Economist and Wall Street prognosticator James Rickards recently gave a long-form interview with stand-up comedy duo Konstantin Kisin and Francis Foster on their YouTube show “Triggernometry,” where he discussed the genius of President Donald J. Trump and explained how China was able to maneuver itself into the world’s second largest economy by lying, cheating and stealing.
Below is Part II of the interview. Click here to read Part I from yesterday here on Money and Markets.
Part II: How China Bullied Its Way Into Prominence
“For 20 years, I’d say the 1990s and the early 2000s, a little beyond that, really up until Trump, the globalists … people like Jeffrey Sachs at Columbia University, Richard Haas at the Council on Foreign Relations, John Kerry, who was our Secretary of State, and of course President (Barack) Obama and President (George W.) Bush — I don’t see much difference between Bush and Obama on this,” Rickards explained. “But the globalist view is, ‘We know the Chinese are kind of bad guys, they’re communists, but if we trade with them and open our doors and let them break the rules and let them steal intellectual property with low-cost … manufacturing and assembly, they’ll grow rich and in the fullness of time, they’ll be just like us.
“Once they taste the fruits and the benefits of capitalism, they’ll gradually — they might not be like a liberal democracy the next day — they will move away from communism.'”
Rickards said he disputed such a notion from the beginning.
“I said 20 years ago, ‘No, you’ve got this exactly wrong. You don’t understand communists,'” he said. “And people go, ‘Oh, Jim, the communists, it’s just a couple of 80 year olds in the power bureau, they’ll die soon. Communism is anachronistic in China.’
“I said, ‘No, they’re hardcore communists.’ So all of this accommodation, China in 1994 does a … devaluation of the yuan (its currency). In 2001 they join the WTO and proceeded to break every rule and every promise. It’s kind of like getting into … an exclusive club and you go before the membership committee and they say, ‘Well, we want to admit you to the club but we have a very strict dress code.’ And they say, ‘Yes, I understand. I’ll adhere to your dress code.’
“And you show up the next day in flip-flops and a T-shirt — that’s China. They show up in a T-shirt and say, ‘Hey, give me a drink.'”
Rickards then explained what happened after the International Monetary Fund let China into another prestigious club, only to see it break the rules again — and then its president tossed the country’s old rules and made himself essentially a dictator for life.
“In 2016, the IMF admitted them to the small group of five currencies that are used to calculate the value of world money. But you have to make certain promises to do that; one, that you would have an open capital account,” he explained. “They immediately proceeded to close the capital account. In other words, China is willing to lie, cheat and steal — we know that. But what is interesting is that the U.S. was willing to tolerate it for the sake of a mirage of a more liberal China, and that hasn’t happened.
“The opposite has happened. President Xi was made president for life. They had a … two five-year term rotation and then in your second five-year term you had to appoint your successor, who would smoothly come in and take over at the end of your … second five-year term. That’s gone. Xi is now president for life.”
This two-part series was gleaned from only 6-plus minutes of the more than hour-long interview. Watch the interview in full below.
Editor’s note: What do you think of Rickards’ explanation of how China was able to bully its way into prominence? Is he right, or oversimplifying it to give himself credit for being the first (and only person, according to him) to see what was coming? Share your thoughts below.
