- Source, Jim Rickards via Proactive Investor
Showing posts with label jim rickards. Show all posts
Showing posts with label jim rickards. Show all posts
Greenspan Has Traditional Been Gold Positive
If you look at Greenspan�s record, before he became Chairman of the Federal Reserve he said many positive things about gold. Since leaving the chairmanship, he�s said positive things about gold on numerous occasions � for instance at the Council on Foreign Relations this week. He has a history of looking on gold favorably but during the entire 20 years that he was Chairman of the Federal Reserve, he never had a good thing to say about gold. I think it says more about the constraints on central bankers; in other words, central bankers can�t tell the truth or what they really think because the market impact would be too great. I think that Greenspan is reverting to saying things today that he was saying 40 years ago but could not say when he was Chairman of the Fed.
The Fed Basically Still Uses LTCM�s Financial Models
The models that LTCM was using the 1990�s were the same models that Wall Street was still using in the early 2000�s and, for that matter, the same models being used today. They are called �dynamic stochastic general equilibrium models� and also risk management models like �value at risk� or VaR models. They were the ones that we used in the 90�s and have continued to use for the last 16 years. They�re still being used now. They do not correspond with how markets actually work or to actual human behavior. They have failed in the past and they will fail again. If you have the wrong model, you will get the wrong policy and you will be negatively surprised by results every single time.
According to Greenspan, the Fed expanded its balance sheet not to boost the economy or to keep inflation moving higher. It was because the Federal government had such large expenditures that it would have �crowded out� private borrowers if the Fed had not increased the size of its balance sheet. Do you think that�s true? Is the Fed directing the economy? Or just reacting to the capital demands of the US government?
I think both things are true. I think Greenspan is right that we are seeing monetization of debt. This is what Frederick Mishkin, the former member of the Federal Reserve board of governors refers to as �fiscal dominance.� Yes, I think Greenspan is right about that but it�s also true that they�re trying to fulfill the dual mandate of price stability and creating jobs. As between the two, the Fed is willing to tolerate higher inflation if they can create more jobs. They don�t talk about �fiscal dominance� and they don�t explicitly say they�re monetizing the debt. In fact they deny that they�re monetizing the debts.
Greenspan�s right. When the credit demands of the Federal government are that great, you either have to accommodate the demands or somebody is going to be crowded out. I think that the result would be deflationary. Governments cannot tolerate deflation. So rather than choose between stimulus from monetary ease and monetization of debt, I think that they are doing both.
According to Greenspan, the Fed expanded its balance sheet not to boost the economy or to keep inflation moving higher. It was because the Federal government had such large expenditures that it would have �crowded out� private borrowers if the Fed had not increased the size of its balance sheet. Do you think that�s true? Is the Fed directing the economy? Or just reacting to the capital demands of the US government?
I think both things are true. I think Greenspan is right that we are seeing monetization of debt. This is what Frederick Mishkin, the former member of the Federal Reserve board of governors refers to as �fiscal dominance.� Yes, I think Greenspan is right about that but it�s also true that they�re trying to fulfill the dual mandate of price stability and creating jobs. As between the two, the Fed is willing to tolerate higher inflation if they can create more jobs. They don�t talk about �fiscal dominance� and they don�t explicitly say they�re monetizing the debt. In fact they deny that they�re monetizing the debts.
Greenspan�s right. When the credit demands of the Federal government are that great, you either have to accommodate the demands or somebody is going to be crowded out. I think that the result would be deflationary. Governments cannot tolerate deflation. So rather than choose between stimulus from monetary ease and monetization of debt, I think that they are doing both.
- Source Jim Rickards, via Proactive Investor
Financial War and Currency Wars Are Very Different
I have discussed financial war, which is different from currency war. Currency war is an economic policy countries use to fight deflation and encourage inflation by cheapening the currency and creating inflation in the form of higher import prices. It�s a way of creating monetary easing. It�s an age-old economic policy, used most famously in the late 1920�s and 1930�s in what became known as �beggar they neighbor.� Countries were stealing growth from each other by debasing their currencies, trying to import inflation and improve their trade balances by causing cheaper exports to foreign buyers and more expensive imports for domestic buyers. That combination was seen to bolster growth.
