Guest Post by Martin Armstrong
Central bankers these days are seriously trapped. They cannot now reverse their policies for that means they have to admit that they have failed. That is far more serious than you might imagine. To even entertain backing down from negative interest rates means they have to admit that Keynesian/Marxist economics has failed and therein socialism, which is based upon the very principle that government CAN and is CAPABLE of managing the economy. This is the real question presented in the American presidential elections, yet nobody will articulate it in this manner. Hillary still preaches the same failed socialist agenda as if government can even do anything other than attack people who earn more money as did Emperor Maximinus of Rome.
Just before Paul Volcker became Federal Reserve Chairman Paul Volcker, who served (August 6, 1979 – August 11, 1987), he delivered his Rediscovery of the Business Cycle in 1978 (published on May 3, 1979). If you Google this book, you will see our site comes up first. You can find used copies around $500. Why is this book so rare? Because before Volcker became Fed Chairman, he told the truth.
“The Rediscovery of the Business Cycle – is a sign of the times. Not much more than a decade ago, in what now seems a more innocent age, the ‘New Economics’ had become orthodoxy. Its basic tenet, repeated in similar words in speech after speech, in article after article, was described by one of its leaders as ‘the conviction that business cycles were not inevitable, that government policy could and should keep the economy close to a path of steady real growth at a constant target rate of unemployment.”
This “New Economics” was all about empowering government to manipulate and control the economy. Even Larry Summers, who is the father of Negative Interest Rates, has publicly admitted that government cannot forecast economic declines. Implicitly, he too is conceding that the “New Economics” has failed and his negative interest rates is not bankrupting pensions and has underwritten government debt like never before. Summers has pushed society over the edge. The conundrum in which we now find ourselves is where global central bankers can gather at the U.S. Federal Reserve’s annual symposium in Jackson Hole, Wyoming, but all they can do is hope something happens to save them. Governments are beginning to depart from the grip of austerity forced upon Europe by Merkel which has greatly suppressed economic growth and created an economic depression exactly as what took place during the 1930s. The option of deliberately creating deflation was the policy of Germany only because they misunderstood the causes behind the German hyperinflation of the 1920s. The failure of the economy to rebound in Europe and in Japan, while the United States has been only a dead-cat-bounce, led to governments insisting politically that central banks maintain and extend their own stimulus efforts.
It is clear, central bankers are in a state of panic. They are looked upon as the sole economic magician and this political shift for responsibility has overburdened then dramatically. They know all too well that serious structural reforms are now necessary. However, central bankers can’t be seen to be giving up on this Keynesian/Marxist policy Volcker called the “New Economics” and Larry Summer pushed to Negative Rates. They are now trapped, unable to reverse policy without sending a signal that they’ve have failed. The great fear is the collapse in confidence, which is on the horizon. They wake up from a nightmare in cold sweat fearing the curtain will be pulled back and the world will witness there is no wizard as in that film – the Wizard of Oz.
The central bankers tremble at market sensitivity to any change in the perception of what they are up to next. They sought this power of a demigod, and now live in fear that they might be discovered as confused and powerless. This is now all about policy makers being unable to admit complete and utter failure. This is the foundation from which a Phase Transition can emerge. Once the majority begin to realize that the central bankers have been like con-men, that is when the stampede begins with a mad rush to private assets.
Wow!
You sell books available for free in PDF format (86 pages) for $500 used?
And you offer conferences for $7500 per person?
Tell me more, Mr. Armstrong!
It is supply and demand . M. Armstrong knows economics.
Ad hominen attack – why don’t you refute the content of his article?
Ad hominem? I attacked the man, not his argument?
No. I attacked the actions of the man. Preying on ignorance cannot be subject to “ad hominem” accusations.
So where is your response to the content of the article?
Concentrating on the authors personality and personal actions instead of his presented content is ad hominem by definition of ad hominem.
Ad hominem means going after the person making the argument rather than the argument itself, popularly known as killing the messenger if you don’t like the message.
Had you included a response to his content instead of mentioning only those things you dislike about the authors character and business you might get by, but you did not.
Amen!
Here’s your supply and demand, Koko:
http://joshhhstore.appspot.com/2015/03/rediscovery-of-the-business-cycle-the-charles-c-moskowitz-memorial-lectures.html
All I can see is the poster pointing-out facts. Self-evident facts.
When is it wrong to speak the truth?
When no-one is buying the truth, that’s when.
Hey, “Thanks, Mr Armstrong”….you have that link for free .pdf download? I would like to read the book
http://joshhhstore.appspot.com/2015/03/rediscovery-of-the-business-cycle-the-charles-c-moskowitz-memorial-lectures.html
Dead link.
same thing…dead link. I have the experience that those types of sites are all bullshit and just try to sucker you buy something to get a free .pdf book
Lock them up!
