‘aloo tag ai B bat. “the bu cee peas Meahee us public shitemoct. & — Wwrde ro tanler os ti fo pls AL acs Ne Dive oy oo oe Ll Ae Sreis iCaA— UE Debit boefane our tacd th sale aN wW Weshuctho 0c, Lm ~ Xs wonseructine » but fo - i en, Atl weArmstrong Economics * The Dow & The FutureT yould like to thank the many people who have been writing from around the world. If is encouraging fo now that there are so many people who are interested fn uncovering the truth. T have also special thanks for So many providing valuable insight Into trends around fhe world from Chine, Soviet Republics, South Africa, Brasil, Australian, and India, I believe we can survive fhe folly of goveriments even if they refuse to listen. the key 1a understanding the nature of events, and that Allows us to correctly sake the decision “to be on the opposite side, I would like to else thank all ny ola friend and former Giients for their support and to know that they fave continued to gather information that serves us all Sn tines of crisie: io are standing on the precipice of a new era in global sovial-cconosies. How we enter this new age is Sf eritical inportance, Coverntent is Incapable to doing Shything for any reform of its ovn abuse of power tz not Gp igor negotiation, Ne must weather the storm, and todo £8 Ne nocd to underetand its mature. Just aa the 19302 Egeat Doproscion set in motion profound changes that were even manifest in geopolitical confrontations, ve have now Eceched such a crossroads, A debt crisis has its tentacles Sseply embedded into every sector right into governneat. Sh Tet the eistinction fom s mere atock market crack, Chat Grorcloveraged and sone hanks are stsll trying to be hedge Zinds and have to cpeculate to make a profit. that is a key warning sign that the worse is yet to cons. conments, Suggestions £ Questions Conments, Suggestions £ Questtons Please mail to: Martin A. Armstrong Ber Fort pix Camp, #12518-050 Po Box 2000 Fort Dix, NJ 08640 PLEASE REGISTER YOUR IRIE, ADDRESS [FOR FUTURE UPORTED NEWS CRITICAL 40 COR SURVIVAL Arastrongicoocmicoaaiail cm ce Gqeiht Metin A Retiees, all Siches emer Ths fopoct nay be forwarded as yeu Like wittout crexpe to indivisuals at govarments aps ts Grelds fn de peovised oa 4 Rede Sones af this tine uchovt cost because of Ue caiticel facts Tee es hone sconenteetly, Tn canes and designe of the aystons are in fact ex Ara rutues Getty grey ecition af 1986 The Greatest Gi Parkst Tn History ese Sock well sour be published on the macs) Htsalf = Tho Geamicy of Timm Tt Ss Situs heading into a DEPRESSION that is Just a repeat of the pest. Wiuh teach turning point in the global econoay, nothing 1s ever identical. Tt's Like. having children, They are a mixture of DNA between two people. ve can see physical resenblance to one parent over another, and we can see personality traits. But what wo do not see is a perfect carbon copy. ‘When vo look at major turning points‘in the world econemy, there are mmerous key variables all in constant movenont $0 when the event. takes place, we can get a very similar effect as it was in the past, but the mixture of variables dictates ‘tho outcome will NEVER be a carbon copy of the past. We resort to history in order to seo the interaction of the variables, but we must study the effects and track individual fundamentals to comprehend our om posterty and present circumstances. have from the cutest warned that the hhigh in 2007 that took place in the stock market: would not be a and we will see now highs in the immediate ‘ahead, T have also warned Wo are in the throes Of a debt crisis centered (1) in real estate, and (2) government, This will be a vital Conponent in understanding how ‘the stock market can explode even with a economic decline in productivity measuring ‘unemployment and property values for example,| ‘This is what I call a SECTOR SHIFT in the CAPITAL, CONCENTRATION within an econony ‘that drives the entire boonbust cycle in and of itself. In other words, capital vill flow from real estate into things Like gold ‘and stocks. Real Bstate is going to have trouble even in an inflationary expansion because of (1) availability of 30 year money ds going to contract redcing the have a downward pressure on prices, (2) the generational cycle of haby-bocmors’ will be Satural sellers to extract life savings they ‘see as cash but the market sees as increasing ‘the "leverage" in the systen, and (3) a debt. crisis in government that federally contracts ‘the duration of meney available while the state governments continue to resist reform causing taxation to rise relative to value of hanes, Add to this trend a declining dollar, and this will further create a dis-investment’ trend ‘anong foreign capital investors toward USA assets in real estate.