James Rickards - The A.I. Market Meltdown: Wall Street's Biggest Blind Spot No One Is Prepared For

Full transcript: James Rickards on London Real

0:00 Brian Rose: This is London Real. I am Brian Rose. My guest today is Jim Rickards, the economist, attorney, and former investment adviser renowned for predicting major disruptions in global financial markets. You are a former adviser to the Pentagon, the CIA, and the US Treasury Department, where you were called upon to simulate global financial war games and stress test the American economy. Earlier in your career, you served as general counsel for long-term capital management and held senior roles at major institutions like Citibank.

Today, your insights help investors, governments, and institutions prepare for what you warn is a looming monetary reset. You’ve been sounding the alarm that we’re not just facing a recession, but a long-term depression. Triggered by broken supply chains, $36 trillion in debt, and AI’s destabilizing role in finance. The Ukraine conflict is a key flash point, especially with Trump’s recent deadline for a Russian ceasefire. If ignored, it could trigger secondary sanctions on China and India and send shock waves through energy and gold markets. Jim, welcome back to London Real.

Jim Rickards: Thank you, Brian. Great to be with you.

4:52 Brian Rose: Great to have you here. I think we jump right into what’s going on with Putin and Russia and Ukraine because I don’t feel like this is getting enough airtime and I think we’re really days away from the deadline. What do you see happening here?

Jim Rickards: Well, first of all, I think you’re exactly right about that, Brian. The war is 3 and a half years old. It started in February 2022. Here we are in late 2025. People seem to have short attention spans.

The news cycle moves on etc. So there has been a decline in interest but that’s a mistake is it’s probably never been at a more critical stage and more important. And here’s what I would say just by way of introduction. Ukraine by itself is a huge story. We just talked about the war the Russian advance you know what Zelensky’s doing the US.

I got to say the UK they’ve been among the biggest war mongers but not on a par with the US and Germany. And that proxy war aspect and confrontation if that’s all it were and that’s a lot it would be a huge story but it’s not Ukraine is at the center of a lot of other threats including global trade sanctions Israel Iran China India Trump’s tariffs etc the price of oil so it is a much bigger story you start with Ukraine but it kind of goes out in ripples from there to embrace the entire US economy so I think investors who or just you people interested in geopolitics or the news who are not well acquainted with it are actually missing a big story.

Brian Rose: Yeah. And right now Putin doesn’t seem to be reacting very well. The few sound bites I sent have been quite confrontational. Obviously Trump sent over the submarines I think on a back of a comment that it was Medvedev that made. This does feel like it’s getting tense and it feels like he’s hit a pain point with Putin whereas these increased sanctions and he’s already talking about India sending oil to Russia and how he wants to shut that down with the latest tariffs. I mean Putin can’t afford this to happen, right?

Jim Rickards: Putin’s fine. Russia’s fine. This is really widely misunderstood. The guy who’s boxed himself into a very bad position is Trump. And again, this is big picture, Brian.

We’ll get into a lot more detail, but the way to understand Trump’s position right now, he came into office, he was sworn in January last January 2025 to his second term. He had an opportunity to get out of Ukraine right away. He could have said, “Okay, sorry, Zelensky, we’re cutting off financial aid. We’re cutting off military aid. You know, good luck.

You’re on your own. This is not our fight. France, Germany, you want to carry on. UK, good show, but we’re out of this thing. And that would have been that the US people, the American people would have understood it.

The warmongers, people like Lindsey Graham would not have stood for it. John Bolton would be foaming at the mouth, etc. But too bad. Who cares? The MAGA movement and the vast majority American people would have supported that.

Instead, he’s kept the war going. Now, he’s been critical of Zelensky at times and then critical of Putin. He’s kind of flip-flopping a little bit. Well, maybe not even flip-flopping. To him, that’s the art of the deal.

And I’ll give Trump credit for knowing the art of the deal. But the art of the deal is not the art of war. The art of war is a completely different thing. Diplomacy is a completely different thing. And Trump does not understand that very well. And I think he’s he’s showing that.

8:23 So Trump is repeating the mistake of LBJ Lyndon Baines Johnson, President Johnson. Johnson became president after the assassination of JFK in November 1963. So, okay, give him a transition. And we had an election 1964. Johnson won by one of the biggest landslides in US history.

So, by January 65, he had a free hand. That war in the war in Vietnam that was you could say it was Kennedy’s war but really Eisenhower’s war but Eisenhower and Kennedy together had got the US where they were on the assassination of President Diem which was conducted by the CIA with help from the South Vietnamese. Now, Johnson could have said the same thing. Say, “Hey, you know what? We’re out of this.

Don’t know how we got here. Last thing we need is a land war in Asia. It’s going nowhere. We can fight. We can win battles, but we can’t win the war in the long run.

We’re out. Hey, South Vietnam, good luck. You know, we wish you well, but we’re out of this thing.” He could have done that and the American people would have understood it. He didn’t. He listened to McGeorge Bundy, Robert McNamara, other bad advice from the warmongers.

They escalated, carpet bombing, etc. And by 1968, we had 500,000 troops in Vietnam. Now, we didn’t actually get out of the war until there was a peace treaty in 1972 that Nixon and Kissinger engineered. And of course, the last helicopter out of Saigon off the move for the embassy, we all remember that famous picture was 1975. But Johnson had the opportunity to end it in 1965.

He didn’t. And that destroyed his legacy. He was going to run for re-election in 1968 and he withdrew because of the anti-war opposition from Robert F. Kennedy and Gene McCarthy. So now think what else Johnson did.

He did the Great Society, Medicare, on and on. Enormous social welfare programs bigger than anything we had seen since FDR. But Johnson’s legacy was destroyed by his failure to get out of Vietnam. Trump’s legacy, MAGA, the one big beautiful bill, tariffs. I’m a big supporter of Trump, by the way.

I think he’s doing a lot of things right in the US economy. That legacy is in danger of being destroyed by Trump’s failure to get out of the war in Ukraine. So that’s kind of where we are. We’re at that turning point, but Trump has made a this has now become Trump’s war. I said this.

I was doing another interview with a kind of a MAGA channel the other day and the host interrupted me. He said, “Hold on Jim. Did you just say this is Trump’s war?” I said, “Yes, he’s crossed the threshold. This is now his war. We’ll see how he handles it from here.” But he failed to get out when he had the opportunity.

Now he’s getting in deeper and it’s going to get it’s going to get worse and worse.

11:16 Brian Rose: Now Jim, he had Zelensky in the White House and Trump was still fairly new to the administration and it felt like he really was going to end it. And then it felt like there was this turn. It felt like when he went to the Vatican and he met him there or maybe he was in the air or of some other leaders, but it seemed like he decided to keep it going. And I just didn’t understand why because he’s not he doesn’t require the funding of the arms makers.

Or is it that other members of Congress put the pressure and said we’ve got to keep this up? It just it never computed for me.

Jim Rickards: It’s first of all, your description is exactly right, Brian. He did pivot. He pivoted in favor of the war. That was fairly recent and that’s when I said it’s not Biden’s war anymore. It was Biden’s war after Trump was sworn in.

It was Biden’s war for several months. No one disputed that. It has now become Trump’s war because of the pivot. Your description was exactly right. But you point to the bigger question, which is why yes, some members of Congress, it’s Lindsey Graham and some others, Tom Cotton, but it’s really people around the White House.

It’s people in the Trump inner circle, not all of them. I would, if you said, who’s got this right, who wants to get out and keep out, it’s JD Vance and, sorry, well, anyway, JD Vance primarily. Oh, sorry, Pete Hegseth. JD, Pete Hegseth have it right. The people who have it wrong, I would say Marco Rubio, General Keith Kellogg, who’s one of his top adviserss and envoys to Ukraine.

Mike Waltz, who was briefly the national security adviser, he’s now ambassador to the UN, but he’s still around. He’s still part of that inner circle. And even, Stephen Miller, who is pretty sound, usually I agree with him, came out the other day, was critical of Russia. So there is a group around Trump who are pro-war. They’re the neocons.

