Chris Martenson Interviews Jim Rickards: Paper, Gold Or Chaos?

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Jim Rickards: Paper, Gold Or Chaos?

History is replete with the carcasses of failed currencies destroyed through misguided intentional debasement by governments looking for an easy escape from piling up too much debt. James Rickards, author of the recent bestseller Currency Wars: The Making of the Next Global Crisis, sees history repeating itself today - and warns we are in the escalating stage of a global currency war of the grandest scale.

Whether it ends in hyperinflation, in the return to some form of gold standard, or in chaos - history is telling us we can have confidence it will end painfully.

On The Cause of Currency Wars

A currency war in the simplest form is basically when there is too much debt and not enough growth. The overhang of debt impedes growth because it clogs up bank balance sheets and clogs up the savings to investment mechanism and has a lot of negative effects. So there is not enough growth to go around. So countries, in effect, try to steal growth from their trading partners by cheapening the currencies.

And indeed, the Fed and the Treasury are trying to do that right now. They are trying to cheapen the dollar, probably for the reason I mentioned. The problem is it does not stop at that. It invites retaliation...
A couple things happen. Number one – we cheapen our currency but other countries try to cheapen their currency also, so you get into these tit-for-tat devaluations where nobody wins. All you do is unleash inflation, restrict world trade without anyone getting an advantage. I like to say that in the currency wars, all advantage is temporary. You give it up pretty quickly.

The other thing is that for countries that cannot necessarily devalue, they can use capital controls, they can use import excise taxes. Currency wars can turn into trade wars. Ultimately, they can even turn into shooting wars. So you get all these bad effects.

So if the US could cheapen the dollar in isolation, if nothing else happened, maybe there would be some quick advantage. But that is not what happens. But it is a temptation that politicians and policymakers can not resist, but it ends very badly

On Current US Monetary Policy

There is no question. It is quite clear that the Treasury and the Fed are trying to inflate their way out of the problem and debase the dollar.

The problem I see is they might not get there, and here is why. The Fed thinks they are playing with a thermostat. You know, you can, if the room is too cold you dial it up. If the room is too hot, you dial it down by adjusting the money supply and working a little bit with expectations on the behavioral side that can gradually tweak economic behavior and lending and spending velocity and money supply that achieve a desired result. The problem is they are actually playing with a nuclear reactor. They are playing with a complex system that is in or near the critical state. Now, you can dial a nuclear reactor up and down but if you get it right, the consequences are worse than having to put on a sweater. The consequences are catastrophic. You can melt down a reactor and ultimately, the entire financial world.

So the danger I see is the Fed thinks they are playing with a thermostat. They are playing with a nuclear reactor and they risk collapsing the entire system.

On the Importance of Understanding What's Happening

So that is what the Fed is trying to do. They are trying to get that lending/spending machine going again, get the velocity of money up and kind of inflate their way out of this problem.

A couple problems with that. Number one, two percent inflation is not so benign. Two percent inflation cuts the value of the dollar by seventy five percent in the course of a typical lifetime. So it cuts it in half in thirty-five years and then in the following thirty-five years, cuts it in half again. So now, you are down seventy five percent from where you started. So from the time you are born to the time you die, your dollar is going to lose seventy-five percent of its value. That is at two percent inflation. At four percent inflation, it will cut the value of a dollar in half by the time your children go to college. So these are cancerous rates of inflation. Two percent sounds warm and fuzzy. It is not.

The other thing economists say is, you know, who worries about inflation because your wages are going up and it all comes out in the wash. Well, I mean, this is the kind of thing that only an economist could say. But the fact is some of it does come out in the wash on average. But we do not live on average. We live our individual experiences.

And the fact is in inflation, there are winners and there are losers. The winners are people who can see it coming, who understand what you and I and hopefully the listeners are talking about and hedge their position by getting gold or silver or land or fine art or investing in railroads as Warren Buffett is doing, some kind of hard asset play. The losers, those are savers, people with insurance policies, annuities, pensions, retirement plans – anything denominative dollars that are not going to go up when the inflation kicks in.

