Martin Armstrong Warns Of The Coming Crash Of All Crashes

Tyler Durden's picture

Submitted by Martin Armstrong via Armstrong Economics,

Why are governments rushing to eliminate cash?

During previous recoveries following the recessionary declines, the central banks were able to build up their credibility and ammunition so to speak by raising interest rates during the recovery. This time, ever since we began moving toward Transactional Banking with the repeal of Glass Steagall in 1999, banks have looked at profits rather than their role within the economic landscape.

They shifted to structuring products and no longer was there any relationship with the client. This reduced capital formation for it has been followed by rising unemployment among the youth and/or their inability to find jobs within their fields of study. The VELOCITY of money peaked with our Economic Confidence Model 1998.55 turning point from which we warned of the pending crash in Russia.

 

The damage inflicted with the collapse of Russia and the implosion of Long-Term Capital Management in the end of 1998, has demonstrated that the VELOCITY of money has continued to decline.

Long-Term Capital Managment

 

There has been no long-term recovery. This current mild recovery in the USA has been shallow at best and as the rest of the world declines still from the 2007.15 high with a target low in 2020, the Federal Reserve has been unable to raise interest rates sufficiently to demonstrate any recovery for the spreads at the banks between bid and ask for money is also at historical highs. Banks will give secured car loans at around 4% while their cost of funds is really 0%. This is the widest spread between bid and ask since the Panic of 1899.

We face a frightening collapse in the VELOCITY of money and all this talk of eliminating cash is in part due to the rising hoarding of cash by households both in the USA and Europe.

This is a major problem for the central banks have also lost control of the ability to stimulate anything.The loss of traditional stimulus ability by the central banks is now threatening the nationalization of banks be it directly, or indirectly.

We face a cliff that government refuses to acknowledge and their solution will be to grab more power – never reform.

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TomB's picture

He's bullish about the stock market though.

Shocker's picture

Throwing all this money at the problem, and still no fix

Economic Job Situation: http://www.dailyjobcuts.com

.

SRSrocco's picture

Martin is very clever about the markets.  However, he doesn't believe in PEAK OIL.  I find that quite interesting.  Anyhow, I believe the peak and decline of the U.S. Bakken & Eagle Ford Shale oil fields will signal the collapse of the U.S. Economy:

Peak Of Bakken Oil Production Will Signal The Collapse Of The U.S. Economy

http://srsroccoreport.com/peak-of-bakken-oil-production-signals-collapse-of-u-s-economy/peak-of-bakken-oil-production-signals-collapse-of-u-s-economy/

strannick's picture

This is 1933 all over.

Hoard cash, in anticipation of another Rooseveltian devaluation.

 

chumbawamba's picture

...all this talk of eliminating cash is in part due to the rising hoarding of cash by households both in the USA and Europe.

Oh, really, Martin?  I could've swore that in one of your many recent other articles you said American households are broke.  So now they're hoarding cash?  But consistency in argument matters no to a little troll.

I am Chumbawamba.

Captain Debtcrash's picture
Captain Debtcrash (not verified) chumbawamba May 16, 2015 12:33 PM

I'm pretty sure what he meant was what money Americans and Europeans do have they are attempting to remove from the banking system by going to cash.  There is no inconsistency in saying Americans and Europeans have less money but what they do have they are removing from banks and going to cash.

 

 

Though this is the result of low interest rates and a loss of trust the calls to ban cash really are just a necessity to be able to do what the banks really want to do...implement negative rates. 

Citxmech's picture

Well shit.  Nothing "stimulates spending" like hyper-inflation either.  The overnight devaluation of any cash holdings is quite a motivator, right?  Maybe that's part of the plan at some point too?

<sarc - sort of, it think. . .>

Haus-Targaryen's picture

They will come for the cash first -- and then for the Ag and au.

Plan accordingly.

Captain Debtcrash's picture
Captain Debtcrash (not verified) Haus-Targaryen May 16, 2015 1:02 PM

Sounds about right.

mvsjcl's picture

Maybe it isn't so much the hoarding of cash as it is the distrust of banks.

philipat's picture

TPTB were never behind the curve because they ARE the curve. Isn't the explanation simply that CB's CAN'T impose negative interest rates and bail-ins on "Folks" if "Folks" can take their money out of Banks as cash in response to (or avoid) such further repression? In this sense, the (now semmingly) coordonated calls for a cashless society are more in anticipation of what they know is coming, not something which has already happened.

