You lost friends in your life.
You had been betrayed by people.
You had been stabbed one time emotionally
which you don't want even to think about it.
And you had been set up at least twice.
You are not lucky with politicians.
You are not lucky with police people. You are not lucky with army people.
You are not lucky with any person wearing uniform.
That's true. - You are not.
And every time you get closer to these people,
you will find out that the fairy tale turning into a nightmare.
Please shuffle the cards.
And cut the cards.
Cut them, okay.
This is number zero and you are
going for a great period of being exposed and being in front of the public.
You had been in a lonely island for a long time
and you came back ready and you will teach
people things that they never even thought about.
And you are a few minutes away before hitting the jackpot.
And when a person is so profoundly inside the ideas,
he gets hurt.
They feel threatened, I saw they succeeded from...
...until you reach a point where you don't care anymore.
When you reach that, then you take all their power away.
When you don't have nothing to lose.
This is the key for your success.
And that's what it shows, simply.
Moving and shaking this morning.
Martin Armstrong who is responsible for one of the largest Ponzi Schemes in history,
well, he’s back.
He cheated investors out of 700 million dollars
and spent 11 years in prison.
Now he's being praised by followers on the internet for his calls.
Among his fans commodities investor Jim Rogers,
who praises Armstrong for his historical knowledge and insight.
His website gets more then 200,000 views per month.
My dad was a single father.
He did the best he could.
He would take us to school, pick us up.
He would take me horseback riding.
He did all of that.
His work was more than just work.
It was his passion, it was
his purpose in life.
During the nights where we were sleeping, he was working.
He just worked
whenever he could, you know, whenever he had a free moment.
If he was traveling, my grandmother was coming down on weekends,
and take us for a couple days.
When I first came out, I was initially told by one of my former employees,
He says, "Oh Marty, the industry’s changed.
You'd be lucky if 25 people show up."
And I was totally surprised.
People I hadn't seen in a long time flew in from all over the world.
I asked them, I said "Why’d you've come all the way over here?"
A lot of them said,
"I just had to come to make sure it was really you."
He got out, September and he had this seminar.
It was just him, he had no one working for him, it was just him.
And he said, "Yeah, I'm gonna have a seminar."
I'm like, "Do you really think, you're ready for this?
You just got out."
I don't think he ever expected that kind of turnout.
And he brought on Danielle just weeks before.
And honestly, like seeing him on that stage, it was just
like he never skipped a beat.
Good morning everyone.
I would like to warmly welcome Mr. Martin Armstrong.
Martin's first rush of money was while working in a rare stamp and coin collection, as a student.
And this is a passion that created a teenage millionaire.
Now, ladies and gentlemen, I'm very honored to introduce our special guest,
Mr. Martin Armstrong.
Welcome to Philadelphia,
I'm Martin Armstrong.
We all know something is wrong.
You just cannot borrow forever,
with no intention of paying anything back.
The reason we have this crisis,
is because since World War II,
they basically have just had this idea
that they can borrow year after year after year,
never have to pay a damn thing back.
The only country ever actually paid anything,
was Romania in 1980.
That's it, it's the only exception I have found since
going back to 6,000 B.C.
The marketplace's had enough of government debt.
They are the only people that never pay their money.
Government debt is always regurgitated year after year after year.
If you're
ever in Princeton, you wanna stop by our office,
we've got all the bonds from around the world.
All these bonds that defaulted, just to remind you
what a sovereign debt default really is.
I mean, try that yourself, go to the bank and say,
"Okay, fine, I wanna borrow every month 1000 $."
"When you gonna pay it back?" "Well, never."
I mean, good luck.
I mean, nobody would run their business this way or their life.
Now what?
Now we're at the point of a sovereign debt crisis
who’s gonna bail them out?
There isn't anybody left.
This thing just reaches the edge and just goes "boom".
Yes, government exempts themself from the law,
basically assuming,
there’s always gonna be people there to tax.
They just take it from you and give it to somebody else.
Their problem comes when
there are more people to pay than there are to tax.
And our biggest crisis
is that historically these systems always collapse.
When they’re done with Europe,
then they’re gonna look around and say, "Okay, who’s next?"
I suspect,
it probably will be Japan.
And then after that then they’ll turn to the dollar.
It's all gonna come to roost.
Historically, nobody has ever beaten this clock once.
I met Martin
way back in 1980, I attended one of his conferences
in Princeton, New Jersey.
So at the time, he was making some unusual forecasts.
He was actually forecasting
that there would be a crash in the stock markets in 1987.
And he was forecasting that years ahead of time.
And it was outrageous.
Because nobody
was possibly contemplating the kinds of things
that he was talking about.
And in October of 1987 lo and behold the stock markets had one of their worst collapses ever.
And as the market was collapsing, he also put out a report saying that
the markets would recover by the end of 1989
to new highs.
And everybody thought he was nuts.
And by 1989 the stock market in the United States was at new record highs.
It was uncanny.
Now here’s a man
who I believe in my heart did absolutely nothing wrong.
And I can tell you,
even if he did,
he didn't deserve the treatment that he received.
They said in the papers, said they stole so many billions of dollars.
He said, "I didn't do any of that, Mom,
I didn't steal nothing," he said.
When he was young, just going to school,
he decided to save coins.
So every time I would go shopping and he came home from school, he'd say,
"Can I go through your change, Mom?"
And he'd empty my purse and
pick out the coins he wanted.
In a while there he was collecting a lot of them,
so I said this coin collection is gonna belong to you and me.
And then my husband would see how much money he would make on his own.
He didn't want to go to college.
"Why do I have to go, look at the money I can make."
His father said, "You gotta do something,
you’re not just gonna quit school."
So then he enrolled him at RCA computer store.
This teacher I had showed us this monstrous machine
and it was about half the size of this room.
And he said, "Before you're gonna be able to graduate,
you're gonna have to know every part in this whole thing."
And you just looked at it and you said, "No way!"
And I had a history professor,
who one day put on this movie.
And this one really blew my mind.
Jim Fisk manipulating the gold market
in 1869.
And he goes to his girlfriend and he says, "Josie,
gold is 162!"
