Armstrong Economics: Entering Phase II of The Debt Crisis
by ilene - March 20th, 2010 8:58 pm
Introduction by Ilene
You may be wondering why Chopshop is referencing Martin Armstrong’s writings, given Marty’s extended stay in maximum security prison. Chopshop contends that Martin’s cyclic modeling is genius and ought to supersede whatever opinion one has of Armstrong’s case.
Armstrong is a gold-to-$5,000 guy. Chopshop agrees that one day gold will likely reach those dollar-denominated "values", but believes that gold will likely digest its 400% gain of the past decade over the next few years before ‘going for the gusto.’
Chopshop and Fibozachi have remained steadfast in calling for first targets of 81 and 84 on the US dollar since they nailed its bottom on December 3rd. (See also this and this.) They believe we are at a juncture within the credit crisis where "gold is much more likely to take a $350 John Edwards-style haircut before reaching $1450 and beyond."
Back to Armstrong, whose proclivity for gold stems "not from an ill-conceived loathing of the dollar but from an impeccably nuanced study of history’s mosaic. Chopshop thinks Armstrong’s work can be appreciated by all, "not only because of Marty’s historical breadth but also because his forecasts are predicated upon explicit methodology."
So I asked Chopshop why Martin was in prison, and, for the first time he paused, answering a few seconds later that the reason is because Martin didn’t "obey the rules of Fight Club" ~ you don’t talk about Fight Club and you don’t talk about the alleged collusion of broker/dealers, investment banks, hedge funds and nation-states publicly when "they" are who you consult / manage money for. Armstrong spoke to the manipulation of silver futures by JPM, named Warren Buffett as a mystery $2 billion futures participant of "the Club" and, ultimately, spoke to alleged cabals operating from within, yet behind, financial markets. Marty spoke about the game being rigged by the Club, being anything but a random walk. Is such the reason for his incarceration with extreme prejudice; not his Pi cycles, public-private pendulum or other brilliant work within cyclic periodicity? So basically, he’s in the hole on trumped up charges.
The long and short of it, according to Chop’s opinion, is that Martin is a political prisoner and cyclic genius who speaks to the intermediate and long-term horizon with probabilistic prescience. He’s not selling anything and not offering actionable advice. He’s focused solely on finding robust patterns within his models and across history. Marty has a nearly…
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Armstrong Economics: Entering Phase II of The Debt Crisis
by Zero Hedge - March 20th, 2010 3:48 pm
Introduction by Ilene
You may be wondering why Chopshop is referencing Martin Armstrong’s writings, given Marty’s extended stay in maximum security prison. Chopshop contends that Martin’s cyclic modeling is genius and ought to supersede whatever opinion one has of Armstrong’s case.
Armstrong is a gold-to-$5,000 guy. Chopshop agrees that one day gold will likely reach those dollar-denominated "values", but believes that gold will likely digest its 400% gain of the past decade over the next few years before ‘going for the gusto.’
Chopshop and Fibozachi have remained steadfast in calling for first targets of 81 and 84 on the US dollar since they nailed its bottom on December 3rd. (See also this and this.) They believe we are at a juncture within the credit crisis where "gold is much more likely to take a $350 John Edwards-style haircut before reaching $1450 and beyond."
Back to Armstrong, whose proclivity for gold stems "not from an ill-conceived loathing of the dollar but from an impeccably nuanced study of history’s mosaic. Chopshop thinks Armstrong’s work can be appreciated by all, "not only because of Marty’s historical breadth but also because his forecasts are predicated upon explicit methodology."
So I asked Chopshop why Martin was in prison, and, for the first time he paused, answering a few seconds later that the reason is because Martin didn’t "obey the rules of Fight Club" ~ you don’t talk about Fight Club and you don’t talk about the alleged collusion of broker/dealers, investment banks, hedge funds and nation-states publicly when "they" are who you consult / manage money for. Armstrong spoke to the manipulation of silver futures by JPM, named Warren Buffett as a mystery $2 billion futures participant of "the Club" and, ultimately, spoke to alleged cabals operating from within, yet behind, financial markets. Marty spoke about the game being rigged by the Club, being anything but a random walk. Is such the reason for his incarceration with extreme prejudice; not his Pi cycles, public-private pendulum or other brilliant work within cyclic periodicity? So basically, he’s in the hole on trumped up charges.
