Currency Wars: The Making of the Next Global Crisis

The short story is that I think this book is excellent. I consider it required reading -- and in fact re-reading as well -- for investors who rely on an informed macroeconomic perspective to guide their decision-making, and for those interested in the science of monetary economics. Below are some passages from Currency Wars that I thought were especially insightful. They put forth prospective answers to many key questions that many traders will want to consider. How Does the Global Economic Crisis Get Resolved? "The new crisis will likely begin in the currency markets and spread quickly to stocks, bonds, and commodities. When the dollar collapses, the dollar-denominated markets will collapse too. Panic will quickly spread throughout the world. As a result, another US president, possibly Obama, will take to the airwaves and cyberspace to announce a radical plan of intervention to save the dollar from complete collapse, invoking legal authority already in place today. This new plan may even involve a return to the gold standard. If gold is used, it will be at a dramatically higher price in order ot support the bloated money supply with the fixed quantity of gold available. Americans who had invested in gold earlier will be confronted with a 90% "windfall profits" tax on their newfound wealth, imposed in the name of fairness. European and Japanese gold presently stored in New York will be confiscated and converted to use in the ervice of the New Dollar Policy. No doubt the Europeans and Japanese will be given receipts for their former gold, convertible into New Dollars at a new, higher price. Alternatively, the president may eschew a return to gold and us an array of capital controls and global IMF money creation to reliquify and stabilize the situation. This isn't far-fetched speculation. It has all happened before. Time and again, paper currencies have collapsed, assets have been frozen, gold has been confiscated, and capital controls have been imposed." Is Widespread Military Conflict Likely? "A conventional military confrontation with the united States seems highly unlikely because of the United States' ability to suppress and ultimately decimate the opposing side. As a result, rival nations and transnational actors such as jihadists have increasingly developed capabilities in unconventional warfare, which can include cyberwarfare, biological or chemical weapons, other weapons of mass destruction or now, in the most unexpected twist of all, financial weapons...the costs of a financial war might be far less than the costs of an arms race and possibly be much more effective at undermining US power than a military confrontation." How Do Currency Wars -- When Economies Compete to Devalue their Currencies -- Start? "Currency wars begin in an atmosphere of insufficient internal growth. The country that starts down this road typically finds itself with high unemployment, low or declining growth, a weak banking sector, and deteriorating public finances. In these circumstances, it is difficult to generate growth through purely internal means and the promotion of exports through a devalued currency becomes the growth engine of last resort." Do Currency Devaluations Help an Economy? "A country that cheapens its currency may make final sales look cheaper when viewed from abroad but may hurt itself as more of its cheap currency is needed to purchase various inputs." Have Currency Wars Happened Before? What Was the Outcome? "Currency War I began in spectacular fashion in 1921 in the shadow of World War I and wound down to an inconclusive end in 1936. In round after round of devaluation and default, the major economies of the world raced to the bottom, causing massive trade disruption, lost output and wealth destruction along the way. The volatile and self-defeating nature of the international monetary system during that period makes Currency War I the ultimate cautionary tale for today as the world again confronts the challenge of massive unpayable debt." How does China play into the Euro crisis? "China has a vital interest in a strong Euro. The European Union surpasses the United States as China's largest trading partner. China's interest in supporting the Euro is as great or greater than its interest in maintaining the yuan peg against the dollar." How is China affecting the gold market? "Between 2004 and 2009, China secretly doubled its official holdings of gold. China used one of its sovereign wealth funds, the State Administration of Foreign Exchange (SAFE), to purchase gold covertly from dealers around the world. Since SAFE is not the same as the Chinese central bank, these purchases were off the books from the central bank's perspective." What are the Possible Outcomes for the end of the Reign of the US Dollar? "Taking a range of views from the conventional to the cutting-edge, we can foresee four outcomes in the prospect for the dollar -- call them The Four Horsement of the Dollar Apocalypse. In order of disruptive potential from smallest to greatest, they are: multiple reserve currencies, Special Drawing Rights, gold, and chaos." What are Special Drawing Rights (SDR)? "The SDR is world money, controlled by the IMF, backed by nothing, and printed at will. Once the IMF issues an SDR, it sits comfortably in the reserve accounts of the recipient like any other reserve currency."

