James Dines has been in the business of making bold calls for over 50 years. In this deep-diving interview, he minces no words about the dire risks the US economy - and the world at large - faces at this juncture.Simply put, he sees the excessive credit in the financial system as having placed the global economy on a collision-course with hyperinflation.
Unlike past periods of turmoil, there are no truly 'safe' places for investment capital to hide. Geographic markets and almost all asset classes are positively correlated these days. They share many of the same risks and if a systemic crash occurs, they will crash together.
At this point, says Mr Dines, you want to invest in assets that can not be printed away by government desperation. You want to hold hard assets; "wealth in the ground" as Dines says (physical commodities, mining companies, etc). They're your best best to make money faster at a rate faster than inflation is going to happen.
On Government's Odds Of 'Saving' The Economy
They are borrowing money with no intention of paying it off. Politicians hope to be safely dead by the time it hits the fan. This year alone America is going to be running a deficit of 1.3 trillion dollars. Most people do not really even grasp how much a trillion dollars is. One trillion dollars. If you spend one million dollars each and every day from now on, back to the time of Jesus’ birth, you could not spend one trillion dollars. Right now America’s debt is approaching 15 trillion dollars, which are numbers used for astronomy. How is America going to earn that? With Facebook and Twitter corporations? Our industrial base is gone. Entitlements of fixed forced payments are a large and growing section of it.
On Resource Scarcity
Energy is, of course, extremely important. We have been writing in recent years about the coming resource imperialism. I founded the neo-Malthusian school of economics, which says that the planet is limited and the population is soaring. By brute logic, it is obviously unsustainable. You cannot just keep having more and more people on the same planet without, someday, sooner or later, running out. The nations that perceive this would start buying assets with that in mind. The primary example, of course, is China.
So there will come a time, in the not-too-distant-future, where the last new copper mine on the planet will be found. Hard to believe – because there has always been more – but with the world’s population soaring into the billions on an accelerating uptrend, something is going to break. Along with the currency going to break, things are going to be happening here from out of nowhere. Because when you are going at high speeds toward a brick wall in the dark, things can happen very quickly.
On Peak Oil
So the rapidly increasing demand and the shrinking supply of oil, despite any short-term oversupply, which is probably true now… is going to lead to a stratospherically higher oil prices. As soon as the military grasps that they will start needing to put windmills on airplanes, they will seize the remaining supplies and you will not be able to drive your car until the last drop. At some point there are some very disruptive changes coming to society.
On Gold
The price of gold and silver did not go up. It is the paper money that went down. Gold and silver are the ultimate money, coins of which are good anywhere in the world, no matter what is stamped on them, and that is the money. Depending on the amount of paper each nation prints is the price of gold in that particular country, or in that particular currency.
That is one way we were protected by the price of gold. Gold is the only investible asset in the world that has gone up the last 11 years without interruption, and that is because they are just running the printing presses. The more they do, the more value builds into gold and silver. Now of course, it will have its fluctuations. It went down in the 2008 crash but came right back up and made new highs. We tend to ride those out, and it is very important understanding what the main trend is. When you are really clear what is happening in the world, you know how to place your bets, instead of doing it blindly or just following casual recommendations from people.
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