ee Armstrong Economics Peed a BR ESS SSS SSS Forecasting the Vorld An Islamic Revolution Is it on TIME? Forser Chairman of Princeton Reonomics International, Ltd: Mortin A, Armstrong strong Copyright ALL Rights Reserve Rogister For Special Updates At. ArmstronPleage cond comments by aail to: Please REGISTER for Special Updates Martin A, Arastrong POP Fort Dix Camp #12518-050 Arnetronglcononics .OON PO Box 2000 Fore Dix, NJ 08640 copyright Rartin_A,_Avmstrosg_ AIT Rights Resorved This Report my be forszded ar you Mike wfthoot charge to individnls ex governments around the orld, Tt Ls proves of » RslSc Serioe gt this tne without coot becuse of the critical fsts that te nov asad ecomaicaly. The contents and designs of the ystane are in fect cxpyghtes. ACKNOWLEDGEMENTS I vould 1ike to thank oll the foraer eaployees, associates, sources, ani contacts for their ongoina aupport and efforts to contribute to the writings I have been able to continuo through their great efforts. I vould also like. to thank those who hoe looked after not Just ayeelf, but wy fenlly, and shown then surprt and ndaess. The purpose of these reports {¢ to brodon the understanding that {8 s0 vital to our personal survival. Goverment cannot save us, and vill only assist the very econonie disaster we face, This is ¢ Sovereign Debt Crisis that threatens our core Survival. There is no plan to ever pay off debts. The majority of debt increase i paying interest perpetually to roll over without ‘any long-term plan, What You see In Greece and in the States, we have run out of other people's money. The socialists Keep pointing to the rich, But to fund the deficits, we need to borrow nov from foreign lands, We ran out of money donestically and to support the current systen Like Gresce, ve need foreign capital, But all governments are facing the sane crisis tnd ve ere on the verge of another widespread governnent default. Ada Smith warned {n bis Wealth of Nations that in 1776, no government paid off their debt and had falvays defoulted. We will have no choice either. ‘There 19 no hope that politicians will save us, for they only form comnittees to nvestigat after the shit-hite-the-fan. They will NOT risk their career for a future problem that may hit on someone else's vatch. There was a politician and a average man standing on top of the Sears’ Tover when a gust of wind blev then off. The average men being a realisticrpessimist, inmediately sees he is about to ate land hogina praying. ‘The politicians, the ultimate optimist, can be heard saying MWell so far so good!” as he passes the 4th floor. At Princeton Economics, our mission was simply to gather global data and to bring that together to create the world's largest and most comprehensive computer system and mogel that vould monitor the world capital flows. By creating that model. @il the fallacies of market and economic theories were revealed. The vorld is far bore dynamic and every change even ina distant land can alter the course of the Blobale economy, Just as has been shoun with the turmoil in Greece, » CONTAGION takes place and now capital begins to look around at all countries. We can no nore comprehend the future but Looking only at donestic issues today than we can do so Snvevery other area, sich as disease and the spread of flus. We Live tn a NEM DYNAMIC GLOBAL ECONOMY where capital rushes around fleeing political changes and taxes just as it is attracted by prosperity. All the people ho migrated to the United States in the 19th and 20th Centuries, cane for the same Feasons as those still coming fron Mexico ~ Jobs and prosperity. In the 19th Century, America vas said to have so mich wealth, its streets were pavel in gold. We must now Look to both the past and the entire world to understand where we nov are today,An Islamic Revolution By: Martin A. Armstrong Former Chairman of Princeton Feonomics International, Ltd. ‘and the Foundation For The Study Of Cycles RE we Looking at a PROTESTANT REFORMATION in Islan? One of the primary reasons shy the Protestant Reformation wis eagerly supported by kings and merchants, wes that they were abolishing the SIN OF USURY and that meant that now Christians could becone bankers without risk of violating religious principles. The Protestant Reformation vas fought for a lot of different reasons in the minds of many, but economically, it vas profitable to break avay from tre Church for those who sought to be bankers in the open to compete vith the Jevish pavnbrokers. This eventually led to a class distinction between Protestants and Catholics. The former were now merchant-banicers able to engage in banking to both borrow and lend, The first exchange was constructed in Austerdan. The Catholics wore forbidden to borrow or lend, Thus, the leverage of @ debt society took hold