Josie! - Jim!
Look Josie, 162.5!
And I'm thinking, "Come on, it's 35 bucks."
So I went down to the libraries
and there it is in 1869. Gold 162 bucks.
Obviously, that whole linear idea that I was raised with
wasn't true.
Everything went like this
and even over the centuries.
And my father was a very conservative guy.
Said, "You're speculating too much with those commodity things.
You should put your money into the
stock market."
I listened to my father, I bought
Fidelity Trend at the top at about 54 bucks
and watched it to go about 7 dollars.
And I turned to my father
and said, "Is this the way, conservative people make their money?"
So then I'm really starting to say, "Hmm, what makes that happen?"
Imagine a computer
that actually learns
and remembers.
Suddenly that huge machine
began to make sense.
I thought I could create a system
that stores the knowledge of centuries
and uses it to predict the future.
I met Marty
about 40 years ago.
He had a coin business in Robbinsville, New Jersey.
He was in business at the mall at that time.
I was here, I just built a shopping center.
We were very competitive with each other.
He would put an ad in, I would raise the price, he would raise the price.
But it was just a way of doing things, you know,
it was nothing personal, it was just business.
And then from the coin business, he went into the gold business.
He had a big built-in vault. I remember that, that was impressive.
And you could see it from the outside.
Virtually everything in history is documented by the coinage.
And there’s one thing interesting about the coinage:
The buildings crumble,
paper gets lost,
coins have survived.
We largely took each coin,
we had them tested and weighed.
And then
you have a database
of something going back six thousand years.
Marty was very generous to the people that worked for him at Christmastime and things like that.
About an hour before I closed on Christmas Eve, but
he would come in, he was like a madman, "I'll take that and I'll take that..."
Exceptionally nice gifts and presents for
his family and his employees.
A very, very generous person.
But Marty never thought small anyway,
everything he did was always first class, I think.
Our company's grown by
developing databases on virtually everything.
We have every possible currency, even Indian rupees on a daily basis
at least back to 1900.
We had like 240 people writing down prices.
And we let the computer search absolutely everything in the world.
These numbers, for some strange reason they're all interconnected.
You can follow it like a ballet.
It's like a Shakespeare's play,
played for hundreds of years, the actors change
but the plot's always the same.
And then I discovered a list of financial panics,
26 events of panics
over a 224-year period.
So, you divide that by those 26 events
and it was 8.6.
And that was pi.
3,141 days in that 8.6 years.
Which then builds up into six waves of 51.6 years.
Six waves of those build up into major waves of like 309 years.
Oh my God, it's actually the perfect cycle.
I met Marty in the Princeton office in Tokyo.
We were discussing his vision.
From his history of going back through the coins and
all the movement that he's found
it led him to this model and this idea.
Here we are, we've got a pattern,
we've got identified a cycle.
And we've put that cycle over the top of finance.
I've been working in IT since I was 13/14 years old
and Marty is the same thing, he's come along from that area,
as someone who understands computers all the way through.
His understanding of the concept of pi,
and how it might be at work in the rhythms of society,
was completely uncanny.
There were signals that were issued to the dime.
I'm rolling.
My name is Mike Campbell.
If you're a mother or a father, I want to talk to you for a moment.
Unfortunately, there are way too many examples
from asking the younger generation to pay off the massive debts,
building up, both federally and provincially.
And the last thing your kids and my kids need
is the transfer of wealth from younger Canadians to older Canadians.
My name is Mike Campbell on Saturday for "Money Talks".
In the early 1980s
friends of mine said you should come and hear Martin Armstrong.
He predicted the top in the Nikkei Index
in December of 1989,
in writing, very clearly, but he also phoned me that day.
And he phoned me that day, "So, I just wanted you to know
the Nikkei Index has hit its high for your lifetime today
and it's going from 39,000 to 8000."
Obviously, that prediction was correct.
So his reputation continued to grow.
Especially in Asia and Japan,
where he had been absolutely correct in his call of these major moves.
So that's why his business grew.
It was because he had been accurate.
Princeton Economics gained
international fame in the early 80s for its forecasting.
I knew that he was consulting with some very big corporations in Japan.
Our Princeton Economics Seminar has become very regular.
Today it is the 14th seminar.
He was very widely followed in the Japanese community
It seemed as if the entire trading community
would scramble to see his signals
as soon as they were released.
And they would act on them because they were
99 percent of the time completely accurate.
I'd like to introduce Lady Thatcher.
Mr. Chairman, Ladies and Gentlemen,
it’s a great pleasure for me to be here.
We don’t necessarily think in cycles in politics. Perhaps we should.
You must learn the lessons of history,
otherwise you might be condemned to repeat its mistakes.
We had one client
and the computer came up and said, "Look,
Deutschmark is gonna make a new low, yen was not."
So I called him on the phone and I said, "Look,
it's gonna start flipping right away
and I suggest to get out."
And he asked me, he said, "Well, how?" I said, "Just get out the market."
And I left the office and by the time I got home
the thing is gonna go ballistic.
My phone was practically melting down.
Oh my God, this client just got killed.
So I called him on the phone
and I said, "Hey did you get out?"
And he starts laughing.
He says, "Yes, that was me."
I said, "What do you mean it was you?"
And he says, "That was me!"
I said, "How many contracts did you have?"
He had 40,000 contracts on his side.
And I'm thinking, Oh my God.
I'm thinking, the ninjas are gonna come into my office at this point.
This is all in the early 80s,
we were still trying to figure out how this stuff works.
I said, "Look, I have to know at this point.
I mean, what am I advising on here?"
One day I picked up an article from the New York Times
and Marty's pi cycles were suggesting a major market high,
that Marty had called to the day.
So I called him up.
You know, I thought that we would have a two-hour chat
and we were still talking at about 9:30 at night.
He was such a wealth of history of markets
and he offered me a job with the title of assistant to the chairman.
Well,
before I went to Princeton Economics, I did some due diligence on him.
I called up Goldman Sachs and I said, "What do you know about this guy?"
