Thursday, July 29, 2021

Jim Rickards: Your $1,000 Deposit Is Only Worth $975

CBCDs use the same underlying distributed ledger technology that cryptocurrencies use. But unlike cryptos, CBCDs aren’t new currencies. They’ll still be dollars, euros, yen or yuan, just as they are today. But these currencies will only be digital; there won’t be any paper money or cash allowed. Only the format and payment channels will change.

Balances can be held in digital wallets or digital vaults without the use of traditional banks. A blockchain is not needed; the CBDC ledger can be maintained in encrypted form by the central bank itself without the need for bank accounts or money market funds.

In the future, customers will discover that paper money deposits will be accepted at a discount to face value when depositing to the new digital system. A deposit of $1,000 may be credited as $975.00 when put into the digital system, if it was after an arbitrary cut-off date, for example.

A system of such discounts (really taxes or penalties) was actually suggested by a prominent economist at a Fed symposium a few years ago. That economist was later nominated for a seat on the Fed board of governors.

As always, the new digital banking system will be promoted on the basis of convenience, ease of use and lower costs. Who needs bank accounts, checks, account statements, deposit slips, and the other clunky features of a banking relationship when you can go completely digital?

In reality, customers will discover that their digital assets are at risk for seizure or taxation not only for criminal reasons (that’s true today) but for political, medical or social reasons.

Could China’s Social Credit System Come to the U.S.?

Such a “social credit” system is being implemented in China. China already uses facial recognition software, mobile phone GPS tracking and the purchase of plane or train tickets to track their citizens. This surveillance can be used to detect anti-state activities and to arrest dissidents, or anyone who doesn’t strictly follow government orders.

Elements of China’s social credit system could end up being used here in the U.S. It might not be exactly the same, but it would nonetheless punish those who don’t comply with government decrees.

“Hmmm, the official record says you haven’t been vaccinated. That’s unfortunate. We’re sorry, but…”

An all-digital cash system could be used to impose fees on those who cannot prove they have received a COVID vaccine or some other medicine. This would amount to universal forced vaccination, although it would surely be imposed under some other more benign-sounding name.

If cash is no longer permitted, savers will be forced into buying land, gold, silver, or other tried-and-true ways of preserving wealth without exposing it to government pirates. The Chime account freezes are the shape of things to come.

Meanwhile, the big banks are also happy to kick you out of the banking system.

- Source, The Daily Reckoning via James Rickards

Monday, July 26, 2021

James Rickards: Do You Have This Smartphone App?

The stock market bounced back today after yesterday’s major losses. “Buy the dip” is alive and well.

But today, I want to revisit a topic I haven’t addressed much lately due to the pandemic, the inflation debate, and many other topics that have taken center stage.

I’m talking about the war on cash.

I’ve warned for a long time that governments are forcing citizens into digital forms of money so that they can more easily freeze accounts, seize assets and impose negative interest rates. As long as cash is an option, you can take your cash outside the system and avoid digital freezes.

Cash prevents central banks from imposing negative interest rates because if they did, people would withdraw their cash from the banking system.

If they stuff their cash in a mattress, they don’t earn anything on it; that’s true. But at least they’re not losing anything on it.

Once all money is digital, you won’t have the option of withdrawing your cash and avoiding negative rates. You will be trapped in a digital pen with no way out.

The movement toward a cash-free society is gathering momentum, but it’s not entirely here yet.

Access Denied!

That’s not stopping some financial institutions from taking your money anyway. For example, a banking app called Chime has been seizing customer accounts and not allowing them to log on or access their funds.

Chime has 12 million customers. So far, 970 customer complaints have been filed, of which 197 specifically mention “closed account” as the cause of the complaint. Many of the remaining 723 complaints involve closed accounts, although the regulatory records do not categorize them that way.

In some cases of individual retail customers, the amount frozen was $10,000 or more. The complaints are being resolved slowly and inconsistently. In the meantime, the customers’ funds are blocked.

