Open Letter to the United States Congress Concerning Martin Armstrong

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OPEN LETTER TO CONGRESS CONCERNING MARTIN ARMSTRONG: Economist/Researcher/Entrepreneur Martin Armstrong may hold a vital key to resolving current dilemmas facing Government.

The circumstances through which Mr. Armstrong came to be investigated and imprisoned lend to the perception that he is a target of high level official retaliation.

Mr. Armstrong was recently able to release an essay that he manually typed while incarcerated. Dated October 10th, 2008 “It’s Just Time” http://www.contrahour.com/ItsJustTimeMartinArmstrong.pdf
It explains the circumstances of his imprisonment and outlines work of his that the government was seeking to obtain. The implications are profound and the veracity of the information is evident in the accuracy of its data.

He has been held almost 9 years for contempt of court (perhaps the longest on record for contempt) and has only recently been transferred to begin an additional 5 year sentence for his original alleged crime of securities fraud. He has been held longer than the alleged crimes warranted already. The clients who where affected by his arrest and the seizure of his accounts have all been repaid 100%.

After making my own investigation of the matter it would appear that an asset of considerable importance is being neglected to our nation’s peril. Mr. Armstrong has stated previous willingness to cooperate with the government in the use and application of his predictive “Economic Confidence Models”.

It is my perception that an official inability to recognize that the researcher’s refusal to sell or deliver his source code to the CIA when requested, was simply beyond his moral or ethical capacity; analogous to being given the option of destroying the planet or going to prison, or being asked to sell your own head. To Mr. Armstrong the information that is being sought IS part of him.

This is a misunderstanding generated in a clash of egos at the practical level. Perhaps if the government had approached him with an 8(a) HUB Zone mentor and a contract instead of Black Op heavies Mr. Armstrong would be free to ply his trade, his clientèle more prosperous and our nation better equipped to face the future.

Please familiarize yourself with the situation by looking at the links provided.
(You may have to cut and paste URL’s into your address bar on your browser if you have a contact form instead of email)

http://seekingalpha.com/article/103613-on-martin-armstrong-s-it-s-just-time

"The Business Cycle And The Future"

http://www.contrahour.com/contrahour/2006/06/martin_armstron.html

MARTIN ARTHUR ARMSTRONG 12518-050 59-White-M 09-02-2011 FORT DIX FCI

Contact your representative:
https://writerep.house.gov/writerep/welcome.shtml

We are in the midst of very dangerous times in our country and around the world. Minds like Mr. Armstrong’s are needed to help develop solutions to the fluid and manifold crises we face. We do harm to ourselves and the world by persecuting our brightest minds when they threaten the illusion of control to which the power elite cling.

Thank you for your consideration in this matter.
Respectfully

Who did the Republic Bank Trading in Armstrong's Accounts?

Since Martin Armstrong has pointed out that the regulators charged some Republic Bank traders with illegal trading in Princeton Economic's accounts, the question is why were these employees of the bank trading in Mr. Armstrong's accounts? Was the bank owner - Edmund Safra's murder related to knowledge of these activities?

Justice Department and Financial System of the USA is Corrupt says Martin Armstrong

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Publish at Scribd or explore others: Business & Economics Research economy martin armstrong

Serious Accusations of Corruption on Wall Street & The Justice Department

Please read new information further down on likely US Government manipulation of Google and Wikipedia.

www.contrahour.com/ItsJustTimeMartinArmstrong.pdf



This article details alleged corruption by the top Wall Street firms and also the Justice Department of the United States.

President Elect Obama and his Economic team should be investigating this information and looking into pardoning Martin Armstrong.

Mr. Armstrong predicted this financial crisis we are in over two decades ago! Martin Armstrong has solid advice on what the government should do now to overcome this crisis and save the United States of America from further disintegration!

Unfortunately things are going to get worse in this part of the cycle which Martin is warning about in this latest report, there are several important cycles that are converging in mid 2011 when the Pi cycle will reach its next major low according to Martin, and this is promising to be a Grand Convergence of these major cycles which means we can expect something likely much worse than has already happened with the banks and financial institutions, perhaps a different sector of the economy will become a problem or it could be a major currency crisis which affects the confidence in the bond markets.

It must also be reported that the Topix online newspaper took this writer's original article without permission and published it on their site. This led to hundreds of comments being submitted by readers of my article on Topix.

Google manipulated what I wrote in a search for Martin Armstrong and scraped a sentence out of context for their search.

He was just about to take Princeton Economics public and get 2 to 3 billion from the sale of those shares. I believe Armstrong's intentions were good. If they were not he would have fled the country rather than drive around collecting items for the court before he faced the judge.

It is wrong that he was denied a trial for almost 7 years. The constitution does not mean much anymore as the editor of JerseyGOP wrote: http://www.jerseygop.com/editor3-29-02.html"

What followed was that Google then placed part of the above comment into the #1 Google search result after doing a search for 'Martin Armstrong' what came up then is deliberately biased. So a carefully selected and out of context part of what I wrote ended up being the #1 item on a google search of Martin Armstrong. I then complained to Martin's lawyer about this and almost immediately the same search result dropped from #1 to #3! It is currently down to about #6. This shows that the government went to Google and got them to manipulate the search results. The content of the main article I wrote in defense of Martin Armstrong that was placed on Topix was ignored by Google and instead an out of context snipet was placed.

Something similar has happened on Wikipedia. I originally participated in writing information on wikipedia in defense of Martin Armstrong, I had pointed out that his lawyer's monies were taken away from them, that the CIA had approached Martin's company Princeton Economics to aquire his 60 million dollar computer model which they had become impressed by because it predicted the downfall of the Soviet Union and also the stock market crash of 1998 to the day. I had also mentioned that his daughter Victoria Armstrong stated on an internet forum, that a big reason her father was still in prison was because of his refusal to hand over the source code for his 32,000 variable computer model. All this has now been removed from Wikipedia, which shows that the US government has now gotten to Wikipedia too! The arguments defending Martin Armstrong are now replaced with government propaganda.

Another example from Wikipedia is the sentence below:
"As an investor, he claims that his market timing approach predicted the high-water mark of the Nikkei in 1989 months ahead of time, and also the July 20, 1998, high in the U.S. equities market."

This is more propaganda, it is a matter of public record that Martin Armstrong predicted those two events and many more long before they happened, including the current financial mess the USA is in. What is on Wikipedia makes it sound like Mr. Armstrong just claims that he predicted these things.


Freedom of the press no longer exists in the USA, as President George W. Bush said, "the constitution is just a piece of paper". The Wikipedia article shows up as the #1 result for a search of Martin Armstrong. Big Brother lives, the US government is now very corrupt just as Thomas Jefferson predicted it would become.




Below was posted by a viewer:

OPEN LETTER TO CONGRESS CONCERNING MARTIN ARMSTRONG: Economist/Researcher/Entrepreneur Martin Armstrong may hold a vital key to resolving current dilemmas facing Government.

The circumstances through which Mr. Armstrong came to be investigated and imprisoned lend to the perception that he is a target of high level official retaliation.

Mr. Armstrong was recently able to release an essay that he manually typed while incarcerated. Dated October 10th, 2008 “It’s Just Time” http://www.contrahour.com/ItsJustTimeMartinArmstrong.pdf
It explains the circumstances of his imprisonment and outlines work of his that the government was seeking to obtain. The implications are profound and the veracity of the information is evident in the accuracy of its data.

He has been held almost 9 years for contempt of court (perhaps the longest on record for contempt) and has only recently been transferred to begin an additional 5 year sentence for his original alleged crime of securities fraud. He has been held longer than the alleged crimes warranted already. The clients who where affected by his arrest and the seizure of his accounts have all been repaid 100%.

After making my own investigation of the matter it would appear that an asset of considerable importance is being neglected to our nation’s peril. Mr. Armstrong has stated previous willingness to cooperate with the government in the use and application of his predictive “Economic Confidence Models”.

It is my perception that an official inability to recognize that the researcher’s refusal to sell or deliver his source code to the CIA when requested, was simply beyond his moral or ethical capacity; analogous to being given the option of destroying the planet or going to prison, or being asked to sell your own head. To Mr. Armstrong the information that is being sought IS part of him.

This is a misunderstanding generated in a clash of egos at the practical level. Perhaps if the government had approached him with an 8(a) HUB Zone mentor and a contract instead of Black Op heavies Mr. Armstrong would be free to ply his trade, his clientèle more prosperous and our nation better equipped to face the future.

Please familiarize yourself with the situation by looking at the links provided.
(You may have to cut and paste URL’s into your address bar on your browser if you have a contact form instead of email)

http://seekingalpha.com/article/103613-on-martin-armstrong-s-it-s-just-time

"The Business Cycle And The Future"

http://www.contrahour.com/contrahour/2006/06/martin_armstron.html

MARTIN ARTHUR ARMSTRONG 12518-050 59-White-M 09-02-2011 FORT DIX FCI

Contact your representative:
https://writerep.house.gov/writerep/welcome.shtml

We are in the midst of very dangerous times in our country and around the world. Minds like Mr. Armstrong’s are needed to help develop solutions to the fluid and manifold crises we face. We do harm to ourselves and the world by persecuting our brightest minds when they threaten the illusion of control to which the power elite cling.

Thank you for your consideration in this matter.
Respectfully,

Decline & Fall of the United States

The article that follows is a review of an article that Martin Armstrong wrote in 1999 just before his arrest. In Mr. Armstrong's latest 77 page article writen in prison and released in October 2008 he appears to have softened his position as to the USA having a civil war and breaking up, he now thinks the USA will survive but not in the form we know now...

The United States of America hit the end of the 224 year political cycle in 1999 from its revolutionary beginning in 1775.29863. Martin Armstrong predicted in Oct.1999 that Sept/Oct 2001 would see an attack on the USA! He in effect predicted the 9/11 disaster and also predicted the reaction to it further on, which would be a new war. "The turning points following 1999 now appear to be Sept/Oct 2001 on the quarter cycle and late 2003. These targets often work in an attack followed by a response."

It is a very strange world. As he wrote in the past the same thing happened to Rome, as their power declined they became vulnerable to outside attack and also got embroiled in wars with Persia. History is repeating now and America is bogged down in a quagmire in the ancient Persian Empire - which encompassed Iraq and Iran. Iraqi dictator Sadam Hussein warned when the USA first invaded Iraq that the Americans would end up stuck in a quagmire that was unwinnable.