‘The inflationary spiral that Lies on ‘the horizon will have its greatest effect in gold and even the stock market. This will have an effect on real estate, but this will bo more of a support mechanism preventing prices fron falling to zero or absurdly low Values such as 30 cents an acre for land in ‘the Great Depression, That took place in the| face of a rising collar for on that cycle tthe USA Was the creditor nation and Burcpe ‘was the debtor. ‘Today, the creditor is China and the USA is hovelessly in debt. with the Variables lined up in this direction, the dollar cannot rise as a safe haven avainst tthe collapee in dabt without war. For you soe, vo must understand the Anterrelationships of all segrents of the econoay in erder to comprehend our future. This 1s vhy FUNDWMENIAL ANALYSIS just will, not work. It is far too domestic in its focus, fails to comprehend external forces ‘that Can overshelm domestic issues, and in ro way contenplates international. valbe that. Aictates whether there will be foreign buy- fers or sellers based upon currency. We can resune all we want that lower interest Fates are bullish, but explain how rates fe11| fron 68 to less than 18 during the Great Depression and the DI Industrials tell by ‘8981 hon you take the fundamental. claims ‘and Line then up with the historical trends, you cone avay with a realization they are Gust hot air with no substance, CAPITAL FLOM ANALYSIS is a name I gave to my observations running around the globe. What you mst understand, is that under a GOD SEAWARD, capital dia not rush around the world as it does today. For capital to flow fron one country tp arcther, it fist was dependent upon trade. There had to be areal advantage to doing business. This was in fact the substance of David Ricardo's (172 1823) CLMPARATIVE ADVANTAGE. If one country could produce sorething cheaper than another then it vas beneficial to import that item and spend one's resources on sonething else. Some, cpital inastal ina foreign land only if it saw a real profit that exceeded What it could make domctically. Today, the FLOATING EICHANGS FATE syston of curroncies has completely altered the way capital now rushes around the world. A local investment an decline by St, but if the currency then rises by 202, the’ foroign investor will now still make 188 cn cumeny with a dmmstic loss, 2 In today's world, capital is rushing ‘around the globe for investment, not just trade, Floating Currency has altered all econanic theories and obliterated most, ‘The World as we once knew is no more, Unless we ‘open our minds and our eyes, we Will go down in flares. This is not my BELIER, for it is based upod my OBSERVATIONS of working around the globe with the movers and shakers of capital. Thare 1s scarcely a capital segnent. have fot worked with from being put on ‘telephone conferences in the middle of an (OPEC meeting to being invited to China. Even when Citibank got into trouble with mortgages after tho SEL Crisis, there was to be a major Global meeting in Asia. All the offices out~ Side of America, wanted me there for this Internal nesting, They even paid in advance, only to have New York reject it for they did rot want to air their dirty launiry inin ‘front of someone from the outside. What the foreign offices could see, New York could not. International capital flows, CRPTIAL FLOWS have évarfed trade flows. 1 fail to comprehend how universities still © mot teach anything on this subject. This is the real 1ife-blood of the global economy today, yot acadanics and politicians are still operating of ideas that date back to ancient Gays of the COLD STANDARD. ‘When I vas invited to fly to China in the aftermath of the Asian Gurrency Crisis and met with the Central Bank, T found the experience enlightening. when'r sat down, was apprehensive at first. ‘Trying to explain global trends to bureaucrats is a delicate Problen. For example, the board of a myjor Australia mining company effectively ordered its chief financial officer to mot with me for be lost a ton of money on edging. In trying to discuss the problen, he vould just reply that parhaps there vas fo cycle and any correct forecast was just coincidence. When T say he vere getting nowhere, I had roticed ‘there vas a dynamic quality to his thought. 1 asked him what vas his background? He got real defensive, and suddenly admitted he wont to ‘school and became a nuclear physicist. He now thought I would belittle him for net being ‘trained in economics. T said great! T told hhim now lat us discuss the market fron the 2nd Law of Thernodynanics, He looked at me and his eyes shoved he was startled. He now responded. "My God, There has to be a cycle!" T said yes and said T never mat a CFO with only a degree in econonics.