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Feb. 12, 2023 - Health Ranger - Mike Adams
31:28
Martin Armstrong interviewed by Mike Adams - NATO military defeat to destabilize the dollar?
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Time Text
- Hello and welcome.
Mike Adams here with Brighttown.com and I've got a really amazing interview for you today with Martin Armstrong of armstrongeconomics.com.
He's got some very important things to share with us over about 20 to 30 minutes here.
Unfortunately, there were some problems with my microphone on my side in the studio.
And we had some glitches here and there on some video as well.
But Martin's audio is all good.
Thank goodness, because he's the most important part of this, and he's got some very important things to say.
So, bear with us here.
You're going to hear the full interview coming up.
My voice will be a little glitchy, a little staticky.
Martin's voice is perfectly clear.
Listen carefully to what he has to say.
We had a great conversation.
We've already solved these audio problems in the studio, so that won't happen again.
I want to be respectful to Martin Armstrong and make sure we get this interview out there so you can hear what he has to say.
Enjoy.
Here we go.
Thank you very much for inviting me.
Well, your insight has proven very much on track again and again and again.
Your modeling has been truly legendary.
I'd like to start off by asking you, what do you think the implications are for, let's say, a theoretical NATO loss against Russia in the Ukraine conflict?
What will happen in the world of finance, in your view, should that event occur?
We're probably looking at near-term anyhow.
That capital will end up fleeing to the United States.
And you also have from Asia, you have effectively North Korea shooting missiles all over Japan.
Then you have Taiwan.
Everywhere you go, even in the Middle East, the capital will tend to Concentrate in the United States as it did for World War I and World War II. That will last probably until maybe in maximum around 2028.
And then we'll end up with a situation where, you know, they really want to move towards a new world currency.
That's what, you know, Schwab's whole great piece that's all about.
So when that happens, what are the chances of the dollar being able to survive that new global reserve?
Carsey, because there's so much money printing and there's so much devaluation of the dollar happening right now.
Do you think the dollar is going to be around in 10 years or where is it going in your view?
Well, I mean, a lot of people just focus on the dollar, but things are far worse outside the United States.
So, in a situation like this, the dollar will be the last one stamped.
You have to understand, by lowering the interest rates to negative in Europe in 2014, raising the rates, just about every pension fund now has lost so much money.
It's crazy.
Japan You know, they actually had bragged that they bought 97% of their government bond auction.
I mean, there's no market for this long-term debt anymore.
That's what the London bond crisis was about.
And Yellen even came out and proposed that the Treasury should buy in long-term debt and swap it short-term.
You know, looking at war, And rising interest rates.
I mean, you have to be insane to buy long-term bonds at this point.
The future is just so uncertain.
Why would you buy anything beyond the really need aid?
And so, it's far worse outside the United States than in the US, mainly because the US still does have the largest economy in the world.
That's why everybody wants to sell to us.
I mean, because the U.S. has a consumer-based economy.
Germany, for example, it's fine.
It's the strongest economy in Europe.
But, you know, if you look at actual wealth, the German citizens have less than Italians.
Why?
Because the taxes are so high.
And Germany has followed the old mercantile Economic theory where all they want to do is sell to somebody else.
They don't necessarily develop their domestic economy like we have.
Japan, Germany, they all made money rising from the ashes, basically, because they could sell to Americans.
So that's the difference.
It's not so much that we're printing money, etc.
I know a lot of people focus on that.
But you also have to look at this thing from a global perspective.
Eventually, all currencies are just basically collapsing, largely because since World War II, All they have ever done is borrow year after year with zero intention of paying anything back.
So the whole system is collapsing that way.
So it sounds like you believe that people have reason to have confidence in at least the dollar as the currency of last resort for some period of time, but at the same time in the experience of consumers in the United States, they see the purchasing power of those dollars dropping quite rapidly in certain areas like food, for example.
How do those things coincide?
I mean, in terms of the dollar holding its value for the next few years for Americans?
