Transcription
When the crisis is bigger than the Fed, when the Fed bailout doesn't get you anywhere because it's already been priced in and this thing is really out of control. I think we're at that point. That is one more reason to own gold.
Right now everyone's holding their breath, walking on eggshells, and pretending there's nothing wrong, but there's a serious problem there. And we've got the wars, and escalation. So, looking at, you know, the price of oil, the Persian Gulf, Ukraine, private credit, dollar shortage, over-leveraged, and AI bubble.
But the Fed money printing is sterilized cuz the Fed prints money by buying Treasury securities, so the Goldman and Morgan Stanley deliver the Treasuries to the Fed, and then the Fed gives them cash that comes out of thin air. Huge crisis in private credit. Now, private credit is just old wine in new bottles, as they say. It's just the junk bond market. But if there's a market distress or disorderly markets in our sole discretion, we reserve the right to not give you your money back. People usually gloss over that, but it's there, and that's what they're doing. Now, people are saying, "Give me my, you know, whatever, 500 million back." You can have 5%. You know, here's 2 and 1/2 million, but we're keeping the other, you know, whatever. The assets are collapsing, but nobody wants to market and the market is in the accountants get involved.
>> That we're getting close to the point of a financial crisis becoming bigger than the Fed. Could you unpack what you mean by that? And ultimately, is excessive Fed and government intervention in the economy and financial markets going to worsen a potential crisis up ahead?
>> Well, I say, uh, in terms of financial crises, I I I've been around long enough. I say, if if I wasn't there, it didn't happen. Uh, I go back to, uh, uh, 1974 with the failure of Bankhaus Herstatt, Germany, um, uh, you know, early 1980s with the, uh, um, um, you know, the Argentina, Brazil, Chile, the so-called ABC banking default and sovereign banking. Uh, 1987, the Dow falls 22% in one day. Not a month or year, one day. That would be the equivalent of, uh, uh, let's see, about 15,000 points in one day. That's what happened. Um 1994, the tequila crisis. 1998, Long-Term Capital Management, Russia crisis. I negotiated the bailout. I was the the lead lawyer for LTCM working with 100 working opposing 140 lawyers from 14 Wall Street banks. Um you know, and then the 2008 financial crisis, I was an advisor to uh uh the McCain campaign. I was I was on my call. It was in It was in late August. It was after the US government bailed out Fannie and Freddie. And the McCain team said, "Great. The crisis is over. Uh now we can talk about the war in Iraq." Cuz that's what McCain wanted to talk about. And I said, uh you know, um you know, pretty pretty you know, John Taylor and other people were on the call.
>> The biggest financial threat may be the false belief that central banks can always restore confidence. Jim Rickards notes that every major crisis since the 1970s required increasingly aggressive intervention, exposing a dangerous dependence on institutional rescues. Markets have quietly learned to expect bailouts, creating even greater systemic fragility. Investors should recognize that confidence itself has become the asset at risk. Next, Jim Rickards reveals why political leaders ignored warnings until the collapse became impossible to hide.
>> I said, I said, "Sorry, guys. The crisis is not over. You are not going to make it to election day without this thing getting much worse. You can see the dominoes falling." Everyone I'll say everyone, at least some of us knew that Lehman was the next next one to fall. I said, "The crisis is not over. You need to prepare now. Have a speech ready. Get your guy on the steps of the Treasury with a four-point plan. Just make up the points. It doesn't matter. The American people are going to want to be reassured." I was not invited back. Then the crisis came. And um, ran around with it like a chicken his head off. Obama didn't actually know any better, but he was smart enough to keep his mouth shut. And then McCain said, "I want a meeting at the White House." And Bush said, "Well, if I invite McCain, I got to invite Obama because uh, you know, it's it's an election going on." And they did. Uh, and Obama came off looking very calm and cool. Even I got to I'm not saying he's an expert, I'm just saying he he played it cool. McCain looked scary. That was the day the Lehman Brothers weekend and then the White House meeting. That's when the polls crossed. McCain was leading in the polls up until then. And then Obama went ahead, McCain went down, and never looked back. So, maybe they should listen to me in terms of a winning winning the election. But my point is I've been through been through it all. Uh, and you know, I I wrote a book in 2019. I predicted the COVID crisis. That was my book Aftermath. Um, so uh, so what uh, what are we looking at now?