Now again, Trump just doesn’t have a lot of experience in this. I know he was president for four years. I get it. But he was so caught up in the Russia gate and the impeachment and the COVID and a lot of other things that kind of really destroyed his first term. He’s learned lessons from a lot of that.

He’s doing much better this time, particularly on the economy. But these neocons have not gone away. And they’re still around and they’re tipping him towards expanding the war. Now, the biggest I’ll say delusion because we have a lot of evidence to the contrary is the are the role of sanctions.

13:43 Now, I happen to be an expert on sanctions. I did this for the intelligence community for 10 years. I was I put a special committee together for the committee on foreign investment to the United States. I did a lot of intelligence work related to that. I worked with the National Intelligence Council and the CIA.

I said that the sanctions would not work when they put them on immediately in February 2022 after the special military operation. Biden put on sanctions. I teach a class in financial warfare at the US Army War College and down in Carlisle, Pennsylvania. And I taught that class in April 2022. So it’s really just a few weeks after the invasion and after the sanctions were put in place.

And I told my class, this is a it’s a small group about 13 people, mid-career officers, lieutenant colonels, brigade commanders, Navy commanders, and others. I said, well, here’s the thing here. Here are how the sanctions work. They’re all going to fail. The Russian economy will prosper.

The Russian ruble will be fine, and this will cost the United States more than it costs Russia. It’s all going to backfire on us. And I got a lot of push back. I mean, this is it’s seminar style. So, you want the push back.

You want the give and take. They were all gung-ho. We’re going to win the war, and all this stuff. And I said, “No, I’ve seen enough of this. This is not my first rodeo, so to speak, and these are going to fail.” A year later in May 2023, I taught the course again.

And I began I said, “Let me tell you what I told last year’s class.” And I told them, and I said, “I was right about everything. The sanctions have failed. The ruble is strong.” And to the today, Bri, I mean, this was true two years ago, but it’s true today. The Russian economy is outperforming the US economy. The Russian ruble is stable against the US dollar.

Remember Biden, you banging the table, the ruble is going to be rubble. The ruble is going to be rubble. It’s not. It’s actually a little bit stronger against the US dollar. The US stole $300 billion of US Treasury securities that were lawfully purchased and owned by Russia as part of Russia’s reserves.

Russia had about $600 billion in reserve positions. About half of it, $300 billion was in US Treasury securities and some mortgage back securities but US dollar denominated mostly held on deposit at Euroclear which is the biggest clearing organization in Europe. By the way, Euroclear has about 40 trillion dollars of assets worldwide that it holds in custody but that’s where they were. So the US froze them. We do that all the time.

We’re really good at freezing our assets. But then we went a step further and began to steal them as collateral for loans to Ukraine which is completely non-creditworthy to pay for the war against Russia. So here Russia’s lawful exports of oil they earned them dollars that they invested in the US Treasury market trusting the US and the rule of law have been stolen and converted into loans to finance Ukraine to fight Russia. So it’s almost like Russia’s paying for the war against themselves that has implications for the US Treasury market that we can talk about.

The smartest thing Russia did and this the head of the central bank of Russia is a Nabiullina. I always say she’s the only central bank in the world who really understands her job. But she began in 2009 for 15 so this was 16 years ago to buy gold physical gold and Russia got to the point where 25% or $150 billion of their 600 billion in reserves was in physical gold in Russia not anywhere else. You cannot hack gold. You can’t trace it.

You can’t freeze it. You can’t do you can’t do anything with it. It’s not even a molecule. It’s an element. Atomic number 79.

You can melt it down. It’s untraceable. So, that was smart. Now, here’s one of the ironies. I love these little ironies.

So, we steal 300 billion from the Russians, right? So, their reserve position gets whacked to that extent, which is a big hit. But on the 150 billion of gold, because of the geopolitical conflicts and because of the loss of trust in the US, they have made over $60 billion of mark-to-market profits on the gold. Because they started buying their gold in 2009 and gold was still I don’t like $700 an ounce at the time. But now it’s actually today it’s very close to an all-time high.

It’s up well over $3,400 an ounce. But my point is yeah, we’re still under treasuries, but they’re they make $60 billion on the gold. So, she knew what she was doing. And Russ that’s one more reason why Russia is not in financial distress because they have physical gold that you can’t steal. So the sanctions don’t work.

The we put 15 rounds of sanctions. I mean when I say rounds each round with like dozens of particular provisions or companies or individuals being targeted etc. So you’re really talking about hundreds upon hundreds of sanctions. None of them have worked. Why does Trump think the next round is going to work?

Okay. I mean you’ve been failing for three years with hundreds of sanctions. Why do you think your next round of sanctions is going to work?

Brian Rose: But the other he even publicly said that. I think he’s like, they’ve been proven that they don’t work, but we’re going to do them anyway. He said something like that.

Jim Rickards: Well, he did. He did. That’s show that’s some self-awareness anyway, but that is the case.

19:01 But now Trump has gone further and he’s boxed himself in by giving Putin an ultimatum. Now, ultimatum is not a throwaway word. It is a it is a hugely significant term in diplomacy. I don’t think Americans are very good at diplomacy anymore, but the Russians are. Sergey Lavrov, the foreign minister, Russia’s the master.

He’s the best at it in the world. There a couple other good ones, but Sergey Lavrov understands this. When you give somebody an ultimatum, what you’re saying is either do this by a certain date or it’s war. That’s what an ultimatum is or some very bad consequence. So, first, some weeks ago, Trump said, “I’m giving Putin a 50-day ultimatum.

He’s got to do an unconditional ceasefire within 50 days or bad things are going to happen. Trump didn’t really spell it out, but he we kind of know what’s on the list. He said bad things are going to happen 50 days. So, a certain period of time went by, a few weeks went by and then Trump suddenly said, you know what, it’s going to be 10 days. It’s not 50 days anymore.

It’s 10 days. Okay, that 10 days runs out August 8th, which is just a few days from now. Okay, so that’s the ultimate. By the way, Trump Putin just shrugged. I mean, Putin’s like Putin’s interesting.

He’s very smart. He’s very deliberate. He’s the opposite of Trump. He does not shoot from the hip. He does not bluff.

And this is one of the biggest mistakes. I don’t know why Americans are so ill-informed on Russia. But they keep saying, “Well, Putin’s bluffing. Putin’s bluffing. Keep pushing.

Keep Putin doesn’t bluff. He may like what he says or not, but he does not bluff.” But again, he’s thoughtful. Doesn’t shoot from the hip. When he says something, it’s been given a lot of consideration. Now, Medvedev is like the attack dog, okay?

He was the he was president of Russia for a few years and he’s still around. He’s a deputy head of the national of their equivalent of our national security council. So, he has a big role, but Medvedev is the one, like just, tearing Trump apart and throwing names around and why Trump would respond to him when you’re at that level, you’re supposed to be dealing with Putin, I don’t know. But Trump took the bait and he said in response to comments had like we don’t really care about your sanctions or we don’t you’re we don’t really take it seriously.

Trump said, “Well, I’ll show you. I’m dispatching two US nuclear submarines to an unknown destination, but good reason to believe it’s, in proximity to Russia.” By the way, why are we giving away locations of our nuclear submarines? I mean that’s the technology is all about not knowing where they are.

Brian Rose: That’s the art of the deal, not the art of war is what you’re referring.

Jim Rickards: That’s exactly right. That’s exactly right. So first of all, why are you taking the bait from me when you’re supposed to be dealing with Putin, too? Why are you giving away locations of nuclear assets? But more importantly, why are you using nuclear weapons as not even a bargaining chip, but part of threatening you’re escalating the rhetoric, not just the rhetoric, you’re escalating the actions to the brink of nuclear war.

Does Trump not understand that nuclear war is the end of life on Earth? I mean, maybe the cockroaches will survive, but not the.

Brian Rose: Which is strange because he’s been caught numerous times saying that this is an existential threat that no one takes seriously enough and that people should never even use that as a veiled threat when they do. He’s called out leaders that do it, including the Russians, and now he’s doing it himself. It’s odd. It’s odd.

Jim Rickards: It’s definitely odd. The nuclear introducing the nuclear element into what is otherwise a conventional albeit horrific high casualty war is reckless in my view but okay he did it.

