Renowned author, lawyer, economist and finance expert James “Jim” Rickards has forecast the US dollar will falter in the wake of a new financial crisis that may be closer to reality than people think.
The expert pointed out central banks still haven’t recovered from the previous crisis, while Russia and China have been buying up gold at unprecedented levels over the past decade.
Speaking with Small Caps, Mr Rickards said the global economy is still wading through the 2008 global financial crisis, with interest rates remaining low and central banks unable to boost their books to previous levels.
He added the world was completely “unprepared for the next crisis”, which will be far worse than the previous two.
Ever wondered when the next financial crisis will be? Possibly in just a couple of years with the “coming collapse of the international monetary system.”
According to Mr Rickards, the 1997-1998 Asian financial crisis could’ve brought the world to its knees if Wall Street banks hadn’t pulled together to bail out US hedge fund Long-Term Capital, which was about to collapse.
The crisis spread throughout the world and hit the US causing Dow Jones industrial average to record its biggest point fall in history by October 1997 – triggering a trading suspension.
However, disaster was averted after Long-Term Capital received a US$3.75 billion bail-out.
Had it not been bailed-out, a cascade of secondary bank bankruptcies would’ve ensued with numerous majors around the world including Deutsche Bank, UBS, and HSBC reporting they had either contributed to the bail-out or written off hundreds of millions in losses.
The following 2007-2008 global financial crisis was triggered by the US subprime mortgage market and excessive risk taking by banks with their lending practices.
Falling prey to the crisis was Lehman Brothers which went bankrupt and caused the Dow Jones to topple to its lowest in seven years.
In this bail-out, it was left to central banks to prevent financial Armageddon, with the US Federal Reserve taking its balance sheet from US$800 billion to over US$4.2 trillion.
The US Government took over flailing banks Fannie Mae and Freddie Mac, while others including Merrill Lynch, Wells Fargo, and Bank of America received hundreds of billions in US Government bail-outs.
What does the future look like in the next crisis?
Mr Rickards was quick to point out he doesn’t foresee a dystopian future or an end of the world scenario.
However, he said he did expect the crisis will begin with “enormous social unrest”.
Elaborating on this statement, Mr Rickards noted the veneer of civilisation is “paper thin”.
“We saw this in August 2005 with Hurricane Katrina in the US where the city of New Orleans was cut off and order broke down within days.”
“By the second day, people were becoming desperate for food and water. By the third day, violence had broken out. You have vigilantes, looters, and the national guard moving in.”
“Civilised behaviour only lasts about three days in the absence of reliable water, food, electricity and all the things we take for granted.”
In a situation where banks are closed and people can’t access their money, Mr Rickards said social disorder will break out “quite quickly”.
This will be followed by a breakdown of internal systems.
“It isn’t a barbarian invasion, but an internal collapse, because of too much bureaucracy, too much taxation, and complexity.”
He said the social disorder will be most acute in major metropolitan areas.
To survive this new system, Mr Rickards anticipates communities will shift to a semi-barter system where skills are traded and silver, or gold if you have it, can be used to buy food and other essentials.
Fall of the US dollar and rise of gold
As the crisis unfolds, the US dollar is expected to become worthless – with gold the primary valuable commodity.
Even then, Mr Rickards said, in his opinion, it was safer to own mostly physical bullion rather than gold futures, options, unallocated gold contracts and ETFs etc.
He pointed out there is not enough physical gold in warehouses to meet these paper claims.
Slightly different was owning shares in gold mining stocks. “There is gold there, but it doesn’t belong to you, it belongs to the miner.”
When looking at investing in gold mining companies and explorers, Mr Rickards said just as important as the geology, location, costs, grade and processing methods is the management team.
“Some gold companies have great management. They know exactly what they are doing and they have a track record of controlling costs etc.
“Other gold companies – some of them are frauds. Some may not be frauds but have poor management. So, obviously you don’t want to be involved in those.”
Gold looks to new future
Speaking with Small Caps on his prediction gold will exceed US$10,000/oz, Mr Rickards said people may look at him like he is crazy, but the forecast is based on “rigorous analysis”.
The number has been arrived at via several scenarios including returning the international monetary system to some form of gold standard.
He said there is definitely enough gold to underpin the global monetary system.
“It’s just a question of price.”
“At US$1,500/oz where it is today – there isn’t enough gold, the gold we have at US$1,500/oz, you would drastically have to reduce the money supply by over 50% to maintain that parity of gold to money.”
“But you could take the same amount of gold and reprice it at US$10,000/oz and now suddenly the same gold supports a much larger money supply.”
