James Rickards: CIA, Pentagon, and the AI Bubble Warning

Jim Rickards is not a typical newsletter publisher. He served as an advisor to the CIA and Pentagon, and he was called in to help negotiate the bailout of Long-Term Capital Management (LTCM) in 1998. As he tells it, they called me in to help negotiate a bailout with the Fed. In fact, in the book When Genius Failed they detail the whole story, plus the five long days I spent on the phone with the Federal Reserve. We likely saved the U.S. economy that day.

His track record includes sending a warning to intelligence officials in Washington in 2006, two years before the subprime meltdown. The CIA circulated his thesis among its senior staff, and it appeared in the CIA’s official journal, Studies in Intelligence. He then testified before Congress in 2007 and supplied the Treasury Department with a plan to avert the crisis. Three weeks later, Lehman Brothers collapsed. His team claims to have helped subscribers achieve gains as high as 468% during the 2008 financial crisis.

Rickards founded Strategic Intelligence roughly 15 years ago, focusing on complexity theory, geopolitical shifts, and capital flows. He claims fewer than 10 people in the world know how to properly apply complexity theory to financial markets, which positions his analysis as genuinely unique. His political track record includes predicting Brexit in 2016, Donald Trump’s victories in both 2016 and 2024, and the Ukraine war. His team also says it warned readers about the Covid crash three weeks before it began and published a pandemic thesis four months before the first reported case.

Rickards introduces the concept of extrapolation bias to explain why most investors will miss the coming crash. People believe that because something has happened in the recent past, it is likely or even inevitable that it will continue happening in the future. This psychological trap makes even the highest IQ people deny a pending disaster, no matter how obvious the danger may be.

Rickards references his experience negotiating the LTCM bailout, where Nobel Prize winners with 150+ IQs managed a fund built on models that assumed the future would look like the past. Those models nearly blew up the entire U.S. economy. Myron Scholes, who developed the Black-Scholes Pricing Model that won a Nobel Prize, was among them. The lesson: intelligence does not immunize against extrapolation bias.

Rickards’ current warning is that AI is in a Minsky Moment bubble that could crash the market by 80%. The Minsky Moment framework, named after Harvard economist Hyman Minsky, describes how bubbles collapse in four phases. First, the hedge finance phase, where companies take on debt they can repay from cash flows. Second, the speculative phase, where companies take on more debt than earnings can cover. Third, the Ponzi phase, where companies need new investors just to service existing debt. Finally, the Minsky Moment itself: the culminating event when investors finally catch on and the market suffers a massive collapse.

Rickards maps this framework directly to the current AI boom. He points out that the dotcom bubble followed the same pattern before the Nasdaq plummeted nearly 80%. The 2008 financial crisis followed it before the market fell close to 60%. The Great Depression of 1929 followed it as well. His argument is that AI is now in the Ponzi phase, and the Minsky Moment is imminent.

Rickards pinpoints August 26th as the date the final domino could drop. This is when AI companies like Nvidia, Meta, and Coreweave release their earnings statements. He argues that a single earnings miss could be the pin that pricks the bubble. He draws a historical parallel to March 20, 2000, when Barron’s published an article called Burning Up warning that at least 50 dotcom companies would run out of money within 12 months. Within a week, stocks began to crater. Pets.com, which had IPO’d just one month earlier, plummeted 67% within a month and was bankrupt within nine months.

Rickards also points to September 28, 2007, when NetBank collapsed, marking the beginning of the subprime mortgage cascade. The Minsky Moment always takes everyone by surprise, he says. One day the market is beginning to soar. The next day, a single sobering report comes out and reality sets in.

The AI Black Paper presentation promotes Strategic Intelligence, Rickards’ monthly newsletter from Paradigm Press. The price is $49 for 6 months, originally $299, an 83% discount that works out to about $8 per month. The guarantee is 3 months: subscribers can request a full refund for any reason within that window and keep all reports.

The package includes six months of Strategic Intelligence plus six special reports: AI Fallout (the biggest AI losers to remove from your portfolio immediately), The AI Black Paper Blueprint (his personal million-dollar roadmap), AI Meltdown Insurance (how to profit from the coming crash), Trump’s AI Arsenal (how investing in AI superweapons could turn $1,000 into $162,000), The Perfect Physical Gold Portfolio, and How to Make Your Home Your Personal Fortress.

Where to Learn More

For the complete analysis, read our AI Black Paper review covering Jim Rickards’ full thesis on the AI Minsky Moment.

Read our profile of Jim Rickards for more on his background and approach.

Read our guide to portfolio protection strategies for the AI age.

Ready to explore Jim Rickards’ full research? Learn more about Strategic Intelligence here.

This is not financial advice. Always do your own research before investing.