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Currency Wars: The Making of the Next Global Crisis
In 1971, President Nixon imposed national price controls and took the United States off the gold standard, an extreme measure intended to end an ongoing currency war that had destroyed faith in the U.S. dollar. Today we are engaged in a new currency war, and this time the consequences will be far worse than those that confronted Nixon.
Currency wars are one of the most destructive and feared outcomes in international economics. At best, they offer the sorry spectacle of countries' stealing growth from their trading partners. At worst, they degenerate into sequential bouts of inflation, recession, retaliation, and sometimes actual violence. Left unchecked, the next currency war could lead to a crisis worse than the panic of 2008.
Currency wars have happened before-twice in the last century alone-and they always end badly. Time and again, paper currencies have collapsed, assets have been frozen, gold has been confiscated, and capital controls have been imposed. And the next crash is overdue. Recent headlines about the debasement of the dollar, bailouts in Greece and Ireland, and Chinese currency manipulation are all indicators of the growing conflict.
As James Rickards argues in Currency Wars, this is more than just a concern for economists and investors. The United States is facing serious threats to its national security, from clandestine gold purchases by China to the hidden agendas of sovereign wealth funds. Greater than any single threat is the very real danger of the collapse of the dollar itself.
Baffling to many observers is the rank failure of economists to foresee or prevent the economic catastrophes of recent years. Not only have their theories failed to prevent calamity, they are making the currency wars worse. The U. S. Federal Reserve has engaged in the greatest gamble in the history of finance, a sustained effort to stimulate the economy by printing money on a trillion-dollar scale. Its solutions present hidden new dangers while resolving none of the current dilemmas.
While the outcome of the new currency war is not yet certain, some version of the worst-case scenario is almost inevitable if U.S. and world economic leaders fail to learn from the mistakes of their predecessors. Rickards untangles the web of failed paradigms, wishful thinking, and arrogance driving current public policy and points the way toward a more informed and effective course of action.
Currency wars are one of the most destructive and feared outcomes in international economics. At best, they offer the sorry spectacle of countries' stealing growth from their trading partners. At worst, they degenerate into sequential bouts of inflation, recession, retaliation, and sometimes actual violence. Left unchecked, the next currency war could lead to a crisis worse than the panic of 2008.
Currency wars have happened before-twice in the last century alone-and they always end badly. Time and again, paper currencies have collapsed, assets have been frozen, gold has been confiscated, and capital controls have been imposed. And the next crash is overdue. Recent headlines about the debasement of the dollar, bailouts in Greece and Ireland, and Chinese currency manipulation are all indicators of the growing conflict.
As James Rickards argues in Currency Wars, this is more than just a concern for economists and investors. The United States is facing serious threats to its national security, from clandestine gold purchases by China to the hidden agendas of sovereign wealth funds. Greater than any single threat is the very real danger of the collapse of the dollar itself.
Baffling to many observers is the rank failure of economists to foresee or prevent the economic catastrophes of recent years. Not only have their theories failed to prevent calamity, they are making the currency wars worse. The U. S. Federal Reserve has engaged in the greatest gamble in the history of finance, a sustained effort to stimulate the economy by printing money on a trillion-dollar scale. Its solutions present hidden new dangers while resolving none of the current dilemmas.
While the outcome of the new currency war is not yet certain, some version of the worst-case scenario is almost inevitable if U.S. and world economic leaders fail to learn from the mistakes of their predecessors. Rickards untangles the web of failed paradigms, wishful thinking, and arrogance driving current public policy and points the way toward a more informed and effective course of action.
318 pages, Kindle Edition
First published November 1, 2011
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January 2, 2012
If you’ve wondered about the secret to Currency Wars’ best-selling success, here’s a clue: it’s essentially a monetary version of Left Behind for apocalyptic “end the fed” types fearful of an IMF-led New World Order. That’s less a reflection on the tone of James Rickards’ writing—though somewhat alarmist, he’s a lawyer and finance professional, not a Tim LaHaye-like rapture peddler—than the worldviews his book will be used to support. Apart from Rickards’ Twitter spat with Nouriel Roubini, I have yet to see a serious argument put forward against this book. While I’m hardly the person to offer a book-length academic criticism, there’s enough problematic material in Currency Wars for me to at least mention a few potential points for further argument and study in lieu of a thorough review of the entire book.
Rickards is an interesting guy. He takes an interdisciplinary approach to his subject, which, as he’s stated in interviews, is something that’s frowned upon by mainstream economists. The problem is that this makes his pro-gold argument seem better sourced than it actually is. Rickards’ argument is an intellectually flashy one—complexity theory, anyone?—but it’s as paper-thin as the fiat money to which he’s opposed. Rickards’ chapter on the classical gold standard era of 1870 to 1914, “Reflections on a Golden Age,” is one of the most egregious examples of how deceptively ahistorical this book is.
“The period from 1870 to 1914 was a golden age in terms of noninflationary growth coupled with increasing wealth and productivity in the industrialized and commodity-producing world,” Rickards writes. “Economists are nearly unanimous in pointing out the beneficial economic results of this period.”
So what of the free silver movement and multiple depressions and financial panics of the late 19th century, and the economists who would cite them as evidence of a gold standard’s shortcomings? Rickards doesn’t even mention them, let alone try to grapple with their possible implications. Of course if he did, then he wouldn’t be able to keep his argument tightly focused on his chosen culprit for monetary failures: the Federal Reserve.
Rickards’ blinkered examination of the causes of the financial crisis includes some gaping omissions and misleading statements. For example, in his list of the Fed’s failures, he mentions Congress’ Financial Crisis Inquiry Commission of 2009, which “concluded that regulatory failure was a primary cause of the crisis and it laid that failure squarely at the feet of the Fed.” So Congress pinned the tail on the Fed—shocking. This would be the same Congress that passed the Financial Services Modernization Act and Commodity Futures Modernization Act. You will search in vain for a reference to the FSMA in the index of Rickards’ book. The best you’ll get is a mention of Phil Gramm, Bill Clinton, and the CFMA—on page 9, where Rickards is not building a thesis, but establishing his bona fides as a Defense Department advisor.
In some cases, Rickards’ attempts to elide the culpability of Wall Street verge on the absurd. Case in point:
“The European banks gorged not only on euro sovereign debt but also on debt issued by Fannie Mae and the full alphabet soup of fraudulent Wall Street structured products such as collateralized debt obligations, or CDOs. These debts were originated by inexperienced local bankers around the United States and repackaged in the billions of dollars by the likes of Lehman Brothers before they went bust.”
I just about shot milk out of my nose when I read that statement, and I wasn’t even drinking milk. Oh, those inexperienced local bankers! However did they fool the world’s savviest financial experts and ratings agencies? Only “the likes of” Lehman Brothers were fraudulent. Not Goldman Sachs and other firms: they were just too distracted with hookers and blow (see Charles Ferguson’s film Inside Job) and betting against the clients to whom they were selling “crap pools,” as they called them in internal emails. So no, it wasn’t Wall Street greed, or the fees that came with recklessly signing people up for deceptive subprime mortgages. It was local bank inexperience. Remedial economics courses for everyone!
Rickards was the general counsel and principal negotiator for Long-Term Capital Management when they were bailed out in 1998, a bailout organized by the Federal Reserve Bank of New York, and one that foreshadowed everything that’s going on now. Does that make his argument against the Fed more credible or less credible? I don’t know. Maybe it just makes it more cynical.
There’s an underlying ideology to Currency Wars that Rickards seldom exposes, but when he does, it’s revealing. For example, there’s the first sentence of his chapter on the G20: “The Group of Twenty, known as G20, is an unaccountable and very powerful organization that arose from the need to resolve global issues in the absence of true world government.”
But only on the final page of the book does Rickards come right out and state why an alternative to the U.S. dollar as the world’s dominant reserve currency is unwelcome: “While all currencies by definition represent some store of value, the dollar is different. It is a store of economic value in a nation whose moral values are historically exceptional and therefore a light to the world. The debasement of the dollar cannot proceed without the debasement of those values and that exceptionalism.”
So says every empire—and, apparently, so says Defense Department consultants who graduated from the Johns Hopkins school named after Paul Nitze, the Cold Warrior described by Andrew Bacevich as “a master at hyping the Threat.”
If Rickards were more familiar with world-systems analysis, he might have given greater attention not to the monetary policy of America’s central bank, but to the cycles of capitalism itself, and America’s place within them. Instead, Rickards uses his conclusion that the world financial system has become too complex to advocate some old right wing chestnuts: “Other suggestions to reverse the impact of complexity include elimination of the corporate income tax, simplification of the personal income tax and reductions in government spending… When the risk of collapse is in the scale itself, the first-order benefits of government programs are dominated by the invisible second-order costs. Smaller is safer.” Right. Because it was the existence of a corporate income tax that made the banks too big to fail. As Nicholas Shaxson writes in his 2011 book Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens, “Nearly every multinational corporation uses tax havens, and their largest users—by far—are on Wall Street.”
As a diagnostic of the Federal Reserve’s failures, Currency Wars is interesting, and most valuable when Rickards picks apart financial economics and risk assessment. But as a prescriptive, i.e. an argument for gold, it’s highly dubious, and Rickards is far too selective in the evidence provided for his arguments.
Rickards is an interesting guy. He takes an interdisciplinary approach to his subject, which, as he’s stated in interviews, is something that’s frowned upon by mainstream economists. The problem is that this makes his pro-gold argument seem better sourced than it actually is. Rickards’ argument is an intellectually flashy one—complexity theory, anyone?—but it’s as paper-thin as the fiat money to which he’s opposed. Rickards’ chapter on the classical gold standard era of 1870 to 1914, “Reflections on a Golden Age,” is one of the most egregious examples of how deceptively ahistorical this book is.
“The period from 1870 to 1914 was a golden age in terms of noninflationary growth coupled with increasing wealth and productivity in the industrialized and commodity-producing world,” Rickards writes. “Economists are nearly unanimous in pointing out the beneficial economic results of this period.”
So what of the free silver movement and multiple depressions and financial panics of the late 19th century, and the economists who would cite them as evidence of a gold standard’s shortcomings? Rickards doesn’t even mention them, let alone try to grapple with their possible implications. Of course if he did, then he wouldn’t be able to keep his argument tightly focused on his chosen culprit for monetary failures: the Federal Reserve.
Rickards’ blinkered examination of the causes of the financial crisis includes some gaping omissions and misleading statements. For example, in his list of the Fed’s failures, he mentions Congress’ Financial Crisis Inquiry Commission of 2009, which “concluded that regulatory failure was a primary cause of the crisis and it laid that failure squarely at the feet of the Fed.” So Congress pinned the tail on the Fed—shocking. This would be the same Congress that passed the Financial Services Modernization Act and Commodity Futures Modernization Act. You will search in vain for a reference to the FSMA in the index of Rickards’ book. The best you’ll get is a mention of Phil Gramm, Bill Clinton, and the CFMA—on page 9, where Rickards is not building a thesis, but establishing his bona fides as a Defense Department advisor.
In some cases, Rickards’ attempts to elide the culpability of Wall Street verge on the absurd. Case in point:
“The European banks gorged not only on euro sovereign debt but also on debt issued by Fannie Mae and the full alphabet soup of fraudulent Wall Street structured products such as collateralized debt obligations, or CDOs. These debts were originated by inexperienced local bankers around the United States and repackaged in the billions of dollars by the likes of Lehman Brothers before they went bust.”
I just about shot milk out of my nose when I read that statement, and I wasn’t even drinking milk. Oh, those inexperienced local bankers! However did they fool the world’s savviest financial experts and ratings agencies? Only “the likes of” Lehman Brothers were fraudulent. Not Goldman Sachs and other firms: they were just too distracted with hookers and blow (see Charles Ferguson’s film Inside Job) and betting against the clients to whom they were selling “crap pools,” as they called them in internal emails. So no, it wasn’t Wall Street greed, or the fees that came with recklessly signing people up for deceptive subprime mortgages. It was local bank inexperience. Remedial economics courses for everyone!
