“University biologists working with infectious viruses have airtight facilities to ensure that the objects of their study do not escape from the laboratory and damage the population at large. Unfortunately, no such safeguards are imposed on economics departments.”
— James Rickards, Currency Wars: The Making of the Next Global Crisis
Oh, the irony.
We’ve been friends, a publisher and travel companion to Jim Rickards for almost a decade. We first met when he was on the road talking about his best-seller, Currency Wars.
It’s uncanny how many of the themes he’s followed in that and ensuing books have come to fruition. Made even more impressive by how prolific he’s been during these years, writing The Death of Money, The New Case for Gold, The Road to Ruin, Aftermath and The New Great Depression.
How did Jim get this way? Well, his story is interesting, as he relates in this week’s Session.
He’s experienced bankruptcy — or close enough to it — twice in his life.
The first time was when he was 12 years old. “The bankruptcy laws were a lot more stringent than they are today,” he tells me. Not only did his family lose their house and car, but Jim’s father had a lien against his salary, dramatically reducing his income.
The family was forced to move to a new town where people were mostly either “farmers or fishermen.“ He had to find a place for himself in the homogenous community while adjusting to a lower standard of living. “My closet was a nail in the wall,” he relates. While it was “highly stressful for my family,” Jim says, “it was the best thing that ever happened to me.”
For one thing, he “became very focused on studies and got good grades.” In fact, he says, “it’s kind of how I got into college.” It also taught him resilience. Even today he believes “if it all went away, I could survive just fine.”
“That’s a great source of strength,” Jim Rickards will say straight to your face… which is why he felt OK decades later, when he nearly went bankrupt on his own dime.
You may know that Jim helped negotiate the terms of Long-Term Capital Management’s (LTCM) bankruptcy in 1998, which came “close to taking down the entire global financial system.” The negotiations were tense. “We were hours away from shutting every market in the world,” he tells me. “That’s not an exaggeration.”
Jim was the seminal interview for the expose about the LTCM collapse called When Genius Failed, written by Roger Lowenstein, then an author and a reporter for The Wall Street Journal.
But LTCM’s downfall affected Mr. Rickards personally. “I also had quite a bit of money invested in the firm,” Jim admits. He assumed that since the place was full of geniuses — including two Nobel Prize winners — “they’ll do fine.” Indeed, he tripled his money in just four years… only to watch… watch it all… collapse. Down 92%.
“I wasn’t bankrupt, I wasn’t kicked out of my house,” Jim says, “but that was a real setback.” Still, his family’s bankruptcy had prepared him to reinvent himself. “You just pick yourself up and you go from there,” he tells me.
Years later, he was negotiating with one of the “big hedge fund asset allocators.” Over drinks, the man explained why he was trusting Jim with his money. “I wouldn’t give money to anyone who’s never had a setback, because you know what it’s like,” he told Jim. “You won’t let it happen again.”
That attitude has led him to a lot of different careers: “a little bit of law, finance banking, hedge funds, intelligence, national security, economics, writer,” Rickards explains.
We’ll talk about some of his specific experiences — including how he got involved with the Central Intelligence Agency — tomorrow.
Follow your bliss,
Founder, The Wiggin Sessions