Money Flow Trading Method along with Risk Management

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Headed For The Tail

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John P. Hussman, Ph.D.

President, Hussman Investment Trust

February 2023

I’ve been a sailor in the belly of a great white whale
Hoping for the mouth but headed for the tail
– Anthony D’Amato, The Oyster and the Pearl
The extreme “tail” risk ahead may be disorienting.

We can allow for deranged monetary policy and enormous fiscal interventions. We can allow for “bit in the teeth” speculation amid historically extreme valuations. We can maintain strategic flexibility, even amid rich valuations, by responding to changes in the uniformity or divergence of market internals. No forecasts are required. Still, I remain convinced that if investors should allow for anything, it is to allow for steep losses in the S&P 500 over the completion of this cycle.

At present, we estimate that a market loss of about -30% would be required to restore expected 10-year S&P 500 total returns to the same level as 10-year Treasury bond yields; about -55% to bring the expected total return of the S&P 500 to a historically run-of-the-mill 5% premium over-and-above Treasury yields; about -60% to bring the estimated 10-year total return of the S&P 500 to a historically run-of-the-mill level of 10% annually.

The chart below may offer a sense of how far we are from Kansas, Toto. The green line shows the level of the S&P 500 that we associate with run-of-the-mill expected returns averaging 10% annually. The blue dotted line is the level we associate with a historically run-of-the-mill 5% premium over-and-above Treasury yields, and the orange dotted line shows the level of the S&P 500 that we associate with 10-year expected returns no better than those of 10-year Treasury bonds. The yellow bubbles show periods when our 10-year estimate for S&P 500 total returns was below the prevailing 10-year Treasury bond yield.
From a valuation perspective, it should not be surprising that the total return of the S&P 500 lagged the total return of Treasury bonds from August 1929 to July 1950, from December 1968 to December 1987, and from March 1998 to March 2020. Stocks don’t always outperform bonds, and starting valuations help to identify when they probably won’t.
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I intentionally use the phrase “run-of-the-mill” to describe potential market losses of -30%, -55%, and -60%, because none of these estimates can be considered “worst case scenarios.” Historically, market cycles typically trough at the point where prospective S&P 500 total returns are restored to the greater of a 10% nominal return or 2% above Treasury bonds, so I lean toward expecting the -60% outcome. Nothing in our discipline relies on that outcome. Still, I believe it is not only possible but likely.

You may be quietly thinking that this entire introduction is preposterous, and that the estimates of potential drawdown are implausible. The chart below shows how reliable valuation measures have been related to actual subsequent market losses over the completion of market cycles across history. It’s important to notice that the blue “cups” are not always filled with red ink immediately. Speculative market cycles often involve extended segments with extreme valuations that then become more extreme without apparent consequence. Those segments of the market cycle are what market internals are for – we’ll talk about that shortly. Still, the deferral of consequences is very different from the absence of consequences. My concern is for investors that may discover that the hard way.
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Over the past 5 years, the revenues of S&P 500 technology companies have grown at a compound annual rate of 12%, while the corresponding stock prices have soared by 56% annually. Over time, price/revenue ratios come back in line. Currently, that would require an 83% plunge in tech stocks (recall the 1969-70 tech massacre). The plunge may be muted to about 65% given several years of revenue growth. If you understand values and market history, you know we’re not joking.
– John P. Hussman, Ph.D., March 7, 2000

Just before, well, an 83% plunge in the tech-heavy Nasdaq 100 Index

No forecasts are required
In the discussion that follows, we’ll examine valuations, profit margins, interest rates, monetary policy, growth, and the composition of the S&P 500. That’s important, because all of these have been used as ways to “justify” today’s elevated valuations, and all of them are problematic. We’ll begin with updated charts and a discussion of our key measures of valuations and market internals. Following that, the progression of charts deconstruct a variety of data-free “feel facts” that Wall Street repeats to investors. The analysis may also address your own questions, particularly about profit margins, the effect of mega-cap stocks, and “Hussman charts” (various “valuation vs. subsequent return” methods and charts I’ve introduced over the past 40 years). I’ll limit math to “Geek’s notes” that you can skip if you prefer, but I hope you don’t.

It’s essential to emphasize, right at the outset, that nothing in our discipline relies on valuations to retreat anywhere near their historical norms. I clearly expect that they will, but we emphatically don’t rely on that. Our discipline is to align our investment outlook with measurable, observable market conditions, particularly valuations and market internals. With one important exception, that’s the same discipline that allowed us to navigate decades of previous market cycles, including the tech and mortgage bubbles and their subsequent collapses (not everyone recalls that I was a leveraged, “lonely raging bull” in the early 1990’s).

The single most important change to our discipline in recent years, as I’ve regularly discussed, is that a decade of zero interest rate policy forced us to abandon our reliance on certain “limits” to speculation, which had been reliable in every previous market cycle. My incorrect belief that speculation had a “limit” became detrimental amid the Federal Reserve’s unbridled expansion of zero-interest liquidity. Valuations and internals remain essential elements of our discipline, but we can no longer be pushed against the wall of “limits.” Reckless or not, the Fed can do what it likes. We’ll be just fine.

Valuations inform our expectations for long-term market returns and our estimates of market losses over the completion a given market cycle. But if rich valuations were enough to drive the market lower, we could never have reached the extremes observed in 1929, 2000, or early-2022. Market outcomes over shorter segments of the market cycle are driven by investor psychology. Today’s extreme valuations reflect a decade of yield-seeking speculation that drove valuations beyond every lesser extreme. Rich valuations alone aren’t enough to drive the market lower.

The trap door opens when rich valuations are joined by risk-aversion. We find that speculative and risk-averse psychology is best gauged by the uniformity or divergence of market internals over thousands of individual stocks, industries, sectors, and security types, including debt securities of varying creditworthiness. When investors are inclined to speculate, they tend to be indiscriminate about it. In contrast, deterioration and divergence of market internals is the hallmark of emerging risk-aversion.

We introduced our primary measure of market internals in 1998, with only minor adaptations since. The chart below presents the cumulative total return of the S&P 500 in periods where our measures of market internals have been favourable, accruing Treasury bill interest otherwise. The chart is historical, does not represent any investment portfolio, does not reflect valuations or other features of our investment approach, and is not an assurance of future outcomes.
Although some shifts in market internals are short-lived “whipsaws” and some shifts persist for well over a year, it’s typical for market internals to shift about twice a year. We don’t use internals in an attempt to “time” or “catch” short-term market fluctuations. Rather, internals are best used as a gauge of speculative versus risk-averse investor behaviour, and we respond to shifts in combination with valuations, as well as other useful though less essential considerations.
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When we abandoned our reliance on historical “limits” to speculation several years ago, we gave increased priority to our gauge of market internals. That should be increasingly evident since 2019. So even as we examine the risk of a -60% market collapse below, keep in mind that valuations are only part of our investment discipline. If investors shift back to speculative psychology, market internals will be among the elements that preserve our flexibility, even in the unlikely event that valuations remain elevated indefinitely.

On the valuation front, it’s tempting to imagine that the market decline in 2022 has eliminated the overvaluation produced by a decade of yield-seeking speculation, leaving the market at the beginning of a new and sustainable bull market. We wouldn’t rule out a period of speculation if our measures of internals were to improve, but from a valuation standpoint, the chart below shows the present reality. The 2022 decline did nothing but remove the most extreme froth from valuations, leaving the price/sales multiple of the S&P 500 above the level it reached at the 2000 bubble peak, and at the same level observed at market peaks in 2018 and 2020. To expect an extended market advance from here is essentially to view the area in the red box as the “new normal,” and to dispense with all of market history before late-2020.
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The chart below shows the relationship between the S&P 500 price/revenue ratio and actual subsequent S&P 500 10-year returns, in fairly recent data, from 1990 to the present.
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The next chart reflects more extensive data from 1928 to the present. MarketCap/GVA is the ratio of non financial market capitalization to corporate gross value-added, including estimated foreign revenues – our most reliable valuation measure, based on its correlation with actual subsequent market returns in market cycles across history. The scatter shows MarketCap/GVA on log scale, versus actual subsequent 12-year S&P 500 total returns. Presently, our expectation for 12-year market returns remains negative.
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It’s not surprising that the chart above looks much like the scatter for the S&P 500 price/sales ratio. Our most reliable valuation measures, including MarketCap/GVA and our Margin-Adjusted P/E (MAPE) are just broad apples-to-apples price/revenue ratios.
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We’ll get to the “but, margins” justification shortly, but the fact that the relationship between valuations and returns has remained stable over a century of market cycles should already give you a hint that justifying rich valuations based on elevated profit margins is problematic. Indeed, those who insist on valuing stocks using price/earnings multiples would do well to understand that the combination of high profit margins and high P/E ratios tends to be disastrous. As I observed in February 2022, paying a high price/earnings ratio, based on earnings that are already elevated by high profit margins, amounts to paying top dollar for top dollar. That is exactly what investors have done in recent years, and what they are still doing today.

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Meanwhile, the best we can say about year-ahead forward operating earnings estimates is that analysts tend to “look beyond” short-term economic fluctuations, making forward earnings less volatile than year-to-year reported earnings. Unfortunately, as I’ve noted before, forward operating earnings only became popular on Wall Street in the early 1980’s. As I observed in 2007, before the global financial crisis, investors seem willing to tolerate extremely elevated “price to forward operating earnings” multiples because they don’t even realize how elevated these multiples are.

