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By Bill
Holter
I
had not planned on penning a public article today but my plans were changed
by Martin Armstrong as he again is busy attempting to rewrite history. He
is again trying to scare people away from their only financial hurricane
insurance, gold ...why? Any thinking person knows a credit disaster is
coming. Heck, even he has called for a pending financial disaster
himself...but gold is not a safe harbor "this time"?
As a reminder of past fallacy, Mr. Armstrong wrote back in September 2015
"…”You are doomed if you cling to the idea that gold will rise simply
because stocks decline. Gold was DEVALUED in 1934 since gold
was MONEY. What it could purchase for $20.67 then cost $35. (this
line has since been deleted from his original article) The government
confiscated gold and moved to a TWO-TIER monetary system
with gold used exclusively for international settlements, not domestic.”
...Martin Armstrong
The fact is, gold was REVALUED 70% higher versus the dollar (and much more
versus other assets) as what previously required $20.67 to purchase one ounce
of gold moved to $35. I said at the time, what he wrote could not have
been a typo or a mistake, his logic was in reverse and he was trying to
rewrite history.
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Fast forward to present, he is at it again. He recently posted "Am
I certain about the strong dollar?" Let's take a look at a few
glaring "alterations" of history and poor logic according to Martin
Armstrong.
His article starts out with "You can denominate oil to peanuts in some
other currency but that still will never put a dent in the dollar. Why? It is
capital flows than count and trade is minimal".
Um not
quite right Martin, and we will save this for the end as it's the main broken
bone to the writing.
He then attacks the Euro. While I do not disagree with his premise that
the Euro is flawed because it is a common currency but consists of members
with different credit ratings and different interest rates. I do
disagree with his historical recollection. Martin tells us "In
general, Europeans are still trapped in World War II thinking that a stronger
currency means economic boom." This is absolutely not so
(please read "The rotten heart of Europe" by Bernard
Connolly). For years prior to the Euro commencing, nation after nation
DEVALUED their currency in order to receive cost benefit for their produced
and traded goods. And besides, hasn't Mario Draghi continually tried to
talk the Euro down and devalue versus other world currencies? World
currencies have been in a race to the bottom, I am not sure what Armstrong is
looking at here.
Then he goes on to say "the Chinese yuan will not replace the dollar
until AFTER 2032". Has he not seen China for at least
the last five years or more readying itself to do its business without using
dollars? Trade deals, credit facilities, bourses and clearing
facilities all being erected to the EXCLUSION of dollars? Does he not
see the rest of the world distancing themselves from the U.S. and following
very closely along with China? Plus, with history as a guide, the $20
trillion current US debt will double twice to $80 trillion by 2032, will the
U.S. even be financially viable by then (is it even viable now)?
He went full circle to what he started with and the most flawed of all;
"Denominating oil in yuan or euro means nothing. Where
will you park your cash?".
And then claims; "The ONLY time we get monetary reform is when
the dollar RISES, not declines. Hey, if the dollar declines, then
interest rates will continue to travel negative, gold will collapse, the
stock market will implode, and Trump will emerge as the best president in
history creating massive new American jobs exporting everything not just blue
jeans, rock & roll, and US corrupt law. Emerging markets can keep borrowing
dollars with no end, dumping commodities that are at excess supply, and
everyone will be perpetually happy – the euro will be strong at last and
magically the ECB can just keep European governments on life support without
end."
First, he is basically saying we will have economic nirvana with a weaker
dollar and only at the expense of the stock market (and gold bulls of
course). A weak dollar sounds wonderful according to him, maybe even
"the answer" to a failed system? Unfortunately there is a thing
called "history" which shows when a currency weakens or even
collapses, stock markets, (gold), and assets in general skyrocket in that
currency ...just look at the results of Weimar, Zimbabwe or even Venezuela,
their stock markets WENT UP in their own local currencies... not down.
If weak currencies (inflation) were such a good thing, why haven't we already
figured this one out and EVERYONE just print and devalue? This has been
tried over and over again throughout time and always ended up with the fiat
currency being busted through over issuance. "Printing"
currency to devalue does not produce prosperity... if it did there would be
no poverty anywhere on the planet. This is historical fact, not
opinion.
As for saying denominating oil in yuan, "means nothing", can he
really believe this? According to Armstrong, "flow" is what
is all important (I must agree), ... and "trade is minimal".
I beg to differ, TRADE is ALL IMPORTANT in today's world and certainly affects
capital flow very significantly "at the margin". If trade and
settlement did not matter to the dollar, then why has the U.S. used its
military for so long to enforce the petrodollar? For that matter, why
was the petrodollar scheme set up in the first place? (It's OK Martin,
you know what happened on Aug. 15, 1971). I bet Saddam and Mohamar
might disagree with Armstrong's take here if they were still living, what you
actually settle oil (and other commodities) DOES MATTER because it affects
"flow", (and ultimately lives!).
I
have a couple last questions. How is it Martin that a weaker dollar
will not bring forth "monetary reform"? I understand your
stronger dollar thesis where foreigners are financially blown up for
borrowing in dollars that increase the difficulty in payoff and service of
their debt. But why would there need to be monetary reform if the
reserve currency was acting like the reserve currency and remained a strong
standard to be compared to and saved in?
How is it, a weaker (or significantly weaker) dollar cannot bring forth
monetary reform? What if the dollar is weaker because less people are
using it ...as they already are today? What if the dollar is weaker
because the Treasury/Federal Reserve balance sheets look like they are
approaching junk bond status ...and foreigners bail out of dollars ...as they
already are? In reality, isn't it the weak dollar itself (and poor
financials of the issuer) that has prompted the rest of the world to seek a
new reserve currency in the first place? They are tired of seeing their
"savings" in dollars depreciate AND don't fancy playing the game of
"never getting paid" ...!
You see Martin, dollars only promise to pay more dollars and
"settlement" is never really made. With gold, because it is
no one else's liability, IS final settlement... (but you already know this of
course). This is just one more difference between a
"currency" and "money" that you seem not to want the
public to understand? I am not sure why this is? You used to be
such a beacon of logic, what happened to it? Where did it go?
One last question, what would John Edelson or Fred Manko say about your
history?
Standing
watch,
Bill
Holter
Holter-Sinclair
collaboration
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