Martin Armstrong's PEI Cycle (4/10/08)
Today I'd also like to discuss the PEI model of Martin Armstrong (http://en.wikipedia.org/wiki/Martin_A._Armstrong), without doubt one of the most brilliant cycleA cycle is a recurring event in the markets analysts in history. In over 30 years of research he developed, based on the past thousands of years, among other factors the Princeton Economics Institute (PEI) model derived from the number pi (3.14159). With the aid of the PEI and proprietary cycleA cycle is a recurring event in the marketss, Armstrong was able to make predictions years (!) in advance (almost) to the day. E.g. he called the Nikkei top in the last week of 1989 and the ensuing spectacular crash. After having predicted the Asia crisis in 1997 the Chinese government wanted to hire him, and after he had called the 1998 summer top and crash begin to the day his reputation grew even more (especially in Asia but also in the US), his institute employed a staff of hundreds.
Unfortunately, his popularity became a major stumbling block after he refused to cooperate with the CIA in 1999. Understandably, he was not willing to give his proprietary cycleA cycle is a recurring event in the marketss and programs to someone else. So on 1/14/00 (‘accidentally' the inflation-adjusted all-time high of the Dow Jones), he was imprisoned for 6 years without charges being pressed. Needless to say this is against the US constitution and everything supports the interpretation that Armstrong is a political prisoner.
This is Armstrong's main cycleA cycle is a recurring event in the markets, the Economic Confidence Model, with the cycleA cycle is a recurring event in the markets length of 8.6 years being calculated as pi 3.14159 x 1000 = 3.142 days. The numbers are stating the year in decimal format, e.g. 1994.25 is early April 1994 and 2006.0 (2006 in the chart) is 1/1/2006. Of key importance are the 8.6-year highs and lows (fat in the chart), all others are secondary.
Economic confidence is crucial for the development of the financial markets, especially of bubbles that can be defined psychologically as exaggerated and unrealistic confidence. The two 8.6 year cycleA cycle is a recurring event in the marketss 1994.25 and 2002.85 were troughs of the 4-year cycleA cycle is a recurring event in the markets, 1994.25 even to the day. The high 1989.95 was the Nikkei all-time high, 1998.55 the high of the stock markets before the crash into October 1998. The latest confidence top 2007.16 (= late February 2007) marked the bursting of the real estate bubble and the first subprime problems.
Around the spring equinox 3/21/2008 (2008.225 in the chart we had a confidence low: confidence and sentiment measures dropped to the lowest levels in 5-10 years indicating a kind of an end-of-the-world sentiment. From here on confidence (and the stock markets) should better into the 2nd quarter 2009 (2009.3 in the chart), however, from mid-2009 there is fire on the roof as almost all models (not just the PEI) are turning bearish.
Interestingly, gold did set a major top in March 2008 8.6 years after the bear market bottom 1999 (7/20/99 & 8/25/99 double bottom). The end of the gold bear market was timed by 1999.625 in the PEI model
Armstrong also made long-termLong-term means a time horizon of years. calls decades into the future, e.g. with the aid of the 224 year political cycleA cycle is a recurring event in the markets (224.7 days is one revolution of Venus): 224 = 26 x 8.6 (http://princetoneconomics.blogspot.com/). 224 (+1) year after the Declaration of Independence of the US in 1776 the nation experienced the first attack from outside (since Independence War), which triggered a dramatic reversal on the political level. Armstrong already warned in the 1990ies of the impending political changes and the chaos in 2012:
The 224 year cycleA cycle is a recurring event in the markets that began with the start of the American Revolution will reach its end of the most chaotic period 2012.471 which is 224 years from the last state of Nine required to ratify the constitution, which was New Hampshire on June 21, 1788. President George Washington was elected in 1789 and thus this formally began the United States.
Washington was elected president in early 1789 which suggests a political pivot point around early 2013 (possibly the US start to fall after 224 years of existence).
An extra-ordinary phenomenon is that the PEI cycleA cycle is a recurring event in the markets has gained importance and accuracy since about 1987 (Harmonic Convergence and Supernova!). While in earlier times you had to allow an orb (time window) of +/- several months, most of the turns of the past 20 years have come within +/- 1 month, and many even within days.
I assume that the reason is that the number pi 3.14 is the 2nd most irrational number after phi (0.618:1 = 1:1.618) and that in an irrational fiat money system confidence is everything. A (rational) gold standard is much more grounded from a subtle perspective and thus creates stability out of itself, so the psychological level with its waves of confidence, fear, and greed is much less important. In contrast, the financial markets in an irrational fiat money system are driven much more by irrational emotions. A monetary system not grounded is like a feather in the wind, very unstable and creating one crisis after the next. That's why over the long haul, every fiat money system in history has always returned to its (rational) inner value: zero (hyperinflation). As we are approaching the end of the fiat money Ponzi scheme, the waves of irrationality are getting more intense...