You know, that's a separate question from the inflation that you're talking about.
The inflation that we have is a real problem for the central banks.
They raise interest rates thinking that they can stop inflation Based upon old theories from the Great Depression.
And they're just not working.
Back in the Depression when Keynes came into play, the U.S. had a balanced budget.
It was him basically coming in and saying, it's okay to run a deficit when you're in a recession.
And so he gave the blessing to politicians.
And ever since, they said, oh, well, Keene said it's okay for us to run deficits.
So they ran deficits in a boom and bust.
It didn't matter.
It's always the same thing.
So now we have a situation where the Fed and all central banks are raising rates to stop inflation.
It won't work.
It only makes it worse.
This type of inflation We're set in motion by COVID. It's shortages.
It's not speculation.
And yes, Americans are watching their food costs rise, etc.
But outside the United States, it's far worse because most of these commodities are in terms of dollars to begin with.
And as the dollar has risen against just about everything in Asia and in Europe, That's why you see the civil unrest in many different countries from Pakistan all the way over to Sri Lanka.
To them, the inflation is probably twice as much as what we are experiencing.
What about, then, combining that with the deindustrialization of Europe that we're seeing happening, you know, because of the cutoff of energy?
We're seeing many industries shutting down in Europe.
We're seeing some uprising of people who are unhappy about that.
In the U.S., we're seeing these, I think, fake jobs numbers that came out recently, but in Europe, it seems to be Industries are just shutting down.
So, do you think that, you know, Europe being America's largest trading partner, at some point soon, aren't we going to see a situation where fewer and fewer Europeans can afford to purchase goods made in the United States?
We're looking at, effectively, we're in stagflation.
And by that we have I mean that the inflation rate is greater than the economic growth.
But then you have that contrasted with the geopolitical problems outside the United States.
And when you've got tanks running down the street, you're not going to be leaving your money in the local bank.
That's what basically, if you look at it, the United States was bankrupt in 1896.
That's when J.P. Morgan had to organize a $100 million gold loan to bail out the U.S. Treasury.
We go from bankrupt in 1896 to after World War I. By 1914, the United States was the financial capital of the world.
London shot itself in the head.
After World War II, the U.S. ended up with 76% of the world gold reserves.
Because whatever money was overseas, it all just rushed over here.
So, I mean, that's what even created the Roaring Twenties.
They didn't understand that.
All the money from Europe came here.
They saw opportunities with the auto industry booming and aircraft starting.
And they were investing here, just like the dot-com type bubble.
It was that concentration of capital which created the boom into 29, and then there was a sovereign debt crisis in Europe in 31, and they had to take all the money back out.
So that's what really caused the Great Depression a lot.
So all these things are intricately connected together.
It's a question of timing.
And at the end of the game, yes, the dollar is going to lose confidence just like everything else because our government doesn't run fiscally proper in any way, shape, or form.
Until we get to that point, you have the geopolitical issues which is sending capital in this direction because it's worse over there right now.
But then that stops.
Right.
So I really like your overview.
So the international movement, the flows of capital around the world.
What about China?
How does China figure into this?
And also talk about China's own domestic challenges with debt, because their debt-to-GDP ratio, I think, is even higher than ours is in America.
How are China's economic problems going to impact us in America, in your view?
Quietly lobbying the Federal Reserve not to raise interest rates.
Basically, China was doing the right thing, but nobody listened.
They didn't do it in a dictatorial manner, but they were telling their provinces and companies not to borrow in dollars.
They were borrowing in dollars because it was always cheap on the interest rates.
They didn't outlaw it, but most of these debt problems that you see in China is because they borrowed in dollars.
Then the dollar went up, and then they couldn't pay it.
The same thing happened, for example, in Europe, everybody was sold Swiss mortgages.
And then the Swiss franc and euro peg broke, and all of a sudden, you owe 25% more in your house.
The same thing took place in Australia back in the 80s.