>> Public confidence often collapses long before financial markets finish falling. According to Jim Rickards, policymakers had visible warning signs before Lehman failed. Yet political messaging took priority over preparing the public for escalating risk. The disconnect between private expectations and public reassurance repeatedly leaves ordinary investors exposed. Protecting wealth begins by watching actions instead of official statements. Next, Jim Rickards exposes why today's warning signals resemble another moment policymakers insist is under control.
>> What I what I've seen, I've seen the Fed bailouts. I'll just say something interestingly, the money came from Wall Street. The Fed orchestrated it, just to be clear about that. But we were like, "Hey, we're not a bank. We're a hedge fund." Um, but even in 2008, Morgan Stanley and Goldman Sachs were just days away from failing. I mean, that was the dominoes were still falling. Lehman, yeah, but Morgan Stanley was going to be next. And the Fed turned them into bank holding companies in in less than 48 hours. Now, I've done Fed applications that took 2 years cuz they didn't like what we were trying to do and they just dragged their feet. Okay. This was like 2 days. Hey, boom, you're your magic wand. Hey, you're a bank holding company and then the Fed bailed them out. So, um and then but as recently as 2023, we had Silicon Valley Bank. Um now, what happened there? I the Sil- on a Friday night, um I think this was in May. I got to check the exact dates, but on a Friday night, the FDIC issued a press release and said, um Silicon Valley Bank has been taken over by the by the FDIC. Um and we're only paying insured deposits. Which is $250,000 per person. You have husband and wife can have multiple accounts, whatever, but you know, low six-figure insurance. We're only paying that. Everybody else, if your deposit is higher than that, we're going to give you a certificate and we'll get back to you in terms of what it's worth. You know,
>> Weekend policy changes rarely happen unless officials believe Monday could become uncontrollable. What Jim Rickards is highlighting is how regulatory rules suddenly became flexible once major institutions faced failure, revealing where systemic priorities truly sit. Retail investors are taught markets are governed by discipline, yet history shows emergency exceptions arrive when the financial plumbing breaks. Next, Jim Rickards reveals why the Silicon Valley Bank rescue changed the bailout playbook more than most people realize.
>> We got to look at the assets, figure out the bad assets, you know, have it have a fire sale, whatever, get some money, do a pro rata, but we'll get back to you on that. Well, that weekend I called the the billionaire crybabies came out in force. Um this guy uh um uh Well, but one of the big hedge fund guys. They're all banging on the White House saying, "You don't understand. You know, Silicon Valley go bankrupt. They're all these startups. They got $3 million at Silicon Valley Bank. It's their working capital. They can't pay the rent. They're going to have to lay people off." They ignore the fact that 95% of these firms fail anyway, with or without a financial crisis. But, they basically Bill Ackman is the name I was trying to think of. He was He was one of the big crybabies, but there were others. Um Anyway, they said to the White House, "You're going to shut down Silicon Valley and all these wonderful startups if you don't do something." So, they did. And so, Sunday night before the market opened the next day, the FDIC came out and said, "Just kidding. All the deposits are insured, unlimited amounts, no problem." Um and then the Treasury said, "Sorry, the Federal Reserve said, 'Hey, all you banks, all you other banks, some of them, you know, upwards of a trillion dollars in assets or 900 billion or whatever, who have Treasury securities.'" And by the way, at this point, because interest rates have been going up and so many banks bought Treasury securities with the yield to maturity of like 1 and 1/2 to 2% because that's where the rates had been earlier.
