Search results for jim rickards

Jim Rickards discusses the Road to Ruin and its context

I have previously mentioned Jim Rickards’ most recent book The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis. In this recent interview, Rickards discusses the book and its context. A great interview that I highly recommend.

In my opinion, we ALL need to understand Rickards’ message, as it is telling us we are facing a financial and economic precipice in our near future, and if you don’t plan for it, you will live to regret it. And this man has been there and done that, as he shares in this interview.

I recommend you read the book, but a starter is this excellent interview.

NB You will need to register to access it.


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Jim Rickards – Road to Ruin – Animated Book Summary

The Road to Ruin is Jim Rickards new book about the elites plan for the next financial crisis.
Building on his previous two books (Currency Wars, and Death of the Dollar (which is more accurately referred to as “”The Likely Severe Loss of Confidence of the Current International Monetary System and it’s Likely Replacements & What You Can Do To Protect Your Savings””) this book explores how the next crisis will actually play out. Why it won’t be solved by injecting more liquidity (as in 2008), but will rather be addressed with something cryptically referred to as ICE-9.

End of quote.

Worth seven minutes of your time.


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The Death of Money by James Rickards – Book Summary

Even Jim Rickards recommends this 8 minute video summary of his book “The Death of Money: The Coming Collapse of the International Monetary System”.

Worth your time, in my opinion.

We live in interesting times…


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Has the SDR been secretly pegged to Gold?

In a recent article, Jim Rickards, the author The Road to Ruin and the more recent book Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos, mentioned that someone appeared to be maintaining a peg between the IMF’s reserve currency the Special Drawing Right or SDR and gold. In Aftermath, he spells it out in much more detail. I quote:

Has a global monetary reset already happened? 

I was alerted to this possibility by a research report sent to my attention from a correspondent named D. H. Bauer based in Switzerland. An explanation of Bauer’s research begins with the dollar price of gold: $ 1,260 per ounce at the date of the report. Following the dollar price of gold, we consider that on a given day gold is “up” or “down” by, say $ 10 per ounce. When we make this observation, we effectively quote a cross rate between U.S. dollars (USD) and one ounce of gold (GOLD) or USD/ GOLD. 

Next, we observe the U.S. dollar value of the SDR. This cross rate, SDR/ USD, is calculated and published daily by the IMF. As of this writing, SDR1 = USD1.406570. That rate changes daily like any floating exchange rate. Bauer took the known rates of USD/ GOLD and SDR/ USD and applied the transitive law to calculate SDR/ GOLD, a price that is not actively followed on trading screens. He then graphed the time series of both prices with trend lines from December 31, 2014, to March 31, 2018. The graph includes a black vertical line corresponding to October 1, 2016. That is the date the Chinese yuan was officially included in the SDR basket of major currencies. The other currencies are sterling, yen, euro, and the dollar. The data and graph show that before China joined the SDR, the dollar price of gold and the SDR price of gold were volatile and highly correlated. After China joined the SDR, the dollar price of gold remained volatile, while the SDR price exhibited far less volatility. 

Importantly, the trend line of SDR/ GOLD is a nearly horizontal line. Gold denominated in SDRs has been trading in a narrow range of SDR850 to SDR950, an 11 percent band with fluctuations of 5.5 percent above and below the SDR900 central tendency. The price exhibits mean reversion. When gold rallies to SDR950, it quickly falls back toward SDR900. Likewise, when gold sinks to SDR850, it rallies back to SDR900. No prices appear outside the range after October 1, 2016. This price band narrowed in early 2017 and was contained in the SDR875 to SDR925 range, a 5.5 percent total band, 2.75 percent on either side of the target. This narrower band is indicative of a currency peg. A first approximation hints the SDR has been pegged to gold at a rate of SDR900 = 1 ounce of gold. This implies a new gold standard using not dollars, but the IMF’s world money. A global monetary reset may have occurred without a formal conference or declaration. SDR900 = 1 ounce of pure gold is the new monetary benchmark. 

