The Occupied Times meets James G. Rickards, geo-politician and author of Currency Wars: The Making of the Next Global Crisis.
OCCUPIED TIMES: What’s happening in the world economy now? Is it a convulsion, or the death throes?
JAMES G. RICKARDS: We are not at the death throes yet. We are at the stage where 18th century doctors apply leeches to ‘bleed’ the patient back to health. The death throes will come later. The leeches consist of central bank and IMF intervention in the form of new money printing to paper over a collapsing banking system at the expense of average citizens. This will work for a while, perhaps through 2013. After that, the deluge. The most recent acute stage of financial collapse, the Panic of 2008, was papered over by the U.S. Federal Reserve.
OT: And after 2013?
JGR: The next acute phase will be too large for the Fed and will be papered over with SDRs, a kind of global money printed by the IMF. By that point, faith in paper money will be at the breaking point mainly as it becomes clear it’s a rigged game favouring those who understand the system best and disfavours those who naively trust the system – savers, retirees, annuity and insurance policy holders and others living on fixed incomes. All of these will be robbed while the financial mavens are properly hedged. Central bank policy is neither more nor less than organised theft from average citizens with state sanction.
OT: Greece’s new Prime Minister is a central banker and a member of the Trilateral Commission since 1998. Is he the right man for the job at this time?
JGR: No, he is part of the problem. The right man for the job would announce that the debt was not being repaid as agreed and needed to be restructured in a way that freed Greece from debt slavery in order to facilitate Greek innovation and entrepreneurship.
OT: What future do you see for Greece?
JGR: At first they will experience debt slavery to euro-creditors. Later, perhaps in 2013 or 2014, they will reassert sovereignty and democracy and default on their debt in order to free their people to make a new economic compact.
OT: Italy is passing its new austerity measures. What does ‘austerity’ mean to you?
JGR: Austerity means some combination of higher taxes and reduced government benefits in order to improve the ability of governments to pay back foreign bondholders. In other words, citizens of democracies are being asked to accept a kind of ‘debt slavery’ for the benefit of the international creditor class. It would be much better to default on the bonds, impose losses on the creditors, and allow democracies to reorder their priorities in favour of wealth creation rather than debt slavery.
OT: You once ranked Ben Bernanke a greater threat to the US than Osama Bin Laden – why?
JGR: Bin Laden was symbolically important, but strategically irrelevant. He could at most destroy several thousand lives. Bernanke has destroyed millions of lives with unemployment, eviction, foreclosure and lost opportunity through his policies that favour banks over individuals. Bernanke’s policies condemn tens of millions of Americans and people around the world to a decade of stagnation at best and a new collapse at worst. This is because of the promotion of the banking interest over the general interest.
OT: Are things fixable?
JGR: Yes. The policy remedies are straightforward. Break up too-big-to-fail banks so that the failure of the parts is no longer a concern of or cost to the citizens. Ban derivatives and other structured financial products that serve no purpose other than to deceive customers and enrich bankers. Reduce regulation on entrepreneurs and increase regulation on banks receiving state subsidies in the form of deposit insurance. Lower taxes to increase incentives to save and invest. Create a sound money system, perhaps based on gold, so that investors, savers and entrepreneurs can plan for the long run instead of making financial bets. So things are fixable. But that does mean they will actually be fixed?
OT: So, you can wave a magic wand: what’s the first economic law or regulation you bring into existence?
JGR: Ban derivatives.
OT: Is there such a thing as a free market?
JGR: Yes, but only if justice is applied. In the past I have called for more bank regulation and been criticized by those who suggest I do not favour ‘free’ markets. However, banks benefit from government subsidies in the form of deposit insurance and too-big-to-fail bailouts. I believe if you benefit from the government, you must accept government regulation. If you want free markets, begin by taking away the government subsidies. Only then can business people ask for a reduction in regulation and only then does one move toward truly free markets.
OT: What’s your advice to the average homeowner or worker who’s caught up in this crisis?
JGR: If you have a mortgage that is worth more than your house, you should stop being a debt slave to your banker and default on your mortgage and become a renter. Home ownership is a myth perpetuated by bankers who profit from mortgages. Renting is a perfectly acceptable economic arrangement between those who need housing and those who provide it. If you are an average worker, take 10% of your income and buy gold in the form of coins as proof against the day of reckoning for paper money.
OT: Why is Gold going up, and has it got further to go?
JGR: Gold has not changed its intrinsic value in 5,000 years. When people say gold is going ‘up’ they need to understand that what is really happening is that paper money is going ‘down.’ Gold will be priced at $7,000 per ounce or higher in the next five years, but this will be a reflection of the collapse of paper money rather than any change in the true value of gold.
OT: What bit of hidden-away financial deviance would you most like to know about?
JGR: Central bank transactions in the gold market.
OT: Finally, what’s your message to OccupyLSX?
JGR: Non-violence, love, persistence, faith. The focus of the Occupy movement is fairness and justice and that is the right focus. My concern is that the focus shifts to revenge or violence. You are a conscience, not a battering ram. A conscience is more powerful.