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The Four Horsemen Cometh ‘Aftermath’ by James Rickards, reviewed by Frank Lee

Frank Lee

Image source: FinancialSense.com

“Aftermath” is the latest addition to three previous publications by Rickards, Currency Wars (2011), The Death of Money (2014), The Road to Ruin (2016). Together, with the present offering (Aftermath, 2019), the author uses the analogy of the Four Horsemen of the Apocalypse to illustrate the themes of his four books. The latest book is thematic in its approach to the events which have taken place in the world in general and the United States in particular during this period.

HIGH SOCIETY

Rickards had previously worked for the CIA (possibly still does – who knows?) but now seems to be a free-wheeling business executive, writer and strategic analyst. He tends to circulate outside of the usual middle-ranking semi-elite circles preferring to consort with the less observable, higher-ranking coteries of the inner-party. Moreover, he has nothing but disdain for the run-of-the-mill talking heads to be found (in abundance) in the media and academia – the outer-party.

His observations of this social stratum are unapologetic and caustic:

History is the first casualty of media micro-second attention span. An army of pseudo-savants saturate the airways to explain that tariffs are bad, trade wars hurt growth and mercantilism … are a throwback to the 17th century. These sentiments come from mainstream liberals and conservatives and tag-along journalists trained in the orthodoxy of so-called free-trade and the false if comforting belief that trade deficits are the flipside of capital surpluses. So, what is the problem? … The problem is that perpetual trade deficits have put the United States on a path to a crisis of the US$.”[1]

As is apparent, his contempt is palpable.

It should be said that much of his writing and theorising is at times occasioned by a high level of sophistication, alas sadly lacking in most of his contemporaries. But for all his refinement and eloquence that doesn’t stop him being, from Off Guardian’s perspective (and mine), on the other side – the side of the Anglo-Zionist empire.

THE GREAT BETRAYAL

Throughout this book and previous books there runs a familiar leitmotif; a sense of betrayal by the present dominant section of the US elite. This is not by any means an unusual political phenomenon and bears comparison with the stab-in-the-back myth – a notion doing the rounds in Germany circa 1918.

It held that the German Army did not lose World War I on the battlefield but it was ‘traitors’ on the home front, especially the traitorous republicans who overthrew the Hohenzollern monarchy in the German Revolution of 1918–19.

This precedent loosely corresponds to Rickards’ belief in the perfidy of the current leadership of the US and his vitriol is directed against this globalist faction who are firmly ensconced in both Democrat and Republican parties and whom, he argues, have sold the pass in terms of America’s strategic interests. He writes:

Obama, both Bushes, and Bill Clinton were globalists, defined as those willing to trade-off or compromise US interests for the sake of a stronger global community … even conservative hawks like Reagan and JFK were firmly in the globalist camp, as they relied on NATO, the UN and the IMF … to pursue their cold war goals.

However, all was not lost. As a result of…

…the Presidential election of 2016 when Donald Trump was sworn in on 17 January 2017 as the strongest nationalist since Theodore Roosevelt. For the first time in 100 years a committed nationalist was sitting in the Oval Office.” [2]

The event was obviously political grist to Rickards’ mill.

However, precisely how this liberation of the US from the domestic globalists’ stranglehold was to be brought about wasn’t made clear, and in fact is barely touched upon by Rickards.

Trump, for all his bombast and promises to Make America Great Again (MAGA), and pursue a radical foreign policy of withdrawal from globalist wars of choice and military adventurism, has been conspicuous by its absence.

Moreover, from the outset he has been beset by the ancien regime of neo-conservatives and neo-liberals – Bolton, Pompeo and Pence – entrenched in key US institutions, as well as various think-tanks and media who are still doggedly set upon the realization of neo-con foreign policy goals.

It seems odd that Rickards doesn’t see fit to comment on this important development given that Trumps’ campaign promises have disappeared almost without trace since he entered the Oval Office.

IT’S THE ECONOMY STUPID

Rickards is on firmer ground, however, when dissecting the 8th wonder of the world – US economic policy. The US sovereign debt (i.e., the debt of the Federal Government) to GDP is now at a record, this is unprecedented for a peacetime administration.

In addition, it is also worth noting the magnitude of US private debt and unfunded future liabilities, pensions, Medicaid, social security and so forth.

This would include household debt, student debt, financial debt, corporate debt, and municipal debt. Add this to sovereign debt and you get a figure roughly 5 times US sovereign debt, and even this is regarded as being a conservative figure according to many – see David Stockman, John Mauldin et al).

According to Rickards, the present situation has been largely the result of excess spending by both Democratic and Republican administrations. The spending has either been on ‘Defence’ – a Republican favourite – or social like L.B. Johnson’s ‘Great Society’ programme – a Democratic favourite.

LBJ’s administration contrived to conduct the Vietnam War as well as an expensive social programme, simultaneously. A guns plus butter economy. (The original version of the Guns versus butter argument was given in a speech on January 17, 1936, in Nazi Germany. The then Minister of Propaganda Joseph Goebbels stated: “We can do without butter, but, despite all our love of peace, not without arms.”)

LBJ’s guns-and-butter policies were enacted in the late sixties at the height of the Vietnam war and the Tet Offensive. The utopian attempt to have the best of both worlds brought LBJ’s administration to an end; more importantly, perhaps it was also the beginning of the process which brought down the curtain on the post WW2 economic world order established at the Bretton Woods conference in 1944.

Because the costs of the Vietnam war were superimposed on the economy not far effectively from full employment, the US domestic sector was severely destabilised.

Instead of taxing the nation to pay for the war, the government engaged in the more acceptable practice of deficit financing…

Vietnam showed that neither the United States nor any other democratic nation can ever again afford the foreign exchange costs of conventional warfare, although the periphery was still kept in line by American military initiatives most recently in Yugoslavia and Afghanistan.

The lesson in the long term is that peace will be maintained only by governments refusing to finance the military and other excesses of the increasingly indebted imperial power.” [3]

The figure for the US sovereign debt – began to rise relentlessly from the 1980s onwards approaching wartime levels by the time of the 2008 blowout.

It has been estimated by some economic theorists that any sovereign Debt-to-GDP figure greater than 60% represents a tripwire whereby governments should act to rein in government expenditures.

The EU Maastricht criteria, for example, stipulated that EU Debt-to-GDP should not go over 60% except in certain circumstances and an annual budgetary deficit should not be more than 3%.

That is a pretty tight monetary and fiscal policy EU style, but not to be outdone the spendthrift US was to go on a wild binge in both fiscal and monetary terms the result of which is a now an unpayable mountain of debt. This gives an indication of how far US economic policymaking has drifted away from any viable economic strategy.

Rickards fulminates:

To see how America came to this pretty pass we, one needs to review almost 40 years of fiscal policy under Presidents Reagan, Bush 1, Clinton, Bush 2, Obama and Trump from the period 1981-2019.” [4]

Under Reagan in 1981 US Debt-to-GDP ratio was 32.5%. The President was gung-ho for tax cuts and big spending increases, particularly ‘defence’ spending. This trend was continued under the tutelage of the Bushes and Clinton, and Debt-to-GDP ratio rose to 56.4% when Bush Jr, took office and had risen to 82% by the time he left.

The Obama years saw the Debt-to-GDP rise to 100%. The diagram below 2009 debt-to-GDP was 82.3% This figure has risen inexorably to over 100% in 2018. Yep, here we have the dreaded law of Diminishing returns. Every new dollar of input gives you 90 cents of output.

The above diagram illustrates the growth of debt vis-à-vis National Income (GDP) since the 2008 blowout. Debt has been growing progressively faster than National Income.

The US economy, like the US shale oil industry, has become a Ponzi scheme in all but name. The Fed’s issuance of new debt to pay off existing debt signals the key moment of the Minsky crisis.[5]

There doesn’t appear to be any viable way out this predicament short of a straight default. But Rickards argues that ‘the United States will never default on its debt because the Fed can simply print the money and to pay it off.’ This will involve an engineered inflation to wipe out the debt. But in fact, inflation is the default, a default by the back door. Getting paid in worthless currency is in essence no different than not getting paid at all.

NO EXIT

As for solutions to a crisis which has seemingly reached the point of no return, all that Rickards can offer is a Japanese scenario of low or zero growth punctuated by recession for the United States and by implication for the rest of the world. The United States had its first long decade from 2007 to 2017 and is now into its second decade.

This growth pattern will persist absent of inflationary breakout which the Fed seems powerless to ignite in the short run; a war; or severe depression perhaps caused by a new financial crisis.[6]

Not much of a prospect for the average family then. But Rickards does give some useful advice to his more opulent readers on how they should diversify their assets.

There are apparently “luxury bombproof bunkers built in former missile silos and expansive estates in New Zealand loaded with rations and good wines.”

Really? At this point one wonders if Mr Rickards is being serious or just smug.

SOCIAL IMMOBILITY AND THE RISE OF OLIGARCHY

The social and economic impact on levels of inequality in both the US and globally have been extremely deleterious and seem set to continue. Inequality in income and wealth – a phenomenon identified and outlined by Thomas Piketty – is resulting in societies which more and more resemble feudal economic and social structures rather than textbook capitalism. Social class is hardening into social caste and rates of social mobility are decelerating at an alarming rate.

The liberal notion that the individual is the author of his/her own destiny has become a very dubious proposition when the drawbridges of advantage, birth and preferment are drawn up. Moreover, high levels of income/wealth are not conducive to growth since the new aristocracy owns most of the wealth/income which is hoarded rather than spent on investment and/or consumption. Stagnation, idled capital and rent extraction becomes the economic norm.

Inequality … is common in college admissions where the wealthy and connected continue to send their sons and daughters to elite schools while the middle-class are restrained by sky-high tuitions and the burden of student loans.

It’s true in the housing market where the rich picked up mansions on the cheap in foreclosure sales whilst the middle-class were frozen in mortgage negative equity.

It’s true in health care, where the rich could afford all the insurance they needed while the middle class were handicapped by unemployment and the loss of job-related benefits. These disparities also affected the adult children of the middle-class. There are no gold-plated benefits packages in the gig society …

Research shows that fewer than 50% of all children aged 30 today earn more than their parents did at the same age. This 50% figure compares with 60% who earned more in 1971, and 80% who earned more in 1950.

The American dream of each generation earning more than the prior generation is collapsing before our eyes … The middle class is getting poorer on a relative basis and lagging further behind the rich whose incomes absorb an increasing share of total GDP … The manner in which the rich become rich is variable.

It could be due to a number of unrelated factors … Problems arise in the way that the rich stay rich become richer and pass on wealth to their children and grandchildren.” [7]

It is a matter of common knowledge that the traditional techniques of preserving and creating wealth have been long established in law, customs, education and socialization; these traditional methods being practised over decades, if not centuries, have produced a system of elite self-recruitment, one moreover which endures through time.

Many of the richest US citizens – e.g., Buffet, Bezos, Zuckerberg – pay minimal tax demands. Much of the wealth of the richest Americans is never taxed because they hold onto real estate and stocks and pass them onto their beneficiaries tax-free. This is one of a perfectly legal method of avoiding tax; there are many more too numerous to cite which include various other examples of tax avoidance/evasion.

Levels of income and wealth inequality within states are usually measured by what is called the Gini Co-efficient. This measure is a commonly used measure of income inequality that condenses the entire income distribution for a country into a single number between 0 and 1 or 0% to 100%: the higher the number, the greater the degree of inequality. A rough estimate of inequality is a figure above 40%.

