Monday, January 9, 2017

Gary North Goes Nuclear On Jim Rickards

Jim Rickards is out with a new book, The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis.

Apparently, in the new book, Rickards has a lot of snide remarks about Austrian school economics.

This has caused Gary North to justifiably go nuclear. Some snippets from North's attack:
He [Rickards] was the legal spokesman for [Long Term Capital Management]the high-leverage firm that engineered the biggest bankruptcy of the 1990's.

The loss required a $3.6 billion bailout by the banks that had lent LCTM the money.

He talks about his five years at LTCM in Chapter 4. He refers to it as a spider web (p. 123). But the market ate the spider. The partners were the biggest investors. They lost everything. "Every big bank in the world wanted a piece of the action" (p. 127). They lost billions.

His point: the smartest guys in the room were economic idiots. Leverage ruined them.

Austrian economics had warned about this back in 1912. Nothing new here.
 Did the experience make Rickards a man who could forecast the economic future? No. In 2009, he predicted imminent hyperinflation.His entry on Wikipedia says:
On March 24, 2009, Rickards presented his view at a symposium at Johns Hopkins, that the U.S. dollar was facing imminent hyperinflation and was vulnerable to attack from foreign governments through the accumulation of gold and the establishment of a new global currency.
If this is scientific economics, include me out.
Yet he keeps writing best-selling books about the imminent collapse of the financial system.
Rickards says we Austrians are hopelessly out of touch. He, in contrast, knows what works.
And what did [his] tools reveal to him? That America was facing hyperinflation in March 2009.
 My theory: his zero-context use of the words "behavioral psychology, complexity theory, and causal inference" is public relations puffery. In the South, it is part of a program called "puttin' the shuck on the rubes." It goes like this: "Step right up. Let me show you how my fully tested forecasting elixir, with its unique, 100% scientific ingredients -- behavioral psychology, complexity theory, and causal inference -- can cure what ails you!"
Read the full demolition here: Why I Don't Take Jim Rickards Seriously.

(ht Christopher Barcelo)


  1. Bob - thanks for linking to this article.

    This is timely for me, as I'm currently reading Rickards' book The Big Drop (released to subscribers of his Strategic Intelligence newsletter).

    The annual subscription fee for Strategic Intelligence was marginal. Since Rickards is connected to all of these supposed "insiders", I wanted to hear what he said behind a paywall.

    But all I've seen from his writing - and the publisher of Strategic Intelligence - is a convoluted mess of complexity theory and monetarist school economics. For example, I've twice challenged them on money velocity as a proxy for consumer demand, even using a Rothbard quote from Man, Economy, and State (since Rothbard can always argue more persuasively than me) to call out money velocity as an absurd concept.

    And last night I ran across this from Rickards in the book The Big Drop: "I wish the central banks could go back to just being boring, opaque, marginal institutions that took care of the money supply and acted as lender of last resort."

  2. I guess Gary learned his lesson in 2000, which is nice. In 1999 and earlier he was making apocalyptic warnings of a similar sort. I think he did, indeed, buy a small farm. It all had something to do with computers not being able to handle four digits when '99 rolled over to 2000 (the Y2K scare). All the Western government were to fail. Digital money would collapse.

  3. RW had Rickards on as a guest a few years back. It seemed to me that he knew his shit and was very well connected and informed. That doesn't mean his economics are any good, but Wenzel and Rickards agreed on a lot if I remember correctly.

  4. The government is creating a lot of money, but the bulk of the money supply is from bank credit, which may contract. I would think one day our profligate spending has to show up in a currency devaluation though right?