Martin Armstrong revealed the existence of a political cycle that is 224 years in length and gives massive amounts of evidence of how this cycle has been dominant for thousands of years all over the world. He developed the Economic Confidence Model during the 1970s which is related to the 224 political cycle. "Aside from the importance of the number of days of the 8.6 year cycle constituting 3141 days or roughly Pi, the data that this cycle emerged from was a period of 224 years spanning between 1683 and 1907. There were 26 financial panics during this 224 year period that produced the actual time frame of 8.61538 years." While he found that this cycle moved in waves of intensity that built up into 6 groups of waves forming a major wave of 51.6923 years, this is not the only timing interval that is important for understanding of the business cycle he said.

Mr. Armstrong went on to say that Americans could expect to see their liberties being stripped away from them after 1999 as the government would attempt to shore up its waning power and war would increase. He said the the power of the USA peaked in 1999, just as it did for the Roman Empire after the death of one of Rome's most brilliant Emperors Marcus Aurelius in 180 AD. The consequences from what President Dwight Eisenhowser warned of, by letting the Militry Industrial Complex become too dominant are now starting to be realized, a civilization that became a worldwide military empire is now starting to crumble from the burden of supporting the military machine. On top of all this US corporations systematically tranferred manufacturing overseas into Asia thereby destroying the industrial manufacturing wealth that Americans have previously prospered from. Of course from a cyclical perspective Armstrong would argue that is was all inevitable, human nature being what it is.

We can see now that the power of the Chinese is surging forward and that as another financial advisor James Dines predicted in the late 1970's - the 21 Century would be the Chinese century. In Marco Polo's time China was the weathiest nation on earth, they are now in the process of getting back that status. Will the new China Era last 224 years or will it move to a greater Europe before then?

At a lecture that Martin Armstrong gave in the early 1990's I approached him and stated: Don't you think that the Chinese will dominate the world's economy going forward now? He said to me that they would at first, but he believed that a greater Europe including Russia would eventually be the largest economy in the world. I don't know if he still thinks the latter to be the case but he wrote in late 1999 "We see the economic power shifting toward Asia and believe the United States has peaked here in 1999". He went on to say that to prove that the USA has peaked in its power may require another 8.6 years (pi cycle - Feb 2007)and may not be verifiable until Martin's death which would likely be in the 2030 time frame. (2032 is the end of Martin's 51.6 year 'confidence in private markets cycle' - so after 2032 we can expect something like 1929 again where there is a massive collapse of the debt markets and then a new confidence in government cycle appears again with another Franklin Delanor Roosevelt style 'new deal' perhaps, except this time China will be the leading economy and the USA will be Britain or Italy as in a fallen Rome.

Martin wrote: "The entire period of rising political chaos appears to begin with 1999 going into at least 2011 but more likely late 2012. The 224 year cycle that began with the start of the American Revolution will reach its end of the most chaotic period 2012.471 which is 224 years from the last state of Nine required to ratify the constitution, which was New Hampshire on June 21, 1788. President George Washington was elected in 1789 and thus this formally began the United States. It does not appear that 1999 will become noticeable as a major turning point until at least one 8.615 year interval takes place. Thus by late 2007, dissatisfaction will become self-evident. Of course, between 2012 and 2020, the real problems will unfold regarding social security, healthcare, and a host of government benefits. Funding such programs will lead to major economic short-falls."

"Cyclically, if the United States were to survive in the form as we know it today (a big if), recovery is not likely before 2103 to 2111 with the extreme projections into 2223. Historically, nations that have had civil wars in the past, breakup along the same lines of political differences even though the issues will have changed. We thus may see a division between north and south taking the issues of religion this time rather than slavery. One must keep in mind that the religious differences have survived the Civil War."

"The Middle East is universally believed to be the source of future problems. Looking at the 224 year cycle of political change provides an eye-opener to say the least. It was the year 1095 that the Byzantine Emperor Alexius Comnenus asked Pope Urban II for help infighting the Turks. If we look at the 224 year cycle between the West and the Muslim World we see the dates 1095, 1319, 1543, 1767 and 1991. Iraq invaded Kuwait in August 1990 and the West invaded Iraq in February 1991. The invasion stopped short of Baghdad leaving Saddam Hussein in power only because he may be the lessor of two evils - keeping the religious extremists under his control. Often overlooked is the conflict between the two prime divisions in Islam the Sunni, who followed Abu Bakr as the successor to Muhammad (570-6432AD) and the Shites, who followed the son-in-law and first cousin. While the Sunni constitute about 85% of Islam, it is the Shites that largely believe that there should be no separation between church and state. Thus, the Shites would overthrow the monarchy of Saudi Arabia if they could and would rejoice had Hussein been removed from power. This would have allowed Iran to expand its power taking Iraq which is believed to be about 40% Shite. This would then put Saudi Arabia at risk not to mention Syria
and Turkey. In other words, if Iran could expand its religious control over the states in the Middle East, it would most likely result in a civil war similar to that of England between the Protestants and the Catholics. It is disturbing that the West invaded precisely on the 224 year cycle target of 1991."

Its all in the cycles, it appears that nothing can be done to stop the cycles from manifesting their effects. As Martin has stated before the whole Universe is cyclical, galaxies, stars, planets are all subject to cyclical laws (our Sun he wrote has a 300 year cycle which causes its output to vary by 15% and the Sun could not even shine if it did not have cycles) it is therefore logical that humans and their societies are also subject to these cyclical energies - 'as above so below'.

If we are to believe in the greater purpose of human society then perhaps the USA has fullfilled its purpose in the 20th Century, showing the world that relative democracy and free markets are the right way for societies to go. Just as Rome led to Great Britain which in a way united the whole world with the English language, then the United States maintained and strengthened the structure. The question is, which country is going to take over from the USA?

Martin seemed to be suggesting that the Earth's climate is likely to start cooling down now based on the Sun's 300 year cycle and it appears that 2007 saw some records being made for cold and snow. There is some evidence now that the sun's output is starting to fall, the sunspots are not being created at this point. Over the past year, anecdotal evidence for a cooling planet has exploded. China has its coldest winter in 100 years. Baghdad sees its first snow in all recorded history. North America has the most snowcover in 50 years, with places like Wisconsin the highest since record-keeping began. Record levels of Antarctic sea ice, record cold in Minnesota, Texas, Florida, Mexico, Australia, Iran, Greece, South Africa, Greenland, Argentina, Chile — the list goes on and on.

Anecdotal evidence, but now, that evidence has been supplanted by hard scientific fact. All four major global temperature tracking outlets (Hadley, NASA's GISS, UAH, RSS) have released updated data. All show that over the past year, global temperatures have dropped precipitously.

http://www.well.com/user/pdeep/pages/warm07/stat02/stat02.shtml This link purports to show evidence that we can expect temperatures to fall for the next 20-25 years.

Could it be that human produced Co2 has created a blanket that will protect our societies from a future ice age or will any cooling now be just a temporary lull in an ongoing warming?

Copyright ©

Witness of CIA remark should be subpoenaed to testify.

Eric Von Baronov who owns the Kondratyev economic site on Yahoo Groups stated in his forum several years ago that a CIA aquaintance of his told him that Martin Armstrong "had to be stopped".
Exactly what was meant by this statement should have been probed. It was this author's understanding that what was meant was that the CIA does not want people with extremely sophisticated computer analysis (which the CIA tried to aquire unsucessfully from Mr. Armstrong), controlling billions of dollars in the futures markets. A proper trial would have dealt with these issues, instead Martin got years of deprivation and even torture from solitary confinement before he was more or less forced into a plea.

According to some comentators Martin got some commodity traders angry by saying that they were manipulating markets and so when he needed to get out of his Yen trade which was going against him those traders made it impossible for him to find a buyer. Martin was also said to have had a position in another commodity that was going well for him but when he was arrested the reciever is said to have liquidated those positions, which meant that future profits from them were cut off. Again all of these issues should have been explored in a court of law with premium legal representaion, which Martin was denied when the courts took away his original lawyer's monies. Martin eventually got a lawyer that his 80 something year old mother scraped some money together to pay for.

Mr.Von Baranov should have been subpoenaed to testify at Martin Armstrong's 'trial'.

Martin Armstrong's Punishment by a Corrupt State

On April 27, 2007 Martin Armstrong's - record 7+ Years Contempt of Court Incarceration was ended. He will now have to start another 5 Years in prison which means he will end up in prison for 12 years for a very questionable criminal charge. His right to a speedy trial was denied, he was not allowed to hire top lawyers and in fact the court took his money away from his original lawyers. He never had a proper trial, he was forced into a plea after they put him into solitary confinement for several days without sleep, as well as having been almost killed by a murderer who was allowed into his cell and then beat him with a typewriter causing Martin to lose many of his teeth while the prison guard looked on according to other inmates, Martin then had to spend a week in intensive care, the man who smashed a typewriter on his face was never charged. This shows how corrupt the US Justice System is, most likely deliberately getting a prison thug to attempt to murder Martin! Nobody in the US government cares though, what has it got to do with their salaries and gold plated pensions. As Martin says: "Strangely there was not one wire transfer (of Princeton Economic's client money) into my personal accounts." No mention was made of the fact that the CIA tried to get his $60 million super-computer model in 1998 a year before he was charged criminally - as Princeton Economics employees witnessed and was written about by one employee named James Smith. The Court then demanding Martin hand over assets (including his computer model) before he had his trial to determine if he was 'Innocent Until Proven Guilty' is wrong and a major conflict of interest by the government since the CIA wanted his model in 1998. A brilliant man will continue to rot in prison.

Southern District of New York Judge John Keenan sentenced Armstrong to the maximum , saying he had no choice but to make the criminal sentence consecutive to the civil contempt, even though the Judge could have legally given Martin credit for time already served.
In a interview with Martin's lawyer:
http://blogs.wsj.com/law/ It was stated that they filed a petition with the Supreme Court for holding Martin in contempt for more than 18 months, which is unlawful. Mr Sjobolm is hoping that "the SC grant cert, find in our favor & Mr. Armstrong will be credited for time served and be released."

The criminal sentence follows Armstrong's guilty plea (under physical duress after being put in solitary confinement without sleep for several days) last August for conspiracy to commit securities violations.

Martin did not steal money, plain and simple. What he or employees allegedly did was:

(1) Lose money trading (not a crime) and Martin claims that Republic Bank employees did illegal trading in his Princeton accounts.

(2) Failed to disclose such trading losses in some cases, some have written that it was some Princeton or Republic employees that may have actually lost the money and kept it hidden.