Either way, I agree that it is a desperate final power grab. And one which should be opposed just as desperately.

Incidentally, if it happens first in the US, it will be VERY bearish for the USD because all of that "grey" economy will now have to be funded in other money, probably real money= Gold because the criminals are not stupid, which will put further downward pressure on the Pig. This is an inevitable, and in macro terms, desirable consequence of too much debt and a much weaker dollar will allow the US to start catually manufacturing and exporting actual things again. So this might also be part of the reasoning of the "Elites".

This trend will, however, be offset as the Chinese take control of the price of physical Gold and allow its price to start rising in Yuan terms, because China will soon already possess most of the Gold. At that point, the paper marets in London and New York will have to allow the paper prices in USD to follow higher to allow the depreciation of the USD to continue. If not, the USD will again de facto begin to strengthen again (CNY via Gold = USD), which the Chinese want to maintain their export game and stop the US taking it all away. In this way, they can indirectly eliminate the USD peg without allowing the CNY to appreciate away their export advantage.

It's actually the Chinese (And Russians) who hold all the cards. It should get quite interesting quite soon........

Keyser's picture

If these asshats think they can restrict cash on a global basis, they are more ignorant than even I feared... 2/3 of the world is on a cash basis... How do they plan on implementing these types of controls on those economies? 

hamstercheese's picture

I read it, don't agree.  Reminds me of when the VCR starting hitting retail shelves and the prediction movie theaters would close.  Didn't happen - we are a hearding culture, we like to

socialize, to shop, to people watch, to get out once in a while.  Many good conversations are held at grocery stores, retail stores, etc.   And most of the transactions there are already cashless.

...

Why do people keep making paranoid predictions?  I don't think I've ever heard a prediction that was of good news, and good things keep happening.  Why?

sheikurbootie's picture

hamster, you need to travel a bit more.  Do you know any poor people in Merica?  Nearly all of the them DO NOT even have a checking account.  Those that do only use it to cash their meager check , not deposit.  What about the remaining 80% of the world's population?  They're surviving on a couple of thousand a year.  I met a family (beautiful daughter) in Panama while I was on assignment.  She told me that she lived with her family on the beach.  It sounded awesome,  until I visited and saw the "beach house" was a thatch shack with a sand floor.  The family's hut stored a years worth of rice in a open pile in the middle of the floor.  The shack only had one room.  The daughter was beautiful, but I couldn't handle the situation at the time (21).

FredFlintstone's picture

88% of US households had a checking account in 2013. If you believe government reports.

DutchR's picture

Damn, sounds you left a part of your soul there,

 

Crash Of All Crashes  Meh, just the tale of our times.....

hamstercheese's picture

Your response has NOTHING to do with my post, and everything about you wanting to voice an experience and make someone else feel bad.  I was responding to a blog link about how retail outlets will become ghost towns - I wasn't talking about cashless systems or thatch houses in Panama.

Squid-puppets a-go-go's picture

indeed. banning cash will further collapse the velocity of money. Its like coming up to an underpoerforming race horse, shooting it in the head and saying 'run faster you idiot!'

sheikurbootie's picture

Exactly Keyser, except from my travels it's nearer to 80% of the world lives in poverty.  Those same numbers reflect a cash society.  If the CB's ban cash, the poor resort to barter.  I'm ready and waiting for the crash!  Hurry the fuck up!  This economic death knell is killing me.  Business just keeps slowing and slowing.

spinone's picture

No one wants to be the next one who is Corzined

Headbanger's picture

This article means what I said here some time ago that the Federal Reserve is only out to protect its own ass now cause they KNOW the economy is fucked.

Creepy A. Cracker's picture

Date please?  Any thinking person knows that a crash will occur, as history is replete with them and they happen regularly.  When will it happen?  Articles claiming that a crash will happen are dog-bites-man articles.

Headbanger's picture

Oh please.  Does the exact date really matter when the results will be so devastating and long lasting?

And THERE IS NO PLAN YOU MOOKS!

It's just all going to fall apart soon.

Waylon Bits's picture
Waylon Bits (not verified) Headbanger May 16, 2015 1:17 PM

Waylon Bits is also predicting the crash of all crashes!

