Economics and National Security

JAMES G. RICKARDS SENIOR MANAGING DIRECTOR FOR MARKET INTELLIGENCE OMNIS, INC., McLEAN, VIRGINIA USA

Rethinking the Future International Security Environment Rethinking Seminar Series – Johns Hopkins Applied Physics Laboratory Marriott Residence Inn, Pentagon City Army-Navy Drive, Arlington, VA Tuesday, December 7, 2010
1min 50sec

Sovereign Debt Levels

Fault Lines in Europe – Haves and Have Nots

The Elements of Growth Is that all there is?

GDP = C + I + G + (X – M)

Whole Clip

Quantitative Easing – What’s in Your Wallet?

Dynamics of Housing Price Bubble and Collapse

When is an Asset not a Liability?

The Problem with QE, QE2, QEn

MV = pY

Velocity is NOT Constant

Fed Expansion of U.S. Money Supply

Sub-Critical and Critical States
Assume 100 People repudiate the dollar in each case in total population of 311,001,000 people

Case 1 Sub-Critical Thresholds

Case 2 Critical Thresholds 1,000 people / T= 100 1 million people / T = 1,000 10 million people / T = 100,000 100 million people / T= 10 mil. 200 million people / T = 50 mil.

1,000 people / T= 500 1 million people / T = 10,000 10 million people / T = 100,000 100 million people / T= 10 mil. 200 million people / T = 50 mil.

Sovereign Debt Rollover Risk

The Rise of State Capitalism

Theory of Classical Mercantilism Washington Consensus – Countries in Convergence Beijing Consensus – Nationalism over Economics Neomercantilism – Victory in a Negative Sum Game Cyber warfare – Currency War – Trade War – Kinetic War

The United States as Gold Superpower

Which of these is not like the others?

Central Banks: Paper versus Gold 1945-2009

The Implied Price of Gold – Window on Future

9,000 8,000 7,000 6,000 Metric Tonnes 5,000 4,000 8,133

Official Gold Holdings – Total 30,462 Metric Tonnes

7,544

3,406 3,000 2,000 1,000 0
Germany IMF Italy France China Switzerland Japan Russia All Others

2,966 2,451 2,435

1,054

1,040

765

668

Official Gold Holdings as a Percentage of Total Global Gold Holdings
United States Germany IMF
All Others 25% United States 27% Russia 2% Japan 3% Switz. 3% China 3% France 8% IMF 10% Italy 8% Germany 11%

Italy France China Switzerland Japan Russia All Others

Holdings with Eurosystem – Total 30,462 Metric Tonnes
12,000
10,798

10,000
8,133

Metric Tonnes

8,000

6,000
5,098

4,000
2,966

2,000
1,054 1,040 765 668 557 423

0

Holdings with Eurosystem as a Percentage of Total Global Gold Holdings

All Others 16% Taiwan 1% India 2% Russia 2% Japan 3% Switzerland 3% China 3% IMF 10% United States 26% Eurosystem 34%

Eurosystem United States IMF China Switzerland Japan Russia India Taiwan All Others

Gold Reserves as a Percentage of Total Reserves for Selected Countries
80.0% 75.0% 70.0% 72.8% 68.1% 67.0% 65.6%

60.0%

50.0%

40.0%

30.0% 16.6%

20.0%

10.0%

7.5% 6.0% 5.5% 1.6%
China

0.0%
Greece United States Germany Italy France UK Ireland India Russia

0.5%
Brazil

4.00%

5.00%

1.00%

6.00%

0.00% 2.00% 3.00% 5.00% Germany
GDP $3.3T / Gold $170B

4.50%

Gold Reserves as a Percentage of GDP for Selected Countries

France
GDP $2.7T / Gold $121B

2.90%

United States
GDP $14.1T / Gold $407B

2.80%

Russia
GDP $1.2T / Gold $33.4B

1.00%

China 0.80% Japan UK 0.10% Brazil Canada 0.01% 0.70%

GDP $5T / Gold $52B

GDP $5T / Gold $38.3B

GDP $2.2T / Gold $15.5B

2.30%

India
GDP $1.6T / Gold $1.7B GDP $1.3T / Gold $.017B

GDP $1.2T / Gold $27.9B

Policy and Prospects

1:35 to 5:30

THANK-YOU

JAMES G. RICKARDS OMINS, INC.
james.rickards@gmail.com Twitter.com/JamesGRickards

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