This interview is so insight-packed I had trouble winnowing down the quotes to highlight. It is a 'must-listen' for those concerned about preserving the purchasing power of their wealth.

Click the play button below to listen to Chris' interview with James Rickards (runtime 29m:25s):


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GeneMarchbanks's picture

Actually, we're all losers as the failed experiment will show in the coming years. Nobody gave a shit about fine art in the Dark Ages because food was hard to come by.

Rickards as a predictive analyst is a joke.

Transformer's picture

Yeah, this whole doom and gloom thing is wearing on me.  It can't really be all that bad.

The Big Ching-aso's picture



Rock, paper, scissors, gold?

Motley Fool's picture

It won't be. In fact I see very prosperous times ahead...after the crash of course.

Badabing's picture


Sure blame us not the fuckers that took us off the gold standard.

Inflation is the crime that is responsible and we had no choose in the matter.

my dad was able to support a family of eight  with the salary a presser makes. Thats a guy that presses pants at a laundry. Inflation made my mom have to work to make ends meet.

Inflation doubled  the work force while all the jobs got outsourced. inflation is a ripoff by the guys in control. Tell me what the fuck gives them the right to inflate the the money that we use to save!

get off the peoples back the people are the victims. the population in the usa is shrinking to the point that the SS ponzi don't work. Even with a shrinking population we should have more to go around, BUT NO inflation took that away!  


LowProfile's picture

Yeah, but look at all the government jobs that enabled...  And all the freedom we spread!


Mariposa de Oro's picture


I share your frustration.  The assholes have no right to do this to us.  Unfortunately, the majority of people give them the opportunity.  I woke up a few years ago and have been trying to wake up those around me.  They REFUSE to think.  How much success have you had waking up those around you?  Face it, most Americans can't be bothered with this.  They live in LaLa land.  Soon enough they'll be living in the real world.  Maybe then things will have a chance at getting better.  Until then, its gonna suck.  Remember, you can't make someone care.  Either they do or they don't.  You can't force it.

Badabing's picture



Look i'm no economist, I'm a working guy and i get it .

i've noticed at gatherings people are getting it.

As it gets worse it gets out that we have been taken over by some greedy bastards.

people are waking up, it is hapening!


Mariposa de Oro's picture

I'm an electronics technician by trade but I was able to see this shit coming a long way off.  Unfortuanely, those around me still don't get it. BUT, I'm on a remote island and we don't have the same pressures.  We don't even have personal vehicles here!  We don't buy gas, pay utilities, etc.  Yep, we're all on the teat here.  Folks here are determined NOT to see it.

Badabing's picture


Sounds like your pretty isolated. very cool you live on an island that doesn't need cars, I like!

But does this isolation give you a false feeling that every thing gonna be alright?

look at the big picture, the world is revolting, the middle east, Greece, London. the protests are a sign that people are not going to take it any more and it's getting worse. 


A Nanny Moose's picture

You are watching the process of creative destruction. A little revolution now and then....

So what's the problem?

Mariposa de Oro's picture

I don't think eveything is gonna be alright for everybody, everywhere.  Those that are awake and have prepared adequately, will for the most part be okay.  For the majority who don't even see it coming, particularly in the USA, it'll seem like  TEOFTWAWKI.  The survivors will flourish once the crap is cleaned out of the system.  As for the folk on my island, we have everything we need here to survive.  Will we work together and do it, who can say for certain.  I think we will.  It won't be smooth transition but we'll manage.  Because of our remote location we have an actual community here.  Everywhere you go, you know people.  There are less than 2000 of us here.  Because this is a military installation, trouble makers and unemployed people are sent back home to the mainland.  We're  a small city in the middle of an ocean and have all the skills needed in get by.  If food and fuel stop arriving it'll be shock to the system I'll give it that, lol.  But we have a huge water catchment system, fish in the lagoon and a shit-ton of coconuts as well as other tropical fruits in small quantity.  We have a couple hundred engineers and technicians here.  We're all quite accustomed to making do with what's available.  Will I miss air conditioning and indoor plumbing?  You bet, lol, but I've been homeless and in the Army and can tough it if I have too.  Many others here  are the same.