I don't consider myself much of financial wiz or to have any far reaching knowledge in terms of global financial markets or economics. That being said I do my best to analysis the world around me in an attempt to figure out what is going on and how it impacts the general population. I cling to the mantra that all the knowledge in the universe is worthless unless it can be applied. This book fills in a lot of gaps in my opinion and more or less synthesizes what I have been trying to piece together over the last decade. Not only does the light bulb turn on, it stays on and continues to burn brighter throughout the book. The book is written in such a way that most humans shouldn't have any problem processing it. I believe very little of what I read, facts and opinions are often pushed out there in such a way to benefit the person sharing the information, helping defeat any bit of cognitive dissonance that may arise in their own world. This book seems to be fair in my opinion. Not really playing any side to any extreme, it feels like it is balanced for the most part. I don't feel it answers any of the BIG questions but I don't think that was the aim. I feel it was written to educate people. In the end I feel it gives the average person a much more sound understanding of some of the reasons/actions that have brought us to the present(and past) financial dilemma. It really isn't as messy as I had thought. It is simply a bunch of independent parties attempting to play together as a team but each having their own interests driving their actions. There is always going to be an equal and opposite reaction, it is just a matter of who is on the action role vs. who is in the reaction role. Kind of like the social unrest throughout the world, people freak out but I think if they had this to read they may get a better understanding of why governments and central banks do what they do. There is always the human/self interest variable that must be accounted for regardless if we agree with the outcome of those interests as they manifest in the short and long terms. Again, I don't know all that much but I feel more aware after reading this book. As a lay person, it has increased my knowledge base thus increasing my quality of life by giving me a map to reference when I look at macro issues and then apply the knowledge to my little micro life. Buen Trabajo Mr. Rickards.

I picked this book up on the recommendation of an acquaintance. We got into a conversation on election night, and of course we got to talking about economics. This guy absolutely knew his s***, and our conversation shifted into more of a lecture, where he was telling me all this stuff I didn't know and I was nodding and hungrily begging for more. This book made me a competent debater. You see, I'm pretty interested in politics and even volunteered my time to collect signatures and make phone calls and signs for the Ron Paul campaign. But when it came to talking about the economy, I was in over my head, and couldn't do much more than talk on a very hypothetical level. This book offers a comprehensive history of the rise and fall of major economies throughout the world in the 20th century. It explains how risk rises exponentially as the complexity of systems increases; it explains how a society's psychological mindset can screw up all predictions of the economy's direction developed from numeric data; it explains how nations of the world are becoming increasingly dependent on one another to create and preserve wealth. This is a book to be read slowly. Read a bit, sit back and process it, discuss it with your family and friends, figure out how each chapter fits into the current state of affairs. Once it's all over, you'll feel so much smarter. Of course, that statement is only true if you're the intended audience for this book. If you've gotten an advanced degree in economics, you may already know this stuff. If you're just not at all interested in the economy, politics, and current affairs, I am quite sure this book will not hold your interest. But if you're a lay person eager to be more well-informed about the economic situation surrounding you, this book does exactly that. Before I go, the reason I knocked a star off: this author is a a proponent of the gold standard. Like I said, I helped out with the Ron Paul campaign, so I assure you I have come across my fair share of gold standard supporters. And unfortunately, while Rickards was very clear in explaining the other theories and practices he describes in this book, he comes up short when describing the benefits of the gold standard. He clearly describes the necessity of tying a currency in to a clear measure of wealth. But, well, returning to the gold standard has some very significant issues that he seems to gloss over. He freely admits that returning to the gold standard would only work if a lot of countries do it. While he admits that this is a problem, he doesn't acknowledge that this very problem is the same problem present in every financial theory he presents: that a plan only works if everyone decides to go along with it and it works as intended! Also, while he acknowledges the need to revalue gold (should we return to the gold standard), I don't think he fully investigates the ramifications of doing this. Different countries have different amounts of gold currently hoarded away, which would seriously impact the practicality of converting standards, and he doesn't even touch in how we would redistribute gold to simulate the wealth a country holds in their current currency.

