By Craig Wilson
This post Jim Rickards: We’re Heading Straight Into a Recession appeared first on Daily Reckoning.
Jim Rickards joined Modern Wall Street and host Olivia Bono-Voznenko outside of the New York Stock Exchange in order to discuss his latest book, “The Road to Ruin” along with a series of topics focused on currency wars, the Federal Reserve and the looming recession facing Trump.
When asked about whether he is suggesting an inevitable economic catastrophe or whether the system is setting up for disaster he responded, “Both items are true. It is the way we’re structured and the risk in the system that will lead to a catastrophe. I would distinguish between a financial panic seen in 1998 and 2008, and a normal business cycle. Right now I think we’re more vulnerable to the business cycle. I think we’re headed into a recession.”
Jim Rickards is a New York Times best-selling author of The Road to Ruin. He is a lawyer who worked on Wall Street for decades. Currently, he advises the U.S intelligence community and military outlets on topics covering currency wars and international economics.
“In my book The Road to Ruin I look at the two recent crisis situations in 1998 and 2008. Both times we came within hours or days from a complete collapse of the financial system. That’s not an exaggeration. In 1998, we had the Long Term Capital Management crisis where I negotiated that bailout. In 2008 Bear Stearns failed, Lehman Brothers failed in September 2008, Fannie and Freddie… the entire rest of the dominoes would’ve fallen as well. That didn’t happen because the Federal Reserve intervened to the tune of tens of trillions of dollars.”
Trump, The Federal Reserve and the Looming Recession
“Here’s the point I make in my book, in 1998 Wall Street got together and bailed out a hedge fund. Then in 2008 the central banks and bailed out Wall Street. In the next crisis, who is going to bail out the big banks. In other words, each crisis gets bigger than the one before. Each bailout gets bigger than the one before. We’re now to the point where we’ve exceeded the capacity of the central banks to “save the day.” When the next crisis hits… where’s the money going to come from next? The Fed balance sheet has expanded from $800 billion to $4 trillion to deal with the last crisis. The problem is they have not normalized and are still at the $4 trillion mark. What are they going to do in the next crisis… Go to $8 trillion? What’s the limit? There is an invisible limit. The Fed knows it. They’re not prepared for the next crisis right now.”
“Where is the money going to come from if you have to reliquify the system? It has to come from the International Monetary Fund (IMF). They have the only clean balance sheet left. We’re focused on trillions of Special Drawing Rights (SDR’s), or world money, that they will print. These outcomes are …read more
Source:: Daily Reckoning feed
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