Name: ?為什麼下一次金融危機會比2008年更嚴重？ (? Why The Next Financial Crisis Will Be Bigger Than 2008 (w/ Jim Rickards))
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JIM RICKARDS: I'm Jim Rickards, writer, author of number of books, all on the international

Currency Wars, The Death of Money, The Road to Ruin.

I have a new book coming out and of October called Aftermath.

And these four books together are what I call the International Monetary quartet, or almost

the four horsemen of the monetary apocalypse.

My view is that the world has been in a depression since 2007, and will remain so for an indefinite

And when you say that people are, wait a second, we know the definition of a recession.

The technical definition of a recession is two consecutive quarters of declining GDP,

There's a few other bells and whistles, there's a little bit of subjectivity to it.

The National Bureau of Economic Research are the unofficial but widely followed referees

on when you're in a recession and when you're not.

Well, we're in the ninth year of an expansion.

Here we are in the summer, 2018, nine years behind us, in our 10th year.

So wait a second, how can we be in a depression if we're in the 10th year of an expansion?

And the answer is, that people don't really understand the definition of a depression.

They assume intuitively, well, if a recession is two quarters of declining GDP, and a depression

sounds worse, it must be quarters of declining GDP.

As I say, we're in the 10th year of an expansion.

But that's not the definition of a depression.

The definition of a depression is a sustained period a below trend growth with no particular

tendency to collapse or getting back to trend.

In other words, if trend growth-- I'll use the United States, but you can apply this

more broadly to the world-- if trend growth is three 3%, 3.5%, and that's probably the

long term potential of the United States, higher nominal growth with inflation, but

we're talking about real growth-- if trend is three 3%, 3.5%, and you're running at 2%,

that gap between say 3.5% and 2%, that's depressed growth.

So yes, you have growth, you're not in a technical recession.

But you're in a depression because you're not getting back to that trend.

And people say, well, 2%, 3%, 1 percentage point, who cares?

And because of the compounding effect, think of it as a wedge.

We've left $5 trillion of potential growth on the table.

That's the output gap or the growth gap, the difference between depressed growth and trend

That's how much wealth has been lost because of this depressed growth.

By the way, that definition I gave, a sustained period of below trend growth, that's not my

John Maynard Keynes came up with a definition in the 1930s.

It was good enough for him, it's good enough for me.

But being objective using the numbers I mentioned, we're in a depression, we're going to stay

You know, Japan had the famous lost decade.

Japan is now almost at the end of their third lost decade.

The United States has had a lost decade from 2007 to now 2018.

If something doesn't change either in terms of policy or a collapse, something gets worse,

but absent that, we're going to remain in this kind of pumped 2% growth as far as the

People say, well, second quarter GDP, Atlanta Fed predicts 4.5%.

Yeah, but we've had 4% and 5% quarters in the last nine years.

You get it real good you know 4% print, and then the next quarter's 2%, and the one after

that is 0.5% or maybe even negative quarter.

So a year and a half into the Trump administration, he's producing the same kind of growth as

Obama, and I don't think it's policy driven.

I'm not saying one guy is a good guy, one guy's a bad guy.

What I'm saying is that the headwinds, demographic, technological, productivity, psychological,

et cetera, haven't changed, and there's no reason to expect they'll change.

So combine this world depression, because what I just described is true of Japan, it's

true in Europe- - not so true in China, but China is a special case.

Their 7%, 8% growth that they've been printing, cut that in half, because 45% of that growth

is infrastructure, most of which is wasted.

So if you apply generally accepted accounting principles, made them write off all that wasted

investment, they'd be a lot lower than it appears.

But the whole world is caught in this trap.

Meanwhile, debt is going up faster than the growth.

Well, it depends debt can be good, if you can afford it, if you can pay it off, and

It's bad if you can't afford it, it's not sustainable, you're using it as a substitute

for real growth, and it's all going to crash and burn.

So you can't understand debt in isolation.

You have to understand debt relative to income.

And that debt to GDP ratio, which is something I spent a lot of time looking at, the GDP

is kind of chugging along, not going up very much.

But the debt is going like this, the debt to GDP ratio is getting worse.

It looks like we're heading for a global debt crisis.

Not quite there yet, but it could happen sooner than later.

Very little doubt that Fed is going to tighten in September.

The baseline scenario for the Fed is straightforward.

They're going to tighten four times a year, every March, June, September, and December,

25 basis points each time, until they get interest rates up to you know 3.75%, 3.5%,

Unless one of three pause factors applies.

The pause factors are disorderly decline in the stock markets.

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