>> A single weekend reversed what regulators publicly declared just days earlier. And the timing deserves attention. Jim Rickards' argument suggests emergency decisions are often driven by contagion fears rather than consistent policy principles. Once authorities abandon their own limits under pressure, markets begin assuming future rescues are guaranteed. Savers should understand that expectations shift long before official rules do. Next, Jim Rickards unravels why those guarantees may have exhausted the Fed's remaining credibility.
>> Those securities were only worth 70 cents on the dollar. Well, that's what, you know, rates go up, prices go down. It's that simple. So, the the the Fed said, "Send us your Treasury securities, we'll give you par." So, it's worth 70 cents on the dollar, but we'll give you 100 cents on the dollar as a 1-year loan, and then, you know, low interest, and then pay us back a year from now, but meanwhile, don't worry about it. So, so the the Fed basically guaranteed every Treasury security in the system at par value, even though they were worth 70 cents on the dollar, and the FDIC guaranteed every bank deposit in the system, regardless of the deposit insurance limit, which was only $250,000. And by the way, there were some crypto exchanges that had multi-billion-dollar accounts at Silicon Valley Bank. And And uh Cisco was was not a crypto exchange, but they had they had that kind of an amount on deposit. So, I I I looked at that, and I thought to myself, "Okay, Fed and and Treasury and FDIC, you just guaranteed every Treasury security in the in the country owned by a bank, and you just guaranteed every deposit in the country regardless of insurance. What else have you got?" Meaning, you can't Your guarantees can't get any bigger than that when you guarantee all the deposits and all the Treasuries. So, um So, then I said, "Well, what happens with the next crisis? What Again, what other rabbits can you pull out of a hat?" And then just to summarize, Jesse, yes, there've been a series of bailouts. I've seen them all, going back uh 40 45 years at this point, maybe longer, but um each bailout is bigger than the one before. And
>> Unlimited guarantees sound reassuring until investors ask, "What remains if an even larger crisis arrives?" This is where Jim Rickards' thesis shifts from individual bank failures toward the credibility limits of government backstops themselves. Every expanded rescue reduces future policy flexibility, while increasing moral hazard across the financial system. Wealth preservation depends on preparing before confidence in guarantees is tested. Next, Jim Rickards exposes the uncomfortable question policy makers cannot easily answer anymore.
>> There's going to come a time when the crisis is bigger than the Fed, when the Fed bailout doesn't get you anywhere because it's already been priced in and this thing is really out of control. I think we're at that point um and it's one more reason to own gold.
>> And what does that crisis as it eventually arrives mean for both Wall Street and Main Street in your view? Are we looking at something akin to 2008? Is this going to be worse? And which asset categories do you think will suffer the most in the aftermath? And and where would you see potential opportunity and perhaps picking up the pieces after a massive correction like that?
>> Possibly worse and the reason I say that is because uh you know, 2008 turned into a global financial crisis but as we all recall it started in the subprime mortgage market. There were trillion dollars of subprime and so-called all day mortgages and uh but what a lot of people say well we could have 20% losses it's only 200 billion what's the big deal. What they ignore was that there was there were 5 trillion of derivatives piled on top of the 1 trillion of junk mortgages and that's what got you know, AIG financial products and Goldman and everyone else uh in in pretty deep trouble. Um so uh but you know, it was huge and it got the Treasury and the Fed involved etc. but now we're seeing it in multiple dimensions. There is a global dollar shortage and people say how could that possibly be with all the Fed money printing?
>> The next financial crisis may not begin where everyone is looking. Jim Rickards notes that leverage not the original asset transformed a contained mortgage problem into a global meltdown in 2008. Today's risks are spreading across several markets simultaneously, making diversification alone a weaker defense than many assume. Gold becomes relevant when confidence in financial engineering starts fading. Next, Jim Rickards reveals why dollar shortages can exist despite years of aggressive money creation.
