Martin Armstrong: “Let Us Prepare For The End Of Democracies”

Economist Martin Armstrong speaks again with SouthFront. In the interview he gave, Armstrong offers some insights into the main issues on the geopolitical and economic agenda. Armstrong’s reflections are based on the interpretative model of economic cycles, the Socrates model. The analysis of economic cycles – according to the model developed by Armstrong – indicates a collapse of Western political systems (the end of democracies) in the coming years. The target set by the economist is 2032, but day after day, citizens of Western communities will be faced with a growing squeeze on subjective and economic freedom.  Each evaluation factor is directly linked to the model. The crisis of Western democracies is a historical forecast resulting from the exponential growth of state public debts (which will never be repaid). Looking at what is happening to the markets, Armstrong explains that the value of Gold will continue to grow (precisely due to the weakening of Western economies).

End of democracy

End of democracy could happen “around 2032. But between here and there, the government will become more authoritarian. All of them will. Because they know they’re losing power. You just had Shultz at Davos saying, we believe in free speech, but not for the far right. Which is his opposition, you know. So, I mean, this is a problem. That you get historically. I mean, just, you know, look at all the different governments, you know, wherever throughout history. It’s it’s always the same issue. They will do whatever they have to do to retain power. There’s a Stele there on the island of Delos, which was the temple of Apollo, which was an ancient central bank in Greece. And there’s a Stella there with a list of all the cities that defaulted on them. And that was 400 B.C.. So nothing’s ever changed. It’s always the same thing, and mainly because human nature doesn’t change regardless of the century you’re looking at.

Public debt

“Well, that’s the problem. They have no intention of ever paying off the debt. They have really primarily since World War Two. They’ve just engaged in this borrowing year after year with no intention of paying anything back. Historically, that’s how. Governments collapse, because eventually what happens is that the interest expenditures push out everything else. And they consume the vast majority of of of the budget like this year. You know the interest expenditures in the United States are exceeding $1 trillion. The national debt was $1 trillion under Ronald Reagan in 1980. So it’s it’s not a sustainable system. And all Western governments are basically in the same boat with this. And then, I mean, ultimately, what our computer shows is that we will go through another sovereign debt crisis like this topically has always happened. And then often, unfortunately, they use war as the excuse to default. Even the United States, the Revolutionary War, the Constitution said they would honor the debts of the Continental Congress. They never did in World War One. They defaulted on the debts, even Canada. It’s I mean, this is just what they do. France is in what, its fifth republic and each new government. we don’t pay the debts of the last one. So. You know, Spain became the serial defaulter. I think it was seven times starting in around 1570. They successfully took themselves from the richest country in Europe to, you know, basically a third world status. But, you know, unfortunately. Governments only really act in their own self-interest. They always just want to sustain their power. It has nothing to do with the people or anything else. And. So, I mean, that’s why you see, in the United States and why Trump won, because people know the government’s gotten too big, too costly, too inefficient. But then the government, those in the in the government fight back to keep their jobs, etc.. Take Nato. Same thing. This is systemic in all governments. All right. Once you create an agency. It will then fight to keep its funding and stay alive. I’ve seen the internal memos from Naito. Naito was very concerned that money was going to climate change and not to them. And they were actually, you know, concerned. They said, how do we remain relevant? The only way they remain relevant is by constantly saying Russia is going to invade”.

Gold Value

“I think you have to understand when currency is in trouble. Like the German hyperinflation, all assets rise. Your home, etc.. Gold Because when you come, when the currency collapses, then everything will be re denominated in new currency. Gold has been historically very good because it was also movable. Whereas a house is not. However, we’re getting into authoritarian governments. And they’re not likely to let you on a plane with with a briefcase for gold bars. So. It will get more difficult for the freedom of movement. But I can tell you this. When the first bullet is shot in a war with Russia there in your. Capital controls are going to come in. Just look at World War One. They shut down all the stock markets. So it’s best to have some money outside of Europe. Because when it gets these people will create war one way or another as a distraction. Because that’s better than having people with pitchforks coming up and storming parliament. And blaming them. And then they can say, no, it’s not us, it’s Putin, you know? So, I mean, Biden did that in the United States. He put the sanctions on Russia. Inflation went up. And what do you say? It’s Putin’s inflation, not his. So I mean, gold basically, I think over the next eight year period will probably rise to at least around a minimum of around $5,000. But that’s also a reflection of the decline in the currency. Its purchasing power. So as we lose confidence in governments, all of our tangible assets will tend to rise. And that’s where. You know, even when Germany. You know, after the hyperinflation in 1925, the rice market they created, what was it? Backed by real estate. They didn’t have any gold. It was backed by real estate. So those things that are. What is real wealth? It’s you”.

