Be it nature or politics, everything dies in a Phase Transition. The fall of communism in 1989 was abrupt and swept from China to Russia within a matter of months. Western political systems will simply collapse by this same process. Everything dies in an explosive Phase Transition. It is said when you die you see your entire life flash before your eyes in a Phase Transition of your consciousness coming to an end like a massive computer crash.

There is no exception to this phenomenon. We live in a sheltered world that assumes man can control the economy and society. We simply cannot accomplish this miracle because we always self-destruct since people do not participate enough and that encourages politicians to wallow in corruption. Those in power leave super rich because they steal and nobody says anything. They write laws to exempt themselves in the same way that Congress is exempt from insider trading. When the people become angered by their theft, those in government are shocked with horror and become indignant. They never see that their corruption creates revolution that seemingly erupts from nowhere.

We will see Western political systems collapse in this same manner in the blink of an eye. For this giant red star, 500 times the size of our sun, its end came swiftly after exploding in about 20 minutes. While life may be measured in billions of years, death comes swiftly to everything. Death in all systems comes very rapidly when you cross the point of no return.

A reader sent this in for everyone to grasp. Job well done.

Whenever the establishment is seriously threatened, they respond with assassination. This is historically the normal in all cultures. One of the more credible conspiracies about the Kennedy assassination centers on the fact that he was against expanding the military and opposed starting the Vietnam War. After Lyndon Johnson approved the war, he latter commented how it was a staged event and that the Vietnamese never fired on Americans to begin with. The official story was that North Vietnamese torpedo boats launched an “unprovoked attack” against a U.S. destroyer on a “routine patrol” in the Tonkin Gulf. Then, the North Vietnamese boats followed up with a “deliberate attack” on a pair of U.S. ships two days later. In 1965, Lyndon Johnson commented, “For all I know, our Navy was shooting at whales out there.” The military wanted war, regardless of the facts. They lied to the American people and took the lives of more than 50,000 boys.

The standard operation is always to assassinate the outsider who resists the establishment, be it military or political. Of course there are plenty of examples like Martin Luther King insofar as activists are concerned. However, proof that the Ukrainian Revolution was real, and not some CIA plot that the communist mafia running Ukraine has spread as propaganda, is the fact that when Ukraine was winning its independence. Those in Parliament at the time were still in the communist mafia and were stealing everything they could from the national production. Viacheslav Chornovil (1937-March 25, 1999) was a political activist who the people turned to as their first independent president. He was very prominent as a Ukrainian dissident in the Soviet Union and was arrested multiple times in the 1960s and 1970s for his political views. A long-time advocate of Ukrainian independence, he was paving the way for contemporary independence in Ukraine. He became known as a dissident after documenting the illegal imprisonment of some Ukrainian intellectuals. They did everything they could to imprison him on non-political allegations. In April 1980, they paid off a girl to claim Chornovil raped her and he was arrested for “attempted rape” since she could not prove he actually did anything. Chornovil was sentenced to five years in prison.

When it became clear he would win the election against the incumbent President Leonid Kuchma, the “former” Communist Party leader in the 1999 presidential election, Chornovil died with his aid in a very convenient car crash on March 25, 1999. The official investigation carried by the Ministry of Internal Affairs naturally proclaimed it was just an accident. He was a national hero and on August 23, 2006, Viktor Yushchenko, the previous president of Ukraine, unveiled a monument to Chornovil and ordered a new investigation into his death, which of course never blamed anyone in power.

Then there was the case of Galina Starovoitova (1946-1998) who began her political career in 1989 when the tide was turning. In the USSR Congress, she became a member of the reformist faction. In April 1998, she became the leader of “Democratic Russia,” which became a registered official party. She was preparing for the State Duma elections that were to be held in December 1999. Galina Starovoitova tried to prevent the old guard from coming to power. Starovoitova opposed the direction of Russia moving from a communist to oligarchy state and made this part of her political platform in “Democratic Russia.” Starovoitova was gunned down in the entryway of her apartment building in St. Petersburg on November 20, 1998. At first, the spin was she was really a puppet of a “western financier,” who was supposed to be me simply because her son worked in our London office.

