Should Investors Prepare for a Dollar Doomsday?

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April 8 (Bloomberg) -- James Rickards, managing director at Tangent Capital Partners and author of “The Death of Money,” explains his view of a coming collapse for the U.S. dollar and the role confidence plays in supporting the currency on Bloomberg Television’s “Market Makers.”


What is different now?

Nothing is different.

You are not going to sell books by saying nothing is different.

Books are hard to sell.

I would rather sell hedge funds.

Look, the system is larger.

The worst thing that can happen is an exponential function of scale.

You make the system bigger, you have a bigger collapse.

That is further down the timeline.

The analysis is fundamentally the same.

What is the ultimate thesis here though?

Deflation is the biggest problem in the world.

The world wants to the fleet.

The central banks and governments cannot have deflation.

It creates bad debts and hurts the banks.

They print money.

If you print enough money, you will collapse confidence in the dollar.

The dollar is backed by confidence.

[indiscernible] we have money issued by an insolvent central bank.

How long can i go on before people walk away from it?

Let's work with your thesis for mama, that the dollar is ultimately backed by confidence.

Where would we be confidence-wise if the fed had done nothing, if the fed had not engaged in quantitative easing and not inflated its balance sheet to trillions of dollars?

People would argue that we would be in a depression.

What kind of confidence is there in a depression?

We are in a depression.

If the fed had not done everything they did, things would have been much worse in 2010, no question.

But we would be much stronger today.

We should be having 7% growth.

We cannot have that for a long amount of time, but you can for a short amount of time.

We have one point nine percent growth as far as the eye can see.

I would much rather have much more robust growth.

The fed truncated the v. as an investor, why do i care?

As long as central banks are doing whatever it takes in the market keeps chugging along, i am confident with that safety net.

I want to buy him feel good about it.

The safety net has holes.

It cannot go on indefinitely.

Why not?

I was in asia and australia last week, and i say the fed is in a dilemma.

Some people said they can do a trillion dollars or $12 trillion.

People said, why doesn't the fed right off the treasury debt?

They actually could do that legally.

Someone economists, and there are some, say the u.s. is approaching is gay velocity were the economic recovery will be self-sustaining and the fed can begin to back off what quake -- we had green shoots before.

Nobody has a worse forecasting record than the fed.

They do a one-year forward forecast every year.

2009 addicted to thousand 10. they have been off every year.

Who cares?

Ben bernanke said once we get to 7% unemployment, we will he done with the taper.

But we have not even begun.

Listen to yourself.

Who cares about destroying confidence.

I care.

I think investors should care.

They should care, but the way people invest, but -- like the way the vote, it is what they care about today.

I wish they thought long term.

Unfortunately, they do not.

That is absolutely right.

Stock market down 30% a couple years from now, you concert of kiss those investments to buy.

Look at warren buffett.

He is getting out of cash and into hard assets.

What about new york real estate?

That is exactly right.

The fed talked about this in chapter three.

The fed is manipulating every market in the world as far as interest rates.

I do not like to be in a manipulating market.

The other thing investors care about is results.

This is been an operating thesis of years for some time already.

Let's rewind the clock for arguments sake to the bottom of the equity market.

March 9, 2009. since then, the s&p 500 has returned 175%. gold is up 40%. hedge fund is measured by the hedge fund research brought index, up 20%. so your thesis has not delivered results -- yet, perhaps.

But what do you say to somebody who looks at the chart?

Two things.

That is exactly the chart i would expect to see.

As stocks are in a bladed higher with zero -- as stocks are manipulated higher with zero interest rates -- they sold 400 tons of gold in 2010. 200 tons went to india.

Where did the other 200 tons go?

They are not transparent about that.

They are funded by u.s. taxpayers do it why will the imf not tell us where that gold went?

It is fun to cherry pick start points.

Go back to 2000 and you will see a very different chart.

And for folks who read your book tonight, what should they be doing in the market tomorrow?

I recommend about 10% gold.

Not always.

70 will read your book tonight.

What is the take away?

-- somebody will read your book tonight.

What is the take away?

Do you want to make money or preserve wealth?

You can make money today and lose it tomorrow.

We talk about the own money in the u.s., the 100-year all money.

In europe, some of that money is 4000 years old.

You cap they survived and they say a third, third, third.

One third gold, one third land, and a little cash.

That is how you preserve wealth for the long run.

I wish i was in the position to preserve the wealth.

This text has been automatically generated. It may not be 100% accurate.


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