Central Banks Have to Avoid Deflation at All Costs

James Rickards, an advisor to the White House and the Pentagon, believes it’s the start of a new currency war.

'Central banks have to avoid deflation at all costs and that’s really what they’re worried about. They’re worried about it in Europe, the U.K., the U.S. and all over the world'- James Rickards

“We’re not always in a currency war, but when they start they can go on for a very long period of time. They can go on for five or 10 or 15 years. They’re not over quickly. The reason they’re not over quickly is that there is no natural resolution,” he said in a recent interview with CBC’s Lang and O’Leary Exchange.

“As soon as one country, particularly the U.S. which started the global currency wars in 2010, tries to cheapen its currency, then other countries retaliate. Some of them cheapen a currency by cutting rates, but others can always put up import duties, capital controls and other techniques they can use to fight the currency war.”

The ECB cut its main refinancing rate to 0.25 per cent, held the deposit rate it pays on bank deposits at 0.0 per cent and cut its marginal lending facility — or emergency borrowing rate — by 0.25 per cent to 0.75 per cent.

The Eurozone economies remain fragile, barely growing after two years of recession. But the real fear is deflation, Rickards said, because it would leave the debt-to-GDP ratio of these countries in a danger zone.

- Source, CBC:

http://www.cbc.ca/news/business/currency-war-feared-after-eu-cuts-rates-1.2423595

Currency Wars Begin Again

James Rickards appears on the Lang and O'Leary Exchange where he discusses the new attempts to devalue currencies. Are currency wars starting again?

- Source, CBC:

http://www.cbc.ca/player/News/TV+Shows/Lang+%26+O'Leary+Exchange/ID/2417288902/

Economic Crisis 2013 - 2014

Jim Rickards discusses the international monetary system and it's upcoming collapse. Jim Rickards tells listeners what this is going to look like.

Inflation Eventually Outruns the Gains

This kind of inflationary environment is good for stocks, but in the long way it’s terrible for stocks. Inflation destroys capital formation. The stock market is all about capital formation, earning profits, expanding your company, coming up with new companies, capital formation, capital expansion, growth in earnings, growth in multiples.
That’s what the stock market is about. Now initially, you have what’s called money illusions. So, a lot of money floods into the system, it chases assets, it could be housing, it could be a lot of things.
Stocks are part of it. No doubt the stocks have benefited the last four years from the Fed monetary ease. Well, if you have more ease, the stock market should go higher. Initially, but eventually the inflation outruns the gains and it turns out the gains are illusory.
It’s not real and then the capital formation dries up, taxation goes up and the stock market crashes. It’s exactly what happened in the 1970s. We had a very severe, serious stock market crash in 1974 and then the stock market never achieved those highs again until sometime in the mid-1980s. So you had a very long period of no growth in the stocks after a severe crash, and we’ll have something similar.

- Jim Rickards via Future Money Trends:

http://futuremoneytrends.com/blog/?p=10062

Hyper Inflationary Response At Some Point

I just think that you will have this hyper-inflationary response at some point. Not right away, because it’s behavioral. The Fed needs to change behavior first. But when they change it, they may find it spins out of control, as it did in the ’70s.

At that point the price of gold will soar or, if we go into a depression (I mean, we’re in a depression, but if we go into a more severe deflationary mode), the Fed may raise the price of gold as a way to create inflation. Either way, gold goes up in the end.

- Jim Rickards via Future Money Trends:

http://futuremoneytrends.com/blog/?p=10062

The US is in the Same Position as Japan Was

First of all I’d say it started in 2007. 2008 was the panic and it was an emergency liquidity response to that, but the roots of this really go back to 2007. That’s when the sub-prime crisis erupted, that’s when the Bear Stearns hedge funds melted down. That’s when the Fed first started in to cut the discount rate and respond a little bit, even though they were way behind the curve and didn’t see it coming.

So the depression started in 2007. It could be over tomorrow if we had the right policies, but we don’t have the right policies. It will continue indefinitely.

We look like Japan. Japan has said, people talk about the lost decade, we’re in the third lost decade; it’s been over 20 years of depression, depressionary symptoms or depressionary economy in Japan.

The U.S. is now in the same mode, it’s kind of ironic because for decades Bernanke and other scholars criticized the Japanese, saying, “What’s the matter with you guys, don’t you know how to run monetary policy, don’t you know how to get out of a depression?” Then they said, you know, in 2007, “We are going to avoid the mistakes of Japan.” But we’ve made every single mistake that Japan made.

