For personal use and notes, this is not financial advice.

It important to remember that capital will always flow, just like energy. Below is examples of capital flows which I am writing to better understand the trends of economics.

In regards to Martin Armstrong’s post regarding capital moving.

What happens in one sector, people will move to the next.

  • 1987 USA Crash: USA capital fleeing to Japan
  • 1989 Japanese Bubble: Japan capital fleeing to South East Asia.
  • Capital fled South East Asia to Europe (creating the Euro)
  • Euro peaked, then capital fled back to USA

Same happens in Asset Categories:

  • People get burned in real estate, move to stocks
  • People get burned in stocks, then run into bonds/cash
  • People get burned by bonds/cash, then run into commodities

Important: When there is alignment, (which appears to be happening), this warns for big crash & burn in public/government assets (not private assets)

What Martin Armstrong, states:

Whenever something happens in one sector, people turn to the next one. Capital will move from region to region and within each region there is still a domestic cycle. The 1987 Crash send capital fleeing from the USA to Japan. Then there was the Japanese Bubble 1989 and capital fled to South East Asia. That then peaked and capital began to rush to Europe for the birth of the Euro. That then peaked and it began to flow back to the USA.

People get burned on real estate, they then move to stocks. The get burned in stocks, then run to bonds/cash. Then they run to commodities. The key remains when there is a great alignment, which we are headed into. That warns the big Crash & Burn lies in government not private for this one.