Jim Rickards STAGGERING Warning About the US Economy!

But what happens when you have high unemployment and high inflation at the same time?

The Fed thinks that can't happen.

It has happened.

It's called stagflation.

Stagnant growth with inflation and prices.

I lived through it in the late 1970s, early 1980s.

I think around 1979, 1980, unemployment was 10%, but interest rates were 15%.

So don't tell me unemployment and interest rates move inversely.

Sometimes they do, but sometimes they can both go up together.

It's called stagflation.

I see early signs of that.

So it's...

In the world of economic prognostication, few voices resonate with the chilling clarity of Jim Rickards.

Known for his uncanny foresight and deep understanding of global finance, Jim Rickards, the renowned economist and financial commentator, has sounded a chilling alarm about the looming threat of stagflation in the United States.

His dire warning comes as a gut-wrenching shock to Americans already grappling with the lingering scars of the persistent inflation, pandemic and wavering economic recovery.

These assertions paint a grim picture of the nation's economic future, one mired in the quicksands of soaring prices, stagnant growth, and widespread joblessness.

The numbers tell a troubling tale.

The inflation rates have been on a wild trajectory.

As of July 2022, the annual inflation rate in the U.S. stood at a benumbing 8.5%, a far cry from the Federal Reserve's 2% target.

This marked the 17th straight month that inflation exceeded 6%.

Even more concerning, core inflation, which excludes volatile food and energy prices, remained elevated at 5.9%.

Currently, the annual inflation rate for the United States was 3.4% for the 12 months ending April, compared to the previous rate of 3.5%, according to U.S. Labor Department data.

Stagnant wages and other variables compound this crisis.

Despite working harder than ever, many Americans find their paychecks stagnant, unable to keep pace with the soaring cost of living.

On the employment front, the picture is equally disconcerting.

While the headline unemployment rate of 3.6% in June 2023 might appear benign at first glance, it masks deeper fault lines in the American labor market.

These statistics paint a portrait of an economy teetering on the brink, and it is against this backdrop that Jim Rickards' warning takes on an even more ominous tone.

Rickards is no stranger to economic prognostication.

In this video, we will delve into the ominous warning issue by Jim Rickards about stagflation and explore its potentially devastating impact on the American economy.

Jim Rickards is a seasoned investor, financial risk manager, and author of multiple New York Times bestsellers on economics and geopolitics.

He has a well-earned reputation for spotting trends and anticipating crises.

His experience spans decades from his role in negotiating the rescue of long-term capital management in 1998 to his warnings about the 2008 financial crisis and the risks posed by the COVID-19 pandemic.

So when Jim Rickards speaks, it

pays to listen.

And what he's saying now is that the US economy is hurtling headlong into the abyss of stagflation.

But what exactly is stagflation and why is it so feared by economists and policymakers alike?

Stagflation is the nightmarish combination of stagnant economic growth, high unemployment, and runaway inflation.

It's a rare and devastating phenomenon that wreaks havoc on economies and leaves policymakers with few good options.

In a typical recession, declining demand leads to falling prices, giving central banks the room to cut interest rates and stimulate growth.

But in a stagflationary environment, inflation remains stubbornly high even as the economy sputters and unemployment soars.

This puts policymakers in a bind, as the usual remedies for recession

Lower interest rates and increased government spending risk stoking even greater inflation.

The US last tasted the bitter pill of stagflation in the 1970s when the OPEC oil embargo and the breakdown of the Bretton Woods monetary system sent prices skyrocketing even as the economy stagnated.

Despite anemic growth and rising joblessness, inflation surged to double-digit levels, peaking at a gut-wrenching 14.8% in 1980.

It took the drastic action of Fed Chair Paul Volcker,

who hiked interest rates to an eye-watering 20% to finally break the back of inflation, but at the cost of a deep and painful recession in 1981-82.

Jim Rickards did not mince words mentioning the gruesome consequences of stagflation on Americans.

For the average American, the specter of stagflation is a terrifying prospect.

It means a world where the cost of living soars out of control even as jobs disappear and incomes stagnate.

A trip to the grocery store becomes a gauntlet of sticker shock as prices of essentials like bread, milk, and eggs climb relentlessly higher.

Filling up the gas tank turns into a painful reminder of the ever-increasing squeeze on household budgets.

And for those lucky enough to still have jobs, any meager pay raises are quickly swallowed up by the ravenous maw of inflation.

According to the Bureau of Labor Statistics, food prices in June 2023 were up 10.4% compared to a year earlier, the largest 12-month increase since February 1981.

Energy prices including oil, natural gas, coal, and electricity were also historically high through 2023, according to the U.S. Energy Information Administration's short-term energy outlook.

But the pain of stagflation goes beyond the immediate hit to the pocketbook.

It's a corrosive force that eats away at the very foundations of economic security and social stability.

In a stagflationary world, the bedrock of the American dream, the idea that hard work and playing by the rules will lead to a better life, starts to crumble.

The rungs of the economic ladder become slick with the grease of inflation, making it harder and harder to climb out of poverty and into the middle class.

The once sturdy bridge of upward mobility becomes a shaky tightrope, with the chasm of financial ruin waiting below.

For businesses, stagflation is a perfect storm of rising costs, falling demand, and impossible choices.

With a price of inputs like raw materials and labor going up, even as consumers cut back on spending, profit margins get squeezed from both ends.

Small businesses, the backbone of the American economy and the engine of job creation, are particularly vulnerable.

Many operate on razor-thin margins and lack the deep pockets of larger corporations to weather a prolonged downturn.