22:44 But getting back to kind of where things stand with Putin so Trump gave this ultimatum it’s up in a couple Putin’s not going to respond show me and here’s why Brian I don’t just like to make declaratory statements without backing it up Russia’s winning they are winning decisively across the entire battlefront Now, if you get your information from the Economist, the Financial Times, the New York Times, the Washington Post, you are reading undiluted propaganda. They have a narrative about the war is a stalemate because it hasn’t moved very much. It’s not a stalemate.

You have to understand the Russian way of war. Like right now, their main objective is a city called Pokrovsk. Now, Pokrovsk is it’s a decentsized city, but it’s a logistics hub. The highways, the railroads, etc. That run through it are it’s highlyworked and it’s the way that Ukraine supplies their troops along the entire front.

You run it to Pokrovsk and then you move it to someplace else. You take that you basically it’s like ripping the heart out of the Ukrainian effort as difficult as it is. They’re suffering in a lot of other ways. Okay. But how does Russia do it?

They’ve spent the past year taking every village and town completely around it. They’ve surrounded it. So then when they surround it, they did this in Bakhmut, they did this in Avdiivka, they’ve done it in Chasiv Yar, which just fell to the Russians in recent days, even though that battle has been going on for a year. So by doing that, then when they went for the kill, there’s no way out. The troop the Ukrainian troops can’t escape.

They cannot resupply and basically Russia says surrender or die. We’ll give you the ability to surrender and you’ll go to a prison camp, a prison of war camp in Russia, but that’s a choice. But if you want to fight, you’re fighting to the death. And they do. This is what happens to the Kursk, when Zelensky invaded Kursk, which is part of the Russian Federation.

That’s not Ukrainian territory. That took about a year, but the Russians killed him to the last man. They couldn’t get out. That’s going to happen to Pokrovsk. So you say, okay, if you’re the New York Times, well, nothing moved in a year.

Well, actually something moved. They surrounded it. Now they’re going in for the kill. This is where the western financial times type propaganda is basically lying to audiences and you around the world really but UK and US in particular.

Brian Rose: So is it true that Putin can’t continue this forever? I know the economy is growing but we’ll get to a point where it isn’t sustainable anymore.

25:55 Jim Rickards: And let me let’s turn to that. Really good question, Brian. So, it by the way, I had a conversation with Peter Navarro. He’s the trade and manufacturing czar in the White House.

Brian Rose: Yeah, we’ve had him on the show.

Jim Rickards: Yeah. Yeah. Yeah. Peter’s a great guy. So, not long ago.

And I he’s like a conversation with him is like an oral exam and a PhD oral exam. He’s like he’s really tough and he asked really hard question which is fine but he’s got that professorial aspect of it but a really good guy but I kind of hit him with something he hadn’t thought of and he said yeah you’re right. I said you want to end this war stop the sanctions flood the market with oil. Get the price down to $30 and Putin will stop the war.

Mhm. That’s how and Peter said, “Yeah, you’re right.” Because what but what are we doing? We’re putting on more sanctions. We’re raising the price of oil. We’re putting more money in Putin’s pocket.

And he So, to answer your question, Brian, he can finesse that we’re indefinitely at these high oil prices. 60. Yeah. Okay. 65.

It’s been up to 90 not that long ago, but 6570 or higher, and I think it will go higher for the reasons we’re discussing. Finances the war and Putin can continue it indefinitely. If you want to this is where the geopolitical eggheads don’t understand markets, right? If Putin’s depending on oil, high-priced oil revenue to finance the war, the way to stop the war is to get the price of oil down to 30, 40 bucks. Well, how do you do that?

Not with sanctions. Forget take the sanctions. Let Russia pump as much. Let Saudi Arabia pump as much. US open up the federal lands.

Open up the Gulf of America. Offshore drilling, Alaska. Flood the market with oil. Get the price down to 30 40 bucks and then Russia will Okay, but not before. So now just let’s just take that thread a step further.

27:48 So, I talked about, okay, what’s Trump going to do on August 8th? What’s he going to do when this ultimatum runs out? Well, he could do nothing, in which case he’s completely lost credibility. He’s embarrassed himself and he’s weakened the United States. They won’t do that, but that’s kind of one choice.

What is he going to do? Well, one thing it could do is increase arm shipments, okay, to Ukraine because US has been dialing those down. All right, let’s talk about that. This has been the another one of these narratives, these mainstream media narratives that’s false, by the way, since the beginning of the war, the wonder weapons. Okay, so what did we do?

We sent HIMARS precision guided artillery to Ukraine. What it took about a month or less for the Russians to hack the GPS system, so they go off course. They fall into cornfields, right? I mean, you can’t if the precision guided artillery is guided by GPS, and you can hack the GPS, the missiles are harmless because they don’t go anywhere. Okay, so forget the HIMARS anti-missile batteries.

You know, by the way, they cost a billion dollars a piece. A billion dollar. And there aren’t that many of them in the world, but we gave them seven or eight. The Russians systematically destroyed every one of them. 7 billion dollars down the drain.

How did they do that? What about the Patriot? What about the Golden Dome and the Iron Dome and the Patriot anti-missile system? They can’t hit hypersonic missiles. They can’t hit cruise missiles.

Cruise missiles go about 500 600 miles an hour. These hypersonic missiles, some of them go 10,000 mph and the Patriots can’t hit them. So, what good are your Patriot missile anti and Patriot anti-missile defense batteries doing if hypersonic missiles can blow them up, which they are? So, send them a few more. Waste a couple more billion dollars.

By the way, we’re stripping our own arsenals of those weapons. And the US, we’re supposed to have them here in the US to protect, critical infrastructure. We want to give to the extent we have any, we want to give them to Israel to protect against Iran. And so the latest version was Trump told Germany and the Netherlands and I think yeah, mainly Germany and the Netherlands, you got to send yours to Ukraine. And they’re like, hey, we only got three left.

You know, now you’re sending one to Ukraine. Yes, fine. Send them two or three more. The Russians will blow them up. A couple more billion down the drain.

They don’t work. Okay. The British Challenger tank, the German Leopard 2 tank, the US Abrams tank, all this armor. Zelensky said we tanks. We sent it to them.

By the way, the UK has pretty much stripped their arsenals of what the few challengers they had left. Same thing with Germany and the Leopard. Same thing with the US and the Abrams. They were all left burning on the battlefield. They’re too heavy for Ukrainian soil.

They’re not well suited and they were invented before the creation of the drone. So using drones and precision guided missiles, etc. Bradley fighting vehicles burning on the battlefield. Tanks burning on the battlefield. They did nothing.

What about the F-16s? Remember that Biden spent two years. Are we going to send them F-16s or not? Well, we finally did. Why don’t you hear about them?

Because they’re getting shot down by the Russians. I mean, but with the A300s or the A and the A400s, sorry, the S-400s. That’s the Russian surface-to-air anti-missile system. So, we’ve sent them all the wonder weapons and they don’t work. In fact, the implications of that are even scarier, which is oh, NATO sent them all their weapons.

They’ve been blown up and destroyed in the battlefield in Ukraine. They don’t work. They haven’t stopped the Russians. What’s stopping the Russians from going to the English Channel? Nothing.

I mean, they’re not going to. I’m not It’s not my forecast. I’m just saying that NATO has actually far from turning the tide in Ukraine. They’ve proved how infinite they are against the latest Russian weaponry and technology, hypersonic missiles, digital warfare, drones, etc. And who’s joined in?

Iran and North Korea. We’re making them stronger. So, every single thing about this has been disastrous for the West, US, but obviously, NATO and UK and France also. So just to round out this part of the discussion, why will sending more weapons to Ukraine make a difference? The answer is it won’t. Okay, so it’s the same failure.

31:58 So, what’s left? Well, economic sanctions. Okay, 100 sanctions haven’t worked. Why not try 101? But here’s where and I said earlier that it’s all connected like on a global basis.

So now what Trump wants to do are called secondary sanctions. So we’ve sanctioned but you can’t sanction Russia anymore. We’ve sanctioned everything. They can’t export. They can’t get high technology, their oil’s, illegal, etc.

