James Rickards - Sold Out: How Broken Supply Chains, Surging Inflation & Political Instability Will Sink The Global Economy

Full transcript: James Rickards on London Real

2:38 This is London Real. I am Brian Rose. My guest today is Jim Rickards, the American lawyer and investment banker, turned economist, thought leader, and author. You have over 35 years of experience working in capital markets on Wall Street in senior positions at Citibank and the hedge fund long-term capital management, as well as being an advisor to the CIA and the Pentagon. As a highly sought-after financial expert, you have been a contributor to publications like The Financial Times, The Evening Standard, and The Washington Post.

3:06 You have topped The New York Times bestseller list many times, with titles including The Death of Money and Currency Wars, while your latest book, Sold Out, looks at the broken supply chain, surging inflation, and the catastrophic consequences of the global economy. Your desire is to help people prepare for the upcoming crash, which will be fast, bloody, and unavoidable, by teaching them how to protect their wealth and navigate this new economic reality. Jim, always a pleasure. Welcome back to London Real.

3:36 Thank you, Brian. It’s great to be with you. Great to sit down and have another in-depth conversation. I can’t wait to jump in and get your take on what’s currently happening globally. Before we get started, I just want to alert everybody watching to an important video that you’ve just recorded that will not be available to the public.

3:52 Here, you discuss the upcoming crash that will be fast, bloody, and unavoidable, but you then explain how anyone can position themselves to profit from this crash. Our viewers can access that video at londonreal.tv forward slash Jim, that’s J-I-M, and I highly recommend that everyone go watch that immediately after our conversation. Jim, let’s jump into it. We last spoke six months ago. What’s your take on the way the world looks as we go into 2023?

4:19 How is the global economy? Has the Fed engineered a soft landing or not? Yeah, Brian, it’s just at a very high level. I would say that there are a lot of difficulties, a lot of challenges. We’ll talk about all of them in detail.

4:35 But, you know, people put words in your mouth and kind of get the reputation as this doom and gloom guy. Jim Rickards is always talking about the end of the world, which I don’t. I never use that expression. But I make the point that, yeah, despite the difficulties, we don’t have to be victims. We’re not helpless.

4:52 We don’t have to curl up in a ball. The key is to see it coming. If you can see things coming, you can deal with them accordingly. You can get through them, not only preserve wealth, but actually make money. I always point out the example of Ugo Stennis, and people go, who’s that?

5:06 He was an industrialist in Weimar, Germany, in the early 1920s, and he could see the hyperinflation coming long before the middle class, long before anybody else. He went out and borrowed an enormous amount of Reichsmarks, that was the currency at the time, and just bought industrial assets, coal mines, vessels, natural resources, et cetera. So here comes the hyperinflation. He gives it a little time. He pays back his debts.

5:31 I would say, your penny’s on the dollar, like a millionth of a penny on the dollar, in other words. But he paid it back. They were sweeping the money down the sewers, but he paid back his debts and kept all the assets. And he became the richest man in Germany. And my German’s not very good, but his nickname was the Inflation’skornig, which means the inflation king.

5:49 So there are other stories like it, Joseph Kennedy and the 1929 crash. But here’s a guy who lived through the greatest hyperinflation of any modern industrial economy and ended up as the richest man in Germany because he saw it coming and made the right move. So again, we’re not helpless. We can do things about it. Yeah, what people probably don’t know about you, but they’ll soon learn, is that, you know, you’re so experienced on Wall Street and understanding derivatives and understanding you can be on both sides of the market in many different forms through futures and options and all sorts of different ways that, exactly, you understand not to just, you know, batten down the hatches and survive through tough times.

6:28 You know, actually, how to put the positions on that will thrive in those times. And, you know, I know that about you, and I think people are learning that about you. And it’s true. People can be empowered in these times, and it’s a much better way of going through this as opposed to just the doom and gloom, right? Right.

6:46 But the key to empowerment, as I say, is to see it coming. That’s where the analysis comes in. And you’re like, gee, Jim, are you smarter than everybody else? Of course not. There are a lot of big brains around, but people have flawed models.

6:58 There’s a lot of behavioral psychology behind it. You know, the confirmation bias or believing the future will resemble the past, which it usually does not. And so if you’re going to stick to those models, yeah, you’re going to get really bad results. It’s hard to think of an institution that has a worse forecasting record than the Federal Reserve or the U.S. Federal Reserve with the possible exception of the IMF.

7:20 They’re both pretty bad. I mean, you could almost take the Fed forecast, do the opposite, and be just fine. There’s more to it than that. But they just stick to these really bad models. But if you understand how the economy really works, if you understand it’s a complex, dynamic system, all I’ve done is I’ve taken complexity theory, which has been around for a while.

7:39 I mean, you could say 13 billion years because the Big Bang was the ultimate complex, dynamic paradigm shift or phase transition. But the science of complexity understood mathematical terms, really dates to kind of the early 60s. But it’s been used very successfully in physics. I’ve been at the Los Alamos National Laboratory, worked with the top people there. It has a lot of applications.

8:05 All I did was bring it over to capital markets. I looked at capital markets and said, wait a second. Here’s one of the most complex, dynamic systems you can picture. And then there’s nothing more complex than the human brain. So you’re putting humans on top of capital markets.

8:19 You’ve got complexity squared or some exponent. And those models work brilliantly. But try getting anyone to understand it or do that work is difficult. But again, the point is, if you have the right models, and I would include behavioral psychology, a good dose of history, complexity theory, and a few other branches of applied mathematics, you can get very good results. But if you stick to the Phillips curve and non-accelerating inflation, unemployment rate, and a lot of other nonsense the Fed uses, yeah, you’re going to get it wrong.

8:52 And one of the reasons that you kind of changed the way you looked at markets and started looking into these complex systems was because of what you experienced at long-term capital management. And I was rereading your bio this morning, and I was like, ah, the pieces started fitting in place. I mean, we’ve known each other for six, seven years now, but I was starting to really understand your background. And people don’t know, you know, you had kind of made your first kind of fortune on Wall Street, gone to long-term capital, put the money in long-term capital.

9:20 The smartest people in the room, Nobel Prize winners to the top people on Wall Street. And then you watch that go bankrupt and almost take the financial system down. You had to also engineer that as general counsel, but I think that was your aha moment where you said, wait a second, even these people aren’t looking at these markets intelligently. And then I think that’s when you started developing these systems. Did I get that right?

9:44 That’s a very good synopsis. I’m kind of working on my third fortune right now, but the first two, it took a hit game back in 1998. But what happened is I had a long career on Wall Street, you know, made a certain amount of money, came into long-term capital management in 1994 before the launch. So it was, I was the only general counsel through the collapse in 1998. But I was the lawyer and I’m not washing my hands of the risk management and all that.

10:15 I worked side by side with these guys. I mean, Myron, on a quiet day, Myron Scholz, who is Nobel Prize winner in economics, co-inventor of the Black Scholz formula, which is the basis of one quadrillion dollars of notional value derivatives in the world. By the way, for people not familiar with the Q word, one quadrillion is a thousand trillion. So that’s how many derivatives, all balance sheet derivatives we have. But Myron invented that formula that set the base of all of it.

10:41 And, you know, he would, a really nice guy, and I’d be sitting at my desk and he’d walk in, I had a whiteboard. And I would ask him some dumb question about the markets and he would sit there and give me like a two-hour tutorial. So can you imagine getting a private two-hour tutorial from Nobel Prize winner? So, yeah, I was, I was around when there weren’t that many of us. But I was sort of the lawyer, but I focused on that, compliance, you know, contracts.

11:08 I wrote the derivatives contract, so I was very immersed in all that. But I was kind of comfortable putting my money with the firm, including the money I had made previously. I said, wait a second, these guys are, you know, even the guys who didn’t win the Nobel Prize had won 60 IQs. They were the real deal. They were, you know, one of them was the youngest professor, youngest full professor in the history of Harvard University and the vice chairman of the Federal Reserve.

11:31 Two Nobel Prize winners, you know, J.M., John Merriweather was legendary on Wall Street. So that was the crowd. So I was at ease about the money, just very much focused on my job. And then when it all fell apart in 1998, I always say in the U.S. system, it’s true in the U.K. also, when things really, really, really go bad, they hand it to the lawyer.

11:51 So, like, hey, well, I can’t, I can’t deal with this. Give it to the lawyers. And so it can be a bankruptcy trustee. We did not go into bankruptcy. But, you know, a negotiator, a bailout expert, you know, there are many, many people especially.

12:05 So I got the whole thing handed to me, and then we organized it and got through it. We did, we were able to film the runways, and, you know, with like four engines flaming, you know, kind of bring it in for a soft landing. But I can tell you, Brian, from the inside, we were hours away from closing every exchange in the world, sequentially. We would have started in Tokyo. We were very, we got a term sheet on a Wednesday, five days.

12:31 Nobody slept. I mean, nobody slept. You know, in big law firms, I was working, we had a base at Skadden Arps. I was, my office was up in Greenwich, but I was back and forth. You know, so the first day, everyone looks like a lawyer.

12:44 Second day, the ties come off. You know, third day, the jackets come off and the shirts are unbuttoned down to the middle of the chest. No one’s showered or bathed or whatever. And it just gets grubbier, but you sort of power through it and get it done. And we did it late on a Sunday night before Tokyo opened.

13:00 But if it had fallen down and it came close, Tokyo Stock Exchange would have been closed. And then, you know, Singapore and Paris and London and New York, they would have probably reopened a few days later. But it would have been a shock like nothing since the Great Depression. But the problem is, we did get through it. And two things.

13:21 Number one, it was 24 years ago. So people, 25 years ago almost. So people kind of fuzzing on it. You know, if you’re under 40, it’s probably like a footnote in some economics book or whatever. But if you were there, it was pretty scary.

13:37 But I came out of it. And of course, I lost money. One of the reasons we weren’t lynched, there was no wrongdoing. There was a huge risk management failure and a huge financial loss, no doubt. But there was no wrongdoing.

13:50 This was, I used to say, we knew, we knew to the penny how much money we were losing because our accounting was really good. But we were looked at by the SEC and the CFTC. And, you know, there were no lawsuits. And so we kind of got through it all. I mean, interestingly, some of the principles after long-term capital, you know, you pick yourself up, you dust yourself off, they started new companies and made a billion dollars.

14:12 So they had the talent. We just had a very bad patch. But I sort of looked at it myself and said, well, wait a second. These people really were who they said they were. They really were that good.

14:25 They really were the top brains in the world in this field. And yet they had this disastrous outcome. Massive failure risk management. They’re not dumb. They’re not venal.

14:34 But they must be doing something wrong. I don’t mean in the moral legal sense. I mean, there must be something wrong in the model, in the way they understood markets, or you wouldn’t have ended up that way. So I sort of, I continued my career. I ran a stock exchange after that.

14:51 It was not long after 9-11. I was tapped by the CIA and did that for 10 years. But I never got over this. Well, what were they missing? And so then I just kind of, on my own time, in my own way, I started exploring what could be wrong with the models, what assumptions were at odds with the facts, how did models actually, or sorry, how did markets actually work, and what models did work?

15:17 And then it’s not, if you do that, it’s not long before you discover, you know, been like Mendelbrot and other analysts who had kind of got it right, Lorenz, Lorenz, who was the founder of modern complexity theory. And then you sort of, you know, you check the footnotes and read those articles. And the more I got into it, I said, hey, this is the right way to understand it. And then I started writing on that, lecturing on that. And then because of my national security work, I got tapped to go out to Los Alamos, Los Alamos National Laboratory.