The advent of low volatility in SDR/ GOLD (versus prior high volatility) occurred on October 1, 2016. The near straight-line trend of SDR/ GOLD after the Chinese yuan joined the SDR is practically impossible without an intervening factor or manipulation. The probability of this occurring randomly is infinitesimal. The SDR/ GOLD horizontal trend line after October 1, 2016, is an example of autoregression. This appears only if there’s a recursive function (a feedback loop) or manipulation. In the case of SDR/ GOLD, one can rule out a recursive function since gold trades in a relatively free market determined by supply and demand. One can also rule out randomness as statistically highly improbable. That leaves manipulation as the only explanation for the flat trend line in SDR/ GOLD. 

If the SDR price of gold falls below SDR900 (indicating a strong SDR and a weak gold price), the manipulator buys gold, sells dollars, and buys the non-dollar currencies behind the SDR. If the SDR price of gold rises above SDR900 (indicating a weak SDR and a strong gold price), the manipulator sells gold, buys dollars, and sells the non-dollar currencies behind the SDR. By monitoring markets and intervening continually with open-market operations in gold and currencies, the manipulator can maintain the peg. There are only four parties in the world with the resources to conduct this manipulation in an impactful way: the U.S. Treasury, the ECB, the Chinese State Administration of Foreign Exchange (SAFE), and the IMF. These are the only entities with enough gold and hard currency reserves (or SDRs) to conduct the large-scale open-market operations needed to peg the price. 

One can eliminate the U.S. Treasury and ECB as suspects. Both are relatively transparent about their total gold holdings, foreign exchange reserves, and the SDR component of their reserves. (For the ECB we look at the large members, including Germany and France, for this data.) If either the Treasury or ECB were conducting open-market operations of this kind, changes in holdings of gold and SDR component currencies would appear in official reports. No fluctuations of any magnitude appear. That leaves SAFE and the IMF. Both are non-transparent. China has about 2,000 tons of gold, probably more—they don’t disclose the excess. China has also acquired SDRs in the secondary market in addition to official allocations provided by the IMF to its members. The IMF owns 2,814.1 metric tonnes of gold and can print SDRs in unlimited quantities subject to executive board approval. The IMF makes loans and receives principal and interest in SDRs that are traded among IMF members through a secret trading desk. Gold is traded surreptitiously by major central banks through the Bank for International Settlements (which also traded Nazi gold in the Second World War). The BIS is furtive and controlled principally by the same nations who control the IMF. China can also conduct gold purchases and sales for yuan or dollars on the open market in Shanghai and London and separately buy or sell SDRs for dollars or yuan through the IMF. China can buy or sell the SDR basket currencies separately through bank foreign exchange trading desks. 

The targeted value of SDR900 per ounce of gold is intriguing, with dark implications for the future of the U.S. dollar. Currently a total of SDR204.2 billion are issued and held by IMF members. The IMF owns 2,814.1 metric tons of gold, equal to 90,475,284.87 troy ounces. If the IMF wished to make SDRs the sole global reserve currency backed by gold at a 40 percent ratio, the same gold cover as the U.S. dollar from 1913 to 1945, then the implied SDR price of gold would be equal to the quantity 0.40( 204,200,000,000/ 90,475,284.87), representing the amount of SDRs divided by the amount of IMF gold in troy ounces times 40 percent. This quantity equals SDR902.8 per ounce, almost exactly the pegged price of SDR900 per ounce.

There is no evidence the IMF is implementing an SDR/ GOLD peg. The IMF’s gold holdings have remained constant since 2010 and permission to launch the gold-peg operation is unlikely to have been granted by the United States or Germany. To the contrary, there is strong evidence to support the view that China is behind the peg. This is ironic; when the SDR was created in 1969 it was originally pegged to gold and defined as a weight in gold (SDR1 = 0.88867 grams of gold). That peg was soon abandoned even as the dollar peg (USD1 = 0.02857 ounces of gold) was also abandoned. Now the SDR/ GOLD peg has returned, albeit at a much higher price for gold. 