Dead link.
The link to the free download is dead.
The one that Thanks Mr. Armstrong! Posted.
Dougie Becker never tires of being pompous, condescending and WRONG. Liberal douchebag Canadians are a wonder to observe.
Since the peak in bond rates in August 1981, deficit spending was literally a means to “increase wealth.”
Step 1: Central bank makes credit-from-nowhere available.
Step 2: Politicians borrow the credit into monetary existence, issuing a….
Step 3: …bond. The bond is deemed WEALTH by anyone who owns it.
Step 4: Wealth has now expanded by the amount borrowed, and it doesn’t matter what the politicians squander the money on (mostly buying reelection, of course.)
Step 5: rinse-and-repeat.
The increase in “WEALTH” of an ocean of bonds led to willingness to bid up the prices of stocks, land, businesses, precious metals, etc. Each asset class has had its own bull and bear markets as the LIQUIDITY represented by all that “WEALTH” sloshed from one thing to another.
Bond rates have bottomed. Negative rates actually destroy “WEALTH” (returning less “WEALTH” to the bond owner than the bond cost in the first place.) NIRP is not inflationary, it’s deflationary.
What central banks and everyone who owns wealth in this environment needs is more borrowing to keep filling the Bond Ocean with more “WEALTH.” This is why “everyone” is calling for more borrowing. Under the system of the last 35 years, this was literally the engine of “WEALTH” creation. (For the record, this is in stark contrast to wealth creation by turning less valuable stuff into more valuable stuff.)
These calls are nothing more than the CARGO CULTISTS demanding that more wooden airplanes and such be constructed so the Cargo will resume landing.
http://money.cnn.com/2016/08/26/news/economy/janet-yellen-government-spending/index.html
The next president of the United States should be ready to work with Congress to spend more money.
That’s the message from investors and economists, including Janet Yellen. The question is how much cash to drop — and when.
About everyone agrees that if a crisis hits, government spending must be part of the rescue effort.
“Fiscal policy has traditionally played an important role in dealing with severe economic downturns,” Federal Reserve chair Yellen said in a speech Friday.
One of Yellen’s colleagues at the Fed was even more blunt.
“Fiscal policy should be our equivalent of a first responder to recessions,” said John Williams, head of the San Francisco Fed, this month. There’s even talk of whether the U.S. should enact “automatic stabilizers” that would kick in whenever the economy sinks below a certain level.
where have you been?
Where have I been? Tilting at windmills.
I’ve simply realized that no matter how much I refine my grasp of today’s collective insanity (its roots, its enablers, the underlying engine that powers it, and where it leads),
1. No one gives a shit.
2. Neither I nor anyone else can change it.
3. Without details (timing, specifics) neither I nor anyone else has, preparing for what’s coming is for all practical purposes impossible. Every preparation A produces massive costs Anti-A today, and the accumulation of those costs is beginning to crush me.
I’m arrogant enough to believe that I see something that almost no one else sees. I’m also wise enough to know that it just doesn’t matter. No bozo buttons are awarded for being first to fully elucidate a process, and 21 years of being wrong on the timing has taught me that there are actually no benefits even to myself. So far, my insights on this crap have only cost me money, heartache and self-recrimination.
So I try to stop wasting my time typing comments. I’m better off putting in a load of laundry, mowing the grass or reloading some more cartridges.
At this moment, I’m running a video-capture of the VHS recording of my wedding in the background of this web browser. It reminds me in a constant bitch-slap of how much time has passed, how youth drains away no matter how hard one tries to slow it, how nothing I do really affects more than that moment of time, and how I’ve lived my life in a fog of ignorance so profound that it’s embarrassing to even contemplate.
I’m an ant, riding on a leaf, floating down a large river. I can’t change the course of the river, I’m surrounded by other ants who have no notion of the river itself, and who grasp not the meaning of the sound of a waterfall ahead. Or if they do, then ours is a dialog that only goes in circles. I’ve been spinning in those circles since 1993. I’m dizzy, so please stop the ride, I want to get off.
Just know that you have company, on many levels.
“I’m also wise enough to know that it just doesn’t matter.” – it always matters; we all have to remind ourselves to get off the negative and stay positive in order to have a chance to persevere/prosper.
thanx for your reply
dc. I know what you mean. A prophet is never recognized as such in his own land.
A belief system has momentum in its own right. What is the belief system in America today?
That you will be taken care of by government, that there is a free lunch, that consuming without producing is a viable life right along with free speech.