The point is, those in power will NEVER surrender their power willingly. Donald Trump is flying in the face of people so corrupt that they would not hesitate to have him assassinated somehow, be it a plane or car crash or under the pretense of some minority who gets amazing access. This is standard operating procedure and it is dominant throughout history from ancient times to the present. They will stop Donald Trump one way or another. They cannot afford to lose control of their money machine. The press is part of the establishment, for you can see they have received their orders to portray Trump as dangerous. They should be nominated for an Oscar at the Academy Awards. This is why there is ultimately revolution. No individual can reverse the direction of corruption. Yet the practice of assassination is historic.

So either they rig the convention, or they create an accident. The “establishment” does not appear willing to accept Trump under any conditions.

The Nikkei was the bright spot in Asian equity markets today closing up 0.8% whilst the JPY decline would have cost 0.3% of that gain. It was far better than the declines we saw in mainland China which closed -1.7%. Yuan gained small ground today and was last seen 6.5212. Given the majority of the markets were closed Friday and many remained closed today, volumes were expectedly light. In late US trading the China 300 (futures) trades +0.7% higher than the cash close earlier today.

European futures were in play today with DAX eventually losing a lot of the recovered ground in the morning session only to close the day small down. Volumes were again very light but that is to be expected when core markets are absent. Most core cash markets closed.

Stocks in the US were quiet also trading within a very tight range. This ahead of a very busy week of speakers, data and supply. Oil was down around 0.8% at one stage but that came back into line just by the close. Gold saw a $7 rally to close $1220 around the highs of the day.

US Treasuries gained (in price, lower yield) ahead of tomorrow speech by FED Chair Janet Yellen but also after supply. Earlier we saw $26bln of 2yr notes at an average yield of 0.877%. The bid to cover was only 2.58%, lowest in over 8yrs. 10yr notes also better bid on the day closing 1.88% (-2bp from last week). The curve 2/10 closed 101bp (2bp flatter than last Thursday. We have had a few FED speakers recently alluding to an April rate increase so the market will listen with bated breath as Yellen speaks tomorrow on economic and monetary policy.

USD suffered a little today after softer economic data than expected. Inflation cooled last month dipping 0.1% in Consumer Spending after a +0.1% release in January. We await further direction tomorrow but todays was a reason the DXY lost 0.3%. Core losses were against GBP and Swiss 0.75% and 0.5% respectively.

Gold opened below our opening pivot and traded up to it to test resistance after making a new low this week from the March high. We remain in a critical staging position in many markets as we approach the end of the first quarter on Thursday. We have reached the point of no return which separates the men from the boys in many markets. The Fed is still struggling between surrendering its domestic policy objectives for international policy lobbying. With capital still in flight to the dollar overall as evidenced by the Dow not penetrating last year’s low compared to the S&P500 and the NASDAQ and the BREXIT vote coming up as the European Migrant Invasion continues to tear the EU apart at the seams, the Fed will have to deal with the consequences of international political chaos impacting capital flows.

Richard Nixon unsuccessfully tried to pass a version of Milton Friedman’s plan. Nixon’s Democratic opponent in the 1972 presidential election, George McGovern, also suggested a guaranteed annual income. Milton’s basic guaranteed income proposal was well thought out and substantially different than simply the welfare state. Our welfare system has seriously altered human behavior as it pays people not to work and pays others per child, which creates incentives to have children to gain more money. The welfare system has done much to alter human behavior and destroy the family structure.

Milton’s proposal was to flip the process to create incentives rather than destroy them. It is ironic that the one president who tried to implement this plan was taken down by the Watergate scandal. The proposal passed Congress and the Democrats stopped it in the Senate under the pretense that they wanted more money.

Another important aspect of Friedman’s proposal was that there were no strings attached. The government did not attempt to tell people what they could buy or do with the money. Whenever government gets involved, they typically screw things up pretty good. Driving to work, I see signs offering cash for diabetes materials that people on welfare get from government. Others sell their food stamps. When you just hand people things, they will alter their behavior to get rid of them if if they do not need them. Milton’s proposal eliminated the government red tape, yet instilled the spirit to raise oneself up out of poverty. This type of system made sense.

