The Tipping Point in Perception of Inflation

�Inflation often begins imperceptibly, and gains a foothold before it is recognised. This lag in comprehension, important to central banks, is called �money illusion�, a phrase that that refers to a perception that real wealth is being created, so that Keynesian �animal spirts� are aroused. Only later is it discovered that bankers and astute investors captured the wealth, and everyday citizens are left with devalued savings, pensions, and life insurance�.

�Inflation can gain substantial momentum before the general public notices it. It was not until 1974, nine years into an inflationary cycle, that inflation became a potent political issue and a prominent public policy concern. This lag in momentum and perception is the essence of �money illusion�.

�Once inflation perceptions shift, they are extremely difficult to reset. In the Vietnam era, it took nine years for everyday Americans to focus on inflation, and an additional eleven years to re-anchor expectations. Rolling a rock downhill is much easier than pushing it back up to the top.�

- Jim Rickards, The Death of Money

China�s Government Crackdown on Corruption

China�s Communist Party announced a formal investigation last month into one of the party's most senior figures, Zhou Yongkang, and one hedge fund manager says the move will bring broader political and market implications.

Jim Rickards, portfolio manager for the West Shore Real Return Income Fund and the author of �The Death of Money,� has experience doing business in China, and recently told FOX Business�s Deirdre Bolton that the investigation is the Chinese government�s warning shot to corrupt officials.

After 18 months of covert investigation, the Chinese government went public with its official investigation against the ex-security chief on July 29, according to Chinese media. The investigation makes Zhou the highest-ranking official to be placed under formal investigation in over a decade.

�Zhou Yongkang was the head of the secret police, the court administration and the enforcement of party discipline. He is the guy who�s now been arrested and investigated,� Rickards said.

While Zhou is just under investigation, Rickards said his fate might already be sealed.

�You have to understand that there is no rule of law in China. They have a constitution, they have courts and lawyers and trials, but it�s all for show�.The Power Bureau, the Central Committee and the Communist Party make all the decisions,� he said.

Rickards described Zhou as part of a group of �financial warlords� in the country that use power and connections to secure multibillion dollar project contracts, such as commercial housing projects.

�If you look at these ghost cities and construction sites� why are they building all these empty things that no one needs? If you are in charge of cement, steel or construction� you scam them and then you take the money buy a place in Vancouver [and] New York.� Rickards said.

Rickards said China�s highly-unregulated legal system makes investing in the country difficult for those without government connections.

�The best way to invest in China, is to find a service business that China needs, where they pay you in hard currencies outside of China, and you don�t have to put a lot of fixed assets inside China,� said Rickards. �That way, if things go badly, you just tear up your contract and walk away.�

- Source, Fox Business

Jim Rickards on Russian Sanctions

Monetary Solutions Can't Solve Structural Problems

The global debt markets have mushroomed to an estimated $100 trillion dollars! According to the latest statistics.

The Death of Money, Playing the Currency Wars

The Significance of a BRICS Development Bank

Jim Rickards, Senior Managing Director at Tangent Capital, explains how the new bank differs from the World Bank and the International Monetary Fund.

- Source, CNBC

China's Giant Ponzi Scheme Won't End Well

(Video cannot be embedded, please click image to view)

The Daily Ticker's Aaron Task and Lauren Lyster discuss the drop in Chinese stocks and economic growth coupled with rise in rates.

- Source, Yahoo Finance

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Ugly Financial Crisis to Jolt US Within 5 Years

A financial catastrophe worse than that of 2008 will hit us within five years, says James Rickards, best-selling author and senior managing director at Tangent Capital Partners.

"The meltdown in 2008 was not a meltdown. It was sort of a half-meltdown," he told Dennis Kneale of Newsmax TV in an exclusive interview.

While Lehman Brothers was the only major financial institution to completely collapse, others were close to it, said Rickards, author of "The Death of Money: The Coming Collapse of the International Monetary System."