>> But the Fed money printing is sterilized cuz the Fed prints money by buying Treasury securities, so that Goldman and Merrill Stanley deliver the Treasuries to the Fed, and then the Fed gives them cash that comes out of thin air. Okay, that's money printing. But then they take the money and give it back to the Fed in the form of excess reserves. So all you're doing is inflating the balance sheet of the Fed on both sides. You're not creating money that does anything for the economy. It's not stimulus. That's nonsense. Um but uh but in terms of M1 and M2, there is a severe dollar shortage. That goes back to what we said earlier about selling gold for dollars cuz to buy oil cuz you're short of oil and dollars. Um so that's uh that's a problem, but we have a uh uh huge crisis in private credit. Now private credit is just, you know, old wine in new bottles as they say. It's just the junk bond market. But instead of junk bonds and Mike Milken and, you know, what they were driving all that stuff in the 1980s, what we have are funds that invest in loans basically to to uh to junk credits. Uh we've seen some big bankruptcies in Tricolor and uh a couple of instead of subprime mortgages, subprime auto loans, but it's not limited to that. Massive massive uh you know, hundred billion dollar and more loan portfolios to these hyperscalers and AI data center builders, um you know, etc. And all that is collapsing now. Because they're funds, uh you don't actually see Well, the some of the some of the the borrowers have gone bankrupt, but you don't actually see the distress because it's it's boxed in the fund, but
>> Money printing sounds inflationary until you examine where the money actually ends up. According to Jim Rickards, reserves trapped inside the banking system create a very different reality than cash flowing through the broader economy. Meanwhile, private credit risk continue building largely outside public attention, where transparency is far weaker. Investors should watch hidden leverage instead of comforting headlines. Next, Jim Rickards reveals why private credit funds may conceal losses far longer than public markets can.
>> happens is the investors gave notice to the fund managers, who are the biggest names. It's KKR, BlackRock, Blackstone, um uh and others, Apollo. I Again, these are the biggest names in the uh in the industry, saying, "I want my money back." And the managers put up gates, and they say, "No." And you know, I've I've I've written scores of uh private offering documents, and I've read hundreds. So, I know what's in the fine print. But it starts out, you know, "Here's what we do, and here's how much money we're going to make, and here's the notice period and how you get your money back." And somewhere around page 15 in fine print, it says, "Oh, by the way, if there's a market distress or disorderly markets, in our sole discretion, we reserve the right to not give you your money back." Uh people usually gloss over that, but it's there, and that's what they're doing. So, now people are saying, "Give me my, you know, whatever 500 million back." And the And the managers are saying, "You can have 5%. You know, here's here's 2 and 1/2 million, but we're keeping the other, you know, whatever, 400 and uh you know, 90 97.50 um million, um and we'll get back to you." And that's what they're doing. So, now that doesn't mean it's all good in the asset side. The assets are collapsing, but nobody wants to mark them to market, cuz then the accountants get involved, and they say, "Hey, this guy just marked this thing down. You own the same thing. You got to mark it down, you know. Why is your value to and then the whole thing implodes.
>> Liquidity disappears long before insolvency becomes public. And gated withdrawals are often the first warning. What Jim Rickards is highlighting is that private funds can legally delay redemptions, masking deteriorating asset values from investors and headlines alike. Institutional portfolios may appear stable simply because losses remain unpriced rather than resolved. That distinction matters when protecting long-term wealth. Next, Jim Rickards exposes why hidden valuations can suddenly become impossible to defend.
>> Right now, I'm just holding my breath, walking on eggshells, and pretending there's nothing wrong, but there's a serious problem there. And then, yeah, but I keep going and then we've got the wars we talked about, um an escalation. So, looking at, you know, the price of oil, the Persian Gulf, Ukraine, private credit, dollar shortage, uh over leverage, and AI bubble. Uh I'm I'm not a not against AI, I've written a book about it, but uh uh I I see four or five different uh
>> [clears throat]
>> stress points or bubbles all at the same time. Not just one. Any one of them could cause a crisis, but you combine them, you're talking about a I use cliches, but the mother of all financial crisis.
>> And so, given everything we've discussed so far today, how would you approach portfolio construction in the current market environment? Would you be heavy in cash in anticipation of a large drawdown in the in the broad market, which would hit all sorts of other sectors as well? Do you think there's areas of the market that present an attractive value proposition regardless? Would love to hear your thoughts there.
