QUESTION: Thank you so much for your world forecasts. It is very helpful to be able to read you here in China. You said that deflation is in motion into 2028. People are cutting back on spending and your model has been correct here in China. Could you provide a quick overview for 2025?

DZ

ANSWER: President Xi Jinping has acknowledged that 2025 will be a challenging year of reform. He’s not wrong, at least about the second point. Deflation remains the major problem going into 2028. Prices are indeed falling as households curtail their spending. We are all human, and as soon as economic uncertainty appears on the horizon, people will hoard their cash. This is self-evident from ancient times.

I am doing my best to try to explain to anyone who will listen that this hair brain idea of Trump and tariffs will bring about an economic depression as we move into 2028 and he has the risk that his legacy will match that of Herbert Hoover. There were the Sovereign Defaults of 1931 and that wiped out capital formation. That was the major cause of more than 9,000 bank failures in the USA. We also face massive sovereign defaults, with the worst in Japan and Europe. Add tariffs to this bearish economic outlook, and Trump will export deflation, and with that, the US will also not be able to see overseas. The entire world’s GDP will decline by about 20%.

The People’s Bank of China is as trapped as the rest of the central banks, and it will be unable to stop the deflation without adopting a new economic theory. We are approaching 2026, which will be an important year for our models, and it is even 72 years from the formation of the Chinese Constitution, which was enacted on September 20th, 1954, with the first meeting of the National People’s Congress in Beijing unanimously approval the 1954 Constitution of the People’s Republic of China. It was a matter of weeks when, on October 1st, 1954, The China Construction Bank was founded.

Canada was the first central bank to cut rates within days of this Economic Confidence Model turning on May 7th, 2024. Overall, we are in a deflationary atmosphere into 2028. With regard to China, the downturn can be hard for two years into 2026.

 

 

 

The Legislative Analyst Office (LAO) found that California is facing “double-digit operating deficits in the years to come” as a result of reckless government spending. For the 2025-26 period, the LOA believes the state may have a balanced budget but called Newsom’s spending and policies highly unpredictable. For now, the state has seen $11 billion in “spending-related solutions” and $15 billion in “other solutions,” which will ultimately become problems. Newsom already withdrew $7 billion from the rainy-day fund. The state is now banking on high-income citizens for tax revenue to accommodate its ever-increasing spending.

This report was compiled before the deadly wildfires caused uncalculated damage to EVERYONE, including the dreaded rich who the state expects to cover the spending gap. Newsom spent recklessly on everything but infrastructure.

Spending growth from 2025-26 to 2028-29 is 5.8%, above the average of 3.5%. Growth over the same period is just above 4%, “lower than its historical average largely due to policy choices that end during the forecast window. Taken together, we view it as unlikely that revenue growth will be fast enough to catch up to ongoing spending.”

The “good news” is that incomes are rapidly rising among high-income residents who the state will extort. The labor market remains soft but those at the top will be expected to fill the gaps. The rising stock market is contributing to growth in pay among high-income workers, with the report noting that those in California’s once booming tech field are seeing pay increases. As with all socialistic economies, the government sees your money as their money.

Tax collections are expected to beat expectations by $7 billion. “This is entirely due to improving income tax collections, which would, under our forecast, end the current year 20 percent higher than two years ago,” the report notes. Since no individual can predict future stock movement, the legislative office is uncertain how much they will ultimately be able to extort, but they believe revenues will be “above or below” $30 billion across the budget window.

The office is also banking on the Federal Reserve lowering interest rates, another unpredictable variable. Currently, the state is facing annual multiyear deficits around $20 billion to $30 billion, which is exactly what they are hoping to ultimately collect from citizens.

GOVERNMENT SPENDING is to blame for the budget failures. Every analysis says the same thing. The LAO suggests: “Legislature would need to address in the coming years, for example by reducing spending, increasing taxes, shifting costs, or using more reserves. The magnitude of these deficits also indicates that, without other changes to spending or revenues, the state does not have capacity for new commitments.”

Newsom has no plans to slow spending. While the state has absolutely no capacity for new spending commitments, state government will not comply. The state can either raise taxes or reduce spending, and ultimately, the current plan is to continually raise taxes and punish the people for government’s failures.