within the Protestant nations and they prospered rapidly. The Catholic nations lagged behind land thus northern Europe was exploding with economic innovation, vhile the southern European nations Ianguished in poverty. Catholics becase a second-grade class. “PROTESTANT” meant someone tho had then ‘There are other differences in Islan protested. Vhst ve are starting to sce in | such as extrene right and left wings just Islam is fot auch different from the real J gs there are within Christianizy and Judisn. econonic driving force that split Christians | These extremes are a concern i7 all major Starting in 1380 vith the rise of English | religions. Hconomics is also a very key factor. Feforsor John Wycliffe who translated the | Catholics vere in fact at firs: forbidden Bible into English. This was sbout the same | Go borrow or lend at profit that subordinated ‘tine frane, 1380 yoare, that have passed” | thom to Protestants. Here we have unemployaent Bince che death of Muhonmad in 632AD. The | that is the driving force bohind the riots and Fiots bagen in Iran, then in Tunisia, and | protests. Yet, governsent is defending itself pow Egypt. These are ALL Beonomic driven! ' shutting down the internet that the US intendsto enact. the very samp pover, What ve must Fealize is that governaent, fo matter ¥hat its form, alvays gravitates toxard its ovn self-interest of maintaining power. There is always this trend and Mubarak came to power in Egypt with the peak of the major Beonoaie Confidence Model tack in 1981 of the last Public Wave 51.6 years. Wo are similarly plagued by the fact that senators and congressmen once they get that taste of power, just never want £0 eave. Mubarak has’ placed his ovn personal self-interest abore those of the people and Cannot see anything that they are’ protesting ‘about as his fault. ‘The Arah World is facing a rising youth who vere much 1ike the Catholics in that they have become second-class citizens thanks to religion. ‘the extremists have cast a dark cloud over their culture end this has caused them to be painted by a single brush. Just as the Vandals of north Africa vho sacked Rone taking the copper from the roofs left a legacy that soneane ‘even 1600 years later vho destroye a place {s called vandalisn. Hovever, from the outside Looking in, Americans are seen ag arrogant, prudish, and imperial. Ashcroft, former Attorney General ‘under Bush, had draped the bronze statue of Justice in'Washington because her bare breasts offended him. Tf Asheroft was in ower in Burope, he vould have destroyed host statues and paintings because of their nudity. Te ie people Like that ail te Janet Jackson incident that causes America to be painted with a single brush as being prudish and religious extremists within the Christian world. Of course, painting any people vith a ‘single brush 15 never really possible. still, the rising rebellion in the Arab World se very important. It is no doubt quitecritical {In the economic evolution of the vorld econ ‘ony, that unless we look past the images, we vill miss the significance of what is truly leveloping. For that sane trend is starting to surface in the lingted States and Puropes ‘The FSSENCE of econoaie evolution is tied to (1) coamunication and (2) the trend Yoward concentration. Civilization is born when people cone together to form a society, they are agreeing on a culture ~ 2 ways and sneans of doing things collectively. Tt then Creates @ atmosphere in which ideas Flow with trade, That ds vital to the evolutionary process within the economy. ‘The INTERNET has been the greatest of all advancenents in helping mankind reach that next level in economic evolution. This ia manifesting in causing the younger gener ‘ation (INE INTERNET GENERATION) to form a ftuch larger global society with the freedon of ideas, This is changing the vorld and it Ze vhy- government is doing its best to now try to contral vhat has been unleashed. ‘The INTERNET GENERATION is sharing the most critical of sll aspects essential to economic evolution = ideas. They are able fo communicate across borders and culture forming a celeure that is all thetr ovn and T have often been told that T think Gifférently. While T have long disagreed that I am sone sort of genius, from my ovn perspective T have seen ay thinking purely 8 a product of internationalisa. I have been a world traveler since the age of 13. ‘That exposure has shaped my thinking process, I have been exposed to both Fast and Vest land everything in between. Thus, when T Look fat the world, I see it through many different eyes. This if a common trait of early thinkers: Who traveled anong many bafore they saw the Light so to speak. This is what the INTERNET Ae doing right now. Te ie allowing Ue sew younger generation to see the vorld through many eyes. Tt is what use to take place by teravel. Now, the younger generation is being exposed to a new global culture. In Fgynt, they saw what took place in Tunisia fant saw tha: protest could ead to change. ‘The youth 1a Iran were using Twitter to comminicate. This INTERNET GENERATION has the potential to make the next leap in our ‘economic evolutionary process leaving behind those who have yet figured out how to fly. ‘The INTERNET is ae poverful as the autonobile in its potential to force the Sconony int> a new higher level. Unfortun- ately, this stands in direct conflict with the self-interests of governaent. The future is on the horizon, We can at least see it, but 0 can governsent.