On this point, it turns out that the price/forward earnings multiple and the Shiller CAPE (which has a far longer history) are well correlated. Based on the estimated relationship between the two, it’s easy to see that a historically “normal” level for the S&P 500 price/forward operating earnings multiple is only about 11.
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The chart below shows our estimate of likely 12-year average annual total returns for a passive investment portfolio allocated 60% to the S&P 500, 30% to Treasury bonds, and 10% to Treasury bills. Presently, this estimate is less than 1% annually. Needless to say, we prefer a value-conscious, hedged-equity discipline. Frankly, we even prefer Treasury bills, to a significant exposure to market risk. That will change as market conditions do. As I’ve often noted, the strongest market return/risk profiles typically emerge when a material retreat in valuations is joined by an improvement in the uniformity of market internals. Presently we observe neither.
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When “errors” are information
There are certainly periods, like the recent bubble, that produce meaningful “errors” between projected returns and actual subsequent returns. It’s tempting to interpret these “errors” as evidence that valuations don’t work. To the contrary, these errors generally occur at points where the end of a particular investment horizon represents the peak of a bubble or the trough of a collapse. As a result, the “errors” themselves are informative about subsequent market returns. They have a correlation between -0.6 and -0.7 with actual subsequent market returns as much as 12 years later. The reason is simple: speculative advances or market collapses that take valuations far beyond their norms tend to be followed by subsequent collapses or recoveries toward those norms.
In the chart below, we define a projection “error” as the difference between the actual S&P 500 total return over a given 12-year horizon and the total return that could have been projected based on starting valuations at the beginning of each horizon. Prior to the recent bubble, the largest “errors” occurred in July 1999 and March 2000. The current “error” is shown by the red arrow, reflecting more than a decade of Fed-induced, yield-seeking speculation that drove actual returns away from valuation-based norms. We don’t know yet what the total return of the S&P 500 will be over the coming 3-year period, but you already know that I would not be surprised by a 3-year period of -20% average annual losses.
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False justifications
Several arguments are typically offered in defence of current speculative extremes. One suggestion is that these extremes are driven by high price/revenue multiples among the very largest companies like as Apple, Google, and Microsoft, that deserve those valuations due to high profit margins. The difficulty with this argument is that even when components of the Standard & Poor’s 500 Index are sorted by their price/revenue multiples, the median valuation of every subset has exceeded its 2000 extreme in recent years, from the 10% of components with the lowest multiples to the 10% with the highest multiples. The same is true when S&P 500 components are sorted by market capitalization.
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A similar proposal is that perhaps revenue-based valuation measures are biased, relative to history, by mega-cap companies with unusually high profitability. Yet when the components of the S&P 500 are sorted by market capitalization, the median profit margins of the largest stocks comprising 20-40% of S&P 500 market capitalization are no higher, relative to the median S&P 500 component, than has been typical over the past two decades.
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Another argument is that improved profit margins in the technology sector justify elevated price/revenue multiples (and by extension, MarketCap/GVA, our Margin-Adjusted P/E, and similar gauges). Yet while the profit margins of technology companies are generally higher than the median S&P 500 component, and those profit margins fluctuate considerably over time, the profit margins of technology companies in the S&P 500 have not materially increased relative to the median profit margin of S&P 500 components in recent decades.
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In short, the rich valuations we observe in the U.S. equity market are not the artifact of a handful of companies, nor have the largest companies become significantly more profitable in recent years, relative to other S&P 500 components.
It is true that the general level of corporate profit margins has been higher, across the board, than in 2000, but three clear macroeconomic drivers account for nearly all of that difference, and none are permanent.

First, when the cost of labour required to produce a given unit of output grows more slowly than the price of that unit of output, profits tend to increase. So profits move opposite to real unit labour costs. For several years following the 2008-2009 global financial crisis, profit margins enjoyed a significant boost due to depressed real unit labour costs – a boost that has been gradually reversing since 2014. As we observed in 2007, profits can “pop” near the end of an economic expansion if consumers run down their saving. In 2007, this “dissaving” was largely financed by home equity withdrawals amid a mortgage bubble. In recent years, consumers have run down the surpluses they accumulated as a result of pandemic subsidies. Still, prevailing labor costs suggest that the resulting “pop” in corporate profits is unlikely to be sustained.
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Second, low interest rates also helped to boost profit margins during the past decade. Economy-wide corporate interest costs closely track Baa corporate bond yields. Given that non financial corporate debt is nearly the same size as non financial corporate revenue, each 100 basis point decline in Baa corporate yields tends to reduce interest costs and boost profit margins by that same 100 basis points. This driver has sharply reversed in recent quarters, as the level of Baa interest rates moved from 3.3% to 5.6% in 2022.

The chart below shows the relationship between the Baa corporate bond yield and the S&P 500 operating profit margin (based on trailing 4-quarter income from continuing operations). Notice that past few quarters were distinct outliers, largely due to dissaving in other sectors. As a side note, the word “operating,” as commonly applied to earnings releases and the S&P 500 P/E ratio, refers to “income from continuing operations” (basically earnings without the bad stuff), not the accounting definition of “operating profit,” which excludes interest and taxes.
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Given that higher bond yields can impact corporate profit margins with a lag, we observe an even stronger relationship between the Baa corporate yield and the S&P 500 operating profit margin one year later. With a Baa yield of 5.6%, the implied profit margin is closer to 9% than the recent 13%. Given likely S&P 500 index revenues, that would suggest 2023 full-year operating earnings (four quarter total) closer to $180 than the current Wall Street estimate of roughly $220. The 2023 forward operating earnings estimate got as high as $249 last July – and this is the mercurial object that people want to use as their “sufficient statistic” for equity market valuation? In recessions, the operating margin typically undershoots what would have been expected from year-earlier Baa yields, so a further drop in operating earnings below $150 next year would not be particularly surprising.
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Notably, technology margins are affected by interest costs just like the margins of other S&P 500 component companies.
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In short, the behaviour of S&P 500 profit margins is not driven by hand-wavy “new economy” dynamics, as much as the talking heads may wax rhapsodic with baffle gab about “mass collaboration and cross-functional mind share enabled by extensible technology and global meta-service networks.”
No. The drivers are wholly pedestrian, macroeconomic factors – primarily labour and interest costs. Both have been depressed over the past decade, and they are no longer at such extremes. The chart below shows their impact in three dimensions. The S&P 500 operating margin implied by current labor costs and Baa yields is shown by the green dot.
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Finally, trillions of dollars in deficit spending caused a sharp but temporary boost in the income and savings of other economic sectors, as every deficit of government must be matched by a corresponding surplus in household, corporate, and foreign saving. This is not a theory but an accounting identity. Unless one expects multi-trillion dollar pandemic deficits to become the norm, this recent driver of corporate profits should not be viewed as sustainable.
It is dangerous and almost superstitious to take the bloated profit margins and corporate earnings of recent years at face value, and to value equities on that basis. The failure of profit margins to maintain a permanently high plateau could have very unpleasant consequences in a market where the price/revenue ratio of the S&P 500 is currently near 2.4, compared with a historical norm of less than 1.0.

Rear-view growth
Examine the record of, say, the 200 highest earning companies from 1970 or 1980 and tabulate how many have increased per-share earnings by 15% annually since those dates. You will find that only a handful have. I would wager you a very significant sum that fewer than 10 of the most profitable companies in 2000 will attain 15% annual growth in earnings-per-share over the next 20 years.

– Warren Buffett's, Berkshire Hathaway 2000 Chairman’s Letter

If you examine the largest components of the S&P 500 at any point in history, you will always find a handful of companies with enormous market capitalization's, that have enjoyed remarkable growth in the preceding decades. Investors have the tendency to extrapolate the growth of these companies, and to assign them enormous valuation multiples. Because the U.S. economy has been dynamic, the industries represented by the largest companies often change, leading investors to imagine that each time is the first time such large companies have ever dominated the market. The reality is that the “new economy” is a very old story, and extrapolating the past growth rates of already enormous companies typically ends in tears.

Warren Buffett’s observation is instructive. As it happened, only two of the 200 top-earning companies in 2000 went on to enjoy annual earnings growth of over 15% in the 20 years that followed. Apple – #168 on the list – enjoyed earnings and revenue growth in excess of 20% annually. United Healthcare – #180 on the list – enjoyed earnings growth of nearly 20% annually, though revenue growth fell short of 15%. Notably, while Amazon enjoyed revenue growth of nearly 30% annually between 2000 and 2020, the company had no earnings in 2000, and its $1.6 billion in revenues were just 1% of Wal-Mart’s.

The perennial lesson for investors is that rapid and sustained growth generally emerges from a low base, not from an enormous one. The most rapid growth rates are typically associated with emerging leaders in emerging industries. It is likely a mistake to expect rapid growth from companies that have already matured to the point of market saturation. It is also a mistake to assign rich price/earnings and price/revenue multiples to those already mature fundamentals.
Geek’s note: If the growth rate of a given industry is r and the market share of a given company increases by a factor of X over a period of T years, the annual growth rate of that company will be g = (1+r)*X^(1/T)-1. For example, if an emerging industry grows by 15% annually over a 10-year period, and an emerging leader in that industry triples its market share over that time, the company’s annual growth rate will be (1.15)*3.0^(1/10)-1 = 28.35%.

A company that already has a dominant market share in an already mature industry is unlikely to enjoy the explosive growth that an emerging leader in an emerging industry often enjoys. Yet investors extrapolate the rear-view growth of the largest companies anyway. The chart below, featuring “glamour growth stocks” of the recent market bubble mirrors a chart that I used to demonstrate this same point about glamour growth stocks in 2000. As Buffett also observed at that time, it is extremely difficult for enormous companies with dominant market share to sustain rapid growth rates.
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With regard to broader economic growth, it is important to recognize that while technology and productivity growth are important drivers of economic activity and living standards, the rate of U.S. productivity growth has actually slowed markedly in recent decades, as has the rate of demographic labor force growth. The sum of those two growth rates is what we describe as “structural” economic growth. The observed growth rate of real U.S. GDP is the sum of that “structural” component and a “cyclical” component driven by shorter-term fluctuations in the rate of unemployment.

The chart below shows how U.S. economic growth can be partitioned into these structural and cyclical components. The structural component is currently growing at only about 1.7% annually. Real economic growth substantially above that level would rely on a further decline in the rate of unemployment, currently at 3.4%.
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On interest rates and recession risk
When the time comes to ask the question – ‘What triggered the crash?’ – remember that this is the least important question. The important question to ask is ‘What drove the bubble?’ That’s where the lessons will be. The most egregious role will be assigned to the Federal Reserve.

For more than a decade, the mountain of zero-interest base money created by the Fed has burned a painful hole in the psyche of investors. Every dollar of base money (bank reserves and currency) must be held by someone until the Fed retires it, but each holder feels that they have to get rid of it, so they pass the hot potato to someone else. Unfortunately, not a single dollar goes ‘into’ the stock market without simultaneously coming ‘out’ in the hands of a seller. So the cycle repeats. The desperate yield-seeking chase for alternatives to ‘zero’ has driven financial markets to extreme valuations, so that they, too, have become priced for dismal (and even negative) future returns.

From these extremes, one doesn’t need to anticipate the ‘catalyst’ that will trigger a crash. All one needs to know is that speculative psychology is impermanent, and that a market collapse is nothing but risk-aversion meeting a low risk-premium.

Meanwhile, when you hear people say that market valuations are ‘justified’ by low interest rates, what they mean – whether they realize it or not – is that dismal future returns on bonds ‘justify’ dismal future returns on stocks. The fallacy is in thinking that somehow the extreme valuations will not, in fact, be associated with dismal returns. That’s simply magical thinking, and it has nothing to do with asset pricing.
– John P. Hussman, PhD., What Triggered the Crash?, July 2021

Among the most repeated phrases on Wall Street during the past decade is the assertion that “low interest rates justify high valuations.” The problem with this phrase is that it is treated as a “hall pass” to justify mindless speculation – ignoring any consideration about the extent of those high valuations, or the consequences of those high valuations.

Now, it’s true that for any set of future cash flows, the higher the price investors pay, the lower the returns they can expect. If interest rates are low, and the future cash flows are unchanged, then it makes sense to price stocks for lower future returns as well. That’s exactly what the “high valuations” do. In other words, to say “low interest rates justify high valuations” is identical to saying “low interest rates on bonds justify low future returns for stocks.” Nobody ever actually says that, because it sounds unappealing – and it should.

