3 Min. Gold News – Jim Rickards – Fox Business – May 8, 2014

3 Minute Gold News

A Quick Read for Busy People

A 3 minute synopsis of the interview with Jim Rickards, by Deirdre Bolton from Fox Business News, discussing his New York Times bestselling book The Death of Money.

Topics:

Federal Reserve 2014 Forecast
Jim’s 2014 Forecast
Warren Buffett

Jim Rickards

Fox Business News
Deirdre Bolton
Interview with Jim Rickards
May 8, 2014

FEDERAL RESERVE 2014 FORECAST

If you believe the FED forecast then they’re going to finish the taper by the end of the year.

They’ll finish the taper by November or December, then there will be a period of time, and then they’ll normalize rates and reduce the balance sheet in 2015.

The problem is that the FED has the worst forecasting record in economics. There’s no reason to believe the FED forecast.

These are the same people who have been wrong five years in a row.

JIM’S 2014 FORECAST

The FED has tapered into weakness.

When you look at inflation, and Janet Yellen acknowledges there’s a danger of deflation, we have disinflation with a danger of deflation.

The employment situation is dismal.

The labour force participation fell off a cliff.

Yellen is guided by an economist named Andrew Levin at the Boston FED. Levin makes the point, which Jim agrees with, that the inertia of getting someone back into the labour force is much greater than it is to take an unemployed person to take a job.

An unemployed person is job-ready, but if someone is out of the labour force then they’re on the couch watching basketball. That situation has a higher bar for easing.

With GDP we have negative growth in the first quarter.

All the indications are bad.

All these indications indicate more monetary easing, BUT Bernanke tied Yellen’s hands, and this is a very hawkish board of governors at the FED.

They have three vacancies, so the board is over-weighted to the regional board presidents because we’re missing three governors.

This may become a more dovish board in 2015.

If the data comes in bad the FED may pause the taper in July. If they get to September and they’re still tapering then Jim expects them to see it through.

He believes they’ll begin new asset purchases in 2015.

WARREN BUFFETT

The stock market and housing markets are in a bubble, and are propped up by zero interest rates. The New York Stock Exchange leverage is at an all time high.

Jim suggests that people do what Warren Buffett is doing — get out of cash and into natural resources and hard assets.

Buffett bought a railroad, he bought oil and he bought natural gas.

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