Jim Rickards Warning All Currencies are Going to Collapse – The Entire Global Financial World has indeed Gone Mad – Fed Interest Rate Hikes Will Cause Massive Recession in the next 12-18 Months.

 

Are we going to get an argentinian style recession in 2022 – Top 3 Reasons a Recession in 2020 Could Happen .

Recessions are normal, cyclical, and healthy. They are also temporary. For the first time since President Trump was elected, more voters say that the national economy is getting worse than getting better, with 37 percent saying it is getting worse, 31 percent saying it is getting better, and 30 percent saying it is staying the same. So is a recession coming in 2020? Fears have increased in recent months in the midst of an enduring trade war with China, pullbacks in corporate hiring and investment, and a manufacturing sector that has already slipped into contraction. Key indicators already indicate that the U.S. is “very late-cycle,” and unless there’s more policy stimulus into the market, the country looks like its headed toward a recession.
The global economy is already in the worst distress that we have seen since 2008, and it appears that the global slowdown is actually picking up pace as we head into 2020. The recession snowball is rolling. The majority of bankers also predict a recession in 2020. We’ve got several recession indicators flashing orange. When a country gets itself in a ridiculous trade war, runs up the most prominent national deficit of any country in human history and has an erratic leader who alternates between hand-modifying weather reports and trying to bully the Federal Reserve into Argentina-style monetary policies, well, it doesn’t inspire massive investor and consumer confidence.

Why don’t we simply Print Money to pay off US Debt? Have you ever wondered why countries can’t just print more money to off their debts. or to feed the homeless or fix unemployment, or any other issue for that matter. The short answer can be summed up in just one word… inflation. Inflation is defined as “a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of the currency. Technically we could potentially resolve our debt problem in that way, but it would lead to much bigger problems. Primarily, it would result in hyperinflation .

With trillion new US dollars in international hands and over a trillion of that in China alone–a dramatic increase in national income everywhere except the US. That income spike would cause aggregate demand for goods purchasable in US Dollar to soar. Merchants would naturally respond by increasing the price of their goods, re-stabilizing the real value of the dollar.

The consequences of such a series of events would be catastrophic.
The purchasing power of the dollar would decrease enormously. This would place strain on American buyers who now have to pay more for goods without the higher income that China has received and thus cause a recession that would dwarf that of 2008. Unemployment would spike, as many firms would find it advantageous to migrate to China and elsewhere where there is new demand for their products. Meanwhile, the People’s Bank of China, for one, would be pissed because, even though they now have more dollars than they did before, those dollars aren’t worth nearly as much as when they sold that debt to the US. Whereas before $1.3 trillion could have bought China, say, 200 aircraft carriers , after inflation of this magnitude , it might only buy them 20. And we know that China’s in this for the aircraft carriers.

They would begrudgingly buy those 20 carriers and haul them across the Pacific to vent their frustrations against our now-decrepit Treasury in person. Meanwhile, we’d be firing bows and arrows from canoes like those island people that went to war with the US in that British movie. Doomsday scenarios aside, we would end up with two major problems (among others, for sure): a devastating recession and a diplomatic fallout with China (and other servicers of US debt). Basically, the dollar is only valuable if it’s scarce, because we use it to procure scarce resources. When it’s no longer scarce, its no longer transitive as a currency and has no value. So, in reality, the reason that other countries would no longer lend us money if we freely printed our own is because the exchange rate between the dollar and any other currency would approach zero, leaving banks and merchants with nothing to gain by transacting in US dollars.

There would be no incentive for nations to produce anything of real value, rendering the concept of GDP meaningless. Furthermore, if we could resolve debt by just printing bills, there would be nothing to prevent other countries/central banks from doing so–and you would end up in a world full of meaningless currency. Money is nothing but a record or a sticker of total goods and services produced in an economy. Therefore money can be printed only at the same rate as an economy (GDP) is growing. So if US GDP grows at 3%, US can print 3% extra dollars.

However if money supply exceeds GDP growth, there is double entry of goods and services produced so a particular good/service is counted twice but can only be delivered once. Its quite obvious that the 2 potential suitors for the good produced once but counted twice will be engaged in a furious bidding war which will drive the price of the good produced once but counted twice. Ultimately you will have a balanced equation where on one side there will be extra currency printed (above the normal rate of GDP growth) and on other side you will have extra price you have to pay for that good. So if you don’t print money if your GDP is growing, you face a depression ,but if you print money in excess of your GDP growth, you face higher inflation which leads to demand shortfall causing job losses. This condition is called stagflation which is worse than depression. In depression jobs are hard to come by but prices remain low. In stagflation, you have few jobs but prices remain high as all the excess printed currency is still in circulation. The US has some leeway as US dollar is global reserve currency .