Etc. A secondary sanction is when you find another country that’s doing business with Russia, and you say, “Hey, if you do business with Russia, we’re going to sanction you.” Well, who’s the you? China and India. Because China and India are buying Russian oil, paying dollars. And that’s, you know, that is financing the war effort, propping up the Russian economy.

No question about it. So, but we haven’t been able to stop Russia’s exports. So, we’re saying to China and Russ or sorry, China and India, you stop buying Russian oil, we’re going to sanction you. Okay. What’s going on right now?

The US is in bilateral trade talks with India and we’re in bilateral trade talks with China. Okay. If you’re Indian and China, you’re sitting there saying, “How can I do a deal with the US?” you may be a couple days away from throwing 200% tariffs on me because I’m buying Russian oil. Why, you know, why are we quibbling over 50% or 20% tariffs? Why should I do anything with you when I don’t know what’s coming on Friday?

Well, the answer is they won’t. So, the failure of the Indian and Chinese trade talks so far is not because they don’t want to talk or they don’t know how to make a deal. Of course they do. It’s because they’re in the crosshairs of secondary sanctions because they get oil from Russia. And why?

How on earth could you agree to any deal if you don’t know that Trump’s going to smack you with 200% tariffs the next day? It would be ridiculous to make a deal. So this again, sorry to go on Brian, but I’m trying to show how from Ukraine to Russian oil, Russian oil exports, imports by China and India, which those countries need to run their economies to primary sanctions that have failed, military aid that has failed now to secondary sanctions, which will also fail, but they’ll fail in a more spectacular way because they’re going to blow up normal bilateral trade talks.

I mean, this whole thing is a mess. They have not I by the way I tell this to people in the Trump administration they I get a hearing but it doesn’t seem to change the analysis.

Brian Rose: That’s an incredible breakdown and now it makes more sense that this these talks are sluggish for both China and India.

34:29 Just a quick question when you were talking about the military this highly advanced drone digital army or force. You mentioned first of all that nothing’s going to stop the Russians from going across the channel but the intellectual property they’re developing. I mean, I’ve read some of the articles in the journal, which I’m sure don’t even do it justice. I mean, that is some scary, dangerous technology. And I’m guessing if you put a thousand of the high-tech Russian soldiers on American soil, they could probably take out every major leader in the country within 24 hours without the US even knowing what’s going on.

Now, maybe I’m exaggerating that, but both of these sides, Ukraine and Russia, seem to have extremely advanced digital warfare that I would guess we better all start getting concerned about.

Jim Rickards: Well, Ukraine has extremely advanced digital warfare, which is completely non-indigenous. It’s run by the UK and the US. I mean, just is with bases in Germany. The other day, Russian special forces landed in a, not really covert operation, but commando operation is a better way to put it, west of Odessa. Now, the Russians don’t control that part of the coastline.

That’s still Ukraine, but they spent they sent their special operations team west of Odessa, closer to Romania, to take out a UK or sorry, a Ukrainian command center. And they captured two British officers who have been identified and an MI6 asset who has not been identified but three two soldiers in uniform and one MI6 spy are now in Russ are now Russian prisoners. So okay here we are World War II. I mean the US and the UK have been the French have been denying that we have access here.

Of course we do. Of course, the CIA has, stations all over the place, operation centers all over the place. So does MI6. So does the UK military. But all the satellite surveillance, the computer capability, the targeting capability, etc.

All comes from the US and the UK. They’re very good at this. Yeah, maybe stuff’s getting launched from Ukrainian soil. Maybe some Ukrainians play a hand, but they don’t have that indigenous capability. So you say the Ukrainians look fairly sophisticated.

You’re right. But they’re sophisticated because they have the US and the UK behind them. So that’s the first the Russians on the other hand have done it completely themselves. They are way ahead of the US. The US doesn’t have a hypersonic missile.

We don’t have one. Now the we’re working on it. Okay. A little late. By the way the stuff we’re here’s another dirty little secret.

The stuff we’re sending to Ukraine and I mentioned HIMARS F-16s Bradley fighting vehicles and a lot else that stuff it’s old stuff it’s from the first of all it’s 80s technology so it’s 40-y old technology and it’s coming out of inventory meaning we’re giving them the used car lot the money when they say US is spending $200 billion on weapons from for Ukraine what we really mean is we’ve shipped them notionally $200 billion worth of used garbage. And we’re spending the $200 billion to crank out new stuff for ourselves. But here’s the problem.

Why would you want a new Patriot anti-missile battery? Why would you want a new Abrams tank? They’ve already proved that even if they’re brand new off the assembly line, the technology is obsolete. We need to start over and rebuild the US military from the bottom up with new technology. We can do it, but it’ll take five years.

So, we’re just behind the eight-ball for at least the next 5 years. And you’re absolutely right. The Russians are way ahead of us in all those respects.

Brian Rose: When I read those on the ground reports, it’s like fascinating. It’s like a whole brand new kind of warfare where the tanks don’t dare get near the front lines. They’ll get taken out. Individual soldiers are now getting taken out by drones. It’s that cost effective.

And like all these tactics have completely reversed. They got the ground based drones. They’ve got the ones that don’t need radio signals. I mean, it just it’s pretty mind-boggling.

Jim Rickards: You’re exactly right. Yeah. Which is one more reason the Russians are winning.

38:35 So, now getting back to the other side of the ultimatum, Putin’s supposed to agree to an unconditional ceasefire. We talked about how they’re winning and why they’re winning across the entire front. Not much standing between Russia. I said they could go to the English Channel. They’re not going to but they probably could, but they’re at least going to go to the Dnieper River, which kind of runs down the middle of Ukraine.

And there’s very little to stop them at this point. But I so Putin’s supposed to agree to an unconditional ceasefire. First of all, that’s a fraud because Ukraine will not respect the ceasefire. They’ll use the time. If you had it’s not going to happen, by the way.

I should be clear about that. But if it did, Ukraine would use the time, stock up on weapons, rotate the troops, give them some RNR, recruit more, kidnap more 16-year-olds off the street because that’s about what they’re doing these days to continue the fight. So they would not use it in good faith. Number one, but number two, show me a winning army in the history of the world that agreed to an unconditional ceasefire. Doesn’t happen.

The loser will yeah the loser will take a ceasefire or if you know like I say if you’ve been beaten you’ll agree to it German army at the end of World War I the armistice you the that was not a peace treaty the peace treaties happened from 1919 to 1922 but what happened in 1918 November 11th 1918 wasn’t was a an armistice which is roughly the equivalent of a ceasefire but the people who agreed to it were the losers which were the Germans Same thing here. So yeah, Ukraine will sign up for that because they want to buy time, but why should the Russians? Why would you ever?

Brian Rose: Okay. All right. So, we’re going to watch. Probably Trump will do some symbolic things. Putin won’t respond and it’ll just be back to business as usual.

Jim Rickards: Well, I wouldn’t say symbolic. If you put secondary sanctions on China and India because they’re buying Russian oil and you try to eliminate the Russian ghost fleet of tankers, they what they do, they the Russians will fill a tanker with oil, send it out, they’ll turn off their transponders, turn off their GPS, paint the back of the vessel so you don’t know where it’s from, and it’ll meet another vessel at sea and they’ll trans ship the oil and then send it to China. That’s going on. It’s going on every day.

You know, the other big thing is we’re going to cut you out of the insurance market. You know, you the Russians are not going to be able to go to Lloyd’s of London and get insurance on your trans shipments. They don’t know much about the insurance business. I mean, first of all, there’s something called self insurance where you just create a reserve fund. There’s offshore insurance, captive insurance.

There are a lot of ways of dealing with the insurance side of the equation. So, none of this has worked and none of it’s going to work.

41:32 Brian Rose: No, that’s a really powerful thought there. And so they’re just going to My question is will they attack both India and China with these secondary sanctions or is that just something that’s just not going to be possible?

Jim Rickards: It’s a really good question, Brian. But look at it both ways. If they do, you’re probably going to send the price of oil 70 on its way to $80 because you’re going to be doing other things, including trying to eliminate Russian exports in the physical sense. If they don’t, Trump loses face. Like I said, the weapons are they’re not a joke, but they’re not effective.

