Jim Rickards: In Depth Discussion of How He Sees the Aftermath of the Next Financial Crisis

Readers here know that we have long featured interviews and writings from Jim Rickards here on this blog. There are some simple reasons why. Jim is a recognized expert on financial and monetary systems and the problems that can result in major changes over time to those systems. Of course that this what this blog is all about. 

Beyond that, Jim has worked with various government agencies that try to anticipate how things might change in the financial system under different possible future scenarios. This means he is well versed on the thinking behind the scenes on that and also has been asked to provide input into that process. All of this makes him a valuable resource for anyone trying to learn about these issues.

Below I have embedded a very recent in depth interview Jim did while in Australia to deliver a presentation. This is very good discussion for those who want to hear Jim's latest thoughts on where things stand and what he continues to see coming at some point in the future (with the timing unknown to anyone per Jim).

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link to video (from Smallcaps.com)

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My added comments: This interview is somewhat of summary of Jim's most recent book Aftermath (available here), but with some interesting add on questions from the interviewer that you may enjoy. 

In the last half of this interview, in reply to questions about his work with various government agencies that try to anticipate future possible problems and scenarios in the financial system, Jim offers an interesting observation.

Jim says that while he has no problem in getting meetings with officials who are concerned about these issues, for the most part they do not really have any serious contingency plan ready if the kind of crisis he talks about does eventually come to pass. He says they will listen and even do financial war games, but don't really believe a crisis of the nature he talks about will actually happen.

These comments caught my attention because I have gotten the same impression from experts around the world that I do get input from now and then. There are many very bright people who constantly work on ideas and proposals for how a new or reformed monetary system might best serve the public (whether in a crisis situation or not), but my take on things is that they all pretty much agree that no consensus plan for what to do (that is ready to be implemented) actually exists at this time in the event of a failure of the present monetary system.

Jim talks in this interview about what he sees as being possible in the next big crisis. However, my take is that he also does not see that there is any real contingency plan on hand that could get the broad consensus needed to move forward very quickly. He notes that gaining consensus between IMF member nations is unlikely to be an easy task.

I believe this is why we are seeing more and more discussion of a future world where there are perhaps at least two major global blocs in competition to reform the present system. The western bloc led by the US and including the UK and the EU and the eastern bloc led by China and including the BRICS nations and Asia in general. Jim talks about the kind of negotiations that might take place between these two major blocs to try and move forward with some kind of new monetary system in the event the present one did fail and suggests the IMF is the most likely place for that to happen. He further explains how the member voting system at the IMF comes into play in any kind of effort to get a consensus plan. This is something we have emphasized here for some time based on input from experts who know how the IMF system works.

The primary point  to emphasize here is that we should not assume that there is some kind of agreed upon grand monetary system reset plan lurking in the background waiting to emerge in the next major crisis. All of the available evidence I have indicates that at this time, there is no global consensus for anything like that. 

This means it is important for all of us to monitor events, stay as informed as possible, and also have some kind of personal plan in mind in case some kind of temporary disruption of the existing system does eventually take place. If there is some kind of agreed upon transition plan ready to help us move smoothly forward out of a new major financial crisis, I am not aware of it. No expert that I hear from has advised that such a thing exists.


Added note: Later this week I will run an article that provides further evidence that China may be trying to move forward independently with its own monetary system reform with a new sense of urgency because of the proposed Facebook Libra project.