QUESTION: Mr. Armstrong, I realize you do not believe you are influential. However, you began your European tour on April 28th and ever since the bond markets have declined and you said buy gold coins in Stuttgart and Germans are frantically buying gold all of a sudden and the economy has not yet collapsed. This seems to be moving in anticipation of what is to come in October. You have even made the top story on German nightly news of which no analyst has ever done. Do you think you are changing the cycle for it certainly seems if anyone can it must be you given the way you have captured Europe.
CB
ANSWER: Yes, I am aware of the current rush to buy gold in Germany, and perhaps I may have influenced that so far. However, that does not yet change the entire trend. Gold started to decline in Euros before my trip. All I said was, “Yes, you should have gold coins that are familiar for they will be eliminating paper money when the economy turns down.” They need to do this to prevent the collapse of the banking system in Europe, not to mention they are desperate for tax revenue.
True, many people are now dumping government bonds of 5 years or more in duration and are pouring cash into the short-term paper, to that extent negative rates are back to where they were at the peak of crisis in 2009. Nonetheless, this is not about me. If I were not here, it would still happen in this manner. Our computer projected the peak in long-term would be May and short-term would be September/October. This would be the bond bubble and the typical flight to quality that creates such events.
Our conferences are for investors and traders. They are sessions that allow people to come together and learn from one another, seeing the world in a new light. Once you see the connectivity, you can understand the world and see this is not me.
Here is a comment from an attendee who has learned to see the world differently and as a whole:
Marty: The bond markets peaked in line with the arrays from the Princeton Conference. It is truly amazing to watch. While the news is all about Greece, the weakness seems to be coming from Japan given the lack of liquidity in that market. Meanwhile China had a phase transition showing the magnitude of a stock rally due to capital flows. It is truly remarkable. As investors were shut out of real estate, they were pushed into the stock market with the Shanghai stock market up 122% in only 8 months with the break out just a week before the turning in the ECM. SHCOMP has actually doubled in only 6 months? Given its recent rally and short cycle, can the rally continue until the end of the summer to line up with the ECM? I might note it is going up in all currencies. According to Socrates, there is a turning point along with a LT peak this month (May), the directional change is two months out in July. Have you ever seen a phase transition this quick?
I understand that most will try to blame individuals for major events. We discussed in Tubingen that it was not Hitler who altered history, for unless there had been WWI and the reparation payments that even John Maynard Keynes said were wrong in his Economic Consequences of the Peace, there would not have been the opportunity for Hitler to seize power. He did not even have the majority of the vote. So was it Hitler’s personality, or was he just a product of his age and the brain dead oppression that the Allies placed upon the German people? When is it government who creates wars – not the people? People are listening to me ONLY because they know something is wrong and they are seeking answers – that’s all.
So yes, I disagree that I have influence in that manner to alter cycles. I stated from the start of the year that things would be quiet in the markets until May. Everything is unfolding on schedule so far; nothing has changed.
When they were illegally keeping me in prison until I got into the Supreme Court, which forced them to end the contempt to stop them from ruling, the real estate market peaked right to the day in 2007.15. Many people called it Armstrong’s Revenge on the floor that day. So was it coincidence for so many times running, luck or influence? I was not touting anything back then – I was silent. I only began to write again because so many people began writing, asking me to speak out after the model target was to the day, not the least of which were members of Congress.
Yes, the target produced an entropic force that was felt around the world. There was a sharp panic crash that day, even with my silence. But it was a panic that was truly global. The Shiller real estate index peaked that very day which did not exist when I had designed or later published the model back in 1979.
Gold reached a temp high and also crashed on February 27th, 2007. The world share markets reacted on that day – not just the United States. It was truly an entropic moment felt around the world.
People have long blamed me for everything. I have been thrown in prison to shut me up, but that did not work nor stop the model from working. Just maybe, it could be a long shot, but perhaps I discovered something incredibly important – a hidden order lurking behind the chaos that is as important as the Earth is round, rather than flat. As long as people point the finger at me, they will never open their eyes to consider that perhaps there is a hidden order we need to investigate.
If the model is correct, it changes everything. Politicians cannot run for office promising stupid things they cannot influence. We would have to live with the cycle rather than trying to eliminate it as Marx did, or manipulate it as the age of “New Economics” was touted following Keynes. We could not alter the cycle, for this is not me. If we understand that the business cycle is the pulse of the mob rather than the individual, then we can manage our affairs in harmony with the cyclical forces of nature and stop increasing the boom and bust through insane manipulation.
We all have our individual cycles of life. As we grow older, hopefully we learn from our mistakes. We will buy the high, as we become caught up seeing the herd buy, which creates confidence to rush in and buy the high. If you are smart, you will then realize that the herd is always wrong. With experience, you will become the person who sells the high when the others rush in to buy the top. We are hardwired to act as a herd, and some of us (the majority) will never learn. In 1968, the social psychologists Stanley Milgram, Leonard Bickman, and Lawrence Berkowitz decided to test the herd instinct in humans by placing a single person on a street corner and having him look up at an empty sky for sixty seconds. A tiny fraction of the passing pedestrians stopped to see what the guy was looking at, but most just walked past. Next time around, the psychologists put five skyward-looking men on the corner. This time, four times as many people stopped to gaze at the empty sky. When the psychologists put fifteen men on the corner, 45 percent of all passersby stopped, and increasing the cohort of observers yet again made more than 80 per cent of pedestrians tilt their heads and look up.
This Milgram study appears at first glance, to be another demonstration of people’s willingness to conform, however, in fact it illustrated something entirely different. This is the idea of “social proof” whereby people feel they are doing the right thing if that is what the majority is doing. This is at the heart of the boom and bust cycle, that not even eliminating paper money will ever eradicate. This is the tendency to assume that if lots of people are doing something or believe something, then there must be a good reason why. This is an entirely different form of conformity from peer pressure or a fear of punishment by authority. People here reveal the herd instinct that is deep within us all. Looking up at the sky as a group, illustrates people rationally assuming that lots of people wouldn’t be gazing upward if there wasn’t something taking place.
This is the herd instinct that is hard to fight. That’s why the crowd becomes more influential as it becomes bigger: every additional person is proof that something important is happening. When everyone is buying a given market, then it must be correct. This is the governing assumption that controls the business cycle for it is the trend of the majority, not the individual. There is safety and confirmation in the crowd. That becomes the reasonable assumption. After all, if the group usually knows best, then just following the group is a sensible strategy.
It is key to understand that the business cycle functions on this herd mentality and cannot be changed. It is not you, individually, that is compelled to follow a cycle, rather it is the group or herd on a collective basis. The only way to survive this political transformation that seems to come around every 309.6 years or so, is to understand the trend and how this functions so you are not just a follower but a survivor. That is what our World Economic Conference will entail. It is what the computer is saying – not me personally.