We should have shut down banks in 2008. We didn’t. We propped them up instead of shutting them down, which is exactly what the Japanese did. They locked the problems into place and financed them instead of writing them off, shutting them down, putting backers in jail, closing the banks, breaking the mob, stripping out the bad assets, putting them under a rock in trust for the American people, sell them over 20 years or however long it takes. Then re-IPO the clean banks.

- Jim Rickards via Future Money Trends:

http://futuremoneytrends.com/blog/?p=10062

Alternative Investment Global Conference Featuring Jim Rickards

(Please Click Image to View Video)

The old truisms about investing in stocks and bonds refer back to an economic reality that’s gone, and likely gone forever. So what do we do now? Should we own stocks at all? Where is the bond market headed? What about inflation and the devaluation of the dollar?

- Source, Alternative Investment Global Conference:

http://camaplan.com/alternative-investment-global-conference/

U.S. Depositors Are Worse Off Than Cypriots

The Daily Ticker interviews Jim Rickards where he talks about the safety of US bank deposits, Cyprus and more.

- Source, Yahoo Finance:

http://screen.yahoo.com/u-depositors-worse-off-cypriots-163832312.html

Jim Rickards - Bernanke and the FED

Five years ago, Federal Reserve Chairman Ben Bernanke warned members of Congress that without an emergency bailout for Wall Street "we may not have an economy on Monday." Lehman Brothers collapsed, Fannie Mae and Freddie Mac were placed into conservatorship, and AIG was seized by the federal government. In providing nearly $1 trillion to Wall Street, President George W. Bush said that he "abandoned free market principles to save the free market system." Did we save the free market system or merely allow the Federal Reserve to forestall yet another economic catastrophe? Author and managing director of Tangent Capital James G. Rickards has claimed that the Federal Reserve is "playing with a nuclear reactor." As the Bernanke-era draws to a close, Rickards will discuss the Fed chairman's legacy, the inherent vulnerabilities facing the U.S. dollar, and the challenges ahead for the new occupant at the Eccles Building.

- Source:

http://www.charleskochinstitute.org/

They May Have to Go to the Gold Standard in the Next Crisis

There’s nothing the Fed can do to solve the depression or to change the structural problems in the U.S. economy. I mean, they’re assuming, they’re saying, “We’re gonna print money until unemployment gets to 6 and a half percent.” Who says there’s any relationship between printing money and unemployment? There’s no necessary relationship there. One’s monetary, one’s structural, so you need to do other things. So therefore they’re gonna keep going, but they think they’re right.

I may be a critic and I may be able to point out why they’re wrong, why their models are wrong and why this says “No Good Exit,” but they think they’re right and they’re gonna keep going and kinda drive the bus over the cliff.

Now, at that point, when the crisis emerges, they may have to go to a gold standard. They don’t want to, but they may have to, to restore confidence. But I’m very doubtful that they’ll do it as a matter of choice and say, “Look, we need to do this, let’s just do it now, let’s be honest, let’s be transparent, let’s be thoughtful.” You could do that but I think that’s very unlikely.

- Jim Rickards via a recent Future Money Trends interview, read more here:

http://futuremoneytrends.com/blog/?p=10062

Depressions Are Structural Problems

People look at the system and they say that it really is not sustainable, it really is based on confidence, but we’re in the process of eroding confidence. There is no exit from quantitative easing. We should say there’s no good exit. You can back away from it, but then you’ll implode the economy in a deflationary crash.

Or you can keep going and eventually cause a loss of confidence in the dollar and then have a hyper-inflationary crash, so you got a crash either way. One looks like the Great Depression, one looks like the late ’70s but worse. Those are the only two paths, but there’s no other path. There’s no way we can just sort of taper, reduce it, finesse it, try to get growth on a self-sustaining path.

The reason for that is we’re in a depression. And depressions are structural problems; they require structural solutions. You cannot use a liquidity solution for a structural problem. You need a structural solution.

- Jim Rickards via a recent Future Money Trends interview:

http://futuremoneytrends.com/blog/?p=10062

Jim Rickards - Currency War's Update

Jim Rickards is interviewed by Future Money Trends. Jim gives a status update on the ongoing currency war's and talks gold, silver, bitcoin and much more. Enjoy the interview!

- Source, Future Money Trends:

http://futuremoneytrends.com/blog/?p=10062