Jim Rickards, author of The Death of Money, spoke with Erin Ade on RT’s Boom Bust this week. He explained why central banks around the world are incapable of preventing the inevitable fallout of the current international currency wars. Rickards isn’t sure what will trigger the next big crisis – a debt crisis in the United States, a panic in China, or the coming Swiss Gold Referendum at the end of the November.
Here are some highlights from Rickards’ interview:
“You talk about lower gas prices giving consumers more discretionary income. Lower gas prices put more money in the pockets, it doesn’t mean they’re going to spend it. They could use it to pay off debt, pay off credit cards, pay off their kid’s student loans, pay down a mortgage, etc. Now there is an alternative to spending, which is saving, which is reducing debt, which is the same thing. So this easy connection between more money in their pockets and spending – that sort of treats the consumer like an automaton who doesn’t know what to do with the money… That’s not what happens in the real world. In the real world, people are deleveraging and saving…
I don’t consider these bullish indicators. They tell me that the economy is running out of steam. An economy is nothing more than two things: how many people are working and how productive are they. You can slice and dice it anyway you want. You can take GDP and divide it into government and private, exports, imports. You can finesse the data anyway you want, but at the end of the day, how many people are working and how productive are they? Well, guess what? Labor force participation is going down, which means fewer people are working. Productivity is actually going down… Real wages are stagnant. Fifty million people are on food stamps, seven million people who have part time jobs wish they had full time jobs. So the kind of thing you mentioned – this is noise. These are day-to-day data points that people get spun up about and talk around them, but they’re not the real story…
