3 Minute Gold News
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A 3 minute synopsis of the interview with Jim Rickards, author of Currency Wars: The Making of the Next Global Crisis and the forthcoming book The Death of Money: The Coming Collapse of the International Monetary System, by Peter Schiff of The Peter Schiff Show.
The Death of Money
The Peter Schiff Show
Interview with Jim Rickards
March 25, 2014
2013 has been a tough year for gold. We all know it’s been a very tough environment for miners, but there’s been some good things happening lately.
As far as the recent Goldman Sach’s call for gold to go to $1,000 per ounce, Jim had a conversation with a Goldman Sach’s person on the sidelines, and she said that some of the people she talked to in Goldman were kind of bullish on gold. Their call for gold at $1,000 is coming from their research department.
Jim found out the research department is using the FED model — which has nothing to do with physical gold and is a model that Jim doesn’t agree with.
Peter says the FED’s model is based on an economic recovery, which both he and Jim believe will not take place.
Peter believes that if the FED follows through with the tightening of QE which it’s telegraphing, then the U.S. will go into a recession. Which will then lead the FED to do more QE, so he believes it’s impossible for the FED to do what they’re claiming to do.
Jim says the only way to win a currency war is to stay out of them.
It’s a race to the bottom so everybody loses.
There’s a myth out there that countries like Japan and the U.S. are trying to cheapen their currencies so they can promote exports and sell a few more Boeing aircraft. That might be a bi-product, but the reason they’re doing it is because they are desperate to import inflation.
It’s not about exporting manufactured products — it’s about importing inflation.
The U.S. is a net importer, so if you cheapen the currency then you have to pay more for tech products and textiles etc.
Peter says that when you debase the currency then your source of inflation is at home. You’ve debased your own currency so you are the source of homegrown inflation.
Jim agrees. The FED has tapered into weakness and has set up to cause a recession in 2014.
Jim says that the data is going to continue to be bad, and that they can no longer blame the weather. He says the weather has very little to do with it. In July they will pause tapering because the data will still be bad.
By late 2014 Jim believes they may increase QE again.
Peter believes that once they announce they are going to pause tapering that the price of gold will increase $100, because people are going to connect the dots to the expansion of the money supply.
Peter also says that if the data doesn’t improve, that the U.S. has gotten so invested in the idea that the weather is to blame, that if it doesn’t improve into May and June that people will take another look at last fall and spring’s data, and realize it’s been weak all this time — that the FED was wrong.
Jim says all the data is bad, and the only reason that consumer confidence is up is because the stock market is up. And the only reason the stock market is up is because the FED is printing money.
It’s the blind leading the blind.
You print money, you provide zero interest rates so there’s massive leverage in the stock market. Stock market gets pumped up. That feeds into leading indicators, and leading indicators feeds into consumer confidence. But it’s all a house of cards.
Jim says that Goldman’s research department used the FED’s model and that no one has a worse record at forecasting than the FED.
Every year they give a one year forward forecast.
For the last five years they were wrong all five years.
They were wrong by orders of magnitude — not just a little bit off.
When Jim hears a rosy forecast from the FED, he sees that as a recession call.
THE DEATH OF MONEY
The Death of Money is a sequel and a prequel to Currency Wars.
Jim takes the story of his involvement with the national defense community back to 2003 before his 2009 involvement in financial war games, where he was an adviser.
He talks about the insider trading that took place before the attack on 911. Jim says that terrorists have a social network — mothers, brothers and associates — and that’s where the insider trading came from. He says it’s very visible and that he talks about it in The Death of Money.
So the CIA said to themselves that if there was another spectacular attack would there be more insider trading and could you spot it, track it down, stop it and save lives?
Jim was involved in this project and talks about it in Currency Wars and in The Death of Money.
The insider trading itself was small, but if the market is up, the sector is up and there’s no news, and then somebody comes in and buys a bunch of bets that United Airlines will go down, then others like the specialist or hedge fund trader sees this and do the same. Those piggyback trades amplify the signal and it sticks out like a sore thumb.
Jim also takes the story of gold as money, and goes back in financial history.
He hopes it helps the reader see gold in a better context. He then looks forward at the next monetary collapse.
The next collapse will be bigger than the FED.
The FED already printed $4 trillion. They can’t print another $4 trillion for another crisis.
They can legally, but they’ll be way past the confidence limit of the U.S. dollar.
The next crisis will be bigger than the FED. It will go to the IMF.
The IMF, International Monetary Fund, has a printing press and they can print Special Drawing Rights called SDRs.
SDRs are world money issued by the IMF. It’s a fiat currency and is not backed by anything.
Jim believes that this is what the financial elites are going to try.
It may fail also, because just as the U.S. dollar is not backed by anything, SDRs are also not backed by anything.
SDRs won’t be for our pockets. It will just be for oil, the settlement of balances of payment between countries, and for large corporations’ books. Our dollars will still be walking around money, it just won’t be the reserve currency. It will be a local currency.
If SDRs don’t work then we’ll have to have some kind of gold standard. No central bank wants a gold standard, but they may have to go to a gold standard to restore confidence.
Another Week on Wall Street
words and music Elaine Diane Taylor
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