3 Minute Gold News – Martin Armstrong

3 Minute Gold News

A Quick Read for Busy People

An interview synopsis of Martin Armstrong from Armstrong Economics, with Chris Waltzek of Gold Seek Radio.

by: Elaine Diane Taylor

 

Topics:

Global Debt
Europe
US Dollar
Debt Reset
Gold Confiscation
Great Depression
Contagion
Gold

 

GLOBAL DEBT

US debt is $20 trillion. But the global sovereign debt is $200 trillion.

Emerging markets issued their debt in US dollars, sothe dollar rising against these other currencies is what will break the back of the world monetary system.

The dollar rose in the Great Depression and President Roosevelt confiscated gold so he could devalue the dollar by 70%  . The dollar rose into 1985 so they held the Plaza Accord to devalue it by 30%.

The US wants a low dollar because it helps them with exports. It makes US goods cheaper for other countries to buy in their currencies.

EUROPE

In Italy, the euro-friendly party has been booted out. The new government wants their old lira back.

Europe wanted to make a united Europe like the United States, but didn’t think all member states would agree. So they tried to just unite the currency first. That’s why they didn’t consolidate the debts.

When the US was formed, Alexander Hamilton took all the member state debts and put them all together as the national debt. After that the states were on their own. Each state issues their own debt, and that debt isn’t the national currency. The national currency of the United States is the reserve currency of the world.

In Europe, every bank has to have a piece of all member states’ debt. So when Greece got into trouble and the European Central Bank (ECB) gave it a haircut, it cut into the banks’ reserves.

In 2008, the bad loans in the States were removed from the banks’ books and moved into Fanny Mae and Freddy Mac.

In Europe they didn’t do that. The bad bank loans are still on the books of the banks.

Mario Draghi,  the President of the European Central Bank, has been making negative interest rates instead of dealing with the debt issue. So the system is fragile and there’s deflation.

Brussels doesn’t send money to Italy for their debt because Germany says it would be unfair because it’s money from other member states. So instead they do a bail in and the bank’s shareholders lose their money.

They wanted a single currency to federalize Europe, but at the same time had each state do their own debt. That way it wouldn’t be seen as favouring one state over another.

US DOLLAR

The US dollar is still the only place for large sovereign wealth funds and pensions to park their money.

The US can’t stop being the reserve currency because there’s nothing else right now.

The dollar is not a petro-currency as some say. Energy is only 7% of the world’s total GDP so even if it’s denominated in some other currency it’s not a big enough market to change the price of the dollar.

DEBT RESET

The whole system is going to break.

The Federal Reserve has become the central bank of the world by default.

The Fed wanted to start raising rates in 2014, but they waited until the last quarter of 2015 because emerging markets were asking them not to as it would make their debt in US dollars too expensive to pay.

The IMF was lobbying the Fed not to raise rates, and the ECB was telling the Fed that it would make it difficult for THEIR banks.

Janet Yellen kept saying they had to raise interest rates to bring them back to normal. She needed to do this because all the pension funds need 8% in order to not go belly up.

So there’s a pension crisis coming. The central banks have created it by keeping rates low.

The Fed has lost the power to control the domestic economy. They lost it to the international powers.

By 2020 – 2021 we’re going to see a currency reset. It’ll be something like Bretton Woods.

Everybody understands there’s a problem, but politicians and governments don’t fix things until after there’s a crisis.

Like Adam Smith said, “Everyone acts in their own self interest.”

What’s best for a single politician isn’t necessarily what’s best for the nation. Politicians don’t fix things until after they’re broken because it’s better for the politician.

GDP growth is in a bear market and steadily declining.

The stock market is going to rise. The bond market is going to go down. The yields are too low. Pensions funds can’t lock in for 10 years at 1.3% with a bond because they need 8% interest to break even.

Central banks are buying the government bonds because no one else can.

Once there’s a crack in the euro then the interest rates will rise fast.

Once the ECB is forced to stop buying their own bonds at the low rates then rates will immediately jump to 10%.

The bond market is going to be destroyed. In the US it will be like the Great Depression.

GREAT DEPRESSION

What made it so “great” was that there was a sovereign debt crisis in 1931.

Herbert Hoover said that capital was moving quickly from one country to the next and they couldn’t figure out where it was going next. All of Europe, except France, basically defaulted. Britain went into a moratorium and suspended all debt payments.

That’s why the US dollar went up back then – the capital all flowed into the US because investors wanted yield.

GOLD CONFISCATION

So FDR confiscated gold in order to get the dollar back down. The US was on a gold standard so he had to confiscated gold into order to devalue the dollar.

We’re not on a gold standard today so they won’t need to do another confiscation.

But the capital is going to flow into the US again like it did because it has nowhere else to go.

It will probably rush into the stock market. The key will be the Dow Jones because foreign capital invests in the Dow.

GOLD

Gold won’t go up in price until the whole monetary system starts to crack.

Gold is a hedge against the government not working properly or surviving. It won’t rise until the confidence of the average person is shaken.

Right now people pay for coffee with their cell phone, so they trust the monetary system to work.

It’s a question of confidence. When you start seeing Europe crack. When you see governments crack then you’ll see the rise in gold.

At this point it’s facing a strong dollar and isn’t ready to break out.

But the issues are coming to a head.

CONTAGION

Deutche Bank has about $45 trillion in derivatives. It’s net risk is about three times the capitalization of the bank. They can’t merge it with the other large bank there because the loss is too big to absorb.

It’s a risk for contagion.

In 1931, the sovereign debt crisis started with a bank in Austria that wasn’t even a big bank. This time the issue could be contagion as well.

Maybe your bonds don’t seem at risk, but they are sold as a whole bulk. Once something goes then it makes people look.