Since this SDR peg to gold is informal and unannounced it can be abandoned at will. The peg probably will be abandoned sooner than later because Chinese sponsors of the peg have ignored the lessons of 1925, when the United Kingdom returned sterling to the gold standard at a level that overvalued sterling. The result was a catastrophic deflation in the United Kingdom that presaged the Great Depression. Likewise, the Chinese peg of SDR900 per ounce of gold is too cheap to sustain, given the scarce supply of gold and the growing supply of SDRs. More to the point, the IMF will print trillions of SDRs in the next global financial crisis, which will prove highly inflationary unless the IMF conditions the distribution of SDRs on the receipt of gold. China would have to sell precious gold reserves to maintain an SDR900 price. This would reprise the U.S. depletion of its gold reserves by 11,000 tons from 1950 to 1970 to maintain the Bretton Woods gold peg to an overvalued dollar. Still, this is an historic development. Even if the peg is non-sustainable in the long run, it’s a clear short-run signal that China is betting on the SDR and gold, not the yuan or the dollar. An important pillar of a global monetary reset seems already in place.

End of quote.

Rickards is an extraordinary thinker and deeply entrenched in the US financial, business and government worlds. He brings extraordinary insight to his writing. I commend Aftermath to you.


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A shudder in the stateroom of the Titanic

Thank you, Nods.
I find article below very interesting. It is clear to me that the Aussie real estate market is in the process of imploding, and it has major consequences for the local banking industry and perhaps the Aussie economy and way of life. The following graph tells the story, but there are additional factors in play to exacerbate things:

A shudder in the stateroom of the Titanic

This release is taken from the editorial of the 6 March 2019 issue of the CEC’s Australian Alert Service magazine.

“What was that?” Great disasters start with that question. It’s being asked now about Suncorp’s unexpected 5 March announcement that repayments are in doubt on a $120 million mortgage bond.

Mortgage bonds, a.k.a. mortgage-backed securities, are based on thousands of mortgages that banks lend and then bundle up together to on-sell to investors. The borrower continues to repay the bank, but the bank passes on the repayments to the bondholders.

Suncorp announced that for the bond in question, the proportion of borrowers in arrears on their payments by 60 days or more has risen to 3 per cent, which is three times the rate of arrears of Suncorp’s broader mortgage portfolio. This 3 per cent threshold triggers an automatic switch in how the bondholders are paid, with all investors receiving their interest payments, but principal repayments being prioritised to those investors holding the most secure, AAA-rated tranche of the bond.

A nervous Australian Financial Review rushed out an article headlined “Suncorp mortgage bond trigger not concerning”, which emphasised that no Australian mortgage bond has ever defaulted, but that is precisely the point—is this announcement the first sign of something unexpected? Expert banking analysts have told the Australian Alert Service that it is “material” to Suncorp and the financial system.

Suncorp’s announcement is reminiscent of the very first sign of the US sub-prime mortgage crisis that triggered the global banking meltdown in 2008. On 8 February 2007, the giant British bank HSBC rocked the markets by announcing a large loss on its US sub-prime mortgage portfolio, caused by rising delinquencies on mortgage repayments. Again, it was unexpected. “This is a material negative surprise for HSBC”, a Merrill Lynch analyst told Market Watch that day. It was the beginning of the losses from borrowers falling into arrears on their mortgage repayments that became the fuse that detonated the global financial system.

Most curious about Suncorp’s announcement is that it regards a bond issued in 2010, which means that the borrowers have been able to meet their repayments for close to a decade. So why have arrears spiked to 3 per cent now? It coincides with the fall in house prices, which has already trapped more than 400,000 households in negative equity and unable to refinance their loans. It also coincides with other signs of economic decline, including a significant fall in new car sales in February, which Sean Wright in the 5 March Sydney Morning Herald called “the canary in the caryard”.

If this is happening to people who borrowed at much lower house prices in 2010, what about the more recent borrowers, including the wave of interest-only borrowers from 2012 to 2016? In her March 2018 submission to the banking royal commission, Denise Brailey of the Banking and Finance Consumers Support Association (BFCSA) exposed the tricks banks use to ensure that borrowers, who otherwise can’t afford their loans, are able to initially make repayments that go to the bondholders of securitised mortgages. These tricks involve giving the borrowers additional “buffers” for the first five years, including credit cards with $25,000 to $100,000 limits, buffer loans and top-ups, additional lines of credit, and refinancing. “If the applicant runs out of money to pay payments during the first five-year period, the top-ups keep rolling, increasing original debt by an average $150,000”, Brailey revealed.

