Jim Rickards: The Fed’s Using the Wrong Models

Jon Fiscal Policies, Fundamentals, Gold, Government, History, Precious Metals, Trading Strategies

James Rickards, author of Currency Wars, gave the following presentation at The Future of Money 2.0 in Bratislava, Slovakia on September 26, 2013.  A week later, Rickards gave the same presentation, though significantly abbreviated, at the Casey Research Summit in Tucson, Arizona.  In the presentation, he covers:

  • US Defense Department’s exercises in financial warfare.
  • Historical currency devaluations by countries to gain trade advantages.
  • Historical examples of re-establishing a gold standard after a currency collapse.
  • The current situation of Inflationary and Deflationary forces working against each other – an unstable situation.
  • Irving Fisher’s (and later Milton Friedman) theory of economics (Quantity Theory of Money … M x V = P x Q).
  • QE, Operation Twist, etc. have had no affect because money velocity is not responding.  2014 may bring efforts to put money directly into the hands of the people (e.i. Tax Cuts).
  • Complexity Theory may provide a better model for the Fed, as it shows that the economic system has become increasingly more interconnected across sectors.  It actually predicted the 2008 collapse and, unfortunately the model is even more densely integrated today, indicating a worse crash ahead.
  • The potential remedies the Fed or the IMF might enforce in response to the next collapse.