MoneyNews
By Dan Weil
The world currency system is riding down the road to catastrophe, says James Rickards, senior managing director of Tangent Capital Partners.
The world already has entered a currency war that began in 2010 on the heels of the Federal Reserve’s massive easing program, he tells Wall Street Journal Digital Network. Since then, plenty of nations have joined in, including Brazil, Switzerland and Japan, says Rickards, author of “Currency Wars: The Making of the Next Global Crises.”
“All major central banks are easing,” he says. “Eventually so much money will be printed that this will lead to inflation. The endgame is collapse of the international monetary system — sometime sooner than later.”
Editor’s Note:
In both the United States and Japan, the central banks are trying to “import inflation” to get their economies going, rather than trying to boost exports, through a weaker currency, Rickards says. “They’re scared to death of deflation. They’ve cut rates, and the last resort is to cheapen their currencies.”
The European Central Bank is actually doing the right thing, easing for liquidity reasons rather than to depress its currency, Rickards notes. The euro has risen to a 14-month high against the dollar as a result, and he thinks it can keep ascending.
His currency view makes Rickards a huge bull on gold. His long-term price estimate is $7,000 an ounce, more than four times the current price of $1,677. Gold could trade in a range between $3,000 and $10,000, Rickards says. “We’re not going to get there all at once.”
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