Jim Rickards: PLEASE Listen! "TAKE YOUR MONEY OUT OF THE BANKS" on 2026 Banking Crisis

本站添加: 2026-05-24

[00:00:00]These are the early signs of a global liquidity crisis, which is different than recession and different than a call it plain vanilla, you know, financial crisis. Liquidity crisis, you know, is when you get ready to turn off the lights. There's a dollar shortage around [music] the world. And people say, "How can that be? You know, the Fed printed, you know, $7 trillion of money, you know, M0, actually higher than that. I think it went up to $9 trillion."

[00:00:26]They just flooded the zone with money.

[00:00:29]And the answer is yes and no. Yes, they did print, you know, over $7 trillion of base money, so-called M0. But that money didn't go anywhere. The Fed How does the Fed print money? Well, they buy bonds from dealers, from the big banks, the so-called primary dealers. So, the open market desk at the Federal Reserve Bank of New York calls up Goldman Sachs and offers me 10-year notes. Goldman says, "Is the price okay?" Done. Goldman delivers the notes to the Treasury, or sorry, to the Fed, and the Fed pays Goldman. And that money comes out of thin air. That is money printing. [music] But then Goldman takes the money and gives it back to the Fed as excess reserves.

[00:01:09]You know, so it doesn't go into the real economy. Nobody borrows it, nobody spends it, nobody lends it. It All All that happens is at the Fed you're building up both sides of the balance sheet. You're building up the asset side with US Treasury securities, and you're building up the liability side with deposits from the primary dealers in the form of excess reserves. So, that money doesn't do anything. I mean, it's it's printed, if you want to say that, but it it has not caused inflation. The inflation comes from, as I discussed earlier, from the supply side.

[00:01:40]The, you know, the price of oil, supply chain disruptions, wheat, food, gasoline, etc. The inflation is flooding it, and it's exacerbated by fiscal policy. Now, you have to What What I just described about the money printing, that's monetary policy.

[00:01:54]Okay.

[00:01:55]But fiscal policy, which is the five or six or probably seven trillion dollars of deficit spending, that's helicopter money. When the federal government and Congress and the Treasury hand out checks, that's helicopter money. That's not like giving Goldman money and then Goldman gives it back to you. That forget that. It doesn't do anything.

[00:02:14]Minute exists, it doesn't do anything.

[00:02:16]But, when the government hands out checks, that's real. Now, people some [music] people saved them during the pandemic.

[00:02:22]A lot of millennials opened accounts on Robinhood and started trading cryptos.

[00:02:26]They could, you know, kiss that money goodbye. But, more recently, that money has been spent and that's when the inflation really took off. So, that was driven not by monetary policy. It was driven by fiscal policy.

[00:02:39]But, getting back to the strong dollar, there's something else going on, which is the entire international monetary system is driven not by the Fed, but by eurodollars, by money that banks lend to each other so that they can support their balance sheets and lend to customers or offer transactions to customers if they will. And the main transactions is approximately one quadrillion dollars of derivatives, options, futures, forwards, swaps, swap options, you know, I could go on and on. All of that, almost all of it has to be backed up by collateral. I could say, you know, if I'm a hedge fund and you're Morgan Stanley and I call you up and say, "Addison, I want a you know, a five billion dollar total return equity swap, which is basically a derivative basket of stocks and I can buy and sell stocks all day long up to five billion, but it'll be notional. You'll pay me the profit or loss and dividends, but I don't actually own the stocks. I just have a five billion dollar swap with you." And then you go out and maybe buy the stocks and hedge your position. You'll do that for me if I'm a big enough hedge fund or sovereign wealth fund or institution or whatever. But, you want collateral. I don't have to give you $5 worth of collateral. I just have to give you enough, a little bit of foundation, and the mark-to-market losses. So, if I lose money on that deal, I will give you that much collateral. So, collateral is the key to the whole quadrillion dollar structure I described. So, what's good collateral? Well, used to be a lot of things, but today, banks are saying to each other, "We don't want your corporates. We don't want your stupid mortgages. We want, you know, two-year Treasury notes, maybe with a haircut, or six-month bills, four-week bills, 30-day bills, the best, absolute best, most liquid form of collateral."

[00:04:32]Well, okay. First of all, there's a scarcity of that. There's a There's a collateral shortage, and banks desperate to prop up their balance sheets are asking, "We're going to get some Treasury bills." And they're bidding for them at prices that produce yields to maturity lower than what the Fed will give you for free. So, if I'm a bank, and I can call the Fed, and give me some Treasury bills, and I give them cash under an agreement on buying that, and the interest rate on the cash is whatever, why would I go out in the market and bid on a Treasury bill that pays me [music] less than what the Fed will give me for a phone call? Why would you do that?

[00:05:10]The answer is you need the bill. In other words, you don't need an expanded balance sheet. You don't need more credit at the Fed. You need that bill to pledge as collateral on this quadrillion dollars of derivatives.

[00:05:21]And that's what's happening. So, how do I get a bill if I'm Deutsche Bank or Credit Suisse or UBS or UniCredit or Barclays or anybody else? I need dollars.

[00:05:33]Those are the bills are denominated in dollars, so if I want to buy them, I got to get some dollars. So, there's this huge bid for dollars that can be used to buy the Treasury securities to pledge as collateral to prop up the balance sheet.

[00:05:45]And that's the That's what's going on behind the curtain. That's the plumbing.

