James Rickards: The Fed is Tapped Out & End Result is Ice-Nine for Gold

The Federal Reserve and IMF have both wrongly forecasted growth and inflation forecasts the for the last 8 years. The economists who run those organizations are not scientists, but dogmatists and ideologues who let preconceived notions and political preferences hinder their objective analysis. In his new book ‘The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis’, New York Times bestselling author James Rickards shows some specific examples of how the scientific methods could work.

In 1998, James was the principal negotiator for the bailout of Long-Term Capital Management (LTCM) by the Federal Reserve Bank of New York. They were hours away from closing every stock exchange and bond market in the world if the bailout didn’t happen. The 2008 financial crisis brought a similar mass-closure threat and another liquidity-injection came to the rescue.

Within a few years, and as soon as tomorrow- provisions are in place for a financial crisis similar to Cyprus and Greece, but on a global scale. FED’s balance sheets are stretched, and they won’t be able to bailout the world. Jim likens this to ‘ice-nine’, which is a fictional material from Kurt Vonnegut’s novel Cat’s Cradle. It freezes water, and if put in a body of water, it could spread and freeze all water around the world.

James believes the coming financial ice-nine will lock down the system.. freezing bank accounts, and closing banks and stock exchanges among other things. This will buy time while the IMF works out how to print out and distribute the trillions in SDRs to reliquify the world- which may take 3-6 months or longer. Gold will also suffer as exchanges will halt, trading contracts will be terminated, and counter parties will lose out on price appreciation and access to physical gold.

Talking Points From This Week’s Show:
• Post-crisis, SDRs will likely be a replacement to the current monetary system
• In July 2016, the IMF issued a working paper calling for the creation of MSDRs (Market SDRs)
• Market SDRs are used in private markets with bonds issued to various institutions.
• Government has a program (SIFI) to order mega-institutions to obey instructions in a crisis

James Rickards is the Editor of Strategic Intelligence, a financial newsletter, and Director of The James Rickards Project, an inquiry into the complex dynamics of geopolitics + global capital. He is the author of The New Case for Gold (April 2016), and two New York Times best sellers, The Death of Money (2014), and Currency Wars (2011) from Penguin Random House. He is a portfolio manager, lawyer, and economist, and has held senior positions at Citibank, Long-Term Capital Management, and Caxton Associates. In 1998, he was the principal negotiator of the rescue of LTCM sponsored by the Federal Reserve. His clients include institutional investors and government directorates.

He is an Op-Ed contributor to the Financial Times, Evening Standard, New York Times, and Washington Post, and has been interviewed on BBC, CNN, NPR, CSPAN, CNBC, Bloomberg, Fox, and The Wall Street Journal. Mr. Rickards is a guest lecturer in globalization and finance at The Johns Hopkins University, The Kellogg School at Northwestern, and the School of Advanced International Studies. He has delivered papers on risk at Singularity University, the Applied Physics Laboratory, and the Los Alamos National Laboratory. He is an advisor on capital markets to the U.S. intelligence community, and the Office of the Secretary of Defense, and is on the Advisory Board of the Center on Sanctions & Illicit Finance in Washington DC. Mr. Rickards holds an LL.M. (Taxation) from the NYU School of Law; a J.D. from the University of Pennsylvania Law School; an M.A. in international economics from SAIS, and a B.A. (with honors) from Johns Hopkins. He lives in Connecticut.