That is an extra $150,000 debt on average for people who couldn’t afford the original debt in the first place, all to create a false sense of security for the bondholders who have bought the securitised mortgages. There is a critical mass of these fraudulent loans in the system from 2012 onwards that were made for one purpose—to prop up the housing bubble. If and when defaults rise in those mortgages, expect a chain-reaction meltdown.

Bondholders might be surprised, but the CEC isn’t. The international authorities have prepared for this eventuality by developing their policy of “bail-in”, to save the financial system by seizing the deposits of bank customers. We must defeat bail-in and instead force through solutions that fundamentally reform the banks to protect the public, including:

End of quote.
There is abundant evidence of the parlous state of the global economy, which I’ve written about, this article being an example.
It is not clear what the snowflake will be that will trigger the avalanche of global economic and financial destruction. Will it be the Aussie real estate bubble? It’s certainly one candidate. As Jim Rickards eloquently describes,  we never know ahead of time.
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How Central Bankers reshaped the world economy following the 2008 economic crisis

Another informed view explaining the intentionally precarious nature of the global financial system.
The intent of this situation is the planned breakdown of the current fiat monetary system and its likely replacement with a global fiat currency, most likely a cryptocurrency based upon the IMF’s “Special Drawing Right (SDR). Also this article
Many informed commentators have warned us:
To name a few. And now Naomi Prins in her new book Collusion: How Central Bankers Rigged the World.
This from her bio page:
Nomi Prins is a renowned journalist, former international investment banker, author and speaker. Her new book, Collusion: How Central Bankers Rigged the World, explores the recent rise of the role of central banks in the global financial and economic hierarchy. Her last book, All the Presidents’ Bankers, is a groundbreaking narrative about the relationships of presidents to key bankers over the past century and how they impacted domestic and foreign policy. Her other books include a historical novel about the 1929 crash, Black Tuesday, and the hard-hitting expose It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street (Wiley,2009/2010). She is also the author of (The New Press, 2004) chosen as a Best Book of 2004 by The Economist, Barron’s and Library Journal.
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The only question is: “Have you prepared for what is coming?
Because there is simply no doubt this is on our doorstep. And the evidence is it will begin later this year. In ways, it has already begun, though it’s not visible to the public (of course not!!!)
If you are not prepared, in my opinion, you need to get very proactive because time is running out.
These experts vary in what actions they recommend to prepare. The only one they all agree on is precious metals that you hold yourself. And, in my opinion, given the inflated real estate values almost globally, real estate is NOT one of the things to be holding beyond, perhaps your own home, unless it’s your core source of income, and even then you need to look very closely at your position.
It’s also a time when the elite harvest the little people. Every economic cycle has this, but few are of the extent of 1929-1937 or so. In my opinion, this one could exceed that.
Do not tell me I didn’t try and warn you.
Kind Regards,

The Great Recession of 2008 Was Just A Warning!

I recently shared with you some videos in which Lynette Zang of ITM Trading shared her views about the elite’s planned control of remaining global assets via a crypto SDR, controlled by the IMF.

And I have just come across an outstanding summary of the state of our financial world and where it’s heading by Lynette, but you have to do some ferreting to find it.

Go to, then click on the Webinar Archive link on the top of the page, then scroll until you see the video entitled “Start Here: 2008 Was Just A Warning!!”

Personally, I agree with everything Lynette says, but I’m not saying you should. What I am suggesting is if you don’t consider what she says and draw your own informed conclusions, in my opinion, you run a very serious financial risk that could ruin the party that you call the rest of your life.

Check it out and see what you think. It aligns very powerfully with what Jim Rickards has also been saying.


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The global world currency is emerging, and it’s a blockchain SDR, and EVERYTHING will be on the blockchain, including your house title

The pieces are falling into place for the new global currency, forecast for 2018 in The Economist 30 years ago.