So, Trump either completely disrupts the global oil market to the benefit of Russia, who benefits from higher oil prices, Russia and Saudi Arabia. But, you’re either going to do that, put more money in the Russian reserve fund, Russian reserves, or you’re going to lose face. So, you have two bad choices. So, why did you put yourself into this box? M the answer is Trump listened to really bad advice from a bunch of warmongers who think Putin’s going to cave.

They don’t understand Putin. I mean I do I got a graduate degree in international economics and international studies before I went to law school but I did that in the mid70s at the height of the cold war and we it was the Soviet Union at the time but still Russian leadership and Russian mentality and we studied it very closely and I had a good working knowledge of it but the people running policy today I mean they’re a generation younger than I am they got their training in the ‘9s what was going on in the 1990s the fall of the Soviet Union yel was like an alcoholic, running around on a tank. You Putin was the upandcomer.

He did he didn’t really take power until around 2000, 1999, 2000. But Russia in the ‘9s was the wild west. I mean, there was no law and order. It looked like it was imploding internally. That was not an exaggeration.

So, the US scholars at the time said, “Oh, this is easy. You know, we can break up the Russian Federation. We can loot the place. We can make them just like us. Make them, dance to our tune, etc.

And Putin’s a punk who came along and ruined the game and they hate Putin for that reason. Again I came from an older tradition that took Russia again Soviet Union at the time but really Russia took it seriously considered it to be a world power and understood how Russians think and I’ve been to Moscow and I’ve spent time there. I have friends there had some very interesting experiences there. But I once ran into a Russian. He said, “Jim, the reason Americans don’t understand Russians is because we’re white and you think we’re just like you are.

We’re not. They’re a different culture, a different civilization, a different religion, the whole Orthodox, Catholic thing. They come from kind of Genghis Khan and we come from England basically. So and elsewhere America is fairly diverse at this point but it’s basically western Europe until recent years my point being these are different civilizations with different histories different cultural modes and Americans unless you study unless you’ve been there do not understand Russia very well and we’re making a lot of mistakes.

Brian Rose: Yeah, that’s a great explanation. I love that quote. Yeah, there’s that. And then there’s that old line from some Russian philosopher novelist that said, you cannot understand Russia with your mind. I always think about that.

45:59 Jim Rickards: I mean, the Putin’s support does not come from the oligarchs. He hates the oligarchs and they hate him, but he put him in a box. He said, “You can keep all your money and do your thing. Keep out of politics. Keep out of government.

Don’t stand in my way. If you do, you’ll end up in jail or worse.” So, they said, “Okay, we’ll take that deal.” Putin’s support is the military, everyday Russians, and the Orthodox Church, right? And that’s another blind spot in the West. We are so secular, we don’t understand the role of religion. This goes back to Samuel Huntington’s thesis, the clash of civilizations.

But if you don’t understand the role of the patriarch of Moscow and the Orthodox Church, then you don’t understand Russia.

Brian Rose: Very well said. All right. Powerful stuff.

46:42 Jim, I’m going to downshift completely into a different topic, but one I really want to get your insight on and that is the jobs report on Friday and the massive revisions we saw downward. I think in the previous two job reports I think it was a/4 million jobs less than we thought because of the revisions they said this kind of downward revision hasn’t happened to that scale since the 60s now according to Polymarket I think the likelihood of a September rate cut is up near 80 90% whereas before you were thinking that Powell might raise rates in September of course Trump fired the bureau and label statistics lady and another Fed governor resigned I got to get the Jim Rickards take on what you think is happening here. What’s going to happen?

Jim Rickards: Well, you may be right about this two prior months revision taken alone being the biggest in very long period of time. But you have to understand, I’m sure you do, how bad the Bureau of Labor Statistics reporting has been for two years, over two years. They’ve they had a string in 2023 and 2024 where every month they came out with jobs created and they revised the prior month down and then the next month here’s jobs create and they revised the prior month down every single time. Now if you said, “Hey, there’s a little there’s a little fuzziness, seasonal adjustments, statistical anomalies, there’s noise, some adjustments.” Yeah, maybe.

But they’re going to be up and down or up and down or they’re going to be moderate. They’re going to be within a range. That’s not what was happening. The job creation was revised down almost every single month. I think every single month except one or two by a very significant amount.

That is statistically impossible unless you have a flaw in your models. Now, I don’t think for one second that they faked the numbers or lied about the numbers. I don’t believe that. I do believe they’re incompetent. So, I was all in favor of this woman getting fired.

Everyone’s like, “Oh, Trump’s trying to shoot the messenger.” She but she was delivering bad messages. She was the worst messenger for 2 years. Or longer. I mean, at least two years. She might have been in longer.

But my point is when you’re in that when you’re that incompetent, you deserve to be fired. So, I was glad to see it happen not out of revenge, not out of shoot the messenger, but because of sheer incompetence of what they did. So, you’re right about that. What does that mean? Well, the look at the last jobs report, the one from last week that you referred to jobs created were about 73,000 approximately.

Well, the prior months were revised down 120,000 each for May and June. There was July created 73,000 jobs. May and June revised down about 120,000 jobs per month. Two very low levels, by the way. Well, if you continue that pattern, then what you would expect is in the August jobs report, which comes out in early September, that July is going to be revised down 120,000, which means we lost jobs.

In other words, the economy is so much worse off than we know because we’re relying on really incompetent and corrupt data. I don’t say like criminal corruption, just statistically corrupt data from the Bureau of Labor Statistics. Number one. Number two, they report two job series every month. There’s what’s called the employer report where they go out and they call companies say, “How many people did you hire?

How many did you fire?” etc. It’s a sample, but it’s a big sample and they draw conclusions from that. But there’s also the household survey where they call individual households and they say, “Hey, did you lose your job? Did you get a job? Are you looking for a job, etc.” And they put that together.

Of the two, the employer report is the one that gets all the news. That’s the one we just talked about. The household survey was down over 200,000 jobs in July, meaning the employer was up 73,000, but probably going to be revised negative. But the household survey, which is generally more accurate, was already down several hundred thousand. So, in my view, the US economy is in a recession.

Unemployment is going up, but it’s being under-reported by incompetent Bureau of Labor Statistics methodologies. And it’s being ignored by Wall Street, but it’s all going to kind of come out in the wash. It’ll we’ll look at revisions in the months ahead. We’re going to find that perhaps, and this is an estimate. I don’t know exactly, but perhaps, 800,000 jobs that were previously reported are going to disappear. They never existed.

Brian Rose: Wow. Wow. There’s a company out there called Truflation. I think they’re actually a blockchain based company that they actually pitched us for an investment, I think, a year ago. But there’s a guy named Anthony Pompliano who broadcast out of New York.

He’s been a guest on the show and he’s constantly referring to that metric which I think has inflation around 1.6 1.7%. But it’s it prides itself in all this real-time data that you can get because of this cool thing called the internet that of course the US government is not using. Have you looked at any of these other alternative sources? Do you trust them? And do you ever see the US government going high-tech and changing all this?

Do you think Trump might task the this the BLS and the Fed to do these kinds of things?

Jim Rickards: I’ve looked I’m aware of them. There a couple others out there. I’ve looked at them. I think they’re doing a good service, but I don’t talk about them a lot. And here’s why.

Because my job is predictive analytics. My job is to figure out what’s going to happen next. Anybody can regurgitate today’s news. What’s hard is telling people what’s going to happen next. Well, if I’m going to do that, I have to kind of put the government hat on.

And what I mean by that is if the Fed is relying on the Bureau of Labor Statistics and markets are relying on the Fed, I think they’re full of problems. But I and I can I’m as critical as anyone. I just criticize the BLS so we can spend another half hour telling me why the Fed’s irrelevant. But so I’m very able to critique them, but I can’t ignore them because other people are relying on them. Wall Street’s relying on them.

Policy makers are relying on. And if I want to predict Wall Street and policy, then I better look at those numbers, however flawed, and they are flawed. I better look at those numbers to predict what other people are doing. Even though I don’t believe them myself, I’m still trying to get the prediction right.

