Home / Federal Reserve / Jim Rickards’ Currency Wars Simulation: Collapse
Print Friendly and PDF

Jim Rickards’ Currency Wars Simulation: Collapse

Written by Gary North on October 25, 2012

Jim Rickards has produced a video of his hypothetical scenarios relating to currency wars. My view is that something like this could happen, but is unlikely. That is also his view.

The general trends he surveys are accurate. He thinks price inflation will go to 20%. Then he adds “and higher.” Here, I think he is incorrect. I think the Federal Reserve will cease inflating at that point to save the dollar from what he describes. But that would create a depression.

The key player is now China. It has the economic power to do what Rickards describes. This is not hypothetical. The only question is this: Would the Communist oligarchs actually do it? It would collapse their export sector. I think the odds are against their doing this.

He focuses on gold. But the Chinese could create a similar effect simply by selling all of its U.S. Treasury debt one morning. The Federal Reserve would then have to buy these IOUs to keep U.S. interest rates down. But recall this: that would be only $1.1 trillion of fiat money. The FED did that and more in 2008-9. The FED still runs the show. China doesn’t. Not yet.

Print Friendly and PDF

Posting Policy:
We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse. Read more.

3 thoughts on “Jim Rickards’ Currency Wars Simulation: Collapse

  1. Texas Chris says:

    Everything I've read points to a collapse in China. It's coming. When it does, China will call in their debts and the FED will be forced to print. Interest rates will then spike, the economy will crash, banks will fail, and excess reserves will be sucked out of the system.

    Unemployment will spike, 30% to 40%.

    The dollar will crash.

    2013 and 2014 will be very… Interesting.

  2. Rabelrouser says:

    Manipulations of currency at this point is the only thing keeping the economy from going into a free fall. As much as the Fed can buy up its own bonds and absorb a dumping of held treasuries, the fact remains that fiat currency (that which is not backed by anything of worth) has to create an inflationary cycle that then represses the economy to the point of depression.
    That would contiue a downward slide in the general markets as prices climb and there is less money in peoples pockets to cover those increasing costs. As businesses lose sales, they will be unable to continue doing business and close; the result will be higher unemployment.
    All because the economic manipulations of the fraudulent private entity known as the Federal Reserve continues, this because the subject isnt "sexy" enough for the people to finally realize that they have been duped for 100 years by both the politicians and the big market makers.
    Untill the people understand this, and stop feeding the beast, can anything be done to correct the economic problems. Maybe they will start after the elections? Nahhhhh.

  3. Blair Franconia, NH says:

    It sounds like something out of Tom Clancy's Debt of Honor.