(3) Allowed Republic to consolidate client funds to limit their own liability and concern for accounting, which then of course allowed payment to some old clients with new client money.

Since Martin's original high end lawyers had his money taken away from them he never got a proper defense team for this, his mother hired one lawyer who while he tried hard was not likely of the same quality as the original team. He was tortured in solitary confinement for days (supposedly for damaging a vent cover!) after an attempted murder by an inmate who was allowed into his cell, proceding to strangle Martin and smash a typewriter over his face causing him to lose many of his teeth and requiring him to be transferred to an intensive care hospital room for a week. After all that they pretty much forced a minimal guilty plea out of him in desperation, since he had been in prison without a trial for 7 years, his life was going by.

The real reason Martin continues to be held in prison as his daughter Victoria Armstrong has stated may be because he will not hand over his computer model's code which President George W. Bush's CIA tried to aquire in 1998. This is constitutionally illegal for the US government to seize copyright material and private property. America is supposed to be all about protecting private property from totalitarian government.

Judge Keenan, who also ordered Martin Armstrong to pay $80 million and $1 in restitution that even the government acknowledged he did not have, said "every criminal case is a tragedy but this is a particularly sad one."

The 57-year-old Armstrong, after being rebuffed in a last-minute attempt to appear pro se, spoke for about 25 minutes, taking the judge on a tour of the origins of what he called the "franchising" of Princeton Notes for large-scale currency trading that began in 1992.

When Keenan told him to get to the point, the former head of Princeton Economics International Ltd. portrayed his downfall as anything but his own fault.

"I was too occupied. I didn't pay attention," he said, his voice quavering. "I don't think this is a situation where I started to go get money from someone. [I earned a] $78,000 salary. I worked all the time. I took care of my kids and I guess that's the most important thing. I trusted people I shouldn't have trusted."

The government alleged that Armstrong was the key player in a multi-billion dollar "Ponzi scheme," (even though it was never proven that Armstrong got any money from the alledged misdeeds) one of the largest ever, which covered the losses of initial investors with money from new investors, said Assistant U.S. Attorney Alexander Southwell. It charged he made misrepresentations about both the value of assets in some accounts and his trading record and illegally commingled funds from separate investor accounts.

Republic Securities, the broker-dealer used by Armstrong, pleaded guilty in 2002 to conspiracy and securities fraud charges. Two of its employees entered guilty pleas in 2004, as did a former employee of Armstrong.

Both Armstrong and his lawyer, David Cooper, disputed the use of the term "Ponzi scheme" Tuesday, saying there was no evidence Armstrong sought to enrich himself.

'COERCIVE' CONTEMPT TERM

That claim is disputed by Alan M. Cohen, the receiver appointed by Judge Richard Owen in the civil case brought against Armstrong and his Princeton companies by the Commodity Futures Trading Commission and the Securities and Exchange Commission.

Owen initially ordered Armstrong jailed in 2000 for contempt for failure to disgorge some $1.4 million in assets -- a figure that later grew to more than $14 million and included gold bars, rare coins and even a bust of Julius Caesar. The civil court never proved that any of these assets were bought with Japanese investors money. They also are illegally trying to get his $60 million computer model that the CIA tried to aquire in 1998.

Armstrong contended that he no longer had the assets, but Owen did not believe him. A seven-year fight over the limit of the contempt power of federal judges was under way as Armstrong refused to budge and launched challenge after challenge to his detention from his jail cell at the Metropolitan Correctional Center.

Ultimately, on Armstrong's fourth trip to the 2nd U.S. Circuit Court of Appeals, attorney Thomas Sjoblom, now of Proskauer Rose, argued in January 2006 that the inherent power of federal judges to jail for contempt is limited by the Anti-Detention Act, 18 U.S.C. 4001(a), which states no citizen shall be imprisoned unless authorized by an act of Congress, and the so-called "recalcitrant witnesses" act, 28 U.S.C. 1826, which gives the power to jail non-cooperative witnesses for up to 18 months.

The argument was rejected by the court last November, with then-Chief Judge John M. Walker writing that Congress authorized "indefinite coercive civil confinement" in the Judiciary Act of 1789 and finding that Armstrong could not be considered a witness.

The court also took the unusual step of removing Owen from the case, saying reassignment was the best course because the long-running dispute over the missing assets could use a "fresh look by a different set of eyes."

Those eyes now belong to Southern District of New York Judge Kevin Castel, who will hold an April 27 hearing on the civil contempt.

Mr.Cooper, a veteran defense attorney who said this was his last case before retirement, went out firing, saying his client was in a bizarre state of legal limbo because of Owen, the absurdity of which became complete when Keenan was unable to consider the civil contempt in determining the criminal sentence to give Armstrong.
"I've never seen a criminal case in which defendant has been subpoenaed to turn over the things he stole," he said. "The fact we aren't allowed to talk about seven-plus years in prison for refusing to turn over items he is supposed to have stolen is crazy. If that's the law, it's crazy.

"The contempt was outrageous and everyone knows it was outrageous and Judge Owen was notorious for the outrageousness of his conduct," he said. "Why did they take it away from Judge Owen? Because he was going to keep him in. The circuit was trying to say 'Let him out -- we are beginning to look draconian.'"

The implication or "wink" that the circuit gave to the lower court, he said, was "resolve" this matter, Cooper said, "But Judge Castel didn't catch the wink."
Despite Cooper's comments, Castel has been pressing hard for both sides in the civil action to reach a settlement.

Martin Jr. Request for Letters of Support

Request from Martin Armstrong Jr. to help Martin Armstrong Sr.


To all whom are concerned,

I'm writing to you on behalf of my father, Martin Armstrong. Over the years you have all kept a watchful eye and provided much appreciated support as he has fought a seemingly never ending, one-sided legal battle.

As you probably know by now, my father's criminal sentencing hearing
was earlier this week and Judge John Keenan, despite legal authority to do
so, refused to give credit to my father for time served on the civil
contempt towards his criminal sentence of 5 years.

This was obviously very disappointing. For those that wrote letters of
support to the Judge, I want to thank you as it was very much appreciated.

This battle is not over, as my father has a hearing on April 27th in front
of his Judge on the civil case to bring the contempt of court to an end (not
only did Judge Keenan not grant credit for time served on the civil
contempt, he ordered that the 5 years on his criminal sentence not begin
until the civil contempt is complete). If you have not already, but still
feel compelled to do so, it would be greatly appreciated if you could write
a letter of support for my father to the Judge presiding over his all
important civil case.

Below is his information:

Hon. P. Kevin Castel
United States Courthouse
500 Pearl St., Room 2260
New York, NY 10007

In addition, if you could copy my father's attorney, Thomas Sjoblom, on your
letters that would be very much appreciated so that he and my father are
aware of letters that were sent to the Judge prior to the proceedings. You
can do so at the following mailing address:

Thomas V. Sjoblom
Attorney at Law
Proskauer Rose LLP
1001 Pennsylvania Avenue, NW Suite 400
South Washington, DC 20004

or send an email to: tsjoblom@proskauer.com

Thank you for your time and your continued support. On behalf of my father
and his family it is very much appreciated.

Sincerely,
Martin




Below please find the mailing addresses for each of the two judges:

JUDGE ON MARTIN ARMSTRONG'S CRIMINAL CASE: Hon. John F. Keenan United States Courthouse 500 Pearl St., Room 1930 New York, NY 10007

JUDGE ON MARTIN ARMSTRONG'S CIVIL CASE: Hon. P. Kevin Castel United States Courthouse>500 Pearl St., Room 2260 New York, NY 10007

In addition, if you could copy my father's attorney, Thomas Sjoblom, on your letters that would be very much appreciated so that he and my father are aware of letters that were sent to the judges prior to the proceedings. You can do so at the following mailing address: Thomas V. Sjoblom - Attorney at Law - Proskauer Rose LLP 1001 Pennsylvania Avenue, NW Suite 400 South Washington, DC 20004 or send an email to: tsjoblom@proskauer.com

Thank you for your time and your continued support. On behalf of my father and his family it is very much appreciated.

Sincerely,
Martin

Letter from Vicky Armstrong - Martin Sr.'s Daughter

It took nearly 30 years for my dad to develop this model and his refusing to turn over its source code to the government is a big reason why he has been held in jail for over 7 years without a trial. His model was his life’s work and his passion that ultimately landed him in jail. Although it's great to hear people that have benefited from his insight, after seeing what has happened to him I wish he kept it to himself.

There is obviously so much I can say and although I never post messages, I am now reaching out. I could never put into words what this has done to my father and my family. Even as I write to you now and try and express my feelings towards what has happened to him my eyes are filled with tears.

Regardless if you support my father's beliefs or not, I'm asking for your help. As of now his criminal sentencing is set for March 20th (now delayed until April 2007 according to brother Martin - editor) and his Civil Contempt hearing for the end of April. These dates have changed many times since they were originally set in January and they are likely to be pushed back again. My family, friends, old client's of my father, and myself have been sending emails and letters to members of the Judiciary Committee of the House and Senate and the Judges involved. Unfortunately our efforts have gone unanswered and we ask for more help. For those of you that have posted supportive comments and blessings, we thank you. You really have no idea how much your thoughtful words mean. Although my dad is a fighter, sometimes he needs to know he's not alone so I've printed out some of your messages and sent them to him just for this reason and I know it has helped.

For over 7 years he's been living in a cell with a 1-hour weekly visit and 300 minutes a month for phone calls. The visiting hours are on Wednesday and I'm the only one of my family who lives near the city so I get to see him the most. Since my grandmom (his mother) is 88 and lives in south jersey almost 2 hrs away, she relies on my brother and/or aunt near her to drive her up. Given that they have to take the day off of work to do so they don’t get to see him that often.

I’m not looking to change anyone’s views or opinions, I only ask for your help in a situation that should make every citizen of the United States outraged.

I attached the latest NY Times article that explains an accurate account of what has happened and some contact information of people that have the power to do something. This obviously means a lot to my dad and my family for you to share your thoughts with any or all of the people listed below. My deepest appreciation for your help and support.