52:58 Brian Rose: Okay, understood. Now, that all being said, what do you think is going to happen at the happen at these next Fed meetings? What do you make of the fact that Kugler will effectively be gone by May? There’s a new governor spot available. Trump has implied that potentially the Powell replacement might take her job.

And then of course you just said the Fed is irrelevant. So your thoughts?

Jim Rickards: Okay. Well, here’s why the Fed’s irrelevant. The Fed is the Federal Open Market Committee. It’s a committee of the board of governors and a rotating group of Federal Reserve regional bank presidents. They meet every six weeks.

Like why can’t it be like quarterly or twice a year? It’s every six weeks. So, it’s crazy calendar. Doesn’t sync up with anything. But they do.

And they set something called the policy rate which is the Fed funds target. Fed funds target rate within a 25 basis point range. The Fed funds market has not existed since 2008. Doesn’t exist. The Fed funds market used to be banks that had banks that needed reserves would go into the market and borrow them from banks that had reserves on an overnight basis unsecured.

And that was an important rate except that nobody’s short of reserves. They have $9 trillion dollars of excess reserves on deposit at the Fed. So if nobody needs reserves, then there is no Fed funds market. So first of all, the Fed’s setting a target rate on a market that doesn’t exist. I mean, people don’t understand that, but it’s true.

Let’s start there. That’s the first reason they’re irrelevant. Okay. What are actual short-term rates? Forget about the Fed target rate.

What are actual short-term rates? Well, I would look at the four-week Treasury bill. It’s very short-term, very liquid, very safe. It’s as safe as you can get. Or something called the secured overnight financing rate, SOFR, sofur for short.

It’s kind of the repo rate. That is a secured market, but it’s basically the overnight repo rate. Those are the two most liquid short-term interest rates that exist in the real world. They actually do exist. Both of those rates today are lower than the Fed funds target rate.

So rates are already down. Trump’s banging the table, lower rates, lower rates. The Feds would, if anything, lower rate for a market that doesn’t exist. And meanwhile, the markets that do exist are already lower than the Feds. So rates are coming down.

And by the way, those rates are dropping even more. So I would say to Trump that you already got what you wanted. Rates are lower than you may realize. Someone should explain this to you. But more importantly, what’s so great about low rates?

The idea that low interest rates are stimulus is nonsense. That is absolutely not true. There’s no research that supports that low interest rates are associated with recession and depression. When did we have zero interest rates? 2008 global financial crisis.

When did we have a sustained period of interest rates below 2%. The Great Depression in 1929 to 1933. In other words, what’s there’s nothing great about low rates. A healthy economy, you would expect rates to be like five 5 and a half%. You got a lot of borrowers.

The banks are willing to lend. Borrowers want to borrow because they see investment opportunities. If I can make 10%, I’ll borrow at 5%. Leverage it, 4 to one, make 25% returns. That’s what a healthy economy looks like.

You know, rates are higher, not lower. So, I don’t Trump doesn’t seem to understand that low rates are going down, by the way. Short-term rates are already below the Fed target on the thing that doesn’t exist. And longer term rates are starting to go down. They’ve been the yield to maturity and the 10-year Treasury notes been it’s been in a range. It hasn’t.

56:30 By the way, the bond vigilantes don’t exist. I was around when they were created. The bond vigilantes have not saddled up since the 1980s. Okay. So forget that’s just another one of these Wall Street narratives to throw.

Brian Rose: What do you mean the bond vigilantes?

Jim Rickards: The bond vigilantes, they did exist in the 1980s. These were people when they saw federal finance, budget deficits too high, too much borrowing, etc. Not enough liquidity, they would short the market to make interest rates go up. And they became known as the bond vigilantes. And they had a huge influence on Bill Clinton in 1993.

And Bob Rubin said warned who was Treasury Secretary Warned well he was a national economic adviser and then later became Treasury Secretary. But he warned Bill Clinton about this and Bill Clinton was like, “Hey, I just became president of the United States and you’re telling me I got to listen to the bond market.” and Rubin said, “Yeah, you do.” So that was the heyday of the bond vigilantes and that was all real. Everything I just described happened, but it was what’s it 20 22 years ago? No, 32 years ago.

So the point is there are no more bond vigilantes. Interest rates are coming down. The yield maturity in the 10-year Treasury note has been trading in a narrow range between four and a quarter and four and a half. You know, up one day, down the next, but it’s been in that range. Any technician can tell you when you’re in a range, that’s a signal that it’s going to break out.

Now the question is a breakout up or down? I’m talking about rates. It’s going to break down. It’s going to break down a lot. Meaning you could see two and 3/4 3% or less in other words on the 10ear note which means huge capital gains on the 10-year Treasury note.

But that’s so if you’re holding 10ear Treasury notes or if you know season to taste if you like five year notes or two notes that’s fine. You’re in for significant capital gains as rates go down, bond math, rates down, prices up, and vice versa. So, you’re set up for that. But, it’s this idea that, the 10-year note rates going to 5 6%. That would be the bond vigilantes.

No, it’s nonsense. There’s a shortage. I mean, people are desperate to get that to get Treasury notes. So, it’s going to go down, but here’s the key thing, Brian. It’s going to go down for really bad reasons because the economy is slowing down.

Brian Rose: Right now, it’s interesting. There’s a few people now even in the mainstream, financial news that is asking that question. Well, wait a second. You know, why do we equate lower rates with the economy getting better? And then when they looking back, it doesn’t always or maybe never has equated in that. So, I’m really glad you brought that up.

59:10 Well, meanwhile, we see the stock market continue to make new highs. I saw a chart today that Marc Andreessen posted from Andreessen Horowitz and he had the S&P 490 versus the S&P 10 and it was a pretty cool chart where you see the 10 wildly outperforming those. What’s your read on stock market and future?

Jim Rickards: Well, Andreessen is exactly right. Of course, I mean the data speaks for itself. But most people buy index funds. They’re not, the day of the activist trader, the active trader, whatever pretty much gone. Yeah, some people sit around in the kitchen and do that kind of research, but the everyday American, the 401k, the IRA accounts, whatever, they just buy the index fund.

So, Andreessen’s right, but the index is going up and so they’re making money. They don’t need the breakdown. It’s absolutely a bubble. Maybe one of the biggest in history. And people always go, “Hey, Jim, how can you say you can’t see a bubble beforehand?

You have to wait till it breaks and then goes down and then you can look back and say, “Oh, that was a bubble.” Nonsense. There’s nothing easier to spot than a bubble. What’s hard is knowing when it’s going to break. That’s really difficult. And I would not go out and short the index today because it could go higher.

The bubble could get bigger. I always say you can lot you can lose a lot of money being right. You can be right about the bubble, but if you short the index, you could lose a lot of money waiting for the thing to break. So, I would basically accumulate cash, not 100%, but get a pretty good slug of cash, maybe 30% of your portfolio and wait for it to break and then go shopping. And by the way, guess who’s doing that?

Warren Buffett. Berkshire Hathaway has a third of a trillion dollars in cash. Over $330 billion. Third of a trillion dollars in cash. Why?

Because he sees what I see. He sees what we’re talking about. This is a bubble. When it breaks, he’ll go out and buy everything for half off.

Brian Rose: Right. Now, he missed the latest rally, but for him, he’s playing the long game. Right.

Jim Rickards: Correct. Yeah. Correct.

1:01:11 Brian Rose: What do you make? I know you do a lot of work with AI and the University of Florida. What do you make of these massive infrastructure investments that Trump is announcing, whether they’re real or not, but the massive build in these data centers, the unquenchable thirst for electricity and energy going forward. And how do you think that’s all going to play out?

Jim Rickards: Well, it’s good for energy producers. I see it. I know what the numbers are. You know, I look at the same stories we all do. I don’t get it.

So some of these companies are spending 75 to$100 billion dollars building AI data centers which are more than just computers. They are computers, but the chips. You need the cooling systems, you need the water, you need the energy, you need, Bill Gates has talked about, why don’t we reopen Three Mile Island? Oh, really? Mr.

