Martin Armstrong Warns Politicians Are Creating The Worst Economic Crash In History

Politicians have totally and completely misunderstood the trends within the global economy and as a result, they are actually creating one of the worst economic debacles in history.

I have explained several times that the bulk of investment capital is tied up in two primary sectors – (1) government bonds and (2) real estate. Because of income taxes, real estate has offered a way to make money in capital gains without having to pay income taxes.

Money has looked to park in real estate around the world for many various different reasons as in Italy it was the escape from inheritance taxes as well as banks or in Vancouver to gain a foothold for residency fleeing Hong Kong. In Australia, there was the Super Annuation Fund which allowed people to use retirement funds for real estate.

People spend more when they believe that they have big profits in their home.

The recession of 2007-2010 was so bad, recording the worst of all declines since the Great Depression, all BECAUSE it undermined the real estate values. People then spent less because they viewed their home declined in value.

As taxes have been rising and the average home value collapsed, the velocity of money kept declining. Especially as real estate values declined and interest on savings accounts vanished hurting the elderly who saved money for retirement and discovered their savings were producing less income, the velocity of money just plummeted.

The velocity of money began to turn up finally in the USA ONLY when interest rates began to rise. The retired could suddenly begin to make something on the savings for once in a very long time. This is something the ECB still has not figured out in Europe as it has wiped out both the elderly savings along with pension funds.

Nonetheless, politicians have gone nuts imposing all sorts of regulations to outright making it a criminal act for a foreigner to buy property.

In New Zealand, the new government wanted to declare foreign investment just illegal and in Australia, they made it a criminal act for a foreigner to own property and not inform the government they were foreigners. Over in London, they imposed taxes on property which created a crash.

But, the USA targeted only New York and Miami requiring that title companies pierce corporate veils to discover who was really behind what.

They did not impose taxes only on foreigners nor did they outlaw foreign ownership of property. This is also why the high-end market recovered, just not the average home on the street.

What they are clueless about is this attack on the real estate market viewing foreign buyers as evil, is undermining real estate as a whole and that is what creates the worst economic decline in history.

This undermines the banking system that has used real estate as collateral for mortgages and it undermines consumer spending because people save more when their property declines.

The politicians are actually creating the worst possible scenario for the economy going forward.

Welcome to the new face of stupidity. They are so out there that it is like they are sitting on a branch of a tree and cutting the branch expecting the tree to fall. This is what they have done to real estate which makes even what Goldman Sachs did in 2007 child’s play.

Now add government borrowing which competes against the private sector and it only gets even more stupid.  Then we have brain-dead investors who actually think government debt is “quality” issued by idiots who have ZERO intentions of ever paying off their debt at any point in the future. Governments borrow year after year with no understanding what they are doing to the entire economy and how they are causing unemployment to rise with ever more taxes and more borrowing completing with the private sector on every level.

Then society elects people with absolutely ZERO business experience who in turn appoint academics who have wonderful theories that have never proven to have worked even once! And people wonder why I say they will never listen to prevent a crisis so we have no choice but wait for the Crash & Burn.

Authored by Martin Armstrong via ArmstrongEconomics.com

Ron Paul Is Warning That A 50% Stock Market Decline Is Coming – And That There Is No Way To Stop It

Is Ron Paul about to be proven right once again?  For a very long time, Ron Paul has been one of my political heroes.  His willingness to stand up for true constitutional values and to keep saying “no” to the Washington establishment over and over again won the hearts of millions of American voters, and I wish that there had been enough of us to send him to the White House either in 2008 or in 2012.  To this day, I still wish that we could make his classic work entitled “End The Fed” required reading in every high school classroom in America.  He was one of the few members of Congress that actually understood economics, and it is very sad that he has now retired from politics.  With the enormous mess that Washington D.C. has become, we sure could use a lot more statesmen like him right now.

But even though he has retired from politics, Ron Paul is still speaking out about the most important issues of the day.  And what he recently told CNBC is extremely ominous.

The following comes from a CNBC article entitled “Ron Paul: US is barreling towards a stock market drop of 50% or more, and there’s no way to prevent it”…

According to the former Republican Congressman from Texas, the recent jump in Treasury bond yields suggest the U.S. is barreling towards a potential recession and market meltdown at a faster and faster pace.

And, he sees no way to prevent it.

Of course lots of such predictions are flying around these days.

In fact, at this point even the IMF is warning of a “second Great Depression”.