Thank you,
Vicky Armstrong

The email addresses of the Judiciary Committee Chairmen for the Senate and the House of RepresentativesPatrick Leahy: senator_leahy@leahy.senate.govJohn Conyers Jr.: John.Conyers@mail.house.gov
House of Representatives Judiciary Committee: General email box http://judiciary.house.gov/Contact.aspx
Senate Judiciary Committee: Website that gives their mailing address http://judiciary.senate.gov/


In Fraud Case, 7 Years in Jail for Contempt
By GRETCHEN MORGENSON
Published: February 16, 2007
The New York Times

On Jan. 14, 2000, Martin A. Armstrong, a globe-trotting investment manager, was told to produce $15 million in gold and antiquities, as well as documents, in response to a civil suit by the government accusing him of securities fraud involving hundreds of millions of dollars.
When he said that he did not have the items and could not produce them, a federal judge ordered him jailed for contempt of court.
Seven years later, Mr. Armstrong sits in the Metropolitan Correctional Center in Lower Manhattan.
Imprisoned two years before Enron and WorldCom brought corporate crime to center stage, Mr. Armstrong, 57, is the white-collar defendant whom time forgot. Over the years, the losses of his former clients have been repaid by a bank involved in his trades.
Still, he remains jailed on one of the longest-running charges of contempt. In many cases, a federal law limits to 18 months how long someone can be held under civil contempt while the court tries to coerce compliance with an order. Even in cases of criminal contempt, whose goal is punishment rather than coercion, an individual is entitled to the full protections of due process after six months.
“A legal proceeding is supposed to be the quest for truth,” Mr. Armstrong said in a phone interview last week from the 12-story building, which is used mostly as a temporary holding site for prisoners. “But this contempt was used to stop me from going to trial, and it’s been nothing but bad faith from the government ever since.”
How Mr. Armstrong has been held for so many years without a trial is a tangled and bizarre tale. Mr. Armstrong, his lawyers say, has been stuck in a surreal situation in which criminal prosecutors have never had to prove their 24-count indictment at trial while the civil case tied him up. Nevertheless, they have gotten their desired result — a lengthy prison term for Mr. Armstrong.
Last August, he pleaded guilty to one count of conspiracy in the criminal case. He struck that deal with federal prosecutors after he was moved from the 75-square-foot cell he shared with another prisoner into solitary confinement and had not slept for days, his lawyer said. Over the years, prosecutors have said that they were ready to proceed to trial and that civil contempt had nothing to do with their case. Mr. Armstrong countered that his detainment impeded his efforts to mount a proper defense, blocking his access to essential documents and computers as well as the assets to pay counsel.
Because there has been no jury trial in the case, it is impossible to say which side is right: the government, whose indictment in September 1999 contended that Mr. Armstrong misappropriated hundreds of millions in client funds; or Mr. Armstrong, who said that officials at the bank executing his trades generated temporary losses that could have been recovered in the market. (Two of those officials later pleaded guilty to fraud in a related case involving the bank.)

Rick Maiman/Bloomberg News
Martin A. Armstrong, pictured in jail in February 2000, has almost served more jail time for civil contempt than he would have if he had been sentenced to the likely 6.5 to 8 years on conviction of 24 criminal counts of securities fraud, commodities fraud and wire fraud.
Exceeding a Sentence
But this much is certain: Mr. Armstrong’s years in jail for civil contempt will soon exceed the sentence of 6.5 to 8 years that he would have received if he had been convicted of all 24 criminal counts of securities fraud, commodities fraud and wire fraud. “The case sends a very bad signal,” said Bernard V. Kleinman, a criminal lawyer in White Plains who represented Mr. Armstrong until 2004 and argued twice for his release before the United States Court of Appeals for the Second Circuit, in Lower Manhattan. “I think it bodes very ill for anybody held in civil contempt. District court judges can look at this case and feel that the likelihood of the circuit reversing them is small and that time is, in and of itself, no factor in determining whether civil contempt has lost its coercive effect and has become punitive.”
John F. Keenan, the Federal District Court judge overseeing the criminal case, has not yet sentenced Mr. Armstrong. It is unclear whether the judge will give Mr. Armstrong credit for the time he has served. Under federal sentencing guidelines, his lawyers expect a sentence of about five years.
A spokeswoman for the United States attorney in Manhattan said that the office did not comment on open cases.
Judge Richard Owen, the senior district judge who ordered Mr. Armstrong held in contempt, still sits on the bench in the Southern District of New York, where he has been for 34 years. When he ordered Mr. Armstrong taken away by federal marshals, he declared, “Mr. Armstrong has the keys to the jail cell in his pocket by production and telling people where to go to get it and dig it up and turn it over.”
Over the years, Judge Owen would revisit the contempt order every 18 months, guided by the federal statute. He repeatedly said that Mr. Armstrong was motivated by greed and was awaiting his release from jail to retrieve the $15 million that the government said was missing. According to lawyers who worked on the case in the early days, the financier’s headstrong manner irritated Judge Owen almost immediately.
But Judge Owen was moved off the case in November by a panel in the Second Circuit Court hearing Mr. Armstrong’s third appeal on the contempt charge.
The three judges unanimously rejected the appeal to free Mr. Armstrong but found that on the seventh anniversary of his confinement, “his case deserves a fresh look by a different pair of eyes.”
It was the second time in less than a year that the Second Circuit had ordered Judge Owen replaced on a high-profile case. In March, a panel overturned the 2004 conviction of Frank P. Quattrone, the former investment banker at Credit Suisse, because Judge Owen failed to instruct the jury properly; the panel assigned the case to a new judge in the “interest of justice.” Later, the government decided not to retry Mr. Quattrone.
Judge P. Kevin Castel has taken over the Armstrong civil case. A hearing is scheduled on the contempt matter for March 15. A request to interview Mr. Armstrong in person was denied by corrections officials, and Judge Owen did not return a call seeking comment.
A Budding Businessman
At the peak of his career in the mid-90s, Mr. Armstrong oversaw $3 billion in client assets. He was widely quoted in the financial news media, including The New York Times, on interest rate and currency movements. He began working at a coin and stamp dealership when he was 13 and opened a collectors’ store when he was 21. He founded Princeton Economics International, based in Princeton, N.J., in 1981.
Mr. Armstrong, an intelligent and imperious man who claimed to have made his first million by age 15, seems to have begun having trouble in 1999 when trading losses turned up in accounts that were held for the firm at Republic Bank. The problems appeared as the HSBC Group conducted a financial review before acquiring Republic.
The government said that Mr. Armstrong had improperly commingled accounts and overstated the value of the account’s securities in client statements.
Mr. Armstrong said that he did not authorize the transactions that produced losses and that he was not involved with commingling of the accounts. He was indicted in September and released on $5 million bond.
In January 2000, the receiver appointed by the court in the civil case said that Mr. Armstrong had purchased gold coins and other assets with his firm’s money. His lawyers argued that the assets might have been purchased before the suspected wrongdoing.
When Judge Owen ordered the assets returned, Mr. Armstrong delivered 4 of the 5 computers sought, 8 of the 11 requested boxes of documents and gold coins worth $1.1 million. He said that was all he had. The receiver said assets worth about $15 million were missing. Mr. Armstrong’s odyssey in the judicial system began.
His assets frozen, Mr. Armstrong has been unable to pay lawyers. He now relies upon David Cooper and Steven Z. Legon, two lawyers from the Criminal Justice Act panel, set up to help indigent defendants, and Thomas V. Sjoblom, a lawyer at Proskauer Rose, who has received nominal compensation.
“On what grounds can you tie up the system of criminal procedure and civil procedure and hold everything in abeyance during contempt?” Mr. Sjoblom asked. “What about your speedy trial rights? What about the government’s need to move forward in the civil case? You’re using the contempt process to wring a settlement or a plea out of the person. That, to me, is abuse of the process.”
Over the years, more than half a dozen government lawyers have cycled through the case. In 2003, Mr. Armstrong changed his legal approach in challenging the contempt charge, saying that he did not have to produce the assets and citing his Fifth Amendment right.
The receiver, meanwhile, has recovered the vast majority of money said to have been lost by investors in the case. In January 2002, Republic New York Securities, a brokerage firm that housed Princeton Economics’ accounts, pleaded guilty to conspiracy and securities fraud charges. Republic Bank paid $606 million to victims, all Japanese companies. It was “full restitution,” the assistant United States attorney said at the time.
Alan M. Cohen, then a lawyer at O’Melveny & Myers and now executive vice president and global head of compliance at Goldman Sachs, is the court-appointed receiver.
His former colleague, Tancred V. Schiavoni, a lawyer at O’Melveny, said that all the victims had been satisfied. “We tried to do the right thing, and we’ve gotten nothing but grief,” he said. “What this guy wants is to be given credit for time served on the contempt and leave with the money.”
O’Melveny & Myers has received at least $3.9 million to cover its fees and disbursement over the years, according to court filings.
The discovery process was protracted partly because of the complexity — hundreds of boxes of materials had to be examined and data transcribed into digital format — and because Mr. Armstrong was in jail and relying on lawyers working pro bono.
In January 2006, criminal prosecutors said they were eager to put Mr. Armstrong on trial in October. Then in early August, federal prosecutors appeared at the correctional center to strike a plea deal. The visit, Mr. Sjoblom said, came a week after Mr. Armstrong had been ordered into solitary confinement — known as “the hole” — for damaging a vent in a common area.
Mr. Armstrong pleaded guilty to one count of conspiracy to commit securities fraud for failing to keep his investors informed about losses and for agreeing to make investor funds available to Republic to cover Princeton Economics’ unrelated trading losses.
“I think the government just wore Marty out,” Mr. Sjoblom said.
On Dec. 7, Stephen J. Obie, regional counsel for the Commodity Futures Trading Commission, visited Mr. Armstrong, with a settlement offer in which he would sign over some $30 million as a penalty. Mr. Armstrong declined.
The Securities and Exchange Commission and the C.F.T.C. declined to comment on the case.
The government has said that $21 million is still owed. Even if that must be paid by Mr. Armstrong’s firm and not Republic Bank, an estimated $40 million is left in what was once Princeton Economics: $30 million in the United States and $10 million in a British entity. Mr. Armstrong and his lawyers learned of the $10 million three weeks ago.