The people at Goldman said, "Well,
he’s a big metals trader,
we've bumped up against him a few times in the markets.
We always thought that we can crush him
but most of the time, he ended up winning."
Then I talked to Republic Bank,
Marty was one of their very best and biggest futures clients,
and they said that they respected him a great deal.
On the back of those two things, I ended up accepting the job offer and going to work for him.
Republic National Bank in New York
they had a fairly clean reputation at the time.
But overseas in Europe,
it was known as the bank for
arms dealers and drug smugglers.
And it was also
reputedly very involved with the Russian mafia.
The head of Republic National Bank, Mr. Edmond Safra,
very, very wealthy man.
Somehow, mysteriously,
he died in a fire in his apartment in Monaco,
right around the time all this was going down with Princeton Economics.
Marty wrote a report
about the cycles of war.
And he predicted some type of international conflict.
Universal Bank of Lebanon
calls me on the phone, says listen,
"We found a book in our basement,
with all the prices of the Lebanese pound back into mid-1800s,
"Could you make a model?" - I said, "Sure."
Put it into the computer
and the computer says, in 8 days the thing is gonna go ballistic.
You got about 8 days. That’s it."
What he says to me, he says,
"So what currency you think would be the best?"
And I'm like, "What?
I just told you your country is just gonna completely fall apart in 8 days.
Now what’s going on here?"
8 days later the Lebanese war begins.
I watched it with the Iran-Iraq war.
One of our clients over there,
calls me on the phone, he says,
"Tomorrow Iran is gonna start attacking shipping in the Gulf.
What do you think gold is gonna do?"
It's not that the computer
is able to predict war.
But what happens is,
those who do know that they're going to invade something
start moving money in advance.
So the computer was picking up the capital flows.
That is how we were able to forecast the collapse of Russia in 98.
We saw about 100 billion in capital flows going in
and about 150 billion coming out.
So obviously there was something seriously wrong.
6 months later we found out.
The actual government itself moved 50 billion dollars offshore
and was hiding it from the IMF so they could get more money.
The CIA called and I was in the office and
Marty came in afterwards and said, "Well, they basically want me to give them the model
and I told them to bugger off,
that I'm not gonna give them anything."
They realized that the model
could forecast the rise or fall of a nation.
That was geopolitically important to them.
That was really what the whole thing was about.
So you can understand why these people
want access to his code and his model.
If they know where the next war is going to be,
then it’s very powerful for them.
If they get hold of the code, then they would be able to reproduce it.
Whether they would be able to understand it?
I could sit down and rewrite the code with Marty.
But would I be able to understand it?
Even though I'm writing it?
Only Marty can really understand those formulas behind everything.
The rumor was Edmond Safra had worked for the CIA
and Edmond was always
pro-bullish on gold and stuff like that, hard metal type guy.
They manipulated just about everything.
This is how they made money.
And that’s what I was always objecting about.
I was never interested in stuff like that.
I was more interested in trying to figure out how this all functions.
We did natural hedging.
So we tried to balance portfolios, in different currencies,
to try and help preserve jobs.
We were the largest in the world. Probably a little over 3 trillion dollars.
I guess we're gonna have to put it over here.
It starts in August of 1999.
This is when this scheme appears to
take over Russia for the commodities, oil, gold,
this is what really they wanted access to.
Edmond Safra is the
primary mover of the brains behind this stuff.
Edmond was Chairman of Republic Bank.
They usually do this in groups,
but Safra is the one who's up front.
All these guys were like
somehow behind the curtain, all trading together and stuff like that.
Khashoggi, Qaddafi, they were involved.
The counterrevolutionary movement for Iran they were trading commodities to earn money.
It was like one giant masquerade party.
Nobody was ever whoever you thought they were.
They would say, "Somebody wants you to manage money."
Yeah who? "I can't say who,
come over and you'll meet him."
Okay, you go over to meet him and they have a curtain here,
You’re here and you’re not even allowed to see the person.
What is this?
"You know, forget it, not interested.
I gonna wanna know who's on the other side of the curtain."
Yes, I believe they took over government.
That's the name of the game.
That's how they make money.
They're not manipulating the whole
scheme with a long-term plan. That's not profitable
All they're looking at is,
"How much can I make for this quarter?"
They’re not about to spend a shitload of money
for something 20 years down the road.
Unfortunately, you have a very powerful community amongst the investment bankers in New York,
who do try to rig the game
to create a perfect trade
at the expense of
entire economies.
Marty was asked
to participate in a Russian bond arbitrage,
something to do with the issuance of Russian debt,
based on the thinking
that the political situation in Russia
was a shoo-in and that these bonds
would never be defaulted on, no matter what,
and that there was a guaranteed rate of return to be had
and it was a perfect trade for the investment banking community.
They put on a dinner for the IMF.
Edmond Safra did,
in Washington, D.C., they rented the whole National Gallery.
I was invited down there and it was basically to show me that,
"Look, won't you join us?
We got the IMF in our pocket.
And stop going against us all the time." And I said, "I'm sorry,
Russia’s gonna collapse, I don't care who you have and who you're paying,
it's not gonna work."
Marty refused
to participate.
His economic models, his study of history,
international capital flows,
all told him that Russia was going to collapse.
And lo and behold we had the Russian financial crisis of 1997/98
where the country effectively went bankrupt
and the bonds were defaulted on.
The investment banking community, that had sought a perfect
"trade",
ended up taking a huge bath,
and it all blew up in their faces.
Marty was the only one who predicted it.
They wanted basically to take over Russia.
All the commodities, all the oil etc., that's what they were after.
So they're paying off people in the IMF.
And the IMF is giving these loans to Russia.
If you are rigging the game,
you’re paying bribes, you're doing all this stuff,
then you’re not doing risk management.
Why you need risk management if you’ve paid the bribes and you think you got the shoo-in?
And then all of a sudden, it doesn’t work, everything blows up,
and then they go to government and say, well, if you don’t bail us out, you’re in trouble.
So, it became a battle between them and me.
A friend of mine had been to a seminar.
Martin had been brought to Australia by a broking firm.
And he said his trading
was quite spectacular.
