Jim Rickards: We Are in a Global Depression

China Stock Market CrashChina’s currency devaluation is a confirmation that the world’s second-largest economy could be on the verge of an economic collapse. At least, that’s the opinion of renowned analyst Jim Rickards.

“There’s no such thing as a one-time thing in currency wars,” he told Amanda Lang on CBC. “It won’t be their last move.” (Source: CBC News, August 14, 2015.)

The Chinese economy is slowing down faster than many economists thought before. China’s exports declined significantly and the country’s stock market crashed by more than 25%. In only a few weeks, this wiped out nearly $4.0 trillion of investors’ wealth. Authorities in China devaluated the yuan to boost the struggling economy and repeatedly said it would be a one-time devaluation.

“Currency wars have no logical conclusion except systemic reform or systemic collapse,” Rickards continued.

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He believes currency wars which started in 2010 with devaluation of the U.S. dollar could last a long time. He suggested that there are only two solutions to make peace in the intensifying currency wars.

He also believes that the economic growth in the Chinese economy is lower than officials report. “The actual growth has been about four or five; today is down to two or three [percent].”

In respect to the possible interest rate hike in the U.S., Rickards thinks that the economic condition is much worse than people think and raising rates could create many more problems. “Raising rates are deflationary,” he warned.

The Federal Reserve is expected to raise the interest rate in September. But recent economic data suggested that the skepticism has grown over the Fed’s crucial decision.

“There is no way that the Fed can raise rates,” he added.

When the world’s largest economy has grown less than 1.5% this year and the second-largest economy is slowing down dramatically, the whole global economy may be on a verge of an economic collapse.

“We are in a global depression,” Rickards concluded. “The whole world is slowing down.”