So if you think we're going back to 1900 (and staying there) buy bullets, beans and gold.

If you think we're going back to 1900 and progressing again (as humans are wont to do) buy bullets, beans, gold and Bitcoin!

 

https://btc-e.com

 

DutchR's picture

1900 hundred and bitcion, really?

 

If you don't hold it you don't have it, period.

 

Tampons are the new gold

Headbanger's picture

To follow up on my rant above:

The Federal Reserve will go into full defensive mode soon to save itself resulting in complete economic collapse.

Which forces the Federal Government to issue "Treasury Notes" to increase liquidity.

This move might also result in making possession of gold illegal again to have further backing of these new Treasury Notes

These actions will ultimately result in recognizing the Federal Reserve is not only useless but is the cause of the financial cataclysm and it will then be abolished.

So there's your Plan B!

Stacking TP, soap, shampoo, deoderant, Kotex and ammo for currency..

And watching "Book of Eli" again. 

usednabused's picture

Well yes, banning gold for sure, but...only for the lowest 99% of the economic ladder. In other words just turn it over to wall street.

JustUsChickensHere's picture

If this 'anti-cash' movement does eventuate, it just makes Gold, Silver AND Bitcoin more attactive (they all have a zero interest lower bound - and Bitcoinn is more portable, private and has lower storage/security costs)

Anyone carefully managing a diverisfied portfolio likely to increase the percentages alllocated to each one.  (That is physical PM's of course, and Bitcoin itself not an ETF or similar)

Counterpunch's picture
Counterpunch (not verified) Waylon Bits May 17, 2015 3:44 AM

Nonsense. Sell any bitcoin you have when it starts going up swiftly.

TruthBeforeAll's picture

Bitcoin requires permissions to use. No thank you.

LikeyMikey's picture

How does bitcoin work when it is turned off by the FCC and other regulatory agencies or it is outrite banned due to the danger to National Defense?

 

Hmmmmm??   If you do not physically hold it then you don't own it!!

JoWazzoo's picture

Well, I want the date so I can buy some Puts without losing more money.

Arnold's picture

 

 

 

November 2012.

That was the end of it.

Plan accordingly.

stant's picture

Just have some resource available that fit your situation for where you live, if you think you can stay there

TheGreatRecovery's picture

This is what trend-following is good for.  When the trend changes, you sell.  You don't need to know a date in advance.  Martin Armstrong, of course, does work by dates. but I don't have his brain power.

Captain Debtcrash's picture
Captain Debtcrash (not verified) Headbanger May 16, 2015 1:14 PM

Head banger, that is why I have my own site, with my own posts.  I use it as a journal, and if anyone questions when I made certain calls its all right there.  We are living through a fascinating times, it will be nice to have a record. 

 

takeaction's picture

I have to say this...I first thought your site was going to be some "Make $9500 a month from home site.."  I have to say...Very well done sir.  Your site is great.  Thanks.

Captain Debtcrash's picture
Captain Debtcrash (not verified) takeaction May 17, 2015 5:06 AM

Thanks, I appreciate it.  I certainly don't do it for the money since it doesn't make any :). 

ThanksChump's picture

Excellent site! That "History and Introduction" piece should be required reading for students in every country.

 

Typo, "History and Introduction"

10th paragraph. "recipe" should be "receipt". Easy fix.

TeethVillage88s's picture

Maybe getting the Front men to suggest Cashless society is what Janet Yellen and Christine LaGaurde were talking about at the BIS Meeting last Year.

Seems like they said they were concerned about QE, ZIRP, and high debt levels... but we don't believe everything since EU is now in QE.

GotNuttin&#039;todo's picture

Exactly. Martin Niemoller said it first, just substitute Cash for "Sociatists", Silver for "Trade Unionists" and Gold for "Jews", and All Other Tangible Assets for "me"

 

First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out—
Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—
Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.

Chandos's picture

First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out— 
Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out— 
Because I was not a Jew.

Then they came for me— and we had a few beers...

TheRedScourge's picture

No, they come for the socialists lasts, because they ARE the socialists. Cannibalising their own kind is the last step, not the first.

logicalman's picture

They are not socialists, they are psychopaths.

Please refrain from commenting until you have learned the difference.