Financial war is different. Financial war involves countries that are traditional rivals or even enemies, for instance the US, Russia, and China, with competing interests everywhere from Eastern Europe to the South China Sea. Countries have fought wars in the past using traditional kinetic methods � armies, navies, air forces, missiles, submarines and so forth. We now live in an age where, thinking about warfare, you have to look at asymmetric forms of warfare � not just traditional forms � like chemical, biological, radiological weapons, guerilla warfare, terrorism, and financial warfare. So the scenario I was discussing that involves China buying gold and selling the dollar was not a currency war; it was a financial war. There you are trying to destroy the economy of your opponent, which is a very different situation.
Financial war is different. Financial war involves countries that are traditional rivals or even enemies, for instance the US, Russia, and China, with competing interests everywhere from Eastern Europe to the South China Sea. Countries have fought wars in the past using traditional kinetic methods � armies, navies, air forces, missiles, submarines and so forth. We now live in an age where, thinking about warfare, you have to look at asymmetric forms of warfare � not just traditional forms � like chemical, biological, radiological weapons, guerilla warfare, terrorism, and financial warfare. So the scenario I was discussing that involves China buying gold and selling the dollar was not a currency war; it was a financial war. There you are trying to destroy the economy of your opponent, which is a very different situation.
- Source, Jim Rickards via Proactive Investor
Why Lower Gas Prices Are NOT �Bullish Indicators�
I don�t think the data is bullish at all.Lower gas prices put more money in consumers� pockets.
But there�s an alternative to spending� Which is saving or reducing debt � which is the same thing.
I don�t consider these bullish indicators. They tell me an economy is running out of steam.
An economy is nothing more than two things: How many people are working and how productive are they?
Labor force participation is going down � which means fewer people are working. And productivity is also going down. Real wages are stagnant. 50 million people are on food stamps. 7 million people have part-time jobs who wish they had full-time jobs.
These data points are not bullish indicators.
We�re in a global depression.
There�s a slow down in Japan, China, Europe and the U.S. � the whole world is in a global depression.
There�s enough fights to go around, but in a fight between the ECB (European Central Bank) and Germany, Germany wins.
The ECB is only doing $2.5 billion worth of asset buying, while the FED has been doing almost $1 trillion a year. So the ECB is going through the motions but they�re not doing anything like QE. They�re not buying soveirgn debt. They�re buying some asset-backed securities, but there aren�t even enough of those to have much of an impact.
The ECB�s Mario Draghi is the best Central Banker in the world. He understands that Central Banks are essentially impotent.
When you�re impotent you have to talk a good game � so Draghi says little and does less.
The U.S. FED is the opposite. They don�t understand how impotent they.
China is the biggest credit bubble in the world.
The U.S. has created a bubble in housing and stocks with easy money, but there�s no bigger bubble in the world than China. They have a greater capacity to keep it going because their investors have fewer alternatives.
But there�s an alternative to spending� Which is saving or reducing debt � which is the same thing.
I don�t consider these bullish indicators. They tell me an economy is running out of steam.
An economy is nothing more than two things: How many people are working and how productive are they?
Labor force participation is going down � which means fewer people are working. And productivity is also going down. Real wages are stagnant. 50 million people are on food stamps. 7 million people have part-time jobs who wish they had full-time jobs.
These data points are not bullish indicators.
We�re in a global depression.
There�s a slow down in Japan, China, Europe and the U.S. � the whole world is in a global depression.
There�s enough fights to go around, but in a fight between the ECB (European Central Bank) and Germany, Germany wins.
The ECB is only doing $2.5 billion worth of asset buying, while the FED has been doing almost $1 trillion a year. So the ECB is going through the motions but they�re not doing anything like QE. They�re not buying soveirgn debt. They�re buying some asset-backed securities, but there aren�t even enough of those to have much of an impact.
The ECB�s Mario Draghi is the best Central Banker in the world. He understands that Central Banks are essentially impotent.
When you�re impotent you have to talk a good game � so Draghi says little and does less.
The U.S. FED is the opposite. They don�t understand how impotent they.
China is the biggest credit bubble in the world.
The U.S. has created a bubble in housing and stocks with easy money, but there�s no bigger bubble in the world than China. They have a greater capacity to keep it going because their investors have fewer alternatives.