Rickards was the general counsel and principal negotiator for Long-Term Capital Management when they were bailed out in 1998, a bailout organized by the Federal Reserve Bank of New York, and one that foreshadowed everything that’s going on now. Does that make his argument against the Fed more credible or less credible? I don’t know. Maybe it just makes it more cynical.
There’s an underlying ideology to Currency Wars that Rickards seldom exposes, but when he does, it’s revealing. For example, there’s the first sentence of his chapter on the G20: “The Group of Twenty, known as G20, is an unaccountable and very powerful organization that arose from the need to resolve global issues in the absence of true world government.”
But only on the final page of the book does Rickards come right out and state why an alternative to the U.S. dollar as the world’s dominant reserve currency is unwelcome: “While all currencies by definition represent some store of value, the dollar is different. It is a store of economic value in a nation whose moral values are historically exceptional and therefore a light to the world. The debasement of the dollar cannot proceed without the debasement of those values and that exceptionalism.”
So says every empire—and, apparently, so says Defense Department consultants who graduated from the Johns Hopkins school named after Paul Nitze, the Cold Warrior described by Andrew Bacevich as “a master at hyping the Threat.”
If Rickards were more familiar with world-systems analysis, he might have given greater attention not to the monetary policy of America’s central bank, but to the cycles of capitalism itself, and America’s place within them. Instead, Rickards uses his conclusion that the world financial system has become too complex to advocate some old right wing chestnuts: “Other suggestions to reverse the impact of complexity include elimination of the corporate income tax, simplification of the personal income tax and reductions in government spending… When the risk of collapse is in the scale itself, the first-order benefits of government programs are dominated by the invisible second-order costs. Smaller is safer.” Right. Because it was the existence of a corporate income tax that made the banks too big to fail. As Nicholas Shaxson writes in his 2011 book Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens, “Nearly every multinational corporation uses tax havens, and their largest users—by far—are on Wall Street.”
As a diagnostic of the Federal Reserve’s failures, Currency Wars is interesting, and most valuable when Rickards picks apart financial economics and risk assessment. But as a prescriptive, i.e. an argument for gold, it’s highly dubious, and Rickards is far too selective in the evidence provided for his arguments.
December 2, 2019
کتاب جنگهای ارزی با شرح تاریخچه ای از مقابله ارزها و استعمارهای دنیای قدیم مانند فرانسه ، انگلیس و آمدن استعمار جدید آمریکا آغاز می شود ، در حقیقت پس از جنگ جهانی اول و دوم ، دلار آمریکا یک پای جنگ ارزی بوده ، تا این که آخرین رقیب خود پوند انگلیس را از رقابت خارج کرده و خود به حاکم بلامنازع تبدیل شده .
تا امروز که دلار ، رقیب های دیگری دارد ، در حقیقت به گمان نویسنده هم اکنون شاهد سه جنگ ارزی هستیم : دلار با یورو – دلار با یوان و یوان با یورو
قبل از این جدال ها باید بدانیم که کاهش پول ملی برای هر دولتی ، شاید بتوان گفت جزء بزرگترین آرزوهای آن دولت است (حتی برای دولتهای مسئول که در برابر شهروندان خود با احترام و احساس مسئولیت رفتار می کنند ، دولتهایی که به هر بهانه ای دست در جیب ملت خود نمی کنند تا بدهی و بی کفایتی خود را ملت پرداخت کند)، چون با این کاهش ، کالاهای صادراتی هم ارزان شده و باعث می شود تا کشورهای دیگر بیشتر کالای ارزان وارد کنند ( مانند واردات ارزان از چین و هند و ویتنام ) . مثلا این یوان ارزان چین است که صادرات چین را تقویت می کند ، با قوی بودن صادرات ، کارخانه ها در چین با شیفت کاری بیشتری کار می کنند و کارخانه های جدید افتتاح می شوند ، که خود باعث افزایش اشتغال و کاهش نرخ بیکاری در چین میشوند . اما اگر یوان چین گران شود کالاهای ساخت چین هم گران شده و باعث می شود که مصرف کنندگان خارجی کمتر کالاهای چینی بخرند ، پس کارخانه های چین باید نیروی کار خود را تعدیل کنند و این یعنی بیکاری مثلا صد میلیون چینی ، که واضح است چه خطری برای دولت چین و سپس برای جهان دارند .
در این جدال ها با این که یورو تقریبا 20% از حجم بازار پول جهان را دارد آشکارا رقیب ضعیف ماجرا ست ، اما کتاب به خوبی نشان می دهد که چین و آمریکا چقدر از یوروی گران حمایت می کنند ( چون با گران بودن یورو ، اروپا بازار بسیار خوبی برای کالاهای چینی وآمریکایی می شود که ارزانتر از کالاهای اروپایی هستند ) و این که آلمان به صورت کامل برنده بقای یورو هست و فرانسه ، ایتالیا و اسپانیا بازندگان آن . چون در گذشته فرانک فرانسه ، لیر ایتالیا ، پزو اسپانیا از مارک آلمان کم ارزش تر بودند و آلمان بازار خوبی برای کالاهای فرانسوی و ایتالیایی بود ، اما الان با نرخ ارز برابر ، مزیت صادراتی این کشورها از بین رفته و آلمان حاکم مطلق بازار یورو است .
اما در جدال سرنوشت ساز دلار(با 60%حجم بازار ) با یوان ( با تقریبا 5%) ، یوان ارزان کمر دلار گران را شکسته و دولت چین هم سالیانه مازاد صادراتی خود را با خرید اوراق دولتی ، تبدیل به دلار می کند ( دارایی های چین در آمریکا تقریبا 850 میلیارد دلار است ) و هر زمان با فروش بخشی از آن می تواند اقتصاد آمریکا را نابود کند ، اما آمریکا هم با مازاد تجاری عظیم و سهم بسیار زیاد دلار ، به راحتی توانایی مقابله با یوان را دارد ، اما این جدال اقتصاد جهانی را هم نابود می کند و برنده قاطعی ندارد .
اما در فصل آخر کتاب ، نویسنده آینده ای را به تصویر می کشد که دلار آمریکا به شدت کم ارزش شده و سهم خود را در بازار از دست داده است، شاید دیدن این روز برای مردم کشورهایی که سالهای متمادی طعم تلخ تحریمهای قلدر مابانه آمریکایی ها را چشیده اند و کودکان آنها چه در ایران یا عراق یا ونزوئلا بر اثر نبود دارو از بین رفته اند ، خالی از لطف نباشد .
تا امروز که دلار ، رقیب های دیگری دارد ، در حقیقت به گمان نویسنده هم اکنون شاهد سه جنگ ارزی هستیم : دلار با یورو – دلار با یوان و یوان با یورو
قبل از این جدال ها باید بدانیم که کاهش پول ملی برای هر دولتی ، شاید بتوان گفت جزء بزرگترین آرزوهای آن دولت است (حتی برای دولتهای مسئول که در برابر شهروندان خود با احترام و احساس مسئولیت رفتار می کنند ، دولتهایی که به هر بهانه ای دست در جیب ملت خود نمی کنند تا بدهی و بی کفایتی خود را ملت پرداخت کند)، چون با این کاهش ، کالاهای صادراتی هم ارزان شده و باعث می شود تا کشورهای دیگر بیشتر کالای ارزان وارد کنند ( مانند واردات ارزان از چین و هند و ویتنام ) . مثلا این یوان ارزان چین است که صادرات چین را تقویت می کند ، با قوی بودن صادرات ، کارخانه ها در چین با شیفت کاری بیشتری کار می کنند و کارخانه های جدید افتتاح می شوند ، که خود باعث افزایش اشتغال و کاهش نرخ بیکاری در چین میشوند . اما اگر یوان چین گران شود کالاهای ساخت چین هم گران شده و باعث می شود که مصرف کنندگان خارجی کمتر کالاهای چینی بخرند ، پس کارخانه های چین باید نیروی کار خود را تعدیل کنند و این یعنی بیکاری مثلا صد میلیون چینی ، که واضح است چه خطری برای دولت چین و سپس برای جهان دارند .
در این جدال ها با این که یورو تقریبا 20% از حجم بازار پول جهان را دارد آشکارا رقیب ضعیف ماجرا ست ، اما کتاب به خوبی نشان می دهد که چین و آمریکا چقدر از یوروی گران حمایت می کنند ( چون با گران بودن یورو ، اروپا بازار بسیار خوبی برای کالاهای چینی وآمریکایی می شود که ارزانتر از کالاهای اروپایی هستند ) و این که آلمان به صورت کامل برنده بقای یورو هست و فرانسه ، ایتالیا و اسپانیا بازندگان آن . چون در گذشته فرانک فرانسه ، لیر ایتالیا ، پزو اسپانیا از مارک آلمان کم ارزش تر بودند و آلمان بازار خوبی برای کالاهای فرانسوی و ایتالیایی بود ، اما الان با نرخ ارز برابر ، مزیت صادراتی این کشورها از بین رفته و آلمان حاکم مطلق بازار یورو است .
اما در جدال سرنوشت ساز دلار(با 60%حجم بازار ) با یوان ( با تقریبا 5%) ، یوان ارزان کمر دلار گران را شکسته و دولت چین هم سالیانه مازاد صادراتی خود را با خرید اوراق دولتی ، تبدیل به دلار می کند ( دارایی های چین در آمریکا تقریبا 850 میلیارد دلار است ) و هر زمان با فروش بخشی از آن می تواند اقتصاد آمریکا را نابود کند ، اما آمریکا هم با مازاد تجاری عظیم و سهم بسیار زیاد دلار ، به راحتی توانایی مقابله با یوان را دارد ، اما این جدال اقتصاد جهانی را هم نابود می کند و برنده قاطعی ندارد .
اما در فصل آخر کتاب ، نویسنده آینده ای را به تصویر می کشد که دلار آمریکا به شدت کم ارزش شده و سهم خود را در بازار از دست داده است، شاید دیدن این روز برای مردم کشورهایی که سالهای متمادی طعم تلخ تحریمهای قلدر مابانه آمریکایی ها را چشیده اند و کودکان آنها چه در ایران یا عراق یا ونزوئلا بر اثر نبود دارو از بین رفته اند ، خالی از لطف نباشد .
March 1, 2013
The author did a good job of explaining the history and politics of currency wars, and yes, there are always nationalistic politics involved. After reading this book, I understand what QE 1, 2 and 3 are: ways for the US to export inflation to China (and others) by devaluing the US dollar. China is the major recipient of the inflation since they peg their currency, the RNB, to the US dollar. The devaluation of the US dollar relative to other counties' currencies makes US exports cost less and is intended to spur US economic growth at the expense of its trading partners.
However, the Fed is making an all-in bet with this move. For example, if the US exports too much inflation to China, then China's economy may stall and cause unrest among its people. Unrest could lead to an uprising which could lead to physical war, especially with the ratio of young men to young women so unbalanced because of more than a generation of China's "one child policy".
Increasing the riskiness of this bet is that each national economy is starting from a relatively different position of strength. These relative differences mean not all trading partners will share the currency and its resultant trade re-balancing equally. This exercise is a classic zero-sum game which means what some trade partners collectively gain in exports, the others will collectively lose. If the changes are too big or too fast, the interwoven international trading system will be destabilized significantly or in the worst case totally collapse.
Think this is far-fetched? The Currency Wars author traces the start of WW II, back to a currency war which started in Germany in the early 1920's when the German's changed the exchange rate of the Mark relative to the price of gold. The author then takes the reader through the series of events precipitated by this revaluation of the German Mark, including FDR confiscating all private US citizen's gold, which culminated in WW II.
Ben's (as in Ben Bernanke, US Federal Reserve Chairman) big bet using quantitative easing to generate US economic growth is an extremely risky policy. To make this work, there needs to be an orderly re-balancing of currencies and the resultant trade. This is why every time he announces another round of quantitative easing, he signals the Fed's intentions. For example, when QE 2 was announced earlier this month, he said that the Fed was going purchase $40 B of mortgages from Fanny Mae and Freddy Mac each month with only the vaguest end date intimated which was that QE 2 would end when it had achieved the desired benefit. These Fed announcements are intended to signal to the international monetary markets, sovereign and others, how much "exported inflation" they will be receiving. The purpose of signaling is to allow an orderly re-balancing of trade among international trading partners. However, if the signals are missed either intentionally or unintentionally, the author postulates several possible catastrophic outcomes including the collapse of the US Dollar. He even goes so far to suggest, an all out physical war could erupt among international blocks of trading partners to physically re-balance trade.