So I just went and found out where the office was and introduced myself.
There was something bigger than two people standing there at the time we met
and I was very conscious of that.
It was kind of almost like,
"Hey, I'm going somewhere with something here. I don't know where it’s taking me,
but there's something unfolding here already."
And he felt Australia is very important for him to have a footprint here.
And in fact one day Martin said, "Do you wanna know
how the number pi related to the cycles or the reversals?"
And I said, "No, it's yours, just leave it."
Martin was outing the players in all these games.
You only had to join the dots.
Their whole play and their manipulation fell over. They got caught.
And the guys
weren’t happy
about all this stuff he was writing in his reports about them.
Marty said, "Get the fuck out of here."
So he's a player in the market,
he's exposed that market,
but he's also outing these other major market players and their collusion.
I don't know the extent to which any one of those characters was involved
in terms of the desire
to shut him down and keep his mouth shut.
The banks controlled pretty much the government.
And how they do that is simply that
the US Government doesn't sell its debt directly, it goes through what is called primary dealers.
So it sells the debt to the banks, the banks then resell it.
So every time they've gotten in trouble,
they've said: "Hey, if you don't bail me out, you can't sell your debt."
And this is the control that the banks have had over the government.
It's amazing it's still running.
Marty’s laptop was maybe the very first one
I ever saw.
It has charts on here which Martin Armstrong produced himself.
These remain on the computer because they've never been changed.
Because they've not been updated for 13 years.
The model's still in there.
If you tried to break into the operating system
and went into an executable file
it'll destroy the hard drive.
They never got there, they never got into this.
The security system
was that every computer in the entire organization pinged each other
to make sure everybody's there.
You take one out,
something's wrong, somebody’s missing,
self-destruct, everything was wiped out.
Some of Marty’s systems were under attack.
And we built honey traps to try to track these people back.
Obviously, we were backtracking to certain IP addresses,
in Langley, Virginia,
that were allocated to government agencies.
Tony, probably one of the best hackers I've ever seen in my life.
Tony creates a system and left little openings.
So somebody coming in, trying to attack says, "Aha!
I got in!"
But they're in this fake computer.
With all fake information in there
and then we can watch and see what they're doing.
Marty always talked about
this club and it involved Edmond Safra and "I was invited to be,
I was invited to be a member of the club
and I turned them down because I didn't want it."
Marty sometimes takes it a step further
and says, "Well, Edmond Safra got killed for that".
Maybe, it's possible.
If I ever wrote a novel, I'd probably try to weave it in, but
it also might just be Marty taking things one step beyond reality
and making a really good story.
At the time I was practicing as a barrister in Sydney and Martin
and Nigel put together a corporate finance team in Australia
and invited me to join them.
I met them at a beach house that Martin owned.
Martin didn't actually live at that home. He lived with his mom.
A man of substance
with a Ferrari and a beach house who lives with his mom and drove an old Toyota.
It was the annual party for his staff.
The whole crew worldwide.
The office staff,
high-profile people.
He was using that as a marketing exercise to promote his
models and his forecasts.
They would go from
3 o'clock in the afternoon through to whatever time the next day.
Some people were enjoying themselves.
UK, Hong Kong, Tokyo and the US.
Everyone was there and then he would invite the brokers from Republic.
Bill Rogers, the guy at Republic
rocks up in a big stretch limo full of beer in the back seat.
And you just said, "This guy is out of control."
These fellows were almost larger than life.
Bad American miniseries of what a
flash Wall Street moneyman was like,
you turned up in a car that was a block and a half long,
they had cigars going, bottles of Champagne in the car,
I just thought it was humorous.
But that’s what they chose.
Bill Rogers was the broker from Republic.
And I did notice from '98 on,
he's just running his own game.
That's what came out.
I talked to him, he was at his beach house,
and I called him up and said,
"Marty, you know, what's going on?"
And he said, as I remember it,
"It looks like my broker has been stealing from me."
I remember one time, I guess it was right around the start of all of it and
I went down to the beach house and he said,
you know, "Things aren't good."
You just had a feeling, like something was wrong.
And then it just happened so fast.
It was very
you know, scary because you just knew that he was concerned.
The guys at Republic
were illegally trading in the accounts.
All this nonsense is starting then.
If you have money in the account,
they sweep the accounts each day
and they sell that money at night.
They get paid back within 24 hours.
It's called "parking".
They're making extra money on that.
But then they put the notes back in the wrong account.
Monday morning I went to my lawyer.
Giving them one week to return the money or we would file suit.
So I called Republic, I said, "Look,
I wanna sit down and talk, what the hell is going on."
But something must have already happened, because they said,
"Safra has left
for security reasons
and went to Monaco.
You can't go see him."
And Safra is killed December 3rd.
I didn't realize that they were actually
blackmailing Yeltsin at the time.
And this is why the club keeps blowing up.
All of a sudden it doesn't work.
Every time it's the same thing.
It's August 1999.
Yeltsin is gonna run for election in 2000.
I believe they were trying to get Russia in their grasp
by forcing Yeltsin to step down
and putting one of Safra’s friends in there.
Berezovsky
is part of their deal
to appoint him as president.
Berezovsky owned in Russia TV stations, Aeroflot.
And they get Yeltsin to take 7 billion dollars from the IMF loans.
And than that money is going to Geneva,
under the pretense of being a fee for refurbishing the Kremlin.
But the wire is steered through Bank of New York,
when Republic is the number one bank
that all this Russian stuff always goes through anyhow.
So it's strange that this one 7 billion dollars goes through Bank of New York.
Now Safra runs to the government and says, "Oh,
looks like Bank of New York
just did a 7 billion dollar money laundering."
Now they threaten Yeltsin,
"You're not going to run for election in 2000,
otherwise all this is gonna come out that you stole 7 billion dollars from the IMF."
So, Yeltsin realizes he's been set up.
They then say, "Look, we’ll protect you, but you resign."
August 27 is the day they take the money out of our accounts.
I go to my lawyers that Monday.
I said, "Look, Republic took this money. Since I can't go to see Edmond,
if you do not return the money, we're gonna file suit by the end of the week."