The long and short of it, according to Chop’s opinion, is that Martin is a political prisoner and cyclic genius who speaks to the intermediate and long-term horizon with probabilistic prescience. He’s not selling anything and not offering actionable advice. He’s focused solely on…
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Low Interest Rates and Easy Credit Are Catastrophes for Any Economy
by ilene - January 22nd, 2010 8:49 pm
Low Interest Rates and Easy Credit Are Catastrophes for Any Economy
Courtesy of Charles Hugh Smith, Of Two Minds
The Federal Reserve insists that super-low interest rates and loose lending are the keys to renewed growth. Their analysis is fatally flawed; those are catastrophically destructive policies in any economy.
One of the key analytic tools in the Survival+ critique is very simple to grasp: sort out the incentives and disincentives, and you are halfway to a systemic understanding.
For example, U.S. sickcare (a.k.a. "healthcare") is fundamentally doomed to insolvency and collapse because its incentives for all participants are entirely perverse. (Please see Perverse Incentives and a Government Doomed to Collapse January 14, 2010).
With this is mind, let’s examine the incentives built into the Federal Reserve policy of super-low interest rates and loose lending ("easy credit"). The fundamental idea here is straightfoward: consumers have limitless desires, and all we need to do to reinvigorate consumer spending is make borrowing more money both cheap and convenient/easy.
But what about the hidden incentives and disincentives? This policy is incredibly perverse in several profound ways:
1. it provides a powerful disincentive to saving (accumulating capital)
2. it offers a powerful incentive to speculate with "free money" provided by lenders
3. it provides a powerful incentive to leverage a small amount of capital/cash into gigantic bets via "easy money" (3% down payment mortgages, etc.)
4. it rewards risk and destroys moral hazard because the losses incurred by the borrower deploying massive leverage are extremely modest (3% down isn’t much to lose, so why not gamble that housing with rise 30% from here?)
5. it incentivizes a feedback loop of ever-expanding bets, leverage and borrowing (i.e. housing speculators buying a second, third and fourth home because they made a killing on their first house) which "rewards" the speculative mania with ever higher assets prices as this specious "demand" grows with expanding leverage and debt.
6. In a financial system which actively suppresses interest rates, then capital earns virtually nothing. Entrepreneurs have no incentive to be prudent in their borrowing, and holders of capital are left with no choice but speculation in risky assets lest their capital melt away in an engineered environment of "benign" (slow steady erosion of capital) inflation. Recall that "low" 2.5% inflation will rob you of a third of your capital every decade.
This…
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Martin Armstrong’s Brand New Essay On The Real Story Behind Goldman, Buffett, And The Fed
by ilene - January 8th, 2010 12:19 pm
Martin Armstrong’s Brand New Essay On The Real Story Behind Goldman, Buffett, And The Fed
Courtesy of Joe Weisenthal at Clusterstock
We’ll admit we haven’t read this yet, and that we probably won’t get to it until this weekend. But those of you who have some time to kill on a Friday may enjoy Martin Armstrong’s latest letter, which looks like a classic.
Nathan’s Economic Edge, as usual, has the document:
What follows is 62 pages of Martin Armstrong spilling what he knows about the club, about politicians, about Goldman Sachs, Warren Buffett, murder, international intrigue, and his own involvement in all of it. We’ve seen a lot of it before, but this is certainly the most comprehensive and reads like a mini-epic in the making.
Those who have not followed Armstrong’s case will learn a great deal about it from reading this. Here you will get a good narrative of his perspective and how the events of his case are related to world happenings and market manipulations by members of the “club.” There is so much here to point out that I’m not even going to try and instead just recommend that you designate a couple of hours this weekend, sit down and read it.
Below is part I. Find the other two parts at Nathan’s Economic Edge >
Part I:
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HOW CAPITAL FLOWS WILL INFLUENCE THE DIRECTION OF THE DOW
by ilene - December 21st, 2009 11:17 am
HOW CAPITAL FLOWS WILL INFLUENCE THE DIRECTION OF THE DOW
Courtesy of The Pragmatic Capitalist
As always, interesting reading from Martin Armstrong:
The-Dow-the-Future-Theory-Myth-12-6-09 –
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site