The author also offers how best to hedge your investment portfolio if you want to protect it from the total collapse of the US Dollar.
Well worth the read.
However, the Fed is making an all-in bet with this move. For example, if the US exports too much inflation to China, then China's economy may stall and cause unrest among its people. Unrest could lead to an uprising which could lead to physical war, especially with the ratio of young men to young women so unbalanced because of more than a generation of China's "one child policy".
Increasing the riskiness of this bet is that each national economy is starting from a relatively different position of strength. These relative differences mean not all trading partners will share the currency and its resultant trade re-balancing equally. This exercise is a classic zero-sum game which means what some trade partners collectively gain in exports, the others will collectively lose. If the changes are too big or too fast, the interwoven international trading system will be destabilized significantly or in the worst case totally collapse.
Think this is far-fetched? The Currency Wars author traces the start of WW II, back to a currency war which started in Germany in the early 1920's when the German's changed the exchange rate of the Mark relative to the price of gold. The author then takes the reader through the series of events precipitated by this revaluation of the German Mark, including FDR confiscating all private US citizen's gold, which culminated in WW II.
Ben's (as in Ben Bernanke, US Federal Reserve Chairman) big bet using quantitative easing to generate US economic growth is an extremely risky policy. To make this work, there needs to be an orderly re-balancing of currencies and the resultant trade. This is why every time he announces another round of quantitative easing, he signals the Fed's intentions. For example, when QE 2 was announced earlier this month, he said that the Fed was going purchase $40 B of mortgages from Fanny Mae and Freddy Mac each month with only the vaguest end date intimated which was that QE 2 would end when it had achieved the desired benefit. These Fed announcements are intended to signal to the international monetary markets, sovereign and others, how much "exported inflation" they will be receiving. The purpose of signaling is to allow an orderly re-balancing of trade among international trading partners. However, if the signals are missed either intentionally or unintentionally, the author postulates several possible catastrophic outcomes including the collapse of the US Dollar. He even goes so far to suggest, an all out physical war could erupt among international blocks of trading partners to physically re-balance trade.
The author also offers how best to hedge your investment portfolio if you want to protect it from the total collapse of the US Dollar.
Well worth the read.
March 17, 2018
جنگ در خاکریز اقتصاد!
اگر بگوییم قرن بیست و یکم دیگر قرن جنگهای متعارف و با سلاحهای کشتار جمعی نیست شاید سخنی به گزاف نگفته باشیم.
جهان را در جنگ سرد فرض کنید. دو ابر قدرت؛ آمریکا و شوروی. موازنه قدرت و موازنه وحشت. این دو ابر قدرت با تسلیحات اتمی وحشتی را ایجاد میکردند که همین وحشت منجر به صلحی بین این دو کشور شد و هیچگاه منجر به استفاده از تسلیحات اتمی نگردید. با سقوط شوروی اما این بار پای قدرتهای دیگری نیز به میان آمد. چین، اروپا و همچنین روسیه. اگر جهان جنگ سرد را دوقطبی بدانیم که دو ابر قدرت دارای بالاترین سرحد تسلیحات نظامی بودند، جنگی که اکنون کم و بیش نیز در جریان است جنگی است که این بار سلاحش نه تسلیحات سخت و اتمی بلکه اقتصاد است. شاید سخن بیل کلینتون در کمپین انتخاباتیاش در دهه 90 بیراه نبوده باشد که گفت: «اقتصاد همه چیز است، احمق!».
جیمز ریکاردز در این کتاب به جنگی میپردازد که سابقهای طولانی داشته و هربار نیز با تلفاتی همراه بوده است. موج اول جنگ ارزی در دهه 20 و پس از پایان جنگ جهانی اول روی داد. موج دوم آن در اواخر دهه 60 میلادی پس از پایان نظام برتون-وودز آغاز شد و تا سال 1987 ادامه داشت. اکنون نیز موج سوم جنگ در جریان است که از سال 2010 شروع شده و تاکنون نیز ادامه دارد.
وی در این کتاب به جنگی که با استفاده از اقتصاد علیه دیگر کشورها در جریان است میپردازد. جنگی که ستاد فرماندهیاش در بانک مرکزی کشورها و سکاندار جنگ نیز اقتصاددانان و روسای بانکهای مرکزی هستند.
ریکاردز دشمن سرسخت بانکهای مرکزی متمرکز است و این روند را برای تمام جهان خطرناک میداند. روندی که هریک از کشورها از این امکان برخوردار بوده که با تضعیف پولِ خود به صورت مصنوعی سعی در رشد اقتصادی و افزایش نرخ صادرات خود از جیب دیگران کنند.
ریکاردز همچنین منتقد سرسخت فدرال رزرو آمریکا است. فدرال رزروی که بذر آن پس از بحران بانکی آمریکا در سال 1907 بنیان نهاده شد و هرروز و هرروز قدرت آن متمرکزتر و بیشتر شد. وی با انتقاد از اینکه دلار ارزی جهانی است به این موضوع میپردازد که آمریکا با چاپ بیرویه پول سعی دارد که پول خود را تضعیف کرده تا بتواند تراز تجاری خود را مثبت نموده و نتیجه این کار نیز تزریق تورم به دیگر کشورها است.
ریکاردز همچنین به انتقاد نظریات کینزی و پولیِ فریدمن، که به قول او دست این دو به صورت آشکار در حل بحران مالی سال 2008 پدیدار بود، میپردازد و معتقد است که اقتصاد رفتاری و تئوری پیچیدگی میبایست جایگزین این رویکردها شود.
کتاب ترجمهای بسیار روان داشته و از آنجایی که تخصص مترجم نیز اقتصاد مالی است به صورت خوبی اصطلاحات تخصصی را در پاورقیها برای خواننده توضیح میدهد.
اگر بگوییم قرن بیست و یکم دیگر قرن جنگهای متعارف و با سلاحهای کشتار جمعی نیست شاید سخنی به گزاف نگفته باشیم.
جهان را در جنگ سرد فرض کنید. دو ابر قدرت؛ آمریکا و شوروی. موازنه قدرت و موازنه وحشت. این دو ابر قدرت با تسلیحات اتمی وحشتی را ایجاد میکردند که همین وحشت منجر به صلحی بین این دو کشور شد و هیچگاه منجر به استفاده از تسلیحات اتمی نگردید. با سقوط شوروی اما این بار پای قدرتهای دیگری نیز به میان آمد. چین، اروپا و همچنین روسیه. اگر جهان جنگ سرد را دوقطبی بدانیم که دو ابر قدرت دارای بالاترین سرحد تسلیحات نظامی بودند، جنگی که اکنون کم و بیش نیز در جریان است جنگی است که این بار سلاحش نه تسلیحات سخت و اتمی بلکه اقتصاد است. شاید سخن بیل کلینتون در کمپین انتخاباتیاش در دهه 90 بیراه نبوده باشد که گفت: «اقتصاد همه چیز است، احمق!».
جیمز ریکاردز در این کتاب به جنگی میپردازد که سابقهای طولانی داشته و هربار نیز با تلفاتی همراه بوده است. موج اول جنگ ارزی در دهه 20 و پس از پایان جنگ جهانی اول روی داد. موج دوم آن در اواخر دهه 60 میلادی پس از پایان نظام برتون-وودز آغاز شد و تا سال 1987 ادامه داشت. اکنون نیز موج سوم جنگ در جریان است که از سال 2010 شروع شده و تاکنون نیز ادامه دارد.
وی در این کتاب به جنگی که با استفاده از اقتصاد علیه دیگر کشورها در جریان است میپردازد. جنگی که ستاد فرماندهیاش در بانک مرکزی کشورها و سکاندار جنگ نیز اقتصاددانان و روسای بانکهای مرکزی هستند.
ریکاردز دشمن سرسخت بانکهای مرکزی متمرکز است و این روند را برای تمام جهان خطرناک میداند. روندی که هریک از کشورها از این امکان برخوردار بوده که با تضعیف پولِ خود به صورت مصنوعی سعی در رشد اقتصادی و افزایش نرخ صادرات خود از جیب دیگران کنند.
ریکاردز همچنین منتقد سرسخت فدرال رزرو آمریکا است. فدرال رزروی که بذر آن پس از بحران بانکی آمریکا در سال 1907 بنیان نهاده شد و هرروز و هرروز قدرت آن متمرکزتر و بیشتر شد. وی با انتقاد از اینکه دلار ارزی جهانی است به این موضوع میپردازد که آمریکا با چاپ بیرویه پول سعی دارد که پول خود را تضعیف کرده تا بتواند تراز تجاری خود را مثبت نموده و نتیجه این کار نیز تزریق تورم به دیگر کشورها است.
ریکاردز همچنین به انتقاد نظریات کینزی و پولیِ فریدمن، که به قول او دست این دو به صورت آشکار در حل بحران مالی سال 2008 پدیدار بود، میپردازد و معتقد است که اقتصاد رفتاری و تئوری پیچیدگی میبایست جایگزین این رویکردها شود.
کتاب ترجمهای بسیار روان داشته و از آنجایی که تخصص مترجم نیز اقتصاد مالی است به صورت خوبی اصطلاحات تخصصی را در پاورقیها برای خواننده توضیح میدهد.
December 19, 2012
Rickards frames his book with an anecdote about his participation in a pentagon war game designed to simulate financial markets. The war game, like the book as a whole, disintegrates from promising to insubstantial. The participants in the war game are portrayed as largely clueless, the rules and outcomes appear arbitrary. I can't decide whether Rickards is sworn to secrecy on the details, whether he is just a poor story-teller, or whether the group of paid consultants participating in, and the government employees designing the exercise blew hundreds of thousands of my tax dollars on what amounts to a buffet-style fellatio conference. Yet Rickards thinks this is a great first step for the Pentagon in understanding the financial weapons of the modern world. Although he rails against debt and profligacy, he seems to be really on board with this weekend pentagon circle-jerk which the author can't seem to describe any concrete benefit to.
This is all merely the introduction, but it leaves a poor taste in the mouth. The subsequent rambling survey of what Rickards designates as the currency wars of the twentieth century are only cursorily examined, with no footnotes or references. The style is infused with an easy smugness that presumes absolute faith from the reader without bothering to substantiate any claims. The book follows a mundane chronological structure that seems labored. In the second half of the book Rickards spatters some interdisciplinary nuggets of interest relating to complexity theory, which would be interesting, except that his application of these ideas is mealy-mouthed and entirely unsuccessful.
The book is too short to do what it seems to want to do, and too long for what it actually does. It lacks the focus to give you a good grip on any of the related topics covered, but it does have a certain appeal as a survey. I can't really form an opinion about the veracity of anything Rickards says, which aims at the big flaw here: this is really just a book full of "expert" opinion and what Rickards considers common sense based on his (I'm sure he would tell you) valuable Wall-Street insider experience.
Take with an enormous grain of salt. I found it mildly entertaining, but only because I have a predilection for the subject.
This is all merely the introduction, but it leaves a poor taste in the mouth. The subsequent rambling survey of what Rickards designates as the currency wars of the twentieth century are only cursorily examined, with no footnotes or references. The style is infused with an easy smugness that presumes absolute faith from the reader without bothering to substantiate any claims. The book follows a mundane chronological structure that seems labored. In the second half of the book Rickards spatters some interdisciplinary nuggets of interest relating to complexity theory, which would be interesting, except that his application of these ideas is mealy-mouthed and entirely unsuccessful.
The book is too short to do what it seems to want to do, and too long for what it actually does. It lacks the focus to give you a good grip on any of the related topics covered, but it does have a certain appeal as a survey. I can't really form an opinion about the veracity of anything Rickards says, which aims at the big flaw here: this is really just a book full of "expert" opinion and what Rickards considers common sense based on his (I'm sure he would tell you) valuable Wall-Street insider experience.