And it’s a blockchain version of the IMF global reserve currency, the Special Drawing Right, or SDR. I discussed the SDR in detail about a year ago.

In that article, I mentioned that Jim Rickards saw the SDR as the new global currency, but what was not obvious was how that would be implemented.

Now we know. It will be blockchain.

In this video, ITM Trading’s Lynette Zang reveals her research that shows the elite’s plans to put EVERYTHING on blockchain, including the digitised title of all real estate and linking it to credit, so people are encouraged to fritter their assets away, leaving all assets in the hands of the elite.

Lynette discusses this further on the SGT Report video entitled BREAKING: BANKERS’ NEW SDR CRYPTO BLOCKCHAIN WILL ENSLAVE HUMANITY?? – Lynette Zang.

I share Lynette’s view that we need to understand it and act to stop it, however we can. Widespread exposure is a start.

And Dahboo7 has woken up to it, as he expresses in his impassioned video It Begins: The Blockchain Beast System Is Here .

And he, like me as I look at it, believe that Bitcoin was their creation, not some unknown techie. It has been a stalking horse for their plans, and Lynette Zang’s material from the IMF shows Bitcoin as a feeder into the new crypto SDR.

I encourage you to watch all three videos and spread this message far and wide, and as Dahboo7 says, be prepared.


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After 47 Years, Stephen Lewis Calls It Quits In A Scathing Critique Of Modern Markets

Another respected punter warns of an impending global market “inflection”:

For decades, portfolio managers around the WORLD would receive the periodic “Economics & Policy” newsletter, full of original insights on everything from the markets, to the economy, to geopolitics, as penned by Stephen Lewis, chief economist at ADM (if best known for his tenure at Monument Securities which was eventually absorbed by ADM). Sadly, on Friday Lewis sent out his “Valediction” – the last ever Economic Insights report. Instead of commenting on it, we present his full thoughts in their original form as this particular career epilogue, a scathing critique of capital markets, modern economists, central bankers, and everything else that is broken in today’s society, is a must read for all market participants, as well as economists, politicians and central bankers.

* * *

Economics & Policy


By Stephen Lewis of ADM Investor Services International

After more than forty-seven years spent observing and commenting on economies and financial markets, I shall be retiring this week to eke out my remaining days, as is fitting, in contemplation of the eternal verities.

When I  set  out  in  the  markets, on 5 January 1970, the yields on sterling bonds, including  those  issued  by  the  UK government (gilt-edged),  were expressed  in  pounds,  shillings  and  pence. One of the first tasks to which I was put, when I joined the stockbroking firm of Phillips & Drew, was to convert these yields into the decimal form with which our computer, fully occupying the building on the opposite side of the street, could cope.  Back then, the London clearing banks were required to hold in cash an amount equivalent to at least 8% of their deposits and 28% in liquid assets (cash, money at call and Treasury and commercial bills). There was not much risk of a bank liquidity crisis in those days. International asset diversification for UK-based investors was impeded by capital controls, with returns subject to variations in the premium on scarce investment currency as much as in the underlying prices of the assets held. For all the restrictions, though, octogenarians commonly travelled into their offices in the City each working day primarily for the fun of it.  It was a different world, unimaginable to those too young to have known it.  When told that we worked at our desks in candlelight during the power cuts of the three-day week in 1973-74, they naturally find it hard to comprehend what it was that we could possibly have been doing, so dependent have we lately become on electricity.

Since 1970, there have been nine UK prime ministers, thirteen Chancellors of the Exchequer, nine US Presidents, seven Chairs of the Federal Reserve and six Governors of the Bank of England; central bankers tend to stick around. Through most of this period, the trend was towards more liberal economic and social conditions, though latterly a reaction seems to have been setting in under the label of ‘populism’.  While there are vested interests still championing the liberalising process, the election of  President Trump shook the confidence of those who had believed that the ‘end of history’ had come with the fall of the Berlin Wall. It no longer seems inevitable that the future will bring ever more globalisation under the banner of the peculiar set of liberal values developed in the USA during the late twentieth-century. 