The United States and China are in the low forties, surrounded by underdeveloped and developing states such as The Democratic Republic of the Congo, Uganda, Burundi and El Salvador. At the other end of the spectrum are Sweden, Norway and Iceland.

In this connection the by now well-known study carried out by two American academics at Princeton University Prof Martin Gilens and North western University Prof Benjamin Page argue that the US is dominated by a rich and powerful elite.

Multivariate analysis indicates that economic elites and organised groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence.”

In plain English: the wealthy few move policy, while the average American has little power.

The two professors came to this conclusion after reviewing answers to 1,779 survey questions asked between 1981 and 2002 on public policy issues. They broke the responses down by income level, and then determined how often certain income levels and organised interest groups saw their policy preferences enacted.

Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association and a widespread (if still contested) franchise. But we believe that if policymaking is dominated by powerful business organisations and a small number of affluent Americans, then America’s claims to be a democratic society are seriously threatened.”

In summation, both gentlemen concluded that in essence the US was an oligarchy not a properly functioning democracy. All very true but somewhat self-evident.

Rickards regards the present situation as being irreversible. He does not present any alternative to this trend other than some vague hopes that the ‘nationalist’ President in the Oval Office will turn things around – MAGA in fact.

The golden age of post WW2 capitalism ended when Nixon took the dollar off the gold standard in August 1971, which was in effect a default by the US. Holders of surplus dollars in Europe who were no longer able to swap these dollars for gold but were merely presented with other US$s with which they had to purchase US Treasurys (Bonds) debts which were never going to be repaid. In the age of fiat currencies Europe and various other holders of US Treasuries were in fact subsidizing the United States.

POOR LITTLE AMERICA

At this point the book becomes one long whinge about how hard done-by America has been and how the rest of the world has taken advantage of this benign gentle giant. This rather bizarre belief calls for further analysis. The US pays some of the bill for NATO whilst European nations pay insufficient amounts for the ‘defence’ of their countries.

It should be pointed out, however, that in terms of military hardware the NATO alliance is standardized to American specifications. This means large-scale purchasing of US war materiel which is a gift bonus to the US armaments industry.

Then Germany has the nerve to buy Russian gas transported to Europe via Nordstream 2 which is cheaper and more reliable than US Liquified Natural Gas (LNG), when in fact they should be buying more expensive and less reliable US LNG. Apparently, Germany ought really to be subsidising the US shale oil Ponzi racket. Bad, ungrateful Germany.

Then comes the incessant carping regarding trade policy and trade deals. The US in its speed to become a cool, post-modern, financialised economy apparently forgot about the importance of production. In the automobile industry the once dominant US triad of General Motors, Ford and Chrysler are no longer in the vanguard and Japan, with South Korea catching up, is now the leading country in the export of auto vehicles, a position which the US once held. It was the Japanese auto industry which pioneered production methods including just-in-time deliveries and lean production (Toyota). Was anyone stopping the Americans from innovating?

In rank order. Figures quoted in Global Shift – Peter Dicken.

  • Volkswagen, Germany: Annual Output 8,576,94
  • Toyota, Japan: Annual Output 8,381.968
  • Hyundai, South Korea: Annual Output 6,761,074
  • General Motor, USA: Annual Output 6,608,567
  • Honda, Japan: Annual Output 4,078,376
  • Nissan, Japan: Annual Output 3,830,954
  • Ford, USA: Annual Output 3,123,340
  • PSA, France: Annual Output 2,554,059
  • Suzuki, Japan: Annual Output 2,483,721
  • Renault, France: Annual Output 2,302,769

Globally, the leading manufacturer of auto-vehicles is Volkswagen followed by Toyota. GM are 4th and Ford are 8th of ten. Hardly market leaders anymore, but Rickards apportions the blame to ‘unfair practices’ by foreign manufacturers and argues instead for tariffs. The same goes for other trade partners. Fact that the United States has to a large extent been deindustrialised was a political choice of its own making.

If the US has lost ground in the competition for trade on world markets that is because of its own insular provincialism and hubris, not foreign competitive malpractice. Moreover, much of its productive industry which remains has been outsourced to low cost venues such as China. The US more than anyone should know that its competitors are simply using the same policies that it itself used during the 19th century to break British trade hegemony.

It has been the same story with agriculture. Trade liberalization (this must rank as the greatest misnomer of trade theory) and trade treaties have been an example of the blatant unfairness of such agreements. During the Uruguay round of ‘talks’ (1982-2000):

…the United States pushed other countries to open up their markets to areas of ‘our’ (i.e. the US’s) strength, but resisted, successfully so, to efforts to make us reciprocate.

Construction and maritime services, the areas of advantage of many developing countries were not included in the new agreement. Worse still, financial services liberalization was arguably even harmful to some developing countries: as large international (read American) banks squelched local competitors denying them the funds they garnered would be channelled to the international firms with which they felt comfortable, not the small and medium-sized local firms …

As foreign banks took over the banking systems of like Argentina and Mexico worries about small and medium sized firms within these countries being starved of funds have been repeatedly voiced.

Whether these concerns are valid or not, whether they are exaggerated or not, is not the issue: the issue is that countries should have the right to make these decisions themselves, as the United States did in its own country during its formative years; but under the new international rules that America had pushed, countries were being deprived of that right.

Suffice it to say that agriculture has always been a flagrant example of the double standards inherent in the US trade liberalization agenda. Although we insisted that other countries reduce their barriers to our products and eliminate the subsidies for which those products competed against ours, the United States kept barriers for the goods produced by the developing countries, and the US continued massive subsidies to its own produce. [8]

EXORBITANT PRIVILEGE

Oh, I almost forgot: the imperial tribute that the world pays to the hegemon; aka the reserve status of the dollar. The role of the US dollar in the world’s political economy gives it advantages which the rest of the dollar surplus-states are dragooned into accepting. In the late sixties early seventies, the US was on the verge of technical bankruptcy due to its spending profligacy at home and military adventurism in Indochina. It had three choices of how to deal with this acute problem.

[The] 3 courses open to the US government on the collapse of the Gold Pool in London in 1968 were: immediately pull out of the war in South-East Asia and cut back overseas and domestic military expenditure to allow the dollar to firm again on world markets; to continue the war paying for its foreign exchange costs with further outflows of Fort Knox gold; or to induce the Europeans and other payments surplus areas to continue to accumulate surplus dollars and dollar equivalents (US Treasuries) not convertible into gold.” [9]

Of course, it was option three that appealed and Nixon in his television broadcast was to announce a ‘temporary’ suspension of gold sales by the US to its overseas ‘partners’.

The date in question, 15 August 1971, marked the end of one epoch and the beginning of another. The temporary suspension soon morphed into a permanent one and a global fiat currency regime based on the dollar came into being. This represented a culmination of a situation in which the US manipulation of the dollar was termed the ‘Exorbitant Privilege’ by the senior French politician Valery Giscard d’Estaing. And privilege it was.

The central political fact is that the dollar standard places the direction of the world monetary policy in the hands of a single country which thereby acquires great influence over the economic destiny of others. It is one thing to sacrifice sovereignty in the interests of interdependence; it is quite another when the relationship is one-way.

The difference is that between the EEC(EU) and a colonial empire. The brute fact is that the acceptance of a dollar standard necessarily implies a degree of asymmetry in power which, although it actually existed in the early post-war years, had vanished by the time that the world sliding into a reluctant dollar standard.” [10]

There were a number of advantages which accrued to the dollar contingent on the ending of gold convertibility which Eichengreen listed these in his book. But the principle one was making the surplus nations of the world pay for America’s wars with an unconvertible currency. Instead of being paid for in gold, or at least a gold-backed currency the world produced goods and services for a piece of green paper backed by nothing.

Quite a clever little racket when you think about it.

Better still is the way that the two biggest surplus nations, Japan and China, have been the US’s main creditors, bankrolling the US by buying its Treasuries. This had another intended, or perhaps unintended effect: long term interest rates on US bonds came down (since bond prices and bond interest rates move in opposite directions) and enabled the property bubble to expand until the inevitable blow-out in 2008.

In mafia terms the US dollar has been a ‘made’ currency enjoying a set of privileges and protection which it did not earn but foisted upon others. This is a unique dispensation which is enjoyed by the US to which the rest of the world is excluded.

However, it is in the nature of things that privileges will ultimately get abused. In pushing its luck to the point of abuse the US should be aware that initial signs are that the world is sloughing off the US dollar. As it proceeds in that direction, the US currency will lose its position as the global reserve asset. Holders of trillions of dollar-denominated assets will become sellers eventuating in a collapse of the currency.

The US economy lives like a parasite off its partners in the global system, with virtually no savings of its own. The World produces whilst North America consumes. The advantage of the US is that of a predator whose advantage is covered, by what others agree, or are forced, to contribute.

Washington uses various means to make up for its deficiencies: for example, repeated violations of the principles of liberalism, arms exports, and the hunting-down of oil super-profits (which involves the periodic felling of producers; one of the real motives behind the wars in Iraq and Central Asia).

But the fact is that the bulk of the American deficit is covered by capital inputs from Europe and Japan, China and the South, rich oil-producing countries and comprador classes from all regions, including the poorest, in the third world, to which should be added the debt-service levy that is imposed on nearly every country in the periphery of the global system. The US superpower depends from day to day on the flow of capital which sustains its economy and society. The vulnerability of the United States represents a serious danger to Washington’s project.” [11]

In light of the above we may conclude that – in spite of the irritating name-dropping – Rickards’ books are interesting well written and well-argued; per contra they are very light on facts which have been left deliberately unexamined as well as counter-narratives which have also been ignored.

This was to be expected quite simply because at bottom Rickards is a sophist much in the tradition of Protagoras, Gorgias and Thrasymachus “I say that justice is nothing other than the advantage of the stronger” [12]

A view which Rickards would certainly endorse. Beneath the Upper Manhattan, polished chic, there resides a ruthless Cold Warrior. The further one digs into the book, the more this becomes apparent.

NOTES:-

[1] Rickards – Aftermath – page.21

[2] Ibid., – page.65

[3] Michael Hudson – Super Imperialism – pp.298/99, 32.

[4] Rickards – Ibid. – page.66

[5] Hyman Minsky’s theories about debt accumulation received revived attention in the media during the subprime mortgage crisis of the late 2000s. The New Yorker has labelled it “the Minsky Moment”. Minsky argued that a key mechanism that pushes an economy towards a crisis is the accumulation of debt by the non-government sector. He identified three types of borrowers that contribute to the accumulation of insolvent debt: hedge borrowers, speculative borrowers, and Ponzi borrowers.

The “hedge borrower” can make debt payments (covering interest and principal) from current cash flows from investments. For the “speculative borrower”, the cash flow from investments can service the debt, i.e., cover the interest due, but the borrower must regularly roll over, or re-borrow, the principal. The “Ponzi borrower” (named for Charles Ponzi, see also Ponzi scheme) borrows based on the belief that the appreciation of the value of the asset will be sufficient to refinance the debt but could not make sufficient payments on interest or principal with the cash flow from investments; only the appreciating asset value can keep the Ponzi borrower afloat.

[6] Rickards – Ibid., page.85

[7] Rickards – Ibid., page.239

[8] Joseph Stiglitz – The Roaring 90s – pp.206/207

[9] Gold Pool 1968. The price of one troy ounce of gold was pegged to US$35. … The larger the gap, known as the gold window, between free market gold price and the foreign exchange rate, the more tempting it was for nations to deal with internal economic crises by buying gold at the Bretton Woods price and selling it in the gold markets. It couldn’t last and it didn’t.

[10] Michael Hudson – Ibid. – p.309

[11] Barry Eichengreen – Exorbitant Privilege – passim.

[12] Plato – The Republic.

Frank Lee left school at age 15 without any qualifications, but gained degrees from both New College Oxford and the London School of Economics (it's a long story). He spent many years as a lecturer in politics and economics, and in the Civil Service, before retirement. He lives in Sutton with his wife and little dog.

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Frank Lee left school at age 15 without any qualifications, but gained degrees from both New College Oxford and the London School of Economics (it's a long story). He spent many years as a lecturer in politics and economics, and in the Civil Service, before retirement. He lives in Sutton with his wife and little dog.

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Antonym
Antonym

One Horseman down: Bolton was fired on Sept 9th by Trump: https://twitter.com/realDonaldTrump/status/1171452880055746560

TFS
TFS

Debt slavery, who would have thunk it?

It’s not as if people throughout history haven’t warned us about the Private Financial System.

The Big Heist is on, just note the winners.

MASTER OF UNIVE
MASTER OF UNIVE

The Second Law of Thermodynamics always wins in the end as there are no winners but Entropy if we read our Clerk Maxwell correctly, eh.

Information Theory, man.

Be cool.

RW

FrankSpeaker
FrankSpeaker

Very informative, objective analysis, thanks for that Frank. You’ve allowed me to see an insight into Rickard’s motives that I’d not really considered before.

Guy
Guy

Excellent article by Frank Lee. Many of us are aware of the problems of the USD but few are able to so succinctly explain why and connect the dots to expose the true picture.
The bottom line is that the lifespan of the USD as king is almost over .There will not be any rabbit pulled out of the hat to make America great again.That is a feel good cliché used to further induce the population to go back to sleep. The US has been exposed , and so well said , as a predator nation .There must be a reason why China and Russia are buying up as much gold as their economy will permit .The exchange medium used for trade since time immemorial .

MASTER OF UNIVE
MASTER OF UNIVE

Gold will be confiscated when the Ponzi Apocalypse morphs into the ZOMBIE Apocalypse and NATO goes ballistic with frenzied hot war between competing blooper-powers that were once referred to as ‘superpowers’ post-WW2.

Gold is an even bigger con-job than the Fractional Reserve Banking System is. The only gold worth owning is physical gold bullion but try cashing that in at a retailer when the gubbermint calls Martial Law and unilaterally decides to appropriate your stash, & cash.

Civil Asset Forfeiture is Too-BIG-to-Fail, Nail, or Jail. Just like the bankster on Wall Street routinely rips off clients so too does the officer on patrol on the state highways so that they can fill their finance quota for the month as they have to buy new MRAPS from the USARMY when a glut appears on the Pentagon budget/procurement balance sheet.

And if you attempt to audit the Pentagon they will murder the Forensic Lawyers & Accountants/auditors by Controlled Demolition right on prime time tv CNN/NBC/CBS et al.

RW

FoodBowl
FoodBowl

What would aliens say about us if they came here today from another planet and read this article?

Excellent exposé by the way!
(exposé as in exposing an impostor or fraud)

FrankSpeaker
FrankSpeaker

You’re assuming they can read English? ;o)

FoodBowl
FoodBowl

Measuring ‘National Debt as a Portion of the US Economy’ is for economics classes and for newspapers to publish.

The Criminal Elites look at things differently.

They measure the National Debt as a Portion of the ‘FEROCIOUS BOMBING POWER the US Possess’.

Also, ‘Spreading Chaos Capabilities’ is added to the Bombing Power.

From this point of view, they see enormous assets, and the debts becomes less worrying as they see less urgency to deal with this ever growing liabilities.

Fair dinkum
Fair dinkum

No analysis required because it’s always been the same.
The few exploit the many.
This has fed the cancers of psychopathy, messiah complexes and endless wars.
We are rushing towards the midnight sun.

MASTER OF UNIVE
MASTER OF UNIVE

The Wall Street ethos has always been ‘kill or be killed’ where bears eat, and bulls eat, but pigs get slaughtered! The problem with today’s market & stock valuations is that they are as hyperinflated as Real Estate Commercial & Residential sectors are which leaves no wiggle room for price discovery until there is a system wide crash that mean reverts the valuations back to a realistic price. Warren Buffett is currently sitting on $55 billion in cash so that he does not get destroyed on the upcoming systemic wide crash. Buffett has never pulled this kind of bread from the table in his lifetime whilst waiting for a systemic crash & the inevitable fat tail blowout that is poised to rip the face off of the USA & EU as their eyeballs get ripped out too.

Ripping a face off & ripping eyeballs out is day trader speak for kicking counterparties in the groin for the deal. The French Revolution was all about teaching the financial elite predator class of monetary control freaks who the boss really is when the gravy train slows during Financial Winter.

And if they can’t take the heat they should get out of the kitchen!

RW

mark
mark

All that is happening now is that Trump is trying to solve his country’s intractable economic and financial problems by looting the rest of the planet. This is not a new development, but Trump is at least refreshingly honest in his public pronouncements.

It has always been thus. The Roman Empire imposed tribute on its subjects. You have to send us so much grain, cattle, so many slaves, so much timber for shipbuilding, so much precious metal and base metal, so many wild beasts for our circuses. In return we won’t kill you.

The Nazi Empire imposed tribute on its conquests in identical fashion. Send us your industrial output, agricultural produce and raw materials. In return we’ll give you a big credit balance at the Reichsbank.

Uncle Sugar says send me your BMWs, fine wines, electronic gadgets, oil and minerals. In return I’ll give you some worthless little pieces of green paper you can exchange for worthless IOUs called Treasury Bills.

The current (real) military budget is $1,134 billion, around 60% higher than the fictitious figure that is normally touted.

The trade deficit is $900 billion. The budget deficit $1,175 billion, over 20% of the overall budget.

America is borrowing around $4 billion a day from the rest of the world. Uncle Sam is the biggest scrounger, parasite, leech, bludger, and panhandler in the history of the planet.