The guys at Republic,
they're telling me,
"Here are the phone numbers that Edmond calls on."
And so I then give them to my lawyers
and we issue to go to court
and issue a subpoena just for these phone lines.
Safra was a control freak who had all the lines recorded.
And Martin subpoenaed... I mean as part of his defense
he subpoenaed those lines.
Today I am speaking to you for the last time as your Russian President.
I am stepping down.
I did what I could do.
This is how Putin gets in.
Nobody ever heard of him, where the heck did he come from?
Putin comes in
and he says, "Fine, you give it to me.
I'll take care of everything."
I had moved for a speedy trial.
So I should have been in trial by March of 2000. At the latest.
I go to my lawyer. We threaten to sue them.
The government comes in to object
that we're going after anything out of Republic.
So they're protecting Republic at this stage.
Safra's death
seems to have scared them a lot.
So what was on those tapes that Safra spoke on?
The government asked for a protective order
that I could not get those tapes.
The tapes had to disappear.
That's when the pressure all came on.
And he starts saying,
"I didn't realize how powerful this club is."
There were about four or five F.B.I. people.
They took everything,
they took some tapes he had around.
Mostly what they could find in his room, you know?
Went out in my shed, went down in the basement, all over.
They didn't leave one thing unturned.
At that stage they're trying to get me
to plead guilty to being in some conspiracy with Edmond Safra.
And then they said, "No jail time, we’ll release you."
I said, "I'll not plead, I don't know...
I'm not getting involved in all this shit.
You know, Monacos and Putins..."
I remember being at the office when
the FBI came in and even at the house, turning everything over.
They had just called on the telephone and the receptionist said
"The FBI is here."
Once all this took place, he could not come back in the office.
There were a lot of people that left immediately.
The office was divided into
who's gonna stick it out and who wasn't.
I called up a friend and said I think I might need a lawyer,
I heard back from the lawyer the next day
that, "Gee, your timing was pretty good because
they were gonna arrive at your doorstep tomorrow morning at 5 a.m.
and take you away in handcuffs."
In front of your kids and embarrass you and have police cars and everything outside.
And I was like, "Why would they do that?"
And he said, "That's just kind of the standard operating procedure to scare the shit out of you."
Then I said, "You know what? I think, I better get on with my life," and so I quit.
It was horrible, it was just terrible.
It was complete surprise.
Regulators in Tokyo had moved in and seized books.
Martin Armstrong had been charged with
some vast sum that I couldn’t contemplate.
Initially I took the view, that
he must have done something wrong. I didn't know what it was.
My source was the newspaper.
So I went to New York with Nigel Kirwan.
'Cause I'm trying to find out what's going on.
There were boxes of documents and
Martin was there.
So Neill Macpherson and I flew to New York.
And we met him in the Chrysler building, I remember that.
I don’t think they had an idea of what they are heading into in terms of Judge Owen's court.
I was in New York at the Chrysler building,
in the offices of Tenzer Greenblatt.
Lawyers from London came in, lawyers from Tokyo came in,
lawyers from New Jersey were in, everybody was there.
So it was like five or six law firms.
Then I get the phone call from my son, "Hey, the FBI was here trying to arrest you." I said, "What?"
My lawyers said, "We gotta get out of New York.
You don't understand, they practice law differently in New York."
I didn’t understand, I thought the law was the law.
And we drove down to Trenton,
once we got into New Jersey, then he phoned the US Attorney
and said we were self-surrendering in Trenton, New Jersey.
Fundmanager is indicted in $3 billion fraud case.
Lawyer of Martin Armstrong
Marty was the largest financial debacle of the 20th century,
that's how the newspapers reported it.
So you had a person who was indicted
for a 3 billion dollar Ponzi Scheme
of yen carry trades on notes
with Fannie Maes and exchange rate conversions
that are hedged by futures contracts?
Who's going to even begin to grasp what we are talking about?
It's an impossible task.
And you've got quantity of paper that just...
...last I heard was a million pages, where do you begin with a million pages?
And most of it was in Japanese.
I didn't see
this cash flow
that supports a Ponzi Scheme.
In fact, it's the other way around.
There were gains in those accounts, not losses.
And if you've got gains in the accounts to pay back,
you don’t need new money to pay back former note holders.
They're judging me by what they do.
A Ponzi scheme
is I take money from one person and I give it to another and there is no business.
That's what a Ponzi scheme legally is.
The city of Mainz in 1448,
where the Gutenberg press was,
and what they were doing is exactly what we're doing today.
It was just one giant Ponzi scheme going around.
They would issue new debt to get money to pay the old debt.
So, this unfortunately is the way government is operated.
They promise you pensions, they promise you everything, there is nothing there.
Nothing ever changes.
History repeats because the passions of man never change.
Politicians were corrupt back then as they are today.
The government came in, they shut down everything, which they typically do,
seized all the accounts.
The receiver Alan Cohen moved for contempt,
that Marty failed to comply with his turnover order.
Cohen is the former associate of Judge Owen.
That’s one thing. The second thing is,
Cohen was the son-in-law
of
US Attorney.
Alan Cohen was
the law clerk for Judge Owen, then he became an assistant US Attorney,
then when he went into private practice,
Judge Owen brought him in as a receiver.
Owen had already taken all Martin's lawyers' money away from them.
So he had no money to pay lawyers.
So he was kind of without a lawyer at that point.
I remember when Tom Sjoblom came into the picture.
He used to be the prosecutor, now he's a defense attorney.
And Tom came on and
we had no money to give him, or beans,
it really wasn't much that we had.
But he really stepped in and for years would go
without any money.
He really gave a little bit of hope when no one would really touch it.
So Marty was asked to bring all these documents into the courthouse.
And a whole lot of argument about a bust of Julius Caesar,
some gold bars and some antique coins.
It starts out that way.
To those coins he's so attached.
They're like his baby, the knowledge that goes with those coins, I mean
there's his model and his understanding of the markets,
but those coins, those antiquities are part of the whole story.
And he's incredibly attached to them.
There was a contempt hearing held in front of Judge Owen.
