The next financial crisis is inevitable, is coming soon and will be of unprecedented scale and damage, says the former LTCM general counsel. The election of Donald Trump does little to change that, and investors need to prepare.
To avoid it, we’d have to break up the big banks and ban most derivatives, and bank lobbyists will stop that, he says
That means banks will close, as will exchanges. Money-market funds will be inaccessible. Forget trying to get your hands on money.
Prefer stockpiling cash? Governments are eliminating high-denomination bills, and Kenneth Rogoff, a former IMF chief economist, has written a book that Rickards describes as “an elite step-by-step plan to eliminate cash entirely.”
According to James Richards, “Losers will fall into two groups. The first are those who hold wealth in digital form, such as stocks, bonds, money-market funds and bank accounts. This type of wealth is the easiest to freeze in a panic. You will not be able to access this wealth, except perhaps in very small amounts for gas and groceries, in the next panic. The solution is to have hard assets outside the digital system such as gold, silver, fine art, land and private equity where you rely on written contracts and not digital records.”
The second group are those who rely on fixed-income returns such as life insurance, annuities, retirement accounts, social security and bank interest. These income streams are likely to lose value, since governments will have to resort to inflation to deal with the overwhelming mountain of debt collapsing upon them. The solution to this is to allocate 10% of your investible assets to physical gold or silver. That will be your inflation insurance when the time comes.
If there is a collapse of the global money system coming, what is the safest store of wealth for private citizens?
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