meeting Martin Armstrong

Arthur2014
By Arthur2014 on Sat, May 23, 2015 - 11:55pm

Some days ago I had the opportunity  to attend a public discussion with Martin Armstrong after a presentation of the film “The Forecaster” in Germany.

The German producer, Marcus Vetter, and Martin Armstrong attended the opening night of their film in some German cities. After the presentation they met the audience to discuss the film.

 

The focus of the film are the events in the 1990ies leading to Armstrong’s imprisonment. Viewers interested in the functioning of Armstrong’s computer based forecasting model will learn not much. They will find much more on his web blog http://armstrongeconomics.com/ .

 

The film consists of a number of interviews with Martin Armstrong himself, family members (his mother, his daughter), former business partners (Larry Edelson), former employees (Justin Pfeifer. A programmer: Anthony Godin; a former managing director: Barclay Leib;), his former advocates (Neill MacPherson, Thomas Sjoblom), friends (a coin dealer where Armstrong bought gifts for his employees), a librarian of the MCC prison library (Oliver Brown).

The film is categorized as a documentary film. It draws a sympathetic, benevolent picture of Armstrong.

From my perspective it lacks neutrality, impartiality and distance. It doesn’t question Armstrong’s central claims. The end titles mention that the judge (Richard Owen) who sentenced Armstrong, a former attorney of New York and receiver (Alan Cohen) and Tancred Schiavoni declined requests for interviews.

Armstrong said that meanwhile the judge Owen suffers from dementia so that he would probably no longer remember him.

Armstrong’s comment on Schiavoni can be found here: http://armstrongeconomics.com/archives/22534

“Wikipedia has become a political manipulation tool for false information and the fault is the ability for anyone to write about anything. ...

In my own case, I believe Tancred Schiavoni and friends not only kept changing my page on Wikipedia, I believe they kept changing the legal definition of contempt to try to cover up what he and his cohorts did to me. I believe Tancred Schiavoni and friends were desperate to alter the definition of contempt to support the position that the receiver Alan Cohen was hired by Goldman Sachs, the very firm we collected evidence against and became a board member yet refused to resign running Princeton Economics. …”

In general the claims made in the film are oral testimonies. Only the producer Mr. Vetter could tell whether there are litigable written documents backing the claims.

I don’t believe that the interviewees lied intentionally. But I am unable to assess whether they could be wrong or biased for other reasons like witnesses of an accident can be wrong about the colour of a car involved in the accident.

If the producer did independent research work in the background, then it is not present in his film. That is the mildest assessment I can give.

Several relevant documents concerning Armstrong’s process were destroyed by the fire in a building of the World Trade Center in September 2001.

As a European I don’t know anything about the US legal system. May be that Mr. Armstrong’s conviction was a horrible judicial error and judicial scandal. He spent eleven years in two prisons. That time must have been terrible.

In Europe we have a European Court for Human Rights. Apparently, Mr. Armstrong could not go to a US state supreme court. I couldn’t figure out why. The film did not explain.

After watching the film I am as stupid and confused as I was before. The matter is much too complicated for being exposed in a film.

For me the film is rather a portrait or a feature (“It is quite possible to write a feature in the style of a news story, for instance. Nevertheless, features do tend to take a more narrative approach, perhaps using opening paragraphs as scene-setting narrative hooks instead of the delivery of the most important facts.”  http://en.wikipedia.org/wiki/Feature_story  ) than a documentary film.

Martin Armstrong is certainly a very experienced trader, a very good salesman (“The Price per ticket is €2500, which will include special reports that would normally be sold separately for about $1,000. Those attending will also receive the DVD of the session.” for his World Economic Conference in Berlin November 2015 Posted on

May 15,
2015

http://armstrongeconomics.com/archives/date/2015/05/page/6) and a very skillful self promoter. The film is almost entirely from his perspective.  The producer let him and his friends talk. He didn’t ask any (critical) questions.

I am sorry, but I think that the film failed. It did not reach its aim. But it is very good advertising for Mister Armstrong’s business activities. The producer was not equal to the task.

 

Finally, I learned more from reading the following articles:

October 12, 2009 Issue

The Secret Cycle

Is the financier Martin Armstrong a con man, a crank, or a genius?

By Nick Paumgarten

http://www.newyorker.com/magazine/2009/10/12/the-secret-cycle

 

Silver, Buffett & the Hunt Brothers

Friday, 3/28/2014

WHY have there been two major corners of the silver market in recent history? asks Miguel Perez-Santalla at BullionVault.

Vice president of business development for BullionVault from 2012 to 2014

https://www.bullionvault.com/gold-news/silver-buffett-hunts-032820146

 

After the presentation Martin Armstrong gave a talk of about 20 minutes. Almost all he said can be found in his regular contributions in his blog http://armstrongeconomics.com/. Reading it is enlightening.

He explained that the best thing one can do is teaching computers how to analyze. The biggest problem with computer models is that one has not enough historic data.