Take with an enormous grain of salt. I found it mildly entertaining, but only because I have a predilection for the subject.
January 2, 2012
This is a really good book - but not a particularly "fun" read. The topic is pretty deep, but even with no formal background in economics (like me), the book is readable and the author does a good job of explaining the issues. The basic proposition is quite scary - that currency manipulation can be used as an effective mechanism to destroy an economy. Given the fragility of the US economy (debt being held by China, others), this is more than plausible. He favors a return in some form to a gold standard - a hotly debated topic since the Nixon era... If you're looking for an informative read on a topic that doesn't get a lot of daily press - i recommend this... very well written.
August 26, 2016
Currency Wars: The Making of the Next Global Crisis is ostensibly that: a book about currency wars. But while much of the book does indeed focus on competitive devaluation, what Currency Wars really boils down to is James Rickards' love affair with the gold standard, and, to a lesser extent, his libertarian values and pride in 'Murica ("a nation whose moral values are historically exceptional", my ass).
Full review to come at Amara's Eden.
Full review to come at Amara's Eden.
October 29, 2016
كتاب ممتع ومفيد لمحبي عالم المال والإقتصاد.
يعتبر كتاب تخصصي إلى حدٍ ما، يدمج الإقتصاد بالسياسة وعلم الإجتماع وسلوكيات الأفراد، ويروّج لدراسة المخاطر من عدة زوايا بعكس المدرسة الكلاسيكية التي تفضل دراسة مؤثر واحد مع إبقاء المؤثرات الأخرى في حالة ثابتة.
يعتبر كتاب تخصصي إلى حدٍ ما، يدمج الإقتصاد بالسياسة وعلم الإجتماع وسلوكيات الأفراد، ويروّج لدراسة المخاطر من عدة زوايا بعكس المدرسة الكلاسيكية التي تفضل دراسة مؤثر واحد مع إبقاء المؤثرات الأخرى في حالة ثابتة.
December 17, 2015
از چند منظر می شود به این کتاب نگاه کرد. یکی شیوه ی نگارش کتاب وفرم آن. یکی محتوای آن و دیگری ظاهر و ترجمه ی آن.
شیوه ی نگارش کتاب بسیار دوست داشتنی است. جیمز ریکاردز در اول هر فصل به عنوان خلاصه و پیش در آمد فصل, یک صفحه سوال جالب و جذاب را ردیف می کند و بعد در ادامه ی فصل با استفاده از داده های تاریخی و تحلیل های اقتصادی مجموعه عواملی را که باعث شکل گیری وقایع مختلف شده اند در جواب به آن سوال ها تشریح می کند. فصل های کتاب ساختار و شفافیت دارند و این خواندن کتاب را خیلی روان می کند.
محتوای کتاب: نگاه به خیلی از وقایع تاریخی صد سال گذشته از یک دیدگاه خاص(دیدگاه جنگ های ارزی و پولی کشورها با هم) جان مطلب کتاب را تشکیل می دهد. ساز و کار ابرتورم آلمان و سقوط پولی آلمان بعد از جنگ جهانی اول تا شکل گیری فدرال رزرو و کارهایی که رییس جمهورهای آمریکا در صد سال اخیر برای حفظ دلار در عرصه ی جهانی کرده اند تا بر آمدن چین و به وجود آمدن یورو و حتی انقلاب های عربی از دیدگاه جنگ های ارزی روایت شده اند.
بررسی روند تاریخی جنگ های ارزی از اوایل قرن بیستم تا بحران مالی اخیر جهان بخش عمده ای از کتاب را شکل می دهد. یک بخش دیگر از کتاب محکوم کردن رویه های علم اقتصاد در قرن بیستم است. جیمز ریکاردز با شلاق بران به جان مدل های ریاضی اقتصاد در قرن بیستم و تئوری کینز و تئوری پول گرایی می افتد و معیارهای ریاضی مدیریت ریسک را زیر سوال می برد. به عنوان جایگزین هم تئوری اقتصاد رفتاری و تئوری پیچیدگی را معرفی می کند و تمام قد ازین دو دیدگاه به عنوان جایگزین مدل ریاضی و به دردنخور اقتصاد در قرن گذشته دفاع می کند.
نکته ای که وجود دارد این است که به نظرم جیمز ریکاردز در زمینه ی تئوری پیچیدگی مطالعه ی کافی نداشته. چیزی که او به عنوان تئوری پیچیدگی معرفی می کند نمونه ی ناقصی از تفکر سیستمی است و 30-40سال است به وجود آمده و روز به روز فراگیرتر می شود. جیمز ریکاردز فقط بخش اول تفکر سیستمی را در کتابش وارد کرده و با شدت هر چه تمام تر مدل های ریاضی را محکوم کرد. در حالی که تفکر سیستمی از ریاضیات هم در لایه های بعدی بهره می گیرد. تفکر سیستمی هم چیزی است که جیمز ریکاردز توصیف کرده و هم چیزی که او محکوم کرده و به نظرم جیمز ریکاردز کم مطالعه کرده.
ترجمه ی حسین راهداری روان است. زیرنویس های او برای اصطلاحات مالی راهگشا است و به فهم مطلب کمک می کنند. یک نکته ضعف ترجمه ی فارسی طرح جلد خشک و بی روح آن است. عنوان کتاب و صفت حیرت انگیز دینامیک است . اما طرح جلد اصلا و ابدا نمودار لحن و روایت کتاب نیست. طرح جلد کتاب انگلیسی بسیار جالب تر است و نمی دانم چرا ناشر از آن طرح جلد استفاده نکرده.
روی هم رفته خواندن جنگ های ارزی به آدم بینش خوبی در فهم خیلی از اتفاقات دنیای اطراف ما می دهد.
شیوه ی نگارش کتاب بسیار دوست داشتنی است. جیمز ریکاردز در اول هر فصل به عنوان خلاصه و پیش در آمد فصل, یک صفحه سوال جالب و جذاب را ردیف می کند و بعد در ادامه ی فصل با استفاده از داده های تاریخی و تحلیل های اقتصادی مجموعه عواملی را که باعث شکل گیری وقایع مختلف شده اند در جواب به آن سوال ها تشریح می کند. فصل های کتاب ساختار و شفافیت دارند و این خواندن کتاب را خیلی روان می کند.
محتوای کتاب: نگاه به خیلی از وقایع تاریخی صد سال گذشته از یک دیدگاه خاص(دیدگاه جنگ های ارزی و پولی کشورها با هم) جان مطلب کتاب را تشکیل می دهد. ساز و کار ابرتورم آلمان و سقوط پولی آلمان بعد از جنگ جهانی اول تا شکل گیری فدرال رزرو و کارهایی که رییس جمهورهای آمریکا در صد سال اخیر برای حفظ دلار در عرصه ی جهانی کرده اند تا بر آمدن چین و به وجود آمدن یورو و حتی انقلاب های عربی از دیدگاه جنگ های ارزی روایت شده اند.
بررسی روند تاریخی جنگ های ارزی از اوایل قرن بیستم تا بحران مالی اخیر جهان بخش عمده ای از کتاب را شکل می دهد. یک بخش دیگر از کتاب محکوم کردن رویه های علم اقتصاد در قرن بیستم است. جیمز ریکاردز با شلاق بران به جان مدل های ریاضی اقتصاد در قرن بیستم و تئوری کینز و تئوری پول گرایی می افتد و معیارهای ریاضی مدیریت ریسک را زیر سوال می برد. به عنوان جایگزین هم تئوری اقتصاد رفتاری و تئوری پیچیدگی را معرفی می کند و تمام قد ازین دو دیدگاه به عنوان جایگزین مدل ریاضی و به دردنخور اقتصاد در قرن گذشته دفاع می کند.
نکته ای که وجود دارد این است که به نظرم جیمز ریکاردز در زمینه ی تئوری پیچیدگی مطالعه ی کافی نداشته. چیزی که او به عنوان تئوری پیچیدگی معرفی می کند نمونه ی ناقصی از تفکر سیستمی است و 30-40سال است به وجود آمده و روز به روز فراگیرتر می شود. جیمز ریکاردز فقط بخش اول تفکر سیستمی را در کتابش وارد کرده و با شدت هر چه تمام تر مدل های ریاضی را محکوم کرد. در حالی که تفکر سیستمی از ریاضیات هم در لایه های بعدی بهره می گیرد. تفکر سیستمی هم چیزی است که جیمز ریکاردز توصیف کرده و هم چیزی که او محکوم کرده و به نظرم جیمز ریکاردز کم مطالعه کرده.
ترجمه ی حسین راهداری روان است. زیرنویس های او برای اصطلاحات مالی راهگشا است و به فهم مطلب کمک می کنند. یک نکته ضعف ترجمه ی فارسی طرح جلد خشک و بی روح آن است. عنوان کتاب و صفت حیرت انگیز دینامیک است . اما طرح جلد اصلا و ابدا نمودار لحن و روایت کتاب نیست. طرح جلد کتاب انگلیسی بسیار جالب تر است و نمی دانم چرا ناشر از آن طرح جلد استفاده نکرده.
روی هم رفته خواندن جنگ های ارزی به آدم بینش خوبی در فهم خیلی از اتفاقات دنیای اطراف ما می دهد.
February 20, 2017
الكتاب تكملة لفكرة جيمس ريتشاردز في كتابه السابق "موت الدولار", فهو يهاجم فكرة العملة الورقية التي لا تعتمد على أي ثروة حقيقة تدعمها. فهو يبدأ بتاريخ حروب العملات, ثم يعرّج خطر الحرب النقدية في النظام المالي الحالي الذي يلعب فيه الدولار دورا رئيسيا و البنك الفدرالي دور اللاعب و الحكم في آن واحد, مما يتيح للو.م.أ التلاعب بطبع الدولار لكي تغلّب كفتها في الموازنات التجارية و تصدير تضخمها لهم, مما يجعل شركاءها التجاريين يخسرون. الخطر يكمن عندما يعتمد الجميع استراتيجية امريكا فتفقد الجماهير ثقتها في الدولار و بقية العملات مما سيسبب انهيار الاقتصاد العالمي كما نعرفه.
December 10, 2011
I received this book for free in a Goodreads First Reads giveaway.
F. Scott Fitzgerald once said "The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function." If that is the case, then James Rickards certainly has that intelligence, because his book is constantly at war with itself to the point that this reviewer cannot recommend it.
When Rickards is addresses the specific issues of monetary policy, both in terms of its use in domestic and international matters, he is insightful and direct. He presents a coherent and unsettling picture of the current predicament the U.S. and world are in with an overleveraged system that is not suffering from a lack of liquidity, but a lack of solvency. The threat presented by a collapse of the dollar is both clear and present and the potential outcomes are disturbing. These portions are valuable and educational.
However, when Rickards broadens his scope to other policy issues, things fall apart. Rickards' hard right libertarian worldview interferes with his reasoning, providing nonsensical talking points unsupported by the examples provided. For example, Richards correctly cites the lack of regulation as being a key component to the banking crisis of 2008. Yet he also repeatedly states, without any supporting evidence, that government regulation is a bad thing and harmful to the economy. Towards the end, he even advocates specific banking regulation to avoid a repeat of the crisis of 2008 while simultaneously advocating for smaller government. The cognitive dissonance is astounding.
In another case, Richards notes that the highly inflationary policies of the Fed are destroying the value of the dollar while advocating significantly reduced tax rates. However, taxation without spending is a powerful tool the government can use to reduce the overall money supply, providing a deflationary pressure to offset the inflation.
As a third example, Rickards attempts to refute Keynesian economics by borrowing from Taylor and Cogan's study of the Obama Administration's Stimulus Package having a net negative modifier effect. In essence, Keynes argues that a dollar spent by the government can have a multiplicative effect by that dollar being pushed into the economy and being used again by the original recipient while Taylor & Cogan's study said that the actual benefit was less than the original dollar spent. But, when Taylor & Cogan looked at individual portions of the package, there was a much clearer effect. Direct support programs like food stamps provided a significant positive multiplier benefit to the economy while the significantly negative effects were caused by the tax cuts in the package. Thus the truth of Taylor & Cogan's study is that the package cut taxes too much and directly spent too little.
And that's pretty much enough to say about it. There's valuable information for those who can read critically and see just how absurd some of Rickard's conclusions are, but I wouldn't encourage reading this in hope of finding a better book without the counterproductive ideology.
F. Scott Fitzgerald once said "The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function." If that is the case, then James Rickards certainly has that intelligence, because his book is constantly at war with itself to the point that this reviewer cannot recommend it.
When Rickards is addresses the specific issues of monetary policy, both in terms of its use in domestic and international matters, he is insightful and direct. He presents a coherent and unsettling picture of the current predicament the U.S. and world are in with an overleveraged system that is not suffering from a lack of liquidity, but a lack of solvency. The threat presented by a collapse of the dollar is both clear and present and the potential outcomes are disturbing. These portions are valuable and educational.
However, when Rickards broadens his scope to other policy issues, things fall apart. Rickards' hard right libertarian worldview interferes with his reasoning, providing nonsensical talking points unsupported by the examples provided. For example, Richards correctly cites the lack of regulation as being a key component to the banking crisis of 2008. Yet he also repeatedly states, without any supporting evidence, that government regulation is a bad thing and harmful to the economy. Towards the end, he even advocates specific banking regulation to avoid a repeat of the crisis of 2008 while simultaneously advocating for smaller government. The cognitive dissonance is astounding.
In another case, Richards notes that the highly inflationary policies of the Fed are destroying the value of the dollar while advocating significantly reduced tax rates. However, taxation without spending is a powerful tool the government can use to reduce the overall money supply, providing a deflationary pressure to offset the inflation.
As a third example, Rickards attempts to refute Keynesian economics by borrowing from Taylor and Cogan's study of the Obama Administration's Stimulus Package having a net negative modifier effect. In essence, Keynes argues that a dollar spent by the government can have a multiplicative effect by that dollar being pushed into the economy and being used again by the original recipient while Taylor & Cogan's study said that the actual benefit was less than the original dollar spent. But, when Taylor & Cogan looked at individual portions of the package, there was a much clearer effect. Direct support programs like food stamps provided a significant positive multiplier benefit to the economy while the significantly negative effects were caused by the tax cuts in the package. Thus the truth of Taylor & Cogan's study is that the package cut taxes too much and directly spent too little.
And that's pretty much enough to say about it. There's valuable information for those who can read critically and see just how absurd some of Rickard's conclusions are, but I wouldn't encourage reading this in hope of finding a better book without the counterproductive ideology.
December 30, 2011
This book is frankly terrifying.
Rickards starts with a historical tour, highlighting the near-catastrophic results of two previous currency wars — the first of which led to the Great Depression and World War II, and the second of which led the malaise and stagflation of the 1970s. In each case, governments desperate to bolster domestic employment vastly increased the supply of their currency (by printing money or through other means) in order to prop up exports. In some cases this tactic worked to some degree over the short term, but over the long term it resulted in competitive currency devaluations with disastrous social and economic consequences.
Delving into the current world financial situation, he explains how the Fed, the U.S. Treasury and the IMF are responding to recession and unemployment with the same tactics that decisively failed in the past, and shows how the current situation is in several key ways far worse than other past crises. With Obama’s stimulus having failed to accomplish anything but vastly increase federal debt, consumers in debt up to their eyeballs, and a third round of “quantitative easing” on the horizon, the powers-that-be are rapidly running out of sleight-of-hand maneuvers to rebuild confidence and get people spending. Rickards sees a wholesale collapse of the dollar — and, by extension, the global financial system — looming ahead. He roots his arguments in recent developments in complexity theory, which seem to indicate that current policymakers vastly underestimate the risk of a systemic collapse.
He proposes some common sense reforms to forestall that collapse: breaking up “too big to fail” banks, outlawing most derivatives (which increase complexity while masking risk), and limiting the involvement of banks in risky trading and underwriting — and one more controversial move: going back to a gold-based currency. This last may seem extreme, but in Rickards’ view we are likely headed back to a gold standard (or something worse) whether we like it or not, and it would be better to adopt this standard in an orderly, reasoned manner than to wait until the dollar simply collapses, leaving gold as the de facto standard.
This book is a well-written, shrewdly argued, balanced and concise account of the predicament we find ourselves in at the beginning of 2012 — and what we can do about it. You must read this book.
Rickards starts with a historical tour, highlighting the near-catastrophic results of two previous currency wars — the first of which led to the Great Depression and World War II, and the second of which led the malaise and stagflation of the 1970s. In each case, governments desperate to bolster domestic employment vastly increased the supply of their currency (by printing money or through other means) in order to prop up exports. In some cases this tactic worked to some degree over the short term, but over the long term it resulted in competitive currency devaluations with disastrous social and economic consequences.
Delving into the current world financial situation, he explains how the Fed, the U.S. Treasury and the IMF are responding to recession and unemployment with the same tactics that decisively failed in the past, and shows how the current situation is in several key ways far worse than other past crises. With Obama’s stimulus having failed to accomplish anything but vastly increase federal debt, consumers in debt up to their eyeballs, and a third round of “quantitative easing” on the horizon, the powers-that-be are rapidly running out of sleight-of-hand maneuvers to rebuild confidence and get people spending. Rickards sees a wholesale collapse of the dollar — and, by extension, the global financial system — looming ahead. He roots his arguments in recent developments in complexity theory, which seem to indicate that current policymakers vastly underestimate the risk of a systemic collapse.
He proposes some common sense reforms to forestall that collapse: breaking up “too big to fail” banks, outlawing most derivatives (which increase complexity while masking risk), and limiting the involvement of banks in risky trading and underwriting — and one more controversial move: going back to a gold-based currency. This last may seem extreme, but in Rickards’ view we are likely headed back to a gold standard (or something worse) whether we like it or not, and it would be better to adopt this standard in an orderly, reasoned manner than to wait until the dollar simply collapses, leaving gold as the de facto standard.
This book is a well-written, shrewdly argued, balanced and concise account of the predicament we find ourselves in at the beginning of 2012 — and what we can do about it. You must read this book.
March 28, 2015
James Rickard is great and easy to understand. I've also watched some of his presentations at investor conferences. I first read "Death of Money" and for some reason got interested in reading "Currency Wars." Based on what I remember from Death of Money, I did not need to read this book. I think they are pretty much the same. Also, I am growing skeptical of his bearish claims. He was predicting the same dire consequences in 2010, that he does in Death of Money. I tend to agree with his thesis, but if no one who matters does anything... It is like the hedge fund manager from the Big Short (Michael Lewis). He loaded up on default swaps against subprime loans 2 years early before making huge returns. His investors hated him and wanted to pull out - "Being too early is the same as being wrong."
If you hate the Fed, you will love this book. If you love gold, you will love this book. I think he publishes a book like this every few years because the people who share his thesis will buy it and love it. Not sure if anything new here.
If you hate the Fed, you will love this book. If you love gold, you will love this book. I think he publishes a book like this every few years because the people who share his thesis will buy it and love it. Not sure if anything new here.
December 20, 2011
This book is the blueprint to current events. What is happening to the dollar? What is at risk in our fiscal relationship with China? With Europe? What are the implications of Obama's policy to double exports? How will we get out of this depression?
It is most remarkable to read such a prescient book in the midst of what Rickards' calls the third currency war. Many already familiar with how the Federal Reserve works, with deficit spending, and a general knowledge of stocks and bonds may not be familiar with the inner workings of currencies.
Rickards makes the case that there is much more going on at the Fed (and in the White House) than simply printing money. We are in the midst of a full scale currency war that, if perpetuated, can only lead to catastrophe.
While the Fed policies of quantitative easing raise fears of inflation at home, this means world wide inflation--a policy that will lead not only to resentment, but countermeasures that will lead to greater conflict.
This is an outstanding book, and I believe most anyone would do well to become familiar with Rickards' argument. My only criticism is that Rickards seems to have one foot in the hard money camp, and the other in the central banking camp. He explictly argues for a flexible (40%) gold standard, and does not seek to "end the Fed". I would be a bit uncomfortable with someone seemingly so pragmatic with the levers of power. For example, he seems too comfortable with the idea of the Treasury seizing foreign-owned gold that is being stored in New York.
It is most remarkable to read such a prescient book in the midst of what Rickards' calls the third currency war. Many already familiar with how the Federal Reserve works, with deficit spending, and a general knowledge of stocks and bonds may not be familiar with the inner workings of currencies.
Rickards makes the case that there is much more going on at the Fed (and in the White House) than simply printing money. We are in the midst of a full scale currency war that, if perpetuated, can only lead to catastrophe.
While the Fed policies of quantitative easing raise fears of inflation at home, this means world wide inflation--a policy that will lead not only to resentment, but countermeasures that will lead to greater conflict.
This is an outstanding book, and I believe most anyone would do well to become familiar with Rickards' argument. My only criticism is that Rickards seems to have one foot in the hard money camp, and the other in the central banking camp. He explictly argues for a flexible (40%) gold standard, and does not seek to "end the Fed". I would be a bit uncomfortable with someone seemingly so pragmatic with the levers of power. For example, he seems too comfortable with the idea of the Treasury seizing foreign-owned gold that is being stored in New York.
February 6, 2017
Bullshit
February 6, 2021
Mình cảm thấy nó hay. Nhưng mình đọc không hiểu mấy.
October 27, 2012
James Rickards has combined a thought provoking mix of history, economics, current events, and his own experience to produce a fascinating and thought provoking book. As the title suggests, it focuses on the relative value of the US dollar versus other currencies, and the possible and probable outcomes of the current fiscal and monetary policies (the so-called ‘wars’) of major economies. Crisply written with just the right level of theory to prove points without dragging the reader into detailed economic formulas.
Rickards provides an historical overview, drawing important lessons and debunking some myths from the gold standard era, two previous currency war eras (post WWI and 1967-1987), and the recent rise of the G20, globalization and state capital. For example, he debunks the myth that German hyperinflation in 1921 was to devalue war debts; rather it was an effort to spur an export led economic recovery when no other options were acceptable. Lessons abound in thinking of who fared better than whom in that era; debtors, and owners of businesses, real property, and foreign assets far outpaced people on a fixed income or with simple savings accounts. With respect to recent history, Rickards is outstanding in highlighting recent news items such as Gazprom’s shutting the valve on Ukraine’s natural gas lines and China’s and Russia’s statements and actions with respect to developing an alternative reserve currency.
Rickards shows the weaknesses in monetarism and Keynesianism, and then introduces complexity theory, in which increasingly complex systems - societies and financial institutions to name but two - require exponentially higher levels of energy to sustain. With respect to society and its energy - money - “at some point productivity and taxation can no longer sustain [it], and elites attempt to cheat the input process with credit, leverage, debasement and other forms of pseudo-money that facilitate rent seeking over production.” A point broadly made more than 60 years ago by Thomas Robertson in his little read work “Human Ecology” (available on Amazon’s US site and through AbeBooks).
Following his description and analysis of complexity theory, and addressing the increased rather than decreased complexity and size of banks since the financial crisis of 2008, he states “a new collapse, larger than the one in 2008, [is] not just a possibility but a certainty. Next time, however, it really will be different … [and] will not be stopped by governments, because it will be larger than governments.”
Rickards concludes with sobering words. “At some point society has three choices: simplification, conquest or collapse.” “Currency wars are just an attempt at conquest without violence. Collapse is a sudden, involuntary and chaotic form of simplification.”
Despite its considerable strengths, the book is not flawless. The introductory section that introduces the concept of currency wars is weak but short. Readers can skip or skim this to no ill effect. As well, in his excellent description of cause and effect with respect to the US federal Reserve’s quantitative easing actions on China’s exchange rate and inflation rates, Rickards notes the Fed was able to “ease conditions in China,” implying this was a desirable outcome. Many economists would counter that one of China’s problems is that monetary conditions are too easy already, as defined by their real rather than nominal interest rates, though the benefit falls almost exclusively to business rather than to consumers. Finally, Rickards approaches his argument with a subtle right wing bias (tax cuts, smaller government) and is given on occasion to hyperbole (for example, “Bernanke was increasingly out of touch with the world”). Minor complaints for such a compelling book.
Many people are far more nervous today about our current fiscal and monetary direction, though for most it is just a general nervousness - a recognition that our economic path, now illuminated by the 2008 crisis, is not a smooth road but a precipice edge. They don’t have a map to provide context or the options as we move forward. Rickards does an excellent job providing that map, and as with the geographic maps in the early centuries of exploration, competing economic cartographers might debate the details, but all would acknowledge that having a map is far superior to just following a crowd. Concise, well written, and thought provoking, Currency Wars should be read by all.
Rickards provides an historical overview, drawing important lessons and debunking some myths from the gold standard era, two previous currency war eras (post WWI and 1967-1987), and the recent rise of the G20, globalization and state capital. For example, he debunks the myth that German hyperinflation in 1921 was to devalue war debts; rather it was an effort to spur an export led economic recovery when no other options were acceptable. Lessons abound in thinking of who fared better than whom in that era; debtors, and owners of businesses, real property, and foreign assets far outpaced people on a fixed income or with simple savings accounts. With respect to recent history, Rickards is outstanding in highlighting recent news items such as Gazprom’s shutting the valve on Ukraine’s natural gas lines and China’s and Russia’s statements and actions with respect to developing an alternative reserve currency.
Rickards shows the weaknesses in monetarism and Keynesianism, and then introduces complexity theory, in which increasingly complex systems - societies and financial institutions to name but two - require exponentially higher levels of energy to sustain. With respect to society and its energy - money - “at some point productivity and taxation can no longer sustain [it], and elites attempt to cheat the input process with credit, leverage, debasement and other forms of pseudo-money that facilitate rent seeking over production.” A point broadly made more than 60 years ago by Thomas Robertson in his little read work “Human Ecology” (available on Amazon’s US site and through AbeBooks).
Following his description and analysis of complexity theory, and addressing the increased rather than decreased complexity and size of banks since the financial crisis of 2008, he states “a new collapse, larger than the one in 2008, [is] not just a possibility but a certainty. Next time, however, it really will be different … [and] will not be stopped by governments, because it will be larger than governments.”
Rickards concludes with sobering words. “At some point society has three choices: simplification, conquest or collapse.” “Currency wars are just an attempt at conquest without violence. Collapse is a sudden, involuntary and chaotic form of simplification.”
Despite its considerable strengths, the book is not flawless. The introductory section that introduces the concept of currency wars is weak but short. Readers can skip or skim this to no ill effect. As well, in his excellent description of cause and effect with respect to the US federal Reserve’s quantitative easing actions on China’s exchange rate and inflation rates, Rickards notes the Fed was able to “ease conditions in China,” implying this was a desirable outcome. Many economists would counter that one of China’s problems is that monetary conditions are too easy already, as defined by their real rather than nominal interest rates, though the benefit falls almost exclusively to business rather than to consumers. Finally, Rickards approaches his argument with a subtle right wing bias (tax cuts, smaller government) and is given on occasion to hyperbole (for example, “Bernanke was increasingly out of touch with the world”). Minor complaints for such a compelling book.
Many people are far more nervous today about our current fiscal and monetary direction, though for most it is just a general nervousness - a recognition that our economic path, now illuminated by the 2008 crisis, is not a smooth road but a precipice edge. They don’t have a map to provide context or the options as we move forward. Rickards does an excellent job providing that map, and as with the geographic maps in the early centuries of exploration, competing economic cartographers might debate the details, but all would acknowledge that having a map is far superior to just following a crowd. Concise, well written, and thought provoking, Currency Wars should be read by all.
October 20, 2017
It is one of the finest books to understand currency wars ;its evolution , impact ,past etc .
July 27, 2015
How does QE export inflation from the US to China and cripple Brazil’s export market? Can the dollar survive as a fiat currency or will it have to be backed by a commodity once again? Why has the Federal Reserve failed on every level since 1913? How might enemy nations bring down the dollar?
These questions are all answered in this alarming book written by former Investment Banker and Risk Manager, James Rickards, who believes the US dollar cannot survive in its current format.
But first, let’s start with the background to the theory. Since 2010 the world has descended into Currency War III, following the two catastrophic conflagrations of 1919-1936 and 1967-1987. In the first war Britain, France and the US ripped up the rules of the International Gold Exchange Standard and tried to gain an advantage by devaluing their currencies for export advantage; in the second conflict, the US Dollar came under speculative attack during the Vietnam War as the Fed printed more paper money far beyond its gold liabilities to creditor nations. Alas the current international system of free-floating currencies came into being, propped up by a Dollar now issued in fiat by the Treasury and backed by the printing press at the Federal Reserve. Instead of a stable store of value we now have a potential Ponzi scheme of IOUs sloshing around the world economy that can be dumped at any time by a combination of geo-political factors driven by Russia (the world’s most powerful energy exporter) and China (the world’s leading industrial exporter).
Rickards has clearly written a thought-provoking book designed to challenge your preconceptions on the international currency markets, but Currency Wars: The Making of the Next Global Crisis is also a welcome history of twentieth century monetary policy and an excellent introduction to the basic economics of trade amongst nations. As such there’s no need to do any background reading for those not familiar with the classic Gold Standard c.1871-1914 as Rickards is articulate and skilled in the use of analogies. Indeed, this will be a refreshing read for undergraduates who’ve not touched this subject since University.
However, as the premise underlying this book is based on advantages gained by currency depreciation, I will illustrate here how a nation can gain an export advantage by devaluing its currency, taking the Pound (GBP) as an example.
In July 2014 the GBP> EUR rate was 1.2642, meaning £100,000 would buy you €126,420 on the exchange. Fast forward to July 2015 and the GBP> EUR rate is now 1.40, meaning the same £100,000 buys you €140,000. Therefore, a British manufacturer importing machinery from Germany will make a saving of 13,580 EUR on the exchange compared with last year. In this case, the rate favours EU nations exporting their goods to Britain as the Euro has depreciated against the Pound and made their goods more desirable in foreign markets (e.g. cheaper to buy).
But the Eurozone is a benign example and is not an offender of deliberate devaluation. In Rickards’ view, the real villain is his home country, the United States. Since FDR’s confiscation of gold from US citizens in 1933 and to Richard Nixon’s forced adjustment of a 12% currency appreciation on her western partners in 1971, America has constantly abused its position as the home of the world’s reserve currency. This can be seen in how QE2 has exported inflation to China. But how has this happened?
To maintain its currency peg with the US, China has to print one new paper note for every additional USD it receives. Yet this will only increase when Chinese merchants paid in dollars surrender their hard currency to the People’s Bank of China in exchange for newly printed Yuan (CNY). The logic is simple and the battle lines are drawn when you consider the effect and purpose of QE: we’ll flood you with surplus dollars if you don’t adjust your under-valued currency.
Indeed, Timothy Geithner disguised this in the language of ‘adjustment’ rather than a deliberate devaluation and enrolled the G20 behind his cause for a re-balancing of the economy in 2010. As Rickards, points out, though, this policy had a hidden agenda: ‘China would have to make all of the adjustments, with regard to their currency, their social safety net and twenty-five hundred years of Confucian culture, while the United States would do nothing and reap the benefits of increased net exports to a fast-growing internal Chinese market.’ In other words, the high savings rate in China would have to be adjusted in favour of more domestic consumption. Why? Because the US economy had binged on credit and leveraged itself to the brink – consumption could no longer drive US growth. Likewise, a huge trade deficit and government bailout of the banking system left the state with no money; therefore, government spending and investment were out of the equation. So what remained? Why, of course, export growth spurred on by currency devaluation.
But surely China, as the nation that props up America’s trade deficit, has a lot to lose if the Dollar collapses? Maybe, but those who see a mutually assured destruction in the Sino-American relationship might need to think again. Yes, China owns up to $920 billion of US Treasury Bills and will suffer catastrophic losses if the US devalues these holdings. But Rickards sees an escape route for Beijing: China could easily swap the long-term maturities for short-term redemptions and call in the liabilities. That would be a massive drain on the US Treasury.
Fortunately, the world is starting to wake up to the fragility of the dollar reserve system and alternatives are being explored, none of which are favourable to the US. Plans are underway for the IMF to issue their own Special Drawing Rights (SDR) currency backed up by a liquid bond market, with Primary dealers ready and the G20 interested in going ahead. It might never get off the ground, but it’s better than watching Russia refuse USD as a currency of exchange for their oil and gas deposits. One move in the status quo might bring China closer, as is already happening in Sino-Russian relations. The figures speak for themselves: US Dollars now make up less than 65% of total global currency reserves and look set to fall further as nations diversify their holdings.
So what does Rickards propose? In his opinion, the US should return to the Gold Standard, whereby the quantity of USD in circulation should always be backed by a gold reserve of 40%. As the annual net increase in gold never exceeds 1.5% and average economic growth is closer to 3.5%, the money supply can expand by 1.5% to combat the mild deflation that would follow. Given the need to fix the convertibility price, he proposes a peg of £7500 per ounce of Gold, mainly to accommodate China, which has abundant paper dollars but less gold. Therefore, no government could expand the money supply without a corresponding increase in the stock of gold except in exceptional circumstances.
There’s no doubt it would do the trick of removing currency devaluation as a US policy and tame price swings, but is this wishful thinking rather than global reality? After all, how difficult is it to get the major industrial nations together to cut carbon emissions? Furthermore, is it even possible in the age of mass democracy to operate such a disciplined system of exchange? Any populist left-wing party could clean up in national elections during a recession with the simple promise to revert to devaluation when times are hard. The fact that Britain could maintain a stable monetary policy during the nineteenth century Gold Standard is because trades unions, workers and voters had no say when wages and prices were forced down by the harsh internal adjustment necessary to protect a fixed exchange rate. It’s hard to imagine any western democracy sticking to the rules when political considerations (e.g. keeping people in work and out of soup kitchens) take precedence over economic science. No highly-educated electorate will vote for subservience to the principles of the price-specie flow mechanism when times are tough.
Nevertheless, beyond the economics, Rickards also demonstrates a flair for understanding the political development of the last seven years. For instance, he believes the G20 has now become a platform for the US to force a re-balancing of the economy on surplus nations while the IMF is close to resembling a de facto central bank with its own currency (SDR). But none of these concerns compare to the ineptitude of the Federal Reserve Bank of New York, which has constantly failed on price stability, unemployment and regulation. Though it may sound bitter, can we argue with Rickards that the Fed was seemingly created to save the major banks from themselves rather than to act as a lender of last resort?
This won’t be the last book you read on the subject of pending economic collapse, but Rickards has set the standard for the debate and might one day the be the reluctant prophet of doom. Can anyone argue that the USD is sustainable in its current guise?
These questions are all answered in this alarming book written by former Investment Banker and Risk Manager, James Rickards, who believes the US dollar cannot survive in its current format.
But first, let’s start with the background to the theory. Since 2010 the world has descended into Currency War III, following the two catastrophic conflagrations of 1919-1936 and 1967-1987. In the first war Britain, France and the US ripped up the rules of the International Gold Exchange Standard and tried to gain an advantage by devaluing their currencies for export advantage; in the second conflict, the US Dollar came under speculative attack during the Vietnam War as the Fed printed more paper money far beyond its gold liabilities to creditor nations. Alas the current international system of free-floating currencies came into being, propped up by a Dollar now issued in fiat by the Treasury and backed by the printing press at the Federal Reserve. Instead of a stable store of value we now have a potential Ponzi scheme of IOUs sloshing around the world economy that can be dumped at any time by a combination of geo-political factors driven by Russia (the world’s most powerful energy exporter) and China (the world’s leading industrial exporter).
Rickards has clearly written a thought-provoking book designed to challenge your preconceptions on the international currency markets, but Currency Wars: The Making of the Next Global Crisis is also a welcome history of twentieth century monetary policy and an excellent introduction to the basic economics of trade amongst nations. As such there’s no need to do any background reading for those not familiar with the classic Gold Standard c.1871-1914 as Rickards is articulate and skilled in the use of analogies. Indeed, this will be a refreshing read for undergraduates who’ve not touched this subject since University.
