Fed Insolvent, Dollar Will Collapse 90% or More-James Rickards

James Rickards Photo 4 (2)By Greg Hunter’s USAWatchdog.com   (Early Sunday Release)

Financial expert and best-selling author James Rickards thinks the “international monetary system is headed for a collapse.”  Rickards contends, “It’s really not meant to be a provocative statement.  The international monetary system actually has collapsed three times in the past 100 years.  It collapsed in 1914.  It collapsed in 1939, and it collapsed in 1971.  When it happens, it doesn’t mean the end of the world or we all go live in caves.  We have a period of sort of economic confusion.”  Rickards new book “The Death of Money” is a road map for what is coming.  Rickards contends, “What I do for the reader is explain why the collapse is coming and, secondly, describe what this new system might look like.  That should be very helpful to investors in preparing to both survive the collapse and be well positioned in terms of wealth preservation under the new system that’s coming.” 

What does the new system look like for the U.S. dollar?  Rickards says, “Here we are, again, looking at another collapse.  The problem today is we are on a global dollar standard.  A paper money standard can work, but only if you maintain confidence in the money . . . and you do that by running a good economy and having a good business environment . . . we’re doing the opposite.  We are printing a lot of money.  We have a lousy business environment.  Taxes are too high.  Growth is too low.  So, a lot of things are combining to undermine confidence in the dollar.  Rickards goes on to say, “The last time the system collapsed in 2008, the Fed rescued it.  How did they do that?  Well, we know the Fed printed over $3.5 trillion in new money in the last 5 years.  The Fed’s balance sheet went from $800 billion to over $4 trillion.  People understand that.  What’s less well known is the swap lines with Europe . . . European banks had dollar liabilities because they borrowed money in dollars. . . .   Where did the European Central Bank get the dollars they needed to bail out their own banks?  They got them from the Fed.  They gave us euros and we gave them dollars.  So, these dollar/euro swaps were in the tens of trillions of dollars. . . . In addition to that, the Fed guaranteed every money market fund in the United States . . . and they guaranteed every bank deposit in the United States.  Here you have a massive $60-$100 trillion bailout, not the $4 trillion you were told.  Fast forward to today. When the next collapse comes, it is going to be bigger than the last one.  It’s going to be exponentially bigger. The five biggest banks that were too big to fail in 2008, today they are bigger.  They own a larger percentage of the total banking assets. . . . When you double or triple the scale of the system, you don’t double or triple the risk.  You increase the risk by an exponent that could be 10 times or 100 times.” 

On the Fed engineering another 2008 type bailout, Rickards claims, “The last crisis was barely enough for the Fed to contain.  They have used up all their dry powder.  They can’t take the balance sheet any higher.  They are already insolvent. . . . The Fed is insolvent.  If you mark their assets to market, they are leveraged 80 to 1, and interest rates have been going up.  So, a very small decline in the market value of their assets and it wipes out their capital.  It’s a very simple math.  So, we have an insolvent central bank.  The next crisis is going to be bigger.  You can see it coming.  It is going to be too big for the Fed.  They have taken their balance sheet to $4 trillion.  What are they going to do, take their balance sheet to $8 trillion and leverage 200 to 1?  The game is up.  This has become very apparent.  They are insolvent on a mark to market basis today, not like next year or the year after.  They are insolvent today.”

Rickards foresees big inflation because the U.S. dollar’s buying power will shrink.  Rickards predicts, “Imagine gas at $20 a gallon and bread at $10.  That’s what we’re talking about.”  So, if big inflation is coming, what about gold?  Rickards says, “When I say the price of gold is going to $7,000 or $9,000 per ounce, which I expect it will, what I am really saying is the dollar is going to collapse 80% or 90% or more.”  It did in the 1970’s.  None of this is unprecedented, it all happened before.” 

Rickards says, “When a collapse happens, it will happen quickly.  You won’t see it coming.  There won’t be time to run out and buy gold, and it probably will not even be available at that stage.  You need to prepare now.” 

Join Greg Hunter as he goes One-on-One with James Rickards, author of the new book “The Death of Money.”

(There is much more in the video interview.) 


After the interview:
Rickards told me he is already starting to sketch out his next book.  He did not tell me the subject, but I suspect it will talk (in part) about the post-dollar reserve currency world.  He says that project is at least 2 years away.  In the meantime, you can order his new book “The Death of Money” by clicking this link.

The Death of Money Cover Art

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Comments
  1. Rodster

    I heard his recent audio interview and may have posted a link to it. He goes on to say that when all the central banks collapse the world will switch to an IMF Global SDR. Which is what Brandon Smith said will happen.

    In other news Russia has announced that it wants the YUAN as the world reserve currency. I believe I posted a link in this last blog. Zero Hedge posted the story. As usual the MSM is out to lunch.

    • Rodster

      Here it is: “Russia Returns Favor, Sees Chinese Yuan As World Reserve Currency”

      http://www.zerohedge.com/news/2014-03-23/russia-returns-favor-sees-chinese-yuan-world-reserve-currency

      • Greg Hunter

        Rodster,
        This is big!
        Greg

        • On Da Beach

          Greg,
          This is big! At the G20, scuttlebutt, “noise,” has it the western banksters will be setting in motion the wheels to drop the USD as the primary global reserve currency, to implement the transition, to a new financial system based on the IMF”s special drawing rights. After 6 years of kicking the can down the road, “they,” are now ready to grasp, the nettle of monetary reform. There will be wholesale global sovereign debt re-structuring’s/consolidation, bank resolutions and massive devaluations of fiat currencies, to put the global economy back on a sustainable footing.

          If a stinking, dirty garbage scow passed by the Titanic 10 minutes before it hit the iceberg, would you have gotten on the scow?
          If that same scow came by 10 minutes after the Titanic hit, would you get on?
          They have to crash the Titanic, in order for you to want to get on board their scow . . . And they just might even be generous enough, to give you 10 cents on your dollar, to get you on board.
          Detroit was the canary in the coal mine, Chicago and the whole of California are two choking miners, Europe is comatose!
          For at least two weeks everything is on sale, in two weeks the sale could be over, life could be much harder.
          We know the shoe will one day, eventually have to drop, lets hope later, than so, soon, to have more time, to prepare, for the coming,”transition!”

          • On Da Beach

            Greg,
            If the above is true, could the G20 be wanting to head the Russians/Chinese off at the pass, with their planes for currency independence?

        • Rodster

          More threats from Russia and China

          “Russian metal companies to redirect to Asia if sanctions hit”
          http://rt.com/business/russia-metal-redirect-asia-833/?utm_source=browser&utm_medium=aplication_chrome&utm_campaign=chrome

          “China demands end to US spying activities after new Snowden leak”
          http://rt.com/news/china-nsa-spying-reaction-869/?utm_source=browser&utm_medium=aplication_chrome&utm_campaign=chrome