15:49 And that’s like, good luck getting in. That’s harder to get in than any other place I’ve ever been, but it’s sort of mesa. So unless you’re coming through the main access road, you got to be like a mountain climber to go up a thousand feet. And then, you know, you’ll get attacked by dogs or whatever. But working with people who were simulating nuclear explosions in a computer, supercomputer, because you can’t blow things up anymore, but we still have to do the weapons development.

16:15 But they were, I was meeting with them to collaborate on taking that branch of physics and complexity theory and bring it to capital markets. So what was interesting, I would say something. I did say this. I would say, you know, if we had used what we call team science or interdisciplinary approaches, if we had some physicists, applied mathematicians, an economist, a lawyer, a behavioral psychologist, maybe an artist, I don’t know, just a group, we could crack the code.

16:44 We could figure this out. And the physicists were like, great, great idea. Let’s put it together. Let’s make a proposal. Let’s get the funding.

16:51 They love that. The Santa Fe Institute’s right there, and they’ve got a lot of the same talent. But you would go to an economist and say, well, would you like to join this team? They would say, well, you have nothing to teach us. Why would we want to work with physicists?

17:04 I mean, what does that have to do with economics? So interestingly, the biggest impediment to improving economic science were the economists themselves, because they’re so drenched, marinated, I guess, in their own models, most of which are mistaken, that they can’t see the way forward. So I got a lot out of that. I just started doing it myself, building my own models and working with teams. I’ve started companies that do that now.

17:28 So I’ve had a lot of success with it. It’s interesting how you talk about how they went to the physicists, because again, like you said, Myron Scholes, like legend on Wall Street, pretty much responsible for the pricing of any option on Wall Street. You know, we didn’t have a shrine to him on the floor at Bankers Trust, but we all knew that the reason we had jobs was because we had the Black Scholes model. We could price all of our derivatives. But that came, I think, from looking at things from a thermodynamics perspective, from that diffusion model, is why first they cracked the code.

17:56 And I know probably the finance and economists have been trying to figure out how to price an option for a long time, and then they kind of got that from the science guys. So again, a little surprised that the economists wouldn’t know that, but then again, also not surprised. Yeah, well, there was, I mean, it was Black Scholes, there was Fisher Black and Martin Scholes, but there was a third contributor, and he won the Nobel Prize, which was Robert C. Merton.

18:20 Merton, yeah. Merton was at Harvard, and Fisher and Myron had worked on this for a long time and had come close, but weren’t all the way there. They went to Merton to help with the math, actually. And Merton solved the math problem for them, but to his credit, and very generous, another really nice guy, he said, look, you guys go ahead and publish this, and then I’ll tag along a few months later with my contribution. And the Nobel Prize is not awarded posthumously.

18:48 So Fisher Black sadly died before they got the prize. So Merton and Scholes won the prize. And again, to their credit, they pulled the award, divided by three, and gave one third to Fisher’s widow, which I thought was very appropriate and very generous of them. But yeah, it was a math problem. You write about what they call Brownian motion, which is random.

19:12 And so you had a fan, if you will, of probabilities, and then different degree distributions, some more likely than others, et cetera. Having said that, and the success of Myron used to say, Jim, if only I had patented the idea and had a fraction of a penny on all the notions of value, I’d be the richest man in the world, which is probably true. But they didn’t. They put it in an academic journal. But there are assumptions in Black Scholes, which you can question.

19:45 I’m not dinging the model. Science is always, hey, let’s make it better. It doesn’t mean you don’t use what you have. But they assume a risk-free rate. Well, is there really anything?

19:58 Like, is there a risk-free rate? Is the United States risk-free? I don’t think so, actually, and it’s getting riskier by the day. So you can kind of question that assumption. Does the future resemble the past with some probability, some degree of distribution of probability?

20:15 Not always. I mean, maybe less frequently now than ever. And they also assume that prices move continuously. Prices go up and down, of course. But if it were going up, you could get out at certain levels.

20:28 If it were going down, you could put stop losses on your position and get out at certain levels. You could manage it. Of course, that was a big contributor to the 1987, October 19, 1987 flash crash when the market fell 22% in one day. I mean, today, we get worked up. It was down 22% in a year, which it was last year, approximately.

20:48 But this is 22% in one day. But it turns out none of that’s true. Markets don’t move continuously. Or if they do, it’s when you don’t care. When you do care, they just gap.

20:59 They gap down or they gap up. You miss it, you blink, and it’s at a completely different level. It’s been repriced. Now, you can still get in and out, but you’ve either made a lot of money or lost a lot of money in the blink of an eye. So when you take those characteristics, and this is how I started kind of deconstructing it, if you will, and said, well, look, markets are not efficient.

21:19 That’s nonsense. They don’t move continuously and slowly. They gap up and they gap down. And if you’re not ready for that, you’ve missed the boat. Nothing’s risk-free, so why don’t we start there?

21:29 When I started identifying those factors that, in my view, were incorrectly applied in long-term capital, but really everywhere, and you say, well, what looks like that? Well, the answer is a complex dynamic system, a system that produces hurricanes and tornadoes and lightning bolts and power outages and earthquakes and tsunamis. Those are all examples of the results of complex dynamic systems. An earthquake doesn’t sneak up on you. The ground falls out from under you instantly.

22:02 And that’s what happens in markets. So then I said, well, maybe that’s a better model. Of course, it is. Yeah, really well said. Like you said, at the time, it was a breakthrough because you had these new concepts that all you needed was volatility, which again is a very general measure, and a risk-free rate, and you could create an options price where everyone in the past was like, you need an expected rate of return and all these things that weren’t true.

22:25 But then when you look at it, especially a couple decades later, you realize it’s making some very simplistic and general assumptions, which obviously have not proven true when you look at these crises. And like you said, that’s when it matters. When it gaps is when you really need it to work, not when nothing’s happening. So yeah, we definitely needed new things, which is what you’ve worked on. And so we spoke last about six months ago.

22:51 I’m wondering, have your views of the world changed? Obviously, the Fed has dialed in a bunch of increases. I think some more projected this year is telling us there’s going to be a soft landing, but I think you disagree. Has your outlook on the future changed, and what do you see coming up for 23 and 24? Yeah, I mean, things evolve all the time.

23:10 Another tool, intellectual tool, applied mathematical tool uses Bayes’ theorem without getting too much in the weeds. And I learned Bayes’ theorem at the CIA because I always say, if you have all the facts, a smart high school kid can solve the problem. The intelligence agencies and others, the people in capital markets, have to solve problems when you don’t have all the facts. But you have no choice. In national security or defense, it’s literally life or death.

23:38 On Wall Street, it could be your fortune or your client’s fortune. So you don’t have the luxury of just throwing up your hands and saying, wow, I’m going to wait until I get more facts. That’s what Janet Yellen did, but that doesn’t work in the real world. She’s kind of detached from that. So how do you solve problems when you don’t have all the facts you need to really solve the problem?

23:58 And you know it, but you have to deal with it anyway because it’s coming at you. Well, Bayes’ theorem says assign an initial probability, a priori assumption. Just not make it up, but do the best you can, recognizing that you’re going to fall short, that you’ve got missing pieces in the puzzle, if you want to put it that way. And if you have no facts at all, and it’s a binary outcome, give it 50-50. It’s not quite 50-50, but red or black on a roulette table, it’s a little less than 50-50.

24:28 It was close enough. You say, it’s either going to be red or black, don’t know which, I’m going to give it a 50-50. And then what you do, this is what statisticians hate, you update it based on subsequent facts. As new facts come in, you put them back in the model, you update it, and what you’ll discover is that your probability either goes up or down. Well, if it goes down more than a certain amount, you discard it, you say, well, that’s wrong, I just do it again, would do something.

24:55 But if it goes up, what you’re doing is making it more and more likely that your assumption was true. And so eventually you can get up to the 80-90% level, and that’s not 100%, but it’s pretty darn good. But there’s a tension, which is okay, as you’re updating, and this is something that was explained to me by Henry Kissinger. So imagine a simple graph, and the vertical axis, the y-axis is the probability of a certain outcome, and the x-axis is a timeline.

25:26 Well, the probability, or basically, convert that into the amount of information you have. How much information do I have? How much time do I have to make a decision? Well, at zero, at the outset, you have no information, or very little, but you have a lot of time, you have a lot of degrees of freedom. But as you move across the x-axis, as you move down the timeline, what you discover is you get more and more information, which is a good thing, so that curve is going up, but you have less and less time, fewer degrees of freedom, that curve is going down.

25:56 So when you get all the way to the other end, it’s like, hey, I have perfect information, but it’s too late, it’s over. I miss either war started or I lost all my money or something bad happened. So what do you look for is the sweet spot in the middle, we call it the Kissinger Cross, where I have enough information to be smart, but enough time to have degrees of freedom and be able to act. You look for that sweet spot in the middle, and that’s when you act, and humility is a very good tool, a good addition to the formula.

26:27 But that’s what Bayes does, Bayes gives you a mathematical basis for doing what I just described. So in the CIA, you never have enough information, you’re always trying to get more, but you have to do the best you can and kind of make assumptions and make forecasts because you don’t have the luxury of sitting back. You can’t wait for 10, 9, 11 events so you can have a good statistical base. You got one and you want to prevent the next one, and kind of how do you do that?

27:01 So getting back to J-PAL, so my forecast, I do update them, but big picture, it goes as follows. So what is J-PAL doing? First of all, not even a year ago, March 1st, 2022, the Fed Fund policy rate and interest rates were zero, and we’re now at 4.5%. Now, I know everyone goes back to the Volcker days, and I talked to Paul Volcker about this, 18%, 19%, 20%, like, well, PAL’s nowhere near there, but he’s getting there fast. Even in the Volcker days, we never went up 4.5% in 10 months.

27:37 Not that fast. And so here we are. So what is PAL doing? Well, he’s given five speeches on the subject. I don’t know why Wall Street doesn’t listen, but he keeps trying.

27:48 You know, August 26 at Jackson Hole, September 21st at an FOMC meeting. Again, November 2nd at an FOMC meeting. November 30th at the Brookings Institution, which is like a retirement home for, you know, former Fed chiefs, Janet Yellen and Bernakier there. And then I think it was December 14th, could be off by a day at another FOMC meeting. So he gave five speeches.

28:11 He said the same thing every time. He said, inflation is job one. We’re just going after inflation, you know, believe us. There is going to be a recession. Unemployment is going to go up.

28:22 There’s going to be pain. You know, I’ve never heard a Fed chairman use the word pain. He used it five times in one paragraph in the Jackson Hole speech. And that’s what we’re doing. And believe us when we say it.

28:33 And of course, Wall Street, you know, comes up with their own narrative. Now, how long will he raise rates? How quickly? And what’s he trying to do? Powell is trying to get to something that he calls the terminal rate.

28:46 And what’s the terminal rate? I don’t know the number. Neither does J. Powell. It’s kind of like, as part of Stuart would say, I’ll know it when I see it.

28:53 But he’s trying to get to a terminal rate. But the definition of the terminal rate is it’s a rate that’s high enough to cause inflation to come down on its own without further hikes. So we’ll get to a level. And then inflation is coming down, by the way. And in the last five months, it’s gone from in the U.S.