While there’s certainly not a one-to-one correspondence between interest rates and market valuations, low interest rates do tend to accompany rich stock market valuations. But those rich stock market valuations, in turn, are also associated with low or dismal subsequent market returns. Again, the function of the “high valuations” is to drive future stock returns to levels commensurate with the low interest rates. Unfortunately, investors may stop asking “how high,” ignoring the extent of overvaluation. In those situations, the likely total return of the S&P 500 can be driven not only to levels that compete with interest rates, but to zero or negative levels.

The chart below shows this dynamic in data since 1928. To assist in “reading” this three-dimensional chart, look first at the vertical axis, which measures the 12-year total return of the S&P 500. Now look at the axis on the bottom left. That axis shows the level of 10-year Treasury bonds, ranging from 14% down to 2%. Notice that lower interest rates are generally associated with lower subsequent S&P 500 total returns. Why is that true? Well, look at the axis along the bottom right. The points associated with low interest rates are generally accompanied by high levels of valuation and poor subsequent market returns. In contrast, the points associated with high interest rates are typically accompanied by low levels of valuation and glorious subsequent market returns.
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Put simply, low interest rates may be the “friends” of investors in the rear-view mirror, because they tend to encourage an advance to rich market valuations. But those rich valuations also have consequences. Moreover, notice that there is a section of the plot where subsequent market returns were below zero. The returns were below zero precisely because investors told themselves “low interest rates justify high valuations,” but failed to ask “how high.” Presently, our estimates for likely S&P 500 total returns are negative on both a 10-year and a 12-year horizon. A sharp retreat in valuations could, and I expect will, change that over a much shorter period. Until that occurs, the market will continue to face substantial downside risk – particularly in periods when divergent market internals suggest risk-aversion among investors.

On the subject of risk aversion, it will be increasingly important to monitor low grade credit in the months ahead. As noted earlier, the impact of higher interest rates tends to hit corporations with a lag of about a year or more, as existing debt comes up for refinancing. We already observe emerging economic strains, and though we would require more weakness in the employment figures before projecting an economic recession with high confidence, employment figures tend to lag other economic data.

Already, we’re seeing increasing announcements of job cuts among corporations. Investors have tended to reward those announcements with knee-jerk advances in stock prices, on the notion that lower employment costs mean higher profits. A difficulty is that these layoffs reflect what economists sometimes call the “tragedy of the commons” – what seems to be a beneficial action for any individual in the economy can have awful outcomes if everyone else does the same thing.

My impression is that the U.S. economy will be in recession by mid-year. Given the conditions already in place, even a modest increase in the rate of unemployment to about 3.8% would be sufficient to trigger our Recession Warning Composite. While stock market weakness often precedes recessions, the lead time is typically only a few months. A recession beginning about mid-year would place the market in a window of vulnerability here and now. Still, nothing in our discipline relies on that outcome. As usual, no forecasts are required, and we’ll align our investment outlook with observable market conditions as they change over time.
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While investors will undoubtedly blame the Federal Reserve for a recession, and already blame the Fed for recent market losses, it’s actually the decade of deranged zero-interest monetary policy that deserves blame. Based on prevailing levels of nominal GDP growth, the GDP output gap, unemployment, and core inflation, the current level of Treasury bill rates is still well below what most systematic policy benchmarks would suggest. The Federal funds rate is still below year-over-year core CPI inflation. The Fed has never cut rates in this situation except when inflation has been below 3% or unemployment has been greater than 5% (even the single instance below a 6% unemployment rate was short-lived). Meanwhile, the recent loss in the equity and bond markets, and the prospect for steeper losses, may have originated in inflation and tighter monetary policy, but recall that the 2000-2002 and 2007-2009 collapses were both accompanied by aggressive Fed easing. Tight monetary policy is not a requirement for a market collapse. As we did in 2000 and 2007, we view steep market losses as an inevitable result, baked in the cake by recklessly extreme valuations. Just like the mortgage bubble that preceded the global financial crisis, the recent bubble was the consequence of speculation by investors who were starved, by the Fed, of any safe yield at all.

Don’t blame the Fed for a market collapse, a recession, a pension crisis, or corporate credit strains – all which I suspect are already baked in the cake. Instead, blame a decade of unrestrained monetary policy that encouraged yield-seeking speculation and enormous issuance of low-grade debt and equity securities. The only differences between the recent bubble and the mortgage bubble are that this bubble was far more aggressive and extended, and it affected a much broader range of securities.

As for bonds, my view is that the current yield-to-maturity on 10-year Treasuries already fully reflects the expectation that the Fed will be successful in quickly bringing inflation to a 2% target. Given structural real GDP growth of about 1.7%, that rate of inflation, if sustained, would produce nominal GDP growth of about 3.7%. Historically, investors have typically used trailing 10-year nominal GDP growth as an anchor for the general level of 10-year Treasury yields. The current level of Treasury yields makes sense if the Fed is quickly successful in bringing inflation down to 2%, but it also assumes that outcome has been achieved already. The risk, of course, is that inflation does not immediately retreat to a 2% target. A recession could accelerate the process, but that would create its own difficulties.
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With regard to long-term interest rates, the 10-year bond yield has rarely persisted below the weighted average of year-over-year nominal GDP growth (0.25 weight), core CPI inflation (0.25 weight), and Treasury bill yields (0.5 weight). Indeed, we find that the entire historical total return of Treasury bonds, in excess of Treasury bill returns, has occurred in periods when the Treasury bond yield was materially above that weighted average. It’s not impossible for bonds to do well when yields are inadequate, as we saw between early-2019 and March 2020. But then, that was a point when the economy was slowing, with core PCE inflation just below 2% – the Fed even had the audacity to describe higher inflation as a “goal” – followed by the sudden crisis of a pandemic that was accompanied by a doubling in the Fed’s balance sheet.
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Geek’s note – Methods and arithmetic of valuation and total return estimates
If you don’t like math, run.

My hope is that you’ll grab a pen, a notepad, and a calculator instead. Some of the content below may be familiar, but the new portions will provide a deeper understanding of how valuations and subsequent market returns are related.
I’ll begin this section with a series of familiar propositions, most which we’ve demonstrated in various charts above.

1. Every security is a claim on some stream of future cash flows that investors expect to be delivered over time. The higher the price you pay for a given stream of future cash flows, the lower your long-term rate of return. The lower the price you pay for a given stream of future cash flows, the higher your long-term rate of return.
2. Low interest rates can encourage high stock market valuations, but those high stock market valuations are also typically followed by low subsequent stock market returns.
3. Investors typically anchor the level of Treasury bond yields based on the trailing 10-year growth rate of nominal GDP.
4. Every valuation ratio, whether price/earnings, price/revenues, price/dividend, or price/cash flow, is just shorthand for a proper discounted cash flow analysis. The thing that makes a good valuation ratio is a denominator that’s representative and proportional to that long-term stream of future cash flows.

Long-term followers may have noticed that I sometimes use arithmetic to estimate the average return over some limited holding period of T years, given certain assumptions about growth in fundamentals and ending valuations. Yet more generally, our projections of 10-12 year S&P 500 total returns simply use the log value of starting valuations. Log valuations? Nominal returns? Come on, what’s going on there?

OK. Here’s what’s going on. Let’s do some arithmetic (yay!).

To be very general about valuations, we can use the letter F as our fundamental, which might be earnings, revenues, book value, or whatever you wish. We’ll use P for price. Our valuation ratio is then V = P/F. We’ll use the letter g as the annual growth rate of fundamentals between today and some future data T years from now. So F_future = F_today * (1+g)^T.

With that, we can write the ratio of the future price to the current price as:
P_future/P_today = { (P_future/F_future) * F_future } / { (P_today/F_today) * F_today}

This can be rearranged as:
P_future/P_today = V_future/V_today x (1+g)^T

You can annualize this by raising both sides to the power (1/T) and subtracting 1. As I detailed in Making Friends with Bears Through Math, the annualized capital gain for the security can be written precisely as:
Average annual capital gain = (1+g) x (V_future / V_today)^(1/T) – 1

The annualized total return just adds dividends. While there will sometimes be very small differences due to compounding and reinvestment, the average dividend yield over the investment horizon is generally accurate:
Average annual total return = (1+g) x (V_future / V_today)^(1/T) – 1 + average dividend yield

Let’s try some examples.

From October 1990 to September 2000, the growth rate of S&P 500 revenues averaged 4% annually. The price revenue ratio started that period at 0.7 and ended at 2.3. The average dividend yield was 3.3%. What was the annual total return of the S&P 500 over that 10-year period?
(1.04) x (2.3/0.7)^(1/10) – 1 + .033 = 20.4% annually

From September 2000 to September 2010, the growth rate of S&P 500 revenues averaged 2.7% annually. The price revenue ratio started that period at 2.3 and ended at 1.2. The average dividend yield was 2.5%. What was the annual total return of the S&P 500 over that 10-year period?
(1.027) x (1.2/2.3)^(1/10) – 1 + .025 = -1.3% annually

All of this is true for any fundamental F you choose. The question of what makes one fundamental better than another comes down to a) how representative that fundamental is of the very, very long-term cash flows that stocks will throw off to investors over time –that’s what makes a valuation multiple meaningful and well-behaved, and b) how smooth and predictable its long-term growth rate is.

Notice that the arithmetic above isn’t a theory. It’s just math. If I choose V_today as the price/revenue multiple of the S&P 500, near 2.4, and I ask what would happen if the multiple retreats to 1.5 in the next 5 years (still above its historical norm of about 1.0), and S&P 500 revenue growth averages 5% annually (higher than its average, including the benefit of stock buybacks, over the past two decades), and the dividend yield averages 2% (higher than the present index yield), my 5-year total return estimate is:
(1.05)*(1.5/2.4)^(1/5)-1+.02 = -2.42% annually

One can choose different inputs, but one can’t choose different math. The estimated total return is the sum of capital gains and income, plus a calculator.
We often offer estimates of likely 10-12 year S&P 500 nominal total returns based solely on starting log valuations. Where did the other terms go? Why log valuations? Why nominal? Why 10-12 years?

Let’s go back to the capital gain term and take the natural log. A few rules. The log of a product is the sum of the logs. The log of a ratio is the difference of the logs. When you take the log of something with an exponent, the exponent pops to the front. Because compound returns involve products and exponents, logarithms are the language of compound returns.
P_future/P_today = V_future/V_today x (1+g)^T
ln(P_future/P_today) = ln(V_future) – ln(V_today) + T*ln(1+g)

Our capital gain comes down to three terms: future valuations, current valuations, and fundamental growth.
Here’s what’s interesting. We know, and have demonstrated, that for market- and economy-wide valuations, higher nominal growth g over a given decade is associated with higher interest rates and lower valuation multiples at the end of that decade.

In the equation above, the higher the nominal growth rate of GDP or corporate revenues over a T year horizon, whether due to inflation or to real economic growth, the higher the level of interest rates tends to be at the end of that horizon. In turn, the higher interest rates are at time T, the lower the level of valuation V_future tends to be at time T. As a result, the first and third terms of the equation above largely cancel out. The higher the third term, the lower the first. This is neither a modelling error nor a peculiar claim. It’s systematic and unsurprising.

That leaves the second term. Specifically, we find that nominal market returns are essentially linear in log starting valuations, with a negative sign of course. Higher valuations imply lower subsequent returns. Moreover, since higher valuation multiples are associated with lower dividend yields, the second term is also informative about the income component of total return. Simply put, starting valuations exert an enormous impact on subsequent returns, by affecting likely capital gains as well as expected income.

Our valuation work is often assailed as some sort of nefarious data mining exercise, yet the fact is that our total return projections for the S&P 500 typically reflect simple, log-linear, single-variable estimates. No data mining, curve-fitting, or multivariate regression is required. We use log valuations because that’s how present value works. The relationship between prices and returns involves terms that have exponents. We’re careful with our analysis. We examine and stress-test our assumptions. But it’s not rocket science. Well, at least not always.

We do have to remember, however, that valuations in one year are typically well-correlated with valuations the next. As a result, valuations may not tell us much about near-term returns, unless market internals are pushing in the same direction. As time goes on, the “auto correlation” between starting valuations and later valuations becomes weaker. In our total return projections, we typically use a 10-12 year horizon, because that’s the point where the “auto correlation” between valuation measures at one point in time and another point in time drops to zero, so it’s the most reliable horizon over which extreme valuations can be expected to normalize.

All of this arithmetic is why, across a century of market cycles, the 10-12 year total return of the S&P 500 has been strongly correlated with log valuations at the beginning of the investment horizon, and why that relationship has remained robust even in periods where nominal growth and ending valuations have varied quite a bit. We could certainly get precise return projections if we knew future valuations and growth rates, because we could do basic arithmetic. Still, these total return projections have generally been reliable even when ending valuations were nowhere near their historical norms.

For example, the rich valuations of early 1972 correctly anticipated below-average S&P 500 total returns even though growth in nominal GDP and corporate revenues was quite strong over the following decade. That’s because valuations at the end of that 10-year horizon ended at depressed levels, due to high interest rates in 1982. In this case, high nominal growth contributed to total return, but low ending valuations reduced it. The first and third terms canceled out. One didn’t need to predict inflation at all. That didn’t occur only between 1972-1982, it’s systematic across market history. One can certainly try to use starting valuations alone to project real returns, but subsequent fluctuations in inflation and ending valuations will regularly gum up your estimates. It’s more reliable to project nominal returns and then simply subtract your estimate of likely inflation.

Across a century of market cycles, we find that large “errors” in our return projections typically emerge only when ending valuations are unusually extreme, representing bubble peaks or secular valuation lows. We can’t rule out those “errors,” but as noted earlier, the errors themselves are very informative, because they are typically resolved by sharp reversion toward more normal valuations.

With regard to the valuation “error” we observed during the recent bubble, the retreat has been underway since early 2022. The peak of this bubble featured valuations that, on our most reliable measures, exceeded the extremes of 1929 and 2000. Establishing that peak required a host of supports and amplifiers, including zero-interest rates, multi-trillion-dollar pandemic deficits, favourable market internals, relentless yield-seeking speculation, and upward pressure on profit margins. My impression is that investors would do well to recognize that these features are no longer present. To expect valuations beyond 1929 and 2000 to become the “new normal” seems more like recency bias than foresight.

As always, no forecasts are required. We’ll respond to shifts in observable market conditions as they emerge. Still, if your financial security could not tolerate severe market loss over the coming year or two, or a period of a decade or more in which stocks lag both Treasury bonds and T-bills (measured from current valuations), it may be best to make your investment plan less reliant on a new normal that was never normal in the first place.

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Prospectuses for the Hussman Strategic Growth Fund, the Hussman Strategic Total Return Fund, the Hussman Strategic International Fund, and the Hussman Strategic Allocation Fund, as well as Fund reports and other information, are available by clicking “The Funds” menu button from any page of this website.
Estimates of prospective return and risk for equities, bonds, and other financial markets are forward-looking statements based the analysis and reasonable beliefs of Hussman Strategic Advisors. They are not a guarantee of future performance, and are not indicative of the prospective returns of any of the Hussman Funds. Actual returns may differ substantially from the estimates provided. Estimates of prospective long-term returns for the S&P 500 reflect our standard valuation methodology, focusing on the relationship between current market prices and earnings, dividends and other fundamentals, adjusted for variability over the economic cycle. Further details relating to MarketCap/GVA (the ratio of non financial market capitalization to gross-value added, including estimated foreign revenues) and our Margin-Adjusted P/E (MAPE) can be found in the Market Comment Archive under the Knowledge Center tab of this website. MarketCap/GVA: Hussman 05/18/15. MAPE: Hussman 05/05/14, Hussman 09/04/17.

Performance data quoted represents past performance. Past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. More current performance data through the most recent month-end are available at the Fund's website www.hussmanfunds.com or by calling 1-800-487-7626.

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https://finviz.com/futures_charts.ashx?t=YM&p=m5

Hello Benny,
Here are trades so far, very exciting.
Thank you for everything!!

https://finviz.com/futures_charts.ashx?t=YM&p=m5

Good morning Thickpipe

You have graduated to Forex trader much quicker than even I expected. I would like you to take some time this weekend to write a report and explain what you have learned and tour Forex trading methods so others can understand how you learned and your method of Forex trading within our basic rules of trading.

https://finviz.com/futures_charts.ashx?t=YM&p=m5

Hello Benny,
Here are my screen shots, I will be posting a report this evening. Thank you for this journey.

https://goldswitzerland.com/powells-...-open-madness/


Powell’s Gettysburg Moment, the USD’s Waterloo & Today’s Open Madness
https://goldswitzerland.com/wp-conte...piepenburg.jpg

By Matthew Piepenburg

February 22, 2023


Below we examine the historical interplay of losing wars, cornered egos, tanking currencies, greater controls, and gold’s loyalty in times of open madness.

History Matters
Despite the fact that universities even in the Land of Lincoln have had a say in canceling Abraham Lincoln (good grief…) for apparently not being “woke” enough circa 1861 to be as wise as the neo-liberal faculties of 2023, I’d still make a case that history matters, and by this, I mean all its wonderful and ugly nuances (and lessons), whether they offend modern sensibilities or not.

History, of course, is full of desperate figures and times, many of which involve desperate economies followed by equally desperate (proxy) wars and desperate turning points.

In this light, the more things change, the more they stay the same. Just look around you…
https://goldswitzerland.com/wp-conte...adness-1-1.png

And in the largely forgotten history of war, there is no shortage of desperate generals at desperate turning points.

Wars Doomed from the Start
Napoleon, who had previously won countless battles from Rivoli to Austerlitz, found himself shivering through 1812 Russia after losing the vast bulk of his army to General Russian Winter and remarking to one of his generals that it’s “only a fine line between the sublime and the ridiculous.”
Three years later, at Waterloo, Napoleon’s “sublime” days (and countless casualty numbers) ended for good.
https://goldswitzerland.com/wp-conte.../madness-2.png

At Gettysburg, on the 3rd day of July 1863, an equally talented and grossly outnumbered Confederate States Army under Robert E. Lee, having humbled Union forces at Manassas 1 & 2, Fredericksburg, Gaines Mill, and Chancellorsville, looked across an open field from Seminary Ridge to the Emmitsburg Road strewn with the dying and dead of his once bravest divisions as the U.S. Civil War reached a mathematical turning point.
https://goldswitzerland.com/wp-conte.../madness-3.png

Despite this carnage, the war (post-Pickett’s doomed July 3rd charge) dragged on for 2 more horrendous years (and countless casualty numbers), ignoring the hard math of waning troop numbers, supplies, cannons, and horses which now rendered Southern “victory” impossible.

Less than a century later, this time near Stalingrad in the winter of 1943, the seemingly invincible German Wehrmacht, having conquered Poland, France, North Africa and large swaths of the East, found itself (and General von Paulus) facing the equally mathematical reality of what once seemed like impossible defeat.
https://goldswitzerland.com/wp-conte.../madness-4.png

By all metrics the Germans, having engaged in a two-front war, were done, but the war (and countless casualty numbers) would continue for two more senseless years.
But what do any of these examples of doomed and costly wars have to do with current global markets and our financial “generals”?
In fact, quite a bit.

Financial Policies Doomed from the Start
The overlapping interplay of the human ego, hard math, and failed strategies doomed from the start have their place in both military and financial history.
For example, once upon a time (circa 2008), our central bankers in general, and the U.S. Fed in particular, had the insanely bad idea that central banks could use fiat money created out of thin air to save bad banks, defeat recessions, manage inflation, monetize debt, win a Nobel Prize and ensure total employment with a “Pickett’s charge” of mouse-click money.
https://goldswitzerland.com/wp-conte.../madness-5.png

Such grand plans, like the promises of failed generals and insane wars of Lebensraum, la gloire de l’empire or the “Southern Cause,” were initially followed by a string of early “Austerlitz-like successes” (i.e., market bubbles) which brought near-term euphoria.
https://goldswitzerland.com/wp-conte.../madness-6.png

Unfortunately, those early and mouse-clicked victories ignored the longer-term realities/casualties, namely: historically unprecedented wealth inequality, grotesque currency debasement, the death of free-market price discovery, and the birth of what amounts to little more than Wall Street socialism and market feudalism masquerading today as MMT “capitalism.”
https://goldswitzerland.com/wp-conte.../madness-7.png

Such short-term “glory” at the expense of longer-term ruin is a pattern all too familiar for those paying attention…
https://goldswitzerland.com/wp-conte.../madness-8.png

Emperor Powell, for example, thinks he can “win the war against inflation,” but like Napoleon, Lee, and von Paulus, he is still unable to admit to himself (or us lieutenants) that his grand vision is doomed either way.
https://goldswitzerland.com/wp-conte.../madness-9.png

And so, he continues to desperately fight a losing cause at the expense of countless currencies and investors (casualties) around the world.
How can we know this?

It All Boils Down to Hard Math and Bad Options
As detailed in prior reports, math speaks for itself.
Global debt levels are past their “Gettysburg moment”—no easy victories are left once we start dealing in the quadrillions…
https://goldswitzerland.com/wp-conte...madness-10.png

Whether Powell continues with QT or pivots to more QE, retail foot-soldiers here and abroad face either economic recession/depression or extreme inflation.
Pick your “victory” or your poison. I see both, namely: Stagflation
Equally serious is the inevitable demise of the USD’s purchasing power at home and the slowness of its hegemony in the world.

The Sad Fate of the USD
Regardless of whether the USD (DXY) rises or falls in the near term, the end result is as inevitable and mathematical as Germany’s two-front war, Pickett’s charge or Napoleon’s Waterloo: Disaster.

