QE 5

James Rickards: Fed Preparing For Next Recession

James (Jim) Rickards, an American lawyer, economist, investment banker, and best-selling author, shared what he thinks the Federal Reserve is up to these days during a recent interview on “The Bottom Line with Henry Blodget.” Rickards, who wrote national-bestseller The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis last year, informed viewers:

Here’s what the Fed is trying to do. They need to normalize the balance sheet, meaning get the balance sheet down to maybe $2 trillion. Right now it’s over four. It’s coming down a little bit. It’s a long way between $4 trillion and $2 trillion, bearing in mind that in 2008 it was $800 billion. And they need to normalize interest rates, which means getting from 1% to 3-3.25%. But the question is how do you get there? So the Fed is trying to raise interest rates 25 basis points, four times a year every March, June, September, and December through 2019 to get to 3.5% or so and bring down the balance sheet. They’re going to be reducing it by the end of next year by $50 billion a month, which is a lot. And there are some estimates that the impact of that is the equivalent of a 1 percentage point rate hike, because it is a form of tightening- you’re reducing the money supply. You’re reducing base money. The question is, why are they doing it? Why are they doing it in kind of a relatively weak economy? The answer is they’re preparing for the next recession. They want to run the playbook again, which is cut rates and then go to QE4 and QE5. How do you prepare for the next recession without causing the recession you’re preparing to cure? That’s the finesse, that’s the problem, and I don’t think they can do it.

(Editor’s note: Bold added for emphasis)

The current U.S. economic expansion is now the third-longest since World War Two.


“The Fed is trying to prepare for the next recession without causing it”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

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