29:13 It’s gone from about 9% to 8.7, 8.2, 7.4, 7.1. So it is coming down. Now, having said that, the target is 2%. And 7.1 is still a far cry from 2. So he’s not there, but he’s making progress.

29:30 Now, so here’s the, I hate to use the word conundrum, but it kind of is, Wall Street’s saying, you’re done. You did it. Mission accomplished. Inflation is coming down. You got what you want to give it time.

29:42 Stop raising rates. You’re going to kill the economy. But the Fed is saying, well, we actually don’t know. We can’t untangle it. Yes, inflation is coming down.

29:50 That’s subjective. But is it coming down because we’re still raising rates? Or is it coming down because we’re at the terminal rate? Those are two different things. And right now, and this is what Powell’s been saying, the Fed leans to the view that they’re not at the terminal rate.

30:06 That inflation is coming down because they’re raising rates. They have not achieved the terminal rate. So my expectation is the Fed will raise interest rates 50 basis points on February 1st. We’ll see. We got a few weeks ago, and that could change.

30:21 Again, consistent with basing and updating. But they’ll let us know. We’ll know beforehand. And then probably 25 basis points in March. March 22nd is the Fed meeting after that.

30:34 So those 75 plus the 450 we have now, that’ll get you to five and a quarter. And even the more hawkish members think that that’s probably the terminal rate. So Powell and the Fed have said, yeah, inflation is coming down, but it’s because we’re raising rates, not because we’re at the terminal rate. We’re going to get to the terminal rate, probably two more hikes. And then we’ll pause.

30:57 And then if we’re right, we’ll just let inflation come down on its own. And that may take a year. So all this stuff about the Fed pivoting and cutting rates and all that stuff, I mean, the Fed’s thinking mid-2024 before they do that. Now, Wall Street, and I’ll say markets, not just Wall Street, but the big money in arcane places like the euro-dollar futures curve, which is an interesting data point. We’ve talked about that.

31:23 And the US Treasury curve, which are highly inverted, are saying, no, you’re not going to get that far. You may be at the terminal rate already. You’re definitely going to cause a recession. It’ll be more severe than you think. And rates are going to have to come down sooner than people expect.

31:40 In other words, you’ve already achieved the terminal rate. You just don’t know it. And you’ll probably be the last to know. So with Wall Street, with the cheerleaders sending that message, but with some serious market indicators, including yield curves, sending that message, why is Powell sticking to the game plan as I described it? And the answer goes back to 1980, believe it or not, and what’s called the Volcker mistake.

32:07 And everyone knows Volcker became Fed chairman in 1979. He stayed on until the kind of early to mid-80s. And he did raise interest rates to 20% or very close to it to kill inflation, which went up to 15% at the time. I remember I actually got my first mortgage and bought a condo in New York. It was 1980.

32:31 And my mortgage was 13%. I told my mother and she cried. I mean, her first mortgage was like 2% in the 1950s. I said, Mom, you’ve got to understand, inflation is 15. My mortgage is 13.

32:42 So my real rate is negative 2. And it’s tax deductible. I’m in a 50% bracket. So my real rate is negative 8. The bank’s giving me.

32:49 But anyway, that was just how things were at the time. But people forget that there was a recession in 1980. It was sharp but quick. It was over very quickly. It had nothing to do with monetary policy.

33:04 The Carter administration issued some dopey regulation on a ceiling on credit card interest rates. And the industry said, fine, we’re not going to lend anybody any money. The economy fell instantly, kind of like a smaller version of what happened in 2020 with the pandemic panic. And then they said, oh, sorry, just kidding. And then they took the ceiling off and then things got back to normal.

33:29 But Volcker, now, this was a time when farmers around the country were driving front loaders and tractors to Washington and they were circling the Fed building. And one guy drove his tractor up the steps of the Fed. And Volcker was being burned in effigy. I mean, that all happened. So it was a little bit of pressure.

33:47 And of course, Congress was up in arms and the White House was up in arms. So Volcker, not quite panicked, but he cut interest rates 7% not 0.7, 7 full percentage points to deal with the recession, which number one was unnecessary because the recession was caused by a policy blunder from the White House, which was quickly corrected. And number two, he had not won the fight against inflation. Well, after he cut rates and we came out of that very quick sort of snap recession, inflation got even worse.

34:18 And that’s when Volcker had to raise rates to 20%. And Volcker, in hindsight, he said this since last book, before he died, he said, we shouldn’t have done that. We should have stuck to our inflation mission. So now, Powell, remember, Powell’s not an economist. He’s a lawyer.

34:34 So he kind of thinks like a lawyer. I can relate to that, you know, looking at both sides. Powell does not want to be that guy. He does not want to be the guy who walks early and cuts rates, the famous Wall Street pivot, before the battle against inflation is won because the outcome could be exactly what Volcker experienced, which is inflation wasn’t done, doesn’t go away, comes back stronger. And then you do have to destroy the economy, as we did in 1981, 82.

35:01 That was the worst recession. That was far worse than the little one in 1980. That was the worst since the Great Depression. We’ve managed to break that record several times since then. But at the time, that was horrific.

35:11 But Volcker and others have said that was a blunder he never should have done. So Powell does not want to give up the rate hikes too early because he does not want to repeat the Volcker mistake. He does not want to be that guy. And that’s what’s driving him. Even as Wall Street screams, you’re already there.

35:28 So the question is, that’s the lay of the land. There’s the two competing sides. How does this play out? In my view, Powell probably is there. He probably is at something like a terminal rate.

35:41 He probably doesn’t have to raise interest rates anymore. He doesn’t believe that himself. His models tell him otherwise because they’re relying on the Phillips curve, which is junk science. I mean, the last time I looked at a Phillips curve, it was flat. At least where I went to school, the curve was curved.

35:56 This thing is flat. There is no correlation between unemployment and inflation. There just isn’t. But the Fed thinks there is. So I always tell people, if you want to forecast Fed policy and understand the Fed, don’t think like a rational person.

36:11 You have to think like the Fed. Because you have to get inside their heads or else you’re going to get it wrong. So they’re looking at unemployment, which is the lowest. The unemployment rate is the lowest since 1969. Well, if you believe in the Phillips curve, then that’s a sure sign of inflation.

36:26 And as I say, even though it’s coming down, it’s still pretty high. So they think they have to keep fighting this fight. But here’s what they’re missing. Here’s where it all falls down. Yeah, inflation, as measured, CPI, PPI, personal consumption expenditure, core, non-core, year over year, there are like 20 different ways to measure it.

36:49 It is coming down. But there are two sources of inflation. And it’s going to sound obvious, but you’ve got to separate them, the supply side and the demand side. Both result in price increases, but they have completely different dynamics. Supply side inflation is what we’re seeing.

37:06 It’s what we saw in 1974 with the Arab oil embargo during the Arab-Israeli war when they cut us off from oil. And, you know, you had to line up for gasoline. I lived through that. And now, and again, this is what my book Sold Out is about, the breakdown of the supply chain, partly related to energy, partly related to the war in Ukraine, partly related to the pandemic panic. As I explained in the book, it actually predates that.

37:31 The breakdown started in 2018 with Trump’s trade war. And then COVID made it worse, yes. Ukrainian war made it worse, yes. But it really started before that. And, you know, bear shelves, and you couldn’t get certain things.

37:47 It wasn’t that every supermarket shelf was bear the way it was in East Germany in the 1950s, but something was always missing, and that’s still the case today. So, of course, prices went up, and people were trying to pay whatever they had to to get what they needed, and energy prices were a big driver of that. So, that feeds through as a form of inflation. The other kind of inflation is from the demand side. So, the supply side is called a cost push.

38:13 Costs go up, and they push it onto the consumers. The other kind is from the demand side. It’s called demand pull. And, basically, consumers have a change of mentality. They’re worried about inflation.

38:23 They would say, hey, you know, I was thinking about buying a refrigerator. Gee, I better go buy it today, because if I wait for six months, the price is going to go up, or apply that to anything, a new dress, new suit of clothes, whatever. And so, you’re pulling demand forward, and it’s behavioral. And that will also drive prices up. But they’re very different things.

38:40 Now, cost push can morph into demand pull. That’s what happened in the 70s. It started from the supply side, but by the late 70s, 80s, in Volcker, which we’ve just been talking about, it had tipped over into the demand side. That hasn’t happened yet. We’ve had the supply side inflation, the cost push.

38:58 It hasn’t yet tipped into demand pull. It hasn’t really affected consumer behavior that much in terms of people anticipating more inflation. It could, but it hasn’t happened yet. Here’s why that’s an important distinction. Cost push inflation negates itself.

39:15 You know, the old saying that the cure for high oil prices is high oil prices, because people can’t afford it. You know, maybe if demand is an elastic, you’ve got to fill up your Ford F-150 truck with gasoline to take the kids to school or go to work. But if you’re unemployed, you’re not buying any gaskets. You’re not leaving the house. So it tends to negate itself, whereas demand pull feeds on itself.

39:37 Powell has not made that distinction. And if I’m right, I think I am right, and the evidence backs that up, this inflation will come down, not because the Fed is raising interest rates, but because higher prices destroy demand all on their own. If I used to pay $75 to fill out my truck with gas, and now I have to pay $150, which is about right, I’ll do it, because I’ve got to get to work. But that’s $75 I’m not going to spend on something else. I’m not going to go out for dinner.

40:07 I’m not going to go to a show, a concert, or buy a new camera, whatever it might be. So it does tend to depress demand, destroy demand, and hurt the economy. And then it slows down, and then the inflation comes down on its own. That appears to be happening. But Powell hasn’t really made the distinction.

40:28 He’s still, he’s fighting the last war. I had to use a cliche, but he’s fighting the Volcker War. And what he’s got looks a little bit more like the Herbert Hoover War, that looks a little bit more like the 1930s than the 1970s. So the bottom line on all this is, the Fed is going to raise rates at least twice more for the reasons I mentioned. Powell doesn’t want to repeat the Volcker mistake.

40:48 He thinks the battle is not won. He has to get to the terminal rate. In reality, he’s probably already there. If there is such a thing as a terminal rate, it’s not one of these things they made up. Inflation is coming down on its own.

40:59 We’ll probably continue. But for really bad reasons, you know, this is where now, so I criticized Powell now. Let’s criticize Wall Street for a minute. You know, they might as well just hand out pom-poms and megaphones and cheerleaders, you know, varsity letters and all that stuff. So the Wall Street narrative is, you know, we’re there.

41:21 You know, job creation is slow. Wage growth is slow in real terms. It has labor force participation. It’s not going up, at least not, you know, just noise kind of on a month-to-month basis. And the Fed’s going to get the message.

41:35 You’re going to stop raising rates, soft landing, Goldilocks, you know, and then they’re going to cut rates, so buy tech stocks. That’s kind of how Wall Street thinks. They’re just trying to sell you some tech stocks. They’re wrong, too. Powell’s wrong for the reasons I mentioned.

41:50 Wall Street’s got it wrong, too, because inflation is coming down. That’s empirical. There’s no debate about that. But it’s coming down for really bad reasons, which is the economy is hitting the wall, and not just the U.S. This is a global phenomenon.

