COMMENT: Mr. Armstrong, we by no means met. I used to be launched to Socrates on the insistence of a buddy at one other certainly one of our divisions. There was no 80% Crash on April 29. The entire de-dollarization appears to be one other hype, as we’ve witnessed ourselves. Your system lets you plot something in any forex. I simply need to remark that you’re clearly a extremely skilled dealer, for it takes somebody who has thrown their hat within the ring to truly give you one thing helpful slightly than principle. Plotting the S&P throughout numerous currencies confirms the bull market, as you’ve constantly mentioned. A bull market requires development in all currencies.
I perceive you’ll be doing a Subsequent Era convention to show the subsequent era how the world actually works. I do know our firm has used you for a few years. I’m a current addition. I simply wished to say that you’ve opened my eyes and remodeled my profession into one thing thrilling.
God bless you, Mr. Armstrong, and thanks.
Robert
REPLY: Thanks very a lot. I do know what you imply. When issues are at all times evolving, it retains you in your toes. Lillian Smith put it this fashion:
“If you cease studying, cease listening, cease trying and asking questions, at all times new questions, then it’s time to die.”
My father took the household to Europe for the summer season again in 1964. That taught me forex, for we traveled throughout Europe, and again then, you needed to change currencies at each border. That journey taught me greater than something at school, for not solely did they by no means discuss forex as a result of all the things was at a hard and fast charge, however economics was not even a science. It was all actually Marxism and Keynes projecting that authorities was great, our savior, who would get rid of recessions and depressions, creating the trail to financial utopia.
It was forex that dragged me around the globe and had firms and governments knocking on my door. It has been my purchasers who’ve taught me, not academia. I discovered early on {that a} bull market is one thing that rises in all currencies – not simply your native forex. In case your forex declines by 50%, your non-public property will rise in proportion as a result of all the things has a world worth.
Not solely does classical economics utterly fail to maintain up with the instances, nonetheless entrenched in theories from the mounted change charge interval, the place they NEVER thought of forex, however all the things relies completely on home evaluation, void of worldwide capital flows. Here’s a chart of the well-known 1989 Crash in Japan. Everybody will act out of their very own self-interest, and that’s measured by way of the eyes of their home forex. Notice that the excessive passed off in yen and {dollars} concurrently.
I rapidly realized that what I used to be being taught at school was all lies and propaganda. I needed to learn Galbraith at school and got here throughout Hoover’s Memoirs. It rapidly surfaced that Galbraith was only a socialist who portrayed companies as evil and the federal government as strolling on water. He omitted all the things concerning the Sovereign defaults of Europe, South America, and Asia. The LEFT rewrote historical past to assist Marx. Nothing has modified. Formal schooling is a detriment. The Shah of Iran paid for the schooling of Iranians, despatched them to one of the best universities within the US and UK, they usually returned with a Marxist agenda combined with Islam and staged the Revolution in 1979. It was that very same LEFTIST hatred I noticed at school that has led to the demise of lots of of thousands and thousands and counting.
An actual bull market is one thing rising in a broad basket of currencies. Then and solely then do you see how markets actually reply. This 80% crash is nonsense. To realize that, which is a repeat of 1929, so many issues must be totally different. The US had a balanced price range in 1929. There was a money scarcity as a result of the Fed feared inflation. Over 200 cities issued their very own cash as a result of money scarcity, Milton Friedman identified.
The market went down as a result of the greenback rose to file highs and different nations defaulted on their debt. The Fed was terrified that the greenback could be subsequent on the checklist of currencies to default, and it tried to maintain the provision tight, inflicting deflation.
I had a dialogue concerning the enterprise cycle with Paul Volcker again in 1999. He, too, noticed Keynesian Economics fail in the course of the Nineteen Seventies. He additionally agreed with my Financial Confidence Mannequin and mentioned he believed that the enterprise cycle was about 8 years.
It was Milton Friedman who got here to take heed to me converse, I imagine it was a COMPUTRAC convention in Chicago. I used to be talking about forex and capital flows, and after I was performed, Milton got here up, shook my hand, mentioned that was one of the best speech he had ever heard, and that I used to be doing what he had simply dreamed about. To say I used to be shocked is placing that mildly. I noticed myself as only a dealer.
What Milton meant was that I used to be doing what he had simply dreamed about, as he had seen in his thoughts a floating change in 1953, nearly 20 years earlier than it materialized. In 1953, Milton Friedman printed a seminal essay titled “The Case for Versatile Alternate Charges,” the place he strongly advocated for a system of floating change charges. On the time, the worldwide financial system was dominated by the Bretton Woods framework of mounted change charges. Milton argued that such a “pegged however adjustable” system was inherently unstable. He proposed versatile change charges as a superior resolution, primarily as a result of they might mechanically modify to financial shocks, serving to to take care of each inside (e.g., full employment) and exterior (e.g., steadiness of commerce) balances for a rustic.
Milton’s case for versatile charges was so influential that it presaged almost all the main arguments that later students would make in favor of floating change charges. It was Milton who inspired me and mentioned what I used to be doing was vital not only for buying and selling, however for economics and the political world.
I’m making an attempt to complete these 4 books as my closing reward. That with the subsequent couple of flicks (1), documentary (1), Hollywood movie, I can say mission completed. I’ve at all times believed we’re despatched right here for a function, and if we don’t stare that future sq. within the eyes, then what’s the function of being right here?