However that may be, after almost a half-century of analysis, there are certain conclusions I would draw.

What stands out is the failure of economics, as an intellectual discipline, to come to grips with the real world.  This was obvious at the time of the global financial crisis of 2007-09.  Since then, academic economists have worked on the assumption that their lamentable performance when it came to  warning  of impending troubles has been forgotten,  or  else  they hope the world at large believes they have so refined their understanding that there could be no recurrence of that debacle.  But they have not subjected their ‘science’ to the root and branch criticism that is clearly called for. As they argue whether they have enough Greek  letters in their equations, events take their own course. A particular weakness in economic analysis arises from the tendency of economists to regard these letters as signifying objective entities. Yet to proceed in this way is to overlook the difficulties attaching to the collection of relevant data. There are problems, not only of the familiar kind relating to proper sampling and timeliness, but of a more fundamental nature. We are not entitled to assume that the concepts favoured by economists in their analyses – consumption, investment, etc. – refer to clearly-delineated objective realities that are important in a causal  explanation  of  economic  events. After all, whether an item of expenditure is to be classed as consumption or investment is, to an unsettling degree, a matter of convention. 

The sadness is that central bankers, in moving to an almost exclusively macro-economic focus in conducting monetary policy, have paid increasing attention to the prescriptions of these self-styled ‘scientists’ of the economy.  Virtually all central banks now subscribe to the frankly weird view that economies cannot grow satisfactorily unless they maintain a 2% rate of arbitrarily- defined consumer price inflation.  This is despite the evidence in this and earlier ages that economies can grow quite well in the absence  of  such  inflationary  price  behaviour  (after  all,  the  2%  target  implies  a  doubling  of the price-level every  thirty-five years).  Thus, we are presented with the spectacle of central banks seeking to pump up demand, even when labour markets are tighter than they have been for decades past. The argument  is  that, without  the  prospect  of  higher  prices  in  the  future, consumption and investment spending would both die away.  But that is not how human psychology works. It may well be that investors’ demand for financial assets depends on the outlook for asset prices but consumers and businesses view the markets in goods and services in a different way.  They must do so, or else it would never be possible to launch new products where prices start high but then decline, reflecting economies of scale.

Central banks have come round to accepting the view, first expressed by Milton Friedman, that inflation is always and everywhere a monetary phenomenon.  But this view is misleading. Friedman based his dictum on his reading of history. Money supply and nominal GDP seemed to be broadly correlated. A more precise statement of the underlying relationship is that inflation occurs when central banks accommodate inflationary forces that usually arise from non-monetary economic and social factors. Mr Bernanke, drew the conclusion from his broadly Friedmanite analysis of the Depression years, that monetary policy could prevent deflation, which he understood to mean falling consumer prices over however short a term. Consequently, he led the world into the most extreme policy of monetary  accommodation since the invention of money. The longer-term consequences of the resulting misallocation of capital have still to be seen. In any  case, the efforts of central  banks in the advanced economies to push consumer price inflation up to a sustained 2% pace have so far proved futile.  A 2% inflation rate,  incorporating the hedonic adjustments that the statisticians have adopted over the past twenty years, seems to be above the sustainable rate in current economic conditions. There was a time when central banks needed these adjustments if they were to achieve a published inflation rate as low as 2% but recently the statistical tricks have contributed to the monetary authorities’ embarrassment in continually falling short of their inflation targets.

It is telling that the theory on which central bank policies are now based should have assimilated the behaviour of all economic agents to that of the financial markets. This has been part of  the move away from output and employment as the goals of economic activity towards the generation of financial returns within a short-term  perspective. It is consistent with the development of ‘financial capitalism’, from the 1975 May Day reforms on Wall Street, through London’s ‘Big Bang’ in 1986 to the massive growth in financial instruments in the early years of this century. The academic tide ran, not altogether surprisingly, in a direction favourable to the interests benefiting most from this development of the capitalist economic model. While academic economists whiled away their time refining their mathematical  expressions, the past few decades were witnessing a major shift in political thinking about the economy.  Whereas in 1970 a compromise had been reached between capitalism and government regulation that accorded government a role, albeit limited, in managing markets and the economy, this broke down in face of the mounting strength of market forces and after continual disappointment with economic growth and inflation control.

