Currency Wars: The Making of the Next Global Crisis Paperback – 4 Oct. 2012

A truly extraordinary book that opens the door of truth on the money systems of the past 150 years - and how they've succeeded and failed.Forget right- or left-wing bias, what this book does is take you into the world of money and economics, the truly gobsmacking mistakes made by so-called intelligent leaders and how the current situation of unsustainable debt (the West) and huge sovereign wealth funds (the East) will play out. The author reveals in clear and highly readable language what caused the tragedy of the Great Depression, the growth times of the 1950s and 1960s, followed by increasing levels of debt as one government after another made monumental errors. LBJ and Nixon do not look good, de Gaulle looks seriously smart, Churchill's greatest error was as Chancellor in the early 1920s, and so on.Above all, Rickards lays out in the clearest possible terms where the world is headed if nothing is done to arrest and correct the situation. He explains why gold has to be at the core of that - his challenge, the fact that economists the world over are dedicated Keynesians with policies to perpetuate the tradegy. Read it if you dare - I couldn't put it down.

I found this a highly readable account of some of the possible outcomes of the policies adopted by major central banks in the aftermath of the financial crisis of 2007/08. How likely any of these outcomes are and too what extent the book was written to be a bestseller rather than a serious study I couldn't say. Rickards' makes much of the era of the classic gold standard (1870-1914) as a period of high growth and benign deflation, both of which he seems to attribute to the gold standard. I found myself suspicious of this - the same period was one in which, in both the USA and Europe colonial expansion and the appropriation of the land of native peoples provided abundant and virtually free resources. Surely this would provide at least as good an explanation of that growth as the nature of the monetary system? It was this that left me questioning to what extent facts had been shaped to fit Rickards' argument as opposed to Rickards' argument being shaped by facts. That's not to say that the argument isn't worth listening to and thinking about. I've long believed that if a significant portion of the oil producers decided to request payment in something other than US$ and Rickards shows just how and why such a thing may happen.

James Rickards mind opening book reveals in one easily accessible volume the International function and Geo-political implications of fiat money. The book challenges contemporary Neo-Classical theory on the role, function and importance of currency.To the uninitiated there is only one kind of debt, arising from individuals or organizations borrowing money from each other, yet there is another entirely different kind of debt, a debt between economic or currency regions, known as a balance of payment. In simple terms, when a country imports more than it exports, it relies on another country/region to do the work whilst it receives the benefit, this shows up in its balance of payments as a negative trade balance, i.e. the country now owes a certain amount of its currency to the surplus country. In the not so recent past, such imbalances were addressed through various Gold Standard Systems. Today we are told no such controls are necessary. For some countries this works just fine, notably the United States and Britain, but for the majority of countries it is a route to disaster, as they inevitably experience a run on their currency and need to ask the IMF and other International institutions to provide funds to bridge their balance of payments gap. We all know what happens then!How much currency can a country create, and to what extent will this currency retain its relative value. This seems to be an interesting question."Currency Wars" sets out the historical changes to the International monetary system leading up to the present day. It reveals its weaknesses and speculates as to its future. It is certain that one-day change will come and the dominant world powers will need to find ways to stay competitive without relying on the dominance of their currencies and the power of their armies. The question remains, when it all comes crashing down, will it happen slowly or all of a sudden.

Currency Wars is without a shadow a doubt both a scholarly and imaginitive work. Rickards touches on a much discussed theme in modern economics, the increasing stress and viability of the dollar. In some ways this work is similar to Barry Eichengreen's Exorbitant Privilege, however Rickards looks at a more global scale of currency collapses, and provides both historical precedents, and possible scenarios in which the dollar could collapse.Additionally, the book contains some decent critiques of economic schools of thought, such as Keynesianism, Monetarism, and Financial Economics, as well as a decent critique of complexity theory. While not simply an economic text book, Rickards provides his own critique and insights to the strength and failings of these approaches.Currency Wars provides a decent history of monetary policy, and an ample divination of what could come if decent policy is not implemented, and mistakes of the past are not learned from.The only criticism I have of Currency Wars is the opening. The war games introduction is too wordy, and filled with details that the readers of the book did not intend to read.On the whole, an excellent and thought provoking book. More suited for those already familiar with economics, but accessible to all provided it is read carefully and terms are referenced.I can only hope that this finds its way onto the desks of Ben Bernanke and Barack Obama.