Rickards: The Coming Currency War With China and What to Do About It

In 2009, Currency Wars author James Rickards was asked to help The Pentagon conduct a financial wargame. In the scenario he devised, China and Russia teamed up to hoard gold and put forth a gold-backed currency based out of London. It “ran the US dollar off the road.” At the time, Rickards said the wargames participants, from the Treasury, CIA, FBI, etc. laughed at him. Because “there was no way that was going to happen.”

Since 2009, China and Russia have tripled their gold holdings. Rickard contends a currency war is on the way.

• The dollar continues to fall against global currencies and the Trump administration has signaled that they welcome a weaker USD
• China will likely fight back, devaluing their currency to make their exports cheaper to foreign buyers. In this environment, Eurozone countries may respond in kind
• Currency wars can last 10, even 15 years at a time, and tend to take place when countries have too much debt and not enough growth…exactly the condition the US is in now
• It’s a negative-sum game; everybody loses over the medium to long-term. The only upside is a brief, meaningless, unsustainable, short-term economic uptick

Rickard’s #1 recommendation to the US? Buy gold. The Chinese and Russians are preparing for an international monetary collapse. The US is likely to be left in a very precarious position should it not take similar precautions.