The above twitter thread is a tweet exhange I had with Jim Rickards earlier today. He wrote the NYT best seller "Currency Wars", and is clearly an ardent Bear. Not unlike our very own Market Sniper, he firmly believes that the current global economic malaise will end in devastating trade wars via head to head currency devaluations.
Below are two informative reviews of his best selling book:
“Rickards, experienced financial adviser, investment banker, and risk manager, tells us we are in a new currency war that could destroy faith in the U.S. dollar; he examines that war through the lens of economic policy, national security, and historical precedent. As a national security issue, he tells a fascinating story of his involvement with the Pentagon and other agencies in designing and participating in a war game using currencies and capital markets, instead of ships and planes, to gain early warning of attacks on the U.S. dollar. The author concludes that ‘mainstream economists and central bankers alike are well aware of dollar weakness and the risks to international monetary stability from the new currency wars.’ He sees four prospects for the dollar—multiple reserve currencies, special drawing rights, gold, and chaos. Rickards’ ideas are controversial and will attract support and criticism across many disciplines. Nevertheless, he presents a compelling case for his views and offers thought-provoking information for library patrons. This is a must-read book.”
Chris Whalen on Ritholtz:
“Timely…Rickards lays the groundwork for the next phase of global beggar-thy-neighbor in this timely volume…The U.S. relationship with China, [is] an area Rickards knows and treats intimately…The hard money…audience which follows the author…is already propelling this book to the top of the league tables…Buy Currency Wars if you want to learn the history and language of the global currency markets and the political economy which they support.”
On the other end of the spectrum is Ray Dalio. The largest hedge fund manager in the world, who overseas over $205 Billion USD, is clearly a comfortable Bull. Like our very own COT, he believes the FED / USGOV will continue to muddle along, engaged in what he terms as a "Beautiful Deleveraging", which after a protracted slow growth slog will eventually lead to a healthy rebalancing of the global economy.
Dalio describes the U.S. deleveraging process as beautiful. Here's an excerpt from Barron's:
"A beautiful deleveraging balances the three options. In other words, there is a certain amount of austerity, there is a certain amount of debt restructuring, and there is a certain amount of printing of money. When done in the right mix, it isn't dramatic. It doesn't produce too much deflation or too much depression. There is slow growth, but it is positive slow growth. At the same time, ratios of debt-to-incomes go down. That's a beautiful deleveraging.
We're in a phase now in the U.S. which is very much like the 1933-37 period, in which there is positive growth around a slow-growth trend. The Federal Reserve will do another quantitative easing if the economy turns down again, for the purpose of alleviating debt and putting money into the hands of people.
We will also need fiscal stimulation by the government, which of course, is very classic. Governments have to spend more when sales and tax revenue go down and as unemployment and other social benefits kick in and there is a redistribution of wealth. That's why there is going to be more taxation on the wealthy and more social tension. A deleveraging is not an easy time. But when you are approaching balance again, that's a good thing."
Jim Rickards clearly disagrees with Ray Dalio.…thus his reply to BDI's above tweet: "A hard Rain's gonna fall". Not only do I concur with his view that there will be blood on the tracks, but it's nice to see he has a sense of humor!
BDI SOH's Idiot Savant, Twitter handle @BOBeDYLAN