This book was fascinating. It was totally outside my area of understanding, but after reading the book, I learned a lot about the process and influence of a currency in this world. The book gives you a brief history of the role of currency, and goes into how people wage war by using the ups and downs of the valuation of a certain currency of a country. The valuation of a currency has a huge impact on the health of a economy. The book talks about the role of gold in the process too. Years ago, all currency was mostly attached to the wealth of gold that a nation had. But recently, this has been separated. There have been a couple of modern currency wars, and this using leads to a zero sum game. The book was written before the quantitative easing, so the author writes about this process, and explains some of the ramifications of this policy. He has a negative view of the results that could happen. So far, though, it seemed to work, but it is more of a long game to see the final results. Moving forward, China is going to play a large part in future wars, because of the manipulation of the yuan. This will be interesting to see. On an interesting note, the author is a good friend of one of the members in Castle Rock. One of the cool things of being at Castle Rock is the world famous people you get to minister too. This is not for everyone, but you need a certain level of money systems knowledge to understand the book, btu the author does a good job of making it accesible.

I read this book several years ago and decided to reread it again in 2025 with US Dollar getting weaker due to continuous printing of money by the Fed. Jim Rickards clearly and accurately outlines the chaos of the dollar in today's world due to this printing. There exists rational solutions to the financial problems of the USA, but presently there's no rational thought amongst the elites in this country, nor the world, to correct this difficiency. For the middle class and the poor, look out below...

This book, though focused on currency wars, offers a wealth of insightful history about the US dollar. Even though it was written in 2011, many of its lessons remain relevant today, especially in understanding how to grow wealth through currency strategies and avoid losing money. Here are some of the key points: - Early in the book, the author highlights President Nixon's announcement on August 15, 1971, when the US officially abandoned the gold standard because gold reserves were too low to support the dollar. Thankfully, Nixon's 1973 agreement with Saudi Arabia, where they agreed to sell oil exclusively in dollars in exchange for US military protection, helped preserve the dollar’s strength. - Thanks to globalization, very few goods are produced entirely within one country anymore. For manufacturing nations, currency devaluation might not be effective since importing raw materials becomes more expensive. - The gold exchange standard was designed to be a self-correcting system. However, central banks started making interest rate and monetary policy decisions based on currency reserves, which gradually caused the system to weaken. - Foreign investors often hold dollars not just because of America's strong economy but also because they trust in the US government and military strength. For instance, Western Europe and Japan rely heavily on the US for their defense and security. - Many understand that Quantitative Easing (QE) involves printing money, but few realize how it actually works and its global effects. When the Fed creates money, it buys Treasury securities from primary dealers, paying with newly printed cash. To decrease the money supply, it sells securities back to those dealers. - By purchasing medium-term debt, the Fed aims to lower interest rates, making borrowing cheaper for homes and businesses, which can boost economic activity. However, this money printing has also led to inflation felt across many countries, sparking unrest, protests, and upheavals worldwide. - The Fed has a dual mission: maintain stable prices and lower unemployment. It also acts as a lender during financial crises and regulates major banks to prevent collapses. The author critiques the way the Fed managed the 2008 crisis, pointing out that instead of letting insolvent banks fail, the government bailed them out, allowing bank owners to continue earning profits at the taxpayer’s expense. - The dollar has lost around 95% of its buying power over time. While wages and prices both increased, the effects weren’t equal. Those who used leverage or understood inflation well—by hedging with assets like gold, land, or art—have fared better than cautious savers or those living on fixed incomes, who saw their wealth diminish. This disparity is a big reason why the rich often get richer while the poor tend to fall further behind.

