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

          • Shadow of Doubt

            Reality seems to be closely following a book by D. R. Bell called The Great Game. The book’s timeline maybe questionable but the outcome looks very probable.

    • Rodster

      Greg, several things in the interview he said has me very concerned and it centers around the IMF. If the IMF loses control during the global collapse or if the SDR fails to work. We are all in big trouble, globally.

      Secondly, regarding financial warfare, Gerald Celente mentioned that the upcoming global war COULD include nations DESTROYING each others infrastructure via the internet.

      • Ugly

        That is why I am leaning to Ham Radio and getting a license. Greg, can you do your show in future on Ham or Shortwave?

        • allen ols

          ugly
          I picked up three baofeng uv82 mostly to receive incoming info, but great walki-talkie feature, and weather channels.

      • lastmanstanding

        You make it sound like one day that the dollar will be gone and the next you will go in and exchange them for sdr’s…the bis bankers wet dream?

        These guys only know how to institute things in a chicken s##@, cowardly, backdoor manner over a long period of time.

        When they finally have the stones to crash the $, the turmoil that will ensue here in the US will be epic. The blood will be knee deep in the streets.

        Something is up with nature right now. The weather, forests, mountains and the animals are all struggling for some kind of balance.
        Expect the same for humanity.

        Humanity is highly compromised and often dishonest…the balance will not come easily to most.

        • Rodster

          The reset we could be looking at if the IMF gets their way is a SOCIETAL reset like Karen Hudes referred to. Just look at what’s happening around the world, most recently in Spain and the cruelty and poverty the Elite have brought upon it’s own people. They have insulated themselves from the misery that’s all around them.

      • 8Ball

        ” If the IMF loses control during the global collapse or if the SDR fails to work. We are all in big trouble, globally…”

        Really? If the parasites lose control then we are in trouble, why so? I think that we would all be far better off with an across the board reset. No matter what happens, a lot of of innocent and clueless people are going to suffer either by acts of omission or of commission.

        • Rodster

          You took it the wrong way. I in no way am a proponent of the IMF. I detest everything they stand for. All you have to do is look at what they have done to Greece. They have no conscience.

        • lastmanstanding

          Right on 8ball…let the game of “survival of the fittest” begin.

        • Galaxy 500

          I am not an IMF fan. Think that only buyers will be people with EBT cards. I dont see Russia or China ceding power to these jokers as they dont need to. Just my 2 pfenigs.

      • OpenThePodBayDoorsHAL

        A long-ish story about Ancient Egypt.
        Cleopatra lived in a period that is actually closer in time to our age than to King Tut. In between her and Tut there was a period of several hundred years when “all trade stopped”. This was because “the money system got corrupted”. Yes, it can happen here, and now. The Wizard of Ben (or now Janet) will eventually get Toto pulling the curtain away. We finally abandoned sound money in 1971, and had a huge party as paper flew everywhere, boy it was a great party. Now it’s hangover time. Ben avoided it by dumping another gallon of vodka into the punchbowl…but now he snuck out the side door because he doesn’t have another gallon on hand. Can I suggest a few metals to consider: gold, silver, lead (.45 caliber), and tin (cans). Oh, and also Bitcoin.

        • Galaxy 500

          Bitcoin was a joke right? As its less usable than candy wrappers

        • pessimist

          I don’t understand how bitcoin or any other crypto-currency is going to do any good during or after a financial collapse. A financial collapse will initiate an economic collapse. If there is no currency to pay workers orthat currency becomes worth-less, how is the energy grid going to be maintained … it will likely go down or at least be sporadic and so how are internet providers going to power their servers? Digital currency will be dead in the water and even if the internet remains available, no one will want to trust digital currency to exchange for anything of real physical tangible value. At least I would not.

          • Galaxy 500

            Friend I agree wholeheartedly with you on cryptocurrencies. The only thing that drove their value was the darknet (illicit purchases) or people looking for an alternative payment or store of wealth. If it was backed by something of value, such as an ounce of silver, I could see maybe people’s buy-in but I am at a loss to explain. You’d think that Mt. GOX implosion would have dropped the value to approaching zero. Obama can cut the net when he wants so if things got bad how do they think it will work.?

      • Scout

        Why follow them?

        Here’s a prescription for you to chew on.

        Political – http://www.nationallibertyalliance.org/sites/default/files/Quo%20Waranto%20filed%203-24-14.pdf – Please read it all.

        Monetary – http://www.monetary.org/intro-to-monetary-reform

        Economic – http://www.henrygeorge.org/isms.htm

        http://www.amazon.com/After-Crash-Designing-Depression-free-Economy/dp/1444333070/ref=sr_1_1?ie=UTF8&qid=1395786999&sr=8-1&keywords=designing+a+depression+free+economy

        Here is a great paper on the subject:
        HENRY GEORGE AND THE RECONSTRUCTION OF CAPITALISM
        by Dr. Robert V. Andelson

        http://www.wealthandwant.com/docs/Andelson_HGRC.html

        Why this way, because we will not be able to afford heavy handed regulation, and this system addresses that, promotes work and improvement, reestablishes the commons, and most especially acknowledges the reality of the divisions across the political spectrum we certainly have today, in a just manner.

        Social – Triage present Institutions, save the best, get rid of the rest, rebuild. Make due, innovate, pull together & cooperate , educate, and move toward a distributed instead of centralized system, like the net.

        The gold might be gone folks…Karen Hudes notwithstanding, er cough.

        Scout out.

    • Rodster

      It’s spreading! Now Russia sanctions 13 Canadian officials. If this whole thing doesn’t deescalate soon, we could be looking at War as Dr. Roberts has said.

      http://www.zerohedge.com/news/2014-03-24/russia-retaliates-sanctions-13-canadian-officials#comments

      • Galaxy 500

        Obama just gave Putin Crimea so it looks de-escalated. However, he drew a red line around the rest of the Ukraine. Or was that the world’s red line?

    • Rodster

      Russia Prepares Mega-Deal With India After Locking Up China With “Holy Grail” Gas Deal

      http://www.zerohedge.com/news/2014-03-25/first-russia-locks-china-holy-grail-gas-deal-now-rosneft-prepares-mega-deal-india

    • robert

      It is not poosiable for China to be the reserve currency. China foes not have open markets and tge do not have the vast bond market needed.

      China is 30 years away from this possibility.

      China could be part of a reserve currency but not the reserve currency.

  2. Galaxy 500

    Another great interview Greg . I need to watch it again. I dont know what to think…still at the Oh Snap stage. The Fed is insolvent! !??!! Damn

    • Greg Hunter

      Galaxy 500 thank you for adding color to this post!
      Greg

    • allen ols

      G5;
      You can find medium sized loaves of bread on my fb page when collapse comes, but I will not take purchase in sdr’s or any other fiat stuff, just gold eagles; my price will be the then current pay of one days wages in gold eagles. thankyou,

      buy wheat, and powdered milk;

      • lastmanstanding

        I’ll trade you a 1/2 gallon of fresh made soup that is on the stove right now. I canned pickled asparagus on Sat. and the stumps are simmering in mushroom broth along with fresh peas (frozen from last summer), onions that wintered in the root cellar and carrots that I dug from the garden y-day…haven’t decided whether to just let them simmer or run them thru the food mill…Probably just leave them “course”… like my personality.

        Some bacon crumbles from a local hog on top for a bit of crunch.

        • allen ols

          lastman;

          I’m in!