The only surprise in this story is that these kinds of account blocks have not happened sooner or on a larger scale. Still, this is the tip of the spear; far more account freezes of this kind are coming.

Chime is a retail application used mainly on smartphones. But, central banks are working from the top down to create central bank digital currencies (CBDCs) that will enable bank regulators to do the same thing.

- Source, James Rickards

Friday, July 23, 2021

Friday, July 9, 2021

Jim Rickards: Central Banks Just Created a Gold Buying Opportunity

Jim Rickards sits down with Shae Russell to discuss inflation, interest rates, and why you need to have some gold in your investment portfolio. 

Jim Rickards is an American lawyer, economist, investment banker, speaker, media commentator, and New York Times bestselling author on matters of finance and precious metals. 

He was the principal negotiator of the rescue of Long-Term Capital Management by the US Federal Reserve in 1998. 

His clients include institutional investors and government directorates. 

He is the author of Currency Wars: The Making of the Next Global Crisis, The New Case for Gold and “The New Great Depression, Winners and Losers in Post-Pandemic World”.

- Source, ABC Bullion

Wednesday, June 30, 2021

Jim Rickards: The Shocking Truth About the Future of the Economy

Listen to Jim Rickard’s predictions about the economy and markets. 

The biggest economic disruptor in over 70 years the world has ever seen that will make central banks a laughing stock – and how to capitalize on this unique window of opportunity.

In this recording, James Rickards had to address the elephant in the room: “Where is the stock market crash you predicted?” 

His answer will shock you. 

Plus, you’ll discover what he had to say about cryptocurrencies… his comments will have you shaking in your boots…

- Source, Goko Group

Thursday, June 17, 2021

Jim Rickards: A Collapse Is Coming

Jim Rickards ( sometimes referred to as James Rickards ) is a popular financial commentator, often known for his interesting contrarian point of view on current market and global economic conditions. 

Jim Rickards is an American lawyer, speaker, media commentator, and author on matters of finance and precious metals such as gold and silver. He is the author of Currency Wars: The Making of the Next Global Crisis (2011) and five other books.

Sunday, June 13, 2021

This is How it Will Go: The New Great Depression Explained, with Jim Rickards

The end of the pandemic draws ever closer. Would you like to know what the“new normal” will look like? If you do, Jim Rickards is the man you should be listening to.

Thursday, June 10, 2021

James Rickards: The Coming After Shock and the Dangers of Junk Science

But governments were not the only culprits in giving bad advice and implementing ruinous policies during the pandemic. Scientists were just as negligent. In fact, governments used “the science,” however flawed the science turned out to be, to justify their draconian policies.

Often, government and scientists worked hand-in-hand, with science offering flawed projections and governments taking the bad advice and using it to force destructive policies on the public.

There are many examples of this. Perhaps none are worse than the Imperial College-London (ICL) models.

Any model is only as good as the assumptions behind it. Real scientists know that no model is perfect. Good scientists continually update assumptions to compensate for output that deviates from observations.

The best scientists will discard a defective model and start over to produce a better one. These best practices are often ignored by scientists, who are more interested in attention, power or research grants.

That seems to have been the case with regard to the ICL pandemic models rolled out in the early stages of the pandemic and used by governments all over the world to guide policy.

The ICL chief epidemiological modeler, physicist Neil Ferguson, produced forecasts that said the U.S. would suffer 2.2 million deaths; the actual number is 581,056 as of today.

ICL’s model said the UK would suffer 500,000 deaths; that actual number is 127,609. ICL’s estimates for deaths in Taiwan were overstated by 1,798,000%.

Egregious overstatements also occurred with regard to Sweden, South Korea, and Japan. If that were the whole story, it would amount to nothing more than a discredited scientist and his institution. But, ICL’s badly flawed projections had momentous real-world consequences.

Governments around the world grabbed onto the ICL nightmare scenarios to impose lockdowns that had even more nightmarish consequences. This was a case of bad science leading to even worse public policy.

The evidence is clear today that lockdowns, masks and social distancing don’t do any good. Our own Centers for Disease Control (CDC) grossly overstated the risk of outdoor transmission of the virus.

