The High Price of Wealth

The High Price of Wealth, by Tobias Lanz.

There is no secret group that meets secretly to make secret plans to run the global economy. All is done in the open. The global money elite is well known — the G7 leaders, the central banks, the IMF, the World Bank, the Council on Foreign Relations, major hedge-fund managers, corporate CEOs, and others. Similarly, their monetary and financial policies are all on public record. But what is “secret” is that there is little media coverage of this elite and their policies and even less understanding by the general public of international financial and monetary affairs. Hence the global elite can get away with a good deal. And they have been doing so for decades. So says Wall Street veteran and best-selling author James Rickards.

Rickards believes the policies of the elite class will lead the world into severe economic crisis, and soon. … The author does not believe in stock- piling food and hiding in bunkers, as he perceives the coming crisis to be simply part of a normal economic cycle. ….

Rickards believes that this economic crisis will create social chaos, which will only embolden the elites to take more severe actions to control the problem. …

The normal economic cycle, however, has been affected by the economic policies of the elites, who have followed a Keynesian-monetarist program that focuses on running government deficits, manipulating interest rates, and printing money. They did this to keep the global economy stable and growing. But Rickards contends that these policies, adopted to avoid normal recessions, forestalled regular economic downturns, making them less frequent but far worse in the event.

He cites several crises, each more severe than the previous one—the 1999 dot-com and the 2008 housing bubbles in particular. These crises he calls foreshocks. And now the mother of all bubbles—one that impacts almost all asset-holding classes worldwide—will explode. Rickards calls this the earthquake. …

In 1914 the U.S. government shut down the stock market for four months to avoid a liquidity crisis caused by war debts in Europe. In the 1930’s Franklin Roosevelt … shut down every American bank for a week, outlawed the ownership of gold, and then pegged gold to the dollar to stabilize the economy. And in 1971 Richard Nixon instilled a wage and price freeze. Such actions are not unique to America. The governments of Cyprus, Greece, and Argentina shut down banks and businesses in response to recent economic crises. And President Obama made an agreement with Germany’s Angela Merkel in 2014 to coordinate such policies at a global level among the G20 nations. …

How the bureaucrats and elite see themselves:

Rickards suspects that the global elites are not even aware that their policies created the current crisis. He contends that they are not scheming actors who purposely drove the world economy to the brink of disaster, but simply ignorant. The real problem with the world’s moneyed class is that their paradigm—what he calls the Keynesian-monetarist synthesis—is outdated. It still clings to economic models based on the certainty that if governments will only take action — deficit spending, the manipulation of interest rates, and the printing of money — all the world’s economies can be adequately managed. …

What needs to be done? It’s too late this time around, but in future:

He contends that economics can best be explained by complexity theory. Economies are massive interactive social systems. Like all complex systems, they can expand and contract, often rapidly. Rather than try to manage systemic stability, it is better to prepare for rapid systemic shifts, including the inevitable collapse. Rickards provides no specific policy prescriptions. Instead, he advocates what essentially is a conservative economic approach, at the public and the individual levels. Money and wealth must be prudently managed. Abstract theories should be avoided, and distortions of the market and other problems should be expected and prepared for. Rickards believes, too, that the reliance on free trade is another error in economics made by the elites. Trade is not, and never can be, free. It is always politically determined, and it must be prudently man- aged by governments and firms.

hat-tip Stephen Neil