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.


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.


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.


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.


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.


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.


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]


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.


[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.