Martin Armstrong is the founder of Princeton Economics and developer of the cycles-based Economic Confidence Model, which has been cited by numerous publications for pinpointing major turning points in the market.
In a recent conversation with Financial Sense Newshour, he explains how MF Global here in the U.S., not Cyprus, was the first example of confiscating funds to bailout creditors:
The next time the banks need money they’re not going to get it. What they’re going to do is allow them to take the money from the depositors. Now this—Cyprus—wasn’t the first. The first was actually MF Global. The law is that your money deposited at a brokerage house is supposed to be segregated from the house. If the house loses money, your money is not supposed to legally be taken, under CFTC regs, to satisfy the creditors of the brokerage house. What happened to that? They just stole everybody’s money… So, MF Global was actually your first Cyprus. That was the first test. Let’s just take the money of the depositors. They got away with it there. Cyprus—they’ve gotten away with it there, and next, when this economy begins to turn down in 2016, that’s what you’re going to see.
On whether this is part of a big plan or conspiracy he says:
There’s no long-term planning. I know a lot of people like conspiracy theories and say, you know, it’s the Rothschilds and all that. Nobody’s planning this. It’s much worse. It’s completely ad hoc. They’re going by the seat of their pants.
On why quantitative easing hasn’t worked to stimulate the American economy or create U.S. jobs:
They’re working under theories that are 50 years old. They take it as if it’s official. Okay, fine, if I buy 30 year bonds, I’m therefore putting money into the system and it should be inflationary… Wasn’t inflationary! Why? Because the economy is porous. You’re assuming that you’re buying these 30 year bonds and an American is selling them to you. What happened? China said, ‘Gee, thank you very much.’ They sold all their long-term stuff and lowered their maturity on U.S. bond holdings to under 5 years. They said, ‘Thank you very much.’ So all the money went right out the back door; it didn’t stimulate anything! They did it again. I said, ‘Listen it’s not going to work.’ Finally QE3 comes: ‘Oh, okay, now we understand. We can’t actually guarantee that an American is going to get the money.’ You’re right! So, what do they do? They try mortgages, and what happens? All their doing is bailing out the banks!
On a downside target for gold:
It’s basically a short-term move. We’re probably going to see lower prices. You might get down to about $1150 or so. But this is a normal correction process. I mean we went up for 13 years! You have to at least pullback a little bit and...probably the biggest short position in history happens to be the dollar.
In the rest of this interview airing Friday, Martin discusses the government’s move toward pension plans, why a gold standard will never be implemented, along with many other forecasts.
To have access to this full interview or any of our other expert interviews, CLICK HERE to subscribe.
For a list of previous podcasts and guests, CLICK HERE to see our archive.