While you feel that your comments are for naught and are falling on deaf ears, I have a different opinion on the matter. Even tho it seems that you are powerless in changing anything or being recognized for seeing a reality that is about to be fulfilled, I believe that your comments are effectively changing the consciousness of the Nation. Even if one family takes your comments to heart and is saved by taking proactive action, isn’t it worth all the work and angst that you are feeling? I think it is.
Change is like an avalanche. New ideas are like snowflakes building up on the mountain of man’s consciousness. Here a little, there a little, until the final snowflake falls and the face of the mountain is changed in a twinkling of an eye. Which snowflake was responsible for the avalanche? It’s impossible to say, other than they were all responsible.
So, take heart in that your comments, like snowflakes, are creating the foundations of change, change that’s as irreversible as that last snowflake that triggers an avalanche.
A little leaven here, a little leaven there and pretty soon the whole loaf is leavened.
Homer, I differ with you on an important point.
I believe the die is already cast. For all practical purposes, I think that the complex system known as “humanity” has a collective pattern, partially cyclical (the Strauss and Howe “turnings,” only different.) This means the future is written. Only the details are yet to be revealed.
I think the collective “mind” chooses the Narrative, and each Narrative is just a fad or fashion, with a beginning, a middle and and end. No one gets to pick or direct the Narrative. Whichever column wins out, the process is endogenous and spontaneous.
The Western world today is animated by a pre-conscious sense of collective optimism so vast that it’s expressed as actions that reveal a belief in unlimited resources. Hand-wringing to the contrary is like that about the National Debt: meaningless. We may “know” resources are limited (and that one can’t borrow one’s way, individually or collectively, to prosperity) but our actions conflict with these conscious thoughts.
The Narrative will turn when it turns; it will have nothing to do with me. Or with you. Or with anyone identifiable. Its leaders will appear to emerge and rule, but in fact it they will be chosen by the fashion/Narrative/fad. They will jump in front of the band and claim to be leading, waving their arms like majorettes. Many will jump. Only a few will succeed in landing directly in the place where they appear to be directing traffic. The rest will be invisible.
Change is difficult to analogize. We still lack the vocabulary to discuss what little we know about spontaneous organization of the probabilistic system we call “complexity.” It is all around us, yet few can imagine its presence. We see its effects all the time, but we mis-attribute them to what is seen, ignoring what is unseen (but that which is even more important.)
When I watch a video of myself a 34 year younger man, and my wife a heart-achingly pretty little girl with long chestnut hair and a ready smile, I know the truth of the adage that youth is wasted on the young.
I’m enjoying my life; I have three grandchildren who are by all appearances bright, precocious, and sweet-natured. My sons are all married to nice girls (two are college-educated stay-at-home-moms, a condition of which I’m extremely proud) and are well-employed in occupations that match their ample aptitudes. I’m still happily married to that pretty little girl and while I find myself outside the world of gainful employment, trapping her in an occupation that has turned into purest mental torture, our lives are otherwise idyllic. We’re not in danger of missing a meal.
I’m not stuck in negativity; I am just all too aware of how fast all this goes, how little time I have left even if I get a long run out of this coil, and how much I realize only in hindsight that I should have enjoyed every step along the way twice as much as I did.
Drink in the joys of your life. If you’re like me, no matter how much you do so, you’ll later realize that you’d do it twice as much had you known ahead of time how fleeting is each stage.
dc,
your remarks are very touching, and I sure hope your wife can relinquish her work for insurance coverage (I’m guessing) soon.
And indeed, you have the pleasure of being proud of your sons
and their wives and the children.
Most of what we were taught and believed is now revealed as false.
With all due respect to the venerable Mr. Armstrong, I suspect he
is sugar coating bankers’ decisions just a bit. Maybe he fears
another mind numbing loss, as he has already suffered.
I am no rocket scientist, but it looks to me like the bankers did
know what they were doing/and they/in collusion with others,
are mopping up the $$$$ and resources everywhere they can as fast as they can. Consider Europe: going broke fast and faster and
surrounded by/infiltrated by murderous rebels. Mind you the Turks have been in Germany forever as hired help.
The USA has been lost for now and maybe forever to the crooked pols that esteem the unmighty dollar over all else. They soak in
their special privileges bath gloating and grinning with images of
sugar plumbs and gold coins. I long for some retribution for their
crimes…whatever will it be? We the people however are cooked
in the juice of our vast ignorance. God gave us the kindness gene,
much to our detriment. I do not believe there is the son, Jesus.
Died for our sins? What sin does an infant commit? The infant impaled on the sword of mighty Islam? Whatever. We may have
free will but we do not have free minds. The collective we that is.
Some of us are beginning to get the scam. As usual, as with youth being wasted on the young, growing understanding and smarts, are wasted on the old.
If Armstrong makes $$, good on him. He isn’t forcing you to spend any on him. Unlike O, selling healthcare tax or else.