I had friends, they said fine, "We’ll put up the money."
In cash.
Denied.
"No, no. We want the assets, we don’t want the money."
"Can I have a list of what the assets are?" "Oh, you know what they are."
The judge is telling you to do something.
Anything. Stand against that wall.
"No, I refuse to." - "Ok, I'll put you in contempt till you do."
The contempt was just another facade.
And then all of a sudden Alan Cohen becomes a board member of Goldman Sachs.
'Cause that’s the way it's just simply done there.
Cohen claimed that
there was a computer that he hadn’t handed over.
Cohen and Schiavoni, the receiver and his counsel,
they are both at O'Melveny & Myers.
Cohen is now a full board director at Goldman Sachs.
They just wanted that source code, which is text,
they couldn’t get it.
What is the agenda?
Why does Schiavoni want the source code?
What's he gonna do with it?
They were going to court with fabricated evidence.
And it was purely about intimidating everyone involved
and corralling as many assets as they could for their own benefit.
I've got no doubt that Cohen and Schiavoni had clients who wanted the model.
But the source code would have been with Marty.
There is no way he would have left it on the computer he handed over.
And it’s in its head ultimately.
"We want the source code."
I said, "You’re not getting it, sorry."
"You can kill me if you want. I don’t care. I’m not turning that over."
They started looking for money,
"You must give us these gold coins that you've given away,
this bust of Julius Caesar that certain people have.
A notebook that had been destroyed." And things like this.
And it became a big spider web.
He was like the fly in the middle of the spider web, he was stuck there.
And all these little spiders were coming through and attacking him down the spider web.
It was coming from everywhere and this is what we were seeing.
You know, I had Schiavoni come down the phone at me, saying,
"We are the United States of America, we have worldwide jurisdiction."
You know, first of all it started of about Marty and in a sense we understood that.
But what the problem became was us.
I had a whole lot of people
threatening me out of the United States what they would do with me
and no one would explain anything.
And I told Mr. Cohen that we didn't have to obey orders
of a judge in New York State,
but as a lawyer, I would cooperate.
And I had never heard anything further from Mr. Cohen.
Our life changed from that moment, completely changed.
And we laughed.
It was as if we were living in some
B-grade movie.
Edmond Safra who's worth billions of dollars
and he's got ex-Israeli Defense Forces, ex-American SIS,
can get himself killed. You know, what hope have I got?
It was like absolute chaos and madness and having to deal with people like those from America,
that I'd never,
I'd never had to deal with people that were as crude, crass and common as they were.
Leslie will tell you, we had a code.
Neill said, if he said something at the door,
don't let him in.
If that word was used you just lock down.
You didn't let anybody in. - Call the police.
They came in and asked if I had dealt with him, I said yes.
"Do you have the records?" I said, "I have them."
He always paid by check.
And it was very harassing, they came back several times
and wanted more and more and more and I gave them everything I had.
And then finally I just told them, I said,
"Do what ever you have to do, but this is it.
I can't give you anything I don't have, you know?"
"Justice...", I guess it was something with justice..."Justice Department"?
They were acting like they didn't believe anything you said.
Judge Owen said, "I don't believe you."
Wrote it out on a yellow pad,
handed it to the US Marshal and he's marched off to jail.
That was January
14, 2000.
He became very bitter when he went to jail.
He didn't have the trust in the government anymore.
But we would try to go up there at least twice a month.
I would pray to the dear Lord that he'd let me live
so I could see him when he comes home, you know?
I went to Alan Cohen and I said, "Look,
Republic took the money, this is what it is.
I mean, you can chase wires, you know where they go."
It's not like you steal 100 dollars and stick it in your pocket or something.
You’re talking about billions of dollars here.
He goes, "Oh no, we believe Republic."
There was a time, he was
very destroyed and I had never seen him like that before.
He was contemplating suicide.
He really was, he said.
He said to me, "If I don't..."
It was hard. He just thought, "Unless,
as long as I'm around they're not gonna let up.
And they just gonna come after you guys,"
So I think for a brief moment, luckily,
he did, he broke down and he thought that might be the only way out of it,
as if, if he's gone.
But luckily, you know, I think he...
I think you have to hit that point before you gain your strength
to move forward and fight. And he really did.
And from that point on, he never wavered.
He just wanted to fight them till the end and not give in.
When Martin Armstrong was in prison
Neill always said, that he was stubborn
and that he is a fighter
and he will never give up on anything or anyone,
no matter what, he will continue on.
He was devastated as to what
the impact on his mother who was
is not and was not a young woman, I don't know she must be 90 now.
He was humiliated in front of her,
I think he was totally embarrassed as to what happened to him.
I visited Martin
shortly after he was incarcerated.
I was quite nervous visiting him.
It was out of my element for sure.
We stood ready to finance Princeton Economic Institute,
retain employees' jobs.
Tancred Schiavoni of Alan Cohen's firm said,
"I don't care how much money you have to finance the operations,
we want the source code."
It was black and white.
They wanted their hands on the computer software code
of Martin's economic models, come hell or high water,
and that's plain and simple.
We gave up.
And then Republic pleads guilty.
Nobody goes to jail, they have to agree everybody is to be made whole.
And you look at the transcript. Cohen then stands up, okay,
now if there is absolutely no victim,
how can I continue to be in prison to turn over assets for...
...there is not even a crime. There is nobody out looking for money.
Cohen stands up, and in the transcript, he says,
"But there was another fraud,
before Republic", all right, "huge", he says,
"But there is no description of it."
"If all the victims have been made whole,
everybody's been paid back
why do I still need to be in civil contempt?"
It didn't matter, they just kept him there.
After every 18-month cycle, Judge Owen would hold another hearing.
"Mr. Armstrong are you ready to turn over the assets yet?" - "No."
Boom, right back to jail again for another 18 months.
So he followed the 18-month rule,
but instead of released him like the statute says he's supposed to do,
he just uses another opportunity to put him back in for another 18 months.
So that just kept going, they had these 18-month cycles
for over seven years.
Then I said, "Judge, you don’t have the constitutional authority
to do this."