I have been warning for many years that the Schengen Agreement would fail. As I explained half a decade ago: “As the economy turns down very hard after 2015.75, we are more likely than not going to see the freedom of movement in Europe fragment and that will be the crack that signals the eventual risk of breaking up the EU idea of empire-building.” We saw things come to a head at the dawn of the refugee crisis when Merkel embarked on an open border policy. Nations began temporarily closing their borders to one another to curb migration. Brussels encouraged open borders but individual nations aimed to protect their sovereignty. Now, massive travel restrictions and requirements are underway.

The Schengen Agreement led to the creation of Europe’s borderless Schengen Area. The treaty was signed on June 14, 1985 by five of the ten member states of the European Economic Community near the town of Schengen in Luxembourg, but was not implemented (partially) until 1995. It proposed the gradual abolition of border checks at the signatories’ common borders. Measures proposed included: reduced speed vehicle checks that allowed vehicles to cross borders without stopping, allowed residents in border areas the freedom to cross borders away from fixed checkpoints, and the harmonization of visa policies.

Germany and others are implementing the European Travel Information and Authorization System (ETIAS) in May. Those wishing to travel to nations with ETIAS requirements must receive electronic pre-approval. Anyone traveling from a visa-free nation will be required to apply. This includes a background check, submitting biometric data, and answering questions in relation to health and criminal history. ETIAS will remain valid for three years or until an individual’s passport expires. It can take up to 96 hours to process according to estimates.

Italy will begin requesting Type D visa holders to undergo fingerprinting at consulates. France, Poland, and Portugal are implementing similar measures. Spain introduced CEHAT (Confederación Española de Hoteles y Alojamientos Turísticos) last month that reshaped the hospitality sector by requiring hotels, campgrounds, resorts, apartments, and short-term rentals to submit extensive traveler info. Travelers must provide a thorough 31-data point survey and hand over their personal information. Additionally, travelers must demonstrate financial independence by proving they have €100 per day of their stay.

One may believe that these restrictions are simply targeted at non-Europeans. However, countless nations have already begun to implement border security and become wary of their neighbor as they do not want their migrants passing through their borders. Brussels remains in a state of denial and tries to force the EU upon everyone while denying any democratic process in order to save the jobs of the Eurocrats. We saw nations like Hungary and Poland fight Brussels on its open border protocols.

Europe has witnessed their population alter entirely in recent years under open border policies that are completely destroying each nation’s traditions and culture, not to mention budgets as there is no way any nation can provide full government assistance to endless newcomers. The Schengen Agreement will fail, for it is an invitation that will bankrupt the governments, for they cannot afford to expand their welfare systems.

Gavin Newsom is unfit to run the state of California. The fire that has consumed tens of thousands of acres at the time of this writing could have been controlled had he not ignored warnings. The devastation of these fires will be felt for years to come as the death toll rises and over 100,000 residents have been forced to flee their homes.

The fires began in the Pacific Palisades on the morning of January 7. All three 1-million-gallon water tanks were completely empty by the evening. In 2019, then-President Trump demanded that Newsom turn his attention to forest management.

“Governor Gavin Newscum refused to sign the water restoration declaration put before him that would have allowed millions of gallons of water, from excess rain and snow melt from the North, to flow daily into many parts of California, including the areas that are currently burning in a virtually apocalyptic way,” Trump recently said.

“He wanted to protect an essentially worthless fish called a smelt, by giving it less water (it didn’t work!), but didn’t care about the people of California. Now the ultimate price is being paid. I will demand that this incompetent governor allow beautiful, clean, fresh water to FLOW INTO CALIFORNIA! He is the blame for this. On top of it all, no water for fire hydrants, not firefighting planes. A true disaster!” Trump added.

Newsom is blaming CLIMATE CHANGE for the failed response. “We’re successfully waging war against thousands of fires started across the state in the last few weeks due to extreme weather created by climate change while Trump is conducting a full on assault against the antidotes,” Newsom said in response to Trump’s message, the Washington Post reported at the time.

