Jim Rickards: America's "Plan B"

[Raz]

This is a very high quality, loooooooong presentation from one of the most erudite and experienced men in the financial world today. This seminar took place on December 7, 2010 at the John Hopkins University Applied Physics Laboratory.

His thoughts on the Bonar and Gold begin about 60 minutes into this presentation.
He says that unlike China, the United States might well have a "Plan B".

http://outerdnn.outer.jhuapl.edu/ret...tionVideo.aspx

Mr. James G. Rickards

Senior Managing Director for Market Intelligence

Omnis Inc.

James G. Rickards is an economist, investment advisor and author with over 30 years experience in global capital markets. He is Senior Managing Director at Omnis, Inc., a consulting firm in McLean, VA and Principal of Global-I Advisors, LLC, and an investment banking firm specializing in geopolitical advice. He has held senior executive positions at Citibank, RBS Greenwich Capital, Long-Term Capital Management and Caxton Associates.

In 1998, he was the principal negotiator of the rescue of LTCM sponsored by the Federal Reserve Bank of New York. His clients include private investment funds, investment banks and government directorates in national security and defense. He is a frequent speaker at conferences on derivatives and hedge funds and is active in the International Bar Association. He has been the interviewed in The Wall Street Journal, has appeared on CNBC, Fox, CNN and NPR and is an Op-Ed contributor to the New York Times and the Washington Post.

Mr. Rickards is a visiting lecturer at the Kellogg School and the School of Advanced International Studies, has delivered papers on econophysics at the Applied Physics Laboratory and the Los Alamos National Laboratory and has written articles on cognitive diversity, network science and risk management. He is an advisor to the Committee on Foreign Investment in the United States (CFIUS) Support Group of the Director of National Intelligence.

Mr. Rickards holds an LL.M. (Taxation) from the New York University School of Law; a J.D. from the University of Pennsylvania Law School; an M.A. in international economics from the School of Advanced International Studies and a B.A. from The Johns Hopkins University.

[swgprop]

Re: Jim Rickards: America's "Plan B"

Rickards is always worth listening to, thanks.

[slippery]

Re: Jim Rickards: America's "Plan B"

This was a very worthwhile presentation. Rickards is one of the brightest thinkers on the political economy. He has a firm grasp of history and game theory strategies being played by the major countries in the world.

[Mega]

Re: Jim Rickards: America's "Plan B"

It might the Anglo-Saxion Plan "B"............but will the rest of the World follow?...........right at the beginning of this crap in 2008 i remember the Italy minster begging to revalue gold @ $7,000............& a MASSIVE TAX TO BE PLACED ON IT!

Mike

[WildspitzE]

Re: Jim Rickards: America's "Plan B"

Wow, thanks Raz. Will check out ASAP.

[Fiat Currency]

Re: Jim Rickards: America's "Plan B"

Yes - thanks for throwing that up Raz.

Personally I already watched it off dollarcollapse.com but I watched it a second time as many Select members know I'm a big fan of Jim.

Both times when he said "I don't know what Canada does with all its gold" I doubled over like I had been kicked in the groin. Members may recall my rant on Canada (who is the 4th largest producer of gold) moving to a gold backed currency with a first mover advantage.

[Chomsky]

Re: Jim Rickards: America's "Plan B"

Fantastic, thanks.

[thriftyandboringinohio]

Re: Jim Rickards: America's "Plan B"

Excellent find, Raz.
I watched the whole 2 hours, it was fascinating.

[mooncliff]

Re: Jim Rickards: America's "Plan B"

So what's the Plan B?

[ThePythonicCow]

Re: Jim Rickards: America's "Plan B"

So what's the Plan B?

Rickards states near the end of this talk that the US is a Gold Super Power, with 8000 tons of gold.

My (cynical, as usual) guess is that we commoners have no clue who has what gold anymore, and that Rickards is being naive to think otherwise.

There have been way too many lying, thieving psychopaths keeping us in the dark on this matter for way too long for there to be any chance that the truth of the matter is public.

But, anyhow, Rickards figures we (the US) can, especially given a little help from its allies in Europe, who hold (supposedly) most of the rest of the gold held in central banks, revert to gold backed (10% to 40% reserve) currencies, with the nominal US Dollar price of gold between (I forget exactly what he said here) $5000 and $8000 or some such.

