Martin Armstrong discusses the 2022 Panic Cycle in his latest interview.
Last year, 2022, was a brutal year for investors as the bubble of everything in stocks, bonds, and cryptos burst, wiping more than 30 trillion dollars off the value of assets in portfolios.
Bizarrely, the longest secular bull market in everything ended not with the global lockdown pandemic but with central banks pulling the plug on monetary easing at the end of lockdowns.
The lockdown charade was an education in what really influences the trajectory of markets, and it is not fundamental economics but central bank liquidity.
“the longest secular bull market in everything ended not with the global lockdown pandemic but with central banks pulling the plug on monetary easing at the end of lockdowns”
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Ballooning public debts in the wake of the 2022 Panic Cycle
“The main driver of markets today is the continual loss of confidence in government debt, argues Martin Armstrong. If we understand the big picture and how this is driving global capital, everything else follows and makes sense,” said Martin Armstrong.
Martin Armstrong discusses the 2022 Panic Cycle and capital flights from the public to the private sector in 2023
The 2022 Panic Cycle created an oversupply of debt with less demand, which caused bond prices to fall and their corresponding yields to rise.
“Because of this dynamic, where government bonds aren’t yielding enough for global investors’ return requirements, this is continuing to push money away from government bonds (public debt) and into the private sector via corporate debt, equities, real estate, and other areas,” said Marin Armstrong.
“The main driver of markets today is the continual loss of confidence in government debt”
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Perhaps this is why we believe the Fed will remain tight until it has triggered a deflationary depression, making treasuries attractive during a worsening war in Europe. We are likely to see a hyperinflationary depression outside the USD zone. The war economy could keep inflation near the Fed’s target.
“The inflationary trend is set to continue into 2024, ” Armstrong stated, adding that his historical models were predicting shortages before the pandemic. The supply issues and manufacturing disruptions we’ve seen since COVID-19 hit are just compounding the problem.
“There are shortages of everything” – Martin Armstrong
Virtually everywhere we look, Armstrong said, there is a shortage. This correlates with his model’s prediction that the commodity cycle will continue to rise into 2024, and he expects conditions to be inflationary into that period,” he said.
That supports the view that the Fed will remain tighter for longer than most anticipated.
Martin Armstrong’s model predicts that we should expect to see major political disruptions, potentially on a global scale. His model is forecasting a high probability of civil unrest in Europe, particularly in regions where there is likely to be the most backlash to government policies.
“There are shortages of everything,” Armstrong said. “There is nothing that I can find that’s not in shortage.
That is typically what happens before and after a big war, as the economy moves into wartime production.
Frankly, we can not see how this is negative for USD, and at some point, those treasury yields will be a good deal, bearing in mind other currencies are melting down.
