The Forecaster (2014) - full transcript

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.