Los Angeles Mayor Karen Bass was 7,400 miles away in Ghana as the fires broke out. Bass approved of cutting $17.6 million in funding from the Los Angeles Fire Department’s budget for the 2024-25 fiscal year. “Do you owe citizens and apology for being absent while their homes were burning, and do you regret cutting the Fire Department budget by millions of dollars madame mayor?” Sky News asked Bass when after her plane landed. “No apology for them? Do you think you should have been visiting Ghana while this was unfolding back home?” he said. Naturally, she had no comment. In fact, she had pushed to decrease the department’s budget by $20 million but was met with minor pushback. Those funds were redirected at the California slush funds intended to help the homeless, and sadly, the number of homeless will significantly rise after this incident.

The mental gymnastics one must do to continue supporting these blue policies is astonishing. This catastrophe was completely unrelated to climate change. Newsom and Bass FAILED California and should be forced to resign immediately.

QUESTION: I know you have the data on temperatures and said we are heading into a cold period. I couldn’t find that chart. Could you please repost that, given this is extremely cold these days? I think I recall you saying something about 2025. Will this also lead to famine, as you had warned?

DK

ANSWER: Yes, I provided the array with the link to that article that WAS PUBLISHED BACK IN 2022. Here is the view of snowfall since 1869, accumulative annually. Note that once more, this shows the BS about climate change and global warming. The record for snowfall in NYC was in 1996.

Compare this to the array that was published back in 2022. They both show a trend into 2029 and that this would shift in 2025. We should be looking at colder periods, and this raises a serious risk of famine as the planet turns colder. That is, when crops fail, food prices rise, and famine increases. Everything that the LEFT has done with respect to the fake climate change has set us up for an environmental disaster. California has outlawed controlled fires, which Australia has done for a long time, so if a strip is burned out, then a raging fire has no fuel, and it stops. Whatever these people have done is precisely the opposite of what experience and history prove is true.

Take corn, for example. The markets have always predicted the future correctly. The August low set the stage for the rally. Pay attention to the cycles and the reversals in agriculture markets. They are projecting that we have some hard times coming into 2029.

 

 

COMMENT: Mr. Armstrong, From here across the pond, the sentence of Donald Trump by this “acting” judge, as you have made clear, confirmed everything you have been saying. It was less of a judgment against Trump than a confirmation of how corrupt the American legal system has become.

For more than a year, all we read here in Europe was how horrible Trump was and that there was no way he would be elected president. This sentence in New York was more of a sentence against the legal system. This judge just wanted to call Trump a felon, and the conviction confirmed there was never a case to begin with.

Thank you for your independent analysis. It is highly respected on this side of the pond.

BP

REPLY: Indeed, the sentencing of Trump was really the final verdict on the New York legal system. The sentence with no jail or probation for the incoming president confirmed that this case was a joke and should have been dismissed. The fake acting judge Juan Merchan should be disbarred, for he only brought down the gavel on the New York legal system as a whole, disgracing the United States worldwide.  NYC is now the laughing stock of the world, demonstrating you better not have any contact with anyone whose headquarters are in NYC. There is tremendous risk to do business in NYC for the courts are the most corrupt in the country.

Manhattan District Attorney Alvin Bragg, Justices Arthur F. Engoron, and Juan Merchan have shown the world that the American legal system is far too often weaponized for political purposes.  How could a judge sentence Trump legally when BY law required one-year supervised release? That would be, as president, he would have to report routinely, and if they did not like something, he would be instantly thrown in prison for the term of supervised release.

Technically, since Trump is a felon, Trump will walk away from this trial and into the White House in less than two weeks, but the New York system will walk into infamy after this day. Merchan did this solely for the pleasure of the Democrats getting something – the label felon, which we will now hear every time.

The case has long been denounced by every objective legal observer I know and have read. Even some of Trump’s critics have concluded this case was legally absurd. CNN’s senior legal analyst Elie Honig denounced the case as legally flawed and unprecedented, and then Sen. John Fetterman, D-Pa., called it total “bullshit.”

What was the most outrageous aspect of this case was the sheer arrogance of NY and how they do not care they are above the law. Alvan Bragg took this case that was based on a non-crime and breathed life into a long-dead misdemeanor. He breathed life into making his own version of the law when only the people make laws, crafting a novel and totally unconstitutional unfounded theory. By using federal violations that were never charged, denying a due process right to a trial, Bragg turned a misdemeanor into dozens of felonies and essentially tried Trump for federal offenses in a state court. The mere fact that the appellate court did not step in demonstrates that NYC cannot be trusted.