[zmas28]

Re: Jim Rickards: America's "Plan B"

Rickards states near the end of this talk that the US is a Gold Super Power, with 8000 tons of gold.

My (cynical, as usual) guess is that we commoners have no clue who has what gold anymore, and that Rickards is being naive to think otherwise.

There have been way too many lying, thieving psychopaths keeping us in the dark on this matter for way too long for there to be any chance that the truth of the matter is public.

But, anyhow, Rickards figures we (the US) can, especially given a little help from its allies in Europe, who hold (supposedly) most of the rest of the gold held in central banks, revert to gold backed (10% to 40% reserve) currencies, with the nominal US Dollar price of gold between (I forget exactly what he said here) $5000 and $8000 or some such.

Not sure I understand what the Plan B would actually entail. Is he implying that the rest of the world, including the emerging powers, would go along with something that would transform the US from a dollar superpower to a gold superpower? Unless he is saying that we have enough in gold to back up all the dollars being printed up by the Bernank?

[tmicou]

Re: Jim Rickards: America's "Plan B"

Not sure I understand what the Plan B would actually entail. Is he implying that the rest of the world, including the emerging powers, would go along with something that would transform the US from a dollar superpower to a gold superpower? Unless he is saying that we have enough in gold to back up all the dollars being printed up by the Bernank?

The way I read what Rickards is saying wrt Plan B, and what EJ is saying here http://www.itulip.com/forums/showthr...141#post184141, is that Gold is the defacto backing of the Dollar, regardless of how many dollars are out there. EJ argues that reserves have locked into a 10% ratio, while Rickards argues that the ratio is better placed at 20-40%, but to my mind the exact ratio is a detail – suffice it to say, those whose opinions I value are arguing that Gold is vastly undervalued in today’s fiat, and whether it should be $2500, or $4-7000 as Rickards says, or something higher is academic. The point is the only way to reign in out-of-control fiat currencies is to peg them to Gold at some very high valuation, and probably do it in a fractional way.

If the equation is roughly G= M/p * 10% where G = gold units, p =price of gold, M=quantity of Bernake Monetary $, and p= price of Gold and 10% is a place holder which could be 10%, 20%, 40% depending on the collective psychology for what fraction a fractional gold reserve quantity is trustworthy enough. The more M dollars are printed, the more p price of gold has to go up in response because G is constant. The world gold quantity is relatively fixed (as I understand it, the entire world supply of gold if formed into a perfect cube, would fit inside the lines of a tennis court, and growing slowly at perhaps 1%/year.)

It seems to me that Rickards is simply restating the Golden Rule – “He who owns the Gold, makes the rules”.

Further, he is saying that between the US and her close European Allies, (and I am inferring above and in-the-ground gold from South, Central and North America) represents 2/3 of the world’s total Gold. China and Russia will never catch up because their above plus in-the-ground reserves are not enough. He is further stating that much of Europe’s gold is stored in the US. We would not “take” their gold, but rather “borrow for a very long-term” their gold with an IOU. It’s sort of an “I’d rather owe you, than cheat you out of it” moment.

So why would Europe trust America to do this? Two reasons – one stated, and one implied: Europe would go along because if they don’t, the world would fall apart financially and go into a deep depression, political chaos, and an outcome that is far more dubious than trusting the Americans to “do the right thing”. So, it’s in their economic and political interest to do so. The implied reason is that the US also controls more of the Lead, Uranium, Plutonium and technology to make “Good Delivery” of same to any part of the world forcing anyone’s hand. Whether or not the US has the will to do so is another matter, but the threat is there.

It seems to me, that the “Golden Rule” is will be supplanted by the “Critical Commodity Rule” (CCR), which I state as “He who controls Gold, Oil, Uranium, Plutonium, Lead, Silver, Lithium, Platinum, et al, in the right combination makes the rules”.

Under CCR, Gold is the universal, immutable store of wealth, Oil is a depleting resource critical to all commerce and food supplies, Lead and the Nuclear’ s are a euphemism and reality for Military Might, the others are critical components for Energy replacements to oil). I have no idea what the right combination is, but I’m pretty sure it’s not 100% of any one commodity.