Eurocollapse

“When they were creating the euro, they did come to me and I explain, okay, fine, how you create a currency and to compete with the dollar, etc., required that they consolidated all the debts of the member states.  So his criteria was not to consolidate the debt, because that would appear like maybe we’re bailing out Greece or something. So when I met with them, I explained you’ll never compete with a dollar in this fashion. And he was everything they were saying was basically a lie. Everybody will pay the same interest rate. There are comparing it to the U.S.. I said, But no, you’re not. If you don’t have a consolidated national debt the rest of the United States. Yes, we have 50 states, but they all pay different interest rates depending upon their credit rating. That’s what Europe will be. And I warned them that, fine, you’re creating a single currency, but you’re only going to shift the volatility to the bond market. So a traitor before if he was. Bearish on Italy, he would short the mirror and buy the German marque. Today they just do it in the bond market. It’s the same thing. So I was told back in 98 that they just had to get the euro in first and then they would worry about the debt later because of Kohl. But here we are, 2025. They still haven’t dealt with the debt. And the problem becomes that. We ended up in this socialistic philosophy post war. And so politicians everywhere, they are basically bribing the people to stay in power. You know, vote for me and I’ll take the money from this guy and give it to you, you know? And consequently, they have all they have ever done has continued to borrow and build up the debt to the same power. There is no intention of ever paying off the debt. And it couldn’t possibly be paid off anyhow. And. So eventually, you know, the system does collapse.

BRICS

“Well, if we really look at what created BRICs, it was the sanctions on Russia in in 2014 when Russia went into Crimea. That’s when Obama went to BRICs and said, We want you to remove them as a punishment. And Brooks refused. So now what did they do? They replaced the head of bricks. I mean, they replaced the head of Swift. I mean, they went to Swift and say, you know, take them out. And so they replaced the head of Swift in 2019. And he just does whatever he sold. So the BRICs ends up other countries began to see if we don’t do what the United States commands, then they can remove us. So BRICs really began more as geopolitical. Rather than economic. All right. And this whole idea initiated with Christine Lagarde when she was at the IMF. She went after tax havens and threatened to take them out of the swift system unless they turned over people. She even did that to the Vatican. It was all about we need money, we’re collecting taxes and these people are not paying. We won’t know who they are. So now you’ve divided the world economy. I mean, it is very nice to sound the gold standard things of this nature. But honestly, that is not going to work. Why? Because we’re in a situation where we have to change the political system. To go to a gold stay there, balanced budgets. Then a politician can say, Vote for me. I’ll take it from this guy and I’ll give it to you. That’s got to change. You know, Trump is. Old school thinking. He’s also stood up and said he wants the dollar down. Also, I can sell more goods outside the country. It be cheaper. Look, I was also called in back in 1985 when they were forming the G5. Same thing. We’re going to lower the dollar by 40% to reduce the trade deficit. I wrote to President Reagan, I said, if you do this, you’re going to cause a crash within two years. Why? You know, and it was the 87 crash. Robert Rubin from Goldman Sachs became treasury secretary. 1997, starting the same stuff. The dollar should be down graded in 97. Asian currency crisis. When you lowered the value of a currency. Yes. Your exports become cheaper. Very nice. But so do all the assets in your own country. In the case of of the 87 crash, it sold a third of the national debt of the United States to Japan. You lower the dollar by 40%, they’re going to sell. So they don’t understand. Currency. They don’t understand how the world economy works. So Trump, in saying, I’m going to put tariffs on. And says, Yes, it’s true. Before the income tax, the US government funded itself only with tariffs. However, it wasn’t this social agenda. There was no Social Security, Medicare. All of these things. All right. So you’re funding a much smaller government with tariffs. Yes. Okay. That worked. Now, trying to do that today, not going to work. So all these governments are on this perpetual borrow now and don’t worry, we’ll you know, they never pay off. So the BRICs is more of a geopolitical.