Badabing's picture


M D Gold

just try to imagine that the earth is an island.


Chuck Walla's picture

Its the chumps selling their votes for a pitance that do the damage. they Twitter Obama how happy they are that the master will give them another $40 a month. Obama just took in 5+ million  last week. Shouldn't they be demanding something a little more substantial than $40?  They pay no income tax and could not care less about those who do as long as some Progressive is willing to give them a lawful claim on another man's paycheck.

EnglishMajor's picture

But the savior state is like a big brother. He looks out for us. He watches over us and gives us a little money and some food when we need it. Big brother will always take care of us and keep us safe from the evil-doers. Big brother is all we need.

malek's picture

I would love to have the same feeling about people waking up. In my experience most still aren't.


Marty Rothbard's picture

You are correct, but things are changing.  I hope for the better.  As Joe Sixpack loses his job, because the car parts are now being made in China, and consequently, he's losing his house, his wide screen TV, and his asurdly large pickup truck, because he can no longer make the payments. He is  losing his family, because his wife is divorcing him, since he has no money, so she can get the quickly devaluing welfare benefits, that the government only gives to single custodial parents, along with the few dollars he can make at Walmart, as child support.  He is rapidly running out of things to destract him, from the way assorted governments, banks, and institutions are bending him over, and reaming him out.  It's too bad the same bad actors have convinced him that we need to keep killing lots of muslims, or else we will never be safe from terrorists.  Otherwise he could vote for Ron Paul, and give his persecutors a reaming for a change.

  I'm afraid however, that since Ron Paul is unaccepably nonwarmongering, there is no choice, other than civil unrest.

oldman's picture

@ Bad,

Agreed, but being off the gold standard and having gold unpegged and traded openly(until recently) has allowed us to see inflation and the effects the theft of the common weal by government and its partner----crony capitalism, sooooooo clearly. This de facto regulator has made all of this obvious for several decades now, but we still pay for war and fuck the working people for all we asre worth.

The whole discussion is fallacious-----throw the motherfuckers(there is no other name for them) out and stop the wars. The growth problem, in part, comes from exporting productivity and importing unemployment and discontent. Basically, we are just to stupid to survive---we don't get it.

An oldman is not so affected, but he does shudder for the future of his grandchildren and those of his friends. Life is too sweet and beautiful to make life so difficult for so many---there's plenty for each member of every species on this planet



Badabing's picture


Old man take a look at my life it's a lot like you.


Its a tough road to right this world wide problem we have. When i say "we" i'm talking about huminkind. I've heard only 1% is in control, and they use this paper ponzi to pay off the the poor basterds that suppress upriseings little to their knowing its their own children and brothers that are getting beaten down for the god given right of happyness. When mercenaries will have to be paid in gold by the 1% this war will be over. Some say it's TSHTF but it can also be a new beginning. I served in the army during Vietnam and didn't serve with anyone who thought that what we where doing was right and we had a choice to expatriate or fight the draft was on at the time. but the young people spread the word with music and it did change things. today we have the WWW. It's sad that I can be consitered a terrorist!

Whiner's picture

I am 68. I have five productive children. I feel lucky,and blessed. I rode the bubbles of inflation and survive today with a net worth sans debt. I am like the guy at the lavish party of drunks who only got a buzz, ate some shrimp and left sober before the gigantic bill was presented to the drunks on the floor, the cops turning on the lights. Glad I am going and not 'acomin'!

Lednbrass's picture

The problem is that the drunks arent going to pay the bill either, its going to be tabulated and divided amongst everyones children unless we get a crash. Theyre all laughing and walking out.

PMakoi's picture

"The debt must be repaid!" -attribute quote to nearly any economist, banker, politician, lawyer, judge, TPTB, etc...