Then, this fake judge Merchan allowed those charges to be brought to trial using federal statutes in a state court but engaged in a witchhunt to convict Trump for political purposes. The liberal media cheered like they say the Romans were still laughing when the Barbarians entered the city. The real verdict was the election since Trump still managed to pull in 3.6 million New York votes, or 42.7%, in the 2024 election. So many polls confirmed that many people saw through this nonsense. The election itself was a verdict against this outrageous judge and had these people not engaged in all of this leag persecution, who knows, perhaps Trump would not have won.

The sad part of this entire weaponization of the law for political gain is that it has been the dark side of the rule of law since the very birth of civilization.

Even Edward Gibbon wrote about the ruthless emperor Commodus, who is the featured emperor in the classic movie Gladiator.

 

It’s Time for serious Legal Reform to actually stop this abuse of the rule of law.

Even Charles Dicken wrote in Bleak House,

“suffer any wrong that can be done you rather than come here” to a court of law (Chancery).

COMMENT: Mr. Armstrong, I have written to RFK, Vance, Trump, and several Congress members asking them to please pay attention to Socrates. Not a single one has ever gotten back to me. I have no faith that Trump will do what he says and all this tale of Greenland and Canada instead of the real issue of the swamp. Do you have any faith that his administration will do as he said?

P

ANSWER: No. You will NEVER get through to any of them because they are all doing the same as everyone else in the swamp – the staff runs interference. There are some people who have been trying to contact Trump. They have asked me if I would agree to meet if they can get a meeting. I politely responded sure, but I doubt any of them would agree to meet because their staff will not allow such a request to get through. Welcome to the SWAMP, which is really an ocean.

I have no real faith that we will see meaningful change for staff to prevent it. There are those who have ideas, and they see this as their turf now, so how dare you walk on their grass? Look, when people get to Washington, they see it as their achievement. They are not there to listen to us, the scum of the earth.

I cannot convince them about how to actually save the country. They are part of this crash and burn. My role is not to prevent it but to perhaps guide the recovery. But they will NEVER listen to me to prevent anything. They cannot see beyond the tip of their nose.

We are on our own –

DO NOT FORGET THAT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I wish Trump all the best. But his staff have him in a bubble already.

QUESTION: Why will people not listen to you? You warned that we were turning not to global warming but to cooling and that the reduction of supply of energy would lead to hardship, disease, and war. Here is Britain, the gas company informed us that they are running out of fuel because it has been so cold. You offer historical data to provide the answer. Others provide nothing but wild opinions based on gossip. I am not sure what keeps you going. I supposed if I was ignored, I would say stuff it, you are on your own.

MV

ANSWER: I cannot disagree. It does get frustrating. It reminds me of my favorite cartoon. I moved to Florida (1) with no state income tax and (2) to get closer to real global warming. My father’s law partner had told me to get out of New Jersey and, if I died there, tell my family to drag my body across the river before they told anyone. The politics of Democratic states has destroyed those societies and this will most likely lead to serious civil uprisings, as you will also see in Britain and Europe.

This nonsense of global warming reminds me of Stanley Milgram’s experiments. When he put a a few people on the street and they just stared upward into the sky, a crown would form trying to see what they were looking at. Just one people people would walk by. They were looking for nothing, and that is what has taken place. Gee – it was warmer today than when I was a kid, so we MUST be causing that to happen with fossil fuels. No evidence has EVER been supported. Even Cicero wrote about the pollution in Rome; when you burn wood, you release CO2. The first Clean Water Act was by Justinian I in Constantinople in 535AD.

It is beyond my power to prevent anything –

I am here hopefully to point the way out of the Crash & Burn

 

Civilization rises during warm periods and collapses during cold periods. These people are beyond idiots or morons. No word describes their absolute stupidity. My dogs are more intelligent than these people who push this nonsense. We will go through a significant correction in civilization post-2032, like the fall of Rome. These are the assholes that are here to ensure that happens.

 

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