September 24, 2013 | By Tekoa Da Silva
I had the chance to reconnect with James G. Rickards, Senior Managing Director of Tangent Capital and author of the New York Times Bestseller,Currency Wars: The Making Of The Next Global Crisis.
It was a fascinating conversation, as James indicated that the U.S. Fed ismanipulating every market in the world in an attempt to abort the country’s first depression since the 1930′s. As a consequence, he notes that emerging countries are abandoning paper currencies in favor of physical gold, in anticipation of a collapse in the international monetary system.
Speaking towards the recent non-tapering and continued Fed stimulus, James explained that, “The Feds are inflating the [stock] bubble as they did in the late-90s, and as they did in the mid-2000s with money printing and monetary easing…[it’s] just money printing. It’s another bubble that will end badly, but the thing with bubbles is they can go on a lot longer than you expect. I mean it could go on well into next year before correcting.”
Many Western money managers believe the rising stock market is an indication of economic recovery James notes, “[But] most of them don’t understand what’s going on in the economy. They’re using the wrong models. Everyone is using cyclical models…expecting some kind of robust recovery…they’ve been wrong every single time, [and] the reason is that we’re not in a cyclical recovery…We’re in a depression. We are in a depression for the first time since the 1930s…[So] if you’re curious and you want to know what a depression feels like, it feels like this because we’re in one.”
“The problem with a depression,” James continued, “is that it’s not a business cycle. It’s a different [economic] condition and so cyclical remedies such as monetary easing don’t work…You need a structural remedy and that means changes in tax laws, labor mobility, regulatory policy, fiscal policy etc…I don’t see any resolution of the structural issues on the table and therefore I would expect that this depression will continue indefinitely.”
Read the full story and listen to the audio interview at Bull Market Thinking.