Ready for an economic catastrophe? Well, it’s time to get ready because that’s what appears to be in the pipeline.
Such is what best-selling financial author James Rickards argued in a recent interview about his new book, “Sold Out,” a book which is yet to be released but is already a best seller on Amazon, in which he makes the case that broken supply chains, raging inflation, and meltdowns like what we saw at FTX are going to lead to a huge 2023 crash. In Rickards’ words:
“It is definitely going to cause sequential collapses in the crypto world, but will it jump the fence into the broader financial world? My expectation is it will, but it can take six months or more to play out. . . . We probably have an acute global financial crisis coming anyway.
“If FTX never existed, I would say we are staring at a worse financial crisis than 2008. Throw FTX on top of that, and it’s like throwing gasoline on a fire. It will accelerate the fire. So, we’re probably going to have problems anyway, but the FTX implosion just makes it worse.”
Continuing and explaining what’s wrong with the supply chains, Rickards said that the old one has been demolished, shattered like a porcelain vase, and so we need to create a new one but are in for a world of hurt before that can be accomplished. In his words:
“The old supply chain has collapsed. A new supply chain will emerge, and I talk about that in my book and what it will look like. Right now, we are in a very messy middle period where things don’t work well. It’s like a vase.
“You knock over a vase, and it breaks into 5,000 pieces. You can’t put it back together. You’ve got to go get a new vase. We broke the vase, and we are shopping for a new one. We are not there yet. We are just cleaning up the mess. . . .
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“Russia invades Ukraine. The Ukrainian plastic conduit factory shuts down, and all of a sudden, the BMW production lines are shut down because they cannot get a part.
“Again, this is another example of how this is all falling apart, and it’s not going to be put back together quickly. There will be a new supply chain, and I call it supply chain 2.0, but we are in that in between time, and it’s going to be just a mess.”
Emphasizing his point, Rickards pointed to the large amount of cash held by famed investor Warren Buffett, saying:
“Why does Warren Buffett and Brookshire Hathaway have $130 billion in cash? Buffett is one of the greatest investors of all time. Why isn’t he out there buying stocks? Again, why does he have $130 billion in cash? It’s because Buffett sees what I see.
“Yes, this thing is going to completely crash. It’s a really good idea to have cash because you can go shopping in the wreckage and pick up some bargains. My point is, we don’t have to guess. Look at the Treasury yield curve. Look at the euro/dollar futures yield curve. Look at other metrics, and guess what it looks like? It looks like 2007.
“Everything I am describing, but not quite as extreme by the way, was true in 2007. . . . These euro/dollar futures were behaving then exactly as they are now. Except now, the inversion is even worse, which means we are in for a worse crisis than 2008. It’s coming. Everything I said has nothing to do with FTX. Throw FTX on top, and as I said, you are throwing gasoline on a fire.”
Watch the interview here: