Global Trends By Martin Armstrong: ‘It’s Being Driven Largely By Underlying Economics’

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Exclusive interview with Martin A. Armstrong by Matt Ehret, Piero Messina and Lorenzo Maria Pacini

Piero Messina: Everybody, welcome to SouthFront TV. The world is running so fast that what we think to be real until yesterday is really changed. The story is running so fast, so in this time it is necessary a moment or maybe a quantum reflection is needed. So it is really important to thank once again Martin Armstrong, one of the most famous economists all over the world.

Martin, thank you for being here with us again. Welcome back to SouthFront TV.

Martin Armstrong: Thank you for inviting me. It’s always a pleasure.

Piero Messina: Thank you. Today the interview will be conducted by two analysts of geopolitical patterns, Lorenzo Maria Pacini from Italy and Matt Ehret from Canada. But before I pass the word to Lorenzo and Maria, please, I have only a simple question for Martin. A simple question, but I think that we have to work to make understood to the people what’s happening. In 2025, Martin, which is the real meaning of the world power, the world really, we see a lot of confusion under the sky, war, peace. It is impossible to understand simply and clearly what’s happening throughout the world.

Martin Armstrong: Well, it’s being driven largely by the underlying economics. And in the case of Europe, as you know, when they were forming the euro, they came to me. And I sat down and said, okay, fine. This is how we create a currency. But at the time it was Chancellor Kohl out of Germany. And he did not allow the German people to vote and admitted that if he did, he would have lost seven to three. So he took Germany into the euro without a public vote. And his demand was that no consolidation of the debt. So, Euro, they were just trying to sell it and to create this centralized government. And I was told back in 98. Because I said this is not going to work. They were saying everybody’s going to pay the same interest rate. You know, they’re going to compete against the dollar, etc. I said, all this is nonsense. Unless you, you consolidate the debt and create a national debt like the United States has. US, yes, it has a single currency and interest rate for the federal government, but all 50 states pay different rates, depending upon their credit rating. So I said, this is what will happen in Europe.

So you see people now trading, you know, the spreads between the bonds in Italy or whatever. And so all they did was move the volatility from the currency market to the bond market. And they understood that in 98, when we had these meetings, they told me they just had to get the Euro through and they’ll worry about the debt later.

Well, here we are 2025 and, you know, nothing changed. Now all these disparities between the different states are growing and then you have hungry, you know, objecting about giving money to Ukraine. So then they want to strip hungry of any right to vote. I mean, this is not civilization. This is about power. Whenever you create a centralized government, it takes on this dictorial type role.

That’s when they failed. Even in the United States, you had Camilla running and somebody was at one of her rallies and talked about God and abortion. And her response was you’re at the wrong one. So in other words, she gets in and it’s going to be my way. I don’t care about your religion. You know, give that up or whatever. This is not civilization.

And this was the problem in Russia. Lenin originally wanted Russia to, you know, creating it like the United States that would have all these republics, which would retain their sovereignty. Still communist.

Yes, but, you know, and he even wrote a letter saying do not let Stalin succeed me. You know, Stalin came in and what did he do? He took all the power from all the states and made it dictorial.

So, whenever I’ve my experience in dealing with governments around the world, once they get power, they always want more. And if they’re they feel threatened that they’re losing power, they become more authoritarian. And that’s what you’re seeing.

The economic problems in Europe. They start this whole process of authoritarianism. Trying to regulate speech. And I mean, that’s what, you know, Vance was talking about at the conference. So, I mean, they wouldn’t do this unless they felt threatened. And this is the way governments always respond. It doesn’t matter what country we’re talking about. Because the one common denominator is ‘we’re all human’. And you put somebody, you know, anybody’s going to fight to save their own life, you know, and that’s basically what you’re looking at.

I’ve seen, you know, the NATO, the memos out of there, when communism fell. And that was the only purpose of NATO. So then when it fell, it really should have been, you know, shut down. And the internal memos, how do we remain relevant? How do they keep their jobs? So they then have to constantly say, Russia’s going to invade any day. They took the old reasoning from Khrushchev: «We will bury you», which was more of an economic religion, per se, against capitalism. And I was in Washington when Reagan wanted to go meet with Gorbachev. And they couldn’t say that, oh, well, the Russians are communists. So then they just said, well, you can never trust a Russian, you know so.

Piero Messina: Martin, thank you for this question. Now I’d like to pass the word to Lorenzo, Matt. Lorenzo, Matt, ask a round and choose who is the first to make a question to Martin Armstrong, please. It’s up to you, okay? Who is the first…

Matt Ehret: Okay, so I guess based on what you just said, my question that just popped into my mind as I was listening to you, is that there’s a lot of discussion right now around the creation of a Euro army. You got it from Ursula. You got it from all of these technocratic warmongers, you know, talking about $800 billion to help, you know, accelerate the meat grinder of Ukraine and to really centralize the economy, both with, again, a military industrial focus. On the other hand, seems like they’ve allowed for decades of incompetence and self-annihilation of their physical economy. And it doesn’t seem to be viable. Like, where’s the money going to come from? Where’s … I don’t know. In your analysis, do you see it… Do you think that these European, like, technocratic warmongers have the ability? Is that even a danger to have a European military? Is it desirable under some paradigm? Or what is your take?

Martin Armstrong: No, it’s not desirable.  Actually, the model that they look at is the Nika revolt in Byzantium. And his wife said, you have a legion outside, they’re not Greek. And tell them to come in and they’ll defend you. And they did. And they came in and they killed about 40,000 Greeks, you know. So the lesson from that is that you always want an army that’s not local. And this is the danger of the European idea.

So if Italy is starting to rise up, they’ll send in Germans. You don’t want somebody from the same area because maybe they’re going to say, well, that’s my brother and I’m not going to do it, you know. That was the problem in Russia when Yeltsin stood on the tank and said don’t fire on your own people. And they looked around and they weren’t going to do that. And so the coup fell. So the idea of creating a European army is very dangerous in the sense that it can be used domestically like a police force. And they’ve kind of even hinted at that.

One of the things from that I’ve encountered over the years, I know some of these neocons. I’ve been to dinner with them and I’ve looked in their eyes and trust me, you don’t see even a warm flicker, you know. But I think that the main thing in their playbook, as I mentioned what they told Reagan: «Don’t go meet with Gorbachev. You can never trust a Russian». And they’re saying this throughout Europe today: «Don’t talk to Putin». Why do they do this? Because they’re afraid that if you actually talk with your opponent, you might come up with a peace deal. He’s evil. He’s this. You know, always fight him. That’s why they’re all upset about Trump. He actually met with Putin. You know, look, diplomacy has been around for thousands of years. I mean, if you don’t talk to your opponent, what’s the alternative? It’s war.

Lorenzo Maria Pacini: I’d like to go on with the same topic. Which are, by your point of view, the possible good chances for the international trade of the United States making the peace with Russia? What’s going on in switching in this race, shaping the world? Because we have several scenarios: Ukraine, Middle East, China with Taiwan, the Arctic. What’s going on in your opinion? Which will be the next consequences of the international market and trade if they arrive to agree for a peace?

Martin Armstrong: It’s questionable whether or not they would get to a peace deal. In all honesty, Europe is preparing for war. They want war. You’ve just had Tusk and Poland tells all males to sign up for military training. They simply want war. And all, unfortunately, all the media is very much just propaganda.

I was looking at the Independent out of London yesterday: Oh, Russia unprovoked invasion of Ukraine. I haven’t found one mainstream media that tells the truth. I mean, you had, you know, it was Victoria Nuland and John McCain from the United States there and John saying, overthrow your government, we’re with you. It leaked tapes that they of Victoria Nuland. They installed an unelected government and they started a civil war attacked the Donbass. And you had an immense agreement. And then they asked Merkel, why didn’t you enforce that? And she actually told the press: well, we didn’t really intend to honor it. We were just buying time for Ukraine to build an army. The Daily Caller in London, Zelensky the day before the invasion, stood up and said: Ukraine’s going to rearm with nuclear weapons. At the Munich, you know, Security Council, you had Kamala reading from the cue cards: oh, Ukraine should join NATO.

Everything that every red line that Putin had, they were trying to cross to force him to come in. Then the Washington Post did find out that Zelensky had all the intelligence and knew when Russia was going to cross the border. They asked: why didn’t you tell your people? It’s response and this is printed: It would have cost me $7 billion if I told them.

You know so from Russia’s perspective, would you then sit down with a peace deal with Europe again after they publicly admitted they negotiated bad faith before?

What are good or treaties or deals? Just to buy time to attack me again? This is the problem. I mean, we’ve seen to have lost all credibility. That’s the only reason I can say that Russia was quite impressed that Trump even wanted to speak. Because every other leader: no, we won’t even talk to him. Even Biden… No, don’t talk to him. Honestly, it just seems as though they want more.

And the rumor behind the scenes is that they. .. You have NATO constantly putting out stories, Russia’s weak, Putin’s going to fall all this. And then from Ukraine, they say, oh, if we fall, Russia’s going to take all of Europe. But which is true? You know, you can’t have it both ways. And then NATO is telling the world leaders there in Europe that, you know, they can take Russia, it’s weak, we don’t need America. And what I’ve heard is that and you even did have publicly administered from Estonia come out and said that Russia’s too big and needs to be carved up. What I’ve been told is that they have $75 trillion in assets. And if Europe can get that, then that’s twice the size of the US national debt, Europe will resurrect again like the Holy Roman Empire and lead the world. And that’s a lot of people in, particularly in France are saying that.

Piero Messina: Okay, Martin, we made a pre-meeting reunion before the interview, and I know that Matt has an important question for you talking about a bubble in the United States. Matt, it’s up to you. I’d like that you talk about your point of view, make a correct question to Martin about bubbles. Let’s talk about bubbles now.

Matt Ehret: You want me to ask the question?

Piero Messina: You know the question.

Matt Ehret: Yeah, I’ll ask the question. The question I had in my mind, it strikes me that there are numerous points, trigger points that could feasibly be the thing that serves as a chain reaction to blow out the system. And one of the things I’ve been sort of looking at, and I’m curious to get your thoughts on this, is the derivatives bubble. I don’t know what it’s up to now, 800 trillion, whatever. I’m not even sure what the estimate is. That’s a lot more than the world’s GDP. And I was wondering what you think about that, how it grew, if that would be the thing that is the time bomb that blows out the system, or would it be something else in your analysis? And also sub-question, what should be done about this bubble economy?

Martin Armstrong: That’s probably not the trigger. Historically when governments are in these Ponzi schemes of just issuing debt year after year, they never intend to actually pay it off. That can last. It’s not a question of the amount of debt. It could be one thing. It could be one trillion or one quadrillion. The real question is, historically, when you look at countries that have done this and then they collapse, the collapse comes when they lose confidence and nobody is in line to buy the new debt. That’s when you’re going to see the real problem. Because what they’re doing is they issue new debt to pay off the old. Once that happens, I think the derivatives will accelerate it. But it’s unlikely to come from the derivatives first. Your worst historical crashes are not stock markets, it’s the debt market.

That’s what made the Great Depression so great. It was in 1931, basically all of Europe defaulted. I mean, even Canada defaulted on its debt. That drove the dollar up to all-time record highs, which is then what sparked protectionism, because they didn’t understand what was going on. And then on top of that, that led FDR to confiscate gold so it could devalue the dollar. So it was a consequence of one thing leads to the next. It’s like a row of dominoes. And so I would, what really started off were the sovereign debt defaults in Europe. And if you look at the timeline, they knew there was a capital flow out of Europe. And the first G4 got together in 1927. And the Federal Reserve tried lowering rates at the request of Germany, France, and Britain to, they thought that would maybe deflect the capital back to Europe. Once they did that, the markets took it as a confirmation that there was a problem. So government has to understand it was the same thing with the 1987 crash.

Even the 87 crash they had the G5 in 1987 saying we were going to lower the dollar by 40%. Then in early 1987, they signed the Louvre Accord. They come out and say: okay, fine. A dollar went down enough. That’s it. And the dollar continued to make lows, and that caused the panic. Everybody said they can’t do anything. And then they didn’t pay attention to the central bank’s debt. So it is a confidence game, and that’s the real trigger, I think. When people begin to lose confidence in the government itself, it could be a number of reasons it doesn’t. And then you’ve got a real problem. I mean, like, if they have a fascinating problem, then everybody’s going to, like, freak out on it, you know, and, oh, we’re going to go back to the other way. And so it’s, you know, an awful lot of crazy things that can happen.

I mean, I remember 85, like, attempted assassination on Reagan, everybody freaked out. And then when the pope was assassinated, and the mortgage went dead silent, without getting calls, what do we do now, you know? Nobody knew what would happen if the pope was assassinated, you know? So it’s always a confidence game.