Cryptocurrency

“Well, now, as you know, I live in Florida. We just had two hurricanes. All right. Internet and power was down for about ten days. You couldn’t even use a credit card. So much for cryptocurrency. If you wanted something and you didn’t have cash, you didn’t get it. Again, the cryptocurrency is based upon a conspiracy theory, in my opinion. They blame the central banks. They create this money. Blah, blah, blah. First of all, things have changed. Back in the 1960s. If you had $100 bond from the United States government, you went to the bank and you said, Would you lend me $50 on it? The answer was no, it was illegal. So we had this theory that it was less inflationary to borrow than to print. Because the debt was you could not borrow against the debt. But after Bretton Woods collapsed, you can. You want to trade gold futures, you post government T-bills. All right. So the problem with the cryptocurrencies is they blame the central banks and they’re not the fault. The central bank has no power over the fiscal budgets of governments. So the government is the one creating the bulk of the money. It’s just debt that pays interest now. There’s no real distinction. So, you know, they keep blaming the Federal Reserve or the central banks as if they’re the you know, it it’s like somebody shoot somebody and you blame the gun, not the person. You know, things have changed. The economy has evolved. It’s grown. And it’s not the same as it was under all the theories. You can search on our site. I knew Paul Volcker. It was one the Federal Reserve back in 1980. And he wrote a book and we put it on our site, 1979. It’s called Rediscovery of the Business Cycle. When the economy crashed in 1974 after the OPEC embargoes. All right. And we ended up with what was called stagflation. The economy was declining, but inflation was actually rising. And basically, you know, Paul wrote that. And he said he called it rediscovery the business cycle. And in there, he says, Keynesian economics, the new economics, it failed. They knew that back then. Look, I talked to a lot of central banks, and I can tell you that they’re they have no power anymore. The Fed raises interest rates. Okay, to stop inflation? It doesn’t. Why? Because the government is the biggest borrower in the room. He raises interest rates, our interest expenditures. Did the government go up to $1 trillion? So you have, you know, Trump, you know, saying, you should be cutting rates, blah, blah, blah. Not going to happen. All right. It’s a different animal. When Keynes came up with an idea in the 30s, the US had a balanced budget. So it made sense. Raise interest rates is affecting us directly. All right. But now the government is the biggest borrower. So if the Fed raises rates, nobody in government says, the central bank wants us to spend less. We better cut our spending. They never say that. So, you know, that’s what.

AI could be a “bubble”

“But when you look at markets, there are always going to be these bubbles. In the 1920s, the bubble was over automobiles. You know, that’s going to be the new innovation. Then it was airlines. All right. And 2000 was the.com bubble. All right. This one here is overvaluing. I always is going to change the world, etc., And then it crashes. All right. People jump on whatever the hot topic is at that point in time. Same thing in Tokyo, 1989, the Russian collapse in 98. They’re all buying geckos out of Russia and sort of dying. That would always bail them out. So they would make their 20 to 30% interest, you know, and there was no risk that all collapsed. This is normal. All right. The over valuations of AI and these in the chips. I’ve been a programmer, you know, since the 60s. There’s certain things about A.I. it’s not going to do. All right. You’re driving down the road. Somebody just. Looks like he hesitates. He might want to move out. He starts to move out, but pulls back. All right. Just a subtle little change. Something like that. We recognize it. All right. A computer is not going to recognize something along those lines. When I was a hedge fund manager, you have to know. Like in a poker game. Is the guy bluffing or is he not bluffing? It’s a gut feeling sometimes. You have to know that person. All right. And so you’re not really going to find an eye computer that’s going to take up all that sort of thing. It can be very good is finding a lot of other things. But look, you know, IBM created Big Blue and they promised always going to cure cancer and failed. You know, you can’t put all this stuff in and shake it up and expect the computer to figure out something that a human being couldn’t do. I mean, there’s certain things it can do and other things it cannot. And most of this is just hype and like the Internet. Okay, fine. Yes. You can buy things delivered to your house off of Amazon faster. And that has affected a lot of small local businesses. But there are other things you need your hair cut. You’re not going to be able to get that on Amazon. All right. There are certain things said need physical. You know people did to do something labor whatever it so the economy’s much more complex and it does shift in it and it grows. I mean the. The Economist. Basically, Schumpeter came up with he called it the cycle of innovation. Basically that the automobile comes out and it destroys its creative destruction, that it destroyed the industry of everybody that made horse and buggies. Okay. They’re outdated. Gone, go bankrupt because now everybody’s using a car. And so. It’s he called it. Basically, these business cycles are partly driven by this trend of creative destruction. So we create the Internet. Amazon comes up and it does wipe out a lot of small businesses around you. All right. But, you know, each time you’re going to come out with some new technology and that’s always going to be the case at these, you know, these economic business cycles that are partly created from this wave of creative destruction. Then you have the climate. It’s in there. Climate changes have been going on for millions of years. That’s what even created, you know, great migrations out of Africa, etc.. I mean, there’s a medieval warming period where they were growing grapes in in Britain, you know. So, I mean, the climate has changed. I think the University of Arizona has found that. They track that the tropical area moves up and down. It’s not constant. So there are cave. Pictures from the Saudi Arabian desert that show all lush and animals running around. And that was around probably 10,000 B.C.. So, I mean, everything there’s a cycle to absolutely everything. We’re born, we live, we die. Governments do the same”.

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