Best-selling author Jim Rickards joins Julia La Roche on episode 21 of the podcast to discuss his outlook on why a severe recession is coming and how to prepare for it.
Rickards is a New York Times bestselling author of Currency Wars: The Making of the Next Global Crisis and several other best-sellers, including The New Great Depression, Aftermath, The Road to Ruin, Death of Money, and The New Case for Gold. He is the author upcoming book Sold Out: How Broken Supply Chains, Surging Inflation, and Political Instability Will Sink the Global Economy. An investment advisor, lawyer, inventor, and economist, Rickards has held senior positions at Citibank, Long-Term Capital Management, and Caxton Associates. He is also the Editor of Strategic Intelligence, a widely-read financial newsletter.
In this episode, Rickards outlines his thesis for why a severe recession is coming. According to Rickards, "we're going to wake up this winter with a severe recession, high unemployment, and a much lower stock market." He notes that the stock market is "starting to get the message," and those who believe in the Fed pivot narrative are missing two huge fallacies.
Rickards also warns on the dire debt situation in the U.S., with the debt-to-GDP ratio exceeding 130%, well past the critical threshold. As Rickards notes, the U.S. is now "well past the point where you can borrow your way to growth, or you can borrow your way out of a debt crisis, and we're heading for a debt crisis."
Elsewhere, Rickards shares his views on why inflation will turn to deflation, a "central banker's worse nightmare" and "pure poison" for debtors. He also details his outlook on the U.S. dollar and weighs in on currency fluctuations globally.
0:00 Intro
0:44 Views on the global economy
1:35 U.S. ‘almost certainly’ in a recession
3:08 What’s coming is a ‘very severe’ recession
3:43 Supply chains breaking down
4:50 Bloated inventories, slashing prices
5:15 Fed tightening rates into weakness
5:45 The stock market is starting to get the message
6:23 The Fed pivot crowd face huge fallacies in that narrative
10:40 Bottom might not be until late 2023
11:40 We’re going to wake up with winter with a severe recession, high unemployment, and a much lower stock market
12:30 Explanation of financial crises and recessions
19:30 Recession may be worse than 2008
21:01 Odds of a financial crisis are ‘uncomfortably high’
22:26 Fed raising rates to curb inflation will be effective at a ‘very high cost’
24:02 Deflation/disinflation coming down the tracks
24:46 2 types of inflation explained
29:16 The impact of debt is like an extremely powerful glacier
35:40 Thoughts on MMT
44:30 Debt does matter
45:05 Deflation is ‘pure poison’ when it comes to the debt-to-GDP ratio
51:09 Thoughts on U.S. Dollar, currency fluctuations
58:46 Diversifying your portfolio
The Julia La Roche Show