The National Federation of Independent Business, or the NFIB Small Business Optimism Index, rose to 89.7 in April 2024, the lowest reading in the survey's history, which dates back to 1973.

The net percent of owners who expect real sales to be higher rose six points from March to a net negative 12%, seasonally adjusted.

A seasonally adjusted net 12% of owners reported planning to create new jobs in the next three months, up one point from March's lowest level since May 2020.

In a stagflationary environment, the main streets of America could turn into ghost towns as a wave of bankruptcies and closures ripples through communities.

Across the board, business owners remain historically very pessimistic, with optimism at low levels and expectations for economic performance in the second half of the year depressed.

The election will create more uncertainty about taxes, regulations, and government spending, which has supported job and growth creation for the past two years.

American business owners will have to deal with rising uncertainty and turmoil.

The housing market, often a key driver of economic growth and a major source of wealth for American families, would also be at risk.

As mortgage rates climb in tandem with inflation, the dream of homeownership could slip out of reach for millions.

At the same time,

Falling incomes and increasing joblessness could lead to a surge in foreclosures and defaults, echoing the dark days of the 2008 financial crisis.

The bursting of the housing bubble would not only destroy trillions of dollars in wealth, but also have devastating ripple effects on the broader economy, from construction and home improvement to retail and financial services.

As of July 2023, the average 30-year fixed mortgage rate stood at 6.71%.

more than double the 2.98% rate seen just a year earlier.

Housing affordability plummeted with the median home price to income ratio reaching the highest since the series began in 1989.

But the impact of stagflation wouldn't stop at the water's edge.

In an interconnected global economy, the pain would quickly spread beyond US borders.

As the world's largest consumer market, a slowdown in American spending would send shockwaves through export-dependent economies from Europe to Asia.

Multinational corporations with significant exposure to the US market would see their profits crumble while developing countries that rely on American investment and trade could face balance of payments crises.

The global financial system, already strained by the pandemic and the war in Ukraine, could seize up as investors flee to safety and liquidity evaporates.

The International Monetary Fund or the IMF has already downgraded its global growth forecast in 2024 to 3.2%.

The organization's largest World Economic Outlook projections, growth this year and next, will hold steady at 3.2%, with median headline inflation declining from 2.8% at the end of 2024 to 2.4% at the end of 2025.

Despite signs of headway, most indicators continue to point to a soft landing.

The IMF also warned that the risk of monetary, fiscal, or financial policy miscalibration has risen sharply amid high uncertainty and growing fragilities.

Moreover, stagflation could exacerbate existing social and political tensions, both within the US and around the world.

As the pie of economic growth shrinks and the struggle for a slice becomes more desperate, the temptation to scapegoat and demonize others could prove irresistible.

Populist movements feeding on the anger and despair of those left behind could gain new momentum.

The fragile fabric of social cohesion

already frayed by years of polarization and unrest, could be torn apart completely.

In a worst-case scenario, stagflation could even lead to a breakdown of the global trading system and a new era of protectionism and isolationism as countries seek to insulate themselves from the economic fallout.

Of course, it's important to note that Jim Rickards' warning is not a foregone conclusion.

The future's not set in stone, and policymakers will still have tools at their disposal to try to steer the economy toward a much softer landing.

The Federal Reserve, in particular, has signaled a willingness to be patient and data-dependent in its approach to monetary policy, balancing the need to tame inflation with the risk of triggering a recession.

If supply chain disruptions ease and demand cools in the coming months, the inflationary pressures that are fueling fears of stagflation could start to abate.

However, the margin for error is razor thin, and the risks are clearly skewed to the downside.

Even if a full-blown stagflation scenario is averted, the US economy is still in for a bumpy ride.

Growth is likely to remain subdued while inflation could prove stickier than many anticipate.

The labor market, while resilient so far, could start to crack under the pressure of tighter monetary policy and slowing demand.

The longer-term structural challenges facing the economy, from an aging population to climate change to the rise of automation, aren't going away anytime soon.

According to the Congressional Budget Office, or CBO,

Outlays in revenues are measured as a percentage of GDP that equals or exceeds its 50-year averages through 2033.

Outlays increased from 23.7% of GDP in 2023, a high level by historical standards, to 24.9% in 2033.

Also, debt owed by the public is projected to rise in relation to the size of the economy each year, reaching 118% of GDP by 2033, which would be the highest level ever recorded.

Debt would continue to grow beyond 2033 if current laws generally remained unchanged.

For ordinary Americans, the key to weathering the storm will be to hope for the best but prepare for the worst.

That means shoring up personal finances, cutting back on discretionary spending, and building up an emergency fund to cover unexpected expenses.

It means being proactive about career development and skill building to stay competitive in a rapidly changing job market.

It also means staying engaged and informed about the economic and political decisions that will shape our collective future.

As the echoes of Jim Rickards' ominous prophecy reverberate through the halls of power and the homes of the American people, the specter of stagflation looms ever larger, a palpable darkness that threatens to envelop the once vibrant promise of the United States.

Like a cruel jester taunting the masses, this unholy matrimony of stagnant growth and runaway inflation

cast its shadow across the land, mocking the very notion of economic stability and social mobility.

The final chapter has yet to be written, and the outcome of this Shakespearean tragedy remains shrouded in uncertainty.

Will the guardians of the economy heed the warnings and take swift, decisive action?

Or will they succumb to the siren song of complacency, dooming hard-working Americans to the bitter fruits of their folly?

The choice, my friends, isn't ours to make, and the consequences

as they say, will no doubt reverberate through the ages.