Over the last weekend I read a book on my Kindle (which I love) Currency Wars: The Making of the Next Global Crisis. The book was written by a fellow named James Rickards who is a lawyer, economist and investment banker with over 35 years of experience working in capital markets on Wall Street. By way of this blog posting I highly recommend you read this book.
He talks about an impending financial collapse, a decline in the dollar and a rise in the price of gold. My recommending his book should not be construed as an endorsement of his views or a recommendation that you should make any of these investments for yourself, but it is a recommendation that you understand what he and people who follow his advice are thinking.
He explains how the worldwide currency wars have been going on for many years with the current debasement of the dollar; bailouts in Greece and Ireland, and Chinese currency manipulation are only the latest manifestation. This book gives us a good understanding of the increasing threats to U.S. national security, from dollar devaluation to collapse in the European monetary system, Chinese emphasis on exports and Russian adventurism. If everyone is trying to devalue their currency at the same time who are the winners and losers.
He quotes economist Keynes who once remarked, “There is no subtler, surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” I am not a raving fan of Keynes, but it is interesting that the man, who many of our current economic theories are named for, is quoted with such an idea that is so opposed to what is being done in his name.
One part of the book I found intriguing is the statistics about where all of the gold reserves are in today’s world. According to Rickards and Wikipedia; the United States possesses about 9,000 tons of gold while Germany has about 3,300 tons, the International Monetary Fund has 2,800 tons, Italy and France are tied at third with around 2,500 tons each and China comes in fifth with 1,000 tons. Even more interesting is that private households in India are reported to hold 18,000 tons of gold; that is a respectable amount compared to all of these governments.
I have always feared a very small, but possible, risk that our economic system could collapse into economic chaos. In recent years those concerns have increased, but they still remain very small. Rickards describes the possible outcomes and one of those is the economic collapse and chaos I fear. Even he does not ascribe a high probability to that outcome, but his thoughts are worth consideration.
Book Report on Currency Wars
He talks about an impending financial collapse, a decline in the dollar and a rise in the price of gold. My recommending his book should not be construed as an endorsement of his views or a recommendation that you should make any of these investments for yourself, but it is a recommendation that you understand what he and people who follow his advice are thinking.
He explains how the worldwide currency wars have been going on for many years with the current debasement of the dollar; bailouts in Greece and Ireland, and Chinese currency manipulation are only the latest manifestation. This book gives us a good understanding of the increasing threats to U.S. national security, from dollar devaluation to collapse in the European monetary system, Chinese emphasis on exports and Russian adventurism. If everyone is trying to devalue their currency at the same time who are the winners and losers.
He quotes economist Keynes who once remarked, “There is no subtler, surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” I am not a raving fan of Keynes, but it is interesting that the man, who many of our current economic theories are named for, is quoted with such an idea that is so opposed to what is being done in his name.
One part of the book I found intriguing is the statistics about where all of the gold reserves are in today’s world. According to Rickards and Wikipedia; the United States possesses about 9,000 tons of gold while Germany has about 3,300 tons, the International Monetary Fund has 2,800 tons, Italy and France are tied at third with around 2,500 tons each and China comes in fifth with 1,000 tons. Even more interesting is that private households in India are reported to hold 18,000 tons of gold; that is a respectable amount compared to all of these governments.
I have always feared a very small, but possible, risk that our economic system could collapse into economic chaos. In recent years those concerns have increased, but they still remain very small. Rickards describes the possible outcomes and one of those is the economic collapse and chaos I fear. Even he does not ascribe a high probability to that outcome, but his thoughts are worth consideration.