[00:05:48]That's why the dollar is strong even though everything about the US economy is weak, meaning recession, long-term depression, >> [music] >> deficits, trade deficits, political dysfunction, borderline civil war. It's all bad, but if I'm Deutsche Bank, I need those dollars to buy treasury bills to prop up my balance sheet. But if you can't get it or you can't get it at a price or the dollar gets too strong, etc. or the yields get negative, etc. etc. What happens is and this is happening, the banks are reducing their balance sheets. And and it's just a matter of time in my view, not guaranteed, but one could see a situation where suddenly some major player goes goes bankrupt.

[00:06:30]They can't meet a collateral call and or a bank gets into stress or there's a run on the bank. Now we're back to 2008. This wouldn't look like 2020. This would look like 2008 except worse.

[00:06:42]Here, the supply side we we kind of talked about. So, energy shortages because of the Biden energy policy, you know, empty shelves, the supply chain breakdowns, bottlenecks at the Port of Los Angeles, not enough truck drivers, higher fuel prices get passed along. I mean, there's everything arrives by truck at the end of the day.

[00:06:58]It could come by boat or train, but the at somewhere in that delivery chain those those transportation channels, there's a truck and they run on diesel.

[00:07:10]>> [music] >> And when when the price of diesel goes up, the price of everything in the truck goes up because you got to factor the delivery cost into the cost of the counter. So, that's that's kind of what's going on from the supply side.

[00:07:23]Demand side inflation, what's called demand pull inflation, >> [music] >> is mostly psychological. In other words, consumers get it in their heads that prices are going up for whatever reason.

[00:07:35]Maybe they actually are going up and they extrapolate from that or they have other reasons for believing that. And so what they do is they pull the demand forward and and I lived through this in the '70s. This was what was happening in the 1970s.

[00:07:47]Um, you want to buy a refrigerator, a car, or you know, a new suit, or clothes, or anything. And you go, "You know what? I better go buy it now, right now, because it's going to be if I wait 3 months or 6 months, it's going to be a lot more expensive." So you do, but what you're doing you're pulling all that demand forward and you're and you're it feeds on itself. Prices are going up because there's more demand, uh, you know, possibly combined with uh, supply shocks. And then when the prices go up, it validates the narrative. It's like, "I see, I told you, prices went up, better go buy more." And it just feeds on itself. So, but they're very different. So the Fed, you know, you it's one thing to say the Fed can't do anything about the supply side inflation. The Fed can't do anything about it. The Fed doesn't drill for oil, they don't drive trucks, they don't pilot ships, and they don't [music] work farm equipment. They can't do anything about it. They can do something about the demand side, which is destroying demand. So So now we're in a situation.

[00:08:40]By the way, we're not we're not all the way to demand-pull inflation yet. In the '70s, it also started on the supply side with the Arab oil embargo in 1973, then there was a second embargo in 1979 from the Iranians. So those supply shocks did tip over into the demand side, and then it just has a life of its own.

[00:09:02]We're not at that point yet. We're getting dangerously close. They We definitely have it from the supply side. It hasn't yet uh, affected the consumer side, but in fact, consumers are pulling in their horns. I mean, you know, they say the the the cure for higher oil prices is higher oil prices. In other words, if the price goes up, people will drive less. Uh, or if you lost your job, you might not be driving at all. So there's another way for those prices to come down, which is the high prices themselves destroy demand by themselves.

[00:09:34]Uh, and then that results in lower prices. And that is happening. We have seen inflation come down a little bit. I know it was higher than a lot of people expected beginning in the middle of last year, but they are starting to come down a little bit right now. But the demand side of it has not yet caught fire.

[00:09:52]But there is something else the Fed can do. They can destroy demand. So, how do they do that? Well, raising interest rates. So, what happens? Credit card rates go up, mortgage rates go up, new housing purchases slow down, car financing, leasing rates go up. So, people stop buying new cars, etc. If you do that enough, you can you can destroy demand, but it's at a very high cost cuz what are you doing? You're putting the economy in a recession. So, can the Fed deal with supply side inflation? The answer is yes, by destroying demand and putting the economy in a really severe recession. So, nice job, Fed. That's That's between a rock and a hard place.

[00:10:29]Let it go, and you know, it'll take a long time to fix the supply side, or crush demand so much that it fixes itself, but at a very high cost. And the Fed is doing the latter.

[00:10:41]>> [music] >> It's a very, very imperfect, blunt instrument, but they are destroying demand. Now, so here's here's the policy question. Does the Fed know what they're doing? The answer is always no. They never know what they're doing. They pretend they do, they say they do, but they don't really. [music] Do they understand what I just said? Not really.

[00:11:00]>> [music] >> So, what are they going to do? They're going to keep raising rates because they got to crush inflation. And that's what Volcker did. Leave aside whether that was really the problem, but that's what he did. So, Powell is going to keep raising rates, and they may raise them 75 basis points in September, again in November, again in December, into 2023.

[00:11:17]And you're like, wait a second, Jim. You said we're in a recession, and unemployment's going to start to go up, and [music] there's demand destruction because of higher interest rates, and that may result in declines in housing prices. The The inflation may cool off.

[00:11:31]So, why is the Fed raising rates into weakness?

[00:11:35]And the answer is cuz they don't get it.

[00:11:36]They're always the last to know, and they're very political. Don't let anyone tell you that the Fed's not political.

[00:11:42]So, here we have the situation where the inflation's coming from the supply side.

[00:11:46]Fed can't do much about it. They can destroy demand, but that'll throw us into a recession. So, why are you raising rates into what may be both a coming recession and a global liquidity crisis, which we just talked about? The answer is that's crazy, you shouldn't do it, but it's the Fed and they probably will.