‘The Arab youth are using American tech~ nology in the INTERWET and that is creating ‘8 new vorld that many behind the curtain in government are starting to fear. This is now ‘spreading berond Egypt into Yenen, Jordan, and we vill in fact see it sweep throughout the entire region, There is sone risk that the religious right will guin power, This could indeed destabilize the Middie East, This will send foil higher aad will help to keep a floor in gold at the $1,000 tevel. Again, ve are looking at the religion has helped'co keep the Arab nations in the economic backseat. This is the sane thing that happened to the Catholics in the wale of the Protestant Reformation, With time, the Catholics loosened their grip of the whole SD OF USURY thing, and gradually a Catholic could participate within the vorld economy along side Protestants. Today, it would absurd to suggest that a Catholic is prohibited fron buying a house on credit or using @ credit card. Yer this transition still awaits many parts of the Arab world. Countries Like that Of Turkey are modern Islamic states vho have relaxed such restraints, This has toa large extent helpet to keep unemployment high in the Arab world and this is pare that was the tip of the svord that vas first revealed in the student rebellion in Iran, T warned back then that this aay be the start of a trend and that the Vestern goveranents would then Start to concider the way to shut dow the INTERWET, ‘That has taken place with @ bill now pending in the US Senate. ‘The poriod shead appears to be rising political tersion everyvhere. This is part Of the effect that takes place when ve are eating vith a SOVEREIGN DEBT CRISIS, This 4s the root cause for Marx sold his utopian ideas assumirg somshow that if governnent controlled everything, clearly this would ‘create a perfect world. Weat Marx overlooked ‘was that the RIGH he learned £0 hate so very uch, were those who also sought political power. People have been quite concerned about Goldman Sachs, It is certainly not for their trading, but for the armour they have been able to construct by hiring so many politic dang oF sending their own poople into key political positions, This is an old trick Adopted by the Borgia and the Medici just to name a couple. ‘The Medici were also bonkers with political ties. They also in fact collapsed vhen the sovereign debt crisis wiped them off the face of the economic planet. ‘The danger ALWAYS cones from those who sizply seek to control government and thus ‘obeain special exempt status to gather all the spoils of wealth unavailable by any fair eans. These are typical of manipulating markets as did Edvard IIT of England or Gictating to the masses by monopolies. Te SIs NOT THE MERE POSSESSION OF WEALTH THAT PRESENTS A CLEAR DANGER, BUT POU OVER Unik THAT TUREATEAS THE LIBERTY (OF MANETNDT Religion haa often been used as the opium of the masses for political purposes. Governments have been known to introduce religion to further political over. Fren Henry VIII was against the Protestant Refor~ mation and vas against Martin Luther. His Seizure of the Catholic Church was purely for political purposes. China also had deliberately introduced Buddhism to help control the masses, and both Stalin and Nao abolished religion fearing it conflicted with the state goals. Therefore, religion has been both a tool to subdue the people fag well as on to enflane them. ‘The economic decline and tension caused from the SOVEREIGN DEBT CRISIS that has been set in motion from 2007, is by no means over rho matter vhat the TV says. They will still Speak the prty Tine and say all is back on tack, but we are in a period of serious economic chaos, Tllinois is raising taxes Significantly rather than reform. People fare leaving New Jersey and with che samo ‘size home, find they have $15,000 less in taxes by moring to New Hampshire. Far too tmany states have followed their self-incerest fand taxed the people to death for they just Seize their assets and homes if they Jo not pay whatever tax they demand. ‘The economic tension in Socialism is spreading with collateral damage