Many people have written emails to ask if we have a model on Yellowstone National Park’s potential for the largest volcano eruption in history. A new study provides evidence of 12 volcano eruptions in about 3 million years, which suggests that Yellowstone’s super volcano can erupt catastrophically on a much shorter cycle of about every 250,000 years. There is insufficient data to create a quantified model that would be accurate. The same problem exists with California’s earthquakes. Before 1857, nobody was there. We can focus on the normal earthquake cycles and project a rise in intensity, but determining the “big one” requires a longer data series than just three instances. The same problem exists with Yellowstone National Park. We can see that we are entering a period where an eruption becomes more likely. However, to forecast when within a year or so becomes just luck and not science.

Some people can face adversity but others want to hide and pretend nothing is happening. What might seem impossible with respect to political reform to save our future, actually becomes entirely probable. What you have to grasp here is that the news may be negative. However, it is that negativity that finally lights the one remaining match to create an explosion. They say that HOPE is eternal. I tried very hard to make a difference while working from the inside on Capitol Hill, but it is true that I gave up. What I saw led me to believe I was wasting my time and, above all, it was pointless.

If you are walking down the street and a guy comes up to you with a gun and says, “Your money or your life?” do you begin to preach that it is illegal to have a gun without a license? Whatever the rules of law might be, such things are totally irrelevant. He has the gun and you do not.

I laugh at those who think corporations are evil and ignore government. They are typically weak minded and easily influenced by propaganda. I may not be a fan of NY bankers who have engaged in manipulating markets and buying government to stay out of jail, but let’s make no mistake — they do not have the guns and tanks to rob us of our freedom. Only government can oppress the people by sheer force of arms. Nonetheless, politicians always blame the “rich” to get elected.

Our HOPE will be very simple. We have to CRASH AND BURN first. Without that pain, there is no reform or gain. Nobody will change anything before the system fails. It is unrealistic to see this message as BAD to justify hiding in the shadows. The good news, if you understand what is unfolding, and you understand what the game is about, then you can help in our time of need. We do not need someone hiding their head in the sand. If they do not comprehend how we have reached this point, then they will blindly hand more rights to those who have created this nightmare. Therefore, what seems impossible (political reform) becomes possible only when the majority opens their eyes.

QUESTION:  You wrote the Socrates site on 3/23/2016: “Once the “confidence” in government cracks for the BULK OF THE SILENT MAJORITY who do not listen to money supply and conspiracy theories, then we move into game over. That is when we will see assets rise as confidence shifts from a corrupt government for the majority will no longer trust then and they will turn to the private sector.” Mr. Armstrong can you please name the private assets that will appreciate? and if there are similarities with 1929, where we are now in 2016? Thank you for all your efforts to teach us the world economy.

DS

ANSWER: There is absolutely no correlation with 1929 from the USA perspective. The people who see that nonsense do not know the facts or the history. The 1931 sovereign debt crisis was omitted from the history books. John Kenneth Galbraith blamed corporations in his book “The Great Crash” in which he states they ignored government defaults. There was no “helicopter money” for it was exactly the opposite – massive DEFLATION. There was a shortage of money to the point that hundreds of cities began to issue their own “Depression scrip.”

All of these forecasts projecting hyperinflation are based solely upon a misguided notion of what caused the German hyperinflation. The USA suffered massive DEFLATION because of a contraction in money supply — not inflation — so we are not facing a 1929 scenario. The analysts that claim this event is commingled with the German hyperinflation are creating a hybrid of something that has NEVER taken place in history.

Everything hinges upon the confidence of the silent majority. They are starting to rumble. That is the key to the future. We are watching this begin with Trump, which is precisely in line with out model that calls for political chaos to emerge in 2016.