He said, "Oh yes, I do. I am a federal judge,
I have inherent power to basically do
what I want."
There's been five properties on the market since November that haven't sold.
And normally you have up to 30 sales in the Bay over the Christmas period.
You know, word's got out for sure, I'm under pressure from the bank.
Whatever, it is what it is.
The market is what it is and it's not good.
It was like a hurricane of events that went on for years.
You couldn’t conceive of...
Look, it's really hard to go back over it without feeling emotional about it, because...
Cohen and Schiavoni
they used every tactic they could, whether it’s dirt in the press,
or whatever court angle they could take.
And then people turning their backs, politely
requesting I might leave the board of this or that,
because they didn’t really wanna be associated with it.
And anyone googles my name, that grubby press still comes out.
...look, everything collapsed.
Final call!
You have the opportunity now,
either to buy or be the highest bidder.
Bid or offer anywhere?
When we first met, Nancy told me,
"Oh, by the way, my brother is in jail."
It took me by surprise.
And I said, "I don't want to pry, but for what?"
She says, "Well, the government accused him of a very large Ponzi scheme."
And he said to his mom,
"They want what I’ve spent my entire life developing.
And I'm not giving it to them.
They're not getting it because they want it for all the wrong reasons."
We would make it a point to see him at least once a week.
And he was always busy, anytime you would talk to him,
"I’m busy, I'm busy." What are you doing? He was always writing.
Writing, writing, writing, writing and
people would wait for his articles to come out every day.
He was like a daily financial newspaper.
To see somebody who had gone through such hell,
to start writing again from prison
and be so current with what was happening in the world
from behind bars
was mind-boggling.
The reports were smuggled out of the prison
and posted to the web by people that were interested in his work.
And all the artwork was done by him by hand.
It's quite amazing.
Marty’s strength is his knowledge of history
and his knowledge of financial history.
And when Marty wrote from prison, a lot of what he wrote was very interesting.
So my cycle map is based on Marty’s pi cycle.
That's it.
And I'm sitting there and I say, "I'm probably one of the few people who realize that
February 24th, 2007
is the next pi cycle date."
These things only happen once every 8.6 years.
So I personally went 100 percent net short that Friday.
This I did in real time
from Marty’s date, he's in prison.
And I woke up on the Monday morning and turned on CNBC
and boom.
China down 5% Monday morning.
Hong Kong down 5%, Europe down 3.5%,
US down 2%, there hadn't been any news,
it just was an entropic moment.
And those are the types of things that make the hair stand up on the back of my neck.
Because it's like, "Oh my God, this worked."
You know, it worked in real time.
I didn't think he'd ever get out,
I thought he'd die in prison.
He looked very close to a broken man,
pale.
I tried calling him frequent times, it was almost impossible to get him.
A Mr. Brown came to his cell one day
and said something to the effect that,
"I'm sorry you're here for this long,
that they are just gonna hold you here until you give in, break, relent."
So I hired some private investigators, and I tracked him down.
I used to operate the law library at MCC.
Armstrong came to me.
Under the law I have to provide legal services to the entire population.
And that's where I met and maintained somewhat like a relationship with Armstrong.
Armstrong used to be there, make these copies
and read them in his cell,
come back the next day, highlight it, get some more cases, cross reference.
It seemed like a tug of war between Armstrong
and the government.
Did you have a conversation with Marty
about Marty being held longer than needed to break him? Any...
I used to get memos from upstairs,
"Can we narrow his time down?"
"Does he really need to be in the law library?"
Only one person can give that order.
That's someone from the administration or executive staff.
"Lock this person up!"
So it's a domino effect at this particular point
and somebody upstairs will make a phone call and say, "Break that person
until he admitted to the crime that he was accused of."
They used to plant undercover agents
at MCC
to get a confession or to talk to the people that they are targeting.
It is manipulation at best,
stupidity on somebody and injustice to the inmate.
And then the lieutenants will go down and pick him up and put him in special housing.
There're maybe 20 cells,
very uncomfortable, mattress, if I call them a mattress,
really thin plastic.
You get your meals fed, officer will come down,
let it down, just like in Alcatraz,
giving you food, put up the tray and move on.
And then you have to cover it up.
I had two visitors a week ago.
From the Justice Department, they identified themselves, they wanted to know
was I aware of Martin Armstrong and its case?
I would not talk to them, I have no reason to talk to them, that's all.
"I'm sorry."
It felt like a losing battle,
I mean we definitely for a long time
just didn't see how he would ever get out.
This is gonna be forever, like this.
I mean, he had no sentence, there was no ending point and
we knew he wasn't backing down and
didn't seem like they were either,
I would have to say, for the majority of the time we did not feel
like he was ever gonna get out. I thought it was never gonna end.
I got called, it was a Wednesday evening,
"We're gonna take a plea from your client."
I said, "What are you talking about?"
"Well, you better get up here,
tomorrow we gonna take a plea for your client, he has been in the 'hole'."
I said, "How did he get in the 'hole', what was he in the 'hole' for?"
"Well, we'll just explain all that tomorrow."
So, I got up early, took a train to New York,
went into a conference room in the US Attorney's office.
Marty is sitting there, he looks terrible, looks tired,
and they said, "Here's the deal.
You wanna go to trial? You're gonna go to trial from the hole
and we're gonna seek 135 years imprisonment
or you can plead guilty to a 5-year sentence
and it won't be about you,
all you have to do is agree you conspired with what Republic officers did.
And you can argue to the sentencing judge you get credit for the time you served in the civil contempt."
They had a script prepared he had to read from.
I tried to edit and change it, the government said, "No, that's it, you gotta read that script."
The judge said, "I understand you have a script prepared for me you're gonna read from."
Here it is,
read this
and we'll let you argue for the credit for the contempt.
It's either that or a rigged trial where I have absolutely nothing.
And
a threat of 135 years.
It's not much of a choice.
He probably never would have seen the light of day,
unless he was coerced into some kind of plea.
His only shot to ever get out was to plead guilty to something.
What Marty Armstrong pled to,
he agreed
in exchange for time
to agree to a conspiracy to what the Republic officials had done
and what the Republic traders had done.