When he elaborated his cyclical model he bought ancient coins to identify their silver content. Within eight years the Roman Empire turned from silver coins to bronze ones. For Armstrong this indicated the collapse of the empire.

When Caesar crossed the Rubicon there was a debt crisis in the Roman republic. Brutus charged 40% interest on cities. Caesar created the Julian calendar to fix the debt problem.

I found at least one of these claims confirmed in:

Michael Parenti: The Assassination Of Julius Caesar: A People's History Of Ancient Rome

Series: New Press People's History

First Edition, 4th Printing edition (August 30, 2004)

ISBN-10: 1565849426

ISBN-13: 978-1565849426

Parenti writes: “Brutus was a usurer of the worst sort….Having lent money at 48 percent interest (instead of the usual 12 percent, …).” Page 146

“Caesar … eased the desperate straits of a large debtor class by allowing people to repay their debts at lower prewar rates. He imposed usury limits on creditors, … He forbade proscriptions, property confiscation, and fines on debtors. He ordered all interest already paid to be deduced from the principal owed, and canceled the interest due since the beginning of the civil war.” Page 151

It is quite painstaking / operosing to check his assertions / claims.

 

Much of what he said are reminiscences of oral conversations. I can neither confirm them nor falsify them. Armstrong claimed that anybody who competes with the established large investment banks in New York is prosecuted by the State of New York. He mentioned the fall of Drexel Burnham Lambert as an example. Obviously, he sees his own case as a further example.

 

There is a very detailed justification from his perspective on the web:

http://www.themartinarmstrongcase.com/

I don’t know whether he wrote it himself or his advocate.

 

Martin Armstrong’s talk was followed by a vivid question and answer session of about 70 minutes.

The audience in the opening night seemed quite credulous or at least they were very polite. No one asked a critical question. The time was over before it was my turn. I would like to know:

What would falsify the hypothetical model? From a methodological point of view one should always look for falsification, not for confirmation. Confirmation is easy to find from retrospect. One is easily seduced to make ad hoc assumptions to save one’s hypothesis.

The central problem that Mister Armstrong does not take the stance of a scientist. He does not disclose his work for public discussion, because he wants to make money with his forecasts.

Essential methodological questions are unanswered for me:

Armstrong emphasizes the objectivity of his computer based model in contrast to mere opinions but any computer code is written by human programmers whose assumptions, intentions, conjectures, and interpretations flow into their model. The model is not the reality itself.

 

The central remark he made was that the pi-cycle and the whole economic system are fractional. That was exactly what I had supposed to be the most plausible explanation for his finding having read a bit about complex systems and fractals before.

In deed there are examples in nature like the two so called Feigenbaum constants  (http://en.wikipedia.org/wiki/Feigenbaum_constants )

See: Melanie Mitchell: Complexity a Guided Tour; 2009; page 34 - 39

Apparent randomness can derive from very simple deterministic  systems ( Mitchell 2009, page 33). The sensitivity to initial conditions makes long-term prediction impossible. Perfect prediction is impossible not only in practice but also in principle (Mitchell 2009, page 33)

 

 

“Although not a physical constant, π appears routinely in equations describing fundamental principles of the universe” (http://en.wikipedia.org/wiki/Pi#Describing_physical_phenomena )

I think that Armstrong discovered some underlying connection. His conjecture does not seem completely absurd.

Being a so called “irrational number” simply means that the number cannot be represented as the ratio of two integers. It does not mean that it is against or out of human rationality. 

What sounds more questionable and arbitrary to me is multiplying pi with 1,000. 1,000 may be around lot in our decimal system. It is not so in some numerical systems based on other numbers.

Whatever will happen after October the 1st 2015, I expect that he will say that it confirmed his forecast . Otherwise he would spoil his two conferences scheduled for November in Princeton and in Berlin. After October the 1st he will find any indicator / parameter / reference number claiming that this is exactly the parameter he had thought of before. Finding a parameter fitting to one’s forecast is only a question of the size of the database.

 

Martin Armstrong does not only dismiss an anthropogenic (manmade) cause of global warming, but he rejects the hypothesis in general and claims that the temperature  on earth will go down because the sun has a 300 year cycle.

 

Another day I saw the German version of the film in another large city. There were exactly fourteen viewers in the movie theater on a Saturday evening at 06 pm (ticket cost ten respectively nine euros). At this point I have to complement Armstrong’s own impression:

“This film is being shown at near blockbuster levels here in Europe …”

http://armstrongeconomics.com/archives/date/2015/05

 

Best regards

Arthur

9 Comments

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 379
Armstrong and Cycle Theory

Thanks for the information, Arthur. And the composition was excellent.

I find that my opinions about Armstrong largely correlate with yours; namely - he offers some important insights but often aggrandises himself. However, I can look past that so I don't hold it against him.