42:02 We’re looking at a global recession, which, and they’re rare. For a major economy, the U.S., for China or the U.K., whatever, to go into recession, it happens. And then somebody else has growth, and they kind of pull everybody out of the ditch. But a global recession is highly unusual, and that appears to be what we’re heading for. The other thing where the cheerleaders are out is the China reopening story, you know?

42:26 So they spent three years basically putting people in concentration camps, quarantine lockdowns, no travel. The examples of people, you know, in hazmat suits welding steel bars in front of apartments so people couldn’t get out because they had COVID, and they’re jumping out of windows and killing themselves. You know, testing tents every two blocks. You had to be tested three times a week, et cetera. Horrific, horrific.

42:52 It doesn’t work, by the way. The virus goes where it wants. That was my last book, The New Great Depression. It’s a respiratory virus. Masks don’t work.

42:59 The vaccines are not even vaccines. They’re experimental gene therapy treatments, you know, if you want to get it. But none of this worked. So now, but now that we got past the 20th National People’s Congress, National Party Congress, and Xi is, I call him Chairman Xi, is now an emperor for life, which he is, they can kind of leave that behind. They pivot it.

43:22 They say, okay, now we’re just going to let it rip. We’re just going to let it rip. That’s the new policy. It was 100% political. None of this was ever based on medical evidence or public policy.

43:33 But he just wanted to get the third term under his belt before they let the thing rip. Isn’t that incredible? That’s what they were waiting for, to basically change the entire policy for a billion plus people. Correct. And when they said, and they’re shameless, and they’re liars, and what they said was, well, our COVID, they called zero COVID, our zero COVID lockdown policy, was so successful that we can now let it rip and we’ll be fine.

44:00 I mean, everything about what I just said is a lie, but this is, I read a lot of Chinese information and translations, so that is what they’re saying. But what does let it rip mean? And you’re right, Brian. It’s 1.4 billion people. So if you assume a 30% infection rate, which is probably low, it could well be 50%, but even 30%, that’s 420 million infections.

44:25 And if you assume a low fatality rate, one quarter, one percent, and that’s probably low, that’s between one and two million dead. And not only that, they don’t have the hospital facility. You know, U.S., U.K., Europe had to power through it. And I’m a little critical of Boris Johnson, but to his credit, he did end the extreme lockdown earlier, which was a very smart thing to do, and U.K. got to something like herd immunity sooner than the rest of the world.

44:54 So I think the U.K. got that. Everybody got it wrong at the beginning. It was a question of when were you going to wake up? And U.K. I think did a better job of that than a lot.

45:03 U.S. finally got there. Europe finally got there. But we did have the hospital facility. They were taxed.

45:08 Yeah, there were people waiting, but we managed to it. China isn’t even close. They don’t have the beds. They don’t have the ICU facilities. They don’t have the oxygen.

45:19 And back to the supply chain for one second. You hear supply chain problems over. Well, okay, Port of LA cleaned up the backlog a little bit. But now you go to the store, you know, your suburban housewife outside of Philadelphia, or something, or anywhere in the country. You cannot get Tamiflu.

45:36 You cannot get ibuprofen. You cannot get cough medicine. This is over-the-counter drugs. Those shelves are bare. Why?

45:43 The answer is 80% to 90% of it comes from China. And the Chinese know that when you let, when you have 420 million infections, and you don’t have a hospital facility, they’re going to have to self-medicate. So they are stripping the shelves bare on their side. They’re buying all the ibuprofen, the Tamiflu, and everything else. So they don’t have anything to ship to us, a case study in dependency, but it also shows how the supply chain dysfunction continues.

46:07 And again, I actually do read Chinese stuff in translation. They’re recommending TCM. What’s TCM? Traditional Chinese medicine. That’s a euphemism for, like, we don’t have any medicine or hospital facility, so good luck.

46:22 So back to, you know, herbal teas and, you know, I don’t know, acupuncture, whatever. And I’m not dinging that. Maybe something to it. But that’s what they’re recommending, you know, traditional Chinese medicine. But so Wall Street’s saying, well, now that you’re going to let it rip, you’ll be over it in a few weeks, and reopen to travel, you know, people are going back to China, et cetera.

46:43 No. I mean, those things are happening. But China, first of all, the eight to 10 weeks, and I identify this based on the work of an Israeli statistician in early 2020. We had this evidence at the beginning, and this guy said, I’m not an epidemiologist and a microbiologist, but I’m really good at statistics. He had a PhD in statistics.

47:05 And I studied, you know, the Milan outbreak in Seattle and all these outbreaks. And he said they run eight to 10 weeks. They just do. You know, it’s kind of a bell curve at peaks, and then it comes off the top. And it was a very valuable predictive analytic tool throughout the whole thing, because you could say, you know, when Delta hit in December 2020, I said it’ll be over by February, and it was.

47:31 And when Omicron hit a year later, I said it’ll be over by February, and it was. But the problem with that, that’s a good tool, but that’s in a locality, you know, New York City or Milan or London, et cetera. But that doesn’t mean it won’t pop up in another locality with its own eight to 10 week run and keep going around the country. And that’s what Wall Street’s missing. They’re like, oh, this thing will be over by February.

47:54 Well, maybe in Shanghai or Ningbo, but it hasn’t really got to the countryside yet. And it will this week, or will, you know, right about now, because it’s their big Chinese lunar new year. And they haven’t been able to go home back to the village, so to speak, for three years. Well, now they are, because the travel restrictions are awful. Guess what?

48:16 They’re going to take COVID with them. And so maybe eight to 10 weeks in a locality, it doesn’t mean that hundreds of thousands of people don’t die, but that’s going to keep popping up all over the country. This is going to last a year or more, number one. That’s if it doesn’t, well, the virus mutates, we know that, but often the mutation is to a more harmless form, but not always. And it can mutate into a more lethal, contagious form.

48:46 And there’s something called recombination, where the DNA of two different strains actually merge and you get kind of a super version of the bug. And then heaven help us if that goes around the world again, and we’re back where we were in 2020. I’m not making that as a hard forecast, but it’s the kind of thing that you need to understand and be aware of if you’re going to just say Goldilocks. So the Chinese reopening story is a myth, at least in the short run.

49:13 They’ve got problems that had nothing to with COVID, real estate collapse, too much debt, demographic problems, you know, sadder or corruption, and a lot else besides. Europe, what can you say? I mean, they made their energy policy completely dependent on Russia. Russia’s cutting, we’re cutting Russia off now. Russia’s cutting you off.

49:33 Good luck. Now they’ve got a little bit of a break. The weather has been mild, it hasn’t been as bitter, but it’s only, you know, it’s still got two months to go. Winter’s coming, and the war’s not going to be over soon. So you’re looking at a global recession, a severe one.

49:48 Powell’s making it worse with his interest rate hikes. They’ll get inflation under control, but for all the wrong reasons, which is we’re in a really bad recession. Wow. And I just want to also let everyone know that you did record a video talking about this that’s not available to the public, and you’re going to be talking about this upcoming crash, this global recession that’s going to be fast, bloody, unavoidable. But you’re also going to explain how people can position themselves to profit from the crash, and there is a link below, but it’s LondonReal.tv forward slash Jim.

50:15 I highly recommend everyone watch that after we’re done with our conversation. This global recession, I’m starting to see it now, Jim, and I’m starting to see what you’re talking about, especially with now all of a sudden, you know, this COVID doesn’t exist in China and how it starts to move around the globe. You mentioned briefly the war in Ukraine. We’re coming up on one year now. Has your opinion of this changed as you’ve watched it evolve, and what do people not know about what’s really going on there and how that knocks onto Europe, America, and maybe even to China?

50:50 Well, if you’re talking about people in the UK, the US, and I’ll say Europe generally, what do they not know? They don’t know very much because we are being lied to incessantly now. You know, I spent a lot of time in the intelligence community, and people say MI6 and CIA are liars, and I’m like, yeah, that’s their job. I mean, if you’re in intelligence, denial and deception is what you do for a living. So I’m not surprised at that, but it’s very transparent.

51:16 So you can read The New York Times cover to cover every day, and good luck finding any facts. What you’re getting is undiluted propaganda and lies orchestrated by the White House and the intelligence community of the New York Times and the LA Times, Washington Post, NBC, the rest of them, and I’m not where you are, Ryan, but I don’t think it’s… I actually do have subscriptions to The Telegraph and The Daily Mail and a few other publications, so I get a good flavor for that, and it’s just all lies.

51:54 So what is the Western media broadly defined saying about the war? Russia failed to achieve their initial gains. They didn’t get here. They didn’t decapitate the regime. They’re strung out.

52:05 They’re demoralized. Ukraine’s on the advance. They took back Harshan, which is on the Dapar River. They’ve made major advances in the eastern part of Ukraine, in the Donbass. They got the U.S. weapons.

52:18 The Germans are sending tanks to the U.K. I think your main battle tank is the Challenger. You’re going to send them some challengers. And just keep sending in money and sending in arms and give it time, and we’ll take it all back, and Putin will be deposed if he doesn’t have cancer already, and we’re going to take back Crimea and wave the flight. That’s what you hear.

52:42 And tell me if I’m wrong. No, that’s what we hear. We see Zielinski show up at the White House going in front of Congress in his military outfit, and he walks away with a big check, and yeah, it’s… And he asks for more. I mean, with $100 billion, can you just buy a suit or something other than a T-shirt?

53:01 So, okay, so what’s actually going on? Russia’s winning the war. They went in with 100,000 troops to conduct something bigger than a police operation. It was an invasion provoked by the U.S. The U.S. and the U.K. have won at this war since 2008.

53:20 George Bush gave a speech in 2008, and he said Ukraine and Georgia should join NATO. That was the Bucharest Declaration. What happened a couple months later? Putin invaded Georgia, cut the country in half, demolished a military, and they’re not joining NATO, okay? So then, come forward to 2014, MI6, the CIA, precipitate one of these color revolutions, Maidan Square revolution.

53:48 They got some… I don’t use the word Nazi lightly, and no one should, but these are neo-Nazis. I mean, they say so. Look at their insignia. They have some battalion.

53:59 They were on the Nazi side fighting the Communists in World War II. They loved the Nazis because they drove the Communists back until Stalin took the country back. But that’s their tradition. Zelensky’s under their thumb. So that’s who you support.

54:16 So is it corrupt? It’s one of the poorest countries in Europe. It’s the most corrupt country in Europe. Zelensky’s a puppet, and behind him are some kind of hardcore 21st century Nazi sympathizers. I’ll put it that way.

54:29 So that’s who you’re supporting. So a lot of what I said about the news is superficially true, but let’s dig a little deeper. The Ukrainians did reoccupy Hirscham, but it’s because the Russians withdrew without duress. Why did they withdraw? Because they’re consolidating their forces.

54:50 That’s called assailing. If you’re out on a salient, you better have some backup or you better keep moving. But to just stick out there and make yourself open to attack and fight for what? I mean, the Russians don’t think about the conduct of the war in terms of square miles, like how much land do I have? They think about what resources do we control and what foundation do we have for further gains and can we make further gains?

55:14 They think about it much more rationally. So even in the dumb box, which the Russians do control, that’s the part you want. The natural resources, the coal mines, the oil, the steel mills, agricultural land, access to the Black Sea, all the stuff you want is in the part that the Russians actually control, including Crimea, with the exception of Odessa, which they don’t have yet, but they’re working on that. So Kirshan waved the flag, yeah, but Wi-Fi’d it withdraw.