Piero Messina: Can you hear me? Lorenzo, forgive me just a minute. I’d like to talk with you and Martin about the new technology, because I think it’s important to put all the peace on the paths, you know, to make the people that follow us what’s happening. So talking to you, Lorenzo, and talking to Martin, I’d like to know from your point of view which could be the impact of artificial intelligence in the economy. If I could change the thing. This is a question for Martin, and after Lorenzo, I’d like that you talk with Martin about a moment of economy, or more of an economy, a quantum of economy, because I know that you want to understand better. So Martin, it’s up to you. Artificial intelligence of the economy, what could happen?

Martin Armstrong: Well, as you know, I developed probably the first artificial intelligence computer. I’ve been using it for about 40 years. I can see how technology has progressed with my own company. We used to have to have maybe 240 employees around the world taking the data from every country, inputting it manually. Now the computer does it all. Okay. So, you know, basically what we used to do with 240 people, we can do now with about 26.

So, but that’s only information type size. You have like Amazon. It put a lot of small businesses out of, you know, into bankruptcy. COVID was orchestrated largely kind of to do this for climate change and try and prevent people from commuting to work and things of this nature. And it put a lot of small businesses out of, you know, into bankruptcy. So, these are what Joseph Schumpeter, the Austrian economist, he called it waves of creative destruction.

You know when they invented the automobile that put the people with the horse and buggy business out. So each one progresses. AI will not replace jobs that require physical contact. Like go getting your haircut. Something like that. I mean, building things. AI can’t, you know, build a house. So you’re still going to need, you know, physical labor for a lot of different things. I think that AI would be much better in the judicial system, replacing these judges so they don’t have bias. I think that would be a tremendous advantage.

And it’s… So there’s certain areas that I think are very good. It seems to be starting to write code to even replace some programmers. Things of this nature. So there are certain areas that it can expand in. And writing reports, things of this nature. I mean, I’ve looked at some of them. They’re pretty good. They’re not 100%. So, you know, this is how the economy will move in advance. These are waves of creative destruction.

And I think the economic times that we’re going through right now; we don’t fix something unless we know it’s broken. And what governments are doing now is basically showing that they are broken. And what our computer project, which is after 2032, we’re going to be looking at really major political reform on a global scale.

Republics tend to be the most corrupt form of government. That’s why Caesar crossed the Rubicon. If you actually looked at the contemporary, you know, accounts, he didn’t fight his way to Rome. All the cities cheered and opened their gates. It was a savior. Why? Because it was a debt crisis. The Senate was just as corrupt as possible. And they’re the ones that fled to Asia. They didn’t have the support of the people. And, I mean, they were, you know, the high priest even had the discretion to put in for leap year. So they’re bribing the high priest. We don’t want to go to election. Give us an extra couple months. You know, so when Caesar crossed the Rubicon in January, supposedly it should have been winter, but it was summer. So he changed the calendar. I mean, when you’re bribing the priest to change the calendar, so you don’t have to go to election. That’s pretty bad.

Piero Messina: Perfect, Martin. Lorenzo, please. Now talk to you. Your question, please.

Lorenzo Maria Pacini: Martin, in last question, that is something very fishable for Italian and for Europeans in general. What is the quantum financial system? How is it working? Is it possible or not? Because you are just talking about artificial intelligence, as you know, QFS is something strictly connected to the American Trump’s scenario. And there are many theories behind this introduction of the QFS. But now we are seeing around the world that all this based market is changing and looking forward to the future. We need to understand what is this QFS, if it’s possible, is it real, or are we still not in this dimension of a Quantum Financial System?

Martin Armstrong: No, I don’t see it. This is more of theory. Okay. Being here in Florida, we had a couple of hurricanes. If you had digital currency, etc., it wouldn’t have done you any good. The power went down. You could even use a credit card. It was cash only.

Money has been around for thousands of years. It was barter from basically maybe 6000 BC until about 700 BC. That’s when coins were actually starting. So I don’t think you’re going to be able to eliminate that. At the end of the day, we still, you know, putting everything on the internet, you know, the power grid, it’s very risky. You get into war and Russia could just explode an EPM bomb over the United States and that takes out the electricity. Fry circuits and things of this nature. I mean, you can starve by the time they ever get it back up to be able to go buy food, you know.