The number one issue concerning Donald Trump is the misrepresentation that this political unrest is about Trump. We are watching a worldwide uprising against government. This is the West’s version of 1989 that took down communism. We are witnessing opposition to the establishment everywhere from Germany, France, Britain, and even China. The Chinese version of Donald Trump is Ren Zhiquiang, who has defied the Communist Party leader President Xi Jinpeng. Normally, anyone who criticized the head of the party would end up in prison, but things are changing on a global scale. This is what our computer model warned would lie on the other side of 2015.75. What has emerged in China is rather amazing as the sophisticated Chinese people, including scholars, journalists, students, and dissidents have all supported Ren against the Chinese Communist Party. That is quite amazing and unprecedented in modern times.

In many countries, the establishment is refusing to connect the dots. There is a change in the political winds and what is coming is something that takes place about once every 309.6 years. The last change in the political wind produced the American Revolution against the monarchy, which caught on structurally in France and eventually in England. What will the wind blow into town this time? Democracy at last? Or will be it be more oppression from the establishment?

It might surprise many, nonetheless, governments have routinely spent more than they take in from taxes. In ancient times, governments simply minted more coins to fund their operations; they generally did not borrow. Some ancient Greek governments borrowed from the temples to fund wars and defaulted. However, typically, tax revenues amounted to only about 80% of expenditure. Records and dies from which coins were struck have survived. Pictured here is an actual Roman die from the Republic period. Each die was hand carved so we can distinguish between dies. Additionally, we know that the average number of coins produced before a die would break is about 15,000. Here is a coin struck from this issue that this die represents. Since we can catalogue the number of known dies, we then can reasonably estimate the annual production of money in the Roman Republic as well as the Imperial era.

The above chart demonstrates the annual production of coinage during the Roman Republic (155-66 BC). We can differentiate periods of contraction (deflation) from inflation, and can see that some periods were clearly deflationary as a shortage of money occurred at times. The Roman Emperor Tiberius, who followed Augustus in 14 AD, was notoriously frugal. We find private coinage appearing as tokens to make up the difference for such periods of deflation.

The private token issues during the period of Tiberius (14-37 AD) are reminiscent of the Great Depression when hundreds of cities issued Depression scrip. We also find private token coinage produced during the American Civil War. They even issued postage currency whereby stamps were exchanged as money.

Since we can ascertain the annual production of coinage with a reasonable degree of accuracy, adding up those annual production figures will give us a look at the total money supply. We are then able to also reasonably ascertain that the Roman government collected only about 80% of its total expenditure from taxes. The rest was simply produced instead of borrowed.

Consequently, this provides the understanding as to why there would even be the practice of debasement. The fact that tax revenues fell short of expenses explains why about 20% of the annual budget was covered by new mining production. Rarely has there ever been a “balanced” budget based exclusively on tax revenue.

This further explains why coins of someone like Gordian I (238 AD), who reigned only 36 days, have survived and are currently worth around $3,000 instead of hundreds of thousands.

Then there is the coinage of Didius Julianus; his wife and daughter ruled for 66 days in 193 AD. The corruption had reached such levels that it was clear that the decline and fall of the Roman Empire began at this junction in time. The Praetorian Guard actually accepted bids for the position of emperor. There were two rival bidders who presented themselves – Titus Flavius Sulpicianus (father-in-law of Pertinax) and Marcus Didius Julianus. Didius’ bid was 25,000 sestertii per man, which was the highest bid, and he was duly declared emperor. This is why so much coinage has survived for someone who was in office just 66 days.

Today, to cover the shortfall, governments borrow each year with no intention of paying anything back. The Romans did not borrow; they increased the money supply to cover the shortfall in expenditure. This was the common practice and it did not cause runaway inflation. That came during the 3rd century following the capture of Valerian I by the Persians who turned him into a royal slave. When Valerian I died, the Persians stuffed him as a trophy. This resulted in a collapse in the money supply as people hoarded and feared the invasion of barbarians. This is when the wall was built around Rome by Aurelian (270-275AD).

Should we stop the borrowing and just increase the money supply as a finite percent of GDP? This makes sense when up to 70% of the accumulated national debt has simply been interest expenditures.