Fred R. Conrad/The New York Times
Victoria Armstrong visits her father most Wednesdays at the Metropolitan Correctional Center in Manhattan, where he has been held for contempt for seven years.
Weekly Visits
Mr. Armstrong, who is divorced, has two children and an elderly mother who await his release. His daughter, Victoria Armstrong, 30, visits most Wednesdays, spending about one hour with him in a common room with other visitors and prisoners.
“You never stop thinking about where he is and what he goes through,” Ms. Armstrong said in an interview last week.
Her brother, Martin, 31, said he was bewildered at what he sees as the breakdown of due process in his father’s case. “That you can keep someone in contempt for such a long time with so many unanswered questions — that part of it has been a real eye-opener,” he said.
Sonia Sotomayor, a judge on the Second Circuit panel that heard Mr. Armstrong’s appeal last year, seemed to echo this point. “The district court’s finding that Armstrong is motivated solely by greed is not enough to justify disregard for due process,” she wrote. “Courts must exercise caution in their use of the contempt power and must recognize when it has reached the limits of its utility.”


http://www.nytimes.com/2007/02/16/business/16jail.html?_r=1&oref=slogin

Discovery of the 8.6 yr cycle

NORTH AMERICA'S TOP ECONOMIST - EQUITY MAGAZINE - 1990



Discovered in the 1970's by dividing the number of major panics into a given time frame Armstrong's 8.6 year pi cycle (piX1000=3141 days or 8.6 years) has had many direct hits on various market indexes, commodities and currencies producing billions to one odds against it being just a meaningless coincidence.Similar to Benner's Cycle which is based around a 9 year cycle, Armstrong's cycle gives dates down to the day years and decades ahead of time, not just a yearly date as Benner's shows. Armstrong's is much more precise. So much so that the CIA and Chinese government tried to aquire his super-computer model after his amazing prediction of the crash of 1998 to the day. Mr. Armstrong has had his constitutional rights stripped from him, his Constitutional right to a speedy trial was taken away from him. Did the founding fathers of America want future judges and politicians to ignore the Constitution? What would the founding fathers do to officials who ignored the Constitution?

Recent events in the world's stock markets show the accuracy of his model, the markets sold off right on his forcasted date of Feb 27, 2007. He said in effect that everything would rise up into 2007 -including the stockmarkets, housing and especially hard assets like commodities. The fact that the hard assets peaked last spring (gold copper etc) shows that capital flows are currently focused on the stock markets world-wide, it is likely that they will continue up and commodities should resume their bull market for the next major leg up - $100+ a barrel oil and Gold well over $2000 - even 3 or $4000 according to some estimates.

According to Timer's Digest top market timer Don Wolanchuk we will be entering into 'Primary Wave 3' that is going to take the Dow to 20,000 in the coming years, gold and commodities should keep moving up too.

[Update as of Oct.16, 2008: Well now that all hell has broken lose in the markets, being one of 5 major crashes over the past 200 years, and coming down with a velocity only exceeded on two other instances in history, we can see much more clearly now. The housing and mortgage issue that I was concerned about in early 2007 certainly turned out to be a very unpleasant event with the US government having to step in with a 700 Billion bail-out package for the financial institutions that used leverage and derivatives to speculate in unsound mortgages. In retrospect Martin Armstrong's pi cycle showed the high in the US financial indices back in February of 2007 which produced a mini-crash, that turned out to be the warning shot fired which has now led to about a 50% loss in the stock markets in one year. As noted elsewhere in my articles, Mr. Armstrong wrote in 1999 that by late 2007 it would be obvious that there was serious problems with the economy. Don Wolanchuk still thinks that the Dow Jones Industrials can have his huge rally, I presume approaching 20,000 before 2011 and while I did think that was a possiblity before, I now think that is pretty unlikey.

After viewing a live webinar put on by GannGlobal.com today, I think it worth noting that a market that declines with this much velocity and by so much is likely to take out the initial panic low that we saw on Oct.10, 2008. It seems like it would be a miracle now for the markets to resume a major bull market. Mid 2011 is the next pi cycle low, so I think the markets are likely to keep going down into that time now, although there can always be strong retracement rallies within any bear market.

I pray that this is not going to get too ugly but I think we can expect to see unemployment rates move up agressively over the next couple of years. As I have explained on a public forum to Mr. Wolanchuk, I do not have the advantage of Martin's 32,000 variables super computer model but I will continue to interpret his model using just my brain, lol.]

Below written in early 2007.
My concern here is housing - if it keeps breaking down into mid 2009 as my own work is suggesting - things may get a little rough, and the next major trough for the economy should be Martin's mid 2011 date. I think it possible that gold and commodities will go up into 2009, which would then lead to the 2011.45 trough, just as the year 2000 was the peak in the markets and led to the low a couple of years later.

The Business Cycle And The Future
By Martin A. Armstrong
September 26,1999

For many years, I have pursued a field of study that is at best non-traditional. My discovery of a global business cycle during the early 1970's was by no means intentional. As a youth growing up in the 1960's, the atmosphere was anything but stable. I don’t really know if it was Hollywood that captivated my interest in history with an endless series of movies about Roman and Greek history, but whatever it was that drove me, I can only attest to what resulted.
My father had always wanted to return to Europe after serving under General Patton during the war. My mother insisted that she would go only when he could afford to take the whole family. That day finally came and something inside me insisted upon being able to earn my own spending money. I applied for a job despite my age of only 14. It wasn’t much, but on weekends I worked with a coin/bullion dealer. In those days, gold was illegal to buy or sell in bullion form so the industry centered on gold coins issued by Mexico, Hungary and Austria. I soon became familiar with the financial markets as they were starting to emerge. It was this experience that began to conflict with the formal training of school.
One day in a history class, the teacher brought in an old black and white film entitled "Toast of the Town." This film was about Jim Fisk and his attempt to corner the gold market in 1869 that created a major financial panic in which the term "Black Friday" was first coined. In the film was a very young support actor named Cary Grant who stood by the ticker tape machine reading off the latest gold prices. He read the tape and exclaimed that gold had just reached $162 an ounce. I knew from my job that gold was currently selling for $35. At first I thought that the price quote of $162 in the movie must be wrong. After all, Hollywood wasn’t known for truthfulness. Nonetheless, I was compelled to go to the library to check the newspapers of 1869 for myself. This first step in research left me stunned – the New York Times verified $162 was correct.
For the first time in my life, I was faced with a paradox that seemed to conflict with traditional concepts. How could gold be $162 in 1869 and yet be worth only $35 in the 1960's? Surely, inflation was supposed to be linear. If a dollar was a lot of money in 1869, this meant that adjusted for inflation gold must have been the equivalent of several thousand dollars. If value was not linear, then was anything linear?
I began exploring the field of economics on my own and reading the various debates over the existance of a business cycle. Kondratieff was interesting for his vision of great waves of economic activity. Of course, others argued that such oscillations were purely random. Over the years that followed, this nagging question still bothered me. I had poured my heart and soul into history, quickly learning that all civilizations rose and fell and there seemed to be no exception.
I was still not yet convinced that a business cycle was actually definable. Kondratieff’s work was indeed interesting, but there was not enough data to say that it was in fact correct. On the other hand, it seemed that the random theory crowd was somehow threatened by the notion that the business cycle might be definable. After all, if the business cycle could be defined, then perhaps man’s intervention would not be successful. Clearly, there was a large degree of self-interest in discouraging any attempt to define the business cycle. I knew from my study of history that a non-professional German industrialist took Homer and set out to disprove the academics who argued that Homer was merely a story for children. In the end, that untrained believer in Homer discovered Troy and just about every other famous Greek city that was not supposed to have existed beyond fable.
I didn’t know how to go about such a quest to find if the business cycle was definable. Admittedly, I began with the very basic naive approach of simply adding up all the financial panics between 1683 and 1907 and dividing 224 years by the number of panics being 26 yielding 8.6 years. Well, this didn’t seem to be very valid at first, but it did allow for a greater amount of data to be tested compared to merely 3 waves described by Kondratieff.
The more I began to back test this 8.6-year average, the more accurate it seemed to be. I spent countless hours in libraries reading contemporary accounts of events around these dates. It soon became clear that there were issues of intensity and shifts in public confidence. During some periods, society seemed to distrust government and after a good boom bust cycle, sentiment shifted as people ran into the arms of government for solutions. Politics seemed to ebb and flow in harmony with the business cycle. Destroy an economy and someone like Hitler can rise to power very easily. If everyone is fat and happy, they will elect to ignore drastic change preferring not to rock the boat.
The issue of intensity seemed to revolve around periods of 51.6 years, which was in reality a group of 6 individual business cycles of 8.6 years in length. Back testing into ancient history seemed to reveal that the business cycle concept was alive and well during the Greek Empire as well as Rome and all others that followed. It was a natural step to see if one could project into the future and determine if its validity would still hold up. Using 1929.75 as a reference point, major and minor turning points could then be projected forward in time. For the most part, I merely observed and kept to myself this strange way of thinking. In 1976, one of these 8.6-year turning points was quickly approaching (1977.05). For the first time, I began to use this model expecting a significant turn in the economy back toward inflation. My friends thought I was mad. Everyone was talking about how another Great Depression was coming. The stock market had crashed by 50% and OPEC seemed to be undermining everything. I rolled the dice and stuck to it and to my amazement, inflation exploded right on cue as gold rallied from $103 to $875 by January 1980.
As my confidence in this model increased, I began to expand my research testing it against everything I could find. It became clear, that turning points were definable, but the wildcard would always remain as a combination of volatility and intensity. To solve that problem, much more sophisticated modeling became necessary.
As the 51.6-year turning point approached (1981.35), there was no doubt in my mind that the intensity would be monumental. Indeed, interest rates went crazy with prime reaching 22% and the discount rate being pushed up to 17%. The government was attacking inflation so hard, they moved into overkill causing a massive recession into the next half-cycle date of 1985.65. It was at this point in time that the Plaza Accord gave birth of the G5. I tried to warn the US government that manipulating the currency would set in motion a progressive trend toward higher volatility within the capital markets and the global business cycle as a whole. They ignored me and claimed that until someone else had such a model, they did not believe that volatility would be a concern.
The next quarter cycle turning point was arriving 1987.8 and the Crash of 1987 unfolded right on cue. It was at this time that a truly amazing development took place. The target date of 1987.8 was precisely October 19th, 1987 the day of the low. While individual models specifically based upon the stock market were successful in pinpointing the high and low days, I did not think for one moment that a business cycle that was derived from an average could pinpoint a precise day; it simply did not seem logical.
After 1987, I began to explore the possibility that coincidence should not be just assumed. I began researching this model even more with the possibility that precision, no matter how illogical, might possibly exist. I began viewing this business cycle not from a mere economic perspective, but from physics and math. If this business cycle were indeed real, then perhaps other fields of science would hold a clue to this mystery. Physics helped me understand the mechanism that would drive the business cycle but mathematics would perhaps answer the quantitative mystery. I soon began to understand that the circle is a perfect order. Clearly, major historical events that took place in conjunction with this model involved the forces of nature as well. If this business cycle was significant, surely it must encompass something more than the mere economic footprints of mankind throughout the ages.
The Mystery of 8.6
At first, 8.6 seemed to be a rather odd number that just didn’t fit mathematically. In trying to test the validity of October 19th, 1987 being precise or coincidence, I stumbled upon something I never expected. This is the first time I will reveal something that I discovered and kept secret for the last 13 years. The total number of days within an 8.6-year business cycle was 3141. In reality, the 8.6-year cycle was equal to p (Pi) * 1000. Suddenly, there was clearly more at work than mere coincidence. Through extending my studies into physics, it became obvious that randomness was not a possibility. The number of variables involved in projecting the future course of the business cycle was massive, but not completely impossible given sufficient computer power and a truly comprehensive database. The relationship of 8.6 to p (Pi) confirmed that indeed the business cycle was in fact a perfect natural cyclical phenomenon that warranted further investigation. Indeed, the precision to a day appeared numerous times around the world in different markets. Both the 1994.25 and the 1998.55 turning points also produced clear events precisely to the day. The probability of coincidence of so many targets being that precise to the day was well into the billions. Indeed, the relationship of p to the business cycle demonstrated the existence of a perfect cycle that returned to its point of origin where once again it would start anew. The complexity that arose was that while the cycle could be measured and predicted, precisely which sector of the global economy would become the focal point emerged as the new research challenge.
It was also clear that the driving forces behind the business cycle had shifted and intensified due to the introduction of the floating exchange rate system back in 1971. My study into intensity and volatility revealed that whenever the value of money became uncertain, inflation would rise dramatically as money ceased to be a store of wealth. Numerous periods of debasements and floating exchange rate systems had taken place throughout recorded history. The data available from Rome itself was a spectacular resource for determining hard rules as to how capital responded to standard economic events of debasement and inflation. The concept of Adam Smith’s Invisible Hand was valid, but even on a much grander scale involving capital flow movement between competing economies. The overall intensity of the cycle was decisively enhanced creating greater waves as measured by amplitude by the floating exchange system. As currency values began to swing by 40% in 4-year intervals, the cycle intensified even further causing currency swings of 40% within 2-year intervals and finally down to a matter of months following the July 20th, 1998 turning point.

