EU vs. US

James Rickards Favors Euro as Future World’s Reserve Currency

 

US Economist James Rickards’ New York Times best-selling book, The Death of Money: The Collapse of The International Monetary System, is an extensive reference work on the reasons the dollar will cease to be the world’s reserve currency and provides an overview of the current landscape of the international monetary system.

Concerning the dollar collapse, James Rickards stated that it is inevitable, and at this point he is “waiting for an avalanche or a trigger for it to come tumbling down.” In my interview with James Rickards I asked him is there the possibility, of a role reversal between the EU and US after the dollar collapse.

“Yes and it is certainly a possibility. I won’t say the only possible outcome, but it is a very strong possibility. The European monetary zone, the euro zone already is larger and more powerful than the US except for the fact that its fragmented into these 18 separate parts. They’re moving very quickly to unification; they’ve taken large steps …. They’ve got more steps in preparation. So the more integrated they are the more they will look like what’s called a United States of Europe.”

During my interview, James Rickards made another prediction and became the first economist to answer the question “What currency will replace the dollar?” James Rickards forecast that if “A catastrophic collapse of the dollar does not take place the euro may replace the dollar anyway.”

James Rickards supported his forecast by stating, “ The fact that Europe is making structural changes others are not; Europe is attracting Chinese capital. Europe is unifying Europe is doing pretty much everything right, so over time the world may find the euro as a very attractive alternative to the dollar. Actually, the currency already is… the problem isn’t the currency; the problem is the investable assets. Anything can be a trade currency; the euro is a trade currency, … but a reserve currency is different to be a reserve currency you need a large pool of investable assets, things that I can buy and put in my portfolio, and that’s where Europe actually falls down today. …they are broken down into these 18 separate debt markets they don’t want to have a unified sovereign debt market. You can see that coming.”

James Rickards also talks favorably of the ECB versus the US Federal Reserve, which he speaks negatively concerning Fed decisions. He stated concerning the ECB, “ you have a central bank that actually sticks to what it’s supposed to do, which is to maintain a sound currency and maintain price stability and doing a very good job of that.

James Rickards speaks very highly of the euro and favors it because of its gold reserves. In talking about the system after the dollar collapse James Rickards predicts, “It is entirely foreseeable what the new system look like and who the powers are who will be sitting around the table.”

“One of the points I make is that you think of it as a poker game as a game … and I’m not saying were automatically going to have a gold standard, but gold will be your pile of poker chips and gold is going to determine whether you get a seat at the table or in the backroom sitting against the wall.”

“Interestingly Europe, the European monetary zone that backs the euro-the 18 countries …they have the largest pile of chips, they have over 10 thousand tons of gold. The United States comes in second, we have about 8 thousand tons of gold, after that believe it or not is the IMF, the International Monetary Fund, they have almost 3 thousand tons of gold.”

“China is playing a very interesting game, China officially says that they have 154 tons, they said in 2009, but there is very good data that they have secretly acquired thousands of tons of gold since then. That’s not some deep dark conspiracy, we can see that with hard data, we can see it in Chinese mining operations and Chinese imports through Hong Kong and sources, and these are all discussed in Chapter 9 and 11 of my book, The Collapse of Money, so it is all very well documented. You can put China for 3 or 4 thousand tons of gold at this point, and they are still acquiring more.”

“So the collapse is coming, it is completely predictable, gold is going to determine who gets the biggest voice in the new system. And Europe has the largest pile of gold, so they are going to be the biggest player in this reset.”

 

This article is one of a three-part series based on my interview with James Rickards

James Rickards, “Europe is Doing Everything Right”

Euro Will Replace Doomed Dollar

EU Bond Market Will Trigger Dollar Collapse

 

 

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