The official national debt of $22.5 trillion understates the true position by a factor of over ten. Every US man, woman, child, and babe in arms is in hock to the tune of over $700,000.

Antonym
Antonym

Trump = / the Swamp. They hate him.

RobG

The global economy is about to crash, yet again (because it’s never really recovered from the 2008 crash)’.

Answers on a postcard, please (and one that doesn’t involve giving the banksters eye-watering amounts of money).

Frank Lodge
Frank Lodge

Without reading the book in question, this seems like an thoroughly sound and incisive review.
Just one thing, “cometh” takes a singular subject.

BigB
BigB

Rickards attitude is famously: “Buy gold” …to which he creates a fear porn scenario around the coming recession. His solution: “Buy gold”. Not, lets look at the conditions that are causing the underlying boom and bust business cycles …and find a solution that works for humanity. His solution: “Buy gold” …which the likes of he and the others who are driving the business cyclical waves of mutilation have already done to hedge their portfolios. Fuck Ricards. I have no time for those who wish to profit from the overfinancial immiseration of humanity. And you know where you can stick your gold.

Good luck to anyone who produces gold in an actual collapse scenario. So you need to buy guns and bodyguards for self-protection if you buy gold. Which is the very self-protectionist individuation exceptionalism that has brought us late in the business cycles of capitalist collapsism …to the point where you might want to hedge your personal wealth against the hungry and immiserated wretch of broken and abandoned sacrifice communities …from whom your personal wealth was impersonally and unceremoniously extracted to leave them behind. By Trump in his $4.5tn tax bonanza for the passive income rentier class with hedged portfolios. MAGA. Double fuck Ricards.

This is called ‘supply side economics’ or Reaganomics …or more colloquially: Vicious Lies. According to real economist and humanist (a rare combination) Dr Jack Rasmus: ‘Business Investor’ tax cuts free up capital to re-invest in plant and productivity – boosting employment and wages. Or hand money to the greedy asset owning shareholders to boost their net worth with buybacks and dividends …so they can hedge their portfolios with gold for when the factories have to close and the workers get uppity about the prospects of permanent unemployment. ‘Nuff said. There is literally nothing about economics that the likes of Jim Rickards and his class can tell me that would not make me want to vomit.

Boo hoo Rickards America …land of opportunity and precious metal hedging (for the few). And kudos Frank for reading his nauseous tale. I hope you had a bucket handy.

Antonym
Antonym

Indian women hold an estimate 20,000 ton of gold as family jewels; some temples also amassed thousands of tons: could come in handy.

OR those for 4 Horsemen morph into 4 girls on ponies….

FoodBowl
FoodBowl

There must be a plan to replace it all with GM gold.

Popular leaders like Modi can follow the nastiest agenda and people cheer for it!

Antonym
Antonym

Those damn plebs don’t vote anymore what they were being told! In the US, UK and in
India. Next Italy or France? Nasty.

Richard Steele
Richard Steele

In an actual “collapse scenario”, what use would gold be? When all the grocery stores are GONE, would you trade your last can of beans for gold?

BigB
BigB

Or Bitcoin?

mark
mark

Gold could form some kind of basis for exchange in a collapse setting. Other desirable barter items would be alcohol, cigarettes, basic drugs like aspirin and paracetamol, electrical batteries, fuel and similar goods. Maybe ammunition as well. Goods were priced in cigarettes in postwar Germany.

Gold would probably be of use. Gemstones, jewellery, would not. 99.9% of people are unable to distinguish a real diamond from a piece of glass.

ursel doran
ursel doran

Demonetization explained.
Woman here is USA inherited a few double Eagle gold coins. Value then about $1,400 dollars. Tried to spend them at Wal Mart, obviously failed, took them to her bank, and no joy there either. Do not recall if she finally got to a coin store.
Another story of a guy on the street asking folks if they wanted the chocolate bar in one hand or the silver dollar in the other hand. All chose the candy bar.
All the stupids touting the SDR line from the IMF delusion factory to have the SDR replace the dollar is the biggest joke ever. Imagine using it at a 7-11 to buy gas.
Old dollars, and coming new dollars trick will follow the history of currency wrecks from German Marks, to Zimbabwe, and many other examples.
When the “Global Vampire Squid” of the Mafia style syndicate of central banksters decide to do whatever they want they will do it. MAYBE Trump will stomp on the head of the FED when, not if the SHTF?

bevin
bevin

“he original version of the Guns versus butter argument was given in a speech on January 17, 1936, in Nazi Germany.”
Not for the first time Wikipedia is wrong here. Bismarck is normally credited with the choice between Guns and Butter. Goebbels was suggesting that Guns will bring Butter.

Martin Usher
Martin Usher

Its nice to see this in a book but its really common knowledge. The only thing I’d dispute is this notion of an ‘elite’, there is no such thing, its just greed holding the reins — its like a mass FOMO, nobody’s willing to take the long view because it might mean they’ll miss out on what they can grab right now.

The danger we face from this is that if a large enough economic bloc runs by more rational rules then its going to eventually cream us economically. This forces us to destroy it. This is what’s at the bottom of our problems with China. The USSR wasn’t strong or well organized enough to pose a real threat to us so it could be taken down primarily by economic means. The Chinese learned their lesson from the Russian experience and ‘played nice’ which they built their country up — we all heard the commentariat from a few years ago about them ‘not really being communists any more’. Now they’re in a position to look us in the eye so we’ve got to confront them, to take them down. (You’ll notice that one of the conditions that will end the trade war is the ‘liberalizing of capital markets’ — that is, we need to take over their banking system and currency.) If — when — this fails then the only recourse would be actual war.