The Domino Effect
The events that followed 1987 were all too easy to foresee. The G5 talked the dollar down by 40% between 1985 and 1987 essentially telling foreign capital to get out. The Japanese obliged and their own capital contraction led to the next bubble top at the peak of the 8.6-year cycle that was now due 1989.95. As the Japanese took their money home for investment, the value of their currency rose as did their assets thereby attracting global investment as well. Everyone was there in Tokyo in late 1989. Just about every investment fund manager globally was touting the virtues of Japan. As the Japanese bubble peaked, capital had acquired a taste for foreign investment. That now savvy pool of international investment capital turned with an eye towards South East Asia. Right on cue, the capital shifted moving into South East Asia for the duration of the next half-cycle of 4.3 years until it too reached its point of maximum intensity going into 1994.25. At this point, international capital began to shift again turning back to the United States and Europe, thus causing the beginning of a new bull market in a similar manner to what had happened in Japan. In fact, 1994.25 was once again the precise day of the low on the S&P 500 for that year. As American and European investment returned home, the steady outflow of capital from South East Asia finally led to the Asian Crisis in 1997. In both cases, Japan and South East Asia blamed outsiders and sought to impose punitive measures to artificially support their markets. In Japan, these interventions have left the Postal Savings Fund insolvent as public money was used to support the JGB market. Financial institutions were encouraged to hide their losses and even employees from the Minister of Finance were installed in some cases engaging in loss postponing transactions of every kind. Major life companies were told not to hedge their risks for fear that this would make the markets decline even further. Thus, the demise of Japan that would have been complete by 1994 was extended by government intervention that has most likely resulted in a lengthening of the business cycle decline into 2002.85.
The next peak on the 8.6-year business cycle came in at 1998.55, which was precisely July 20th, 1998. While the intensity was defined rather well by the model’s forecast of 6,000 on the Dow by the quarter-cycle target of 1996.4 followed by 10,000 for 1998, the development of highly leveraged hedge funds created a trap that was not fully anticipated. It was clear that the European markets had captured the greatest intensity between 1996 and 1998 and that Russia too had reached our target for maximum intensity. However, the excessive leveraging of funds like Long-Term Capital Management had significantly created the peak in volume as well. Thus, the spread trades were so excessive, that the collapse that was to be expected, took on a virus type of affect. As Russia moved into default, and LTCM moved into default, the degree of leverage caused a cascade of liquidation that was spread around the world. Everything became affected causing the collapse in liquidity and credit to further undermine the global economy as a whole. Despite the new highs in US indices into 1999, the broader market has failed to keep pace and the peak in both liquidity and volume remains clearly that of 1998.55.
The Future
While this business cycle can be calculated on quarter-cycle intervals of 2.15 years into the final peak for this major wave formation of December 24th, 2032. Though this is long beyond my life expectancy, there is so much more behind the true understanding of the driving forces within the business cycle. I have learned that it is easy to claim coincidence and ignore the telltale signs of a hidden order. It is easy to argue that there is no basis for such a model without ever making an effort to test results. If everyone stopped with such criticism, most of ancient Greece would still be buried and Homer would still be considered a book for children. Man would not fly or travel to the moon. A cure for cancer would not be sought and progress would simply not exist. But furthering our understanding is part of humanity. Like law, that when strictly enforced deprives society of justice when circumstances are ignored, it is also the sin of ignorance toward new concepts that deprives mankind of progress and ultimately our posterity.
The Economic Confidence Model in 2.15-year intervals
1998.55... 07/20/98
2000.7.... 09/13/00
2002.85... 11/08/02
2005.... 01/02/05
2007.15... 02/27/07
2009.3... 04/23/09
2011.45... 06/18/11
2013.6... 08/12/13
2015.75... 10/07/15
2017.9... 12/01/17
2020.05... 01/26/20
2022.2... 03/22/22
2024.35... 05/16/24
2026.5... 07/11/26
2028.65... 09/04/28
2030.8... 10/30/30
2032.95... 12/24/32
In the next issue of the WCMR, the details of this business cycle will be expanded to provide a list of turning points down to the 8.6-month interval. There is a wealth of knowledge that lies ahead if we are not afraid to explore. Regularity of the business cycle does not mean that we lack free will. For it has taken me 30 years of observation to get this far. The peak for one nation may be the low for another. For within the scheme of global capital flows, not everyone can enjoy a boom simultaneously. For every gain in trade, there must be someone who loses. This is simply the nature of the global economy. The greatest booms unfold when capital concentrates in one sector. When that capital shifts, you also find the result of the greatest financial panics in history. An individual will always possess the free will to follow the crowd or strike out with his own independence to buck the trend. There will be those who believe in the business cycle and use it to their advantage just as there will be those who refuse to acknowledge its existence. As long as not everyone believes, the cycle will exist forever. The regularity of the business cycle is not determined by man alone; for within its deep calculations resides the very heart of nature itself. Like the Biblical forecast of Joseph that seven years of plenty will be followed by seven years of famine, understanding the nature of the business cycle can certainly enhance our ability to better manage our affairs rather than constantly add to the intensity of the cycle through our own error of intervention. For now, it is more likely that the politics will continue to act in the opposite direction of the cycle adding to its intensity and enhancing its volatility. Perhaps I have been an evangelist seeking to point out that the economy is like a rain forest – destroy one species and it will ripple through the entire system. The global economy to me is the same delicate system that cannot be viewed in isolation, but only through its collective integration. The failed labor policies of Europe have created perpetually high unemployment and the worst record of economic growth for the past 30 years. Instead of objectively reviewing what has happened, Europe seeks to federalize and strengthen the very controls that already exist. Communism and socialism are all political byproducts of our failure to understand the business cycle. Blaming the rich, your neighbor or a particular race are all vain quests to explain the cause of a cycle that has moved through the boom bust phase. Who knows, perhaps it is possible that if for one moment we truly understood the business cycle and worked in harmony with it, the possibility of reducing the amplitude just might result in a more stable political-economy for all mankind.

Republic Bank Corruption Charges...

Insider information on Republic Bank...
If I could add my two cents here…. when reviewing the Martin Armstrong situation it's important to note the following:

1)Republic Bank, the securities firm his company traded thru and kept client funds, was in the middle of a merger negotiation for $10 billion with HSBC when the Japanese FSA started investigating Cresvale/PEI. So when the FSA inquired with Republic for confirmation of client funds Republic then started closing positions without PEI/Amstrong approval and then contacted US authorities before Armstrong new what was going on. This resulted in substantial losses, and their objective was clear: make Armstrong the scapegoat and save the merger with HSBC - which they did by knocking off $500 million from their price tag, which ultimately re-surfaced in the form of payment to the supposed victims in Japan a couple of years later when they finally had to admit guilt for mishandling client funds. But by that time it didn’t matter, they already secured their acquisition and Armstrong was already publicly made out to be the villain. $500 million was a small price for them to pay.

2)Although Armstrong flat out admitted being on the wrong side of trades towards the end and losing a sizeable amount of money, that is no crime. Moreover it's inaccurate to reference quotes from those at Republic Bank as a source for Armstrong's trading performance. In particular, the individual who made the quote you reference regarding Armstrong's performance being no better than "flipping a coin" was later found to have been stealing from PEI accounts while working at Republic. The government later found that this individual, along with one colleague at Republic and a senior person at PEI, orchestrated a scheme in which he siphoned winning trades from PEI and allocated them into personal accounts while taking losing trades and putting them into PEI accounts. Hence, he had every reason to tell people Armstrong's trading was much worse than it really was because he himself was taking millions in winning trades. I believe he is coming up for sentencing of his own soon.

3)One final note, what Armstrong recently plead guilty to is a far cry from what he was originally charged with. He admitted to bad trades, shared accountability with Republic for failing to keep client funds segregated from each other, and took responsibility for allowing sales/marketing materials to continue to go out to prospective clients that promoted favorable trading performance even as he/PEI continued to lose money (hence, the “misleading of clients”).

I'm not here to proclaim Armstrong was without fault, he obviously made mistakes and has paid for them, but there is more that meets the eye in his case and there is a big difference between a legitimate, well intentioned business failing and a business the set out to deceive and defraud from the outset. Clearly Armstrong is the former, not the latter, and his research and contributions to the industry (see earlier post about his discovery of 8.6yr cycle) should be recognized independently.

Written by Anonymous from http://nihoncassandra.blogspot.com/2006/08/enigma-of-martin-armstrong.html

When was the 6th Amendment Repealed?

From: JerseyGOP a now defunct pro-Republican web site advocating small government and upholding law.
AuthorTom Schneider
When was the 6th Amendment Repealed?
"In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the assistance of counsel for his defense."
Amendment VI of the US Constitution
While our Constitution seems to be under constant attack these days form many fronts there is apparently one amendment we surrendered years ago. Currently there is a prominent US businessman who has been held for over two years in prison without a trial, stripped of his assets, and even for a time denied legal counsel.
He was once a darling of the conservative movement, helping the successful launch of The Weekly Standard and Bill Kristol’s career in the media. When The Weekly Standard was on the brink of failure he was the sole advertiser, promoting not his own products and services, but public service announcements supporting a national sales tax. He hosted forums where Kristol spoke alongside dignitaries like Margaret Thatcher. He wrote reports that strengthened the positions of members of congress like Dick Armey, and think tanks like GOPAC. Now that he is imprisoned with fewer rights than those granted to Gihad-Johnnie everyone seems to have forgotten him and the Sixth Amendment.
Martin Armstrong was once the founder and head of The Princeton Economic Institute, in Princeton, NJ. There he did historical and current market analysis and wrote monthly reports on economic and political trends. He was incarcerated on Jan. 14, 2000 accused of defrauding Japanese investors out of $1 billion. He was once free on $5 million bond after pleading innocent and having his and his children’s possessions confiscated. The $1 billion number was gradually lowered to half of that, but still there is no trial date.
The judge believes he is hiding assets and that keeping him locked up indefinitely will cause him to turn these supposed assets over and admit guilt. This is not the way the American justice system is supposed to work. This is the kind of treatment Amnesty International protests in China. This is the way justice was carried out in communist Russia.
Today the First Amendment is under attack by Democrats and Republicans alike with Campaign Finance Reform, the Fourth by high-tech surveillance systems and national ID cards, and the Second by the usual suspects. Do any of these components of The Bill of Rights stand a chance at survival if we ignore the actual elimination of the Sixth? If our leaders will not stand up for the Constitutional rights of their supporters and political warriors, can the rest of us; not a part of the political game, have any hope of anyone defending our rights?
In this case not only is the sixth Amendment being violated but probably the Fifth, Seventh, and Eighth, as well. If the state cannot convict and is unwilling to even try then the accused remains innocent in the eyes of law and should not be imprisoned or have assets confiscated.
"There is surely a limit to how long someone will choose to stay in jail, even for $14.9 million," the appeals court said. And then added, "The length of his confinement must be viewed in the light of the value of the concealed property, which is unusually great."
If there is no proof of guilt then the numbers presented in the allegations should be meaningless. American Justice must be blind to class as much as it is to race.
The Associated Press reported that, "The court said in an eight-page ruling that Armstrong's repeated efforts to overturn the incarceration order by U.S. District Judge Richard Owen probably had weakened its coercive effect."
This is a blatant warning to all citizens not to challenge the authority of judges. It is a threat against US citizens asserting their constitutional rights. It is an insult to our system of government and stinks of bias and corruption.
If a person can receive additional punishment for simply annoying a judge by asserting Constitutional rights, doesn’t that approach ‘cruel and unusual punishment’?
Armstrong was first held on a contempt order that expired after 18 months. A newly issued contempt order last July 6 has no set expiration date. The court has now said that, "Armstrong will for the first time be faced with the prospect of indefinite confinement."
How long can a judge take The US Constitution into his own hands and suspend its authority? How does this coexist with the right to a "speedy and public trial"?
The press had a hissy-fit over the treatment of the terrorist detainees in Gitmo-Bay, in an effort to protect their rights. Where are they when a US citizen is denied rights in our own country? Where is Bill Kristol now? Is Dick Armey too busy planning retirement to defend the constitution and one of the original authors of the national sales tax plan?
Does the US Constitution have any actual meaning or protectors anymore?

Princeton Economics Press Release Sept.1999

Press Release of
Princeton Economic Institute September 20, 1999

The Princeton Economic Institute is an independent research organization and is not owned by Martin Armstrong nor is Mr. Armstrong a director of the Institute. It is NOT related to Princeton Global Management or part of Princeton Economics International nor does it engage in the management of any funds.

Our daily forecasting reports, Global Market Watch and system models used at Princeton Economic Institute are independent models that are not the product of any single analyst. It is our intent to continue to publish our research and bring an independent and objective information to our many loyal clients around the world.
While Mr. Armstrong has always been an outspoken opponent against government manipulations, interventions and "the billionare's club", his direct warnings about the political corruption in Japan and the billions of dollars in hidden losses within its financial system , in some cases carried out by ex-MOF officials, have put him in the direct line of fire by the Japanese government as the man they most wish to discredit. No doubt his highly critical stand against the accounting systems used by all governments that falsely distort CPI, GDP, trade statistics, poverty statistics and taxation have not made him very popular in some circles. His outspoken warnings about the failure of the Euro have also created a few enemies. Mr. Armstrong has always been aware that his research has made him a target over the years nevertheless, he has always stood his ground.

Mr. Armstrong's involvement as an activist in governmental reform is well documented particularly in the field of global tax reform and its impact upon the economy. He stood by his convictions against the birth of the G5 back in 1985. When his Economic Confidence Model pinpointed the precise day for the low during the crash of 1987, he stood alone calling for new highs into1989. His research was even requested by the Brady Commission charged with investigating the incident and some of our clients were on the Commission itself (See Request). He became famous in Japan when his model also projected the high for the Nikkei in 1989 and boldly warned that the market would collapse by 20,000 points within 10 months. His research forewarned of the bull market in US and European equities in 1994 calling for the Dow to reach 6,000 by 1996 and later 10,000 by 1998. (See Vancouver Sun) His research warned of the Asian Crisis in 1997 and of course his model was able to project the collapse of Russia which made headlines in the London FT. His warning that the Euro would fail made him an enemy to some political groups in Europe. Of course when the very same model that pinpointed the 1987 Crash, Tokyo Crash and the birth of the bull market in equities also gave July 20th as an important major top last year, the validity of more than 20 years of his model became undeniable.

As staff members here can attest, even the CIA approached this office requesting that Mr. Armstrong assist the government in duplicating his model just last October, but he refused offering advisory services while insisting that the model remain proprietary. Mr. Armstrong was invited to China by the government where the Chinese made a similar proposal to obtain his model following his successful forecast of the Asian Crisis in 1997. Even after a visit to Princeton in 1998 by a representative of China, Mr. Armstrong still refused to cooperate with the Chinese insisting that the model remain proprietary.

Even the Gold Bugs have tried to join in on the issue claiming that there is a huge short position in gold of 20,000 ounces and that the demise of Mr. Armstrong will now lead to a bull market. Once again, there is no huge short position by anyone and this is another example of outright slander by GATA in a futile attempt to blame Mr. Armstrong for the bear market in gold simply because of his warnings of coming central bank and IMF sales more than one year ahead of the general media. Mr. Armstrong's warning that gold would decline has generated even personal threats sent to this office by some crazy Gold Bugs. There are many who have a vested interest in trying to discredit Mr. Armstrong, including one financial institution in particular which stands a lot to gain. They may all try to kill the messenger, but they will not change the forecasts that he has made for the future.

Mr. Armstrong flatly denies the allegations made against him and he intends to vigorously defend himself. His attorney has stated publicly that he is being made a "scapegoat" but the media prefers to print the propaganda handed directly to them by his opponents. The Japanese press is blaming all foreign firms for the demise of the Japanese financial system and even the FSA has publicly stated that they will investigate all foreign firms in Japan with a new nationalistic zeal after the Credit Swiss affair. If Mr. Armstrong is misquoted by the media in any response he would make, it can be used against him by the government. This is why his legal advisers insist upon his silence until he is heard in a court of law. Any similarity to Credit Swiss has been totally ignored by the western media and they prefer to try to discredit his research of the past 20 years. At no time has Mr. Armstrong ever misrepresented his background as confirmed by Mark Pittman of Bloomberg in his article of September 14, who interviewed him two years ago for Bloomberg. After all, Keynes, Ricardo and even Adam Smith became important contributors to economics without any formal degree in the subject relying instead upon unbiased experience and observation.

The staff of Princeton Economic Institute greatly appreciate the numerous responses of support, the gifts sent to the staff to cheer them up and those who have come forward offering even financial support to insure the long-term survival of this operation. We will keep our clients updated as to any developments in the near future and the staff here will do its best to keep the flame of free speech and objectivity alive. It is not an easy task.