When Greece went down in 2010 the traders made a lot of money. So they then looked around and said, “Who’s next? Oh, Portugal. Then Spain. Then Italy. Then France.”

This is the way capital moves.

Once it cracks it just goes.

In the 1840s all the states went bust. Some states went belly up and didn’t pay their debts at all and just wrote them off.

In the 1920s corporations went down.

This time it’s back to governments being in trouble.

Governments are borrowing money that they have no intention of ever paying back.

The US paid off its debts and survived in the 1820s and 1830s, but other than that no government has ever paid off their debts and survived.

The crisis is in government. They’re all going belly up.

GOLD

The big rally in gold will come after 2020 to 2021 when people begin to see what’s going on and stop trusting the system.

In 1921 there was a change in trend from up to down in one month (called a bear reversal). In 2007 the change took three months. Today we’re not even close to changing.

Pay attention to the Dow because that’s what foreigners buy.

Interest rates doubled between 1927 and 1929. So did the stock market.

 

Martin Armstrong can be found at Armstrong Economics.

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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.

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Gold is at $1,208.90 U.S. per ounce. From Kitco News.

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My thoughts…

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So there’s the big issue –

The Fed must either do what’s in the best interest of the nation or the best interest of the globe.

One loses or the other loses.

That’s why some people are so mad when President Trump negotiates and uses his power to look after America. He wants everyone to do well, but not at America’s expense. Trump is mandated to do what is best for his country and the UN is mandated to do what is best for the globe.

There’s the big stress.

The hope is that the IMF is able to set up a legitimate large system with their own currency, the SDR (Special Drawing Rights) that can reset the world’s debt against something that is steady – that would probably be a group of things including physical gold.

The IMF wants to make a bigger economic pie. They want to reset the debt and then have everyone grow, some more some less, but the switch would be to a digital world economy headed by them.

All good. Resets happen and we can have calm lives while it’s going on if we see it coming and prepare for it. Martin and Jim say the same thing with different angles. Jim says to get a little gold now because no one knows when it will go, and when it goes you won’t be able to get the metal. Armstrong says it won’t go yet, but when it does in 2020ish, it will go fast.

All good.

It snowed this morning and the guitar is wonderful, I’m back to weightlifting and practicing scatting jazz.

All is well. ;)

Elaine~

November  9, 2018

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Coins and Crowns

words and music Elaine Diane Taylor
SOCAN/ASCAP
from the album Coins and Crowns available on iTunes

 

Single featured in Episode 1 of Mike Maloney’s documentary series Hidden Secrets of Money.

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Thank you to Jim Rickards for including me in his bestselling book The New Case for Gold.

Screen Shot 2016-03-11 at 9.49.31 AM

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From David Crosby’s Twitter message: “Well Miss Taylor…lyrics are the hardest part and yours are excellent…music’s good too.”

A Terrible Breeze    (North Korea and Nuclear War)

The news comes down
A little bluebird sings
Words of war
Fire and furious things
Of testing might
‘Til no patience knows
If keeping still
Still keeps you safe at home

It’s a terrible breeze
They speak of today
Of threats that used to live a world away
We all know wind
Can blow both ways
And a terrible breeze can blow it all away

A worldwide net
Sees our village grow
Until we all forget
What each one used to know
How a blind bird’s wings
Can reach the shore
And turn the wheel of peace and war

Village fools sinking down, down, down
Debt and gold wound in numbered shrouds
Deal of a life it’s bread and clowns
Can we afford another go around?
The news comes down.

It’s a terrible breeze. The news comes down.

words and music Elaine Diane Taylor
©2017 Elaine Art & Media SOCAN/ASCAP

 

Single available on iTunes

I am thrilled about the peace summit and new ways of thinking about the future.

So amazing.

No one wants to turn that wheel of peace and war.

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Not Much of a Holiday (Greek Debt and Media Persuasion)

words and music Elaine Diane Taylor

© 2015 Intelligentsia Media, Inc. All rights reserved.

SOCAN/ASCAP

Single available on iTunes

The Greek bank holiday and long lines to get a few euros for the day. Debt deals behind closed doors. The media telling us what opinions to have. China building islands in the South China Sea and claiming all the international waves. More dealing to come. More standing in line for those who owe. Who owes? There’s a long line of nations in debt and this is far from done.

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Screen Shot 2016-03-11 at 9.49.31 AM

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AlbumCover.PreparingfortheFall

Preparing for the Fall live boutique album available on iTunes — featuring Wag the Dog, Black Swan Dive,  American Pie and Gods of the Copybook Headings.

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The Gods of the Copybook Headings

words by Rudyard Kipling and music by Elaine Diane Taylor

©2014 Intelligentsia Media Inc.

SOCAN/ASCAP

from the album Preparing for the Fall available on iTunes

 

The copybooks of the early 1900s gave us all the wisdom we need. The sayings that were copied are the truths, the gods, of our world. All the empires who followed the gods of the marketplace instead have fallen, and there’s terror and slaughter when the gods of the copybook headings return. The lyrics are by Rudyard Kipling. One of my gurus.

Another Week on Wall Street

words and music Elaine Diane Taylor

© 2013 Intelligentsia Media Inc. All rights reserved.

SOCAN/ASCAP

from the album Coins and Crowns available on iTunes

See the bankers wave their Wall Street wands and conjure piles of paper green. Naked short selling is like betting that your neighbour’s house will burn down. But in this scenario it happens to burn down. If the bankers win then we lose the whole world as we know it. I wrote this in 2009, with a lyric “A little grease (Greece) is floating out to sea, and little pigs (Portugal, Italy, Greece and Spain) are bobbing up and down, they’ll send a storm and we’ll see, when the tide goes out who’s naked on the beach“, and it’s coming on now. The world is changing as we know it.

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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.

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