The crime in all this is in the pursuit of money — ultimately a wholly artificial concept — we’re wasting immense amounts of resources and human potential, spreading misery and despoliation all over the planet and generally behaving like really awful global citizens. We can and must do better.

wardropper
wardropper

And we certainly must stop talking about “taking down” the Chinese, and instead actually try to understand where they come from, with their roots in a far more ancient civilized society than ours.
American exceptionalism, for example, takes it for granted that we in the West are good, and therefore the East must become more like us. But we are logically, and morally, obliged to look at this from the opposite perspective too: What if the Chinese take it for granted that they are good, and therefore the West must become more like them?
I have been to China, and found the people there to consist of the same mixtures of honest, good, nondescript, sinister and deplorable as we have here at home.
They also share exactly the same fundamental problem as we do: Their politicians and their people, like ours, are two entirely separate things.
Of course the origins of Chinese, or Russian, society are different from ours, but that is no reason to despise them.
Our origins are often pretty despicable too.

Antonym
Antonym

The Chinese people are as materialistic or spritual as any; it is the local deep state (CPC) totalitarian culture that needs to change.

wardropper
wardropper

It’s up to the Chinese to change their culture – if they want to, that is.
It is, after all, THEIR culture, and it is also, frankly, none of our business.

wardropper
wardropper

I should add that most cultures allow, and probably welcome, outsiders to participate in and cooperate with their domestic traditions and laws.
But of course no outsiders have the right to change any of those traditions and laws.
It’s amazing to me that that even needs to be said, but it certainly does need to be said, given the overpowering arrogance of many of our western statesmen today.

Antonym
Antonym

Sure, only massive local Chinese can only modify the present CPC culture. Other nations will wait and watch with their trade / diplomatic relations regarding China accordingly.

Robbobbobin
Robbobbobin

“The crime in all this is in the pursuit of money — [w]e can and must do better.”

Three thousand years?

He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity. –Ecclesiastes 5:10

Two thousand years?

For the love of money is the root of all evil –1 Timothy 6:10

Surely the Anti Deceased Equine Distress Society has lobbied some sort of statute of limitations onto the books by now?

MASTER OF UNIVE
MASTER OF UNIVE

American parasitism writ large over the last half century has amply signified to the entire world that ‘manifest destiny’ was merely a ruse to foist American hegemony onto all sovereign nations at the behest of an out-of-control American Oligopoly that was power-tripping post WW2 & drunk on the souls of the poor sots all over the entire world with their power hungry warmongering Military Industrial Complex.

Proof of their combined ignorance with respect to Cybernetics & Systems Theory was their willingness to follow the likes of the Vietnam War architects that assumed incorrectly that they could impose a closed-looped cybernetic control system over world finance & mercantilism throughout the entire world at the behest of academic failures like Macnamera who would not know a ‘closed-looped cybernetic’ from an open-looped cybernetic if his life & legacy depended on it.

Simply put, American printing presses at the privately owned Federal Reserve cannot even remotely help or assist in anymore financial profligacy for the Neoconservative or Neoliberal camps of the cerebrally sclerotic & Early Onset Dementia riddled, & uneducated, financial buffoons that emanated out of the now defunct Chicago School headed up by Strauss et al. in the 60s & 70s.

All the macroeconomic indicators over the last two decades have clearly indicated that the Greenspan era of asset inflation was nothing more than the undoing of Federal Reserve Chair Paul Volcker’s hard won success during his tenure pre-Greenspan ‘Maestro’ halcyon days of animal spirits run amok.

In brief, the United States of America can eat my shorts as it is solely responsible for manufacturing a finance control system & requisite money pump fraud that is nothing more than a worldwide Ponzi scheme to defraud the entire world of disposable income & discretionary income gain so that all gains accrue to the rentier class of speculative investors like Warren Buffett & Bob Paulson.

Bottom line is that Warren Buffett will have to purchase all the new automobiles, trucks, houses, mansions, cottages, farms, cites, towns, railroads, roads, & precious metals as the emerging markets & first world markets all decouple just as Professor Emeritus Benoit Mandelbrot hypothesized they would just before he died.

Go ahead, America, print the fake fiat greenbacks to infinity in vain hope of extricating yourselves from the intractable financial muck & mire you are most assuredly going to find yourselves in this approaching October 2019.

Go ahead, Punk, make my day!

Are you feeling lucky, Punk?

RW

Martin Usher
Martin Usher

Its not “American”. We just happen to be the chosen host for this part of history. Before us it was the British Empire that was top dog.

Money has no particular loyalty to a country. In pre-WW1 Europe the bourgeois were all intermarried, connected primarily by wealth and power regardless of their nominal nationality, our present equivalent are similarly connected. Just like WW1 when the chips are down we — the ordinary people — will be sacrificed on the alter of patriotism while they’ll survive and prosper.

MASTER OF UNIVE
MASTER OF UNIVE

March 10th 2008 around 11:00am Bear Stearns time New York shitty was the virtual end of American hegemony worldwide forever more into the obvious future of Macroeconomics & Macroprudential Policy as an ongoing concern. Debt-to-GDP of all sovereign Western imperialist nations is intractably North of any semblance of sustainability vis-a-vis Finance worldwide or within Emerging Economies or First World Developed Economies.

Intractable debt limits were broached when Nixon declared the bankruptcy of the Bretton Woods infrastructure of gold backed USA Reserve Currency Status and then opted in ignorance for the petro-dollar bait & switch fiat USD Finance capture worldwide which has now come home to roost across the rust belt of the heartland USA, and in places that were once bastions of manufacturing for the middle class USA blue collar worker such as Detroit or Chicago. Today the business model of the USA is transnationalist whereby places across the USA are not even remotely financed into that transnationalist Wall Street model of Finance that is wholly parasitic to the point of crashing mainstreet USA across all sectors of the Service Sector Industries that were supposed to be replacing the long lost USA Manufacturing Base that was offshored to the Third World sovereigns that would temporarly increase profit margins for the transnationalist class of corporate parasites run amok to collectively destroy all life on Planet Earth for centuries to come if we are lucky.

