Alternate View: Economic Crisis Will Cause Stock Markets To Skyrocket: “We’re the Only Game in Town”

Could you imagine the Dow Jones Industrial Average rising to over 25,000 points, from its current all-time highs of 16,900?

Given the economic malaise facing the entire globe many would argue that such a value is simply not possible and as soon as it becomes clear later this summer that the U.S. has officially entered another recession stock markets will inevitably crash full-force into a long-term deflationary environment.

But what if the opposite happens? What if the panic caused by a collapsing global economy leads to a limited crash and then sends stock markets soaring?

This is the forecast being proposed by well known cyclical theorist Martin Armstrong, whose past predictions were so accurate that he identified, nearly to the day, the Savings & Loan crisis, the collapse of the Russian Ruble and the crash of Japan’s stock markets.

Even Armstrong himself suggests that his ideas run counter to what one might expect to happen given the state of the world’s political, financial and economic affairs, but stock markets could nonetheless skyrocket 50% or higher from where they are today.

Well, I think the best thing to do is clearly stay in the United States right now. Get out of any emerging markets because what you are going to have is: China is rattling its sabers against Japan and South East Asia; you have all kinds of turmoil in Eastern Europe, and I think you’re going to probably see that start to pick up quite sharply after September. So you don’t want to be involved in those types of assets. I would stay home clearly.

The U.S. stock market, although it sounds a bit crazy, it’s liable to go up very dramatically. I would think we could go up 50% at least. But it’s going to depend upon when the capital flows start coming in very dramatically, and they’ll come when you start to see those types of geopolitical problems [along with]…economic problems from Europe. But, I mean, there will be more dips—one more little crash first—and then it’s going to take off.

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You get a lot of these dollar haters, I call them. But what are you supposed to have as an alternative? The Euro is an absolute basket case… Canada doesn’t have a big enough economy… Australia doesn’t… Britain doesn’t… Japan, forget it… So what are you down to? Are you going to use Rubles or Yuan? The dollar is the world reserve currency for a reason… and effectively we are the largest economy and right now we are the only ones really holding anything up.

It’s a pretty bad recession in China… in Russia… Europe is a basket case… France is on the verge of bankruptcy… it’s crazy everywhere… We’re the last place that is still booming… it’s not as much as it used to be, but we’re still positive. That will turn down next year and when that does the rest of the world… as they say when the U.S. catches a cold the rest of it gets the flu.

The capital flows will move into this direction also because Europe is hunting capital dramatically… The IMF is saying they should just confiscate 10% of everybody’s accounts… If I say I’m going to punch you in the face are you just going to stand there and let me punch you? You’re either gonna move or fight back.

People act in anticipation.

So, capital has been flowing to the United States. The top end real estate in New York, Florida, California, is booming. Why? It’s mostly foreign money coming in. So that supports the dollar. And if you then have more geopolitical problems with Russia, etc., money is going to pour here again, the same way it did with WWI and WWII. If you’re blowing everything up and banks aren’t safe, you put your money on the first ship and you bring it over here…

We’re really the only game in town and that capital will come here as the geopolitical movement develops.

Full audio interview: Financial Sense Newshour with Jim Puplava

Sourced from Armstrong Economics via Prepper Website

Capital flows, as Armstrong notes, are the key variable to keep an eye on. Historically, global investors have always sought safe haven in the United States because up until now America has never defaulted on its Treasury issues, making it one of the last perceived bastions of financial security on earth. Yes, it sounds ridiculous considering the insurmountable debt being held by the U.S. government, but according to Armstrong global investors will still turn to the United States when all else fails, just as they have done during every major crisis in recent history.

But before you commit to the idea that everything will be fine and dandy as a result of potentially hundreds of billions of dollars making their way into the United States, keep in mind that capital flowing into domestic markets will further contribute to a recessionary environment by increasing the value of the dollar and decreasing exports, so this effect won’t necessarily signal boom times or economic health.

In fact, Martin Armstrong says that we should begin seeing serious cracks forming here in the United States some time next year. Those problems will revolve around America’s debt crisis and the destruction of our domestic economy. The end result, suggests Armstrong, will be one that’s been witnessed throughout history and will lead to dire repercussions:

People will not fight if they’re fat and happy. Turn the economy down and you get war. World War II follows what? The great depression.

This is the way it is. People don’t go to war if everything is really great. But if you start losing things then you get aggravated… who caused this, etc…

Historically what will happen is that the economy turns down aggressively and the people get angry. Now, you have a choice. They’re going to get angry at government and they’re going to come after you. Or, you find somebody else for them to get angry at and you say ‘hey, it’s not me it’s them’…

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Absolutely [we are in danger of going from a cold war to a hot war].

One way or the other, whether stocks rise or fall, we’ve entered an unprecedented period in world history.

The end result, regardless of how we get there, will likely culminate in a war unlike anything human civilization has ever witnessed before as politicians the world over angle to convince their citizenry that someone else is to blame for their problems.

Though we can’t predict with certainty the dates or sequences of events that will lead to the eventual downfall of the system as we know it today, we can, at the very least, prepare in advance and insulate ourselves against the brunt of the hit when it does happen.

Deep down, though many refuse to admit it, we know that something just isn’t right.