So when it actually takes place it won’t be much of a surprise.  However, I do believe that many will be surprised by the ferocity of the coming crash.  According to Ron Paul, stock prices could end up falling by up to 50 percent…

Paul is a vocal Libertarian known for an ardent grassroots fanbase that propelled him to multiple presidential runs, as well as his grim warnings about the economy. Yet he has been warning investors for years that an epic drop of 50 percent or more will eventually hit the stock market. He predicted the February correction, but not in size and scope.

Actually, stock prices need to fall by at least 50 percent in order for stock valuations to get close to their long-term averages.

In the end, if stocks only fall by 50 percent we will be extremely fortunate.  Stock valuations always, always, always return to their long-term averages eventually, and usually they fall below those averages during a period of adjustment.

And the mood on Wall Street has definitely changed.  The euphoria that we once witnessed is now gone, and instead it has been replaced by a gnawing sense that a really big downturn is coming.  In his most recent piece, John Hussman compared it to the fading out of a pop song…

In recent days, the combination of extreme valuations and unfavorable market internals has been joined by acute dispersion in daily trading data that often occurs within a few days of pre-collapse peaks in the market. My opinion is that the music has already quietly faded out like the end of a pop song, in a wholly uneventful way, and that even a surprise push to further highs would be marginal.

And he concluded his most recent piece with this very chilling statement…

For now, and until market conditions shift, there’s an open trap door under the equity market, and it’s a very long way down.

The end of last week was very bad for the markets, and so Monday and Tuesday will be key.

If stock prices continue to fall, this could be the beginning of a race for the exits.

But if stock prices rebound a bit, it means that we could have some more time.

And keep an eye on junk bonds.  They crashed really hard just before the financial crisis of 2008, and they are starting to slip here in October 2018.

A full-blown junk bond panic would definitely be a very clear sign that a major market crash is imminent.

As I write this, all of the markets in Asia are down.  Chinese stocks have fallen almost 3 percent, and that is very troubling news.

But whether a massive crisis erupts right now or not, the truth is that there is no way that we are going to avoid the consequences of our actions.

At this moment we are in the terminal phase of the biggest debt bubble in human history.  In fact, total indebtedness in the United States has increased by more than 2 trillion dollars over the past 12 months…

In total, indebtedness of consumers, corporations, and all governments has grown by $2.04 trillion over the past four quarters. And they’re going to be paying higher interest rates on this ballooning debt. In other words, debt service costs are going to rise substantially.

All of this debt has fueled a short-term bubble of relative “prosperity”, but meanwhile all of our long-term problems just continue to get worse.

There is no possible way that our debt bubble can continue to grow much faster than the overall economy indefinitely.  In fact, we have already been defying the laws of economics for way too long.

Eventually all debt bubbles burst, and when this one bursts we are going to experience economic pain on a scale that America has never seen before.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

The Last Days Warrior Summit is the premier online event of 2018 for Christians, Conservatives and Patriots.  It is a premium-members only international event that will empower and equip you with the knowledge and tools that you need as global events begin to escalate dramatically.  The speaker list includes Michael Snyder, Mike Adams, Dave Daubenmire, Ray Gano, Dr. Daniel Daves, Gary Kah, Justus Knight, Doug Krieger, Lyn Leahz, Laura Maxwell and many more. Full summit access will begin on October 25th, and if you would like to register for this unprecedented event you can do so right here.

As The Economic Collapse Gets Closer The Worst From Government Is Yet To Come

“The controls by governments will become increasingly draconian…We should be braced for the likelihood that the worst controls are yet to be revealed…”

by Jeff Thomas via International Man

Years ago, when visiting the US, I’d often watch late night television. Just prior to each interval, in order to ensure that viewers would sit through the adverts, the show would run a panel that said, “More to Come.”

This, of course, was effective, as the viewer would be anticipating that the best part of the programme would come in a later segment. He would then be more likely to continue watching.

Today, we’re looking at the reverse of that situation. The programme we’re watching is The Decline and Fall of the American Empire and those who recognize the decline are viewing with ever-increasing trepidation the developments that are unfolding there. Even those of us who are not American and don’t live there are glued to our screens, as we’re aware that we’re viewing the early stages of a collapse that promises to be the greatest social, political, and economic event that we’re likely to see in our lifetimes.

Following World War Two, the US was in a boom beyond anything the world had ever seen. The Americans came to the war late, after having built up their manufacturing capacity for war dramatically, at the expense of the Allied powers in Europe. And they achieved this, essentially for free. It was paid for with the gold from the vaults of the European allies. After the war, Europe was trashed, and it would take decades for them to get on their feet again. Meanwhile, the US had been going flat-out in production, had first-rate modern factories, and, most importantly, held the majority of the world’s gold.