So The US can print dollars slightly in excess of its annual GDP growth but this will reduce US debt by few 10s of billions every year when theoretically the US needs 100s of billions every year to reduce its debt. The best way forward is to refinance the debt and push for higher growth every year and pay back over a period of several decades but such a scenario is susceptible to black swan events like wars, recessions etc. Now, if a country gets into financial trouble, it may have to default on its debt, which basically means you won’t get your money back. But the US is generally considered an extremely risk-free investment because the US dollar is the most widely used and most trust-worthy currency in the world. It’s even written into the Constitution that the United States cannot default on its debt. I’ll leave you with this final thought and what I think is possibly the best way to sum up why governments can’t just print off unlimited amounts of money : “If money grew on trees, it would be as valuable as leaves” .

The criminal Federal Reserve Bank will bring this global recession. There is nothing Federal about the Federal Reserve Bank. It is a private bank incorporated in 1913. They print money out of thin air; it is Monopoly money that has no real value. The Federal Reserve creates booms and busts, so they can robe the people of their assets. It cost the Private Federal Reserve bank $230.00 in ink, paper, and labor to print 10,000 bills of any denomination, 1,5,10,20,50, and 100 dollar bill.

They then lend it to the Federal Government for face value plus interest. We have a fake debt to these criminals. They are the biggest counterfeit ring in the world. This upcoming recession was discussed as far back as 2014 from what I remember. It’s based on calculations of countless business/political/economic/world events and is pretty accurate. The recession began in 2019 and will start to ramp up. Expect another housing crash as prices in places like the Bay Area of California are grossly inflated by Chinese buyers and Silicon Valley. Prices are $200k over real value, and this is the peak. Only idiots are buying homes right now, as the value will crash and level out, and you’ll be in the hole.


This recession will likely last until 2025. Expect 2022 – 2023 to be the worst of it. The economy always crashes every 18 years, and the most influential factor in this is land values, they rise on hope value then crash when we cannot afford the land and borrowed too much to get access to land. A mid-cycle dip every nine years – so next year 2019/2020 a dip and the big crash in 2026. Barring wars and natural disasters economies have followed this pattern for hundreds of years. This is well known to Georgist economists, and the 2008 recession was well predicted by economists like Fred Harrison.

The economy expands and contracts at the will of the shareholders of the Federal Reserve bank, which is a privately owned institution. The Oligarchs take profits from the markets during both expansions and contractions while the US Citizen suffers during the contractions. A US President is a scapegoat to be cast out of the Wall Street temple tent into the wilderness to carry off the sins of the Oligarchs, which happens right before the high priests of the FED slaughter the kids of America upon the fiery altar of corporate warfare with great fanfare. It’s the banks that are the real problem, and until you wake up to that fact, they will ever so gently continue to squeeze your balls until you don’t even have a dime left.

They are blood-sucking vampires. And they own your property if they foreclose. Nobody can predict the future. But we can learn from the past. The stock market has virtually gone nowhere over the past 19 months — not a good sign. Freight-hauling companies like railroads, truckers, and airborne, have all reported that freight quantities are declining — not a good sign. The “smart money” has been fleeing the stock market since last September or so, and has made a ton of money betting on bonds over stocks in that time. Not a good sign. The thing to remember is that economies and stock markets move glacially.

They may flash signals that indicate possible event months, sometimes years in advance. The trade war has, to this point, targeted Canadian lumber on 1/1/2018; lumber prices in the US went up 41% (the tariff was 21%), steel and aluminum (GM and Ford both reported that the tariffs cost them $1 billion in lost profits), and the 25% tariff on components, and now, the 10% tariff for consumer products. The recent tariffs targeted the not so easy to spot goods, where the imported components were not the majority of the finished goods. So the effect of tariffs was marginal. The 25% tariffs are directly going to affect consumer goods, meaning you’ll likely see iPhones ratchet up in price by 10%.

The concern, and it’s significant and legitimate, is that Trump will ratchet those tariffs up to 25% in the not too distant future, and that will be noticeable to American consumers, who in spite of what the President keeps repeating, actually do pay the tariffs, and not “China.” Will that lead to a recession? If we get a recession sometime in the next 18 months, people will look back and say that the beginning occurred in early 2018 and just continued to deepen, and they’ll cite those factors I did before. You have to understand that markets and economies are macro devices that turn about as slowly as the Queen Mary, and unless you’re watching closely, you never even see, detect, or notice the elements leading up to a recession, except in retrospect.

The trick, if there is one, is to study history, especially the history of market crashes and economic debacles to see what the advance signs were, and from that, learn to see them in the present. They don’t always lead to a recession, but all recessions start with them. Forewarned is forearmed, and those who don’t know their history are doomed to repeat it.

