A major financial crisis could occur in 2024, when “the United States sees its economic growth drop to third in the world behind China and India,” Nomi Prins, a former managing director at Goldman Sachs, argues in an interview. and ThinkAdvisor.
Indeed, America “will see more and more economic disruption as we move into the next one.” [presidential] choice,” according to Prins, an outspoken critic of the Federal Reserve and the United States’ banking system.
The economist, frustrated by the bank’s “unfair” practices, left Goldman in 2002 to expose “how money is used to benefit a few elites at the expense of everyone else,” according to his website.
Thus, he became an investigative reporter and author of eight books, including the bestsellers “Collusion” and “All the Presidents’ Bankers”.
His most recent presentation is “The Forever Disruption: How Financial Markets Left the Real Economy Forever” (Public Affairs – Oct. 11, 2022).
The constant confusion is how Prins explains the difference between the real economy, where many people suffer from financial difficulties, and the rest of the US economy, which is controlled by Wall Street and the banks.
The latter raised a lot of money, while selling ordinary workers, they argue.
In the interview, Prins, a popular speaker who advocates for economic reform, compared the Fed to “creating money from somewhere else and injecting it into the larger financial system” to “a virus in your body that has not caught on and is giving off symptoms. It’s a hidden part of the economy, our markets.” , our banks,” he says. “It’s a habit.”
So, today’s markets are waiting for the Fed to say, “The economy is getting better — so we’re going to give you money,” says Prins.
It all started with the Fed’s policy of reducing interest rates during and after the 2008 financial crisis, which grew into “a habit, then a compulsion and finally an addiction,” he says.
However, in this interview, Prins, who has a doctorate in international technology studies, discusses what he sees as the coming financial era that prevents “deeply disrupted” banks.
Prins, who, at Goldman, oversaw credit-based accounting, was previously a managing director at Bear Stearns, a senior analyst at Lehman Bros. and an analyst at Chase Manhattan Bank.
ThinkAdvisor recently conducted an interview with Prins, who spoke by phone from Los Angeles.
Discussing the central bank’s policy of raising interest rates as it seeks to shrink the economy that is leading to job losses and low inflation, he said: “The Fed has a very confusing way of looking at things.”
Here are the highlights of our discussion:
THINKADVISOR: In your new book, “The Perpetual Disruption: How Financial Markets Left the Real Estate Forever,” you write that the revolution brought about by the perpetual bankruptcy is “just beginning” and that “this will be the biggest revolution the world has ever seen.” Please define “permanent interference.”
PRINCE: That is the difference between the real economy and the financial markets in terms of money flows.
One of the biggest perplexing things is that the Fed creates money in every crisis. They generate money from elsewhere and inject it into the larger financial system.
Now they have done this up to $9 trillion.
Are you saying it has become the Fed’s MO?
It’s like a virus in your body that hasn’t caught on and is causing symptoms. But there it is.
It is the hidden part of our economy, our markets, our banks. That’s why I call it the eternal twist.
How has it been?
Since the financial crisis of 2008, the markets, Wall Street and institutions have been set up to create very cheap money.
This was one of the reasons why the markets moved faster than the economy grew.
What do you think about the current markets?
Right now, the markets are concerned – and this is part of the disruption – waiting for the Fed to turn around and say, “The economy is starting to falter; so we’re going to give you money, guys.”
It is a habit and culture that sometimes, money [injection] it will restart. Markets don’t like to know when it’s going to happen.
“We should have another major crisis in 2024 if the trends hold,” you write. Why is this your prediction?
There are many challenges in cooking. He will appear in 2024 because going to the presidential election, parties and politicians ignore, especially the economic situation to try to be re-elected.
This creates a much smaller partnership than we used to in directing money, resources, plans and strategies in the real economy.
Our economy is not really growing compared to our markets.
You write about two ways of “crisis and economic collapse, one based on debt and adding to the crisis; the other on mistakes in monetary and financial policy. Please discuss.
We have had political and economic crises that have come to a head in election years [in the 21st century].
We have seen major economic crises or economic crises that have led to major political changes. We saw it in 2008, when we had a huge financial crisis and the outflow of money to save the banks. This was happening at the same time as it was [presidential] election.
The economy was unstable, but it was supported by a [Federal Reserve]. That was one of the confusing things.
What else has been part of the trend?
