Martin Armstrong: Why The Fed Risks are Nonsense

Posted by Martin Armstrong: Armstrong Economics

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Martin Armstrong’s perspective fascinated so many at last night’s Emergency Gold Summit, as you can tell from this sent to Martin:

Thank you. Your insight into how everything is connected has saved me a fortune. I cannot tell you how many people showed up tonight simply to hear you. As the moderator said, you have the best track record of anyone. Your insight into the world is amazing. I understand what you said tonight as so many were talking about your speech walking out. It will be the markets that force political change. You have thousands of followers here in Vancouver. You should know that.

Thanks for everything you are doing.


Martin’s Answer to R…S,,,

Thank you. It is nice to see the understanding of the world economy is growing. I believe to create political change that will preserve our liberty, it requires the public to grasp the world is all connected. If we can accomplish that, we have a chance at leaving our children and their’s a better life rather than a dismal one. I have been speaking in Vancouver for 30 years. It has always been one of my favorite spots in North America.

An example of Martin’s thinking that he posted in this on his blog last night:

Why The Fed Risks are Nonsense

imagesAll we have heard is about the hyperinflation is all based on the idea that the Fed has increased the money supply. I have warned that the dollar has become the new world currency. The German elections in September are not looking good. Let’s just step back a second and look at the issue without bias. The real risk of the Fed is perhaps a half-trillion loss that is less than 3% of GDP. We have the Bank of England buying nearly 100% at times of government new debt compared to 60% at the Fed. The Fed has simply a theoretical inflation risk. However, what is the risk at the ECB and Bundesbank? The risk there is the collapse of the Eurozone that ends in the split of the union. The whole issue of the ECB saying that depositors will have to bailout the banks is because they cannot reach agreement of who will pay for what. Germany is not about to pay for a bailout of Spanish banks. So the only solution is that the depositors of the troubled bank will have to suffer the loss. That is the “fair” way of doing this with of course those with more than a €100,000 euro will pay most of the cost.

In this case the Bundesbank, that sits on €700 billion of peripheral euro (debt) assets of member states. If these assets were shaved by 30%, the currency devaluation for such assets would be about 5% of the German GDP.  Clearly, the risks of a catastrophic collapse exists in Europe on a major scale. No such risk exists at the Fed.

The Swiss government holds assets of €350 billion in  foreign currency reserves. A 20% franc revaluation to EUR/CHF parity would give them a loss of €70 billion that would amount to 15% of Swiss GDP. The risk for the Swiss is trying to prevent the Swiss from rising against the Euro and that risk in the result of the peg. The Swiss are intentionally buying Euro to keep their currency down. The peg is a loss that could be devastating. They are trying to diversify in turn selling the Euro for other currencies including A$ and C$ along with the US$ of course..

The dollar is the only game in town. If the German elections turn bad, look out come September.

Ed Note: To order the entire Video Presentation of the Emergency Gold Summit including Martin Armstrong’s presentation click below HERE

Mike Campbell: Martin Armstrong has been clear for the last two years that while the market would dictate ultimate price action – the trend remained down. His models warned that gold was not the place to be until late 2015 at the earliest. He has written consistently that the majority of gold analysts don’t understand the factors that move gold. Over the years I have learned to pay attention when Marty speaks.


That’s why personally, I wanted him to answer the questions above and the video includes that Q&A with Marty at the Emergency Gold Summit.