I haven't seen the film itself, only previews. But my expectation of it is much like you described; he has an axe to grind for a perceived injustice. This was evident from the scenes which are available on preview and the commentary in his blog.

Anyway, on to content. I've just read the Secret Cycle article which you posted above for the first time and found it illuminating. The fact that even Cycle Theory itself exists within a cycle peaked my interest;

Quote:

If it was emerging, it did so haltingly, and then retreated into its hole. They say that, like the length of women’s dresses and the release of new horror films, tolerance of cycle theory increases in down markets. It blossomed in the thirties, enjoyed a revival in the seventies, and is having a quiet renaissance now. (The interval between each revival is about four pi cycles.) We tend to ascribe rising markets and an expanding economy, as long as they last, to our own ingenuity—to progress, experience, rationality, a generational refinement in the ability of economists and central bankers to manage our affairs. Bull markets are seen to be incarnations of human perfectibility. (Home prices would rise forever, because we had invented a new kind of debt, one that didn’t ever have to be repaid.) When things go to pieces, we shirk responsibility and seek other explanations. Fatalism creeps in. It can’t be merely that we are, as ever, greedy, short-sighted creatures, prone to self-delusion, incapable of learning from the past. There must be something, or Something, else at work, beyond our understanding or control.

 Personally, I see Armstrong as a component in a much larger scheme. I think he is essential reading for his analysis into solar cycles, debt cycles, capital flows and the interplay between currencies and commodities. But I'm also interested in what people like Oswald Spengler, Vilfredo Pareto and Nikolai Kondratieff have to say. William Herschel was also the first recorded observer to link solar cycles to wheat prices.

One of my favourite Armstrong quotes taken from the article is;

Quote:

Fair enough. But what creates the energy? What dictates the geometry? “There are going to be people who believe and those who don’t,” Armstrong said. “If it wasn’t that way, you wouldn’t have a cycle.”

It seems to me that Armstrong is simply the modern proponent of this idea, others have come before him and others will come after. If he wants to sound like a martyr in the meantime i don't really care, i like to think that i have the good sense to look past that kind of stuff.

What makes me irate though is that you can still be jailed for contempt in a civilisation that supposedly went through an Enlightenment Period.

Do i have utter contempt for the people who write and enforce laws which only we lower-borns must obey? Absolutely! Does this mean i should rot in a cell? 

Legitimacy only comes through consent. I am slowly withdrawing my consent from the system. What happens when the system no longer requires the facade of legitimacy?

All the best,

Luke

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5459
good summary

Great to hear the summary of your experiences with the movie, and the subsequent Q&A session.

I paid to see his "solutions" broadcast.  To me, it was worth it simply to listen to him run down history and tie everything together.  The man really has tried to model things - I know, because I've tried to do the exact same thing, and have run into the very problem he describes, namely, not enough consistent good data to train my model.

What's more, things change in the middle, sometimes dramatically.

For instance, while the US was on the gold standard through 1972, the long-running "US monetary gold" timeseries was an important indicator of - well, something.  Perhaps its the closest thing to a import/export imbalance indicator - which also happened to drive money supply in the distant past.  Then once the US dropped off the gold standard, that timeseries stopped, and the USDX started up.  And yet DJIA goes from the 1890s to the present.  How do you put them all together?  Martin would understand the issue, but not too many others would.

He's also called the whole deflation thing correctly.  Perhaps only he can properly read the tea leaves output by his model, but his calls look good.  All the stuff he says about what's likely to happen - it all feels right to me.

I'm not sure I buy into PI, but its clear that business cycles are just a part of life.  Steve Keen agrees.  They both depart from mainstream econ guys who believe in equilibrum, and just assume there must be an exogenous shock that causes the economy to turn down each and every time.

I also agree that each instrument has its own cyclic pattern, and there are periods of interference and amplification where they interact.  You can see that in any of the longer term charts, especially around inflation and/or bank credit.  There ARE hidden cycles - pulling them out of each instrument and coming up with the general "song of the world" (with each instrument - each country - making a single tone, modified its interactions with other instruments) would be a really meaningful discovery.

But to get there, you first have to acknowledge that cycles exist, and that they overlap, and so on.

I haven't tried applying PI to my models.  I probably should, but I'm not even sure how to go about doing it.  I probably also don't have enough data.  The longer-running monthly timeseries I have dates back only to 1920.

I'm very willing to believe he was thrown in prison so he would give up his code and/or it would take him out of play so he couldn't interfere with the plans that Mr Global had for 2000-2008.  Catherine Austin Fitts tells a similar tale of woe, only she didn't actually land in prison.  If she's right and there are people who can kill with impunity, having a wild card around like Armstrong that couldn't be controlled would seem to be something that might need fixing.