Green New Scam wants to reopen a damaged nuclear power plant. Well, okay, that tells you something. But I don’t understand getting rewarded for infrastructure spending on something that hasn’t produced any revenue. I mean, it’s just they say it will. They’re betting it will.

Wall Street loves the narrative. I understand all that, but I don’t see where you’re going to make any amount of money that just that gives you a decent return on the expenditure. So, this is how crazy it is. Wall Street is spending, sorry, Wall Street is bidding out the stock prices of companies that are spending tens if not hundreds of billions of dollars building infrastructure that has with no promise that is ever going to produce any kind of revenue return commensurate with the expense. Some.

Yeah, sure. But I mean I would look for companies that are sitting back. You know the people talk about first mover advantage. Brian, as it’s often the case. It’s the second or third guy who comes along who actually makes the most money.

I mean Google was not the first search engine. Amazon was not the first online department store. They did it right and they made fortunes, but there were a lot of failures before that.

1:03:12 I think not a big fan of OpenAI, not a big fan of Sam Altman.

Brian Rose: Because you think what he’s doing is dangerous?

Jim Rickards: Well, what he’s doing is absolutely dangerous. I would separate, you’re right, I would separate that from the economics of it. I don’t think the economics make sense, but as far as danger, absolutely. And I talk about this in my new book, MoneyGPT. Particularly at the end I explain why you’re never going to see artificial general intelligence and you’re never going to see super intelligence they’re just not happen there reasons for it’s not just an opinion has to do with abductive logic we don’t necessarily have time to go into that I’ve read numerous works by Charles Sanders Peirce who was a 19th century philosopher and engineer a lot of people think the greatest philosopher since Aristotle no one’s ever heard of him but he was the inventor of semiotics which is the keystone of modern philosophy and also abduct ive logic people are taught inductive logic which is inference from a large sample deductive logic which is conclusion from major premises but nobody teaches abductive logic which is it’s basically intuition common sense there’s a lot more to it but you can’t program that and humans have it and if humans have something that you can’t program and never will be able to program then the computers are not going to catch up to the humans they’ll waste a lot of money trying but they’re not going to get there.

But meanwhile, there are enormous dangers from this. And that’s what I point out in my book. As for capital markets, banking, and nuclear war fighting. And the point I make is that I’m not bashing AI. It’s here.

It’s everywhere. It’s in my refrigerator. It’s in the dashboard of your car. It’s not going away. It’s telling you what to do, etc.

And it does a lot of good. I mean there are some diseases that are going to get cured because AI can find correlations between molecules that would take humans forever. So that’s true but that’s not the whole story.

1:06:06 First of all there’s cost-benefit analysis. Secondly, there are enormous dangers that are being in the euphoria and the narrative and the kind of thing that Andreessen was talking about. There are enormous dangers and then and but that’s what I point out in my book, but and then again I have a whole chapter on a nuclear war fighting. Keep AI out of the nuclear kill chain because it will make it more not less likely that you’ll actually have a nuclear war. But beyond that AI learns I put that in quotation marks because it’s actually not intelligent.

They call it that. It is artificial but it’s not intelligent. But whatever it does it learns on what’s called a training set. So the training set are the materials that it searches to form word associations, even letter associations. They call them tokens and nodes and it kind of lines them up and then enables it to write or talk sort of like a human.

And you can buy the whole internet. I don’t know how much it costs, but you can buy every page on the internet if you want to use as a training set. Most of them are curated or they’re smaller than that for specific purposes. But here’s what’s going on. A couple things.

Number one, as AI becomes more and more widespread, it’s producing output that goes into the training set that the future AI trains on to produce AI. So it good way to understand, let’s say you’re making yourself a I drink rum like a nice rum and tonic on a Friday night, right? And you say, I want a bigger drink. So you start pouring in more tonic. Are you getting a better drink?

No, you’re diluting the drink. In other words, if you pour in enough tonic, the rum is going to be gone and you’re going to have, just diluted tonic water. Same thing with the training set. If you put more garbage, more AI output, highly flawed AI output into the training set, the AI output is going to get worse and worse because it’s training on its own output, which was pretty flawed to begin with. So, that’s one problem.

Number two, what’s the training set? Well, it’s the internet. When did the internet start? Well, kind of 1996, give or take. I mean, I know it’s older than that, but the world by web and the internet, the search engines that really came along in 1996.

So, it’s heavily biased towards recent events. Now, yeah, you can find Aristotle and the history of World War II in there. I get all that ancient literature, but it’s heavily weighted to recent news and developments, which includes, all this woke garbage and bias and censorship and all that. So that’s what it’s training on. So it’s training on garbage.

It’s creating more garbage which is going into the training set. And that’s one of the reasons the output is flawed. And you never get to what they’re trying to get to which is AGI or super intelligence for reasons I explained in the book. So, the whole thing, I’m not saying it’s not valuable or can’t produce stuff. It can, but on the scale that they’re talking about and the money they’re spending and the stock price projections, it’s all nonsense.

1:09:08 Brian Rose: Wow. Okay, that’s powerful stuff. And the other thing I wanted to ask you about was the blockchain space. I know you’ve not always been a huge fan. Obviously we’ve seen some big IPOs happening this year.

Circle the stablecoin provider. It seems like Ethereum is the new darling of Wall Street because I guess it’s going to power a lot of these stablecoin rails. Obviously the Bitcoin ETF and the Ethereum ETF is now getting very popular. Just curious your thoughts on that and also just your thoughts on stablecoins. It even thinks that Jamie Dimon seems to be at least turning the corner or at least admitting that his customers can have what they want whether he agrees with it or not.

Just curious what you see. Obviously the Trump family quite heavily involved in this space. Yeah, what are your thoughts?

Jim Rickards: Well, I mean blockchain technology has been around since the 1980s. Works just fine. I mean I think you have to separate blockchain technology as a ledger from all the things that are being put on the blockchain. So yeah, blockchain works just fine. Probably is the future of a lot of recordkeeping etc.

It already is. It’s sort of already playing that role. Very easy to hack. By the way, I did some work for the US Special Operations Command when ISIS was using Bitcoin as one of their currencies. It’s Bitcoin and gold.

It was kind of interesting. They were the two ends of the spectrum. But it’s a lot easier forensically to hack than people realize. So, I’ll leave it at that. So, but beyond that, what can I say?

I still don’t see the use case. Now, I by the way, I’m not a technophobe. I read Nakamoto’s paper, in 2009 when it came out. I’ve been in 100 Bitcoin debates, always win, etc. But the I so I understand the technology and the applied mathematics.

What I never understood, was the use case like what is it? What like what’s it good for? In other words, and so I finally figured it out and that kind of put my mind at ease. The best metaphor, it’s more than a metaphor. It’s a casino chip.

So, I walk into a casino. I put $1,000 down on the roulette table. The croupier gives me my chips. I gamble. I can make money or lose money, etc.

When the night’s over, I take my chips to the cashier, get my money, and walk outside and I can buy myself a cup of coffee. But if I walk out with the chips, I can’t buy anything. Those chips have no value outside the casino. So cryptocurrencies have value as trading tokens inside the crypto world casino, but they don’t have any use case outside. Like when you go through a portal and get your dollars back, yeah, you can spend the dollars, but you can’t spend the Bitcoin.

The vast majority, almost all the Tether that’s purchased is used to buy other cryptocurrencies. So what people do, they buy Tether, then they spend the Tether to buy Bitcoin or Ethereum or Solana or one of the other cryptocurrencies, etc. And then when they cash out, they go back to Tether. So Tether is kind of like the holding tank, if you will, in crypto world. But you’re still in crypto world.

You know, I love the fact that, have you let me ask you a question. Have you ever seen a graphical representation of Bitcoin that was not a gold coin with like a B in it?

Brian Rose: No, I don’t think so.

Jim Rickards: I don’t think I don’t I look I don’t think so either. But that’s my point. It’s like oh that’s interesting. Your logo is a gold coin. Well, it says something about gold if you ask me.

But getting back to the cryptos themselves. So I do think that the gambling metaphor holds up. You are in crypto world. You’re not outside. You have to go through a portal and get back to dollars to get there.