He pointed out China, the US, Japan and Europe account for more than 80% of global gross domestic product (GDP).
Combined, these countries’ money supply is about US$24 trillion.
“If you said we want 40% gold backing (and historically that’s a pretty high number), 40% of US$24 trillion is US$9.63 trillion.”
There is about 33,000t of gold in the world – not counting private ownership.
“If you take 33,000t and divide it by US$9.6 trillion, which is how much you have to back, the gold price comes to about US$10,000/oz.”
“So, when I say that number, it is not pulled out of thin air, it is actually the implied non deflationary price of gold to have any kind of gold standard,” he explained.
Another way of reaching the US$10,000/oz price is by looking at gold’s previous performance.
There have been two prior great bull markets for gold.
The first started in 1971 and continued through to 1980 where the gold price ran up more than 2,000% from about US$35/oz to around US$900/oz.
The collapse of the Western financial system will wipe out the standard of living of its population while ending ponzi schemes such as the stock exchange and the pension funds. The population will be hit so badly by a full array of bubbles and ponzi schemes that the migration engine will start to work in reverse accelerating itself due to ripple effects thus leading to the demise of the States.
This unseen situation for the States will develop itself in a cascade pattern with unprecedented and devastating effects for the economy. Jobs offshoring will surely end with many American Corporations relocating overseas thus becoming foreign Corporations!!!!We see a significant part of the American population migrating to Latin America and Ucraina while migration to Europe – suffering a similar illness – won’t be relevant. Nevertheless the death toll will be horrible. Take into account that the Soviet Union’s population was poorer than the Americans nowadays or even then. The ex-Soviets suffered during the following struggle in the 1990s with a significant death toll and the loss of national pride.
Might we say “Twice the pride, double the fall”? Nope. The American standard of living is one of the highest, far more than double of the Soviets while having added a services economy that will be gone along with the financial system. When pensioners see their retirement disappear in front of their eyes and there are no servicing jobs you can imagine what is going to happen next.
This video explains the steps one should take to prepare for the potential of an Economic Collapse
At least younger people can migrate. Never in human history were so many elders among the population. In past centuries people were lucky to get to their 30s or 40s. The American downfall is set to be far worse than the Soviet Union’s one. A confluence of crisis with a devastating result…
Jim Rickards explains the terrifying new financial system that has now been signed into law and drastic changes he sees coming to how money is handled. He discusses how the Federal Reserve will control your money. Jim Rickards and Robert Kiyosaki explain executive order 14067 on the rich dad poor dad show, and what it means for American’s and their money and the new control powers possibly coming to the federal reserve. Jim Rickards and Robert Kiyosaki join together on the rich dad poor dad radio show to explain executive order 14067 and what it means for the future of American’s money, the CBDC (Central Bank Digital Currency) and the American economy.
What are they going to do? They can’t raise interest rates. We saw what happened in the beginning of December when the equity markets started to unravel. So it will be a loss of confidence in the con game and the con game is soon coming to an end. That is when you are going to see panic on Wall Street and around the world.”
Supply chains remain compromised. We are still having material challenges in both producing and distributing real physical goods across oceans and continents.
This is such a serious threat to global prosperity that best-selling author James Rickards has made it the focus of his new book: SOLD OUT!: How Broken Supply Chains, Surging Inflation, and Political Instability Will Sink the Global Economy
For answers, we sit down now with James Rickards himself.
This video explain the steps one should take to prepare for the potential of an Economic Collapse
Hope for the best, but prepare for the worst.
This is a good motto to live by, despite how you think about things.
Individuals can still hope for the best (that things can and will eventually work out), but what good is your prosperity going to do if you don’t have anything to eat or a safe place to hang out for an extended period of time?
Why not prepare while you still can — when things are readily available and can still be purchased at cheap prices? The coming hyper-inflation will make any such purchases beforehand look very intelligent…
To prepare for the worst, you need a plan. Why are most people so against doing basic preparations that could be the difference on how they survive — or whether they survive?
History shows time and again that those who prepare always fare better than those who did not.
Having a plan and being determined to act on that plan will always be the best way to handle any
contingencies, should they occur.
After disaster strikes, your mind is going to be racing around like a car on a race track. Preplanning
and having a written set of measures to take will make someone’s life go much smoother when the SHTF.
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SOURCE : https://www.prepperfortress.com/jim-rickards-warning-money-will-disappear-from-your-bank-accounts-economic-collapse-is-predicted-in-2023-us-dollar-crash-gold-prices-to-10k-massive-78-u-s-depopulation/
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