The bankers were selling Swiss loans, and the $8 collapsed against the franc.
Whenever you're going to borrow in one currency and invest in another, there is a currency risk.
And that's not well understood, I think, by anybody, including banks.
I mean, what I probably started down the road of getting called into these financial crises was back in 1973.
I happened to have known the executive vice president of Franklin National Bank.
It was the first bank that failed after the floating exchange rate took place.
I got called in because they didn't understand what happened.
They thought it had to do with the currency.
They lost basically almost 10% of their capitalization because of the decline in the dollar against the world currencies at that time.
They had a lot of Capital invested in Italian Lira.
That was the first bank to go down.
Then the next round came around by 1980, etc.
By then, they were saying, get that guy that did the other one.
They still don't teach these things of currency hedging, etc., in university.
I won't mention a name, but one of the very top five universities in the world Actually, he asked me if I would teach there.
And I said, excuse me?
I said, I'm not really interested in teaching a class.
And I said, why are you asking me?
And they actually said to me, we know what we teach doesn't work.
Wow, that's a rare mission right there.
...for a degree in something that you're admitting that doesn't work.
But they are still teaching Keynesian economics, etc., and...
All these theories are from fixed exchange rate periods, not from floating exchange rate.
Well, you make a really great point.
It leads me to my next question.
So most of what people have been taught about money and debt and finance is obsolete or distorted in some way, like this MMT, right, which, of course, I call magical money theory.
But what is your...
I'm not going to use the word advice, but guidance for people right now who may be starting to question their belief system about how to protect assets.
What would you advise them to look toward or to study or to learn in order to not lose their assets as the world's fiat currencies fall apart over the next decade or so?
Where should they begin?
Well, the first thing you have to understand is that all Tangible assets, and that can be not just precious metals, that's stocks, that's real estate, etc.
They all tend to go up when the currency goes down.
The government calls it inflation.
They make it sound as if it's the private sector that's at error.
In effect, if you can look at the German hyperinflation, etc., They didn't even have any gold or silver, so when it collapsed, they came out with a new Deutschmark and was backed by real estate.
Tangible assets make that transition.
It's a question then of liquidity.
Obviously, real estate isn't liquid.
You can't necessarily go shopping and say, okay, fine, I'll give you some land over here for a bottle of milk.
But as far as making the transition to whatever new currency comes, that's what real estate does.
Okay?
I saw it, you know, in Germany when the wall fell, the same thing.
It was real estate over there suddenly began to rise dramatically.
For liquidity purposes, you're probably looking at, you know, more on the area of gold and silver for that sort of thing that you can, it tends to be a universal market.
But just about everything from like coins and stamps and art All of these things went up with the German hyperinflation, for example.
What you have to understand is that there's basically just envision it this way, that there's a scale.
On one side is all assets, the other side is the currency.
When the currency goes down, just about everything else rises.
That's why you've seen real estate going up dramatically.
It's capital wanting to get off the grid.
Getting out of the banks, because if the bank is at risk, etc.
We all have these different things.
On top of that, in real estate, you have a migration problem, where there's more people leaving places like California, New York, and Connecticut.
And they're going to places like Florida and Texas, right?
So that's mainly because of the COVID over-restrictions and things of that nature and the taxation.
Yep.
No, we see that.
I mean, this studio is in Central Texas.
We see that directly.
But you mentioned something really important, which is about banks and bank solvency.
And a lot of people are concerned about bail-ins.
I want to ask you about that.
There was some FDIC video.
That went viral recently that appeared to be from an FDIC board member meeting saying that they thought that they would have to have bail-ins, or at least being prepared for certain bail-ins, which our audience knows bail-ins means the bank claims ownership of your deposits and then decides how much you can ever take out, if any.
But do you think that bail-ins, you know, which we saw in the Greek islands a few years back, I forgot the name of the country, but do you think that that's a very real risk at some point here in the United States?
The United States did that with MF Global.
That's true, yes.
Corzine.
Corzine.