Disclaimer: I’m not an economist, and I really don’t know what I’m talking about here – Just like most people, I’m trying to read the tea-leaves and make sense out of what I read, and simplify it for my Pre-Cambrian brain. I could be way off-base here, and look forward to hearing other opinions…

[cobben]

Re: Jim Rickards: America's "Plan B"

"So what's the Plan B?"


Rethinking the Future International Security Environment
informal notes taken by a JHU/APL staff member at the Seminar.
https://outerdnn.outer.jhuapl.edu/vi...sNotes2010.pdf

• US is in extremis again so may need to take drastic action – the President has the executive power to "seize, freeze, and don’t say please"
o Could send federal troops to confiscate all the foreign gold in New York banks
o Would then send another 14,000 tons of gold to West Point, the other gold depository
o Then would re-price gold to start the system all over again
• This at least gives us a Plan B
o China and Russia have no Plan B
o Exercise Unified Quest is designed to look at military issues that might come up if civil disorder broke out after a collapse of the economic system

[ThePythonicCow]

Re: Jim Rickards: America's "Plan B"

"So what's the Plan B?"


Rethinking the Future International Security Environment
informal notes taken by a JHU/APL staff member at the Seminar.
https://outerdnn.outer.jhuapl.edu/vi...sNotes2010.pdf

• US is in extremis again so may need to take drastic action – the President has the executive power to "seize, freeze, and don’t say please"

Good "informal notes" - thanks for finding and posting.

It will be about the time that the President executed (or attempted to execute) such powers that we see most clearly, if we ever do, any split between (a) the world's most powerful families and (b) the more nationalist powers of the military-industrial-intelligence-financial centers of the US, UK and Israel.

I suspect that group (a) is more interested in moving the world's political and financial power centers from London-New York-Washington to the east coast of Asia, and in cutting back the over grown arrogance of group (b). My money is on group (a), but group (b) can put up a nasty fight.

My once and former heroes, the American neo-cons, must fail.

[c1ue]

Re: Jim Rickards: America's "Plan B"

Well, I know there are a number of Rickard's fans here, but really the presentation is underwhelming for anyone who spends much time at iTulip, doubly so for those not die hard gold bugs.

Points of interest:

1) Rickard's example of waterfall rejection of the dollar uses Americans as the population, when in reality it is the ROW that is the relevant population.

Americans have no choice as to what currency they use - it is simply too difficult to transact in anything but dollars in the USA but that does not hold true for anywhere else.

2) Rickard's has a completely different view of the Treasury maturity split than most: he says the shortening average maturity is due to the lower interest that must be paid.

Most others say that it is due to China and others reducing the duration of their exposure to Treasuries.

3) Rickards also characterizes wealth building as a pure exercise in force. This was true in feudal Europe and much of Roman history, but was NOT true for many other regions: the city states in Italy controlling trade to the Middle East/Asia, the Sumerians/Babylonians building trade routes, China industrializing (and before them the Asian Tigers), and so forth.

His view of China is also strangely myopic: he says China isn't playing fair by being 'open'. Yet they've never been 'open'. To go with this he seems to exhibit a touching faith in the Neo-Liberal free trade economic philosophy.

Somehow China's peaceful, if economically mercantile, seizure of political and economic power is bad whereas US and UK bankster-sponsored seizure of political and economic power is good.

3) As for the 'gold superpower': this is quite understandable from the gold bug perspective, but it leaves out the question of ongoing federal and trade deficits in the US - which was why the US left Bretton Woods to start with.

It also leaves out the question of how the existing debts are handled. Effectively the position requires the abrogation of most existing debt - otherwise it just becomes a mechanism for transferring US gold to China and Japan.

4) Rickards also erroneously talks about the Founding Fathers and gold/silver - betraying his gold bug leaning: the Founding Fathers did use paper money. It was inquestionably their experiences with the Continental which at least part formed the later Constitution and early US monetary system.

5) Rickards also has a very curious view of the Great Depression - that it was due to an erroneously low price for gold. Uh, ok, what about the gigantic margin debt money black hole that was the popped by the Crash of 1929?

Again, a weird combination of Neo-Liberal monetary policy and gold bug.

6) Then Rickard's gold bug-ism comes out in full force - he starts showing gold reserves as an arbiter of power - in conjunction with his statement: "I believe the US has never gone off the gold standard"

Can't take anymore. Will have to take a break at the 80:00 point.