But the Federal Reserve stepped in to prevent financial firms from going under. As a result, "the Fed truncated" the avalanche, he explained.

"Think of it as a bunch of dominoes falling. All the dominoes are going to fall, but if I drop a steel curtain between two dominoes, that's going to stop. That's what the Fed did."

Rickards believes "things should have been allowed to crash" in 2008. "All the banks should have been nationalized by the government, the stocks should have been wiped out, the bondholders should have taken a haircut and the clean banks should have been re-IPOed," he argued.

"That's hope and faith in the American people and entrepreneurship. That's what I advocate. The government doesn't believe in itself. So when you start to go down, but instead of hitting bottom, you truncate it and guess what, you're flat-lining forever," he asserted.

But the Fed's tactics didn't change the dynamics, Rickards maintained, as bad debt and leverage haven't gone away. "That's all still there. Except now, it's worse, because in 2008, what did we hear about? 'Too big to fail,' right? Well guess what, the five biggest banks in America today are bigger than they were in 2008," he insisted.

"So everything about '08 that was too big to fail is bigger today. Those dominoes are still waiting."

Meanwhile, the Fed has printed $4 trillion during the last six years. "So, they've got no more drive power," Rickards contended. Liquidity crises arise every five years, he said. "So what's going to happen when the next liquidity crisis comes?"

It won't be pretty. "The next time it happens, it's going to be bigger than the Fed, that's why they're not going to be able to stop it," he predicted. The fact that the financial system is bigger than in 2008 will make this crisis worse, Rickards added.

"The depression of 1920 was as sharp and as hard as what happened in 1929 and 2008. But the government let it go and guess what? It was over in 18 months and we had 10 years of prosperity and Roaring Twenties," he said.

"But that actually is a very healthy process. But because we haven't allowed the system to heal in all these other crises, the next one is going to be so big that the outcome is likely to be money riots and social discord and then you'll see a neo-fascist response."

Rickards compared today's economy to the San Andreas Fault, because "underneath these forces are building up."

"We're in a depression � not a recession � a depression."

He warned that the deflationary forces from the depression and the inflationary forces from policy are pressing against each other.

"They're fighting each other to a standstill, but that's going to snap, that's exactly like two tectonic plates crashing into each other," Rickards declared. "It's going to be ugly for investors, it's just a matter of time."

As for the timing of the crash, "it could come tomorrow," he said. "I'm not predicting tomorrow, but three years seems like a long time for this, five years definitely a long time."

So what will cause the collapse?

"The correct answer, the scientific answer is it doesn't matter, and what I mean by that is, it's like the snowflake in the avalanche," Rickards explained.

"The snow's building up and it's building up, and you're looking at it. An expert can say, hey, it's unstable, it's going to fall down. So here comes a snowflake, it disturbs a few other snowflakes, it starts to slide, it starts to shoot, gains momentum and the whole thing comes tumbling down."

And what might be the first snowflake to move?

"It could be a failure to deliver physical gold," Rickards suggested. "Physical gold is disappearing, there's a mountain of paper gold. . . . So a failure to deliver could cause panic buying of gold."

Other possibilities include "an IMF-global type of failure, a prominent suicide, a natural disaster such as Fukushima," he said, referring to the March 2011 Japanese nuclear accident. "It could be a lot of things. . . . What's important is the rock that's already in the system."

For investors seeking to cope with the crisis, Rickards recommended a 10 to 20 percent exposure to gold � "10 percent for the conservative investor, 20 percent for the aggressive investor."

Meanwhile, corporations have record amounts of cash on their balance sheets. "That wealth is highly concentrated in a relatively small number of companies," he stated. "Apple, Google, IBM � they've all got records amounts of cash."

But why do they have that cash? "This is what the IMF calls precautionary savings," he explained. The companies "build up the cash so when the next panic comes � and it will be coming � they know that they'll have to fund themselves internally for six months because the commercial paper market will go. So it's not a source of strength," he noted.