The first crack came with President Nixon’s ‘closing of the gold window’ on 15 August 1971. This action, which marked the end of the fixed exchange rates that had, for the most part, prevailed up to that time, was arguably the most momentous event in economic policymaking of the past half-century.  In fact, on the day, it caused remarkably little stir in the London markets, only a sense of puzzlement.  This may well have reflected London’s isolation from international developments, stemming from  the very  strict UK exchange control regime in  force  at  that time. But with the advent of the Thatcher and Reagan administrations, free-market ideology was clearly in the ascendant.

The intellectual argument in favour of free markets, as against rigged markets and government intervention, is compelling. However, anyone who has been involved in markets will be aware that they are never perfectly free and fair to all participants. Instead of accepting uncritically the virtues of free markets and indiscriminately breaking down barriers and safeguards, policymakers would have been better employed addressing the dangers posed by the ‘free’ markets as they were developing. This was the lesson of the 2007-09 financial turmoil but it is a lesson that, by and large, has not been heeded.  The post-2008 growth in global credit massively raises the risk of a future crisis, despite official measures requiring more stringent bank capital requirements. Even these strengthened defences would prove flimsy in the event of any future collapse in confidence, a collapse that is all too likely to occur in view of the aforementioned misallocation of capital.

The promoters of free markets are wont to appeal to Adam Smith as their authority. This Enlightenment philosopher has suffered a similar fate to such luminaries as J M Keynes and Karl Marx, in that his followers have presented a distorted view of his insights. The ‘free marketeers’ focus on Smith’s work The Wealth of Nations without paying heed to the ethical presuppositions underlying that analysis.  His assumptions were derived from Hutcheson’s moral philosophy and are set out in his earlier publication, The Theory of Moral Sentiments, a work that is usually ignored or denigrated by Smith’s modern-day adherents. To be sure, his view of human nature, as there set out, is rather benign. He makes no allowance for the cheating and exploitation that characterise behaviour in actual market situations. His failure to understand, or at least to recognise, the moral failings of his fellow-men diminishes the value of his economic analysis as a guide to action.

Free markets have gone hand in hand with globalisation, the strengthening power of transnational commercial interests relative to that of national governments.  At the same time, in the advanced economies, there has been a growing sense among the many that a few are making off with the fruits of economic progress. These developments are probably connected. 

The positive function of the nation-state is to maintain equity between the social classes. The nation-state is the largest unit that can feasibly fulfill this function. I realised something was going badly wrong several years ago when a respected British fund manager said that he felt he had more in common with a banker in Frankfurt than with a factory-worker in Birmingham. The nation-state was no longer fostering a sense that we were all in it together.  The subsequent social tensions and rise of populism were no surprise.  In 1970, the UK ruling elite was seeking to dissolve national sovereignty in a broader European entity.  In view of the unhappy record of subsequent UK-European relations, the 1973 accession to the EEC is likely to be judged a historic mistake.  I had not expected to see the day when that decision would be reversed.  But Mrs May and her advisers seem to understand the crucial importance of the nation-state in preserving social justice.  If they have a chance of living up to their words, the UK may well become a beacon to the world.

With that thought, I shall lay down my pen and depart in peace.

End of quote.

Eerily aligned with the prognostications of Jim Rickards.


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Two important commentators from completely different spheres use the term “Extinction Level Event”

My regular readers will know that I look for patterns in things that come into my awareness, and it has happened again this last week.

In this video (and others) Jim Rickards uses the term “Extinction Level Event” when discussing the financial scenario he sees facing the world anytime from today forwards, in his view most likely next year.

Then, looking from a completely different perspective, the predictive linguistic context that he has mastered, Clif High also uses the term “Extinction Level Event” to describe what he is seeing in his data concerning events later in 2017 and beyond.

With a rare and powerful term like this, two examples are enough, especially when it aligns with the time I see that we are in from a higher perspective.

I encourage you to prepare in whatever way is there for you, and listen to both of them make their case.

We live in interesting times…


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