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"It's just money printing"

June 22, 2011

James Rickards explains to Becky Quick who gets burned when countries and banks are bailed out.

Quick: You make up the money, it’s monopoly money that you’re playing with. who gets burn in the end? is it taxpayers around the globe that get left holding the bag?

Rickards: It’s a form of inflation, savers, pensioners, people in annuities, average people. same thing happens. I’m saying over time, the thesis of financial repression, we don’t need hyperinflation. 4% a year for 15 years is enough to cut the value of savings in half.

Quick: The people who have been doing the right things by saving money and making sure they haven’t been ridiculous with throwing their money around and buying stupid things, they will be the ones who suffer the most?

Rickards: Yes. that’s how governments get out of this. Having said that, there are alternative pasts including chaotic outcomes. Is the fed out of bullets? they’re not. Historically in ’33 and ’71, you can conduct open market operations in gold, to bid the price of gold up to $3,000 an ounce, all of the other commodity prices adjust accordingly. cheapen the dollar, you cheapen the debt.

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