Financial crises rarely arrive in a single, dramatic collapse. They build up over time, erupt in jolts, pause, then pick up again. Each headline might tell you things are stable or even safe, but history shows the dominoes fall one by one, not all at once. Jim Rickards, a veteran in economics and capital markets, puts it plainly: things are about to get a lot worse before they get better.
If you’re watching markets, holding assets, or just want to keep your money safe, understanding the cycles behind these crises can help you make smarter choices. Let’s break down Rickards’ insights on what’s really happening with the dollar, gold, interest rates, and why complacency is a risk all its own.
The Domino Effect in Financial Crises: It’s Never Just One Thing
Crises in finance work like a line of dominoes. They fall in order, sometimes with long pauses between each one. The story of the 2007–2008 financial crisis is a perfect example:
- Spring 2007: HSBC, a global bank, first reports mortgage-related losses.
- July–August 2007: Two Bear Stearns hedge funds collapse under the weight of high-risk mortgages.
- March 2008: Bear Stearns itself collapses.
- June 2008: Fannie Mae and Freddie Mac fail, both key players in US mortgages.
- August 2008: Congress steps in with a bailout.
- September 2008: Lehman Brothers files for bankruptcy.
While the public remembers Lehman’s downfall as the breaking point, these problems built up over almost 18 months. Each event knocked down another domino, spreading panic and loss through markets worldwide.
Rickards points out that today’s economic troubles aren’t over, not by a long shot. Too many people think the worst has passed, but the warning signs haven’t faded. “We’re in falling dominoes, it’s not over, it’ll get a lot worse and people should prepare for that but as usual they don’t… People are very complacent, Wall Street says it’s all good and people believe it, but they shouldn’t.”
Complacency is the biggest mistake: every crisis starts small and quietly, then grows into something bigger.
Tight Money and Rising Interest Rates: The Engine Behind the Trouble
A core part of Rickards’ warning involves the policy of tight money. When central banks lift interest rates, they make borrowing and investing more expensive. As of March 2022, US interest rates jumped from zero to five percent. Historical figures like Paul Volcker ramped rates into double digits decades ago, but even then, it took years.
As rates rise, the value of bonds falls. Bankers may hope losses are just on paper (“unrealized”), but the damage is real. In today’s financial system, confidence matters much more than the details on balance sheets. If investors, customers, or markets doubt a bank’s stability, that’s enough to trigger panic.
The Federal Reserve hasn’t signaled the end of their rate hikes either. Many experts on TV talk about a “pivot”—a belief that the Fed will pause or even cut rates soon. Rickards believes this thinking is wrong. Interest rates are likely to climb further, squeezing banks, borrowers, and investors for even longer.
Why does it matter?
- Underwater Bonds: Banks invested when rates were low. Now, as rates race higher, bond values sink, piling up losses.
- Poor Risk Management: Many bank managers either ignored or misunderstood the very real risks of a tougher policy. The Federal Reserve promised to keep raising rates to crush inflation. Banks should have prepared but didn’t.
- Fast-Moving Bank Runs: These losses erode trust. In a world where customers can empty accounts instantly by phone, trouble moves at the speed of a swipe.
The cycle is clear: rising rates → falling bond prices → bank confidence dips → risk of bank runs.
Bank Runs Aren’t What They Used to Be
Not so long ago, bank runs meant crowds forming lines around blocks, hoping to withdraw savings before the doors shut. That image is out of date. Now, withdrawals happen with a tap on a smartphone. Whole fortunes can disappear from a bank’s balance sheet in seconds.
Traditional vs. Digital Bank Runs
| Traditional Bank Run | Digital Bank Run | |
|---|---|---|
| Speed | Hours or days | Seconds to minutes |
| Scale | Limited by physical lines | Billions can move at once |
| Trigger | Word of mouth, panic lines | News, rumors, social media |
| Visibility | Obvious, public | Silent, almost invisible |
Even just a hint of instability—whether true or not—can spark massive outflows, testing banks in ways never seen before. Customers can move billions if they have the accounts, causing instant liquidity crises.
A Long Line of Bigger and Bigger Financial Crises
History suggests that every crisis outpaces the last, both in damage and the need for bailouts. Let’s look at the pattern:
- 1974: Herstatt Bank collapse during a foreign exchange squeeze
- 1980s: Latin American debt crisis
- Late 1980s: US Savings & Loan (S&L) crisis
- 1994: Mexican Peso (“Tequila”) crisis
- 1998: Long-Term Capital Management collapse
- 2007–2008: The Financial Crisis that reshaped economies worldwide
- 1987: Black Monday, US stock market falls 22% in a single day
Each event grew the problem’s size and forced larger, more creative rescue efforts from central banks and governments.