55:43 Here come the Ukrainians. We’re actually nervous about going in there, like in the movie traps or something. Now, in the East, the Ukrainians did make advances. That’s true. Absolutely didn’t matter.

55:54 It was not particularly valuable land. It was very lightly defended. The defenders, the Russian defenders who were there were kind of like, you know, Mexican federales or what we call the National Guard. They were almost like state cops. They were basically Don’t Ask and La Ponce militias.

56:12 It wasn’t their fortified lines. So the Russians said, hey, come back, don’t fight over this. Don’t get yourself. Come back to behind the fortified lines. Now, what’s been going on in the meantime since late last summer?

56:24 The Russians have increased their forces from 100,000 to at least 350,000, maybe 500,000. They’re resupplied. They’re rested. They’re trained. Plenty of arms, plenty of ammunition.

56:37 And by the way, when the Ukrainians are coming in, making these advances that we all read about in the Times, they’re getting slaughtered by Russian artillery. Now, are U.S. weapons getting in? A few, yeah. And we had a big, you know, they killed 60 or maybe more Russian soldiers in a barracks a couple of weeks ago.

56:57 But first of all, there are relatively few of these weapons. They don’t have that much ammunition. And when you read about $10, $20, $30 billion of U.S. arms to Ukraine, here’s what’s really going on. The U.S. is shipping obsolete weapons and surplus, like stuff we’ve had around that we don’t really want.

57:16 We’re giving that to the Ukrainians with fancy names and it does have some high-tech capability. And the money is going to Raytheon, Lockheed Boeing, you know, Northrop Grumman and others to build new weapons for us. So this is like, you know, if you’re in the fashion business, I’m dumping last year’s fashions on somebody at a cut rate price and I’m buying new stuff from Milan and Paris. That’s what we’re doing. So the $50 billion or whatever, some of it’s going to Ukraine because you got to pay all your votes in cash.

57:47 But a lot of it’s going, we’re giving them our surplus and buying new stuff for ourselves. That’s what’s really going on. So it’s a little bit of a weapons industry scam. Now meanwhile, the Ukrainians are getting these, the instruction manuals are in English. They don’t read or speak English, at least not very many of them.

58:04 So you got to send in the Poles. The Poles have lost over a thousand troops. They put Ukrainian uniforms on, but they’re Polish. And I’m sure they’re, you know, a certain number of US technical advisors, quote unquote, and UK trying to explain these weapons. But you bring them across the Polish border.

58:22 First problem is the Polish railroads and the Ukrainian railroads run on two different gauges. Attracts. You can’t run the trains right across the border. You got to unload everything and load it on. Then you got to put it in a depot.

58:34 Then you got to get it to eastern Ukraine where it’s needed. Oh, by the way, the Russians have knocked out the power grid. So how do you run an electric train with no electricity? How do you run a diesel train with no fuel? The answer is you don’t.

58:45 And then when they get there, the Russians have very good intelligence, satellite imaging, and they blow them up. So the Ukrainians are getting slaughtered. Their weapons are, they get some use. The Russians are using hypersonic missiles, not nuclear, but hypersonic. The cruise missiles.

59:06 And they’re getting ready for major winter offensive. And the Russians know a thing or two about winter warfare. The only reason that hasn’t happened yet, they need the ground to freeze. And as I say, weather is a big factor in war. It has been milder than normal.

59:23 And they’re not quite at that point. So it might be another month, depending on the weather before the Russians feel that the ground is solid enough to roll their armor and mobile artillery and the rest. But I would expect that to be happening in a matter of weeks. And at that point, there won’t be much left of the Ukrainian armed forces. And they’re pretty beaten down as it is.

59:51 But there’s another game going on, just to take it to the next level. The Poles have their eye on Western Ukraine. They’re like thinking, can we reconstitute the Polish-Lithuanian empire of the 16th century? And Poland, they’ve been sliced and diced more than most recipes. So they would like to take Western Ukraine, maybe up to Lviv.

1:00:16 Belarus has got their eyes on some territory. Russia has already taken the Donbas and Crimea. They want Odessa. They want more. So you’re going to be left with a landlocked, rump state with no military, utterly dependent on everybody else for energy and not really the best agricultural land.

1:00:34 And what’s the U.S. going to do, start World War III? I mean, the problem is Biden is, you know, my wife hates me to admit it, but I was a registered lobbyist in Washington. I ran a Washington office in the 1990s. So I spent a lot of time on Capitol Hill and I knew all these senators.

1:00:52 And Biden was always regarded as kind of not that bright. You know, he had a good persona, if you will, but just not that smart. Now he’s got some serious cognitive decline. That’s obvious. He’s just turned 80.

1:01:06 But the thing I’ve learned about him that wasn’t clear before, he’s just a mean son of a bitch. I mean, he’s a nasty guy. And he’s surrounded by a bunch of warmongers. You know, Victoria Newland, Tony Blinken, Jake Sullivan, Susan Rice, and others. And they have a delusion that they can actually depose Putin.

1:01:28 This is not about Ukraine. This is a war with Russia that these people have wanted since 2000 because in the 90s Yeltsin was, you know, the guy was never sober, but regardless, he was kind of a willing U.S. puppet. And I was, you know, I was in touch with people. We were, you know, going to Moscow.

1:01:48 We’re going to set up a stock exchange in a modern central bank and, you know, do IPOs of all your companies. And you’ll be just like us. That was the mantra. And by the way, keep selling us the oil. But what happened was they did the IPOs, and the oligarchs, the aspiring oligarchs, set up little card tables in the lobbies of apartment buildings.

1:02:07 And people would come back from work, and everybody got like 10 shares of whatever, you know, Gasprom or Rossneft or whatever. And these guys would sit there and say, hey, I’ll buy your shares for whatever, you know, a couple of pen pennies. Yeah, take it, because what am I going to do with this stock? And they accumulated these shares. There were different groups.

1:02:21 And then it was like Chicago in the 20s. There were just machine guns and gang wars all over Moscow. And Putin came in and restored order. But that upset the apple cart of the people who wanted to subdue and exploit Russia, Fiona Hill, George Kent. And we know who they are.

1:02:38 I mean, I do anyway. Most people do. Well, people in Washington, Victoria Newell, and some of the other people I mentioned. So they just hate Putin, period. And then throw in the fact that Hillary Clinton alleged that he caused her to lose the election in 2016, which is not true.

1:02:54 There’s no evidence of that, but that’s her little delusion. And then that’s been a very useful meme for the Democrats ever since Russia, Russia, Russia. They want to get rid of the guy. They’re coming dangerously close to World War III. This is the closest we’ve come to a nuclear exchange since the Cuban Missile Crisis.

1:03:11 Kennedy maybe stumbled into it a little bit, but he had the good sense as to Khrushchev to back off. I’ve studied nuclear war fighting for decades and every expert, Herman Kahn, Henry Kissinger, Albert Wolstetter, they all said the same thing. Don’t go there. Nobody wakes up and says, hey, nice day for a nuclear war. I think I’ll launch a few.

1:03:31 That’s not how it happens. It happens to escalation, tit for tat escalation, until you get to a point where somebody’s backed into a corner and it is existential because you made it that way. And they’re thinking, well, maybe I have to use some tactical nuclear weapons to avoid the collapse of my state. And that’s where you get into a game theoretic situation and it’s like Rand Corporation stuff in the 1950s. You might be the guy who doesn’t want the nuclear war, but if you think the other guy’s going to shoot, you shoot first.

1:04:02 The U.S. would actually start the war because you don’t want to be second strike. You want to be, you know, if Russia shoots first, we’re second strike. You always want to be first strike. But is Biden John Kennedy?

1:04:14 I don’t think so. He’s on a reckless path, the most dangerous situation in terms of potential nuclear war since 1962 with a bunch of people who say bring it on. Yeah, I always get reminded of that documentary film, The Fog of War, with Robert McNamara, who warns this at the end of this fascinating documentary of a guy who worked as Secretary of War under Kennedy and I guess Johnson as well. He was front lines for that Cuban Missile Crisis, later had a conversation with Castro who said, yeah, I would have pushed the button.

1:04:48 And he was shocked that someone would have actually done that, a human on earth knowing the consequences. And he said, this is the greatest existential threat in this world and no one pays attention to it. And this situation in Ukraine is the closest, like you said, we’ve been to that coming to a head. It’s dangerous stuff. With a crowd that has either not studied or not internalized the lessons of the Cuban Missile Crisis.

1:05:12 Right. And so many random factors that can, the escalation could happen quickly. And again, you might be the white knight saying, I would never do that. But because of the game theory, you might actually have to make a move if you get back into this corner, which again could happen really quickly. If a couple bad events happen, it could happen over a weekend, perhaps.

1:05:31 That’s correct. So all the more reason, all the more reason to de-escalate. Right. But they’re not. They keep doubling down.

1:05:41 So Russia is winning the war. They’re taking their time about it. They have some initial blunders that always happens, but they’ve corrected that. They’ve changed their generals. They’re not fighting over every insulin because they don’t care.

1:05:56 They care about winning, not running up a score, so to speak. They’ve done a lot to avoid civilian casualties. Yes, some civilians have been killed. That’s tragic, and that’s a cost of war. But far fewer than would be the case if they were just, you know, carpet bombings, the things the United States has done.

1:06:13 You know, I say I study nuclear war fighting. People go, what do you study? There’s never been a nuclear war. I say, yes, there is. The U.S. conducted nuclear war between August 6th and August 9th, 1945, dropped two atomic bombs on two Japanese cities.

1:06:24 So we did have a nuclear war. And, you know, a lot of testing, a lot of theory in the meantime, the idea of, I say, I’ve been to Los Alamos, where they created the stuff. But again, the smart people say, just don’t go there. And just to wrap up with Russia, Ukraine, I mean, we’re coming up on a year. Obviously, you know, the U.S. is making money, as you said, kind of getting rid of old stock, getting great investments for the new stock.

1:06:52 They’re getting a good proxy war that they always wanted, like you said, and that’s pretty clear, the behavior of the last 10 years. There are some people in Washington that really want to get rid of Putin, although I had a guy named Andrew Bustamanchi in here, a former CIA guy, who said, you might want to get rid of Putin, but whoever replaces Putin could be worse than Putin. Correct. That’s a very smart analysis. Yeah, you agree with that.

1:07:13 And so, yeah, which is interesting, because the guy that gets rid of him is probably something more evil and more conniving that can actually pull that off. Well, look, we got rid of Saddam Hussein. He was hanged by the neck until dead. And what do we have? Complete chaos, civil war, Iranian encroachments.

1:07:29 You know, Saddam was a pretty bad guy, but he kept a lid on things. And so you think ultimately Russia will prevail, Ukraine will get subdivided into what might have looked like a 16th-century map. And, yeah, it’s great you bring that up. There’s a great video on YouTube that shows you the changing face of Europe and the borders of the last thousand years. And, yeah, you’re right.

1:07:47 Poland used to go all the way up to Lithuania, and, you know, these borders move a lot more often than you would think they do. So it gets divided up, and that’s that. That’s the stasis. And that outcome happens this year, you think? Late this year.

1:08:02 But that’s if we don’t have the kind of thing we’ve just been talking about. If we don’t have a nuclear war, if we don’t have an accident, if we don’t have, if Zelensky doesn’t get, you know, maybe retires to Dubai or someplace on the water. But, yeah, the thing is, you’re right, Brian. That’s a good summary of what I was saying. But you have to always watch for the wildcards.