Once stock and bond bubbles reach their tipping points, the last bubble to die is always the currency, which is precisely where our prize-winning (?) central bankers have placed us.

In short, and as shown below, the global economy and USD, led by Field Marshall Powell, is about to cross that infamously fine line from the sublime to the ridiculous…

The USD’s Sublime Last Moments
As in any losing war, however, there are always those clinging for hope, including those who think the USD will never, well…surrender. (In 2022, the British pound, the yen and the euro already caved…)

Recently, for example, the headlines, politicos, markets, and perma-bulls were positively giddy over the stronger than expected US jobs report and non-farm payroll data. The DXY climbed in lock-step.

However, what was equally higher (60% higher…) than expected was the 2023 US Treasury borrowing estimate –aka: Uncle Sam’s increasing bar tab–$930B! –for Q1 alone.

Each of these data points has sent the USD temporarily higher, along with inflation expectations, which now seem to be embedded.
So, the big question today is this: Will the USD get stronger or weaker in 2023 and beyond?

There are two camps in this strategic debate, and two consequences depending on which camp is right. Neither is “victorious.”

Bad Scenario 1: A Rising Dollar’s Consequences
If the USD gets stronger, it kills just about every asset class but the USD…
Already, we are seeing this open carnage in credit markets as rising rates and General Powell’s strong-Dollar policies cripple lending and borrowing norms of the past.
https://goldswitzerland.com/wp-conte...madness-11.png

Loan officers are confirming a tightening of credit availability (and a widening of bank lending spreads, above) at levels only seen in prior recessions, adding more weight to my ongoing contention that the US is already in a recession, despite every Göbbels-like attempt in DC to redefine, cancel, ignore or downplay the same.
https://goldswitzerland.com/wp-conte...madness-12.png

The equally dismal rise of defaulting High Yield bonds adds further proof of the slow (then steady) death of bleeding bonds in a rising rate and strong USD backdrop/policy.
https://goldswitzerland.com/wp-conte...madness-13.png

A strengthening USD will send bonds down and hence yields and rates higher, which will be deflationary as debt-soaked America gets poorer and foreigners are forced to sell more USTs alongside a tightening Fed which is doing exactly the same thing—namely: Bond dumping and yield-spiking.

Bad Scenario 2: A Falling Dollar’s Consequences
However, if the USD gets weaker, the inflation we are already feeling will only get worse as $2T+ deficits make their steady climb North toward $3T, $4T or even $5T+ for 2023.

So, once again: Will the USD get stronger or weaker?
Does the answer lie in what signals (or desperate generals) you track or trust: Powell’s Fed or the UST market?

Trust What Powell SAYS?—Strong Dollar Ahead
If, for example, you follow the Fed and its bogus yet deadly-serious inflation narrative, then you will be lured into Powell’s “we must beat inflation” war cry, which boils down to a zero-sum battle plan of “high inflation bad, low inflation good. Must beat inflation.”

Equally part of this bogus battle plan (Powell needs inflation and negative rates…) is the courageous meme that “rising rates kill inflation.”

Well… yes, but at what cost?
If Powell wins the headline battle against inflation, he loses the war for global credit markets, economies, and political credibility, which loss will be immediately blamed on a virus and Russian bad guy but never on the mad generals who pushed us over the debt cliff.

However, if we get beyond linear headlines and two-dimensional thinking of central bankers like Powell, we quickly realize that the 3-dimensional UST market is perhaps the real (and superior) indicator of future probabilities.

Or, Trust What Bond Markets DO?—Weaker Dollar Ahead
Thus, rather than watch the Fed, I’m looking at bond markets to get my directional compass-North in a world of policy cannon smoke.
As said more times than I can count: The bond market is the thing.

And as for the sovereign bond market, it has seen 3 periods of complete dysfunction in recent years, namely: 1) the repo rate spike of September 2019; 2) the March 2020 “Covid” crash, and 3) last October’s gilt implosion spawned by the rising USD.

Those who follow the Fed (and this is entirely understandable given that the Fed IS the market in our post-2008 centralized nightmare) can’t be blamed for therefore expecting the USD to rise on more tightening and Powell “inflation-fighting.”

But those who follow the Fed also ignore those 3 bond market cracks in the ice above.
It’s my view that this ice is about to break if we have a 4th “uh-oh” moment/crack in sovereign bonds.
Thus, rather than follow the Fed, we might be wiser to look at the UST market, which is heading precisely in that “uh-oh” direction unless someone (i.e., Yellen?) pushes another meme—namely more toxic liquidity and thus a weaker USD.

But as previously argued, either way, we are doomed…
Failed Battle Plan 1: Tightening into a Debt Crisis (Stronger Dollar)

Let’s play out the Fed’s current scenario first.
If we look only at what the Fed says, and it tightens, which, for now, seems like the plan for Q1 and Q2, the USD will strengthen, yields and rates (5% to 5.25%) will rise further and the UST market will see such a wave a selling (foreign and QT Fed-driven), that a fourth “uh-oh” moment in the sovereign bond market will be inevitable, and likely enough to not only “crack the ice” of global bond markets, but drown everyone skating above it.

Given these realities and risks in the UST market, risks which even a fork-tongued and totally cornered Jerome Powell understands, I see no realistic way forward other than a weaker USD and thus a move from QT to QE.

Why?
Again: Because I’m taking my signals from the bond market, not Powell.

To track (and trust) Powell means a tanking US Treasury and fatally rising rates, which is like kryptonite to America’s debt-based “accommodation” model.
Instead, I believe Powell will be forced to strategically consider the fact that this inflation war has killed his army of USTs and hence force him (at Yellen’s direction) to change tactics.

Or stated more simply, just as Napoleon, Robert E. Lee, and even the Wehrmacht learned that no outnumbered army can win an extended war, Powell will discover that no sustained policy of rising rates can end well for the toxic bonds/IOUs which float a bankrupt nation.
In short: Unless Powell weakens the USD and injects more QE liquidity sometime in 2023, his victory over inflation will be at the expense of America’s lifeblood—namely the UST market.

Failed Battle Plan 2: Resort to More Mouse-Click “Miracles” (Weaker Dollar)
At the end of the day, and despite all this “beat inflation” rhetoric from Powell, it is my admittedly contrarian and unpopular (don’t say “gold-bug”) view that saving Uncle Sam’s IOU lifeline (i.e., the UST market) will take strategic priority over “beating inflation.”

By the way, this appears to be a view shared by none of other than that Corps Commander of toxic liquidity herself: General Janet Yellen…
In other words, expect an eventual (not immediate) capitulation to more fake money—aka, QE, i.e., “liquidity.”
This means that despite gyrating USD moves and hence DXY flip-flops today, the only direction and choice in the longer term to beat a recession and save Uncle Sam’s IOUs is a weaker not stronger Dollar.

Ultimate End-Game? Blame, Reset, and Centralized Control
A weaker USD will buy time (and USTs) until ultimately the developed economies of the world, which in fact have the balance sheets of banana republics, finally realize that there’s still nothing left to save them but a great big “reset”—i.e., a global Chapter 11 or Economic “Versailles Treaty.”
The need for this “re-set” will, of course, be conveniently blamed on Putin and Covid rather than the central bankers (failed generals) who caused this horrific war on real money, sustainable debt, and sound fiscal spending years ago.

At that point, history will remind us that lost wars and failed policies always devolve into more centralized controls masquerading as governmental “guidance,” payment efficiency, and “democratic” leadership, nicely encapsulated in that toxic new direction of Central Bank Digital Currencies and a more Orwellian new normal…
But I digress…

How to Position Yourself?
Switching from military to equestrian metaphors, I argued in 2022 that investors, like polo players, need to think where the ball is headed, not where it lies currently.
Regardless of what Powell says today, the real play is 3 to 4 moves ahead, which all point toward an inevitably weaker USD and thus an inevitably rising gold price.
Powell, of course, is more a politician than an economist, and central banks like the Fed are anything but independent.

As such, Powell, DC and the creative math and fiction writers at the BLS will continue to do what all politicians (or losing armies) do when things are going against them: Lie.

Thus, the DC creative writers will continue to fudge, distort and “tweak” the CPI data to misreport true inflation as nearly “beating expectations,” thereby allowing Powell to save face in a losing “war against inflation” while Lieutenant Yellen quietly pushes a weaker USD narrative to save the UST market (i.e., prevent more foreign UST dumping).

This face-saving policy will then allow the US to do what it does best: Borrow, spend, and go deeper into inflationary debt spirals.

The Pesky Human Factor
Based on bond market Realpolitik, the probabilities point toward a liquidity pivot and weaker USD, the longer term.
But history also reminds us that power-drunk figures don’t like to admit defeat. Their egos get in the way of rational decisions.

Powell, who desperately wishes to be remembered as a Napoleonic Paul Volcker rather than a comical Arthur Burns, is no exception to such human-all-too-human small-mindedness.

Unwilling to accept a Gettysburg moment that originated with Colonel Greenspan, General J. Powell could indeed push too far and too long with rising rates, a stronger USD, and tanking bonds until inflation and everything else is destroyed.

We can only wait and see.

The Gold Factor
Whether on battlefields or in economic cycles, man’s history of the absurd and his disloyalty to the many for the benefit of a few is nothing new under the sun.
https://goldswitzerland.com/wp-conte...madness-14.png

In short, chaos eventually rears its head.
Powell or Yellen, QT or QE, inflation to deflation, left or right, Davos or DC, the chaotic results are always the same: Currencies and markets die, opportunists, lies and controls increase and the little guy (and common sense) get trampled, drafted or “canceled.”

Physical gold, of course, loves chaos and offers far greater loyalty to those who put their trust in this natural metal rather than flimsy paper money and the even flimsier promises from on high.

So which form of money will you trust to preserve your wealth?

A digital and speculative “coin” promoted by human cons that is anything but stable?

https://goldswitzerland.com/wp-conte...dness-15-1.png

A fiat currency that is losing its purchasing power by the second?
https://goldswitzerland.com/wp-conte...madness-16.png

Or a naturally finite monetary metal with infinite duration born from the earth rather than an anonymous code writer or overheating printer?
https://goldswitzerland.com/wp-conte...madness-20.png

The choice, of course, is yours.

Tags: Bitcoin Gold Gold/Silver Ratio

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Matthew Piepenburg
Matterhorn Asset Management
Zurich, Switzerland
Phone: +41 44 213 62 45

Matterhorn Asset Management’s global client base strategically stores an important part of its wealth in Switzerland in physical gold and silver outside the banking system. Matterhorn Asset Management is pleased to deliver a unique and exceptional service to our highly esteemed wealth preservation clientele in over 80 countries.