Yes. I do believe a recession will likely take hold early next year. Why? Three reasons:
#1. The Fed has already started cutting rates — a great indicator from some very smart people that something is amiss.
#2. At more than 120 months, the current business cycle is now the longest on record in U.S. history: America’s economic expansion is now the longest on record.
#3. The stock market has been flat for more than a year and a half and Trump’s ill-advised tariffs, just like his tax cut for the rich (and the stunning amount of national debt created by those cuts), are proving to be yet another blunder from a man who thinks he knows everything about everything.

The Fed starts to cut the Fed funds rate just before a recession. The Fed just cut the rate by 0.25 points, though there were several Fed members who thought that should be 0.5 points. Say what you want to ,about the Fed ; but those guys are smart; and they know what they’re doing. Even Janet Yellen, the previous Fed chief, was broadcasting that a cut was needed. Powell, in his follow-up press conference, did everything but say that a recession is very likely (he called the cut a “mid-cycle adjustment” to keep financial markets from freaking out). Wall Street sees even more Fed rate cuts ahead with Morgan Stanley predicting a return to zero. As of July, the business cycle has already passed 120 months.

The stock market is a “discounting mechanism,” and it will start discounting U.S. stocks because they are too expensive. Walmart has said that its prices will be impacted. 70% of the American economy is consumer goods, and if people stop buying those because companies are passing on the cost of the tariffs, then that will be the catalyst for a quick drop in GDP growth, leading to a recession.

Every Economic expansion is fueled by easy credit and low-interest rates. Every Economic contraction happens when the bills come due, and spending has to be curtailed to service the debt. When the Federal Reserve reduced interest rates to zero and increased the money supply by buying $4.5 Trillion in bonds and MBS, it created massive inflation, but not in the consumer goods measured in the CPI. It was “asset inflation” in stocks, bonds, and housing. It didn’t work as a stimulus very well because of the counter-effect of Dodd-Frank’s over-regulation of the banks, especially with regard to the small business sector.

Most of that $4.5 trillion of the increased money supply were lend to publicly traded corporations, including the big banks, to buy back their own stock. 72% of the stock market gains over the past decade are attributable to stock buybacks. Trillions more were borrowed by selling corporate bonds rated “BBB Investment Grade” when they didn’t deserve it.

Moody’s, Fitch, and Standard and Poors are still selling undeserved BBB ratings for high fees — a practice that contributed to the Financial Crisis. Next economic downturn, many of those publicly traded companies will file bankruptcy on their debt, stiffing their own stock and bondholders, while the CEO’s who made millions on their stock options will take their golden parachutes and retire in Aspen with no accountability for what they’ve done. Small businesses had a long history of getting a business line of credit from their local bank, where the loan officer knew them personally, knew their workers and their customers, and was familiar with their balance sheet and income statement. He was willing to provide a line of credit to finance payroll and inventory against accounts receivable and the business owner’s history of meeting his obligations.

Dodd-Frank made that illegal. It required the business owner to put up iron-clad collateral equal to 125% of the line of credit. If they had it at all, it was in their home equity, and the reason they all formed LLCs or Subchapter S corporations was to protect their home in case of business failure. Dodd-Frank killed small businesses, the largest employer in the country. A few years ago, the CEO of Wells Fargo said, “We employ 10,000 people just to keep us out of trouble with Dodd-Frank. Small banks and businesses can’t afford to do that. Dodd-Frank is killed small business in this country.” Since Dodd-Frank was implemented, the top six bailed out banks increased their profits by 600-800%, and now control 70% of the assets of the entire banking system. Meanwhile, there are far fewer state and local banks.

The Fed painted itself into a corner it can’t get out of without crashing the stock, bond, and housing markets. Anyway, in a fiat corporatist financialized system (like we have basically globally now), any reasonably wise person would always be “preparing for a recession.” Real economic activity is irrelevant to the whims of a politically managed economic system. And you never know for sure what the agenda is (impossible to know for sure actually). The trade deficit with China ballooned by more than 20% just in the first year of Trump’s term, when Trump finally caved in and declared a phony “win” we already lost hundreds of billions. The Economic downturn IS COMING. The question is whether Trump can delay it until after the election. Buckle up. I am. Hope for the best, prepare for the worst, not the worst strategy in life.

READING ARTICLES IS NOT ENOUGH. YOU ABSOLUTELY NEED THIS BOOK TO UNDERSTAND WHAT IS HAPPENING IS YOU ARE TO SURVIVE WHAT IS COMING.

 

 

 

 

 

 

 

 

 

 

 

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