Rickards now asks: are we facing problems so huge that even the Fed may not be able to stem the tide? “Are we at the point where the crisis is so big it’s bigger than the Fed… people lose confidence in the dollar itself?” This isn’t just about banks or individual economies. This is about trust in the backbone of the financial world—the US dollar.
The Dollar and Gold: Two Ends of the Seesaw
Gold and the US dollar have a relationship much like a seesaw. When the dollar is strong, the price of gold in dollars drops. When the dollar weakens, gold’s price rises.
But in times of panic, this relationship changes. Sometimes, investors flee both other currencies and other assets, rushing into both dollars and gold. In these moments, Treasury securities—especially very short-term, safe ones—see heavy buying.
- Investors outside the US scramble for dollars to buy US Treasuries.
- At the same time, worried savers buy up gold, viewing it as a timeless store of value.
This explains why, during a true panic, both gold and dollar prices can spike at once. But over time, the seesaw tends to win out: a strong dollar presses down gold’s price, while a weak dollar lifts it.
The Key Difference: Payment Currency vs. Reserve Currency
There’s a lot of confusion about the role of the US dollar in the world. Some see it simply as the currency used to buy and sell goods. Others view it as the last safe anchor for central banks worldwide. Here’s how Rickards untangles it:
Payment Currency
- Used for buying and selling goods and services.
- Any money accepted with confidence works—dollars, euros, yuan, rubles.
- Even non-money items (baseball cards, bottle caps) fill this role in small groups.
Reserve Currency
- Much bigger. Central banks and countries need a place to keep “reserves” safely.
- These aren’t stacks of hundred-dollar bills in vaults. The real reserve is made up of digital US Treasury securities.
- Having a reserve currency means having a big, liquid, trusted market for bonds and notes of all types and maturities.
- Backed by the rule of law and a deep history of financial infrastructure.
What makes the US dollar unique?
- Only the US has spent centuries building the world’s largest, most trustworthy market for government debt securities.
- No other bond market (not even Germany’s) matches the scale, security, and trust.
- Countries like China or Russia lack both the needed bond markets and the confidence of investors worldwide.
BRICS+, New Payment Currencies, and What Might Come Next
Challengers to the dollar’s top spot as a payment currency are coming together. Saudi Arabia is in talks to accept yuan for oil instead of dollars. Brazil and China have reached new agreements for trade in their own currencies. The group known as BRICS—Brazil, Russia, India, China, and South Africa—is now BRICS+, inviting countries like Iran, Turkey, and Argentina.
There’s active research on launching a new payment currency, possibly tied to a basket of commodities or even gold. While it’s too soon to say exactly what shape this will take, the push to move away from dollar-only trade is real and already underway.
This race affects how countries pay each other, not how they store long-term reserves.
Could the Dollar Lose Its Crown?
Jim Rickards makes it clear: the US dollar isn’t likely to lose reserve currency status to another currency any time soon. There’s simply no rival system with the size, trust, and infrastructure it would take. Building a replacement would take decades, not years.
There is, however, one thing that could knock the dollar off its pedestal—gold. Pure, physical gold stored in vaults or safes. Gold doesn’t need a digital network, can’t be hacked or frozen, and doesn’t depend on any country’s legal system.
As more countries question US financial policy, they could quietly build up gold reserves alongside—or even instead of—dollars. If that shift grows large enough, the dollar’s unique role could fade. Foreign policies can’t destroy the dollar, but “we might do it ourselves” if policy mistakes stack up.
Risks aren’t just headlines—they’re real and growing. The next crisis might shake the money system at its core, not just a single bank or market sector.
Conclusion
Jim Rickards sounds a clear warning: the problems building in global finance are bigger and more complicated than before. Every cycle sees higher stakes, faster crises, and less room for easy fixes. Don’t get lulled by temporary calm or reassuring headlines. The dominoes are falling.
Understanding the mechanics—how crises cascade, how tight money makes things worse, and how trust moves between currencies and gold—arms you with useful knowledge. If you want to protect your savings, investments, and future, keep learning, stay alert, and never forget the lessons of the past.
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Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.