Martin Armstrong's Economic Confidence Model (ECM)

This is a qualitative description of Martin Armstrong's ECM. For a more quantitative analysis, see:

Economic Confidence Model, just a play on numbers of 8.6

The Nature of the "Model", also known as his Pi Cycle

Forecasters MUST have models. Like weather models. In short, such models always mimic some parts of the system they are designed to be a mirror image of. In some more detail, a weather model contains some parts that reflect the surface of the earth, air flows, the moisture in the air, radiation of the sun etc.. Then complex simulations are run to simulate the interplay between these components, which then results in a trajectory of the predicted weather.

Martin Armstrong, in contrast doesn't  have ANY model at all! Yes, no model! The ECM is NOT a predictive model! Here is the simple hard anecdotal proof:

In the RealVision interview  Interview with Martin Armstrong (an interview that is possibly the best Armstrong interview available on the entire internet), Raoul Pal asks him at 18:01

So how do you know where we are in terms of the big cycle?

Martin Armstrong cannot answer that question. Instead we get Roman history.

That is the ultimate proof that Martin Armstrong is absolutely clueless, and that he does not have any confidence whatsoever in his forecasting ability. I suggest you watch his body language during this interview, where he always gets into an extremely defensive posture the moment when Raoul Pal asks him a question, and then dodges the question.

Price Predictions using the ECM (Pi) Model

Martin Armstrong's computer does not predict anything. Instead, throughout many years, he makes guesses, using the same pattern of predictions as follows:

1. Pick an asset
2. Multiply its price by 8-10
3. Pick a date which is next or second-next in his deeply flawed 3.14 Pi model

Examples:

Oil $10 to 100 (10 times) by the next 3.14 date 2007.15

Dow 3.5K to 35K (10 times) by next 3.14 date 2015.75

Gold 500 or 1200 to 5000 or 12000 (by 10 times) by the next 3.14 date 2015.75 

If the forecast fails, he just shifts the date into the future and makes a new forecast with the old price (which he did twice with the Dow) or flip flops (like he did with gold or with oil).

 

Gold is Hedge against Collapse in the Confidence in Government

Martin Armstrong claims that his ECM fundamentally reflects the confidence in Government. And he claimed multiple times that “Gold is not the hedge against "inflation" but against the "collapse in the confidence in government.". In other words, when people lose confidence in government they buy gold, and when government is strong - gold is low. As proven in the following, nothing could be further from the truth:

 

The absolute high (inflation adj) in gold was in 1980 when the US has the lowest level of Debt\GDP since the Great Depression with gov. debt around 1 trln, which is a joke in comparison with what it is in 2016 (19 trln, > 100% Debt\GDP). And yet the gold price in 2016 is around 1100 which is far less than the peak of 2011 which (inflation adj.) in turn is less than the peak of 1980. So what Martin Armstrong tells you is that the confidence in the US government and all other governments was lower in 1980 than it was in 2016.

Deflation after every 51 Year Cycle Peak

Economic Confidence Model

 

Martin Armstrong claims that every 51-year wave is followed by deflation, i.e. after 1929, 1981, 2033, etc.. The reality is that deflation started after 1921, briefly paused and then restarted after 1926. There was no deflation after 1981 - there was high inflation instead. But in 2016 we are almost in a deflation mode but his deeply flawed model says we should get deflation no earlier than 2033.

 

This sample proves that he must know that his theories are completely bogus and that he hopes that nobody checks his assertions against reality - which is probably true for gullible low IQ people whom he targets with his scams. Perfect.