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Blog/Armstrong in the Media

Posted Feb 25, 2023, by Martin Armstrong

View the video above or click here to watch the latest interview with One Radio Network: “EVERY WORLD LEADER IS ALL IN ON THIS WAR WITH RUSSIA, THAT MAY INVOLVE CHINA”

https://www.bitchute.com/video/rRzlOxAzXbke/

Categories: Armstrong in the Media

Tags: Interview, One Radio Network, Patrick Timpone

« Interview: NATO military defeat to destabilize the dollar?

https://chrishedges.substack.com/p/t...m_medium=email

The Trump-Russia Saga and the Death Spiral of American Journalism

The media caters to a particular demographic, telling that demographic what it already believes — even when it is unverified or false. This pandering defines the coverage of the Trump-Russia saga.
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Chris Hedges


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De-Pressed - by Mr. Fish

Reporters make mistakes. It is the nature of the trade. There are always a few stories we wish were reported more carefully. Writing on deadline with often only a few hours before publication is an imperfect art. But when mistakes occur, they must be acknowledged and publicized. To cover them up, to pretend they did not happen, destroys our credibility. Once this credibility is gone, the press becomes nothing more than an echo chamber for a selected demographic. This, unfortunately, is the model that now defines the commerical media.

The failure to report accurately on the Trump-Russia saga for the four years of the Trump presidency is bad enough. What is worse, major media organizations, which produced thousands of stories and reports that were false, refuse to engage in a serious postmortem. The systematic failure was so egregious and widespread that it casts a very troubling shadow over the press. How do CNN, ABC, NBC, CBS, MSNBC, The Washington Post, The New York Times and Mother Jones admit that for four years they reported salacious, unverified gossip as fact? How do they level with viewers and readers that the most basic rules of journalism were ignored to participate in a witch hunt, a virulent New McCarthyism?

How do they explain to the public that their hatred for Trump led them to accuse him, for years, of activities and crimes he did not commit? How do they justify their current lack of transparency and dishonesty? It is not a pretty confession, which is why it won’t happen. The U.S. media has the lowest credibility — 26 percent — among 46 nations, according to a 2022 report from the Reuters Institute for the Study of Journalism. And with good reason.

The commercial model of journalism has changed from when I began working as a reporter, covering conflicts in Central America in the early 1980s. In those days, there were a few large media outlets that sought to reach a broad public. I do not want to romanticize the old press. Those who reported stories that challenged the dominant narrative were targets, not only of the U.S. government but also of the hierarchies within news organizations such as The New York Times. Ray Bonner, for example, was reprimanded by the editors at The New York Times when he exposed egregious human rights violations committed by the El Salvadoran government, which the Reagan administration funded and armed. He quit shortly after being transferred to a dead-end job at the financial desk. Sydney Schanberg won a Pulitzer Prize for his reporting in Cambodia on the Khmer Rouge, which was the basis for the film “The Killing Fields.” He was subsequently appointed metropolitan editor at The New York Times where he assigned reporters to cover the homeless, the poor and those being driven from their homes and apartments by Manhattan real estate developers.

The paper’s Executive Editor, Abe Rosenthal, Schanberg told me, derisively referred to him as his “resident commie.” He terminated Schanberg’s twice-weekly column and forced him out. I saw my career at the paper end when I publicly criticized the invasion of Iraq. The career-killing campaigns against those who reported controversial stories or expressed controversial opinions was not lost on other reporters and editors who, to protect themselves, practiced self-censorship.

But the old media, because it sought to reach a broad public, reported on events and issues that did not please all of its readers. It left a lot out, to be sure. It gave too much credibility to officialdom, but, as Schanberg told me, the old model of news arguably kept “the swamp from getting any deeper, from rising higher.”

The advent of digital media and the compartmentalizing of the public into antagonistic demographics has destroyed the traditional model of commercial journalism.

Devastated by a loss of advertising revenue and a steep decline in viewers and readers, the commercial media has a vested interest in catering to those who remain. The approximately three and a half million digital news subscribers The New York Times gained during the Trump presidency were, internal surveys found, overwhelmingly anti-Trump. A feedback loop began where the paper fed its digital subscribers what they wanted to hear. Digital subscribers, it turns out, are also very thin-skinned.
“If the paper reported something that could be interpreted as supportive of Trump or not sufficiently critical of Trump,” Jeff Gerth, an investigative journalist who spent many years at The New York Times recently told me, they would sometimes “drop their subscription or go on social media and complain about it.”

Giving subscribers what they want makes commercial sense. However, it is not journalism.

News organizations, whose future is digital, have at the same time filled newsrooms with those who are tech-savvy and able to attract followers on social media, even if they lack reportorial skills. Margaret Coker, the bureau chief for The New York Times in Baghdad, was fired by the newspaper’s editors in 2018, after management claimed she was responsible for its star terrorism reporter, Rukmini Callimachi, being barred from re-entering Iraq, a charge Coker consistently denied. It was well known, however, by many at the paper, that Coker filed a number of complaints about Callimachi’s work and considered Callimachi to be untrustworthy. The paper would later have to retract a highly acclaimed 12-part podcast, “Caliphate,” hosted by Callimachi in 2018, because it was based on the testimony of an imposter. “‘Caliphate’ represents the modern New York Times,” Sam Dolnick, an assistant managing editor, said in announcing the launch of the podcast. The statement proved true, although in a way Dolnick probably did not anticipate.

Gerth, a Pulitzer Prize-winning investigative reporter who worked at The New York Times from 1976 until 2005, spent the last two years writing an exhaustive look at the systemic failure of the press during the Trump-Russia story, authoring a four-part series of 24,000 words that has been published by The Columbia Journalism Review. It is an important, if depressing, read. News organizations repeatedly seized on any story, the documents, no matter how unverified, to discredit Trump and routinely ignored reports that cast doubt on the rumors they presented as fact. You can see my interview with Gerth here.

The New York Times, for example, in January 2018, ignored a publicly available document showing that the FBI’s lead investigator, after a ten month inquiry, did not find evidence of collusion between Trump and Moscow. The lie of omission was combined with reliance on sources that peddled fictions designed to cater to Trump-haters, as well as a failure to interview those being accused of collaborating with Russia.

The Washington Post and NPR reported, incorrectly, that Trump had weakened the GOP’s stance on Ukraine in the party platform because he opposed language calling for arming the Baltic state with so-called “lethal defensive weapons” — a position identical to that of his predecessor President Barack Obama. These outlets ignored the platform’s support for sanctions against Russia as well its call for “appropriate assistance to the armed forces of Ukraine and greater coordination with NATO defense planning.” News organizations amplified this charge. In a New York Times column that called Trump the “Siberian candidate,” Paul Krugman wrote that the platform was “watered down to blandness” by the Republican president. Jeffrey Goldberg, editor of The Atlantic, described Trump as a “de facto agent” of Vladimir Putin. Those who tried to call out this shoddy reporting, including Russian-American journalist and Putin critic Masha Gessen were ignored.

After Trump’s first meeting as president with Putin, he was attacked as if the meeting itself proved he was a Russian stooge. Then New York Times columnist Roger Cohen wrote of the “disgusting spectacle of the American president kowtowing in Helsinki to Vladimir Putin.” Rachel Maddow, MSNBC’s most popular host, said that the meeting between Trump and Putin validated her covering the Trump-Russia allegations “more than anyone else in the national press” and strongly implied — and her show’s Twitter account and YouTube page explicitly stated — that Americans were now “coming to grips with a worst-case scenario that the U.S. president is compromised by a hostile foreign power.”

The anti-Trump reporting, Gerth notes, hid behind the wall of anonymous sources, frequently identified as “people (or person) familiar with” — The New York Times used it over a thousand times in stories involving Trump and Russia, between October 2016 and the end of his presidency, Gerth found. Any rumor or smear was picked up in the news cycle with the sources often unidentified and the information unverified.

A routine soon took shape in the Trump-Russia saga. “First, a federal agency like the CIA or FBI secretly briefs Congress,” Gerth writes. “Then Democrats or Republicans selectively leak snippets. Finally, the story comes out, using vague attribution.” These cherry-picked pieces of information largely distorted the conclusions of the briefings.

The reports that Trump was a Russian asset began with the so-called Steele dossier, financed at first by Republican opponents of Trump and later by Hillary Clinton’s campaign. The charges in the dossier — which included reports of Trump receiving a “golden shower” from prostituted women in a Moscow hotel room and claims that Trump and the Kremlin had ties going back five years — were discredited by the FBI.

“Bob Woodward, appearing on Fox News, called the dossier a ‘garbage document’ that ‘never should have’ been part of an intelligence briefing,” Gerth writes in his report. “He later told me that the Post wasn’t interested in his harsh criticism of the dossier. After his remarks on Fox, Woodward said he ‘reached out to people who covered this’ at the paper, identifying them only generically as ‘reporters,’ to explain why he was so critical. Asked how they reacted, Woodward said: ‘To be honest, there was a lack of curiosity on the part of the people at the Post about what I had said, why I said this, and I accepted that and I didn’t force it on anyone.’”

Other reporters who exposed the fabrications — Glenn Greenwald at The Intercept, Matt Taibbi at Rolling Stone and Aaron Mate at The Nation — ran afoul of their news organizations and now work as independent journalists.

The New York Times and The Washington Post shared Pulitzer Prizes in 2019 for their reporting on “Russian interference in the 2016 presidential election and its connection to the Trump campaign, the President-elect’s transition team and his eventual administration.”

The silence by news organizations that for years perpetuated this fraud is ominous. It cements into place a new media model, one without credibility or accountability. The handful of reporters who have responded to Gerth’s investigative piece, such as David Corn at Mother Jones, have doubled down on the old lies, as if the mountain of evidence discrediting their reporting, most of it coming from the FBI and the Mueller Report, does not exist.

Once fact becomes interchangeable with opinion, once truth is irrelevant, once people are told only what they wish to hear, journalism ceases to be journalism and becomes propaganda.

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February 25, 2023

Loyal Biden Comrades Issue “There Will Be No Peace In Our Time” Warning

By: Sorcha Faal, and as reported to her Western Subscribers

A thought-provoking new Security Council (SC) report circulating in the Kremlin today first noting the approval rating of President Putin now stands at 82%, says this astonishing achievement of unity among the Russian peoples is joined by the independent institute Levada Center revealing that 75% of Russians said they supported the actions of Russian military forces in Ukraine—and to mark the “Special De-Nazification Operation” to liberate Ukraine, it saw Security Council Deputy Chairman Dmitry Medvedev factually observing:
A year after the start of the special military operation, we celebrated yet another very important date in our history in February 2023: the 80th anniversary of the Soviet people’s victory in the Battle of Stalingrad - the chief battle of the 20th century, after which the final rout of the Hitlerite armies became inevitable.

History repeats itself. We are again confronted actually with a whole empire of diverse enemies: Ukrainian and European Neo-Nazis, the United States, other Anglo-Saxons and their minions, about half a hundred of countries.

The enemies have set the task of wiping Russia off from the face of the earth but their attempts will fail.

