Rickards: This is a Rigged Financial System

[Ed. Note: Jim Rickards’ latest New York Times best seller, The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisisclaim your free copy here – This groundbreaking work transcends politics and the media to prepare you for the next crisis in the ice-nine lockdown.] 

To catch the first round of Jim Rickards’ discussion with The Keiser Report click here.

Jim Rickards joined Max Keiser of The Keiser Report for round two of discussions covering what to expect in from the current financial system. They dig deep into what Rickards’ analysis reveals so far about Donald Trump’s economic policies.

Starting out the conversation Keiser posed whether the United States is on The Road to Ruin or if Trump may offer a correction for dangerous economic policy. Jim Rickards responded, “There are two separate dimension to this. One one hand, for normal business cycles, credit cycles, economic growth – I think Trump has a lot to offer. The problem is, and this is what I talk about in my book The Road to Ruin, when you talk about financial and systemic crisis that is a different phenomenon than the normal business cycle.”

“My view is that we are still set for a major financial collapse that will be worse than 2008. While that will not be Trump’s fault, it will be his misfortune. It very well could happen on his watch for reasons that have nothing to do with his policies.”

“When you are talking about normal macroeconomic business cycle policies: cutting taxes, less regulation, infrastructure spending – the things he is talking about. A lot of those areas are good for the economy. But none of them address the embedded problems, the systemic risks, the grotesque scale and the way that bankers have organized the system in their favor.”

“I still think that the systemic risk of a major financial crisis is out there – regardless of Trump’s policies.”

Jim Rickards is a New York Times bestselling author of The Road to Ruin (score your FREE copy here) and economist who spent over three decades working in capital markets while in major Wall Street firms. Rickards’ understands the banking and financial system well stemming from his position as the principal negotiator in 1998 for the U.S Federal Reserve’s rescue of Long-Term Capital Management (LTCM). Since then Rickards’ has advised various officials within the U.S intelligence community and the Pentagon.

When asked about the repeals of regulation on Wall Street Jim Rickards responded, “Dodd-Frank is an 1,100 page document. Contrast that with the original Glass-Steagall. Glass-Steagall was passed in the 1930’s and separated commercial banking from investment banking – which was a very good idea. We repealed it in 1999 and only ten years later had a major financial meltdown. Glass-Steagall worked beautifully for the near seventy years that it was in place – but the law was only about 5 pages long. They are not going to be able to repeal every word of it… but remember, the bank lobbyist run Washington.”

Rickards and Keiser Interview

Keiser then asked about the bestselling author’s thesis on central banking policy around the world and how it has only deferred collapse of the financial system, Rickards’ responded “First, a lot of what should have broken down in 2008 did not happen. My economic analysis is based on complexity analysis… What we have learned from that is that the worst thing that can happen to the system is an exponential function of scale. If you double the system, you don’t double the scale.”

“Right now for example, we know there is a problem with the San Andreas fault. We know that the fault could snap at any time and cause a lot of death and destruction in California. Does anybody think it would be a good idea to send engineers out and make the San Andreas fault bigger? Nobody thinks that is a good idea. We can’t predict the next earthquake.”

“When you transition to looking over at the banking system, and capital markets, that’s what we are doing. We’re making the San Andreas fault bigger by expanding derivative books, expanding the big bank balance sheets, the overall concentration of assets, etc. There is no reason not to expect a much worse financial crisis – sooner than later.”

To catch the full interview on what to expect out of the financial system with Jim Rickards on The Keiser Report click here.

If you would like to secure your FREE copy of The Road to Ruin, click here to learn more.

Thanks for reading,

Craig Wilson, @craig_wilson7
for the Daily Reckoning

The Daily Reckoning