Quotes: James Rickards - MoneyGPT: AI and the Threat to the Global Economy, 2024

• ‘Long-term interest rates are still high but moving sideways. There's some speculation they may be at a peak. Short-term rates are up slightly; the Fed has not budged on its tight money crusade. Inflation appears constant; there's no sign that it's moving down to the Fed target. Dollar index is up to 106.52; sterling, euro, and Swiss franc all down slightly. Yuan is down again to 7.67; yen is joined at the hip to yuan-it's up to 155.78. Oil's flat, stuck around $82.50 per barrel. Gold's boring, still in a narrow range around $2,300 per ounce. Industrial commodities are mostly down on the continued slowdown in China; copper's $3.40. Ag commodities all down, but not by much. Chinese stocks down 1%; Japanese stocks are right with them. S&P futures up 0.50%, Nasdaq up 1% both on good earnings and on steady interest rates despite recession signs.’ Pg 2

• ‘The problem is the banks are losing their appetite for swaps even if they're off-balance-sheet. It's hard to find swap hedges due to collateral shortages; swap spreads require owning Treasuries, which take up balance sheet. That game is over. Once Treasury rates fall, the momentum buys will fold like a cheap suitcase and we'll be on our way to a rally.’ Pg 3

• ‘Nick was now long $10 million of ten-year Treasury notes. He had negative carry since overnight financing rates were higher than the yield-to-maturity on the notes, but Nick was betting the notes themselves would gain 20% or more as rates declined. His repo collateral haircut was 2%, yet he kept cash against the position as well. His leverage was 10:1 on the trade. If all went well, his return on equity could be 200%. Of course, his equity could be wiped out and then some if rates rose.’ Pg 3

• ‘They were acting in unison because of their nearly identical training sets and neural networks. The algos got one input — the market — and had one output: sell.’ Pg 14

• ‘Transfer the cash to PolyBit Bank. They're a portal between the Fed system and cryptocurrencies. Instruct them to convert the cash to Tether, use the Tether to buy Bitcoin on the JCN Exchange, and hold the Bitcoin in cold storage.’ Pg 22

• ‘While stock market distress usually led to safe haven bond buying, now the opposite happened. A critical threshold had been crossed in investors' minds. When interest rates went up, the U.S. deficit went up because the Treasury had to pay the interest on government bonds. This would push the U.S. debt-to-GDP ratio even higher than the record levels already achieved. Traders saw inflation as the only way out of the debt. That meant the Fed would be the buyer of last resort as the market suddenly became all sellers. Total losses on U.S. government securities positions were estimated at $3 trillion. Still, as with stocks it would take longer to calculate the losses in derivatives, futures, and options. The bond market was more heavily leveraged than the stock market, so total losses of $10 trillion or more were easily foreseeable.’ Pg 24