3 Min. Gold News – Jim Rickards – TheBlaze – May 5, 2015

3 Minute Gold News

A Quick Read for Busy People

A 3 minute synopsis of an interview with Jim Rickards, Chief Global Strategist at West Shore Funds, and New York Times bestselling author of The Death of Money and Currency Wars, by Glenn Beck from TheBlaze.

Topics:


Economic Trouble
The Snowflake and the Avalanche
Paradigm Shift
History
Shutting Down the NYSE

 Rickards - Brisbane

Jim Rickards

Interview link

We’re in deep trouble economically.

It’s called “The Snowflake and the Avalanche”.

It’s snowing. The snow is building up and building up.

An expert mountaineer looks at it and says, “Look, that’s very unstable. It’s windswept, it’s exposed to the sun in a certain way and it’s going to collapse. If it collapses it could kill people in the village below.”

Then a snowflake comes along and disturbs a few of the snowflakes that have already landed, which disturbs a few more, which disturbs a few more, which creates a slide, which creates an avalanche chute. The whole thing comes loose and buries the village below.

Who do you blame?

Do you blame the snowflake or do you blame the unstable snow pack?

If it wasn’t one snowflake it would have been another — the one before or the one after. You don’t blame the snowflake. You blame the instability in the snow.

When you go skiing in Aspen, what do they do in the morning? They get up at 6 am and throw dynamite down the slope. It’s a safety tactic so the snow doesn’t build up.

What are we doing in the banking system?

The thing to do would be to break up the big banks.

When Jim started in banking J.P. Morgan was five different banks. We should be breaking up the big banks. Instead we’re letting the snow pile up and we’re going to get a catastrophic collapse.

Jim has had members of the Federal Reserve board of governors tell him point blank in private that they don’t know what they’re doing. They try things and if it works they do a little more. If it doesn’t work they try something else — it’s a big science experiment.

The Fed can’t say this publicly because it would cause a panic.

They’re smart, they have PhDs, but they’re using false science. For example, people used to believe that the sun revolved around the earth. There were smart people around but they were using false science.

When you get data that contradicts your theory you’re supposed to question your theory. Instead they made the math more complicated.

Copernicus came along and said maybe the earth revolves around the sun, then Kepler came along with better observations and said maybe the orbits were elliptical. Low and behold the whole thing worked.

That’s called a paradigm shift.

PARADIGM SHIFT

We are in a world where the smartest people have the wrong paradigm.

They have equilibrium models when the world is a complex system. If you make a complex system bigger then when it collapses it doesn’t collapse with three times the force, it collapses with a thousand times the force.

It’s exponentially greater.

HISTORY

In 1998 the world was hours away from every market in the world being closed.

There was a collapse of the hedge fund Long Term Capital Management and Jim Rickards negotiated that bail out.

Wall Street bailed out the hedge fund.

In 2008 it was Wall Street that was collapsing and the central banks bailed out Wall Street.

Again we were hours or days away from a much larger collapse. If we hadn’t had the bail outs we would have been in much better shape today.

Let’s go forward to 2018.

In 1998 the banks bailed out the hedge fund and in 2008 the central banks bailed out the banks. In 2018 it’s going to be the central banks that are in distress.

Who’s going to bail out the central banks?

There’s a limit to how much the central banks can print — not a legal limit but a confidence limit.

There’s only one clean balance sheet left in the world and only one thing bigger than the central banks — the IMF (International Monetary Fund).

The IMF is really the central bank of the world.

They’re only leveraged 3 -1 while the Federal Reserve is leveraged 80 – 1.

They have world money called the SDR (Special Drawing Rights).

The IMF will print four or five trillion dollars of SDRs and hand them out. Then all of a sudden a broke country like Hungary, or maybe the United States, will have reserves and can buy tractors and get the whole game going again.

But here’s the problem — where’s the limit to that?

The plan is to use the IMF and SDRs but Jim believes we won’t get there — he believes we’re going to have a spontaneous snowflake and avalanche collapse in the meantime.

The solution when that happens will be to lock down the system.

They won’t be able to print their way out of it. They’ll freeze the bank accounts and reprogram the ATMs to limit everyone to $300 per day — basically what happened in Cyprus.

The FCC came out and said they would do it.

Money market funds locked down, banks locked down, deposits above secured amounts becoming an unsecured creditor, shutting down the New York Stock Exchange.

SHUT DOWN THE NYSE

You think that can’t happen?

The London Stock Exchange was closed for five months in 1914.

From July to November in 1914 the New York Stock Exchange was closed. At the beginning of World War I there was a run on the banks and everybody wanted their gold back.

All these things have happened before.

They will happen again.

When you get to the point where you can’t print your way out — and we’re at that point — you just lock the system down.

This could lead to money riots.

The IMF is transparently non-transparent. It’s all there but it’s hard to read through unless you’ve been trained to understand the language.

Jim Rickards is a lawyer, a banker and an economist. He uses complexity theory, physics and scientific theory, and says history is one of the most powerful things to look at.

Just look at when the stock exchanges were closed.

Jim Rickards can be found on Twitter and at James Rickards Project.

 

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I’m currently staying in a little town along the Gold Rush Trail in British Columbia, Canada.

Guitar and gold pan.

The waterfall shot below is at the end of a trail in my backyard.

I’ll be back in Vancouver next week to have a fun dinner with Jim Rickards.

 

 

 

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Wag the Dog (Drums of War and Backroom Banker Passes)
words and music Elaine Diane Taylor
© 2014 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Preparing for the Fall available on iTunes

 

Coins and Crowns
words and music Elaine Diane Taylor
© Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Coins and Crowns available on iTunes

Single featured in Episode 1 of Mike Maloney’s documentary series Hidden Secrets of Money.

 


The Gods of the Copybook Headings
words by Rudyard Kipling and music by Elaine Diane Taylor
©2014 Intelligentsia Media Inc.
SOCAN/ASCAP
from the album Preparing for the Fall available on iTunes

 

 

Another Week on Wall Street (Naked Short Selling and Fiat Currency)
words and music Elaine Diane Taylor
© 2013 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Coins and Crowns available on iTunes

 

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AlbumCover.PreparingfortheFall

 

Preparing for the Fall is a boutique live solo album available on iTunes — including the singles Wag the Dog, Black Swan Dive, Miss American Pie and Gods of the Copybook Headings.

 

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Nothing on this site is personal investment advice. We’re all watching how the wind is blowing.

 

 

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