Jim Rickards Comments on the Ongoing Currency Battles
Jim Rickards, senior manager director at Tangent Capital and author of Currency Wars: The Making of the Next Global Crisis, was posed the question by CNBC’s Hong Kong based host Bernie Lo, “are we on the brink of an all out currency war?” Rickards responded this has been going on since 2010 and that there are all-out battles and then there are quiet periods, which lasted until December.
“Japan has started a big battle and it’s resonating around the world,” he added. Japan’s policy is so aggressive that it’s sucking the world down with it, he stated.
Rickards quipped that he might not live long enough to see a rate increase from the Fed which is trying to prop up real estate and stock prices and create a wealth effect and improve confidence.
Rickards stated the Fed is trying to inflate asset prices without creating bubble. How do they do that? Rickards said the answer is that every now and then they need to let a little air out of the bubble. But Rickards added that the Fed is no where near reducing purchases of bonds and raising rates, so it will be years at the earliest.
Rickards believes stocks will go up through the rest of this year but warned you’re riding a wave and “when bubbles pop they pop very quickly.” But this bubble could go on a year or even longer, he added.
Lo brought up the fact that the Chinese market has not followed suit with the rest of the world and asked Rickards if they would catch up to the others. Rickards said he thought China had a lot of problems and they “were in a different place.”
Rickards went on to explain why China needs to let their currency rise and their economy is going to slow significantly [see video below].
Back in November 2011, Rickards said the best case for the U. S. was a lost decade, but the worst case was much worse [link].