Rickards: World's Wealth At Risk?

Jim Rickards joined Bloomberg Markets to discuss the financial crisis that he believes is coming soon and what is in store for the world’s wealth, the Trump administration and more.  The best selling author and chief global strategist notes that the financial climate is ripe for a economic trouble and that we are reaching a pivotal point.

Jim Rickards is a New York Times best selling author and international economic advisor to the US intelligence community. Rickards vitally informative and well researched book, “The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis” is officially out this week.

“The banks in 2008 were too big to fail, the biggest banks are bigger. They have a larger percentage of the total banking assets, the derivatives books are bigger.  Everything that was unstable in 2008 is even worse today.  These crises happen every seven or eight years (it doesn’t mean it is going to happen tomorrow) – look at 1994, 1998, 2008. It has been eight years or so since the last one and it won’t be very long until the next one. The next one is going to be different. The last two times, in 1998 and 2008, when everyone wanted their money back – banks printed more money.  The next time they’re not going to print money because they’re tapped out.”

“When Ronald Reagan ran the “Reagan playbook,” when he was sworn in January of 1980, interest rates were 20%, inflation was 13% and debt-to-GDP ratio was 35%.  Interest rates had nowhere to go but down, the bond market had nowhere to go but up and stocks and bonds rose together. Reagan piled on debt, but starting from a very low level.  Reagan had all tailwinds.  Trump is going to try and ran that same “playbook” with nothing but headwinds… Debt-to-GDP is 100%, interest rates have nowhere to go but up, inflation has nowhere to go but up.  This is as though Reagan ran the playbook against the high school football team.  Trump is going to run the same playbook against the New England Patriots so you will get a very different result.”  

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“The systemic risk doesn’t care if you are a Republican or Democrat.  It is like when an avalanche happens and kills a skier, it does not care if the individual is a liberal or conservative.  There are bigger forces at play than the partisanship and the policy that they choose.  These cannot be stopped except by extreme measures.”  

“That is why I am talking about locking down the system.  For example, the money market funds where in 2008 they could not suspend redemptions.  They had to give you your money back… laws have been changed very recently.  Now they can break the buck.”  When prompted on whether it was a good thing for the system to “lock down,” Rickards responded pointedly noting, “That is a good thing unless you want your money…”

To see the full interview on Bloomberg click here.

If you are interested in Jim Rickards newest book, “The Road to Ruin” that is just out this week and would like to learn how to have it sent to your doorstep for free – CLICK HERE for more.

Regards,

Craig Wilson, @craig_wilson7
for the Daily Reckoning

The Daily Reckoning