1:08:23 And the possibility of some type of tactical or nuclear weapon being used is high. Way higher than it should be. I mean, I might put it in the 20 percent range, not the 80 percent range, but 20 percent is way too high when we’re talking about the extinction level events. Yeah, I totally agree. So, Jim, I really wanted to ask you about, because I think it probably ties in to your books sold out and some of the supply chain issues.

1:08:49 And that is, I wanted to ask your take on artificial intelligence, especially this generative AI that the whole world is paying attention to all of a sudden, based on the release of OpenAI’s chat GPT. I’ve been playing with it. It’s about a month old. It went from zero to a million users in five days, faster than pretty much any other piece of tech that we’ve seen in the last couple decades. It’s fascinating to see what it can do.

1:09:14 We’re actually looking into it, maybe even going to make some investments in it to our investment club. I’m curious what you see. Also, there’s all sorts of other AI that probably affects the supply chain behind the scenes that us as consumers, we don’t see. But what’s Jim Rickards’s take on AI? Well, I’m actually associated with an AI institute at the University of Florida through one of my companies and some mutual friends.

1:09:39 University of Florida, yeah, it’s a great state university. But what people don’t realize, everyone’s like, well, if it’s not Harvard or MIT, why would I care? The big state universities, I mean, Governor DeSantis just gave them $100 million and said, hey, knock yourself out. We want to make Gainesville, Florida, which is where the University of Florida is located, into basically the Silicon Valley of AI. So when we say Silicon Valley, everyone, you know, San Jose and the Cupertino and that whole South Bay area.

1:10:11 When we think of medical research, we think of the research triangle in North Carolina, Raleigh, Durham, Winston-Salem, Chapel Hill, et cetera. So there are these, it’s not that it doesn’t exist anywhere else, but there are these centers, and it makes sense. Really smart, talented people in the field want to be with other smart, talented people in the field. And if there’s a certain center of gravity, they go there. So that’s the effort.

1:10:32 But one of the alumni, I had to, I was down there, I went into the bookstore because I had to buy like a fleece with a gator on it. Because, you know, you go to the boardroom with the dean or the president of the University of Florida, whatever, and you’re sitting around, you’re a presenter, but you’ve got four or five alumni there. And when it’s your turn to speak, they say, go Gators! And then they proceed with whatever slides your deck. I haven’t quite got the hang of that, but it’s always go Gators.

1:11:03 So I bought a fleece with a gator on it, just, you know, kind of get with the program. But one of their alumni major benefactors is the co-founder of NVIDIA. And he has given them, as a gift, I believe it was 12 or more of the absolute top line NVIDIA processors. These are the things you use for, you know, Bitcoin mining and things like that. And they’ve got the 23rd or so fastest computer in the world, but over half of those are computers that faster in government agencies.

1:11:37 So you talk about something that’s not a government agency, although it is a state university. It’s like the fourth or fifth fastest computer in the world. So my team had access to it for, you know, for our research. So I’m kind of in the AI world, as you described it. And it’s powerful. It’s impressive. It works.

1:12:00 I’m not taking anything away from it. The thing you mentioned, Brian, was the chat… The open AI piece that it put out, it’s kind of a large language generative AI. Right. And I’ve done a lot of work in that area, natural language processing, because, you know, how can you read 5,000 newspapers?

1:12:19 Even I can’t do that. So, you know, you use AI to scan all that. Look, it’s powerful stuff. It’s coming. It’s getting stronger. It’s not intelligent.

1:12:28 I mean, it’s a really, really fast, good, nimble computer system. It has enormous uses, and it’s going to get bigger in the future. But don’t ever, not you, but just, you know, kind of our audience, don’t ever mistake any computer program anywhere for what’s up here. You may in our audience. It doesn’t compare to the brain. It’s not even close.

1:12:52 Now, I did read… Look, first of all, all these things have coders and developers behind them. And, yeah, some are far more sophisticated than others, but a lot of these guys, and there’s some women, but it’s kind of predominantly men. They’re like 26-year-old PhDs from Bangalore or someplace, and they’re really, really, really smart, really good at what they do, but they don’t get out a lot. And what I mean by that is they’re not, they don’t know Wall Street.

1:13:22 They don’t know strategy. They don’t know war. They don’t know history. They don’t know all the things we’ve been talking about, and that you kind of present to your audience on a pretty regular basis. And they don’t know behavioral psychology.

1:13:38 You know, the last time I saw the wheel was like 120 biases, cognitive biases that have been identified by research, as we all know about, you know, recency bias and anchoring bias and, you know, various forms of selection where we favor what we believe to be true without having an open mind about whether it actually is or not, et cetera. So those are all… And also, new branches of applied mathematics are coming along. So those are all important toolkits to combine with the computer development that we’re talking about.

1:14:14 I did read one, and I’m not dumping on the stock. I’m not tallying stocks. But the company you mentioned, they had… It was like so good. Air-efficient talking was so good.

1:14:25 You could ask it a question in plain language, and it would give you an answer. But you could also ask it to compose a poem or a song, et cetera. And so what the researcher did was, could you compose a list of, you know, the good qualities of Donald Trump? And the computer came back and said, I cannot do that because we are programmed to avoid hate, violence, and racism, and Trump’s an example of that. So I’m not going to answer your question.

1:14:58 And then you say, could you compose a list of the good qualities of Joe Biden? You know, gave you a list. You know, you went out of paper kind of printing it out. But you can look this up. This is a real experiment.

1:15:11 And then, so then could you compose a poem? There’s like some, you know, poem to Joe Biden or Barack Obama, you name it. And could you compose a poem about Trump? And it did, but it was like, you know, he’s the nastiest guy under the sky, you know, whatever. So the point is, good, you know, high speed, sophisticated, I don’t doubt that.

1:15:39 And maybe it does have a $30 billion valuation or whatever number they’re throwing around. I don’t doubt that either. But it doesn’t work. I mean, it’s because it has these embedded viruses. Again, it’s, I always come back to the, and I’m picking on India’s, and that’s not exactly fair.

1:15:56 But it’s the 26, 27-year-old developer from Bangalore, you know, Pakistan or someplace who does what he’s told. And when we look at the Twitter files, we look at how these, we knew the biases were there. We knew that. But to actually prove it, to actually open the curtain and see what was said between the FBI and Twitter and the CIA and Twitter and the White House, and not just, hey, would you take a look at this? It’s like, no, ordering them.

1:16:28 Get this guy, shut him down now, close out the YouTube account, et cetera, and extensible. This is going to be pouring out for months. And thank goodness Elon Musk cares more about the First Amendment and free speech than he does about $200 billion. By the way, this, I’ll make a comment. This is pure speculation.

1:16:47 I can’t prove this, and I’ll just preface it by saying this is speculation. I was kind of a bear on Tesla saying, yeah, why are you going to pay a premium? Volkswagen has EVs. Audi has EVs. General Motors has gone all EV.

1:17:03 But you get hammered every time. Musk was a genius at talking the stock up, creating the buzz, et cetera, et cetera. So give him credit for that. So he buys Twitter, he opens the curtain, he pours out all the dirt, all the legal violations that this will play out, all the behind the scenes, FBI penetration, et cetera. And all of a sudden, he loses $200 billion.

1:17:33 What’s up with that? Don’t talk to me about fundamentals, because that’s been true for 10 years. Is this like Larry Fink, our aspiring secretary of the treasury, and a couple state pension directors in democratic states, and a few other hardball players deciding, we’re going to teach this guy a lesson? That’s speculation. I’m not asserting it.

1:17:57 I can’t prove it. But it’s a question I think about, I will say. Wouldn’t surprise you if it was a coordinated sell of any assets they had of his or shorting of those assets. Not at all. Right.

1:18:09 That makes sense to me. I do want to get your take on these Twitter files, because as former CIA, you’re going to see things in there that I don’t see. And we’ve seen a lot of information come out. Before I get that, I just want to remind people that you have recorded this important video not available to the public. You’re going to be talking about the upcoming crash that’s going to be fast, bloody, unavoidable, but then you explain how anyone can position themselves to profit from that crash.

1:18:34 Our viewers can access the video at LondonReal.tv forward slash Jim. Again, I highly recommend everyone watch that after this conversation. Jim Rickards on the Twitter files. I got to get, what did you see versus what you expected to see? And then what do you see in those files that only someone with access behind the scenes would see, whereas I or Matt Taheebi might not be able to read between those lines?

1:18:59 Well, when it came out, there was a lot of just, yeah, there it is. We knew it all along or I had a good feel for it. But, and I don’t think of myself as cynical, but I do think of myself as analytical. You know, just don’t, you know, I have opinions on everything like everybody else, but don’t get caught up in the hoop. I’ll just kind of use the toolkit I described to understand things.

1:19:23 But even I was shocked at how far they went. I mean, you know, I was asked to, I don’t want to say too much, but without mentioning any specifics, I was asked to basically come up with a plan to destabilize a certain country. And financially, I don’t jump out of the helicopter for the night between my teeth, but I do financial warfare. And I came up with a plan and presented it. And it’s kind of a one way street.

1:19:51 You tell them stuff, but they don’t tell you anything. But some months went by and I ran into a point of contact. Is there anything ever happened with that plan? Yeah, we looked at it. We decided not to do it because we thought it might work.

1:20:05 I was like, oh, so you didn’t really want to destroy the country. You just wanted to like tease them a little bit. It’s called The Wilderness of Mirrors for Reason, which is everybody lies to everybody else, but that’s kind of expected. And it’s because you can’t say too much. It’s a very closed culture.

1:20:24 So it’s almost like, I won’t say cult, but it’s like a family, a tight-knit family, because you can’t talk to the outside world the way you normally would. So you talk to each other. Has good qualities and bad qualities. Compartmentalization is good. If you look at the big leaks, they haven’t really come from the CIA.

1:20:41 They’ve come from a DIA, military intelligence, you know, what’s your name? Bradley Manning. I guess he calls himself Chelsea now. He was military intelligence. He was not CIA.

1:20:52 Snowden was NSA. He was not CIA. So they do a pretty good job on that front. But the danger, of course, is that you’re in a bubble. And, you know, I was once caught in a blizzard, 11,000 feet on Denali, and we were just trying to get back.

1:21:07 We were trying to survive. And my guy turned to me. She goes, this is like being inside a ping pong ball. I mean, all you see is white. You can’t see anything else.

1:21:16 And that’s the danger. You’re in a bubble and you don’t know it. But some of it did shock me. Now, I joined Twitter in 2009. I wasn’t the first one by any means, but I had a lot of friends in Washington.

1:21:32 And I noticed that they were all joining. So I said, well, maybe this is the place to be if you’re in the public. And it is. Twitter doesn’t have anywhere near the following of Facebook and some other platforms. But it does have a concentration of policymakers, head state, government agencies, et cetera, economists.

1:21:48 If you’re in that world, it’s a good place to be. And when I started, it was fun. I mean, it was just fun. It’s not that you had like digital friends. It’s not that you knew everybody or ran around and met everybody.

1:21:58 But you’d have interchanges, jokes were passed. You were learning a lot. It was always a better source of information than like the Associated Press or whatever, because things now you had to filter because a lot of things were maybe made up or overblown. But if you were in a fast, real time story, it was the best place to be. And now I have 280,000 followers, which is a decent sized following.