Honestly, to understand what he's done, I'd have to read his code.  Some of the simple indicators he's talked about in passing have helped my model out a great deal.  Just based on the problems he's run into, and the hints he's dropped that have proved very helpful, I'm willing to believe he has something unique, if only to inspire me to keep searching.

thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1628
Remember Solzhenitsyn's warning about purges

Dave wrote:

I'm very willing to believe he was thrown in prison so he would give up his code and/or it would take him out of play so he couldn't interfere with the plans that Mr Global had for 2000-2008.  Catherine Austin Fitts tells a similar tale of woe, only she didn't actually land in prison.  If she's right and there are people who can kill with impunity, having a wild card around like Armstrong that couldn't be controlled would seem to be something that might need fixing.

I'm hoping that, if Nazi or Stalin or Pol Pot-style roundups and purges are attempted in the US, we will be the first such nation to offer such savage resistance that the oppressors give up, realizing they can't sustain the losses to their personnel long enough to "disappear" all the independent, liberty-minded, critical-thinking people.  I know for sure that Hitler and Stalin did not in the beginning have the loyalty or submission of all the police and military, but they were able to round up most of their suspected enemies by using a very, very small number of sociopathic goons over and over in different locations until nearly all potential resistance was removed.  How different things might have turned out if the goon squads had been met with fierce resistance at nearly every home?  Solzhenitsyn had this thought while in a prison camp in Siberia:

“And how we burned in the camps later, thinking: What would things have been like if every Security operative, when he went out at night to make an arrest, had been uncertain whether he would return alive and had to say good-bye to his family? Or if, during periods of mass arrests, as for example in Leningrad, when they arrested a quarter of the entire city, people had not simply sat there in their lairs, paling with terror at every bang of the downstairs door and at every step on the staircase, but had understood they had nothing left to lose and had boldly set up in the downstairs hall an ambush of half a dozen people with axes, hammers, pokers, or whatever else was at hand?... The Organs would very quickly have suffered a shortage of officers and transport and, notwithstanding all of Stalin's thirst, the cursed machine would have ground to a halt! If...if...We didn't love freedom enough. And even more – we had no awareness of the real situation.... We purely and simply deserved everything that happened afterward.” 

― Aleksandr Solzhenitsyn

Despite all the civic and moral decay in America, I still harbor a little hope that there is still a large enough minority that loves freedom more than life and perceives the situation for what it is/is becoming, and will fight to the death before they are imprisoned in FEMA camps.  I know we have enough guns (unlike the German and Russian people who were first disarmed by their governments in the name of public safety)!  So "they" can kill with impunity, only so long as we don't arm and train ourselves to fight back day or night when they come, and we fight to the death.  We don't individually have to "win."  We just have to extract to high a cost from the goon squads for them to continue.  Some will have to die to stop such a totalitarian movement here before it gets well-established, but that has ALWAYS been the price of freedom. Just ask Patrick Henry.  When he shouted, "Give me liberty or give me death!" the British oppressors eventually gave him death!  But, but, he helped pay for OUR liberty.  If things go that badly here (again), I harbor hope that there are enough of us who prefer liberty over enslavement that we will be able to buy the country's liberty with our blood again. Happy Memorial Day all!!

"Welcome to the Hunger Games.  And may the odds be ever in your favor."

Tom

Arthur2014's picture
Arthur2014
Status: Bronze Member (Offline)
Joined: Jul 17 2014
Posts: 56
forecasting turning points exact to the day

Dear Luke,

 

Thank you very much for kind remarks. I beg your pardon that I couldn’t answer earlier.

 

You wrote:   “This was evident from the scenes which are available on preview”

Armstrong said that the USA and Switzerland are the only Western countries where the film will not be shown. He attributes this to the influence of the large banks in both countries.

As a basic principle one should never attack persons and I didn’t want to do so in my post from May 24th.

I don’t believe that any other producer could have done much better than Marcus Vetter. The stuff is too complicate to be cleared up in a film of 90 minutes.

In a short interview in German Marcus Vetter claimed that Martin Armstrong is a leading game theorist. But Vetter falsely said ”Spieletheorie” instead of “Spieltheorie  (“games theory” instead of “game theory”) If someone doesn’t know the correct expression then I doubt that the person really understands the subject he or she speaks about.

 

Some weeks before the film was launched in Germany, a German weekly business news magazine, Wirtschaftswoche ( http://en.wikipedia.org/wiki/Wirtschaftswoche ) , published an interview with Martin Armstrong.

The magazine has a large circulation of 149,600 copies and reached 910,000 readers in 2010 (so called “Reichweite”):

http://de.wikipedia.org/wiki/Wirtschaftswoche#Auflage

 

the headline was

“The next crash will come on October 17th

( >>Börsen-Prognose "Der nächste Crash kommt am 17. Oktober"<<

http://www.wiwo.de/finanzen/boerse/boersen-prognose-der-naechste-crash-kommt-am-17-oktober/11616664-all.html )

 

But at least since May Armstrong has been communicating October 1st as alleged date of the or respectively of a turning point.

 

As you can see, the magazine has never corrected its headline. Apparently, Armstrong didn’t protest and didn’t demand a typographic correction.

 

His statement in the interview is little bit less precise:

“I expect a crash in October this year because the sovereign debt bubble will burst. Around October the 17 most should have understood that.”

( „Ich erwarte einen Crash im Oktober dieses Jahres, weil dann die Blase an Staatsanleihen platzt. Um den 17. herum sollten die meisten das verstanden haben.“ )

 

When I attended the opening night in the movie theatre other local, regional, and national media had adopted October the 17 as alleged date. Some of the viewers already knew the two conflicting dates. A local journalist introducing Martin Armstrong apologized for the wrong date (October 17th) he had adopted and published. From now on only October 1st was referred to without any discussion.

 

For me this short episode was telling. It somehow illustrated both the credulity of the public and my methodological doubts about Martin Armstrong’s approach.

One might be tempted to ask: If one is so eager to forecast a specific event exact to the day, how can one accept the publication of a false date in a magazine with a large circulation without demanding typographic correction? All one’s reputation seems to depend on that.

 

Martin Armstrong has hedged against falsification.

I expect that on October 1st he will identify a parameter / a variable that is somehow commensurable with a change in trend and he will assert that this was what his prediction was about.
 

The clearest expression of his method / procedure which I found is the following one:

Understanding a New World Order in Economics Is Possible

May 6, 2015

“The next turning point … should not produce a major event to the day this time around because it is not focused in a single market, as we have experienced to date. This time, the concentration of capital in government is the bubble …

The G5 was all about manipulating the dollar… . The actual announcement took place on September 22, 1985 (1985.72). This is the type of turning point we see for 2015.75. Nothing precise took place on that day, besides a noticeable shift in trend. This may have been when the decision was made behind the curtain …”

http://armstrongeconomics.com/archives/date/2015/05

 

His method seems somehow always similar: He talks about shifts and turning points allowing him to fill in whatever he needs after a specific calendar date. In retrospect he will always find a suitable event that fits into his putative / alleged / pretended pi-cycle or into a fraction of pi (half cycle, quarter cycle) because his database of eligible, interpretable events and parameters is large enough.

 

Creating the Bond Bubble – Role of the Stock Market

May 14, 2015

 

“We still see May – July – September as key targets for turning points. Whatever we end up with in September should produce the opposite trend immediately thereafter.”

2015.75 = The Crash in Government

May 26, 2015

“… It seems just using the word “crash” leads people to assume we are talking about another stock market crash. Interestingly, inaccurate reports have said that I have said that were will be a “stock market crash” rather than a “crash in government””

The Money-Debt Paradox

May 27, 2015

“This is why the long-term bonds should have peaked ahead of the short-term going into 2015.75. It is the shift in the yield-curve.”

 

For those who are nevertheless interested in a more extended paper, written by Martin Armstrong while he was imprisoned:

October 10th; 2008

It’s Just Time.

The decline & Fall of the United States?

http://www.contrahour.com/ItsJustTimeMartinArmstrong.pdf

77 pages

 

There is much more I would like to discuss with you all. Of course, I will also answer to davefairtex’s and thc0655’s posts. My next posts will be constructive and positive.

 

Best regards

Arthur

Arthur2014's picture
Arthur2014
Status: Bronze Member (Offline)
Joined: Jul 17 2014
Posts: 56
forecasting turning points

Dear Luke,

 

Thank you very much for kind remarks. I beg your pardon that I couldn’t answer earlier.

 

You wrote:   “This was evident from the scenes which are available on preview”

Armstrong said that the USA and Switzerland are the only Western countries where the film will not be shown. He attributes this to the influence of the large banks in both countries.

As a basic principle one should never attack persons and I didn’t want to do so in my post from May 24th.

I don’t believe that any other producer could have done much better than Marcus Vetter. The stuff is too complicate to be cleared up in a film of 90 minutes.

In a short interview in German Marcus Vetter claimed that Martin Armstrong is a leading game theorist. But Vetter falsely said ”Spieletheorie” instead of “Spieltheorie  (“games theory” instead of “game theory”) If someone doesn’t know the correct expression then I doubt that the person really understands the subject he or she speaks about.

 

Some weeks before the film was launched in Germany, a German weekly business news magazine, Wirtschaftswoche ( http://en.wikipedia.org/wiki/Wirtschaftswoche ) , published an interview with Martin Armstrong.

The magazine has a large circulation of 149,600 copies and reached 910,000 readers in 2010 (so called “Reichweite”):

http://de.wikipedia.org/wiki/Wirtschaftswoche#Auflage

 

the headline was

“The next crash will come on October 17th

( >>Börsen-Prognose "Der nächste Crash kommt am 17. Oktober"<<

http://www.wiwo.de/finanzen/boerse/boersen-prognose-der-naechste-crash-kommt-am-17-oktober/11616664-all.html )

 

But at least since May Armstrong has been communicating October 1st as alleged date of the or respectively of a turning point.