So I’m more of a skeptic on that longer term. I think there’s, from a financial perspective, we can look at globalization was actually most people don’t realize, but just before World War One, we were more globally connected. The same bonds that traded in New York traded that way in London, Milan, Paris, and St. Petersburg. So you could arbitrage between all of them.

And it was World War One that basically because of that, the world was much more interconnected. That’s why Europe shut down all the stock markets. Because it would, you know, you could then sell the same stock anywhere, move it from one exchange to another. So it was more of a capital control situation because of war. And that’s, that’s the real danger I see with this advance that you end up with more power in the hands of government.

And we’ve already seen it with COVID shutting people down because they didn’t like what they said, or, you know, getting to the point of debunking people like they did in Nigel Farage for political reasons. So I am not in favor of this. I think it’s much more authoritarian. And we don’t want to give government more power because they always will abuse it.

Piero Messina: Thank you, Martin. Thank you so much. Do you want to make another question or is it possible to pass to Matt?

Lorenzo Maria Pacini: Let’s go with Matt.

Piero Messina: Matt, it’s up to you the big final reset in Italy. It’s up to you. Last question.

Matt Ehret: This is a more secondary question based on what you said, I was curious, because you mentioned that Republic is the worst form of government. But what would be the best form of government in your mind? And do you think a Roman Empire renewal would be the way to go? Or what would be the configuration of that type of government that you think would be the best?

Martin Armstrong: Well, I think it would be more of a direct democracy. I know Aristotle, Socrates and Plato were against that. But look at it this way. When we went into Vietnam, for example, you were 18 years old, you could be drafted. You were too young to drink and too young to vote. That’s democracy. You know, we should be given the right to vote. Do we go to war with Russia? Yes or no? We’re never asked. It’s a bunch of guys that are not even elected to make these decisions.

And I would suggest that you can look at, on YouTube, Gen. Wesley Clark, his 2007 speech, he went to the Pentagon after 9/11, and he was told they were going to attack Iraq. He said, did Iraq, and was Iraq involved? No. And then they said to him, which really upset him that they were going to take five countries in five years. And he said, what’s happened to the military?

Before, the military was to defend the country. Now it’s to overthrow other governments. So this is my concern with governments in general. The Roman, they overthrew the Senate, and then you ended up with an emperor, mainly because they didn’t trust the senators. He kept the Senate. And if you look at the Roman coins, we can date them because he pretended to be elected every year. More or less like our politicians today. They’re there forever. So I would say that we have to have accountability.

What makes them the worst is that you can bribe these people. The founding fathers of the US, I think, had the right idea. What they didn’t anticipate were career politicians. Congress, you were a congressman for two years, but Congress also only met for maybe six weeks of the year. We ended up with career politicians from the American Civil War. They bribed these people and said, you vote for us and we’ll give you an annual salary. That’s when they started. It was always bribing. So that’s why I’m not fond of republics.

I’ve dealt with governments a lot and, you know, it’s… I mean, I was asked back in the 90s to create a wealth fund out of Social Security. I went down: okay, fine; this is how we do it guys with track records. Democrats wouldn’t vote for it because they wanted to be able to change the fund managers when they got back in power. I said, I’m not asking who they voted for and who has the best track record. That’s it. I don’t care if they never voted, but it’s always what I get out of it. So that’s why I’m against republics. I think the only way to clean them up is to have one time in and out. That’s it. Once you have somebody always on the opposite side, it’s always them against us.

One of the most impressive forms of government that I did see was Genoa. And the doge rotated among the rich families. They were there for a year. Because they, next year, they would be back on the other side. They would never pass a law that would be abusive to themselves. So, and I think that’s the key. That you don’t want career politicians because it’s always going to be them against us. And I don’t care what country you’re talking about. I’ve always seen the same thing.

Piero Messina: How time is over? Thanks a lot, Martin. Because while Europe tried to rearm the defense and military system, thanks to Martin, we rearm our brain. Thanks a lot, Martin. Really, thanks a lot.

Lorenzo Maria Pacini: Thank you very much.

Piero Messina: A big hug for all you. A big hug to my friend Lorenzo, for my new friend, Matt. And, Martin, hope to see you soon on SouthFront TV. Thanks to all.

Martin Armstrong: Very good. Nice to be here. Thank you. See you again.

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