So there was never any like we said trial or evidentiary hearing of any kind.
So no evidence was ever presented.
Was there any evidence brought forward that Marty himself did engage in the fraud? No.
It's not what I understand is law.
If you think the way that law is, is to intimidate, coerce,
frighten people. It's not what law is about.
It's not to secure a conviction by hook or by crook.
But actually to present the evidence in a fair, open and candid way
and let the jury decide if there has been a crime committed.
It's better that one guilty man go innocent
than one innocent man be found guilty.
And then he started his criminal sentence in Fort Dix.
And the Bureau of Prisons refused to credit him for the time served in civil contempt.
This is a case of everybody exceeding their powers.
In the end, when he did sign that plea,
we knew how hard it was for him.
But in the end, we were all like, "Okay, now you have
an end date. You're gonna get out of here. And that's all that mattered."
In MCC in New York, you are in a high-rise building.
I was absolutely chalk white, never seeing the sun for seven years.
So then I walked out in the backyard and it was raining.
And I was out there kind of like that scene
I think in "The Shawshank Redemption" and everybody's like,
"What the hell are you doing? It's raining."
I said, "It's the first time I've felt rain in seven years."
That was wild, that was good.
I really feel that the world needs his financial mind.
They need to see the type of work he does and the answers and potential answers
he has for the financial crisis that is going on.
We have this perfect storm that seems to be brewing here.
One is the war cycle and
2014, the cycle starts turning up again.
Extreme hostility developing around the world.
And every time that cycle has hit,
we got World War I, World War II.
So I think there’s going to be fertile ground for putting a spin on anything
when that war cycle begins to turn up in 2014.
War tends to erupt largely from an economic perspective,
The more governments are in trouble the more they can’t pay their debts,
and off it begins to go.
Everytime you get something that turns down like this,
you get seperatists movements.
That is also the possibilty of Europe eventually breaking up.
2016 we'll begin to see
a third party begin to rise.
You have the natives against the immigrants that are coming in.
It's always the same patterns that come up.
After 2015
is probably gonna be the real crisis in confidence on a global scale.
We see the assets beginning to rise,
going into that peak there in October 2015.7.
The debt crisis then becomes much more critical
from 2016 going into 2020.
And then you gonna start seeing the rates rise.
Because then the banks are gonna have to start to bid
because they're gonna need money.
And as the money begins to flow out of the banks,
then you're gonna see the rates start to take off.
With rates that's so low,
it's just a small uptick in rates
you're creating these interest expenditures and it's just gonna take off like a rocket ship.
So we have to eliminate by law that government cannot borrow money, period.
Because once they start borrowing,
the end is there, that's it.
Why are you borrowing?
You really intend to pay it back?
And they just look at you like,
"That's a dumb question. Of course not!"
It's effectively back to where we were with the 1860s.
We're now issuing money that just pays interest.
The same as it began.
There's no difference.
But we're graced with idiots, that's all I can tell you.
When Europe is basically getting worse and worse and Japan,
then the capital comes here.
It then forces the dollar up.
If they're gonna fear a collapse in Europe, it’s gonna move in different places.
This is how it does.
History honestly is really just a road map to the future.
You really don’t need to be Nostradamus or something, I mean
you really just look at what they did before
and it's sure enough they always do the same thing.
I have a family, I wanna see that they have a future.
Let's actually organize
how we're going to do this
and let's be real about what the economy is.
There is three doors:
Default, inflate or restructure.
We have to restructure,
otherwise Western civilization is going to be off the map.
This is a ride on a roller coaster.
You pay upfront or you pay at the end of the ride.
Which one do you want?
I'd rather know where I'm going.
I paid when I got on the ride.
I don't wanna pay at the end.
What do I have left?
I might not have anything.
And at that point, you create civil unrest,
blood in the streets, people rioting, because
they counted on this and it's not there.
I didn't hear anything from Marty until I contacted him.
I rang him in his sister's place, they sent me the number.
He was real keen to talk, we had probably a 3 to 4 hour talk.
We ended up touching on what we were gonna do to get it going.
Shit, 11 years are gone by, we'd all been subjected to so much.
But now I'm minding peoples houses and dogs.
That's all right.
That's working out, I mean they're friends so far.
Relatives and friends, but that's what I have to do.
But it just doesn’t stack up for me to plan a revival of all that we were doing.
I want to say, thanks a lot to everybody.
We are starting Princeton Economics again.
It's been great to see you all here.
It's been a long time.
Thank you for coming back.
It is at least my revenge.
Right? Cheers!
And I discovered that we are all
children of light.
It's only by knowing the cycle of evolution.
The sun.
This happens to me really once in a decade.
You just look at this yourself.
The first card.
Last 13 years, you are holding something.
Maybe it's not you, it's someone else.
It looks like a friendship which may be more important
for the coming period for you.
And you're not gonna be alone in the end, see?
Okay. - I think you agree.
Yes, I understand.
I mean, you had a very interesting life.
The euro does not look very well.
Big turning point is with the Economic Confidence Model 2015.
I mean
look at Switzerland.
How do you fix the value of money?
Fixed rates, pegs, these things don't last.
If you're gonna fix the money, you gotta fix wages, you gotta fix prices and nothing moves.
If you're gonna create a peg,
what you're doing is you give me
a guaranteed trade.
It's like going to the casino. I'll put a $100,000 on 23.
I win, I get 35 to 1, I lose, you give me my 100,000 back.
That's basically a peg.
So you're guaranteeing, you're gonna buy that at that price all the time.
I can do whatever I want, dump billions on it.
If I win I'm gonna make a fortune. If I lose, I don't lose anything.
So we'll see the Swissie peg go, it's just a question of time.
They can't stop it.
As much as Switzerland would like to prevent
the capital inflows of the euro...
It doesn't look too positive that they are going to be able to defend it off.
Once capital decides to move against it,
the euro comes all the way back down to the historic lows.
And then...
...the euro is going to go down. I'm sorry, that's just the way it is.
The peg's gonna go...
...and they're not gonna be able to do too much about it.