I’m glad that you are asking questions; I wish more people did.

I read most of it again today. It is that important.

My thoughts, in brief are these. People are now rightly shocked at what has happened over the past two years. So it is natural to look at something like Armstrong’s work for help. I do my own TA, so I don’t need an Armstrong to help me, but I do like to know about the turn dates; they are one more piece of information. I have maintained for years here and at GE that one needs to be independent; that means to do one’s own TA and FA and due diligence, etc.

What this means for me is to search for the best information available, and to test it.

Armstrong explains why the US dollar is rising, and why it will fall later on, and how we can use the yield curve [that Sabregold has mentioned numerous times] to judge how close we are to that point. Redneckokie understands this, and has been posting about the bonds, and yields.

Armstrong developed his model and used it over the past thirty years. I am not going to learn it and its intricacies in a week. So I will not dismiss it if some of it does not make sense to me now.

When you read it you will see, as I pointed out, that there are two or more cycles at work and being described in his article. ONe has to do with confidence in Public, that is government themes, and one has to do with confidence in Private, that is commercial, themes. So, at the moment, we are seeing a loss of confidence in the Private theme, private business, banks etc., and a rush to government money; that is the dollar and US government bonds. This explains why the US dollar is rising.

At some point the danger to money invested will be perceived to be greater in Public themes, such as the US dollar and US government bonds, and some area of Private themes will emerge as deserving more confidence. So investment will go there.

I think that Cyclist is correct in thinking that debt-free, cash rich commodity producers with large resource bases will be that Private investment of choice. Here is a link to his thread. It would be a good investment of time to spend twenty or more hours reading the backposts there, imo.

www.kitcomm.com/showthread.php?t=85&page=1342

Armstrong explains the options available to governments today, as he wrote this and published it only a month ago. He makes clear that the choices are limited, and that one will be government borrowing to fund the deficits. This will crush the stock markets in a deflationary phase, as it will vacuum available cash from the equity to the government bond market, in his opinion.

The other option is to monetize, and this will see the equities rise in nominal value in an inflationary phase. Real value could continue to plummet as this happens.

The third option is a combination of the above.

In my opinion, the first two create either a deflationary depression, or an inflationary depression, as business will be ruined, and cash will be scarce, so in short supply in terms of value; there will be little or weak buying power or demand.

If China and others with real cash savings do not buy the government bonds, then the US and other governments will need to monetize to fund the debt offerings.

Off-shore money coming in would strengthen the dollar, and imo this would to some extent mitigate the inflationary effect of more dollars arriving from outside the US to buy the bonds for foreign investors..

I am not sure, but it is possible that the best of all possible outcomes will be a non-deflationary and non-inflationary depression, lasting until all the bad debt has been scrubbed from the system. He suggests placing the bad debt into a special fund at market value, and selling units of this to investors. He has many more important suggestions. Since the ethical foundations of our culture appear to be compromised, and very weak, I do not hold much hope that these will be implemented. The downturns in his graphs show turns down in confidence. This decline of confidence will be in part due to the lack of integrity in the leadership, and especially reflected in the Rule of Law, that is, law exercised and used or misused by the System. This is a very important factor, much more important than investing.

I have mentioned a few times that this appears to be a Debt-Repudiation period, and my concern is that it becomes a debt-repudiation depression, as has occurred in 1837, and later.

Armstrong explains how the derivatives in themselves were not the problem; but that the credit default insurance from London was non-collateralized. It was not backed by value.

I see the credit default insurance as the fiat that was hyperinflated. It has been called in, and does not exist, so now we are seeing rapid deflation. The assets that were acquired with derivatives that are now being sold in order to raise cash are also being sold, as the derivatives which were used to raise credit in order to buy the assets are devaluing, and in order to repay the loans which were based upon the derivatives, the assets are being sold to make up the difference.

I don’t know if I can post more tonight.