"They're not going to spend that cash or use that cash, they're holding it. . . . They're holding it because they're scared to death of liquidity evaporating. But it's not going to stop this global meltdown because that's much bigger than these corporations."

Rickards also warned that the United States isn't doing enough to thwart the "financial warfare going on behind the scenes, some of it obvious, some of it behind the scenes."

He believes the "greatest single threat" to the nation is "cyber financial warfare, the combination of a financial attack done in cyberspace."

"Everything the United States is doing is making the situation worse. China's on the attack, Russia's on the attack, Saudi Arabia will soon be on the attack," he stressed.

When it comes to the banking system, "we should break up the big banks. JPMorgan should be five separate banks. That way one of them goes down, too bad, but it didn't take down the system," Rickards claimed.

"We're actually enabling the banks to get bigger, we don't understand the fiscal properties at risk. Everything about what the U.S. is doing from a policy perspective is moving in the wrong direction."

- Source, Money News

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James Rickards Talks to Melike Ayan on Death of Money, FED

Jim Rickards appears on TV where he discusses he second best selling book. The Death of Money. He sees a US dollar crash coming and the only safe have is gold.

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When This Bubble Pops it is Going to End Very Badly

I actually had breakfast with some of the leading private equity investors and CEOs this morning and, you know, privately they'll say, look, the bank covenants are gone, cost of funds is very close to zero, they've got more leverage than they've ever had, the U.S. inner stock exchange has greater leverage than they've ever had, so it looks good but this is a bubble being supported by zero interest rates, high leverage.

We all know what happens, they will collapse sooner than later.

You know, stocks could actually be higher by the end of the year, based on, I expect, the Federal pause, the taper around the middle of the year. But in the long...this is a bubble. The problem is bubbles, they last longer than we think, but when they pop, it ends very badly. This is all being floated by zero interest rates and leverage.

- Source, James Rickards via FXStreet

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Financial Collapse and Massive Shortages in Gold Coming

Financial expert and best-selling author James Rickards� latest book predicts �the coming collapse of the international monetary system.� One of the sign posts is countries like Russia declaring it will shed the U.S. Dollar as reserve currency in international trade. Rickards explains, �Putin said he envisions a Eurasian economic zone involving Eastern Europe, central Asia and Russia. The Russian Ruble is nowhere near ready to be a global reserve currency, but it could be a regional reserve currency.�

Rickards� latest best-selling book, �The Death of Money,� was released in April. Even Rickards is surprised at how fast the economic situation is unfolding. Rickards says, �If you ask me what has happened since you finished writing the book that comes as a surprise, I would say a lot of the things I talk about in my book are happening faster than I would have expected. Things that I thought would happen in the 2015 or 2016 time frame seems to be happening now in some ways. If anything, the tempo of events is faster than expected. Therefore, some of these catastrophic outcomes may come sooner than I wrote about.�

Rickards goes on to say, �Right now, we are on the precipice now. When you are on the precipice, it doesn�t mean you fall off immediately, but you are going to fall off because you can see the forces in play. What I tell clients and investors is it�s not as if we are going to make some mistakes and some bad things are going to happen. The mistakes have already been made. The instability is already in the system. We�re just waiting for that catalyst that I call the snowflake that starts the avalanche. You don�t worry about the snowflakes; you worry about the snow and that it�s unstable and it�s just waiting to collapse. That�s what the system is right now; we are just waiting for a catalyst. People ask me all the time, what could it be? Technically, my answer is it doesn�t matter because it will be something. It could be a failure to deliver physical gold. It could be an MF Global financial failure. It could be a natural disaster. It could be a lot of things. The thing investors need to understand is the catalyst doesn�t matter. It�s coming because the instability is already there.�

On gold manipulation and when it will end, Rickards says, �It will end when the physical shortage gets to the point that someone fails to deliver; which, at that point, there will be a buying panic. There could be a buying panic or what some people call a demand shock. One of the things I said about gold manipulation is if I was the manipulator, I would be embarrassed at this point. The manipulation is obvious. The evidence is coming in from all directions. . . . The manipulation is clear. When will it end? It will end when there is a physical shortage that pops up somewhere, or it will end with a short squeeze.�

Rickards goes on to say, �We are going to get a very large demand shock coming from China and India. Let me explain those two cases. We have a brand new government in India, and they are going to repeal the import tax on gold. We also have the wedding season coming up. . . . So, India is set up for a very large surge in demand in the fourth quarter. Now, over to China, this is one of the things that it�s happening faster than I originally thought. The credit collapse story is happening in real time. I said (in my book) this might be a 2015 event, but it looks like it is happening now. Defaults are piling up. We are seeing money rise. We�re seeing people march down to the banks . . . trying to get their money back. . . . So, if they can�t buy foreign stocks, domestic stocks, don�t want to put their money in the bank and are getting out of real estate, then what�s left? The answer is gold. . . . I see a demand shock coming from China. . . . You could see a scramble to buy gold. It is going on anyway, but you could see it accelerate. That will take down the manipulation. Once the markets prevail over the manipulators, then watch out.�

Rickards says the collapse will happen, but he is not sure of when it will come. Rickards explains, �It is the thing you won�t see coming that will take the system down. Things happen much more quickly than what investors expect.� Rickards adds, �What will happen in gold is that it will chug along and then all of a sudden�boom. It will be up $100 an ounce, and then the next day it will be up another $200 an ounce. Then everyone will be on TV saying it�s a bubble�boom. It�s up $300 an ounce, and before you know it, it will be up $1,000 per ounce. Then people will say gee, I better get some gold, and they�ll find out they can�t get it because the big guy will get it. You know, like central banks and sovereign wealth funds will be able to get the gold. The typical investor will run down to the coin shop and they will be sold out, and the U.S. Mint will say sorry, we�re not shipping. You�re going to find out you can�t get it because the whole thing is set up for massive shortages in supply.�

- Source, USA Watchdog

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Catastrophic Outcomes May Come Faster Than Expected

James Rickards, author of the new best-selling book called "The Death of Money," says the financial collapse will happen, but he is not sure of when it will come. Rickards explains, "It is the thing you won't see coming that will take the system down. Things happen much more quickly than what investors expect." Rickards adds, "What will happen in gold is that it will chug along and then all of a sudden--boom. It will be up a $100 an ounce, and then the next day it will be up another $200 an ounce. Then everyone will be on TV saying it's a bubble�boom. It's up $300 an ounce and, before you know it, it will be up $1,000 per ounce. Then people will say gee, I better get some gold, and they'll find out they can't get it because the big guy will get it. You know, like central banks and sovereign wealth funds will be able to get the gold. The typical investor will run down to the coin shop and they will be sold out, and the U.S. Mint will say sorry we're not shipping. You're going to find out you can't get it because the whole thing is set up for massive shortages in supply."

- Source, USA Watchdog

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Rickards Predicts Collapse of Global Monetary System

The collapse of the monetary system awaits the world in the near future, says financial expert James Rickards. Russia and China's desire to rid the US dollar of its global reserve currency status is an early sign of the �increasingly inevitable� crisis.

�China has three trillion dollars, but they are buying gold as fast as they can. China worries that the US is going to devalue the dollar through inflation so they want to have a hedge if the dollar goes down, so the gold will go up,� Rickards told RT.

As one of the key events in support of his forecast, Rickards points to the words uttered by Russian President Vladimir Putin at the 18th International Economic Forum in St. Petersburg that took place earlier this month.

�Putin said he envisions a Eurasian economic zone involving Eastern Europe, Central Asia, and Russia. The Russian ruble is nowhere near ready to be a global reserve currency, but it could be a regional reserve currency,� he said, as quoted by ETF Daily News.

Rickards� book about the demise of the dollar was released in April under quite an apocalyptic name � 'The Death of Money.' However, the author is surprised that the events are unfolding much faster than he predicted.