My description of the book is: disjointed. The first few chapters discuss participating in structured war games. I thought the wargame could have been a book in and of it self. Not so much what was provided, but an in-depth approach to his thinking on how to conduct economic warfare as he saw it. Rather, you get, more or less, the Pentagon is thinking about it and planning for it. The worth of the book for the those with a general interest in economics is chapter 9 and 10 which discuss, cursorily, existing differing approaches to macro-economics and risk, and recommended approaches for future analysis. I found the most value in these chapters because I later read about, in depth, about complex systems theory and mathematics of fractals (it actually applies quite a bit believe it or not...they think you're smart but I digress). My criticism is that the structure and analysis of the book is shallow. A couple of chapters about economic war games lacks real detail (not unexpected if disclosure requirements dictate limited disclosure but why include it then?). Another few chapters highlight historical currency wars, also without detail. The final few discuss views on risk management, a touch of predictions without much analysis, and commentary on both. I understand the approach which is for someone who probably grasps capital markets and the basic thinking behind professionals that participate in it, but as an avid reader, the book seemed like a series of memos with different themes. Nonetheless, the topics discussed are pertinent more than ever. It's a worthwhile read, but will only be useful if you already understand prevailing economic and finance theories or are interested in researching them. The author summarizes the theory behind such thought, but, as with much in this world, you have to practice it before you understand criticisms of thought in which a system is based. That said, the author's conclusion about economic theories being misunderstood and misapplied is quite apt. You have to know them to pass a reasoned judgement. In sum, I recommend reading the book, but it's not necessarily something to keep on the bookshelf.

This book is about the fall of the dollar, which the author believes is at least being partially engineered as the first salvo in a currency war fought to reverse the trade imbalance that the US has with most of the rest of the world. Rickards believes that monetarism (the control of the economy through the control of the money supply) does not work and that Keynesian economics not only does not work, but is also dangerous to boot. That leaves the gold standard, which Rickards favors, but he is fair enough to recognize that the increase in the gold supply of only 1.5% is not enough to provide the growth required (about 3.5%) for a robust economy with an acceptable level of unemployment. He also recognizes that there are circumstances where a strict gold standard will not work, so he proposes a somewhat more flexible version, which believers in a true gold standard hold as heresy. I found the Rickards' writing to be clear and for the most part he did a good job of explaining difficult economic concepts. However, while I agree with most of the facts that he presents, my reading on the subjects that he covers leads me to somewhat different interpretations. Rickards definitely has a distinct opinion and, in my opinion, sometimes distorts the interpretation of facts to fit this opinion. For instance, he blames the actions of Federal Reserve System for contributing to the great depression. Most economists agree that this was the case, but believe that the Fed was forced into these actions in defense of the gold standard, whereas Rickards ignores this interpretation. Rickards ends the book with a frightening scenario of a President of the US confiscating not only the gold of US citizens, but also that of foreign governments that is held in the NY Federal Reserve. He bases this on a 1977 act, which gives the President emergency powers in the event of a national emergency. However, the act does not specifically provide for the actions described by Rickards. While such actions might be possible, they are not necessarily going to happen. His rational for the scenario is that Roosevelt used an equally general law to confiscate gold held by US citizens (but not foreigners) in 1933. Unfortunately, the depiction given by Rickards is so persuasive that its hypothetical nature is likely to be lost on those who do not take the trouble to actually read the wording of the act itself, or the limited extent to which it has been applied so far. All in all, I agree with his belief that we are teetering on the edge of economic catastrophe. Unfortunately, the somewhat hyperbolic presentation of this made me frightened and depressed, especially since I do believe that even if his proposed alterations in the world's economic system would work (and there are many who believe that they would not), there is absolutely no chance of their being implemented in order the prevent a collapse. Perhaps they could be implemented after the collapse, but I see no chance of this before the collapse, making it inevitable, which is truly frightening.