The only policy recommendations that made sense were washing your hands and staying home if you had symptoms. There were no lockdowns during the Hong Kong flu of 1968 or the Asian flu of 1957.

Let’s hope we don’t suffer another pandemic of the kind we’ve just been through. If we do, let’s hope cooler heads prevail and don’t destroy the economy again for no good reason.

The Coming Aftershock

But despite the happy talk coming out of Washington and Wall Street, the full economic effect of lockdowns hasn’t hit yet.

In response to the pandemic, the Fed printed over $4 trillion of new base money. Congress approved $3 trillion of new deficit spending under President Trump and $1.9 trillion under President Biden, with another $4 trillion of deficit spending on the way later this year.

This massive monetary and fiscal response to the pandemic could be called the visible part of the bailout. There was also an invisible part.

The invisible bailout did not consist of direct handouts or checks; it consisted of forbearance and grace periods on loan and lease obligations. Student loan borrowers were told they did not have to pay interest on their loans. Tenants were told they did not have to pay rent. The rent moratorium was backed up by an eviction moratorium. If tenants did not pay rent, landlords were powerless to evict the tenants.

Meanwhile, the landlords had to keep paying mortgages and property taxes, which put 100% of the economic burden of the pandemic adjustment on the landlords’ shoulders. What was the statutory or legal authority for these orders?

Some were justified by explicit statutes, but many economic relief orders were issued by the CDC under a broad interpretation of its powers during a public health crisis. Now, litigation challenging these orders is making its way through the courts.

A judge in the U.S. District Court has just ruled that the CDC eviction moratorium is an illegal use of CDC’s public health powers. This is the first of many moratoria and grace periods that are set to expire.

The full economic impact of the pandemic has never been felt, partly because so much debt and rent were held in abeyance. As those back payments become due, a new way of defaults will ensue. But the media isn’t paying much attention to that.

The economic damage lockdowns have caused will not be undone in weeks or months. Much of the lost wealth is permanent. It will be inter-generational.

Growth will return, but it will be weak. Investors should go into the post-pandemic world with clear vision.

The government was wrong in the policy response, and they’re wrong again in their rosy scenario forecasts.

- Source, Jim Rickards

Sunday, June 6, 2021

James Rickards: The Greatest Policy Blunder Ever

Since the outbreak of the pandemic, the “respectable” media has pushed the theory that the virus came from a wet market in Wuhan, China.

Any talk that it might have come from a bioweapons lab in Wuhan was dismissed as a conspiracy theory.

But the Bulletin of Atomic Scientists, not exactly a fringe organization, published a paper recently acknowledging the possibility that the virus escaped from a lab.

It didn’t say definitively that the virus escaped from a lab, but it maintained that it’s a legitimate possibility, not just some baseless conspiracy theory.

The origins of the virus are still being debated, but here’s what we do know:

The outbreak of the COVID-19 pandemic began in November 2019 in Wuhan, China. From there, it spread west to Milan, Italy and east to Seattle, Washington.

The virus mutated in Italy, then spread to New York, where it hit the tri-state area (NY, NJ, CT) viciously in March-April 2020. Eventually, it spread to the entire world with severe outbreaks in Melbourne, Madrid, London and Lima.

Over 3.2 million around the world have died from COVID. Even now, the virus is out of control in Brazil and India.

Although lower caseloads and much lower fatality rates are emerging in the U.S. and elsewhere, the pandemic is far from over.

The progress is due to both herd immunity from infected survivors with antibodies and the impact of experimental gene modification treatments from Moderna, Pfizer, Astra-Zeneca, and others.

The end is in sight, if not quite here. What have we learned?

Lockdowns Didn’t Work

Obviously, public health authorities around the world were completely unprepared for a health emergency of this magnitude. There were severe shortages of personal protective gear, masks, oxygen, testing kits and trained staff.

China was grossly negligent to the point of criminality in covering up the outbreak, not allowing foreign experts to research the outbreak or possible cures on-site, and blaming others for their negligence. Still, the list of government blunders doesn’t stop there.