�If anything, the tempo of events is faster than expected. Therefore, some of these catastrophic outcomes may come sooner than I wrote about.�

Last Wednesday, China and Russia signed a historic US$400 billion gas deal which will provide the world's fastest growing economy with the natural gas it needs to keep pace for the next 30 years. Experts say this could be the catalyst that dethrones the greenback as the world's reserve currency.



The best-selling author writes that the �linchpin� of the collapse is the approaching failure of the dollar since it is at the foundation of the system. Powerful countries such as Russia, China, Iran, and India do not rely on the US in their national security and would benefit from the US economy being weaker, thus desiring to break free from the dollar standard.

He elaborates that the dual collapse �looks increasingly inevitable.�

�The mistakes have already been made. The instability is already in the system. We�re just waiting for that catalyst that I call the snowflake that starts the avalanche,� he said, as quoted by ETF.

There are three big international factors that are pressuring the dollar right now � Russia, China, and Saudi Arabia.

�Since the 1970s, Saudi Arabia [has been] the leader in what�s called the petrodollar. It basically means that Saudi Arabia and, by extension, OPEC, price oil in dollars, so the world market is in dollars.

�Russia is a major natural resource exporter; they price their exports in dollars as well. But Russia now is engaged in a financial war with the US around the issues in Crimea and Ukraine.�

The threats to the dollar are �ubiquitous,� the author states in his book. The only way the US can pay off its $17 trillion debt is with inflation, which would drive other countries away from the dollar while the accumulation of gold by Russia and China presages the shift to a new reserve asset.

�The next time we will have a liquidity crisis in the world it�s going to be bigger than the ability of central banks to deal with it. The IMF will basically have to bail out the world by printing the SDRs (an international reserve asset created by the IMF in 1969 to supplement its member countries' official reserves). By that time, you will see the SDR emerge as the new global world currency,� Rickards told RT.

- Source, Russia Today

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Jim Rickards & Keith McCullough Unplugged on Fed, USD, Gold, Economy & More

Controversial best-selling author James Rickards sits down with Hedgeye CEO Keith McCullough to discuss a number of important subjects in this wide ranging interview such as the FED, USD, the flagging economy and much more.


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Should Investors Prepare for a Dollar Doomsday?

James Rickards, managing director at Tangent Capital Partners and author of �The Death of Money,� explains his view of a coming collapse for the U.S. dollar and the role confidence plays in supporting the currency on Bloomberg Television�s �Market Makers.�

- Source, Bloomberg TV

The Coming Crisis is Bigger Than The Fed

James Rickards, financier and author of the excellent cautionary best-seller Currency Wars, has recently released a follow-on book: The Death of Money: The Coming Collapse of the International Monetary System. In it, Jim details how history provides plenty of precedent for the collapse that has begun amidst the major world currencies.

The historical progression is predictable enough that Jim is comfortable claiming that the next economic crisis we face will be bigger than the ability of the Federal Reserve (and the other world central banks) to contain it. And that such a calamity will happen within the next five years.

- Source, Peak Prosperity

Next Liquidity Crisis, IMF to the Rescue

According to Jim, the coming IMF SDR solution will be hyperinflationary, but it will also provide today's central bankers a scapegoat. Will they be able to pull this off before social unrest gets out of control?

- Source, Russia Today:

www.rt.com

China is Worried About the US Dollar

There�s been a lot of talk yet that China has acquired thousands of tons of gold. The world�s largest gold producer. The world�s largest gold importer and they�re also bringing in gold that�s not being reported in the official import statistics using military channels.

And I talk about that in Chapter 9 and Chapter 11 in my book, how they�re using the People�s Liberation Army to smuggle gold into China overland, without going through Hong Kong. So they�re getting all the gold they can and so are others. But there�s been a lot of speculation as to why is China getting all this gold.