 

As you can see, the magazine has never corrected its headline. Apparently, Armstrong didn’t protest and didn’t demand a typographic correction.

 

His statement in the interview is little bit less precise:

“I expect a crash in October this year because the sovereign debt bubble will burst. Around October the 17 most should have understood that.”

( „Ich erwarte einen Crash im Oktober dieses Jahres, weil dann die Blase an Staatsanleihen platzt. Um den 17. herum sollten die meisten das verstanden haben.“ )

 

When I attended the opening night in the movie theatre other local, regional, and national media had adopted October the 17 as alleged date. Some of the viewers already knew the two conflicting dates. A local journalist introducing Martin Armstrong apologized for the wrong date (October 17th) he had adopted and published. From now on only October 1st was referred to without any discussion.

 

For me this short episode was telling. It somehow illustrated both the credulity of the public and my methodological doubts about Martin Armstrong’s approach.

One might be tempted to ask: If one is so eager to forecast a specific event exact to the day, how can one accept the publication of a false date in a magazine with a large circulation without demanding typographic correction? All one’s reputation seems to depend on that.

 

Martin Armstrong has hedged against falsification.

I expect that on October 1st he will identify a parameter / a variable that is somehow commensurable with a change in trend and he will assert that this was what his prediction was about.
 

The clearest expression of his method / procedure which I found is the following one:

Understanding a New World Order in Economics Is Possible

“The next turning point … should not produce a major event to the day this time around because it is not focused in a single market, as we have experienced to date. This time, the concentration of capital in government is the bubble …

The G5 was all about manipulating the dollar… . The actual announcement took place on September 22, 1985 (1985.72). This is the type of turning point we see for 2015.75. Nothing precise took place on that day, besides a noticeable shift in trend. This may have been when the decision was made behind the curtain …” May 06 2015

http://armstrongeconomics.com/archives/date/2015/05

 

His method seems somehow always similar: He talks about shifts and turning points allowing him to fill in whatever he needs after a specific calendar date. In retrospect he will always find a suitable event that fits into his putative / alleged / pretended pi-cycle or into a fraction of pi (half cycle, quarter cycle) because his database of eligible, interpretable events and parameters is large enough.

 

Creating the Bond Bubble – Role of the Stock Market

“We still see May – July – September as key targets for turning points. Whatever we end up with in September should produce the opposite trend immediately thereafter.”  May 14 2015

2015.75 = The Crash in Government

“… It seems just using the word “crash” leads people to assume we are talking about another stock market crash. Interestingly, inaccurate reports have said that I have said that were will be a “stock market crash” rather than a “crash in government”” May 26 2015

The Money-Debt Paradox

“This is why the long-term bonds should have peaked ahead of the short-term going into 2015.75. It is the shift in the yield-curve.” May 27 2015

 

For those who are nevertheless interested in a more extended paper, written by Martin Armstrong while he was imprisoned:

October 10th; 2008

It’s Just Time.

The decline & Fall of the United States?

http://www.contrahour.com/ItsJustTimeMartinArmstrong.pdf

77 pages

 

There is much more I would like to discuss with you all. Of course, I will also answer to davefairtex’s and thc0655’s posts. My next posts will be constructive and positive.

 

Best regards

Arthur

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Offline)
Joined: Jun 25 2014
Posts: 851
So one might assume...

So one might assume that if the peak of the government assets bubble is 2015.75, and the stock market is going to skyrocket, and yet the powerful will not just give up without a fight, then we are going to see open season declared on the poor.

How might that develop, I wonder? Treaty of Vesailles for Greece?

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 379
Armstrong's Fundamentals

Hi Arthur,

First of all, thank you for the response. I hadn't come across the variation between dates (1st vs 17th Oct) but in fairness to Armstrong I think it was quite bold giving such a precise timeframe anyway. It makes sense to give himself some flexibility, as below;

Arthur2014 wrote:

the headline was

“The next crash will come on October 17th

But at least since May Armstrong has been communicating October 1st as alleged date of the or respectively of a turning point.

For me this short episode was telling. It somehow illustrated both the credulity of the public and my methodological doubts about Martin Armstrong’s approach.

One might be tempted to ask: If one is so eager to forecast a specific event exact to the day, how can one accept the publication of a false date in a magazine with a large circulation without demanding typographic correction? All one’s reputation seems to depend on that.

 

Martin Armstrong has hedged against falsification.

I expect that on October 1st he will identify a parameter / a variable that is somehow commensurable with a change in trend and he will assert that this was what his prediction was about.
 

His method seems somehow always similar: He talks about shifts and turning points allowing him to fill in whatever he needs after a specific calendar date. In retrospect he will always find a suitable event that fits into his putative / alleged / pretended pi-cycle or into a fraction of pi (half cycle, quarter cycle) because his database of eligible, interpretable events and parameters is large enough.

