunate enough to get a ticket to your movie premier whilst they are going for double and triple prices already in the after market. A friend told me your film has already been picked as number one out of more than 3000. This proves you are more than you suspect.
ANSWER: Yes. I think you have pulled the pieces together and articulated it better than I could have written. Sometimes you are too close to something and what is obvious to me I skip over whereas it is not so obvious to others. I am still trying to learn writing for the general public rather than just institutional. It is quite different.
The demise of gold and the break up of the Euro all go hand in hand. We need the rising dollar that will then attract foreign capital into the US market as it did for Japan when the yen was rising going into 1989. The rising dollar will then put pressure on all those who issued dollar debt to save interest outside the USA and contribute to bond defaults globally.
The rising dollar and the collapse in the euro is again part of this trend. The rising dollar puts further pressure on oil and gold. The undermining of oil by the rising dollar and the increase in supply that creates the excess only forces the Middle East to lower prices as has Saudi Arabia. ISIS is like the barbarians coming in upon Rome at its time of weakness. A decline in oil prices will shift the world to a different new order. Those who think shifting trade into other currencies will weaken the dollar are living in history unable to see the changes within the new world economy constructed on instant capital flows that out rank trade by more than 20:1 – sorry, but it is world capital flows of investment that far outnumber trade flows.
You can see the shift in major trends if you step back and open your eyes. It’s a sequence of dominoes governments are fighting against the trend to prevent – not to save society, but their own power.