Yes, it was Corzine.
The judge in New York was amazingly, he just basically took the depositor's money.
It all depends upon what they're doing and how politically charged they can get away with it.
I would be very concerned that the way they will interpret the FDIC Is that you're entitled to their limit, and that's for all the banks you have.
I thought it's supposed to be for each bank.
Supposed to be, yes.
But that's not necessarily the way it's guaranteed or anything else.
Even Italy, when it got into trouble in the last decade, If you had 90-day government bonds, they just extended it and said we're going to convert them to 10.
Governments can do whatever they want.
Just keep that in mind.
Nobody prosecutes.
Not one banker has ever gone to prison.
Pfizer just pled criminally guilty.
Nobody goes to prison.
Nobody's personally charged.
Effectively, whatever a bank or they make in the pharmaceutical industry, the government comes in and says, okay, we're going to make it look good.
We're going to charge you and give us 10% of whatever you made.
That's our cut.
And that's basically it.
Yeah, you're right.
They don't charge an individual, mainly because they can't get those big kind of fines from an individual.
How are you going to get $100 billion from an individual?
I mean, you can't.
If the bank made a trillion, we'll give us $100 billion.
That's basically the way it works.
So they always go after the institution that way.
And it's just basically bribe money.
That's really all it is.
You're exactly right.
Now, in the couple minutes we have left, please tell people what they can get from your website, armstrongeconomics.com, and what you offer to people through your modeling.
I'm not sure exactly how you describe it, but you have a very advanced modeling system that also helps make projections.
Go ahead and tell people what they can learn from you or get from you, please.
Being a hedge fund manager, I saw, you know, Back in the 70s and 80s, really, how capital really moved.
I was in Geneva, for example, in the 80s, and everybody was there.
We were dealing with the OPEC money at that time, and then Japan started to rise, and then all of a sudden, the money was shifting to Japan, and as the money shifted, then all the talent shifted.
All the top brokers who were in Geneva were suddenly in Tokyo.
I've seen the way capital really moves.
You take it when Greece defaulted.
Immediately, the dealing desk, they make a fortune, they go, okay, fine, who's next?
Oh, okay, let's go after Spain.
This is the way it is.
You can read...
A chapter of Herbert Hoover's memoirs.
It's free.
It's online.
1931.
You'll see Capitol is acting like it did back then.
He said it acted like a cannon on a deck of a ship in the middle of a hurricane.
He said it was shooting off in every which direction so fast you couldn't figure out where it was going next.
That's exactly the same thing that we have seen how Capitol responds.
So I had taken...
Basically, from the beginning, I got involved in computer programming, etc.
I had focused on artificial intelligence back in the 70s.
I developed a computer that basically monitors the entire world.
It writes reports.
It Itself, without any human involvement, on over a thousand instruments around the world.
We're covering basically every country in the world.
The advantage is that it's the same system on a global scale.
Once you understand how the system works, you can pick it up in India, Rwanda, wherever you want to go.
It doesn't matter.
The biggest thing with it is that We can forecast things personally.
Maybe we're right, maybe we're wrong.
We all have different opinions.
I mean, this computer basically has done war amazingly.
I learned back in the 80s, we had a client at the Universal Bank of Lebanon and they had found a ledger in their basement with the Lebanese pound in it and they asked us if we could create a model on it.
I said, sure, send it over.
I put in the data and out came the computer and said the country was going to fall apart in eight days.
I thought there was something wrong with the data.
I called him and said, look, there's something that's got to be wrong.
It says your country is going to fall apart in eight days.
And he said, well, what currency would you recommend?
I said, well, it says the Swiss franc.
And eight days later, the Civil War took place.
The same thing happened.
We had a big shipping client in Saudi Arabia And he calls and he says, what do you think gold's going to do tomorrow?
Iran's going to start attacking shipping in the Gulf tomorrow.
I said, you tell me a war's going to start?
Yeah, yeah, yeah.
What do you think gold's going to do?