 

No doubt, as you say, he will be able to retrofit an event/turning point to suit his narrative.

Arthur2014 wrote:

For those who are nevertheless interested in a more extended paper, written by Martin Armstrong while he was imprisoned:

October 10th; 2008

It’s Just Time.

The decline & Fall of the United States?

http://www.contrahour.com/ItsJustTimeMartinArmstrong.pdf

77 pages

 

Thank you for the link, I'm currently ploughing through it. Although, like yourself, I'm not convinced by the exact science of his methodology I do believe he has the macro concepts nailed down.

Please consider the following quotes from Armstrong's "It's Just Time";

Quote:

“Confidence has always been the determining factor. If the people trust the state, the flight to quality will run to bonds fleeing the private sector. But if that level of confidence should swing the other way for fear of an abundant supply of bonds, the swing could be violent in the opposite direction toward hyper-inflation. It is the yield-curve that provides clues to the swing between Public and Private confidence.”

“If the confidence swings back to the Private Sector and foreign investors dry-up, the yield-curve steepens exponentially. Suddenly, the market sees $1 trillion in bonds and the yield-curve rises sharply. If Public Confidence collapses, even short-term rates will explode upward. If you believed the Fed could still stimulate the economy by lowering interest rates, think again. Excessive borrowing defeats that premise and runs the risk of exposing the lack of economic control.”

I believe this is why the Fed flirts with the notion of raising interest rates, it needs to maintain confidence to prevent capital from fleeing the Public Sector (bonds) and into the Private Sector (stocks and real estate - dare i say precious metals?). Once that happens then the Fed is powerless to do anything. Maybe the Fed is now holding out for the IMF, through the issuance of the SDR as a reserve currency, to take over the reins but i'm only speculating here.

I also like how clearly Armstrong explains what is going on.

Again, please consider the following;

Quote:

“If people are not concerned about the state going into default, they will sell tangible assets and buy the short-term debt of the state. This becomes self-evident by the yield-curve (short vs long-term interest rates). As capital flees to quality, they will buy the shortest government debt driving the yield-curve into a sharp steep angle. Short-term rates move toward zero, but the long-term rates may remain the same or even rise. What is not commonly understood, is that if the pendulum can swing back toward the Private Confidence that causes the opposite effect – sharp rise in asset values in direct proportion to the decline of purchasing power of the currency.”

Even on its own this kind of economic analysis is worthy of merit. The fact that he gives timeframes is just a bonus. But for me it's all about the fundamentals which I think he understands.

Also, last one, please consider;

Quote:

“The problem with the Keynesian Model, is the same with Marx - it assumes some role as a benevolent dictator exempt from the self-interests that drives the entire economy as explained by Adam Smith (1723-1790) in his Wealth of Nations. Once the theory created a role for the government to justify deficit spending, it became addicted to the drugs.”

That nicely sums up the statist (Keynesian) model - and why, ultimately, it's doomed to fail. If only my friendly central banker would take note...

I'm only about a 1/5th of the way through Armstrong's paper so I'll post more as I go. From my perspective (someone new) I'm finding that it's a fascinating piece and essential reading.

I look forward to hearing from you again.

All the best,

Luke

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5459
good references

Thanks for the references Arthur.  I've read a fair amount of what he's written, but I missed this one.

I've tried applying his 8.6 ECM and the 51.6 ECM to some of my own things.  It does seem to help resolve things somewhat, but its not magic.  Of course, I'm going by hand-drawn pictures and trying to intuit what his equations are from that.  The man doesn't appear to have any good charting packages...sadly...

His 2007 paper hints that picking the starting point for the ECM is key.  No kidding.  I get the sense he does his business cycle ECM peak from the 1929 high and from there its a 51.6 year larger cycle with 8.6 year mini-cycles.

Gold is a 64 year cycle, with a 5.6 year mini-cycle.

http://armstrongeconomics.com/archives/15537

Real estate is a 78 year cycle, with 8.6 year mini-cycles on the upside, and then a very long (likely 2 cycles - 17.2 years) downleg.

http://armstrongeconomics.com/models/7219-2

He also talks about agriculture cycles too, presumably for commodities.

The 8.6 year frequency is fractal in nature and it may indeed work from different dates other than the formal dates we show on the ECM. This is a frequency that is inherent in everything and is fractal in nature. Its proper use is determining the shifts in capital flows to yield the boom bust cycle in the economy (global investment). It is by no means a universal model for every market. Cycle duration in Agriculture tend to be shorter and more volatile because they are also lined up with weather. The markets in financials (stocks & bonds) tend to be the longer than commodities, with the longest cycle duration being real estate.

My sense is, he picks a big high, and a big low, and bang, that's the major cycle.  Might be more than that - but then again, it might not.  I also get the sense he adjusts for inflation, at least for some things.  Perhaps on everything - but he didn't mention it if he does.