However, as the premise underlying this book is based on advantages gained by currency depreciation, I will illustrate here how a nation can gain an export advantage by devaluing its currency, taking the Pound (GBP) as an example.
In July 2014 the GBP> EUR rate was 1.2642, meaning £100,000 would buy you €126,420 on the exchange. Fast forward to July 2015 and the GBP> EUR rate is now 1.40, meaning the same £100,000 buys you €140,000. Therefore, a British manufacturer importing machinery from Germany will make a saving of 13,580 EUR on the exchange compared with last year. In this case, the rate favours EU nations exporting their goods to Britain as the Euro has depreciated against the Pound and made their goods more desirable in foreign markets (e.g. cheaper to buy).
But the Eurozone is a benign example and is not an offender of deliberate devaluation. In Rickards’ view, the real villain is his home country, the United States. Since FDR’s confiscation of gold from US citizens in 1933 and to Richard Nixon’s forced adjustment of a 12% currency appreciation on her western partners in 1971, America has constantly abused its position as the home of the world’s reserve currency. This can be seen in how QE2 has exported inflation to China. But how has this happened?
To maintain its currency peg with the US, China has to print one new paper note for every additional USD it receives. Yet this will only increase when Chinese merchants paid in dollars surrender their hard currency to the People’s Bank of China in exchange for newly printed Yuan (CNY). The logic is simple and the battle lines are drawn when you consider the effect and purpose of QE: we’ll flood you with surplus dollars if you don’t adjust your under-valued currency.
Indeed, Timothy Geithner disguised this in the language of ‘adjustment’ rather than a deliberate devaluation and enrolled the G20 behind his cause for a re-balancing of the economy in 2010. As Rickards, points out, though, this policy had a hidden agenda: ‘China would have to make all of the adjustments, with regard to their currency, their social safety net and twenty-five hundred years of Confucian culture, while the United States would do nothing and reap the benefits of increased net exports to a fast-growing internal Chinese market.’ In other words, the high savings rate in China would have to be adjusted in favour of more domestic consumption. Why? Because the US economy had binged on credit and leveraged itself to the brink – consumption could no longer drive US growth. Likewise, a huge trade deficit and government bailout of the banking system left the state with no money; therefore, government spending and investment were out of the equation. So what remained? Why, of course, export growth spurred on by currency devaluation.
But surely China, as the nation that props up America’s trade deficit, has a lot to lose if the Dollar collapses? Maybe, but those who see a mutually assured destruction in the Sino-American relationship might need to think again. Yes, China owns up to $920 billion of US Treasury Bills and will suffer catastrophic losses if the US devalues these holdings. But Rickards sees an escape route for Beijing: China could easily swap the long-term maturities for short-term redemptions and call in the liabilities. That would be a massive drain on the US Treasury.
Fortunately, the world is starting to wake up to the fragility of the dollar reserve system and alternatives are being explored, none of which are favourable to the US. Plans are underway for the IMF to issue their own Special Drawing Rights (SDR) currency backed up by a liquid bond market, with Primary dealers ready and the G20 interested in going ahead. It might never get off the ground, but it’s better than watching Russia refuse USD as a currency of exchange for their oil and gas deposits. One move in the status quo might bring China closer, as is already happening in Sino-Russian relations. The figures speak for themselves: US Dollars now make up less than 65% of total global currency reserves and look set to fall further as nations diversify their holdings.
So what does Rickards propose? In his opinion, the US should return to the Gold Standard, whereby the quantity of USD in circulation should always be backed by a gold reserve of 40%. As the annual net increase in gold never exceeds 1.5% and average economic growth is closer to 3.5%, the money supply can expand by 1.5% to combat the mild deflation that would follow. Given the need to fix the convertibility price, he proposes a peg of £7500 per ounce of Gold, mainly to accommodate China, which has abundant paper dollars but less gold. Therefore, no government could expand the money supply without a corresponding increase in the stock of gold except in exceptional circumstances.
There’s no doubt it would do the trick of removing currency devaluation as a US policy and tame price swings, but is this wishful thinking rather than global reality? After all, how difficult is it to get the major industrial nations together to cut carbon emissions? Furthermore, is it even possible in the age of mass democracy to operate such a disciplined system of exchange? Any populist left-wing party could clean up in national elections during a recession with the simple promise to revert to devaluation when times are hard. The fact that Britain could maintain a stable monetary policy during the nineteenth century Gold Standard is because trades unions, workers and voters had no say when wages and prices were forced down by the harsh internal adjustment necessary to protect a fixed exchange rate. It’s hard to imagine any western democracy sticking to the rules when political considerations (e.g. keeping people in work and out of soup kitchens) take precedence over economic science. No highly-educated electorate will vote for subservience to the principles of the price-specie flow mechanism when times are tough.
Nevertheless, beyond the economics, Rickards also demonstrates a flair for understanding the political development of the last seven years. For instance, he believes the G20 has now become a platform for the US to force a re-balancing of the economy on surplus nations while the IMF is close to resembling a de facto central bank with its own currency (SDR). But none of these concerns compare to the ineptitude of the Federal Reserve Bank of New York, which has constantly failed on price stability, unemployment and regulation. Though it may sound bitter, can we argue with Rickards that the Fed was seemingly created to save the major banks from themselves rather than to act as a lender of last resort?
This won’t be the last book you read on the subject of pending economic collapse, but Rickards has set the standard for the debate and might one day the be the reluctant prophet of doom. Can anyone argue that the USD is sustainable in its current guise?
December 16, 2018
Currency Wars discusses the emergence of a new frontier in the theatre of modern warfare that is often underestimated by the world governments. This book does a great job of explaining the complex economics phenomena involving currency flow, international trading, international monetary systems in simple terms. However, sometimes it becomes hard to follow when the author dives into its subtleties. From WWI to 2010, this book covers, in chronological order, various financial recessions and crisis including, but not limited to, the great depression and 2008 market crash.
The author is a strong supporter of gold-backed monetary systems and desperately wants to return to some variant of it. He presents these variants as the ultimate solution to the problems discussed in the book. Overall it is a good read and is recommended to all. In the author's own words, Currency Wars is a good guide to the past but a better guide to the future.
The author is a strong supporter of gold-backed monetary systems and desperately wants to return to some variant of it. He presents these variants as the ultimate solution to the problems discussed in the book. Overall it is a good read and is recommended to all. In the author's own words, Currency Wars is a good guide to the past but a better guide to the future.
October 16, 2012
This was an absolutely fascinating book on a topic I suspect few people educated in America have any foreknowledge.
Recently, I've found myself interested in fiscal responsibility both on a personal scale and national scale. To that end, I've read other books such as Endgame by John Maudlin as well as Michael Lewis' excellent books The Big Short and Boomerang. These books discuss the macroeconomic effects of our money system, national debt and trade. Very interesting stuff, especially if you have something of a traditional American education. Absolutely none of this stuff was covered in my economics classes during school.
The fact is that we are currently in a very interesting time. On the short term we have significantly increasing political turmoil in the USA and abroad. The national debt is astronomical and no real solution is on the horizon. The US elections are in 3 weeks. On the intermediate term, we are still in the throes of a significant depression for the past 4 years from a jobs standpoint and worldwide economic growth (though the stock market has mostly recovered). On a somewhat longer-term, we may be at a "market top" on a 30-40 year scale. Uncertain times, indeed. We've experienced significant economic manipulation by most of the major governments of the world in an effort to halt the downward slide of the current depression. Whether or not that has been successful is probably a very personal discussion for you.
That's a lot of preface for a book review, but if you have put any thought whatsoever into any of the stuff in the preceding paragraph, you really should consider checking out this book. It not only has an extremely well-considered accounting of our current situation, which turns out to be Currency War 3, but also gives a fascinating account of Currency Wars 1 and 2 (which occurred around WW1 and WW2, respectively).
There is excellent discussion of various United States monetary policies over the last 200 years. Discussion of various economic theory that you may hear spoken of on CNBC or maybe even some of the political debates and the commentary that follows. The educational value of knowing where The Fed came from and how it arose, as well as the changes to Federal Reserve policy and structure over the years is excellent and invaluable.
One of the great things about Currency Wars is that I felt James Rickards was very fair and non-political in his assessment. He applied the same degree of historical perspective with the current policymakers and situation as he did with the previous major shifts in monetary policy. There doesn't seem to be any political agenda other than educating individuals who have interest on the topic. In the end of the book, the author discusses some possible future scenarios depending on how things go from here based on economic theory.
While he doesn't seem to have a political bias, there is clearly a bias in his opinion on how monetary policy should be handled. This is interesting to me as a layman as well. We simply don't get to see much point-counterpoint discussion from the major policymakers at The Fed like Ben Bernanke and the other mega-bankers.
Overall, I just can't say enough positive things about this book. Totally awesome.
Recently, I've found myself interested in fiscal responsibility both on a personal scale and national scale. To that end, I've read other books such as Endgame by John Maudlin as well as Michael Lewis' excellent books The Big Short and Boomerang. These books discuss the macroeconomic effects of our money system, national debt and trade. Very interesting stuff, especially if you have something of a traditional American education. Absolutely none of this stuff was covered in my economics classes during school.
The fact is that we are currently in a very interesting time. On the short term we have significantly increasing political turmoil in the USA and abroad. The national debt is astronomical and no real solution is on the horizon. The US elections are in 3 weeks. On the intermediate term, we are still in the throes of a significant depression for the past 4 years from a jobs standpoint and worldwide economic growth (though the stock market has mostly recovered). On a somewhat longer-term, we may be at a "market top" on a 30-40 year scale. Uncertain times, indeed. We've experienced significant economic manipulation by most of the major governments of the world in an effort to halt the downward slide of the current depression. Whether or not that has been successful is probably a very personal discussion for you.
That's a lot of preface for a book review, but if you have put any thought whatsoever into any of the stuff in the preceding paragraph, you really should consider checking out this book. It not only has an extremely well-considered accounting of our current situation, which turns out to be Currency War 3, but also gives a fascinating account of Currency Wars 1 and 2 (which occurred around WW1 and WW2, respectively).
There is excellent discussion of various United States monetary policies over the last 200 years. Discussion of various economic theory that you may hear spoken of on CNBC or maybe even some of the political debates and the commentary that follows. The educational value of knowing where The Fed came from and how it arose, as well as the changes to Federal Reserve policy and structure over the years is excellent and invaluable.
One of the great things about Currency Wars is that I felt James Rickards was very fair and non-political in his assessment. He applied the same degree of historical perspective with the current policymakers and situation as he did with the previous major shifts in monetary policy. There doesn't seem to be any political agenda other than educating individuals who have interest on the topic. In the end of the book, the author discusses some possible future scenarios depending on how things go from here based on economic theory.
While he doesn't seem to have a political bias, there is clearly a bias in his opinion on how monetary policy should be handled. This is interesting to me as a layman as well. We simply don't get to see much point-counterpoint discussion from the major policymakers at The Fed like Ben Bernanke and the other mega-bankers.
Overall, I just can't say enough positive things about this book. Totally awesome.
March 29, 2018
Reading this book felt a lot like watching the movie 2012, after the year 2012. In fact it has a dramatic flair that even exceeds the movie. The first page itself shows how outdated the book is. James Rickards declares that Obama will go back to the gold-backed currency regime. This audacious and miscalculated prediction perhaps makes him cringe now, though his subsequent books suggest otherwise.
Rickards quickly follows it with a financial war game he participated in at the Pentagon. It sounds a bit over the top, but entertaining and even fascinating enough to make you want to continue. I wish the whole book was about that simulated currency war. But he takes a detour to describe in detail the two currency wars that happened in the last century and an imminent third one, and never really comes back to the simulation. It's educating but tedious after a point. It's basically a global financial history of the 20th century through a dollar prism. As in every theory in economics, you can bet that experts differ. There's an apocalyptic "China is here to get us!!" tone that reeks throughout the narrative. He even uses the phrase "and dollar will be left out in the cold" at one point.
