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breakingnews
Capital Account -- 11/30/11
More rounds of ammunition were fired off in the global currency wars today, as six of the world's central banks including the Federal Reserve, Bank of England, and the European Central Bank coordinate to get cheap dollars to starving european banks. Meanwhile, across the pacific, China is cutting its reserve requirements by 50 basis points for the first time in nearly 3 years, a sign that the world's second largest economy and biggest exporter is now reversing its policy of trying to curb inflation and loan growth.
We are joined by James G. Rickards, author of Currency Wars to discuss these issues, as well as the growth in gold buying and gold repatriation by foreign central banks, the world over.
We also speak to Jim Rickards about the role he thinks the IMF and its global SDR will play in the years to come, and if the latest bailout 600
billion euro italian bailout rumor may be just the opportunity for the IMF to step up as a player in the global currency war. He says the IMF is turning into a global central bank and that the federal reserve is looking more and more like a hedge fund.
December, 2011
1 19:17
First this is a great show, and even when I disagree with a guest I learn quite a bit. So thanks Lauren.
As for Rickards, while highly intelligent, he is ultimately a snake oil salesman. He started his pitch lamenting how inflation hurts widows, orphans and others on fixed income, trying to pretend that a wealthy finance guy like him, is in the same boat. He then makes his claim about how gold will bring stability. However, in the Q and A, he deliberately misunderstands Nourieli. What the latter is arguing, as other gold bug critics do, is that gold is just as artificial as any fiat currency. And Rickards just proves the point. He argues that gold was deflationary in the depression because the finance ministers pegged it at wrong price! He even says that if they chose another price it could have been inflationary. The key is too choose the right price. But if gold doesnt have inherent fixed price (and it obviously doesn't because it's value is artificially created by people) what does it bring to the table? Rickards himself says the price has to be fixed by - fiat! And you can be sure that when they want to, finance ministers can print money by changing the price of gold.
So if gold has no inherent fixed value and is just another form of fiat currency why is Rickards such a fan? The reason comes out in the answer to another question - countries that don't have gold reserves will have their currencies tied to the dollar! Rickards disingenuously says it might actually be a basket of currencies including Euro and maybe the Yuan. But the fact is US has largest gold reserve and many foreign countries keep their gold here. So essentially the real reason behind Rickards gold bug is to guarantee US economic ascendancy.
There is nothing inherently illegitimate in taking that position. But Rickards should be up front about this, instead of pretending he is the defender of the powerless.