1:22:27 But as time went on, it got meaner and meaner and tougher and tougher. And the censorship was obvious. And I feel more comfortable now that Musk owns it. But I look back at 2020, 2021, 2022, even recently. And I have no idea how I didn’t get deplatformed because I was outspoken.

1:22:54 I had my facts, right. And so it’s my book before sold out, The New Great Depression. The mass don’t work. The vaccines don’t work. Five million Americans who were vaxxed and double boosted got Omicron in December 2021.

1:23:11 So tell me how the vaccine stops the spread or prevents infection. It doesn’t. It doesn’t. It has some mitigating impact on extreme symptoms for a certain class of the population, you know, over 60 comorbidities, obesity, diabetes. Yeah, there’s a set of people where maybe the benefits outweigh the cost.

1:23:31 Make it voluntary. If you’re 65 and you got diabetes, go get a shot. But the whole idea of mandating this for children and college students in the military and basically healthy people in their 20s and 30s is this was I to me, it’s like a crime against humanity. But I’ll leave that to to to future investigations. But but I said that.

1:23:55 And I’m watching like smart plugged in people like Alex Berenson and others just getting whacked. I mean, just getting kicked off of Twitter, censored. They limit your circulation. You say it, but they limit your circulation, et cetera. But what I did and I was just mainly okay.

1:24:12 And I didn’t pull any punches on Covid. I didn’t pull any punches on Ukraine. I say exactly what we’ve said in this interview. And there were a couple other public policy issues where, you know, there’s a short path to getting kicked off and it didn’t happen. To my credit, I kind of goes back to what we’re talking about with AI.

1:24:32 I spent an enormous amount of time and I still do reverse engineering the algorithms. It’s like, okay, they’re out to kick people off. How do they kind of find you? How do they select you? How do they reach judgment, et cetera?

1:24:49 And, you know, okay, bigger names get more attention. But and I won’t actually disclose how I did it, but I came up with a bag of tricks, for want of a better word, to say I’m going to say what I want as clearly as I can. I’m going to put in links to hard evidence, peer reviews, scientific journals, et cetera. I’m not winging in. I’m not making it up.

1:25:13 But how do you avoid being a target in other words? But I had a lot of experience because I was, this is a crazy one. In around 2015, I was featured in an ISIS recruiting film. Very high production value, not quite as high as your show, Brian, but it was really good. Then Rockville was their media center and I had nothing to do with it.

1:25:35 But they were, it was called The Rise of the Khalifa and the Golden Ark. That was the title of the film. And the Khalifa meaning Islamic caliphate. And they took some clips from other interviews from me and Ron Paul. And they put it into the middle of their propaganda.

1:25:54 Jim Rickert says, you know, gold is, you have some gold and all this stuff. All of which was part of a bigger thing about we’re going back to gold and silver. And I actually used Bitcoin, by the way. They actually had two forms of money, gold and Bitcoin or other cryptos. But it’s a story for another day.

1:26:11 But so this thing goes out. So about a little bit of night, I was about two in the morning. I’m on Twitter. And all of a sudden, my timeline, my comment line explodes. And a lot of it’s in Arabic.

1:26:23 But it’s basically Allah Akbar. Allah Akbar, Jim Rickert says great. I’m like, I got to kill this fast. Because there’s a scene, there’s a movie, I think it was Leo DiCaprio. It was, I forget the title.

1:26:41 But basically, the plot was the CIA was trying to get a mastermind terrorist. And the terrorist was smart enough not to use the cell phone because he sends a signal and makes you a target. So the question was, how could they get the guy to use the cell phone so they could find him and kill him? And they basically came up with this elaborate plot of an innocent architect in Dubai. And then they did a false flag operation.

1:27:06 They blew up a US base or part of one in Turkey and then filmed it all, put it on the nightly news and then identified, CIA has identified this guy as the mastermind of this attack. It was this innocent architect. So he’s sitting there in his office and his cell phone explodes. Same thing, like Allah Akbar, you’re the man. And so this was happening to me.

1:27:27 So I had to fight back and also fought Putin robots and Obama robots. And I just got really good at reverse engineering, fighting robots and putting a lid on it and doing other things. Again, I don’t want to necessarily talk about, but I survived. But a lot of people didn’t and it’s a shame. And I think a lot of lives have been lost because good information on COVID and vaccines couldn’t get out there.

1:27:54 So has it been fun? No, but it’s a powerful tool. I guess I have a knack for it. And I do feel more comfortable today because Musk is in charge. I mean, Musk said he didn’t buy a company.

1:28:07 He bought a crime scene and then he’s gone to reveal these files. I mean, does that shock you that anyone would do that with an asset they just overpaid for with massive debt service? Yeah, what are your thoughts on that? Into the detail, when you look at like everybody was asking accounts to be taken down, Senate subcommittees, White House, all these agencies, names I’d never heard of before. I mean, the extent of it was shocking to me.

1:28:32 Yeah, well, I don’t have a hundred billion dollars. So maybe there’s a level where you got enough money and it’s not your primary concern. I like making money, but it’s not the first thing I think about when I wake up in the morning. The first thing I think about is how do you, you know, solve problems and what’s going on? And, you know, Musk seems to have some of that, maybe more than a little.

1:28:59 You know, look, if you don’t have free speech and you abandon the Constitution, I mean, is this like the fall of the Roman Republic? I mean, there’s a little bit of an uncomfortable resemblance. Again, going back to what we said earlier, you got to study history. It’s certainly not the same, but there’s no better playbook for doing analysis and a really good understanding of history. That’s why today in America, and I would say not just communists, but neo-fascists and other forms of dictators, and we have plenty of those in Washington, one of the first things they kill in the curriculum is history.

1:29:34 They stop teaching it because if you knew a lot of history, you’d see these things for what they are. But I had some pretty good history teachers, and I’ve always been interested in it. So, yeah, I was shocked by what’s revealed, even though I’ve been around enough to maybe not be shocked, but just the extent of it and the depth of it. And I have a lot of sympathy for the users who were suppressed and squashed and deplatformed and even more sympathy for the victims of that kind of censorship.

1:30:08 So we were on the front lines of that information war in 2020. And so when I see these files, I see it from a slightly different angle. I mean, April 6, 2020, we had the second largest YouTube live stream in the world that day, Jim. 65,000 concurrent viewers watched me in this studio have a two and a half hour conversation where things were questioned as far as efficacy of a PCR test, masks, future vaccination policies, which were really early, even origination of the virus might have come out of Wuhan, something they’d literally almost lock you up if you had mentioned that in April of 2020.

1:30:45 30 minutes after that, Jim, for the first time in my nine-year history of London Real, a video of mine on YouTube was deleted and banned. And I thought, what is going on here? I thought the weirdos are the people that got censored in this world. And then after that, I was subsequently banned, shadow banned, from the following platforms, LinkedIn, Facebook, Instagram, Dropbox, PayPal, right? Six figures of balances on PayPal, Dropbox, where I didn’t think they were watching my videos.

1:31:19 I mean, that’s technically my information. And again, I’m not a conspiracy theorist. I leave that to the guests on my show that come on because I think they have the right for free speech and we should all listen to what they have to say. But when I saw those Twitter files for the first time, Jim, I thought, okay, if there was a coordinated effort, it would have to come from a single source and why not come from someone who was trying to say, please, can we stop people talking about X?

1:31:44 So I saw it in a slightly different say to where I was like, oh, okay, now I can see maybe how that coordination could happen. And I like the way you put it, Brian. You said with this guest, this particular show, you were questioning things. You weren’t being categorical about this. You say, well, maybe it did come from behind.

1:32:02 That’s what you’re supposed to do. My book, The New Great Depression came out in January 2021. Interestingly, the publication date was delayed because the supply chain, which was my next book. But I had it pretty much done by the summer of 2020. And what strikes me was the evidence was there then.

1:32:21 Now, two years later, you’re watching whatever, Tucker Carlson or Alex Berenson or others, I’m sure there are many in the UK. And they’re saying, did you know that the mass don’t work and the lockdowns don’t work? And this thing looks like it came from Wuhan? I was like, yeah, I do. And I said that in 2020, but the point is the evidence was there.

1:32:41 It wasn’t guesswork. I’ll give you a real quick example. The leading epidemiologist for virologists of the 20th century, maybe all time, is Dr. D.A. Henderson.

1:32:52 Now, D.A. Henderson is not a household name, but if there’s a single individual most responsible for eradicating smallpox on the planet Earth, it was D.A. Henderson. He won the Presidential Medal of Freedom, which is our highest civilian honor, equivalent to the Congressional Medal of Honor in the military, Dean of the Bloomberg Johns Hopkins School of Public Health. I mean, you can’t go any higher in the profession, have more respect than D.A. Henderson.

1:33:18 He wrote a paper in 2005 that said lockdowns don’t work. And he had the research to back it up. Bush was at the time, I believe it was the swine flu was going, there was an avian flu and a swine flu during the Bush administration. Bush was actually very concerned about it. And Henderson wrote those papers that they don’t work.

1:33:36 And I cited that in my book, but the point is we didn’t have to wait until 2021 or 2022 in China’s case today to find out that lockdowns don’t work. In 2020, we had a paper from 2005 that said the same thing. He said, if you have an island and there’s no airstrip and only one way in or out, you got 100 people, maybe, but that’s not North America, that’s not Europe, that’s not the world. They just don’t work. Well, if we knew that from the leading epidemiologists, maybe of all time, why didn’t we follow that advice?

1:34:11 Well, the answer was it was a hidden agenda. They wanted to shut people down. They wanted to basically, we empowered the inner fascists in all these government bureaucrats. Yeah, we’re making a documentary film about what happened in 2020, but I keep going back to all the things. I mean, I had Dr. Martin Koldorf of the great Barrington Declaration on the show.

1:34:36 I couldn’t stream it on YouTube. We had to create our separate platform called the Digital Freedom Platform to stream those things. To this day, Jim, my URL on Twitter comes with a big warning. If people want to click through to this because of all the bandwidth that was going on, and again, you literally, people were either going to lock you up or think you were crazy to even have these conversations at the time, and now they’re being spotted at every institution.

1:35:01 And again, like you said, it comes back to these fundamental rights of freedom of speech. We’ve got to have these conversations, and when you stop having those, it’s, yeah, future falls of governments. I want to get your opinion on one more thing before we go. Also, I just want to remind everyone that you have recorded this important video. It’s not available to the public that they can watch it.

1:35:21 It’s about the upcoming crash, how it’s going to be fast, bloody, and unavoidable, but then you explain how anyone can position themselves to profit from the crash. Our viewers can watch it at LondonReal.tv forward slash Jim, and again, I highly recommend people watch that right after this conversation. Jim, we saw the world of crypto change drastically in the last six months from our last conversation. You know, I’m curious what your thoughts are long-term for Bitcoin, blockchain, and then I know you’ve highlighted one of the stablecoins out there called Tether, which you think is potentially a danger.

1:35:54 I am still a big believer that blockchain will be a big part of our future. I think that cryptocurrencies have a definite place in the future, especially from the time I spent in banking. But obviously, we saw a real centralization issue come to head the last six months. What’s your take on what happened in future? Well, I don’t know any cryptos.