to the rest of the third World, What ve are now watching fs the rise of @ younger generation that is fat last saying enoush ie enough!coup Gold peaked right on tine end it has now closed’ on a monthly basis beneath 1372 Suggesting that the decline shold now be {in motion. The fundamentalists vill be pounding their chests yelling at the top Of their lungs SEE! GOLD TS DEAD! LONG LIVE EVERYTHING ELSE! There is also the talk about hov gold is really a hedge against inflation, but it rallied only because it becane a brief hedge ‘against collapse. This is just gibberish. Gold has NEVER boen a hedge against infla tion for if it vas, then it should be right how several thousand dollars. Gold has at fll tines been a hedge against collapse. Te is absurd to call ita hedge against infla~ tion when it by no means keeps a steady pace with everything else. The bottom-line fe just that those tho refuse te see the world for vhat it is, hate gold for any ise in price warns them they are wrong. If they tell you gold is dead, Listen to what they are trying to sell you. Te 18 usually governnent debt. These poopie are insane for just how do they expect to keep the debt game going forever? The music stops From a timing perspective, ve should see turning points in April, June, and October in 2011, The next trending’ period appears to Start in October/Novenber. We could see a {ow into April/May, rebound into June, @ retest of the lov or nev lov in October, and then a rally resuming at that period into 2015.75. Likevise, if Gold rallied back to retest resistance into as early as March or April, then a drop into June vould also be possible. If we achieved a low in June 2011, fold could be Lined up for @ rally 4.3 years thereafter. ‘The debt crisis is still preving. We are seeing a reversal of fortune in ail. such government spending. This is vhy Obama put a freeze of hiring and raises for government Workers that is causing a flurry of retire tients now, Obama would not have done that if the economy was improving. The real effect is simply that the vorse is yet to come. Gold is not even a safe haven exclusively for the (IS Dollar. That applies worldwide. ‘Those who try to argue from 1968 into 7001 the CPI rose 5.1% annually and gold 5.6 so that shows its is 3 hedge miss the point. The CPL is highly manipolated and the formula has heen change far too many times to be able to fake any kind of comparison, Gold is still the hedge against sovereign debt and that has NEVER escaped defwelt in history just once-(CRUDE oT. Crude Oi1 has come back to test the $100 Level that is critical. This ss about the top of the 1998 Breakout Channel. As I have made clear over the years, there are ALWAYS three chansel constructions from each major turning point. Here Thave shown the longest with the shortest being the FXTREME version that provided che high quite nicely. The Std channel is the 1998-2001 UPTREND CHANNEL. TE ‘var this channel that provided the support the 2008 Crash. Bloonbers Nevs had covered our forecast at Princeton when oil fell to $10.35 on Decenber 21st, 1998, that it vould rally then to test the $100 by 2007. When that forecast was put out, it seemed quite impossible at that tine, But that is the difference between opinion and projections. Here in 2011, the $85-77 level is the critical pivot point. We need to sce a close above $105 on a monthly level to signal ve Could see a sustained rally with the top of the 1998 Breakout Channel becoming support. A-monchly closing ABOVE $100 will also be positive for nov, This 1s NOT basis the Brent, but basis NYC. There are different numbers altogther in each market that 18 @ important distinction. ‘The rally from esrly 2007 was precisely 17,2 month rally into the major high. AS 2011 is shaping up, the important turning points in tine appear to be May/June and Getober/Novenber. On an annual basis, it Still appears that ve should see 2 17.2 year high from the 1998 low. That places us also in alignment with the 2015.75 turning point fon the next 8.6 year Wave that starts this coming June. With the uprisings across the Arab world, this is far fron over, We are more Tikely than not going to see real political tension in this part of the world going into 2015.75 and this seens Likely to be a big influence in the ol market: We may indeed fee crude oi} well above $200 for the next major high due in 2015.75. From this perspective, this S100 Level is very critical, If we get above it and this decones support, then doing this at the start of the next 8,6 yoar wave would tend eo imply oll vill even get’ above $300 dy 2015.75, Hovever, keep in mind that ve ate in the midst of a debt crisis and that is Likely to cause the dollar to decline long-term relative to all tangible assets in general with the worst being real estate.