Retort query: "Why?"  Eventually, people will ask.  Eventually, people will refuse to pay for the mistakes made by lenders.  Eventually most will be unable to pay, and the few will finally refuse to pay.  The financial Ponzi will end, but not before some of us are ostracized, jailed, made paupers, and scapegoats.  Maslow's overpopulation resolutions coming to Countries near you soon.  Keep your family, your neighborhood, and your communites strong.  It will matter. 

SunnyDD's picture
You got it man!!!!


++++++10000000000000 hehe.


ManOfBliss's picture

This isn't the dark ages, faggot. Food is more readily available. Storage and refrigeration methods are vastly improved. Farming methods are far more productive. Food is much more abundant and will be more accessible during a collapse. Fine art will be a barter good, because we all know EVENTUALLY we'll come out the other side of this, and art will retain its value.

He shared 30 minutes of really helpful insights, and you're only reply is... "he's a joke". You're obviously intimidated by him.

The Alarmist's picture

Only because they haven't cut the power yet, doofus.

BidnessMan's picture

What is all this "the grid is going to fail" thing all about?  Absent a major weather event, there is no reason for the electrical grid to go down the day there is a financial event.  Nuclear power plants are fueled for years.  Coal plants have 60 - 90 days of coal on the coal pile at the plant.  And the coal is delivered either mine mouth or by trains.  All of the recent generation capacity additions have been natural gas peaking combustion turbines.  That have underground gas pipelines to the power plants.  And with NG prices at very low prices because of all the new supply from the Barnett Shale and other fracking / horizontal drilling recently, the Combustion Turbines are now cheap as well as fast and easy to spin up.  As long as utilities keep paying the generation operators and the linemen, typical line failures will be replaced.  Most of the electrical grid operates without a lot of human intervention anyway.  There is likely to be financial chaos, but all the "stuff" will still be there.  Just a matter of who owns it.

That said, if the "With my EBT, its Free" crowd in central cities just starts randomly burning down their neighborhood, and chopping down power lines to sell the copper for scrap, all bets are off for all kinds of services including power to center cities.  But that is not where electrical generation stations, or the cross-country transmission lines, are typically located.  The electrical distribution network outside of major cities will be okay, and there are enough Transmission interconnects to route around failed cities.  Despite periodic union grumbling, the average electrical lineman takes pride in keeping the lights on, and quickly getting the lights back on after a storm.  They are not part of the "With my EBT, Its Free" crowd, and I expect they will continue to keep the lights on outside of center cities.  Those guys rise to an occasion.

So let's stop with the "the grid will go down".  Only if a pack of really stupid people destroy the electrical distribution network will that happen.  And it will be local to their neighborhood.  If they crap in their own nest, well there is no law against being stupid. 

kentmills's picture

It is hard to pay an electric bill without a functioning currency. No payments means no juice.

A Lunatic's picture

And good luck growing enough to feed yourself, let alone your family/neighbors/community/State, without a shitload of chemicals in the form of fertilizer, insecticide, fungicide..............Of course maybe all of his food is made at the grocery store.

earleflorida's picture

our nat'l electrical grid is barely out of the 20th century - when's the last time you read up on america's current crises

can't even talk/hand-off electronically to stationary grids within a few hundred miles away in most areas - rolling blackouts as far as the myopic bureaucrats can't see [?], and a change in the weather pattern down south in hurricane season that "Just" might send hurricane alley up the eastern shores into virginia, ny, n.e.,... just like last summer --- jmo

pathetic! ___ 11/4/2010

Vic Vinegar's picture

Yeah but here in Amerikka (LOL) we can still link to

earleflorida keep in mind that fading Jim R is a rather profitable play.  Nothing pathetic about that.

OldTrooper's picture

Of course, the other side of that is without juice, there's no payments of any kind (no eggs, no FRNs, nothing).  How long can a utility company make it on zero income?  There will be local currencies.

Wolf-Avatar's picture

I was thinking one step further back from that.

Who is going to be running the equipment if they aren't going to be paid for spending all their time there.

I think it more likely that they will be at home trying to get THEIR stuff in order rather than worrying whether anybody elses is in order FOR FREE.

