James Rickards Quotes Page 2

“In our time, the aureate has become brazen – the golden has become brass. A return to true value based on trust is long overdue.”

“Inflation is the stealth destroyer of savings, capital, and economic growth.”

“Ironically, solutions are not hard to devise. These solutions involve breaking big banks into units that are not too big to fail; returning to a system of regional stock exchanges, to provide redundancy; and reintroducing gold into the monetary system, since gold cannot be wiped out in a digital flash.”

“It may be too late to save the dollar, but it is not too late to preserve wealth. We live in an ersatz monetary system that has reached its end stage.”

“It was curious that just as Federal Reserve officials were publicly disparaging gold’s role in the monetary system, the president felt the need to mention gold to the Congress as a confidence booster. Despite disparagement of gold by academics and central bankers, gold has never fully lost its place as the bedrock of global finance.”

“Policy makers respond to economic distress by pursuing polices designed to improve the data. After a while, the data themselves may come to reflect not fundamental economic reality but a cosmetically induced policy result. If these data then guide the next dose of policy, the central banker has entered a wilderness of mirrors in which false signals induce policy, which induces more false signals and more policy manipulation and so on, in a feedback loop that diverges further from reality until it crashes against a steel wall of data that cannot easily be manipulated, such as real income and output.”

“So the dollar is money, money is value, value is trust, trust is a contract, and the contract is debt.”

“The economy is like a high-altitude climber proceeding slowly, methodically on a ridgeline at twenty-eight thousand feet without oxygen. On one side of the ridge is a vertical face that goes straight down for a mile. On the other side is a steep glacier that offers no way to secure a grip. A fall to either side means certain death. Yet moving ahead gets more difficult with every step and makes a fall more likely. Turning back is an option, but that means finally facing the pain that the economy avoided in 2009, when the money-printing journey began.”

“The Fed sees inflation as a way to dilute the real value of U.S. debt and avoid the specter of deflation.”

“The Great Depression is not an argument against gold; it is a cautionary tale of central bank incompetence and the dangers of ignoring markets.”

“The gross size of all bank derivatives positions now exceeds $650 trillion, more than nine times global GDP.”

“The solutions to this systemic risk overhang are surprisingly straightforward. The immediate tasks would be to break up large banks and ban most derivatives. Large banks are not necessary to global finance. When large financing is required, a lead bank can organize a syndicate, as was routinely done in the past for massive infrastructure projects such as the Alaska pipeline, the original fleets of supertankers, and the first Boeing 747s.

The benefit of breaking up banks would not be that bank failures would be eliminated, but that bank failure would no longer be a threat. The costs of failure would become containable and would not be permitted to metastasize so as to threaten the system.

The case for banning most derivatives is even more straightforward. Derivatives serve practically no purpose except to enrich bankers through opaque pricing and to deceive investors through off-the-balance-sheet accounting.”

“The wealth effect is one pillar supporting the Fed’s zero-interest-rate policy and profligate money printing since 2008. The transmission channels are easy to follow. If rates are low, more Americans can afford mortgages, which increases home buying, resulting in higher prices for homes. Similarly, with low rates, brokers offer cheap margin loans to clients, which result in more stock buying and higher stock prices.”

“When it comes to betting on a sure thing, greed trumps common sense and makes the bet irresistible.”

“Workers receive raises in nominal terms, while wages adjust downward in real terms. This is a form of money illusion or deception of workers by central banks, but it works in theory to lower real unit labor costs.”

“The confidence of the entire global financial system rests on the U.S. dollar. Confidence in the dollar rests on the solvency of the Fed’s balance sheet. And that solvency rests on a thin sliver of gold.”

“Economics and politics converged long ago. Now economics and medicine have joined hands.”

“In the fullness of time, the 2020 lockdown of the U.S. economy will be viewed as the greatest policy blunder ever. Lost wealth and income will be measured in trillions of dollars. Any gain in lives saved or damage avoided was inapposite, since equally effective policy choices were available but untried. There’s no evidence that epidemiologists considered lives lost to drugs, alcohol, suicide, and despair when they pursued policies that pushed 60 million Americans out of jobs.”

“Markets did not see the crash coming in 2008. And they did not see the crash coming in 2020. That's not what markets do. Understanding what's coming next is up to you.”

“Modern Monetary Theory is old wine in new bottles. The old wine consists of the belief that the value of money is created by government dictate and the volume of money is unlimited because government offers citizens no choice but to use their money as payment for taxes.”

“Central banks and finance ministries do not hold copper, aluminum, or steel supplies, yet they hold gold. The only explanation for central bank gold hoards is the obvious one – gold is money.”

“Elite support for so-called free trade is due to the fact that elites share a global perspective at odds with the best interests of the United States. Policies that produce world growth at U.S. expense are endorsed. Policies that benefit the United States while slowing world growth are rejected. Today globalization’s triumph over nationalism is energizing a nationalist revival as nations reassess their individual interests.”

“Gold is the world's least understood asset class. Confusion arises because gold is traded like a commodity, yet gold is not a commodity, it is money.”

“New World Order is not new. Civilizations have devised forms of world order for millennia because the alternative to order is chaos. Order rarely includes liberty or justice. Order mainly ends disorder, and mitigates violence. That is how order achieves legitimacy. The next world order is emerging. What is new is that world order is no longer circumscribed by a defined 'world' such as in the Roman or Chinese empires. The next world order will encompass the globe and all of its civilizations at once.”