Why we may be headed for another financial crisis – the i newspaper online inews

In his book Road to Ruin, Rickards details the reasoning for his prediction, by studying the history of financial crises, the behavioural psychology of those involved, and the complexity of the financial market itself.

The former Wall Street employee – who has briefed the US department of Defence on financial threats – ignored pollsters and predicted that Donald Trump would become the next President of the United States.

Rickards talked to i about why we should see the crisis coming, the steps that should be taken to prevent it, and how the public could prepare for financial catastrophe. Andhra bank interest rates on fd Author of Road to Ruin James Rickards suggests we are headed for another financial crisis Why the next crisis could be even worse

Eight years on from the global financial crisis, Rickards suggests that nothing has been done to resolve the original causes of the collapse.

“The systems have got bigger and thus more dangerous, the central banks will not be able to stop the next financial crisis. Bank deposit interest rates They have not normalised their balance sheets or interest rates and they will have to turn to the IMF.”

“These crises have been coming sequentially and each one gets worse than the one before. Best bank for interest rates In 1994, to resolve the Mexican Peso crisis, the US bailed out a country.

“It only takes one snowflake to cause an avalanche. Us bank interest rates However, what we should look at is not the snowflake, but the collection of unstable snow as a whole.”

“In other words, each crisis gets bigger, each bailout gets bigger, and we’re now at the point where we should expect the next crisis to be larger than the central banks.” Explaining the risk – with an avalanche metaphor

Would this oncoming crash be preventable? Rickards claims that subsequent crashes could be avoided if drastic changes are made to the global banking system.

Through the use of an avalanche metaphor – for those of us who are less well-versed in economics jargon – Rickards explains possible solutions to a financial meltdown.

“It only takes one snowflake to cause an avalanche. Highest bank interest rates on fd However, what we should look at is not the snowflake, but the collection of unstable snow as a whole.”

“What do ski patrols do early in the morning in Switzerland or Colorado?” asks Rickards. Current bank interest rates canada “They go out and they set off dynamite charges before it reaches a critical state, to ensure the safety of skiers. Bank fd interest rates That’s called descaling.

“Reducing the scale of the system reduces the likelihood of a collapse. Highest bank interest rates 2016 How does this translate from the slopes of the Swiss Alps to the financial system?

A derivative is a contract that derives its value from the performance of an underlying entity, such as an asset, index, or interest rate, and are used to speculate and to hedge investments. State bank of india interest rates 2013 They are one of the three main categories of financial instruments, along with stocks and debt.

Rickards suggests that we should begin by separating commercial banking from investment banking, banning derivatives and breaking up oversized banks.

“Separate the practice of taking deposits and making loans from the practice of underwriting and underselling securities – there is an inherent conflict of interest.

“Ban derivatives, these over-the-counter derivatives that the banks create are now approaching 1 quadrillion in Gross National Value. Bank interest rates india 2014 Those should be completely banned.

“They serve no purpose other than to steal money from customers and allow debts that may be lucrative for the bankers but are utterly destructive for society.

“We should break up the big banks. Syndicate bank interest rates on fixed deposits 2013 JP Morgan is a big example, that was five very large banks now rolled into one – break it back into five separate banks.

“If you punch a hole in a ship on a vessel, one compartment will fill up, but the vessel will not sink because the other compartments are water tight.

“Same with the banks: by breaking up the banks you might have one bank that fails, but the entire system doesn’t fail because it is contained.” A trader stares at his screen as Dow Jones drops below 7000 points for the first time since 1997 following the 2008 financial crisis (Photo: Getty) Fascist governments, a new world order and cyber warfare

A colossal financial crisis isn’t the only chilling prediction made by Rickards in Road to Ruin – a book which at times reads like a dystopian horror novel.

“If you punch a hole in a ship on a vessel, one compartment will fill up, but the vessel will not sink because the other compartments are water tight. All bank fd interest rates 2014 Same with the banks”

“Cyber attacks from Russia and China are happening on the banking system as we speak. Good bank interest rates Some of these attacks have been quite severe and have disabled the banking system for periods of time.

“Stock exchanges keep being shut down for a short amount of time, but with no coherent explanation given. Hdfc bank interest rates on fd We have good reason to believe that these are all cyber attacks.

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