The lockdown response used by the U.S. and other countries did no good medically and was immensely destructive from an economic perspective.

Scientific evidence that lockdowns don’t work to contain a virus was available in 2006. The anti-lockdown view was widely shared long before that.

Evidence from the 50 states in the U.S. (which had varied lockdown policies) and 30 countries around the world shows that there is no correlation between lockdown policies and virus spread. Orders for extreme, moderate, or no lockdowns all resulted in similar caseloads and fatalities.

Lockdowns had no material impact on the course of the disease.

But, lockdowns did destroy businesses and jobs. Large parts of the economy were simply destroyed and will never recover – they’re gone. Lockdowns also increased suicides, drug and alcohol abuse as well as domestic abuse.

The CDC, White House, state governors and other officials adopted lockdown policies without knowing if they worked (they don’t) and without considering the costs, which resulted in trillions of dollars of lost wealth and output.

Friday, June 4, 2021

Jim Rickards Drops Truth Bombs Behind LBMA Silver Inventory Mishap

Bestselling author Jim Rickards speaks with our Daniela Cambone about the recent stories surrounding silver inventories and the London Bullion Association. 

The LBMA overstated their silver holdings in April, an error which they later rectified. Rickards gives his thoughts on the matter and other theories circulating in the gold and silver market.

Wednesday, June 2, 2021

Inflation: The Biggest Financial Story Today

Economists had expected over one million jobs to be created in April. The actual number was 266,000, and March’s numbers were revised lower.

Do last month’s woeful unemployment numbers undercut the mainstream theory that falling unemployment will lead to inflation?

The biggest financial story today is fear of inflation. Inflation has spooked the bond market and raised expectations that the Fed will soon have to raise interest rates to fight inflation.

Any increase in rates will also hurt stocks because stocks and bonds compete for investor dollars. If yields on bonds go up, prices on stocks will go down.

Growth stocks, like many leading tech stocks, are especially vulnerable to inflation because much of their valuation comes from future earnings. As inflation rises, the present value of their futures earnings can fall dramatically.

There’s no doubt that inflation expectations have been rising. This is especially true after a spike in the reported CPI core and non-core data on May 12. This inflation spike roiled the bond markets.

From the low yield of 0.508% on August 4, 2020, the 10-year note yield peaked at 1.745% on March 31, 2021, and hit a recent peak of 1.704% on May 13 (intraday) on the CPI news before backing down a bit to the current level (1.640%).

The dollar price of gold moved down in lockstep as the yield on the 10-year note rose. Still, there’s less than meets the eye in the recent increase in rates.


As recently as November 4, 2018, the yield on the 10-year note was 3.238%. On November 4, 2019, the yield was 1.942%. The fact is today’s “high yields” are actually quite low and are much lower than the two interim peaks of the past three years.

In fact, real inflation is as elusive as it’s been for over a decade.

The surge in CPI reported on May 12 was driven predominately by base effects and energy prices. The Fed isn’t right often, but in this case, I believe they got it right. Year-over-year price gains off the low 2020 base are to be expected.

April 2020 marked one of the steepest output declines in U.S. history. Consumer prices plunged. In April 2021, many of those prices recovered, especially in travel, airfares, hotels, restaurants and other services that were almost completely shut down in 2020.

They are also transitory because the 2020 output collapse was transitory. As we move into the third quarter of 2021, the new base will reflect the strong growth in Q3 2020. That’s a much steeper hill to climb for inflation metrics.

Inflation will come down sharply, and the ten-year note yield will come down with it. Gold will rally, and stocks will breathe a sigh of relief.

This does not mean all is well in the stock market. Bubble dynamics persist, although it’s impossible to know exactly when a bubble will burst.

But, at least in the short run, inflation fears are a false alarm. Inflation will arrive eventually, maybe in 2022 or later, but for now, the disinflationary dynamic is fully intact.

Don’t believe the hype.

- Source, James Rickards