Well, they must want a new reserve currency backed by gold. It may end up there, but that�s not what they�re doing in the short run. Here�s the way to think about it. They own $4 trillion of reserves today, mostly in paper assets. Most of that is US dollar denominated and most of that are US Treasury notes. So they�re the biggest creditor of the United States of America.

They actually don�t want to gold to skyrocket. What they want is a strong dollar. Nobody wants a stronger dollar more than China because China owns more dollar securities than anyone else in the world. But they�re worried. They�re fearful that we will inflate the dollar and if you do a 10% inflation of the dollar, you reduce the dollar�s value by 10%.

That�s like a $300 billion wealth transfer from China to the US because their assets are worth less, our liabilities go down, so we�re stealing wealth from China and they know it. Now they can�t dump these treasury securities. There are too many of them. But what they can do is buy gold and here�s how it works.

If we have a stable dollar maybe the gold doesn�t go up that much, but they�ll be very happy with that because their securities will be worth what they think they are. But if we inflate the dollar which we�re trying to do, they�re going to lose money on the paper, but they�re going to make it on the gold.

Because we all know that if inflations comes along gold is going to go up very, very significantly. So in effect they�re creating a hedge position. They�ve got paper over there, gold over here. They would like the paper to be valuable, but if the paper drops in value, the gold is going to go up. So they�re actually building a hedge book.

- Source, Jim Rickards via Sprott Money:

http://www.sprottmoney.com/news/ask-the-expert-james-rickards-march-2014

Chinese Slow Down to Have a Major Impact on the World

One of the problems are �wealth management products� which the banks have set up as Ponzi schemes, offering high rates of return, but financing them not through investment but through the funds of new investors, Rickards said.

�How long could that go on. It will go on until something happens. There�s a failure, a fraud, something will cause a panic and everyone is going to run down and try to cash them in,� he said.

�They�ve set themselves up through wasted infrastructure investment, opaque financial product and ponzi financing � they�ve set themselves up for a collapse,� he added.

If China experiences a softer landing, it will have to be happy with growth of closer to four per cent, Rickards estimated. But if it faces a crash, or a bank default, growth may decline to two per cent.

�The world is not ready for this. China is 10 per cent of global GDP. If you take Chinese growth rates down from 7-7.5 per cent even to 4.5 per cent, let alone 2.5 per cent, which is possible, that�s going to have a major impact on the entire world,� he said.

- Source, CBC:

http://www.cbc.ca/news/business/slowing-chinese-gdp-growth-worries-investors-1.2559940

Financial War Games Being Conducted by the Pentagon

My methodology is the same which is I�m a complexity theorist and I use a number of techniques. Complexity theory, Bayesian Technique, causal inference, network science. I have a number of scientific and analytical tools that I use to understand markets. So like any tools, the longer you use them you can refine them and get better at it.

So I�m probably getting a little better at it. But I�m using the same basic tools. See, that hasn�t changed, but what has changed is that events are actually playing out the way we expected and predicted in Currency Wars. So the new book also has forward projections, so I hope leaders can take that to heart and feel some comfort that they�re looking at the future when they read the new book.

Just to give you a concrete example. In Currency Wars, my first book, the first two chapters talk about a financial war game conducted by the Pentagon at a top secret weapons laboratory outside of Washington D.C. and a lot of readers really enjoyed that chapter. But what we did in that war game, and I was one of the planners and facilitators and I got to participate in the war game.

With some friends, we cooked up a plan whereby Russia and China would pool their gold in a UK bank with a Swiss vault and issue a new currency backed by gold and say �Henceforth, any Russian energy exports or Chinese manufactured goods exports could only be paid for in the new currency. And if you wanted some, you had to deposit your gold and the bank would give you some of the currency.�

In other words, it was a way to turn your back on the dollar and dethrone the dollar as the global reserve currency. So that was something we did in 2009 and frankly, some of the other people there, some of the Harvard types, we were ridiculed and people said, �That�s ridiculous��

- Source, Sprott Money:

http://www.sprottmoney.com/news/ask-the-expert-james-rickards-march-2014