The next time that someone in Washington or Wall Street pontificates that the international economy is getting better should perhaps continue living in that bubble and avoid the reality.
James Rickards, financial author of “The Death of Money: The Coming Collapse of the International Monetary System,” recently told Russia Today news service that the global economy is in a state of “indefinite depression.” In other words, Rickards isn’t a bull on the economy.
“We are in a depression. This is a global depression,” Rickards stated. “It started in 2007, and it is going to continue indefinitely. Depressions are structural, monetary solutions are cyclical. You cannot solve a structural problem with a cyclical remedy. Monetary policy will not work.”
Citing the Federal Reserve’s immense quantitative easing program, record-low interest rates and an enormous $4.5 trillion balance sheet, Rickards argued that there is a major and extensive currency war unfolding before our very eyes.
“I think this is one long currency war,” said the West Shore Group portfolio manager. “We are now getting into more of a battle, more of a confrontation. The U.S. dollar is the only strong currency that cannot last. The U.S. cannot have a strong currency, because we are desperate for inflation.”
Despite the paucity of financial crises in North America or Europe in the past two years, Rickards avers that the collapse will erupt somewhere and then eventually spread around the world. He alluded to the bubble in the United States stock market and the credit bubble taking place in China, which isn’t investing in foreign or domestic stocks and the financial institutions pay nothing.
“So they are putting all money in real estate and also wealth management products, these are structure products like CDO`s but they have real estate behind them,” added Rickards. “Their sponsors raise money in these funds; give you a wealth management certificate. And then they take money and put it into real estate. But the real estate is not producing, it is all speculation, it is all a bubble. That bubble will collapse…”
Earlier this year, Rickards warned that the price of gold could very well eventually be hitting anywhere from $7,000 to $9,000 because of the “annihilation” of the U.S. dollar.
Gold is currently trading at just over $1,200, while silver has dipped to just above $17.
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