1:12:44 But stablecoins in particular are extremely dangerous. And here’s why. A stablecoin. So, how does it work? So, I give you dollars.

Could be yours or whatever, but I give you dollars. You give me stablecoins. You know, I hold them somewhere, whatever. You get into wallets and exchanges and all that good stuff. But I hold them somewhere.

They pay no interest. And I can use it for whatever I want. I can move money around and then at some point and maybe I cash them in. What does the sponsor do with the dollars, you know, that I gave them to get the stablecoin? Well, no one actually knows now with the GENIUS Act, they have to hold now treasuries, right?

Yeah, it’s brand new and let’s see how it plays out. But you’re right. Tether doesn’t have to comply for a couple years. So, okay. Okay.

Yeah, nice grandfather. So the truth is none of these have been audited. None of them. We don’t know what they have now. A well-run, well sponsored, stablecoin should buy short-term treasury bills.

Buying high-grade commercial paper. Well, that failed in 2007. Just asked, General Electric about that. But let’s just say, first of all, you could steal all the money and it could just be the biggest particular stablecoin could be the biggest Ponzi in history if you just stole all the money. I’m not alleging that.

I’m not saying anyone did it. I’m just saying it wouldn’t be hard and it wouldn’t surprise me someday if that one pops up. Okay, but let’s assume that the sponsors are legitimate. What’s in it for them? Hey, this is as close as you can get to free money, Brian.

So, I take your money. I pay you nothing. I invest in treasury bills and I keep all the revenue and my operating costs are really low because it’s all digital, highly scalable. I make all this free money. I mean, why wouldn’t you sponsor a stablecoin if you could, right?

Brian Rose: Yeah, it’s a great business model.

Jim Rickards: It’s a great business model while it lasts, but basically you keep all the money and pay the investor nothing. That’s a good model. So but what happens when there’s a classic run on the bank and they’ve been happening since at least the at least the 15th century with the Bardi and Peruzzi banks in Milan during the just ahead of the black death. But everyone wants their money back at once. Well, now if you’re the sponsor, assuming you’re legitimate, you have the Ponzi, you haven’t moved to Majorca, but if you’re legitimate, you got to sell those Treasury bills to get the dollars to pay the people who want their money back.

What are the odds you’re going to break the buck when there’s that much selling going on? Very high. U this happened. Now, this happened to regulated money market funds in October 2008. They broke the buck and the Fed bailed them all out.

The Fed bailed out the bond market. Silicon Valley Bank in March 2023. So, and the they FDI the FDIC insurance bailed out all the uninsured depositors. So, when you have a real honest to goodness run on the bank, there better be a Fed or an FDIC or somebody behind it to basically provide the liquidity that the sponsors and the holders of the banks don’t have because everyone’s selling the same thing at once. That structure does not exist in the stablecoin market.

There is you don’t have FDIC insurance. The Fed does not bank this back the sponsor and they’re going to break the buck and no one’s going to get their money and they’re going to shut their doors and that’s going to then feed into the legitimate banking sector. So, I’m looking for I’ll call the mother of all runs on the bank starting in the stablecoin market with no government back stop and they’re not going to be able to improvise one very quickly.

1:16:16 Brian Rose: All right, that’s a very good point. And it’s hard to argue with a lot of those points for sure. What do you make of things like Robinhood? Jim, because, when you and I were in the markets in the ’90s, there really wasn’t this retail investor that could move markets, as we saw with the meme stocks. And also had enough capital where they were as significant players as some of the institutionals.

And yet, it seems like with Robinhood and companies like that, there is this new breed. Maybe they consider themselves professional traders, but they’re not, you know, what we remember, like you said, dad around the kitchen table looking through the Wall Street Journal back pages. Is that a new type of investor to keep your eye on? They do they act differently than other investors or are they dwarfed by the big institutions?

Jim Rickards: Well, if I can paraphrase Marianne Faithfull, if there was a financial crisis and I wasn’t there, it didn’t happen. So, I’ve been I’ve seen every single one of them. I know. I know. There’s nothing new.

I mean, new technology a little bit, but no, they’re just a new round of suckers and they’ll find out the hard way when the whole thing breaks.

Brian Rose: Okay. But do they act a little bit differently than the traditional retail that would listen to what your broker said and then the hedge fun guys that would do what they want to do? Is it a kind of a different force out there?

Jim Rickards: Maybe a different source, not a different force. I would say it’s the same mentality. Get rich quick, something for nothing. Whether you’re listening to traditional Wall Street research or you’re registered investment advisor or you know what’s the guy I want to say Hello Kitty, but what’s it called? He calls himself Roaring Kitty or I don’t know.

There’s some guy out there, the meme stock guy. Sorry, I don’t.

Brian Rose: Yeah, I know him. I don’t remember his name though.

Jim Rickards: I don’t follow I’ll call him Hello Kitty. Yeah the point is yeah the source of the information or the prompt may be different but the behavioral psychology is the same.

1:18:14 Brian Rose: All right and last thing I want to ask you is what are you working on first of all MoneyGPT excellent book I was actually talking to Robert Kiyosaki recently about it and he was singing your praises really enjoyed it what is next for you. You’re always working on something Jim whether it’s a war game or another book but I’m just curious what the next couple years are have in store for you.

Jim Rickards: Yeah, good question. I do have a couple book projects in mind, but I’ve been a little spending most of my time as kind of a caregiver, so I’m learning a lot about the medical profession living in hospitals. So I’ll get around to it. But I do have some thoughts on a new book. I think MAGAnomics I call it MAGAnomics, not Trumpanomics because Trump’s the leader of MAGA.

But Trump will leave the stage someday and hopefully MAGA will continue for 40 or 50 years or maybe longer, have the kind of impact that Lincoln or FDR had on their parties. So I think it’s not well understood. So there’s room for a book that really explains what MAGAnomics is.

Brian Rose: Guess last question is you’re a regular on Steve Bannon’s War Room which I’m actually watching a lot lately. I’m actually really starting to like Steve Bannon. I know you’ve known him for a long time. He’s convinced that Trump will be reelected and he will be in the Oval Office in January of 29. Do you think that’s possible?

Jim Rickards: It’s definitely possible. I mean, it’s not that hard to envision. I mean, there are two ways to do it. One is you can amend the Constitution. That’s a bit of a long shot, but it is possible.

The more likely way is that you would see a ticket of JD Vance running for president and Donald Trump running for vice president. Then they would win and get sworn in and then JD Vance would resign and under the 25th amendment Trump would become the president of the United States. That does not violate the Constitution because he would not have been elected. He would have been he would be filling a vacancy and then there’s a vacancy in the vice president. Trump can appoint JD Vance and they could just carry on that.

It’s never been done by the way, but there’s no reason why it couldn’t be.

Brian Rose: So you could legally do that.

Jim Rickards: Yes. Don’t rule it out. And then maybe Trump only wants to be president for two years and he resigns and JD Vance becomes president. Who knows? But you I’m a lawyer among other things and it is possible.

Brian Rose: Yeah, Bannon doesn’t want to talk about the details because I don’t think he wants anyone to be proactive in trying to stop that. It’d be an interesting one to sell to the American people too, but then again, I guess if you’ve got a popular vote, then you have it. So yeah, it’ll be fascinating. Jim, thank you so much for the time. Really always appreciate your insights.

It’s fascinating to see what we’re reported to that’s happening in the world versus what’s really happening under the surface. And we know, like you said, the British and the US papers have been highly biased to just, echo the same narrative that Russia’s losing, Ukraine is winning. It’s only a matter of time and the other three, four things on their list. And we just get it ad nauseium to where your brain probably has to really go out of its way to look at things objectives. So, I appreciate you reminding that stuff and also talking about stock markets bubbles as well.

So, thanks Jim. Always appreciate the time. Everybody needs to go out and get money GBT and your whole catalog of books. Go all the way back to Currency Wars. I’m guessing Amazon is the best place for those.

Jim Rickards: That’s right.

Brian Rose: All right. Fantastic. Thanks, Jim. Until next time, we’ll see you then.