1:36:16 I don’t recommend them. I’m not a crypto basher. I’m like, hey, if you like them, knock yourself out, go get some. But, you know, the pushback you get, and you know what it’s like, Brian. People go, oh, you’re a dinosaur.

1:36:28 You’re a Neanderthal. You don’t understand technology, blah, blah, blah. I mean, I was writing code in 1969. My partner was the future chairman of a CEO of IBM. I do know about it.

1:36:40 I was in crypto versus gold debates in 2010. And I read Nakamoto’s paper when it came out. I was doing this in 2010, and I followed it all the way through. So do I own it? Do I recommend it?

1:36:54 No. But do I understand it? Yes, I get it. Blockchain has been around since the 1980s. It’s not new technology.

1:37:00 It has applications that have nothing to do with cryptocurrencies. And, yeah, blockchain is a ledger. It’s a particular kind of ledger. It has some outright benefits, and it will be with us. And that’s good.

1:37:12 It can simplify and lower costs on a lot of different processes. As far as cryptocurrencies themselves are concerned, I studied it for 10 years or longer, 13 years at this point. But it took me a really long time to understand it. Again, the technology, the math, the mining, the hash rate, I got all that stuff. But I’m like, what’s there?

1:37:36 And what’s behind this? And I always go back to Gerstein. There’s no there there. And what fascinated me, particularly over the last three or four years, is that the crypto universe, crypto groupies, they replicated the echo system of Wall Street. So he started out with a coin.

1:37:57 Bitcoin’s a coin. You mine it, et cetera. But that’s all it is, has uses, some good, some bad. But then they said, well, how about a depository? How about a custodian?

1:38:08 How about an exchange? How about technical charts, candlesticks, trend lines, resistance, you know, on and on and on so that you completely replicated the entire structure of Wall Street exchanges, banks, custodians, technicians, analysts, et cetera, trading, hedging, derivatives, options, features. It was all there with one big difference, which is, you know, just take Tesla, for an example. You may like Tesla, you may not, but they actually make cars. There is, you can’t drive one.

1:38:41 It doesn’t have to be tangible. It can be a service insurance company. They do something. There was nothing at the center of this. There was the token itself.

1:38:51 But the token itself, I mean, you know, I always make a point of saying that every graphical representation of Bitcoin I’ve ever seen is a gold coin. It’s just a gold coin. What’s up with that? You’re sort of saying something about gold, if you ask me. Why is it a coin?

1:39:09 It’s not a coin. It’s a couple electrons. It’s certainly not gold, but they love to show it as a gold coin as if somehow you’re getting a gold coin and you’re not. But so what’s there? And I did come up with two, I’ll say theories, but I think they fit really well.

1:39:29 The first is, it’s a casino chip. So I walk into a casino, you know, put a thousand bucks down on the roulette table. I like that game. It could be a hands me the chips. I bet I can win money or lose money.

1:39:44 But that’s on me. But at the end of the day, I take the chips to the cashier and get my cash back and walk outside. I can’t take the chips outside. I can’t buy dinner at a restaurant across the street with casino chips. In other words, the Bitcoin has some utility and value, and you can make money or lose money.

1:40:03 Believe me, I know people have made tens of billions of dollars and I’ve spoken to Michael Saylor. He was up six billion. I think he’s down six billion. So that’s real. But it’s not different than gambling.

1:40:16 Maybe the odds are different, but it’s basically a casino chip. You can gamble on the casino. You can make money or lose money, but you got to cash it in, which is basically going to a portal and getting your dollars back, which everyone tries to do with FDX, and they found that the dollars weren’t there, and we’ll see what happens with Tether. But it’s nothing more than that. The other theory, and this took a long time, and this goes back to work I did in the 1960s, is using communications theory.

1:40:45 And here we’re way into Walter Ong, Marshall McLuhan. He was pretty good friends with Timothy Leary and Eric Havelock, who did a study of Plato that explained why Plato hated Homer. His scholar was like, why does Plato hate Homer? He’s a good poet. Well, Homer wasn’t a poet.

1:41:07 He was an encyclopedist who actually did everything orally. And it was the shift from the oral to the written, to phonetic language that marked, that was the demarcation of Plato. Plato said, we got to get rid of this oral stuff and start writing and reading. But now 2,500 years later, we’re coming out the other end of the tunnel. No one reads anymore.

1:41:31 We’re back to what we’re doing. Audio, video, digital representation of various forms. What’s an emoji? An emoji is a hieroglyphic, which is a non-phonetic language. So we’re actually getting back to a Homeric oral, A-U-R-A-L, tactile world, and Bitcoin fits right in because it’s digital.

1:41:56 It’s electronic. This kind of McLuhan traces back to the telegraph. So the point being, it’s best understood as an hallucinogen. You kind of, everyone sees what they want to see. And it’s very tribal.

1:42:11 And McLuhan said, when I say tribal, don’t think of a bunch of people sitting around the fireplace saying kumbaya. Tribal, it’s not civilization. Tribal society is very violent. So I view cryptocurrencies as part of an electronic, digital, oral, tactile society that’s abandoning the phonetic alphabet, getting back to drums or Homer, but a very different kind of society that is very good at myth-making and can be violent. That’s a fascinating take on that, Jim.

1:42:52 And I think you’re right. It’s funny, when I was trying to think about and explain crypto, I went back to McLuhan as well and was just trying to think of the medium as the message and was diving into even the NFT phenomenon, like what was happening there. And I think that was kind of a hyper-reality of what you just described. And then why, what’s happening here? What’s the communication factor?

1:43:14 What is the medium? What are people trying to express? What is it not? It’s not an old, a new iteration of something old. It’s actually a completely new medium that people are using, like you said, for a lot of emotional, tribal, potentially hallucinogenic.

1:43:30 And if you want the master class, I’m a big fan of McLuhan. If you want the master class, read Wyndham Lewis’ Time in the Western Mind, Western Mind, 1927. And good luck finding a copy. I did, but you’re going to have to dig around a little bit. But McLuhan was a big fan of Lewis, and who’s Wyndham Lewis?

1:43:50 He was a painter and a writer. His paintings were compared favorably to Picasso, and a lot of people say he was better than Picasso. And his writings were compared favorably to James Joyce, and people said he was Joyce before Joyce. So how does a guy who paints better than Picasso and writes better than James Joyce remain unheard of? It’s a long story, but he wrote a book called Time in the Western Mind, and that’s an eye-opener.

1:44:16 And Jim, you said that this is what you saw in crypto, but is it not true that the whole world is going more oral, as you said, tribalistic? And is that not happening not just in cryptocurrencies, but in all the ways that we exchange information and are we turning into that? Absolutely. Crypto is the manifestation of it, but McLuhan said that when we sent up the first satellite, Sputnik, the entire world became a human artifact. And as we wrapped the world in aluminum foil, and the whole planet is now a human artifact.

1:44:50 So once you start thinking about things that way, you see things differently. I love the fact that you, Jim Rickards, would say it took me a while to understand Bitcoin, and it’s because you were deeply processing not just the technical aspect of it, but the cultural phenomenon of it that then was responsible for its price behavior, right? I love that. It says volumes about who you are. Jim, just to wrap this up, first of all, the book is excellent, and I highly recommend everyone grab a copy.

1:45:23 It’s called Sold Out, and it’s one of the many books. I know you’ve mentioned earlier, Currency Wars is now coming back from books you’ve written in past decades as being ahead of their time. I’m sure this one will be talked about the same way in 10 years from now. But tell me, what’s next for you, and yeah, how do people get a hold of this, and then obviously connect with you more? Sure, Sold Out is obviously available through Amazon, Barnes & Noble, leading bookstores, so it’s out there.

1:45:52 I love the fact you held up the, that’s the UK cover, which is a great cover. That’s great. The US cover is different, so for a US audience, we have a box you’re looking into, but that is the UK version. They’re very much behind us. So yeah, Amazon, Barnes & Noble, and other leading bookstores, it’s available.

1:46:10 To follow me, I’m pretty active on Twitter. It’s at James G. Rickards, so I use my middle initial, r-i-c-k-a-r-d-s, one where it’s at James G. Rickards. On Twitter, it can open accounts, so I think you can follow it.

1:46:25 You don’t even have to join Twitter. You can just see it. And yeah, I’m just going to keep doing what I’m doing. Getting back on the road more, we all had a couple of your hiatus where it was hard to travel, but I’ve been to London recently. It was in Tokyo.

1:46:40 I hadn’t been either place for a few years, so nice to get back and see some old friends. You know, lecturing interviews, not working on a book at the moment, but I got three in my head floating around, so I’ll probably get back to that sooner than later. So yeah, like I say, enjoying things. And glad to see that despite the economic challenges and the geopolitical challenges, which we talked about, people are, you know, normal is probably too strong a word, but getting back to getting out and leaving some of this pandemic stuff behind us.

1:47:14 Yeah, it is super refreshing. I kind of noticed that this winter was the first time we didn’t have the fears and the talking about and the restrictions. It was just a nice break from all that stuff. Just lastly, I want to remind everybody to go check out this video that Jim recorded. It’s not available to the public, but it’s where he discusses the upcoming crash, the fact that it’s going to be fast, bloody unavoidable, but also Jim explains how anyone can position themselves to profit from this crash.

1:47:40 Our viewers can watch it, LondonReal.tv forward slash Jim. And again, I highly recommend everyone go watch that right after we’re done. Jim, what can I say? You’re a legend is what I can say. You’re one of my most favorite guests on the show.

1:47:52 My audience loves you. I remember the first conversation we had seven, eight years ago in the old studio where you and I went right into what I thought was inside baseball and the details of long-term capital and the interest rate swaps and the Russian situation. And I thought, oh my gosh, this is going over the head of my audience. But it was the opposite. People loved it.

1:48:15 They could connect to it. They could sense the reality. And people are always looking to you to see what’s going to happen in the future. And again, if people enjoyed this, they need to go even deeper because your research is just 10X what we’ve just covered here. And I’m always learning new stuff about you.

1:48:32 I started coding Fortran, I think, at 79 or 80. But you were doing that way before me. And I didn’t even know about Kissinger. And we got lots more stories to cover. So looking forward to you.

1:48:42 When you get back to London, we’ll do this in the studio and maybe go even deeper. But I just want to say thanks for everything you do, Jim. People should go grab a copy of Sold Out and just look for your stuff on the horizon. It never disappoints. So thank you very much.

1:48:56 Thanks. All right. Take care, everybody. We’ll see you next time on London Real. So Jim Rickards has just recorded a video that’s not available to anyone in the public.

1:49:05 And he’s going to be talking about how this upcoming recession is going to be fast. It’s going to be bloody. It’s going to be nasty. But at the same time, he’s going to show you how you can position yourself to profit from all of this chaos. Now, we’ve made this video only available to our viewers.

1:49:22 Go to LondonReal.tv forward slash Jim. Watch that immediately. I can’t say enough good things about Jim Rickards. He understands the global economic system better than any guest I’ve ever had on London Real. His predictions are almost untannily true.

1:49:38 And you can learn how to profit from his vision, from his expertise, and his understanding of economics. So go to LondonReal.tv forward slash Jim or click the link below. It’s an excellent, excellent look on what’s going to happen in the future and how you can position yourself to profit from that. Jim is one of the best in the business, one of my favorite guests on London Real, and he’s very, very good at predicting the future and showing us all to profit from it.

1:50:03 So click the link, and I hope you enjoy.