RW

martin
martin

You have made the common mistake of asserting that it is America, instead of those who govern (the USA and its pundits) that have engineered the problems you point out.

Why would the two parties in congress (Article II followers) and the two fellows with the Article II power, continue to [expand the debt in fake, made up and useless expenses], unless they were controlled by external forces?

Maybe bankers and their high powered corporations are finding they can no longer easily dupe Americans into delivering their resources into the pockets of the wealthy. Maybe the American people have drawn the line, no more, will they produce for the IMF, world bank?

Maybe Americans have decided to refuse the tax burdens imposed to retire the fed debt? Maybe foreign nations have denied the banks and their corporations access to their resources as a means to pay the USA debt? Maybe script has been recognized as a false capital in-capable of ruling the world? Maybe organized criminals have taken up positions in the western governments and used those positions to force on the governed many things? Maybe burdening the USA with debt is part of the plan to bankrupt America? <==but why should the banks bankrupt America, why has access to education been limited, why has the USA spied on Americans? Why have the governed Americans been denied access to the USA? Has the USA retired Americans from productive jobs, in order to accelerate the demise of America? The USA has made Americans into debtors obligated to pay bankers in the form of taxes to be collected by the USA and remitted to the bankers. <= just as is now occurring in Britain, Greece, France, and other places. Privatization, monopolization and conversion from public to private franchising and ownership have served as the transforming agents that have made the elite so wealthy.

Economic Zionism. as opposed to government regulated capitalism, condones no competition, allows no prisoners and either takes or destroys all likely competitive elements (persons, corporations, or nations) Economic Zionism demands the government that governs (as in USA governance over Americans) assist in rendering Americans broke. Is it because until Americans are broke, the EZ bandits are hampered? Is scooping resources into private, monopoly powered, already wealthy hands, the goodies to be had the goal? Maybe the USA is a privatizing agent instead of a benefactor serving Americans?

In USA governed America, there is much very-productive farm land, millions of tons of minerals, many productive seaports, and tons and tons of money making monopolies (patents, copyrights, royalties, government franchised goodies, lucrative government contracts, and plenty of government services and resources) to be privatized for profit. The goodies are located in thousands of acres of rich farmland, the major ports and services attached thereto, and embedded within little domestic American companies which the USA debt will eventually burden into bankruptcy. After all “scalping a bankruptcy” is historically a speciality of economic zionism.

MASTER OF UNIVE
MASTER OF UNIVE

In 1994 JPMorgan management & traders went on a little holiday in Miami to concoct the Global Ponzi of debt & risk associated with loans into what is known today as the Financialization Process whereby bank risk would be shuffled off of investment bank balance sheets and onto those speculators that wanted to purchase all that risk involved in the bank portfolios en masse because they knew how to offload that risk to unsuspecting greater fools that were always certain to come knocking in a climate of upward growth and yield curve convexity. But the chink in their financial alchemy was obviously debt limits and the ability to track the risk to the system as a whole given that all transactions in the derivatives world are dark & unregulated due to the helmsmen like the Treasury Secretary Henry Paulson who previous to being nominated as Treasury Secretary was in fact the top man at Goldman Sachs where he raked in approximately a smooth billion before traversing the revolving door between the Whore House & Goldman Sachs New York shitty offices.

Casino Banking morphed into Late Stage Ponzi Capitalism when Bob Paulson wanted more Residential Mortgage Backed Security issuance and pressured Goldman Sachs into providing more issuance via NINJA loans & Liar Loans after 05 when the Wall Street speculators had to go bottom feeding for loan issuance in order to meet investor demand & apatite for their unhinged Gordon Gecko greed.

‘Maestro’ Greenspan emphasized his ‘flaw’ in his macroeconomic model of the world when the investor greed broached fat tails on the order of a 10% crash of the power laws of distributions of loan issuance. Greenspan never assumed that the Financialization Process would exceed a default scenario greater than 5-7% of no-performing loans in the subprime issuance tranche.

American exceptionalism via Henry Paulson USA Treasury Secretary 08 is what rendered American Late Stage Ponzi Capitalism wholly defunct going forward into 2020 & beyond with a permanent lower bound CB Interest Rate Regime & specter of WW3 hot conflagration.

My money is on the pinko Commie bastards this time round the sovereign insolvency loop of domestic misery USA.

WELCOME to the New World Disorder!

RW

nottheonly1
nottheonly1

To condense this lengthy essay:
This ship is sinking.

This would include household debt, student debt, financial debt, corporate debt, and municipal debt. Add this to sovereign debt and you get a figure roughly 5 times US sovereign debt, and even this is regarded as being a conservative figure according to many

One – at least on this side of the screen – cannot but think that all this is by design. The cart is driven intentionally off the cliff. To start off with a clean slate? Where the wealthy still have their wealth, but the suckers are depending on hand-outs?

An old proverb alledges that:

To borrow brings sorrow.

To which only those who make loads of money from lending will disagree.

Where are the solutions? No solutions, just listicles as to how bad it all is? Sure, the West is reminiscent of the HMS Titanic – with the slight difference of the hole made by the iceberg (debt) extending over the whole length of the ship. It is listing beyond dancing.

Well, I am willing to tell a secret (that isn’t one anymore for quite some time):
Outlaw/prohibit Interest.
Prohibit capital gains. Or tax them with 99%.

Prevent under all circumstances a continuation of

Performanceless Profits.

Make them punishable with prison time of no less than half of the age at which they were perpetrated. You’re 30? You’re going in for 15. You’re 65? Easy math.

Fact is, that there are solutions galore to save our souls. Problem is, those whose lives are depending on them, don’t demand them to be implemented. And why would the wealthy tax non-payers like Bezos et al want to change their ‘winning team’? That is a well known no-no. The only solution the masses of the little people can hope for is ‘Force Majeur’ that works to their benefit. Shall we wait for that to happen?