James Rickards

This interview with James Rickards, author of Currency Wars and the Death of Money is more pessimistic than my own view, but it seems clear we are headed toward a crisis. This really should not be a surprize as the US has had many crisises over the last 50 years–the gas shortages of the 70's, the interest rate crisis of the 80's, the internet bubble of the late 90's and of course 2008. we are due for another one. 

I could not embed the interview, so click the link if interested. 

Collapse?

Brought to You by the Apocalypse Shopping NetworkSo, why don't I expect a collapse? Let's quote future First Man Bill Clinton: "It depends on what the definition of 'is' is." If by collapse you mean the EBT cards not working, armed gangs breaking into hardware stores, or the zombie apocalypse, then no, there will be no collapse. 

But if by collapse you mean an event similar to the Great Depression, then that might be in our future. Personally I expect something worse than 2008, but not as bad as the Great Depression. But then among the hard money types I pass for an optimist, or as I like to call myself guardedly pessimistic.We talk about the "fall" of the Roman Empire as if it was a single event. But the fall took centuries. In the same way, as tough as I fear the economy will be, the next few decades will still be American decades. Times will be tough everywhere--I am not sure where you might go to avoid it. The power of the state is immense, and all available tools will be used. This is not a happy thought, depending on the tools used.

Trivial Pursuit Question: Who Am I? But a collapse is not impossible, and the crisis could happen quicker than I think. (Or for that matter, later.) The crisis in the Ukraine might be a tipping point. That seems unlikely, but who would have thought an assassination of an Archduke would have caused WW I? The Great War seems the closest parallel to today. 

War could have already broken out by the time this post publishes. It does not look good this Sunday as I view the burnt corpses of protestors. I doubt the absurd claim of the Ukrainian regime that they set fire to themselves will pass the smell test, as there is video that contradicts this—but the sheep are not too bright, and I am always amazed by what people believe. I am still guardedly pessimistic as I do not think Putin actually wants East Ukraine—way too expensive to bring that region up to Russian infrastructure standards. But if the murders continue, then he may feel he has no option.

But in any event, no I do not think we will have a collapse, just hard times.

Why 2017? Maybe the Horse Will Sing

There is a lot of "buzz" about economic collapse. I do not think there will be a collapse, but a severe downturn around 2017. You might ask me two questions. "Why 2017?" "Why won't there be a collapse?"  

Why 2017? There are several reason that I think this. First the presidential elections in 2016 will give the "powers that be" incentive to continue the craps game as long as they can. They remind me of the old joke about the singing horse. 

Nasrudin was caught in the act and sentenced to die. Hauled up before the king, he was asked by the Royal Presence: "Is there any reason at all why I shouldn't have your head off right now?" To which he replied: "Oh, King, live forever! Know that I, the mullah Nasrudin, am the greatest teacher in your kingdom, and it would surely be a waste to kill such a great teacher. So skilled am I that I could even teach your favorite horse to sing, given a year to work on it." The king was amused, and said: "Very well then, you move into the stable immediately, and if the horse isn't singing a year from now, we'll think of something interesting to do with you."

As he was returning to his cell to pick up his spare rags, his cellmate remonstrated with him: "Now that was really stupid. You know you can't teach that horse to sing, no matter how long you try." Nasrudin's response: "Not at all. I have a year now that I didn't have before. And a lot of things can happen in a year. The king might die. The horse might die. I might die."

"And, who knows? Maybe the horse will sing." 

I can see the "powers that be" screaming at the economy,"Sing, damn it, sing." But the economy is hoarse and can't sing. But while the powers wait for the horse to sing there are some good signs in the economy. Greece is actually doing a lot better. The unemployment rate in Spain is 25%. This is not good news, but there are no riots in Spain as the unemployed patiently wait for the horse to sing. The Eurosceptics are doing well at the polls in some countries, but they can't seem to win. This is very good news for the PTB. 

The key thing to watch is the interest rate. As long as it remains low things will chug along at a leisurely pace, until they don't. But when interest rates rise, it will not be pretty. While there is talk and some action about a "tapering" of the Federal Reserve's money printing, it is so far minor. So the goal of the PTB is to kick the can down the road and hope for better times. 

So President Bush or Clinton will ride in on their non-singing white horse and save us all in 2017.

I will answer the question why there won't be a collapse next time. 

Paul Craig Roberts

Another interesting interview. Click here to listen. 

Four Horsemen (Economic Documentary)