We are stronger and this is also obvious now. And the so-called ‘Western world’ is just a small part of the international community, about 15% of the planet’s population. A rich, over-satiated but still a minority.

The past year of the special military operation in Ukraine has taught the Russians many things and consolidated the country’s citizens in the fight against the common enemy and has finally helped get rid of the illusions about the democratic West whose hypocrisy and frenzied Russophobia have gone beyond all thinkable limits.

What Russia has gained over that year is its firm confidence in its own strength and in its victory.

Leading the godless socialist Western colonial powers to wipe Russia off the face of the earth, this report notes, is Supreme Socialist Leader Joe Biden, whom a new Associated Press-NORC poll found only 19% of the American people have confidence in his handling of Ukraine conflict—this same poll also revealed: “Support among the American public for providing Ukraine weaponry and direct economic assistance has softened...Forty-eight percent say they favor the U.S. providing weapons to Ukraine, with 29 percent opposed and 22 percent saying they’re neither in favor nor opposed”—in response to this poll Socialist Leader Biden declared yesterday: “I don't think a lot of people are asking how long we can keep spending billions on Ukraine”—a declaration joined by neocon Republican Party warmonger Senate Minority Leader Mitch McConnell, proclaiming yesterday: “It is not an act of charity for the United States and our NATO allies to help supply the Ukrainian people’s self-defense, it is a direct investment in our own core national interests...The road to peace lies in speedily surging Ukraine the tools they need to achieve victory as they define it”—all of which was joined by the beyond shocking revelation: “The payments to Ukraine have already exceeded the annual military expenditure of the United States in the war in Afghanistan from 2001 to 2010”.

In viewing the hundreds-of-billions-of-dollars that the American-led military bloc NATO has spent on failed wars all around the world, this report continues, it caused Chinese Foreign Ministry spokesman Wang Wenbin to assess yesterday: “The world will continue to be beset by wars and geopolitical turmoil as long as NATO keeps behaving as if it’s still fighting the Cold War and the Iron Curtain never fell”—an assessment joined by the Chinese Foreign Ministry releasing its document “China’s Position on the Political Settlement of the Ukraine Crisis”, wherein it factually noted: “So far, the United States had or has imposed economic sanctions on nearly 40 countries across the world affecting nearly half of the world's population”—at the G20 meeting of finance ministers it was reported today: “Finance leaders from the world’s biggest economies were unable to resolve differences on Saturday over the war in Ukraine”—in the just published economic article “Why Western Sanctions Against Russia Failed” sees it revealing: “Much to the dismay of Western politicians, not only did Russia survive the sanctions storm, but it has the potential to emerge even stronger than before”—and because Russia has never depended on socialist Western colonial services, as it actually makes and produces everything for itself that the world needs, the leftist Washington Post, in their article “A Global Divide On The Ukraine War Is Deepening”, factually noted: “Only 33 countries have imposed sanctions on Russia, and a similar number are sending lethal aid to Ukraine…An Economist Intelligence Unit survey last year estimated that two-thirds of the world’s population lives in countries that have refrained from condemning Russia”.

In response to China’s peace plan for Ukraine, this report details, Foreign Ministry spokeswoman Maria Zakharova declared: “We highly appreciate the sincere desire of our Chinese friends to contribute to the settlement of the conflict in Ukraine by peaceful means, but the main obstacles to peace are the Ukrainian leadership and its backers in the West”—in further response NATO Secretary General Jens Stoltenberg proclaimed: “China doesn’t have much credibility because they have not been able to condemn the illegal invasion of Ukraine” and European Commission President Ursula von der Leyen stated about China seeking peace: “You have to see them against a specific backdrop, and that is the backdrop that China has already taken sides by signing, for example, an unlimited friendship right before the invasion…So we will look at the principles, of course, but we will look at them against the backdrop that China has taken sides”—and to put the final nail in the coffin of China’s peace plan, Ukraine President Vladimir Zelensky raged: “We are readying an offensive to seize the Crimean peninsula...We’re taking military steps, we are preparing for them...We are mentally prepared already...We prepare technically, with weapons, forces, we form new brigades, we form offensive units of various kinds and types, we are sending people for training not only in Ukraine, you know, but also in other countries”.

At the same time President Zelensky raged about preparing to take Crimea from Russia, this report notes, the Wall Street Journal quoted a senior French official truthfully saying under the condition of anonymity: “We keep repeating that Russia mustn’t win, but what does that mean?...If the war goes on for long enough with this intensity, Ukraine’s losses will become unbearable...And no one believes they will be able to retrieve Crimea”—a truth joined by the leftist Washington Post declaring: “The Biden administration is wrong...Time is not on Ukraine’s side...By next year’s anniversary, there might not be a Ukraine to save”—in the just published Wall Street Journal article “Graves Without Names, Messages Unanswered: Ukraine’s Missing Soldiers Hint at War’s Bloody Toll” it reveals the staggering number of deaths inflicted on ill-trained and ill-equipped Ukrainian soldiers by vastly superior Russian military forces—all of which is now joined by the Business Insider news service grimly reporting on what awaits Ukrainian soldiers sent to fight against Russian military forces: “The average life expectancy of a front-line soldier in eastern Ukraine is around 4 hours”.

As to why the socialist Western colonial powers are sending Ukrainian soldiers to their near instant meat grinder battlefield deaths, this report explains, is because this conflict has nothing to do with Ukraine, and everything to do with the United States maintaining its military and economic stranglehold over the entire world—a fact noted by top Russian geopolitical analyst Dmitry Trenin, who, in his just released open letter “One Year On, Here's How The Ukraine Conflict Is Changing The World Order”, observed:
US efforts to get China to distance itself from Russia appear ridiculous in a situation where Washington’s strategy appears to be to defeat/contain its two main adversaries one by one, and, moreover, to pit them against each other.

The famous Kissingerian triangle is now pointed in a different direction: it is Washington that has the worst possible relations with the other two. As for Moscow and Beijing, they are getting even closer as a result.

Closer cooperation and coordination between China and Russia amid the war in Ukraine, which is gradually emerging on the platform of common strategic interests, represents a major shift in the world power balance.

What is more – and what goes well beyond the usual Western concept of 'great power competition' – is the rise of over a hundred actors of different caliber in many parts of the world that have refused to support the US, and its allies, on the Russia sanctions and have maintained or even expanded their trade and other relations with Moscow.

These countries insist on following their own national interests as they see them and seek to expand their foreign policy autonomy.

At the end of the day, this phenomenon – call it the Rise of the Global Majority (no longer silent) – could be the single most important development so far en route to the new world order.
Among those knowing the truth that this conflict has nothing to do with so-called democracy and freedom in Ukraine, but is an existential war waged by the socialist Western colonial powers against Russia and China to preserve American global hegemony, this report concludes, are loyal Socialist Leader Biden leftist media comrades like Tom Nichols, who, in his just released article “The War In Ukraine Is The End Of A World” dementedly proclaims: “A shroud is settling over the dreams many of us had at the end of the 20th century...The war in Ukraine is the final shovel of dirt on the grave of any optimism about the world order that was born with the fall of Soviet Communism...Now we are faced with the long grind of defeating Moscow’s armies and eventually rebuilding a better world”—and Brandon J Weichert, who, in his just released article “World War III Is Already Here”, assessed the events of the past week and warned the American people of their future: “Putin spoke for a whopping two hours on Tuesday evening, in which he reiterated his commitment to total victory over Ukraine and how the United States was ruled by “satanists” and “pedophiles”...Unsurprisingly, most Western media outlets simply refused to cover the speech...Those few that did were openly derisive…Face it, there will be no peace in our time…The recent speeches made by Biden and Putin, as well as the increasing involvement of China in the Ukraine conflict, mean that war is our lot – and this war is not one that the West can easily win”. [Note: Some words and/or phrases appearing in quotes in this report are English language approximations of Russian words/phrases having no exact counterpart.]

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February 25, 2023 EU and US all rights reserved. Permission to use this report in its entirety is granted under the condition it is linked to its original source at WhatDoesItMean.Com. Freebase content licensed under CC-BY and GFDL.

[Note: Many governments and their intelligence services actively campaign against the information found in these reports so as not to alarm their citizens about the many catastrophic Earth changes and events to come, a stance that the Sisters of Sorcha Faal strongly disagree with in believing that it is every human being’s right to know the truth. Due to our mission’s conflicts with that of those governments, the responses of their ‘agents’ has been a longstanding misinformation/misdirection campaign designed to discredit us, and others like us, that is exampled in numerous places, including HERE.]

[Note: The WhatDoesItMean.com website was created for and donated to the Sisters of Sorcha Faal in 2003 by a small group of American computer experts led by the late global technology guru Wayne Green (1922-2013) to counter the propaganda being used by the West to promote their illegal 2003 invasion of Iraq.]
[Note: The word Kremlin (fortress inside a city) as used in this report refers to Russian citadels, including in Moscow, having cathedrals wherein female Schema monks (Orthodox nuns) reside, many of whom are devoted to the mission of the Sisters of Sorcha Faal.]

NATO Brands World War III “One Of The Great Epics Of This Century”

Demonic “Genesis Machine” Superweapon Unleashed To “Rewrite Code Of Life”

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https://www.lewrockwell.com/2023/02/...wreck-america/

The Plan To Wreck America

By Mike Whitney

The Unz Review

February 25, 2023

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In America, we have an oligarch problem, and it’s much bigger than the oligarch problem that Putin faced when he became president in 2000. The entire West is now in the grips of billionaire elites who have a stranglehold on the media, the political establishment and all of our important institutions. In recent years we have seen these oligarchs expand their influence from markets, finance and trade to politics, social issues and even public health.

The impact this group has had on these other areas of interest, has been nothing short of breathtaking. Establishment elites and their media not only stood foursquare behind Russiagate, the Trump impeachment, the BLM riots and the January 6 fiasco, they also had a hand in the Covid hysteria and the host of repressive measures that were imposed in the name of public health. What we’d like to know is to what extent this group is actively involved in the shaping of other events that are aimed at transforming the American Republic into a more authoritarian system?

In other words, are the mandated injections, the forced lockdowns, the aggressive government-implemented censorship, the dubious presidential elections, the burning of food processing plants, the derailing of trains, the attacks on the power grid, the BLM-Antifa riots, the drag queen shows for schoolchildren, the maniacal focus on gender issues, and glitzy public show-trials merely random incidents occurring spontaneously during a period of great social change or are they, in fact, evidence of a stealthily orchestrated operation conducted by agents of the state acting on behalf of their elite benefactors?

We already know that the FBI, the DOJ and the intel agencies were directly involved in Russiagate –which was a covert attack on the sitting president of the United States. So, the question is not “whether” these agencies are actively involved in other acts of treachery but, rather, to what extent these acts impact the lives or ordinary Americans, our politics and the country? But before we answer that question, take a look at this quote from from a recent interview by Colonel Douglas MacGregor:
I was reading a document that was authored by George Soros over 10 years ago in which he talks specifically about this all-out war that would ultimately come against Russia because he said this ‘was the last nationalist state that rests on a foundation of orthodox christian culture with Russian identity at its core. That has to be removed.