There's a lot of fluff in the middle before he consolidates his arguments for a gold backed dollar in the final chapter, or even better - gold coins. It's not quite convincing, but interesting nevertheless. There's a lot of confidence in his arguments that comes only with hindsight, a characteristic feature of every economist. If you start this book with the notion that economics is a pseudo-science that theorizes about events of the past while nobody has any clue what they are doing now or what's going to happen, there's nothing much in this book that's gonna convince you otherwise.
Rickards quickly follows it with a financial war game he participated in at the Pentagon. It sounds a bit over the top, but entertaining and even fascinating enough to make you want to continue. I wish the whole book was about that simulated currency war. But he takes a detour to describe in detail the two currency wars that happened in the last century and an imminent third one, and never really comes back to the simulation. It's educating but tedious after a point. It's basically a global financial history of the 20th century through a dollar prism. As in every theory in economics, you can bet that experts differ. There's an apocalyptic "China is here to get us!!" tone that reeks throughout the narrative. He even uses the phrase "and dollar will be left out in the cold" at one point.
There's a lot of fluff in the middle before he consolidates his arguments for a gold backed dollar in the final chapter, or even better - gold coins. It's not quite convincing, but interesting nevertheless. There's a lot of confidence in his arguments that comes only with hindsight, a characteristic feature of every economist. If you start this book with the notion that economics is a pseudo-science that theorizes about events of the past while nobody has any clue what they are doing now or what's going to happen, there's nothing much in this book that's gonna convince you otherwise.
July 19, 2020
Ch iến tranh tiền tệ là một trong những kết cục đáng sợ và có tính h ủy hoại cao nhất trong kinh tế học quốc tế.
Phá giá tiền tệ là cách đánh cắp sự tăng trưởng từ các quốc gia khác. In tiền có nghĩa là các khoản nợ công của Mỹ đã giảm giá trị (các chủ nợ nước ngoài sẽ được bồi hoàn bằng đồng USD có giá rẻ hơn). Phá giá tiền tệ nghĩa là tỷ lệ thất nghiệp tăng cao hơn tại các nước đang phát triển (vì ngành xuất khẩu của họ trở nên quá đắt đỏ với người Mỹ).
Tại sao lại phá giá tiền tệ?
Ta có: GDP = Tiêu dùng (C) + Đầu tư (I) + Chi tiêu công (G) + Xuất khẩu ròng (X-M).
Khi nền kinh tế gặp vấn đề thì C và I đều giảm, G có thể tăng một cách độc lập tuy nhiên lại tăng gánh nặng thuế. Lựa chọn duy nhất là tăng Xuất khẩu ròng và cách nhanh nhất để làm điều này là phá giá đồng nội tệ.
Năm 1971, Nixon ban hành lệnh kiểm soát giá cả quốc gia và chấm dứt chê độ Bản Vị Vàng tại Mỹ, trong một biện pháp cực đoan nhầm chấm dứt cuộc chiến tiền tệ đang diễn ra, cuộc chiến đã hủy hoại niềm tin vào đồng USD. Nền kinh tế Mỹ được FED dẫn dắt đã liên tiếp chứng kiến nhiều bong bóng tài sản, các vụ đổ vỡ trong vòng 40 năm từ khi rời bỏ Bản Vị Vàng.
Tuy nhiên, USD, mặc dù có nhiều sai lầm và yếu điểm, vẫn là trục chính trong toàn bộ các hệ thống tiền tệ.
Phá giá tiền tệ là cách đánh cắp sự tăng trưởng từ các quốc gia khác. In tiền có nghĩa là các khoản nợ công của Mỹ đã giảm giá trị (các chủ nợ nước ngoài sẽ được bồi hoàn bằng đồng USD có giá rẻ hơn). Phá giá tiền tệ nghĩa là tỷ lệ thất nghiệp tăng cao hơn tại các nước đang phát triển (vì ngành xuất khẩu của họ trở nên quá đắt đỏ với người Mỹ).
Tại sao lại phá giá tiền tệ?
Ta có: GDP = Tiêu dùng (C) + Đầu tư (I) + Chi tiêu công (G) + Xuất khẩu ròng (X-M).
Khi nền kinh tế gặp vấn đề thì C và I đều giảm, G có thể tăng một cách độc lập tuy nhiên lại tăng gánh nặng thuế. Lựa chọn duy nhất là tăng Xuất khẩu ròng và cách nhanh nhất để làm điều này là phá giá đồng nội tệ.
Năm 1971, Nixon ban hành lệnh kiểm soát giá cả quốc gia và chấm dứt chê độ Bản Vị Vàng tại Mỹ, trong một biện pháp cực đoan nhầm chấm dứt cuộc chiến tiền tệ đang diễn ra, cuộc chiến đã hủy hoại niềm tin vào đồng USD. Nền kinh tế Mỹ được FED dẫn dắt đã liên tiếp chứng kiến nhiều bong bóng tài sản, các vụ đổ vỡ trong vòng 40 năm từ khi rời bỏ Bản Vị Vàng.
Tuy nhiên, USD, mặc dù có nhiều sai lầm và yếu điểm, vẫn là trục chính trong toàn bộ các hệ thống tiền tệ.
August 16, 2016
Great read, even fun. He grabs you right from the start as he describes how some finance and Wall St. guys engage folks from the Pentagon and the intelligence community to simulate financial war games.
Let me offer a caveat, the author does have a pro-gold bias, and this upset a friend to whom I recommended the book. However, if you can get past that you'll see that he lays out a history of two currency wars fought in the 20th century as well as sets up how the next one will unfold. In fact, he believes it's already started. It sheds a lot of light on *why* some monetary and economic policies are what they are and provides a view that is difficult to see when delving into any of these subjects too deeply.
Rickards does a superb job of connecting the dots and making a clear map of how nations turn to sophisticated financial weapons instead of conventional ones. If you wish to have a better standing of how the economies of nations interact when self-preservation is on the line, and how they tend to view the world's economy in terms of winning and losing, this is an informative and intriguing read.
Let me offer a caveat, the author does have a pro-gold bias, and this upset a friend to whom I recommended the book. However, if you can get past that you'll see that he lays out a history of two currency wars fought in the 20th century as well as sets up how the next one will unfold. In fact, he believes it's already started. It sheds a lot of light on *why* some monetary and economic policies are what they are and provides a view that is difficult to see when delving into any of these subjects too deeply.
Rickards does a superb job of connecting the dots and making a clear map of how nations turn to sophisticated financial weapons instead of conventional ones. If you wish to have a better standing of how the economies of nations interact when self-preservation is on the line, and how they tend to view the world's economy in terms of winning and losing, this is an informative and intriguing read.
January 31, 2013
This book was quite interesting, helping me understand a little more:
Why the FED does all the horrible things it does
Why FDR confiscated American's gold with an executive order &
Why our president could possibly do the same thing if a crisis arises.
Why the GOV is intentionally trying to devalue the dollar with QE
Why the elite laugh at those who speak of the need for a gold standard
Why the last two global currency wars hurt even the winners
Its something else how entangled our world is together and how disastrous have been the global consequences resulting from the FED and our presidents decisions. America started the 3rd currency war and by all means other nations do have every right to hate us and seek revenge.
I thought the author seemed extremely knowledgeable and did a good job at sharing the history, over all what he shared seemed pretty balanced and reasonable. It was not the work of some conspiracy theorist, polemicist or radical. I want to listen to the audiobook again.
Why the FED does all the horrible things it does
Why FDR confiscated American's gold with an executive order &
Why our president could possibly do the same thing if a crisis arises.
Why the GOV is intentionally trying to devalue the dollar with QE
Why the elite laugh at those who speak of the need for a gold standard
Why the last two global currency wars hurt even the winners
Its something else how entangled our world is together and how disastrous have been the global consequences resulting from the FED and our presidents decisions. America started the 3rd currency war and by all means other nations do have every right to hate us and seek revenge.
I thought the author seemed extremely knowledgeable and did a good job at sharing the history, over all what he shared seemed pretty balanced and reasonable. It was not the work of some conspiracy theorist, polemicist or radical. I want to listen to the audiobook again.
April 12, 2016
"The path of the dollar is unsustainable and therefore the dollar will not be sustained." So writes this clear-thinking author as the first line in his concluding chapter. This is an outstanding book that should be read and digested by every thinking American voter.
Of course, it won't be. And so we all in for perilous times as our thoughtless Fed continues to devalue our dollar and ruin our economy. The racking up of astounding public debt every year doesn't help out either. We're shackling our kids to a future of slavery.
Chapter nine ("The Misuse of Economics") is also a gripping read. This author is not a careless bomb thrower but speaks from years of experience. He derives a conclusion that is sound and well worth doing by our central bankers and US Treasury officials. Absent a change in our current ludicrous direction, the rocks of chaos and sure destruction loom just ahead.
Of course, it won't be. And so we all in for perilous times as our thoughtless Fed continues to devalue our dollar and ruin our economy. The racking up of astounding public debt every year doesn't help out either. We're shackling our kids to a future of slavery.
Chapter nine ("The Misuse of Economics") is also a gripping read. This author is not a careless bomb thrower but speaks from years of experience. He derives a conclusion that is sound and well worth doing by our central bankers and US Treasury officials. Absent a change in our current ludicrous direction, the rocks of chaos and sure destruction loom just ahead.
July 12, 2020
Being myself a lawyer, interested in finance and economics, I read books on the topic. However, I would recommend you to be wary of lawyers who actually write such books. Aparently, this Rickards guy is too self-important and full of sh*t. Although, you shouldn't take my opinion for truth of last instance.
I might have overrated the book due to my lack of expertise. The research is not in-depth, but it is still of some value as a more or less fine introduction to the subject. Also, I was glad to discover about Collapse of Complex Societies by J.A Tainter. Haven't read it yet, but it seems a marvelous work.
The comments, that the book is "terrifying" or "scary" (found even on the book's cover) are very funny. I guess, people who share such opinion haven't read a single serious book on human history.
I might have overrated the book due to my lack of expertise. The research is not in-depth, but it is still of some value as a more or less fine introduction to the subject. Also, I was glad to discover about Collapse of Complex Societies by J.A Tainter. Haven't read it yet, but it seems a marvelous work.
The comments, that the book is "terrifying" or "scary" (found even on the book's cover) are very funny. I guess, people who share such opinion haven't read a single serious book on human history.
May 8, 2012
It is funny how "in the dark" we are in this country regarding what really runs our politicians and our political arena. We are teetering on the brink of economic collapse, however our masses have been brainwashed to not only not notice, but to not care.
Well, I personally do care. And I want to read as much as I can about what's coming to try to prepare myself and my family for the hard times ahead.
Currency Wars provides great insight to what The Fed is really doing behind the curtain, and why it is doing so.
If you can realize that Paul Krugman is full of shit and that Ron Paul is right on the money, than this is the book for you!
Well, I personally do care. And I want to read as much as I can about what's coming to try to prepare myself and my family for the hard times ahead.
Currency Wars provides great insight to what The Fed is really doing behind the curtain, and why it is doing so.
If you can realize that Paul Krugman is full of shit and that Ron Paul is right on the money, than this is the book for you!
May 30, 2022
Good book about historical currency wars during the period of open trade (post-Mercantilist; particularly 1920s, and then 1970s), written during the "great financial crisis" 2007-2013 (and thus not reflecting covid's massive money printing, etc., but predicting stuff like it). To some extent, it's an argument for a good/hybrid gold standard as a possible future, and advocates strongly for studying the use of gold. Doesn't include anything about crypto or general commodity and competing private money (my personal favorite solution, given technological progress), but partially that's due to when it was written.
December 13, 2011
Fascinating survey from someone qualified to observe and opine on the topic. Unlike some books on the topic, Rickards' work is not radical or extreme right-wing in its observations but honest, balanced and thought-provoking. The opening discussion of the Pentagon's financial war game simulation is enlightening, opening a window to the reader of the financial dangers and global consequences which could lie ahead. Rickards' is a bit biased toward some kind of gold standard for all paper money but a bias that is not without a factua basis. Highly recommend.
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