He also hints that he runs correlations on basically every time series to see what matches up with what.  Correlation is a pretty useful tool; I used it to good effect to see what matched up with SPX.

I'm guessing he has a massive database, and he cross-correlates everything, orders them as to their inter-correlations, and from there he draws some conclusions.  Hmm.  Just typing this makes me think.  I think I really need more data.

He hints that his computer tells him about strange and surprising things about the world and how things interrelate.  I'd guess that's the correlations at work.  He has set up the thing to run, it grinds away and lets him know the interesting bits that float to the surface.

I would definitely like to know more about how he uses the ECM, and the cycles of each item.  If I got enough hints, I could probably reproduce some parts of it on my own.  I have a lot of data.  Not as old or as complete as his, but - its a fair amount.  I suspect something interesting would probably pop out.

 

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 379
Martin Armstrong on Deflation Implosions

Martin Armstrong on deflation implosions taken from “It’s Just Time”;

Quote:

“In order for the deflationary spiral to unfold, as was the case in the crash of 1929, the currency must be of steady quantity and perceived to be a preservation of capital. During the 1930s, all of Europe was defaulting on its debt. Capital sought then to preserve itself. It was not a question of profit or even yield. During such a time, capital is satisfied with virtually zero return. Raising and lowering interest rates has no real effect. The dollar rose to record highs going into 1932 not to obtain interest rate differentials, for U.S. rates fell to about 1%, but to flee the plain uncertainty in Europe.”

This must give Yellen the frighteners – the Fed will have no control on capital flight towards the dollar when this goes live despite tinkering/jaw-boning interest rate policy.

Quote:

“We must struggle to understand that a Hyper-Inflation outcome involves the sheer collapse in public confidence. How does this happen? The new fiscal year began on October 1st, 2008. We know that last year the amount of new debt coming to the market was about $400 billion. This implies we can expect probably at least $1 trillion. We can expect to sell the bonds making a standard presumption. However, to whom is critical. If the sale were purely to the domestic market, this would become a zero-sum game from a money-supply perspective. Someone with cash, buys the bonds, the cash is recirculated from where it is needed. If we sell the bonds to China, then new cash enters the domestic economy from overseas increasing money supply that stimulates in Keynesian concepts that is more inflationary that [sic] a contracting redistribution.”

And yet, even with China buying US debt, still no wage inflation for the working poor in the US. So what happens to wage inflation expectations now that China has started dumping? Is some other satellite power going to relieve New Rome from this deflationary burden?

Quote:

“Now, we can see in our current monetary system structure, if the contagion spreads around the globe infecting all economies, we can slip into a new Great Depression with nations failing to understand what is going on once again. If debt cannot be sold in the domestic market, rates will rise beased [sic] upon a huge increase in supply. If the confidence in the Public Sector collapses, then dollars would be printed and we can see the mechanism that would lead to a Private Sector of Hyper-Inflation that is the collapse in the value of the currency in purchasing power terms. This becomes the Phase-Transition outcome that physics may call subject to Power Laws. To survive, we must respect that the leverage in the banks is collapsing. That is a money-supply that is imploding when such electronic money is created by the private sector. We must now comprehend the new dynamic structure and interconnectivity of the world economy to even approach the correct solution. We are painted into a corner facing also some $50 trillion coming in unfunded programs for Baby-Boomers. We must monetize in combination with borrowing in a delicate balance. If we borrow everything, we will extract cash needed to stimulate the economy to cover losses by the Bankers. This will place the nation at risk of an economic deflationary implosion.”

Armstrong’s solution to the deflationary implosion involves money printing as well as borrowing. He mentions elsewhere that monetary supply should increase as population increases. Please consider;

Quote:

“We could have printed $6 trillion less since 1986 had we just monetized allowing the money supply to grow in at least the proportion to the population. In 1986, the national debt on a per capita basis stood at $8,774 each whereas in 2006 it was $28,504 (source Bureau of Public Debt). The population has increased from about 226.5 million to 298.4 million in 2006. We have added 72 million making it an increase in total population about 32% for this same period. This means that had the money supply simply been monetized in proportion to the population growth, the national debt would have been about $11,500 per capita or $3.5 trillion instead of $10.2 trillion. If we subtract the interest payments of $6 trillion, we still would have saved $700 billion (10.2 – 6 = 4.2). Borrowing the money seems to be more inflationary than just printing the money in proportion to population growth.”

To me, history seems about to repeat – the Banking elite could head off the coming deflation (asset confiscation) through either a debt jubilee or monetary printing relative to population growth. But instead the working economy will be starved of credit, people will need to cover debts, assets will be sold at knock down prices and then the Banker’s will reflate once they are satisfied that the debt-serfs have been duly punished for their reckless speculation. Madness.

And so if the Fed are as data dependent as they claim to be then where does this fit into the picture?

Debt related suicides and The Ones We've Lost

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