So by 98, you know, the computer put out that, you know, Russia was going to fall.
And I did a conference in London and London Financial Times happened to be there and they stuck it on the front page.
They said Armstrong says that Russia is going to collapse in about 30 days.
That was a long-term capital management crisis.
I've come to understand the computer is monitoring absolutely everything.
And just like those guys at Universal Bank of Lebanon, obviously they saw capital moving themselves.
All right?
So they wanted us to do a model.
So when I said your country is going to fall apart in eight days, they weren't shocked.
So then do you do consulting with specific clients where you use your system to help provide answers to them, or is this something that the public can subscribe to your analysis that's based on this system, or how does that work?
I opened it up so that anybody can go in and use it now.
For probably 30 years, it was just institutions only.
So it...
It's been reliable.
It's been quite interesting to watch it and how it forecasts.
And it's not a personal opinion.
So it's not, you know, well, I think this is going to happen.
We can all be right or wrong on a personal basis.
So I think that's the main thrust of what What it is.
Okay.
And just about, at this point, just about every government is tapping into it as well.
Well, I'm going to call it the finance version of chat GPT, then.
That's what I'm going to name it.
You were doing AI before people were even talking about it, so I just want to let people know they can find out more about that at your website, armstrongeconomics.com.
Any final words before we wrap this up, Martin?
Yeah, like that chat...
That just simply goes out to the web and gathers information.
It's not capable of making a forecast.
You can't ask it what the name of Lady Gaga's dog is.
It will forecast what's happening because what it has is all the markets in the world, capital flows, etc.
It's a completely different thing.
It's doing the analysis itself.
I would say that we have to understand that we're in a time of war and the most critical period is going to come up in April, May.
And we've reached the point of really no return on a lot of this.
And as far as war is concerned, the West just is not interested in negotiating anything with Putin.
This is really a climate change war.
They want to destroy Russia because 50% of its GDP is all fossil fuels.
That's a really interesting point.
The climate change war, and you said April, May timeframe, is that when you believe that Russia is likely to launch its expected springtime offensive, or is that a breakthrough time for Russia?
This has been coming up.
I mean, we had these targets two years ago.
So it's not something that's based upon that.
But look, in the...
Security Minister of Ukraine just basically came out and said, of course we're going to use those long-range missiles to attack Moscow.
He was quoted in a German newspaper after telling everybody, no, we would never do that.
You do that, and honestly, Russia has no choice but to nuke Ukraine.
I can tell you from the other side of Russia, Putin is not...
The madman.
There are guys far worse behind him.
And they've been pushing him and pushing him and saying that he's been too soft.
Didn't Medvedev just come out and say that the West will burn if they continue to escalate?
Yes, absolutely.
He's one of them.
You have to understand about Putin.
Putin is a historian and he is nostalgic.
He did not want to conquer Ukraine.
He just tried to do the Donbass.
Too soft.
And everybody has complained that that is the problem.
Kiev is where the Russians began.
That's where the Rus were.
And then the Mongols destroyed it in 1240, and then they re-rose again in Moscow.
So to him, nuking Kiev was kind of like us taking out London.
So he didn't want to do that.
But you have the hardliners that don't care about that.
And you remove Putin and it's going to get much worse.
Alright, I hope you enjoyed that interview, folks.
Remember, Martin Armstrong's website is armstrongeconomics.com and I hope you learned a lot from that interview.
It's just a taste of information yet to come from Mr.
Armstrong.
We'll reach out to him again in a month or two and kind of see if he's got updates or if he wants to come on and sound the alarm on anything important.
He's always analyzing world events and money flows and asset flows, commodities flows around the world.
So I know he's going to have some very insightful analysis to share with us.
So again, sorry about the little audio glitch that we had there, and thank you for your patience.
Thank you for listening, and feel free to share this interview anywhere you'd like.
I'm Mike Adams, brighteon.com, and we interviewed Martin Armstrong, armstrongeconomics.com.
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