TIP138: JIM RICKARDS

CURRENCIES, THE EURO, & CENTRAL BANKING (PART II)

14 May 2017

In this second part episode, Preston and Stig continue their conversation with world renown economist and central banking expert, James Rickards.  Jim is the New York Times Best Selling Author of books like Currency WarsThe Death of Money, and A New Case for Gold.  During this episode, Jim provides important insights into the way currencies work.  Additionally, he provides his contrarian point of view on the power of the Euro as a currency.

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TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

Preston Pysh  0:02  

Hey, how’s everybody doing out there? So this is our second part interview with Jim Rickards. If you missed the first episode, I highly recommend that you go back to the previous episode and listen to it. Quick background on Jim, if you haven’t listened to our first episode, Jim is a graduate of Johns Hopkins University. He has a doctorate from Penn. 

He also went to New York University School of Law. He’s written multiple New York Times bestselling books, and he’s one of our most popular guests on the show because of his comments about the Federal Reserve, different ideas about macro, and where he sees the general economy is going.

Stig Brodersen  0:37  

In this episode, we will have a very detailed discussion about currencies in a world where everyone seems to be bearish on the euro. We’ll talk about why Jim is bull and whether or not the euro might end up replacing the dollar. 

We will also investigate if the world will be better off with a fixed exchange rate system the way it used to be. Finally, we will revisit the idea of replacing the current monetary system as we know it with gold and SDR, and why it seems to be a more and more popular solution.

Preston Pysh  1:11  

So without further delay, we’re going to jump right into this episode. So if you guys are ready to do this, let’s go ahead and hop to it.

Intro  1:21  

You are listening to The Investor’s Podcast, where we study the financial markets and read the books that influenced self-made billionaires the most. We keep you informed and prepared for the unexpected. 

Stig Brodersen  1:41  

So Jim, I would like to kick off the second part of our conversation with a discussion about currencies, specifically about the Chinese yuan, In international comparison, it’s actually a very small currency. 

That being said, China has gradually asked their trading partners to sell the transactions in yuan, as opposed to USD. Do you see this as a long term strategic move to support a yuan-based bond market? And if you do, is it really just the first step in the markets’ bigger global plan for the currency?

Jim Rickards  2:13  

I think the answer is yes. I mean, we all know we’re students of Chinese history and Chinese culture. We know that they are the ultimate long-term thinkers. You know, one of my favorite quotes is a conversation between John Lyon and Henry Kissinger in the 1970s, when Kissinger was over there secretly preparing the way for Nixon to go to China. 

As the two pretty big brains, the intellectuals and Henry Kissinger asked John Lyon what he thought about the French Revolution. And Joe turned and said, “Too soon to tell.” In other words, 200 years was not long enough to see how things really play out since the Chinese mentality. 

So yeah, there’s no doubt that China is the second largest economy in the world. It’s the fastest growing major economy in the world. They do have hegemonic ambitions in Western Pacific, East Asia. We all know what’s going on in the South China Sea. They’re expanding the periphery. They’re making some very audacious plays. 

IN THIS EPISODE, YOU’LL LEARN:

  • Why Jim is a bull on the Euro and whether or not it can replace the Dollar.
  • Why the world would be better off with a fixed exchange rate system.
  • If a new currency that few have heard about will replace the monetary system as we know it.
  • Why high economic growth won’t be happening in the US anytime soon.

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