BidnessMan's picture

Unless the customer has a functioning smart grid meter, the electro-mechanical meter does not turn itself off just because the bill is not paid.  Someone from the utility has to go out and manually turn off the meter for non-pay. If there are a lot of non-paying customers, that might take quite a while.  And the utility gets no revenue if the meter is turned off.  And hope the customer does not hot wire around the meter to keep their power on.  Just saying how it works in the real world....

malek's picture

maybe you should lower your daily dose of hopium, to see the light

Dirtt's picture

Nothing personal but you FAIL to look at reality.

The premise with solar is that more structures on PV would allow us to wean off fossil fuels lowering the costs of energy.  Except HECO is now jacking up rates "because the number of solar installations is draining revenue" for maintenance of the grid.  Propane is now $6.30 PER GALLON here.

YOU FAIL to recognize that everyone is a fucking LIAR.  The grid will go down.  WHY?  Because they are FUCKING LIARS.

You look at this with a rational mind.  FAIL.

The whole alternative energy scam was never meant to draw down on the grid.  Crap in your own nest?  Where do you live?  I live in paradise and the crap is everywhere.  This has nothing to do with "electrical distribution" and everything to do with the wrath of unintended consequences.

Someone at the FDA is trying to figure out a way to make energy a food group while the Fed is pretending that energy doesn't belong in the CPI.  Good riddens USA.

The Alarmist's picture

It takes a whole lot of somewhat free and fair exchange for the grid to produce at its current level (even if the end product is not so freely or fairly offered), and as pieces of the supply, generation and distribution channels fail the grid starts to fall away.

At some point people in places like Washington state might get tired of paying high rates because all their power is being sucked away to supplement and subsidize rates in San Francisco, so they cut the lines. What are the Feds going to do? Nationalise the power generation assets in Washington and force the locals into involuntary servitude to run it under threat of jail? Use the Army to run it?

Don't think it will happen? Lou Dobbs is already making noise that the US should stop being the largest exporter of refined gasoline because it keeps US gasoline prices higher than they "should be." Follow that through ... US stops exporting gas to lower it's prices; rest of world stops selling oil to US because they now need to re-source refined products to a more reliable producer, so US now has even higher prices and a far bigger problem.

Absinthe Minded's picture

Oil. If we have it we survive, without it all bets are off.

Clay Hill's picture

Dear Mr Mertz,

To be fair, I will acknowledge that you have a valid point about linemen and plant operators rising to the occasion when the grid is threatened by weather events. We rise to the occasion precisely because we are well compensated to do so through contract negotiated overtime, and hazard pay. Many of us are motivated to one degree or another by things like patriotism, or pride in our community, but these are a pale shadow compared to monetary compensation.

Keep that in mind as you read on.

Your point about NG and the speed at which new equipment can be brought online is also well taken. However, these projects can only flourish in an organization that is well staffed, well run, and above all well capitalized.

Do you think that a "credit event" involving Sovereign debt will not also rapidly spill over into the Muni market? Do you think my people in payroll, or accounts payable keep stacks of cash in a box somewhere?

I assure you they do not. It is all run by electronic ledger entry the same as the rest of the economy, sir.

Next, I will deal with your misconceptions about how power transmission and repair scheduling is prioritized. Despite the fact that power generation and water treatment plants were usually placed well away from densely populated areas, we had two decades of housing developments incroaching on the buffer areas that were in place when most of these plants were built. There is also the little matter of where most Federal, State, and Local offices are located.

You guessed it... densely populated areas.

Not only is it more profitable for the Utility to return service to the most densely populated areas first, we are under orders to do so by those aforementioned Government authorities. The easier for them to quell any disturbances that may arise from hundreds of thousands of Twitter and Cable TV addicts awakening to find themselves in the middle of the 19th Century. With no food. And no money.

Now for the big question. Do you think that I will cheerfully drive through torchlit neighborhoods passing darkened or destroyed gas stations to repair lines and pumping stations while under fire from an enraged citizenry? For the weeks on end that would be required to get it all back online?

To collect rapidly devaluing or useless paper?

Good luck with that, bitchez.

BidnessMan's picture

All good points.  And I don't expect you or your compatriots will drive through torchlit neighborhoods while under fire from an enraged citizenry.  Regardless of what any Government Authority has "ordered" you to do so.  I was in New Orleans after Katrina.  No utilities got repaired until after the National Guard restored some semblance of order.  I recall the Sprint cell tower repair guys had to pull back to Baton Rouge when the locals were stealing their tools out of their repair trucks while they were inside the cell tower equipment rooms.  Only returned to New Orleans when Sprint could arrange for Blackwater to send along an armed guard with each repair truck.  

So you guys will repair what you can, where you can.  Which will likely be outside of city centers where there is civil unrest.  Despite whatever "orders" you get from Government Authorities. Don't blame you - I won't be there either.

Clay Hill's picture

Thank you for the reply.

It was not my intention to be snarky in a personal way, but I do get a bit tired of the "magical thinking" most Americans have about living in a society so heavily dependant on 21st C technology.

For the most part they have no idea how fragile the grid is, even under the best of circumstances. Even now, there are whole sections of my city where we do not go without without armed escort. In daylight. Some of my buddies were called up to deal with the aftermath of Katrina, and I've dealt with being accosted by the public after power loss lasting five days. Not fun.

I see some type of world-wide credit or currency "event" as inevitable, and have extrapolated the cascading effects down to how I will be affected at the local level. That's all.

But all is not lost. Eventually some form of leadership emerges. What worries me is the type of leadership. If it is going to be more of the same, then welcome to the 19th Century, bitchez.

tarsubil's picture

The unique thing about the dark ages is that mankind regressed at the beginning. The logistics of the Roman military disappeared for a thousand or more years. The dark ages were all about slowly and painfully rising from the muck. Another dark age is probably coming. We're hitting our peak or already have. Things will regress and it'll be another slow and painful rise from the new muck.

Mariposa de Oro's picture

Rise  from the muck we will.  I don't think it'll be a thousand years, either.  Many people are educated and we'll still have technology.  The 'Swipe my EBT, its free' crowd won't be contributing however.  It'll be the 'preppers' and those that remember the 'old' ways.  Even my 23 year old daughter and her peers are getting it.  I don't believe the whole world will go dark/Mad Max.  It may seem like to the 'Government will save us' crowd, though.

xela2200's picture

Agreed. The US will do an Iceland eventually. It will take a decade or two since the US is piling on more and more people that will depend on entitlement programs.

One year here in Miami, we had about 5 hurricanes visiting us (Wilma and Katrina). The community became closer. Greed times bring the worst out of people but times of need brings out the best in people. We will see.

Prometheus418's picture


It may be bad, but I and others are doing what we can, as fast as we can, to collect and store as much information as humanly possible for just such an occasion.  With computer technology, it's amazing how much even one person can collect and store in a Faraday cage.  I am fully aware that that is not a hard copy, but enough electronic copies with the equipment and power sources to run them distributed as far and as wide as possible is bound to shorten the rebound period.  While Alexandria was one location with manuscripts painstakingly copied by a small literate elite, anyone can now store whatever information they feel they may need on SD cards and tuck them away in metal tins.  Tie that to a $200 netbook in a fireproof safe and a solar panel to charge it, and you have a whole library whenever you may need it.

GeneMarchbanks's picture

He performed brilliantly in the LTCM case. A true patriot, you should hang on every word he utters with all his amazing insights. You should purchase his book on amazon... or you can visit several blogs for free that document the glaringly obvious fact that economics in this century is a replacement for military expansionism.

Errol's picture

The Roman empire ran out of cheap energy (slaves and tribute from easy conquests); 1000 years of depression followed.

The US empire is running out of cheap energy (easy to exploit coal and oil).  Fertilizer, irrigation, refrigeration, and distribution systems for food are all powered by fossil fuels.  Due to overpopulation, pollution, topsoil loss, and climate instabillity, the depression following the collapse of this empire will likely last for more than 1000 years.

Oh, and all over Europe buried hoards of Roman gold and silver coins have been found; the owners buried them, intending to return for them later.  Just sayin...