A Scramble For The Almighty

What’s our beat? Money, economics, a bit of history. During the Pandemic we kept in touch with our network of writers, authors, stock market analysts and “gurus” through Zoom. Sometimes we veer into the suicide lane of politics. Sometimes we swill a good wine or gaze at a beachfront property from afar.

The Wiggin Sessions are meant to be a lively conversation about the state of the world and how we live – thrive – in it. Seriously. Uncorked.

Yesterday, we were recording a Session with Jim Rickards. Then, as fate would have it, our Wi-Fi died. Xfinity, our provider, was doing a scheduled upgrade to the network on our street.

Luckily, Jim had finished a 45 minute romp through the rise and fall of the Bretton Woods exchange rate system.

After I asked him to walk us through why it was established and what its purpose was… and why it failed, ultimately… Jim started in 1815 with the final demise of the Napoleonic era, whipped through the Victorian gold standard, both World Wars, the Great Depression, Guns and Butter of the Johnson administration and, finally, “Nixon’s the One” and the glitch in the system that forced Bretton Woods to fail on August 15, 1971.

Jim’s acumen with monetary history is quite impressive. And fun for a geek like me to listen to. I’m sure you’ll agree, when you get a chance to listen, too.

We’ve scheduled part two of our Session for tomorrow and will post them both on YouTube starting next Monday. The second part will focus on what it means when the dollar rises during financial panics and how to think about your investments during the recession, as well as what to expect during the winter months ahead.

In the meantime, we’ll give you a bit of a tease. As you know, part of our network includes Bonner Private Research. Here we summarize some of Jim Rickards thoughts on the state of the world today and what you should be doing with your money…

Here’s Rickards:

Around the world, China, Germany, the United States, Ukraine, Russia, elsewhere, any one of these problems would normally be a big story. We’d be like, “Oh great, here’s something to analyze, something to write about, something with a lot of explanatory power.”

But you’ve got four or five of them going on at once. So, a lot of things are in play. It can be a bit overwhelming. You have to tackle all those issues.

What I do, I, of course, I look at all them individually. But I look at two other things. Number one, I say to myself, is there a thread that runs through them? Is there some linkage?

I think of a meta narrative or a meta causal factor that overlooks all of them that may have explanatory power, vis a vis all these individual crises connected together in a meaningful way.

The answer is yes, there is something like that going on.

The golden thread, Rickards claims, to the world’s “race to the bottom”, is what he calls a “global liquidity crisis.” More in depth on that next week. For now:

People are pounding the table and yelling about the Fed printing money, et cetera. The Fed printing money is irrelevant. It didn’t cause inflation for 12 years. It’s not causing inflation now.

In my view, the Austrians and the Monetarists have got that completely wrong. Right now, inflation’s coming from the supply side. We’ll see if it tips up into the demand side, it may, but we’re not there yet. But the point is, if there is a global liquidity crisis going on, a scramble for dollars, that explains the strong dollar, that explains the low price of gold, that explains why commodities are scarce.

Jim presents an interesting thesis. Persistent global supply chain issues and a subsequent liquidity crisis are beyond the United States or the Fed’s purview. The current crisis is bigger than The Fed. Bigger than Jackson Hole. Bigger even than a global depression.

So it goes,

Addison Wiggin

Addison Wiggin
Founder, The Wiggin Sessions

Addison Wiggin

Addison Wiggin

Addison Wiggin is founder and executive publisher of Agora Financial LLC, an independent economic forecasting and financial research firm. He and Bill Bonner began writing the firm’s flagship Daily Reckoning in the midst of the tech boom and bust. It was one of the first widely distributed email newsletters on the Internet. The publication’s critical eye on finance and economics continues today. He’s also creator and editorial director of Agora Financial’s daily missive The 5 Min. Forecast.

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