So I think that the people who are in charge in the west and the people in charge in Washington think they have successfully destroyed the identities of the European and American peoples, that we have no sense of ourselves, our borders are undefended, we present no resistance to the incoming migrants from the developing world who essentially roll over us as though we owe them a living and that our laws do not count. Thus, far I would say that is an accurate evaluation of what we’ve been doing. And I think that’s a great victory for George Soros and the globalists, the anti-nationalists; those who want open borders what they call it an “Open Society” because you end up with nothing, an amorphous mass of people struggling to survive who are reduced to the lowest levels of subsistence … (Soros) even goes so far as to talk about how useful it would be if it was east Europeans whose lives were expended in this process and not west Europeans who simply won’t take the casualties.

This is not a minor matter. This is the kind of thinking that is so destructive and so evil, in my judgement, that that’s what we’re really dealing with in our own countries and I think Putin recognizes that.” (Douglas Macgregor – A Huge Offensive”, You Tube;, 11:20 minute)

The reason I transcribed this comment from MacGregor was because it sums up the perceptions of a great many people who see things the same way. It expresses the hatred that globalist billionaires have toward Christians and patriots, both of which they see as obstacles to their goal of a borderless one-world government. MacGregor discusses this phenom in relation to Russia which Soros sees as “the last nationalist state that rests on a foundation of orthodox Christian culture with Russian identity at its core.” But the same rule could be applied to the January 6 protestors, could it not? Isn’t that the real reason the protestors were rounded up and thrown into the Washington gulag. After all, everyone knows there was no “insurrection” nor were there any “white supremacists”. The protestors were locked up because they’re nationalists (patriots) which are the natural enemy of the globalists. The MacGregor quote lays it out in black and white. Elites don’t believe that nationalists can be persuaded by propaganda,. They must be eradicated through incarceration or worse. Isn’t that the underlying message of January 6?

The other underlying message of January 6, is that ordinary people are no longer allowed to challenge the authority of the people in power. Again, political legitimacy in the US has always been determined by elections. What January 6 indicates, is that legitimacy no longer matters. What matters is power, and the person who can have you arrested for questioning his authority, has all the power he needs. Check out this excerpt from a post on Substack by political analyst Kurt Nimmo:
“Klaus Schwab, a student of the war criminal Henry Kissinger, is a mentor to power-hungry and narcissistic sociopaths. The WEF “Great Reset” is designed to turn the world into an impoverished social concentration camp, where destitute serfs “own nothing” and this, in true Orwellian fashion, will set them free…

I challenge people to investigate the WEF’s Global Redesign Initiative. According to the Transnational Institute in the Netherlands, this “initiative” proposes
a transition away from intergovernmental decision-making towards a system of multi-stakeholder governance. In other words, by stealth, they are marginalizing a recognized model where we vote in governments who then negotiate treaties which are then ratified by our elected representatives with a model where a self-selected group of ‘stakeholders’ make decisions on our behalf. (Emphasis added.)

In other words, large transnational corporate “stakeholders” will be deciding where you live, what you eat (insects and weeds), how you reproduce (or not reproduce; children produce carbon emissions), and what you can “rent” from them, or not be allowed to rent if you complain about an unelected globalist “economic” cartel driving humanity into serfdom, worldwide poverty, and depopulation.” (“WEF Calls for Destruction of America’s Middle Class“, Kurt Nimmo on Geopolitics)

What Nimmo is saying is that these billionaire elites are now so powerful, that they can openly say they’re going to “transition away from intergovernmental decision-making” (ie– representative government”) to a system of “multi-stakeholder governance.” If I’m not mistaken, that is a pretty unambiguous declaration of a new form of supra-national government, in which only the billionaire stakeholders have a vote in what policies are implemented. But isn’t that the way things work already? On any number of topics from ESG, to digital currencies, to vaccine passports, to AI, to gain-of-function research, to 15-minute cities, to transhumanism, to war with Russia; the decisions are all being made by a handful of people of whom we know every little and who were never voted into office.

And that brings us back to our original question: How many of these oddball events (in recent years) were conjured up and implemented by agents of the deep state to advance the elitist agenda?

This seem like an impossible question since it’s hard to find a link between these dramatically divers events. For example, what is the link between a Drag Queen Children’s Hour and, let’s say, firebombing a food processing plant in Oklahoma? Or the relentless political exploitation of gender issues and the January 6 public show trials? If there was a connection, we’d see it, right?

Not necessarily, because the link might not have anything to do with the incident itself, but instead, with its impact on the people who experience it. In other words, all of these events could be aimed at generating fear, uncertainty, anxiety, alienation and even terror. Have the intelligence agencies launched such destabilizing operations before?

Indeed, they have, many times. Here’s an excerpt from an article that will help you to see where I’m going with this. It’s from a piece at The Saker titled Operation Gladio: NATO’s Secret War for International Fascism.” See if you notice any similarities with the way things have been unfolding in America for the last few years:
Yves Guerin-Serac: the Black Ops Grandmaster behind Operation Gladio…. wrote the basic training and propaganda manuals which can be fairly described as the Gladio order of battle.”…

Guerin-Serac was a war hero, agent provocateur, assassin, bomber, intelligence agent, Messianic Catholic, and the intellectual grandmaster behind the ‘Strategy of Tension’ essential to the success of Operation Gladio. Guerin-Serac published via Aginter Press the Gladio manual, including Our Political Activity in what can aptly be described as Gladio’s First Commandment:
“Our belief is that the first phase of political activity ought to be to create the conditions favoring the installation of chaos in all of the regime’s structures…In our view the first move we should make is to destroy the structure of the democratic state under the cover of Communist and pro-Soviet activities…Moreover, we have people who have infiltrated these groups.”

Guerin-Serac continues:
“Two forms of terrorism can provoke such a situation [breakdown of the state]: blind terrorism (committing massacres indiscriminately which cause a large number of victims), and selective terrorism (eliminate chosen persons)…

This destruction of the state must be carried out under the cover of ‘communist activities.’ After that, we must intervene at the heart of the military, the juridical power and the church, in order to influence popular opinion, suggest a solution, and clearly demonstrate the weakness of the present legal apparatus. Popular opinion must be polarized in such a way, that we are being presented as the only instrument capable of saving the nation.”

Anarchic random violence was to be the solution to bring about such a state of instability thus allowing for a completely new system, a global authoritarian order. Yves Guerin-Serac, who was an open fascist, would not be the first to use false-flag tactics that were blamed on communists and used to justify more stringent police and military control from the state….” (“Operation Gladio: NATO’s Secret War for International Facism”, The Saker)

Repeat: the first phase of political activity ought to be to create the conditions favoring the installation of chaos in all of the regime’s structures… This destruction of the state must be carried out under the cover of (communist) activities…. Popular opinion must be polarized in such a way, that we are being presented as the only instrument capable of saving the nation.”

In other words, the objective of the operation is to completely disrupt all social relations and interaction, cultivate feelings of uncertainty, polarization and terror, find a group that can be scapegoated for the wide societal collapse, and, then, present yourself (elites) as the best choice for restoring order.

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Is this what’s going on?
It’s very possible. It could all be part of a Grand Strategy aimed at “wiping the slate clean” in order to “transition away from intergovernmental decision-making” to a system of “multi-stakeholder governance.”

That could explain why there has been such a vicious and sustained attack on our history, culture, traditions, religious beliefs, monuments, heroes, and founders. They want to replace our idealism with feelings of shame, humiliation and guilt. They want to erase our past, our collective values, our heritage, our commitment to personal freedom, and the very idea of America itself. They want to raze everything to the ground and start over. That is their basic Gameplan writ large.

The destruction of the state is being carried out behind the cover of seemingly random events that are spreading chaos, exacerbating political divisions, increasing the incidents of public mayhem, and clearing the way for a violent restructuring of the government.
They can’t build a new world order until the old one is destroyed.

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Reprinted with permission from The Unz Review.

Copyright The Unz Review

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Blog/Armstrong in the Media

Posted Feb 26, 2023 by Martin Armstrong

Watch the video above or click here for the latest interview with USAWatchdog.

Commentary from Greg Hunter:
Legendary financial and geopolitical cycle analyst Martin Armstrong said at the end of last year the U.S. is being set up for a “nightmare fall.” Train derailments and political problems are spinning out of control, but the biggest threat is war. Armstrong explains, “They want a war, but they also need it because the monetary system is collapsing. . . . You have had interest rates at negative since 2014. So, suddenly interest rates are rising. Any bond owned by any institution in Europe is a loser. They have lost so much money, it’s incredible. What happens?

Nobody is interested in long-term debt – period. . . . If you have interest rates rising, and rates are going to be going up because the Fed cannot stop this kind of inflation. Then, you got war. You have untold billions of dollars being shipped into Ukraine which is absurd. This is what you have. . . . You also have to look at what Janet Yellen said, and she was concerned with the tons of new debt coming out. You are exceeding the balance sheets of the Primary Dealers. To be a Primary dealer you have to be able to guarantee you will be able to buy X amount of debt. If you can’t sell it, what happens? The bank is stuck with the debt, and then, they go bust. So, we have a real problem here. They cannot continue to issue this kind of debt in perpetuity. They have been borrowing money since WWII with no intention of paying anything off. . . . The Fed is independent, and they don’t want long-term debt. They have been moving towards the short end of the curve. How do you continue to fund a government if there are no buyers for the debt? This is on a global scale.”

So, war checks all the boxes? Armstrong says, “Absolutely. They get to default on all this debt which is the real objective. That’s why (Klaus) Schwab is out there saying you’ll own nothing and be happy. He’s trying to make it sound like they are doing this for you. We are going to default on all debt and relive you of all your debt. This is because they are going to wipe out everything. Pension funds will be all gone. That’s why they are coming out with guaranteed basic income to replace your pension. They’ve got this all worked out. That’s what the end goal is here because they cannot continue to function this way. They cannot continue to borrow whatever they need with no intention of ever paying it back.”

Armstrong reveals why the 2024 elections may not happen. Can the Deep State commit enough voter fraud to keep Biden and the rest of the Neocons in power? Armstrong says most of what is happening today is the fault of the Neocons, and they have control of both parties. Armstrong points out Democrat Hillary Clinton paid for the phony Trump/Russia dossier, and Republican John McCain delivered it to the FBI. Armstrong calls it the “Uni-party,” and goes deep on the problems the Neocons are causing on purpose.

Armstrong also talks about the dollar, gold, civil unrest, tangible assets, and the Ukraine war. Armstrong’s sources say the real number of casualties of the Ukraine Army stands at a whopping 250,000 dead. Armstrong says Russia is NOT losing the war. It is winning.

Categories: Armstrong in the Media

Tags: Greg Hunter, Interview, Neocons, USAWatchdog

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