8.6-Year Review

by Martin A. Armstrong

As a brief introduction to the 8.6-year frequency within the Princeton Economic-Confidence Model, let us follow its course beginning with the last major panic that took place in October 1929 from the US perspective. Factoring in the month of October as .75 to represent a decimal portion of the calendar year, the calculations embark on their journey with 1929.75 to see how well the cycle will hold up in forecasting the past 52 years. The next step was to add 4.3, half the cycle duration, to come up with the next bottom. It projected 1934.05 which would have been January. This year marked the Gold Reserve Act and the beginning of the New Deal. As a result, it also marked the beginning of the turning point in that human emotion known as hope. The stock market had actually bottomed in 1932 and in the later part of 1934 it had begun a rally that would double the Dow Industrials by March of 1937. Continuing on, we apply the next half cycle of 4.3 years which brings us to the next peak projection of 1938.35. This was extremely close to the real events. The stocks had peaked early, a s they always do in a recovery. The long-term trend in the business cycle had rallied from a -38% to -10% in growth according to the Cleveland Trust Co. Index of US business activity. Despite the fact that the growth was still negative, it was a strong improvement within the economy that began to fall off reaching a -18% during 1939. The next bottom, projected out by adding another half cycle of 4.3 years to arrive at 1942.65, which corresponded to the beginning of World War II and another beginning of an economic boom. The Dow Jones Industrials had been declining since March of 1937 when it peaked at 194.40. the Dow eventually bottomed out on April 28th, 1942 at 92.92. From there the Dow would begin another 4 year rally.
The 8.6-year cycle was holding up very nicely. From 1942’s bottom, the cycle peaked again in 1946.95. This corresponded with the end of the World War II period and the beginning of the post war recession. The stock market had peaked during 1946 at the 220 level on the Dow and for the next three years the Dow traded sideways between 160 and 200.
Moving ahead, the next bottom was projected to arrive at 1951.25. The 1949 recession was a deep one in which the US did not begin to pull out until 1951. Although the business cycle began to rise due to the Korean War during mid 1950, it actually peaked during mid 1954 at a +18% on the Cleveland Trust Co. Index followed by a sharp drop to a -2% in 1954. The Dow had started to rise during 1950 and remained in a bull market rising from 195 to reach 525 by 1956.
The next cyclical peak projected out to be 1955.55. The Dow had pulled off a 250% rally between 1950 and 1956 and then fell sharply by 100 points going into 1957. The business cycle peaked during October of 1955 rising from a -2% in 1954 to a +8% growth factor during 1955. The cycle at this point appeared to hold up very nicely, being off no more than 1 year at any point.
From the 1955 projected peak, the next cyclical low was due in 1959.85. The Dow had actually bottomed during 1957. During 1958 and 1959 a bull market once again returned to the Dow Industrials. The business cycle fell from the 1955 high of a +5% to a bottom during 1958 of a -7%. Early during 1959 the business cycle growth bounced back to a +6%, but in the last quarter of 1959 fell again reaching a -1%.
The next peak on the 8.6-year cycle projected out to be 1964.15. During this year, silver coins became extinct and inflation, as measured by the CPI index, had reached 92.9 which was nearly double that of 1929. Industrial production rose in its index that year for the first time to exceed the 80 level after bottoming out during 1932 at 11.6. The Dow was still strong, reaching a high during 1964 near the 890 level only to continue to eventually reach 1001.11 during 1966.
The cyclical projection then called for a bottom on 1968.45. The Dow had peaked on February 9th, 1966 and a sharp 260 point decline had begun. Inflation had continued to mount in much of the world. The United States and six West European nations agreed on March 18th, 1968 to discontinue the sale of gold to private buyers.
The next cyclical projection pointed to a peak in 1972.75. The Dow Industrials had rallied from a sharp decline which saw the Dow bottom at 627.46 on Tuesday, May 26, 1970. From that low, the rally in the Dow peaked at 1,051.70 on January 11, 1973. That high would remain a major record high going into the 1980s. This projection was accurate because the 1973 recession was a serious one, marked by the failure of the Franklin National Bank. It would serve as the worst recession since the 1929 panic.
The next projection came up with a bottom during January 1977.05. The early peak on the Dow during 1973 was followed by a severe panic decline that dropped even below the previous cycle low in the Dow. The bottom came on December 6th, 1974 after nearly a 50% decline. Despite the fact that gold began its rally during August of 1976, the economy didn’t begin its inflationary upswing until 1977.
The next projected high on this 8.6-year cycle called for that peak to come in at 1981.35. This was the precise month when the bond market reached a bottom and interest rates began to turn downward. But, from that 1981.35 peak, the next projection called for a decline into 1985.65 which marked the end of deflation as the stage was set for a new global economic trend. Thereafter, the next two major turning points are 1989.95 and 1994.25.
December 1989, (1989.95), was the major turning point for the Japanese share market and real estate prices worldwide. In addition, it also forecast that the first stage of recession would unfold moving into a bottom in January 1991. Now that same cycle is pointing upward moving into February 1992 and, indeed, the economic numbers are just now showing that the worst of the recession is over. While the majority did not speak of recession until December 1990, our model was forecasting that the decline would unfold years in advance.




The Business Cycle and the Economic Confidence Model by Martin Armstrong


In separate research works on our Economic-Confidence Model published since 1979, the complete and detailed historical review stretching back several centuries will provide the in-depth analysis of this model for those interested in more serious study. The primary purpose of this discussion is to present an overview combined with a practical guide as to how to implement this model into your investment and/or business decision making process.
Understanding the business cycle is extremely important to successful trading, investment, and corporate strategic planning. Paul Volcker, former chairman of the Federal Reserve, stated that the business cycle frequency amounts to a duration of 8 years. Research at Princeton has revealed a similar duration of 8.6 years, but on a more dynamic scale.
The overall structure of the Princeton Economic-Confidence Model is based on an 8.6 year business cycle. This 8.6-year cycle builds in intensity to form long-waves of economic activity measuring 51.6 years. This should NOT be confused with the long- wave of Kondratieff whose work revealed an average long-wave of 54 years. Kondratieff’s work, conducted during the early part of this century, covered a period of slightly less than 150 years. At that time 40% or more of the total civil work force was employed in the agricultural sector. Therefore, the primary input used in Kondratieff’s model was the commodity sector. Today, agriculture accounts for only 3% of the total civil work force and the service sector now employs nearly 70%.
While the world waits for the Kondratieff Wave to predict the next Great Depression, the reality of the situation is quite different. The major high in commodities during the early part of this century took place in 1920 followed by the low in 1932. Precisely 54 years after 1920 provides a target of 1974 while 54 years from the 1932 low yields the target of 1986. In fact, 1974 was the major high for many commodities as 1986 was a major low. The Kondratieff Wave has come and gone and the commodity sector indeed experienced a massive deflationary wave. By 1986, only 50% of the number of farmers remained from the peak in 1974.
No one in their right mind would develop a model based on pork bellies and then claim that it’s capable of forecasting the stock market. Nevertheless, those who write so much about Kondratieff’s work are doing precisely that! If Kondratieff were alive today, he would have chosen the service industry to base his model upon rather than commodities, since services now represent the lion’s share of the economy.
Long-wave economic theory did not begin with Kondratieff. It has actually been around for centuries. Kondratieff merely captured most of the publicity during this century. We offer as one proof of this statement an illustration of a most curious chart which was published in the Wall Street Journal on February 2, 1933 with the following caption:
“The above chart [shown left] was sent to the Wall Street Journal by Edward Rogers of Detroit. Mr. Rogers states that it was found in an old desk in Philadelphia in 1902. The original drawing was much discolored. The desk was of a pattern that indicated it was at least 40 years old.
“The author of the chart is unidentified and the circumstances lead Mr. Rogers to believe that possibly the chart was made during the Civil War or before. It is submitted to Wall Street Journal subscribers for what it may be worth.”
Under the circumstances, the Wall Street Journal could not have commented on the accuracy of the chart. At that point the chart, on the surface, had predicted the past brilliantly, but what about the future? The bottom of the depression had been reached according to the stock market in 1932. However, since this factor was not clear, even at the time of publication in 1933, the Wall Street Journal was not in a position to make a qualified statement. Even though this chart accurately had pointed to all the ups and downs in the past, it could have been a forgery or a hoax that only time would reveal.
Today we have hindsight to provide us with an honest review of this chart that the most cynical skeptic cannot dispute. We know that this chart, constructed by some unknown 19th century economic explorer, was published by the Wall Street Journal during 1933 and cannot be a hoax concocted for today. Looking at the performance of this chart since 1932 yields some interesting information.
The year 1932 was indeed the bottom the Great Depression as well as the stock market. But 1934 was the real bottom in the emotional confidence of the people as they began to look toward Roosevelt for hope in his famous New Deal. The 1938 peak predicted by the chart was fairly accurate. The economy reached its peak during late 1937 to early 1938. From there, the actual bottom of the 1949 recession occurred in 1951. The chart predicted the bottom of the next recession for 1968 at which time there was a bottom of a less severe recession. The chart called for the next peak to come in 1975. In this case it was off slightly since the peak came in 1972. Then the chart predicted another decline into 1979 followed by another peak in 1983. In truth, the recession bottomed out in 1977 and the economy peaked in 1981. The chart continued to point to the next bottom in 1985.
We must admit that while not perfect, the errors tended to be less than 1 year from the actual economic events. Careful analysis of the mathematics behind this forecast from the 19th century reveals that the author made a few errors. Nonetheless, this forecast from the past illustrates that others were looking for the key to the business cycle long before 20th century man.
Another famous believer in long-wave theory was Joseph Schumpeter, a professor at Harvard. Schumpeter devoted his life to explaining long-wave theory and in the process emerged with his own Theory of Innovation. Schumpeter saw Kondratieff’s long-waves corresponding to man’s economic evolvement. For example, one wave could be attributed to the development of the railroad. That invention allowed the West and east coasts in the United States to be connected, thereby expanding the marketplace for goods and services. This enabled the East to become the center for manufacturing while the West flourished in agriculture. As prosperity unfolds, competition increases. Eventually, the peak is reached due to over-competition that results in lower profit margins. Lacking a new major innovation to allow the economic expansion to continue, the economy begins to slow and eventually a correction takes place. The wave of the 1920’s could easily be attributed in part to the development of the automobile.
Others, such as Rostow, a professor at the University of Texas, have also sought to explain Kondratieff’s long-wave. At MIT you will find another group including Jay W. Forrester who has also dedicated his life to understanding long-wave theory. At MIT they take every fundamental event and public decision and input this into their computer models.
At Princeton we have taken a different road. Our 51.6 year long-wave is not based on any of the works mentioned here, other than an agreement in the general theory that long-waves exist. We have named our model the “Economic-Confidence Model” because our research has shown that all long-waves of economic activity are NOT the same. There is a cycle of different activity in long-waves themselves. We have found that in one 51.6-year period the underlying confidence of the community may reside heavily within the public (government) sector and the private sector will have a certain degree of skepticism attached to it. The next long-wave of 51.6 years will be exactly the opposite, showing confidence moving away from government and toward the private sector. This alternating confidence of the people is caused by the excesses of each sector.
For example, during the mid 19th century, people became very skeptical about government and didn’t even trust its currency. This gave birth to the term “greenback” which referred to the only “backing” being the green ink on the reverse side of the note. To inspire the acceptance of unbacked paper currency, there used to be a schedule of interest payments on the reverse. Currency had become merely a strange form of circulating bonds.
The long-wave that resulted in the Great Depression was a wave of “Private Confidence” as people believed more in the virtues of the private sector. This high concentration of private confidence results in strong stock markets and great expansion. When it reaches its point of maximum entropy or excess, the correction begins. Due to the losses that take place, confidence then turns to government as its savior—in this case Roosevelt.
Confidence can be determined by simply monitoring capital movements. During public waves, capital is comfortable to reside in government bonds, whereas during Private Waves, capital begins to look more at diversification into stocks, commodities, business, and real estate. We have entered a new Private Wave of confidence as of July 1985. This is why the stock market continued to make new highs beyond 1986 when the bonds peaked. It is also why the ’87 crash took place, because volatility is always higher in Private Waves than in Public waves.
Many of our observations of this alternating confidence was based not merely on market activity, but on the newspaper analysis of events. Several specialized works have been published which are available through our book department for those interested in a deeper background on this subject. The titles are “The Greatest Bull Market In History” and “The Economic-Confidence Model.” Both offer a detailed account of historical events and how they correspond to this model.