- Martin Armstrong: Rates are Going to Jump to 10% Instantaneously
by Greg Hunter’s USAWatchdog.com (Early Sunday Release)
Near the end of last year, legendary financial and geopolitical analyst Martin Armstrong said the Trump tax cuts were going to be a very positive move for the U.S economy. He was right. What does he say now about the U.S. dollar? Armstrong predicts, “They keep talking about the U.S. debt is $20 trillion. Global sovereign debt is over $200 trillion. The U.S. basically is holding up the whole world, and U.S. debt is why it is the reserve currency. Europe couldn’t make it because they could never consolidate the debt. . . . What you have is a crisis that has been building in emerging markets to sell their debt they issued in dollars. The dollar going up is what breaks the back of the world monetary system. . . . The world monetary system is going to do great if the dollar goes down. Everybody is going to be borrowing more and say this is fantastic. It’s only when the dollar goes up that we get things that break. . . . The U.S. always wants the dollar down, but it’s not going to work that way. . . . The dollar is probably going to go up pretty strong until late 2021 at the latest. . . . The whole thing is going to break. The Federal Reserve has become the central bank of the world by default.”
So, where does Armstrong see big trouble brewing? Look no further than the bond market. Armstrong explains, “The bond market is going down. . . . We’ve already started into it. . . .You have to understand both Japan and Europe have destroyed their bond markets. They have completely and utterly destroyed them. They are the buyers. That’s it. There is no pension fund that can buy 10-year paper at 1.3% when they need 8% to break even. They are locking in a 10 year loss. They can’t do it. We have been helping major funds shift into equities because it is the only place they can go. . . . Once you start seeing the cracks in Europe, you are going to see interest rates rise faster than you have ever contemplated in your life. There is nobody in their right mind that can buy an Italian bond at 1.3%. It’s just not going to happen. Once the ECB is forced to stop, those rates are going to jump to 10% instantaneously. Once it starts to crack, that’s it, it’s gone. What is going to make everyone know it is cracking is when you see rates going up dramatically, and the ECB is at a point it just can’t buy any more.”
Armstrong does not see a big War in the near term, but one is brewing in the Middle East. What Armstrong does see right now is “increasing civil unrest.”
On gold, Armstrong sees the yellow metal “fighting a stronger dollar” but predicts it will have its day sometime after 2020 to 2021.