>> Sure. Uh I'd have 10% gold. We have to revisit that. We talked about that at the beginning of the interview. So, I'd have 10% gold, not 50%. You know, but 10% is a nice slice. Um I'd have 30% cash. That's a big allocation, but uh people say, "Well, cash has a pretty low yield." Well, yeah, actually higher than it used to be, but but that's not the point.
>> Markets often ignore simultaneous risks until they begin reinforcing one another. Jim Rickards' argument suggests today's danger isn't a single bubble, but several fragile systems interacting under mounting geopolitical and financial pressure. That combination increases uncertainty far beyond what traditional portfolio models typically assume. Investors preserving capital should prepare before correlations unexpectedly move together. Next, Jim Rickards reveals why holding significant cash could become a strategic advantage instead of dead weight.
>> Cash has embedded optionality, meaning you have an out-of-the-money call on every asset class in the world. When things collapse, you're the one who can go shopping instead of selling assets cuz you're in distress, you're the one who can go shopping for the bargain. So, uh and also cash, um don't rule out deflation. We talked about inflation, but uh so cash is a very robust asset that gives you a lot of optionality. Uh I like real estate, not not downtown commercial real estate, but uh farms and income-producing real estate, residential real estate, uh that'll do well. Um Treasury notes, I think interest rates are going to come down a lot. They they may go up a little before they come down, but you know, rather than picking an exact top, you don't need to do that. Uh depending on your appetite for volatility, shoot in uh 10-year notes, 5-year notes, 2-year notes, etc. When interest rates come down to the 1% 2% level, which I expect, you're going to have really nice capital gains on those, and they're safe and liquid, assuming you're not Russia. Um so, uh that's a good asset class. In terms of stock market, I would lighten up. Um you don't have to get out completely. I would get out of AI, I'd get out of um hyperscalers, get out of software, um and uh some other sectors. Sectors I like, defense um is is going to do well, and healthcare. You know, I look at we all look at employment statistics um and a lot of them break here the job gains, job losses, and they break down by category, etc. For job gains, healthcare is always number one.
>> The best performing asset after a crash is often the one that gave you the ability to buy, not chase returns. This is where Jim Rickards' thesis shifts from predicting markets toward preserving flexibility when valuations reset. Cash, selective real assets, and quality government bonds can create opportunity while speculative sectors struggle. Patience itself becomes an investment advantage. Next, Jim Rickards unravels which industries may quietly benefit despite broader market weakness.
>> It's not tech uh technologies up there. You know, other manufacturing, other uh service occupations. You know, Chamber of Commerce, but we should have some of those categories are pretty high, but healthcare is always number one. And that's for a lot of reasons, but one of them is demographics. I mean, the the oldest baby boomer is turning 80 this year. You know, happy birthday, but the correlation between that and a whole, you know, an 80 million people must declining now, but 80 million baby boomers approaching their 70s and going into the 80s with uh sad to say, you know, Alzheimer's, Parkinson's, dementia, um heart attacks, you know, and and more. Um and then help then they the healthcare providers, you know, could be in their 30s or 40s or whatever, but they they are I can tell you from personal experience, they are so in demand. The talented ones can get jobs in a heartbeat. So, I like that sector. Oh, sorry. I should also I should also mention energy. You know, there's Chevron uh Chevron's Exxon Mobil. So, energy, defense, healthcare, uh I like I like uh natural resources, mining minerals, agriculture, I like. I'd be out of uh AI, um hyperscalers, uh software, and uh and whatever else is associated with the bubble.
>> The strongest long-term investments may come from demographics rather than the latest technology narrative. Jim Rickards notes that healthcare, energy, agriculture, and natural resources benefit from structural demand that persists regardless of market enthusiasm or speculative cycles. Investors chasing fashionable sectors often overlook businesses supported by unavoidable real-world needs. Durable trends frequently outperform exciting stories over time.