Jim Rickards: Obama�s Abandoning the Saudis for Iran and Dooming the Petrodollar
By Alex Daley, Chief Technology Investment Strategist
This interview just scratches the surface of the topics Jim covered in his speech at the most recent Casey Research Summit in San Antonio. You can grab a complete recording of that speech, and all 25 of the others, in the Summit Audio Collection, which is on sale with a juicy preorder discount for just a few more days.
Alex Daley
Chief Technology Investment Strategist
Casey Research
CIA Expert Warns Of A Disaster That Would Make The Great Depression Seem Harmless
The Misery Index combines the true inflation rate with the true unemployment rate.
Why don�t you hear about this in the mainstream news? It is because the Federal Reserve has repeatedly changed how the Misery Index is calculated.
Rickards believes that the way the Misery Index is being calculated is being used to hide the true state of the economy.
He said:
�Today you rarely hear the government talk about the Misery Index with the public. The reason is they may not want you to know the truth. And the truth is, the Misery Index has reached more dangerous levels than we saw prior to the Great Depression. This is a signal of a complex system that�s about to collapse.�
Rickards specifically pinpointed how he thought the crash will come about:
�I expect the first phase will appear as a nearly instantaneous 70% stock market crash. From the outside, nobody will see it coming. Once it becomes clear that it�s not a flash crash � it�s a systemic meltdown in the economy itself, that�s when the gravity of the situation will sink in. And there will be no digging out from it. $100 trillion is a conservative estimate for the damage. A lot can happen over 25-years as our country struggles to recover from this.�
There you have it. A CIA economic expert reveals how he thinks a 25 year depression is about to hit America. Jim Rickards can�t be dismissed as a crackpot. So what do you think will happen to the country�s economic situation over the next 25 years?
- Source, WJ
The World is in a Depression and There is No Getting Out
We are in a depression. This is a global depression. It started in 2007 and it is going to continue indefinitely. Depressions are structural, monetary solutions are cyclical: you cannot solve a structural problem with a cyclical remedy - monetary policy will not work. What it could do eventually is cause inflation. So far people say: �Where is the inflation?...We printed trillions of dollars, there is no inflation�. That is because we would have had deflation, extreme deflation, but for the money printing. It did produce inflation to the extent that it offset the deflation� The world is in depression, we are not getting out of it.
- Source, Jim Rickards via RT
The Currency War Goes On
I think this is one long �currency war�. We are now getting into more of a battle, more of a confrontation. The US dollar is the only strong currency that cannot last: the US cannot have a strong currency, because we are desperate for inflation. We have done all thequantitative easing, we have raised the zero, we have issued further guidance, we have done a twist, and we have done three versions of QE. We have done everything possible. The only thing left is to try to cheapen the currency and in fact the dollar is getting stronger. The Fed might not have minded a stronger dollar. Six months ago it did look like the economy was getting stronger. We saw strong second quarter GDP. So it was a little bit of a good day. And Europe was desperate for the help: they were stepping into recession. Japan`s economy collapsed in the second quarter. So you could see the feds saying �ok�we will have a stronger dollar and give Europe and Japan a break�. But that is over. Now the US is becoming a loser and we are the ones who need to take a break. The only way to get it is a cheaper dollar. I would look for that in the months ahead.
- Source, Jim Rickards via Russia Today
Jim Rickards on China�s Slowdown & Marshall Auerback on Independence Movements
China�s central bank is injecting a combined 500 billion yuan into the country�s top banks � a move signaling the deepest concerns yet of an economic slowdown in China. Erin weighs in.
Then, Erin sits down with Jim Rickards, economist and author of �Currency Wars: The Making of the Next Global Crisis,� to discuss Europe and China. After the break, Erin speaks with Marshall Auerback, director of institutional partnerships of the Institute for New Economic Thinking, to continue the discussion on Europe.
And in The Big Deal, Erin and Edward Harrison go over the most recent iPhone 6 reviews and break down some of the new features.
- Source, Russia Today
The Coming Stock Market Crash and The Death of Money
Max Keiser and Jim Rickards - Currency Wars and the Death of Money
Catastrophic Outcomes May Come Faster Than Expected
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.
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