Posted May 6, 2015 by Martin Armstrong
I have been doing a lot of interviews in Germany, from TV and radio, to newspapers and magazines. It is clear that they are starting to get the message that this is not about opinion. Every economist has recognized that there is a business cycle. The approach has been starkly different from medicine. Instead of trying to decipher the DNA code to understand how life functions, in the social science of economics it has been about MANIPULATION ever since Karl Marx.
Marx set out with the approach that there is indeed a Business Cycle, but he saw the early transition from an agricultural life to industrial revolution as evil. Capitalists forming factories were then exploiting labor, for they profited by using the labor that he determined was the real wealth. Marx assumed this could be eradicated by simply taking all personal ownership and handing it to government. What he overlooked was that those in government were not exempt from the same human nature that drives greed and power trends. Indeed, it proved far worse as government possessed guns and tanks to force their demands upon the people. No factory owner could have ever harmed society in such a manner.
Even John Maynard Keynes followed the assumption of Marx, that government possessed the capacity to MANIPULATE the business cycle. Keynes did not advocate taking everyone’s possessions or the freedom to be what you wanted to be in life because in communism, the needs of the state came first. Nevertheless, Keynes advocated what became hailed as the age of New Economics, where recessions and depressions were forever smoothed out and eliminated under the stewardship of an idealistic benevolent government.
Two former Chairman of the Federal Reserve conceded that the Business Cycle has won every time. Sadly, the entire approach to economics is wrong. We look at the existence of the Business Cycle, like DNA, and mistakenly believe we can change the the system simply because we do not like the way it operates. Medicine is advancing because we FIRST discovered the way DNA functions. In economics, we need to discover that there is a Business Cycle and try to live with it.
Unfortunately, those in government want to exercise the power they think they have. All we hear is “vote for me, vote for change” as if they can actually alter the Business Cycle and eliminate recessions and unemployment. The more they try to force the cycle to obey their commands, as we now see with a tax on savings (negative interest rates), the worse the swings within the Business Cycle will be.
The next turning point in the Economic Confidence Model should not produce a major event to the day this time around because it is not focused in a single market, as we have experienced to date. This time, the concentration of capital in government is the bubble. The smart money is starting to move out of banks and into other areas, from stocks to real estate.
The 1985.65 low in the ECM, which began this Private Wave, was actually August 25, 1985. This marked the decision to gather the following month when the formation of G5 and the Plaza Accord took place. This was the beginning of deliberately trying to force the economy to do as it desired. The G5 was all about manipulating the dollar low to reduce the trade deficit. The actual announcement took place on September 22, 1985 (1985.72). This is the type of turning point we see for 2015.75. Nothing precise took place on that day, besides a noticeable shift in trend. This may have been when the decision was made behind the curtain to manipulate the world economy.
Of course, we then had the 1987 Crash come 2.15 years (quarter cycle) later, precisely to the day, for this was a reaction of capital in the private sector. This crash was set in motion by the G5 and their stupid attempt to manipulate the dollar lower by 40% to help trade. This above all demonstrated that lawyers should never be allowed anywhere near economic decisions. The G5 set off a currency panic where Japanese sold U.S. assets and took their money home. That set in motion the bubble top in Japan, as the peak in the ECM first wave 1989.95 as capital from around the world now noticed the rise in the yen and Japanese assets.
Once Japan peaked, capital looked around and asked – Who is next? When Greece hit in 2010, traders looked around and also asked the same question. This is how capital moves. The capital ran into South East Asia and peaked on the next turning point in 1994.25.
We can see international capital flows for when SE Asia peaks, we find the precise day of the low in the U.S. share market on April 1st, 1994. The capital concentration was moving into private assets, and we saw that confirmed to the day, just as the 1987 Crash bottomed precisely to the day on October 19th.
The next target was 1998.55, or July 20, 1998. Again, precisely to that very day, the U.S. share market peaked. That marked the high of the cycle, but what unfolded thereafter illustrated how everything is connected.
At our World Economic Conference held in London that year, a journalist from the London Financial Times was there. We gave the forecast that Russia would collapse. That made the front page story of the second section.
The events set in motion following the 1998.55 turning point were quite astonishing. Indeed, the concentration of capital in Russia had come to a head. The contagion spread rapidly because when people could not get out of Russian bonds, they sold whatever else they had to raise money. The contagion became massive, resulting in the Federal Reserve having to bailout the banks by pretending to bailout Long-Term Capital Management hedge fund, set up by John Meriwether who was the supervisor in the Salomon Brothers manipulation of the U.S. Treasury auctions back in 1991.
What came after the 1998.55 turning point was really fascinating. It was at this point that we seem to begin to see a shift in intensity toward government power. We can see that the pi frequency from the July 20, 1998 turning point was precisely in line with the World Trade Center 9/11 attack that shifted the power clearly into the hands of government. Ever since, terrorism has been used as the excuse to track money, and is now the drive behind eliminating paper money.
There was something hidden behind the mask. Gold reached its 19-year low on August 25, 1999. This was precisely 8.6 days after the ECM target of August 16, 1999. On our 224 Year Cycle of Political Change, that too was due at this time. The United States hit this target in 1999 on the 224-year cycle from 1775. We get the low in gold, which is the hedge against government (not inflation) and we get the 9/11 game changer in power following this target.
The 2002.85 turning point was not precise to the day in the Dow. It was precisely on the 19 frequency cycle. This marked the first high from the low on October 10th.
The 2007.15 high came precisely to the day for the high in the Shiller Real Estate Index, for that was where the capital concentration existed. The 2009 low came on the half-cycle 2.15 years later and the 2011.45 turning point saw the formation of the high in gold, and the breakout in the stock market.
Precisely to the day that the Greek Crisis began on April 16, 2010. This was pi from the 2007.15 turning point, exactly as the 9/11 attack on the World Trade Center in 2001. How is it possible that such events take place to the very day? This is the most fascinating discovery I have ever made, yet it is illogical on the surface, and a mind stimulating demonstration that there is something going on that is much more profound that warrants our investigation.
What stands out has been the regularity of the Business Cycle, even when it is not precisely to the day. The mere fact that this has worked out at times to the very day in the economy or market that reflects the concentration of capital, demonstrates that there is a hidden order behind this mask of chaos. For this reason alone, the entire field is certainly worth exploring, as we do other sciences. We have to stop the idea of manipulation and reflect upon understanding how this all works. That is the ONLY way to advance in this game we call life.