Martin Armstrong: The Insanity of Government & Socialism


Martin Armstrong produces the data that politicians and most economists prefer to simply ignore.

I have warned that government expansion reduces economic growth and acts like a black hole that sucks in more and more wealth, thereby reducing economic expansion.

If the government keeps growing, ultimately we will end up with 100% government consumption or the equivalent of communism.

Here is a chart produced by OECD that nobody pays attention to.

This clearly shows what I have been warning about.

The higher the tax rate, the lower the economic growth.

A reader sent this in commenting that EVERY POLITICIAN should be shown this chart.

The problem is that they lack the comprehension to understand what it means.

The Insanity of Government & Socialism
Martin Armstrong – 25 Jan 2016

Politicians and Keynesian economists have been studiously avoiding reality during my lifetime.

A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator.

Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.

Ponzi schemes occasionally begin as legitimate businesses, until the business fails to achieve the returns expected. The business becomes a Ponzi scheme if it then continues under fraudulent terms. Whatever the initial situation, the perpetuation of the high returns requires an ever-increasing flow of money from new investors to sustain the scheme.

Unraveling of a Ponzi scheme
When a Ponzi scheme is not stopped by the authorities, it sooner or later falls apart for one of the following reasons:

1) The promoter vanishes, taking all the remaining investment money (which excludes payouts to investors already made).

2) Since the scheme requires a continual stream of investments to fund higher returns, once investment slows down, the scheme collapses as the promoter starts having problems paying the promised returns (the higher the returns, the greater the risk of the Ponzi scheme collapsing). Such liquidity crises often trigger panics, as more people start asking for their money, similar to a bank run.

3) External market forces, such as a sharp decline in the economy (for example, the Madoff investment scandal during the market downturn of 2008), cause many investors to withdraw part or all of their funds.

Martin Armstrong’s prognosis is grim and the hour is getting late.

There is NO WAY OUT of this mess.

We simply have to crash and burn.

The Insanity of Government & Socialism
Martin Armstrong – 25 Jan 2016

“There must be some way out of here,” said the joker to the thief
“There’s too much confusion, I can’t get no relief
Businessmen, they drink my wine, plowmen dig my earth
None of them along the line know what any of it is worth”

“No reason to get excited,” the thief, he kindly spoke
“There are many here among us who feel that life is but a joke
But you and I, we’ve been through that, and this is not our fate
So let us not talk falsely now, the hour is getting late”

All Along The Watchtower by Bob Dylan
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