The 1944 Bretton Woods Agreement ensured that the US dollar would become the world’s default currency and would later become the petrodollar, ensuring American hegemony over much of the rest of the world.

There can be no doubt that, in the first decades after the war, the US had an amazing run and was, arguably, one of the best places to live in the world.

But, unfortunately, as so often happens, American political and industry leaders became full of themselves and couldn’t resist going out on a limb to gain even more for themselves. In so doing, they turned the US from the world’s foremost creditor nation into the world’s foremost debtor nation. Worse, when they reached this unprecedented point, they opted to just keep going.

Worse still, it would appear that today’s leaders are aware that the mother of all bubbles that they’ve created is going to pop sometime in the near future, as they’re preparing themselves for the mother of all pushbacks from the populace when the crashes come.

The FBI, CIA, NSA, and a host of other authorities have either been created or expanded, allowing the creation of the world’s foremost police state. And, beginning in 2001 with the Patriot Act, they have created a host of laws to assign authority to any of those bodies to exert ever-increasing control over the population. Capital controls, migration controls, higher taxes, confiscation of deposits in banks, and quite a bit more have been passed in legislation, including the ability to declare the US in its entirety to be a “battle zone,” through which habeas corpus and the court system can be suspended nationally.

Yipes. (Or blimey, depending on where you’re from.)

At this point, any American who’s paying attention could be forgiven if he’s genuinely frightened as to where his government is going with all this.

And so, we come back to the title of this essay—“More to Come.”

A regular flow of proposed laws is now coming down the pipeline that would have been considered the stuff of a bad movie a few decades ago, but is now only too real and  threatening to the freedoms of the average citizen.

Instead of “more to come” meaning that the best is still on the way, the opposite would appear to be the case.

“But how can this be?” we ask ourselves. Surely those in power—the politicians, the industrialists, the central bankers, etc.—must see this coming, and, if that’s so, surely they’ll do something to stop it.

Well, historically, that’s never been the case. Those in the greatest positions of power have never suddenly reversed an empire when it was about to self-destruct. What they tend to do instead is to guard against becoming casualties of the disaster they’ve created.

So, is that what’s happening this time around? In a word, yes.

The Bernie Madoffs of the world go to jail. However, those who commit the same fraudulent acts from within the system never go to jail. For example, if the heads of a bank commit massive fraud, the bank pays an enormous fine. The fine is then paid by the stockholders. And should the fine be large enough to crash the bank, the bankers can appeal to the government to bail them out, as they’re “too big to fail.” Thus, the taxpayers pick up the bill. Therefore, the more damage the bankers do, the more they prosper.

At this point, what we’re witnessing is an era in which laws are regularly being passed to ensure that the creators of the bubble will have a “Get Out of Jail Free” card and others will sustain the losses.

This is the very essence of what happens in an endgame run. Just as a hitman who places a bomb in a building makes his exit before the bomb can go off, the creators of bubbles safeguard themselves before the economic bomb can go off. They have no intention of being around to live with the resultant devastation that they’ve put into play.

Pete Townshend wrote, prophetically, “Won’t Get Fooled Again” in 1971, in which he hoped that the latest gang of leaders would be better than the last. In the final line of the song, he grimly announces, “Meet the new boss—same as the old boss.”

And, in fact, this is the usual outcome. Perhaps the reason why empires collapse much in the same way, time and again, and their citizens consistently fail to see it coming, is that empires general last a long time before collapsing. The Venetian Republic lasted over 1,000 years. The Spanish Empire lasted just under 500 years. Holland lasted 130 years; Russia, almost 200; the UK, by some estimates, about 300.

And it’s been much the same for the others. In every case, they last longer than a single lifetime, so it’s rare that any individual sees more than one empire collapse in his own lifetime and doesn’t understand that empires don’t end with a whimper. They end with a crescendo, not unlike The Who’s “Won’t Get Fooled Again.”

We will be witness to the collapse of the world’s foremost empire. This is not mere conjecture. The US has all the symptoms that historically precede a collapse, and we’re now coming close to the final stages.

And, if history plays out yet again, as it has repeatedly, we can expect that, in the lead-up to the collapse, the controls by governments will become increasingly draconian. As we consider “more to come,” we should be braced for the likelihood that the worst controls are yet to be revealed.