BOOK REVIEW: Jim Rickards' "Currency Wars"

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Turd Ferguson
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BOOK REVIEW: Jim Rickards' "Currency Wars"

Lots of interest in this book. At the suggestion of "Jack", here's a forum to discuss it.

Edited by admin on 11/08/2014 - 06:26
Shill
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Thank Turd, you forgot the

Thanks Turd, you forgot the link m8ty...quiet the take down going on right now :(

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survivalwstyle
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bOOk it

got this on my Xmas wish list...but i wiLL foLLow the review here as a way to build my interest. gOOd idea spaRRow.

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Shill
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Your grocery bill is getting

Your grocery bill is getting higher, and higher

The price of food at home is projected to rise by 4 to 5 percent this year, and another 2 to 3 percent next year, according to the Agriculture Department ...... The price of beef was 10 percent higher this September than it was a year ago, according to government data........ Fresh fruits and vegetables costs 7.6 percent more in September than a year earlier,

Life Inc. - Your grocery bill is getting higher, and higher

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Just saying Thanks

Thanks for setting it up TF, and definitely a great idea by Jackyes

I'm going to try and find the book at Barnes Noble this weekend or I'll order it if I have to.

I need to read it before I chime in any further.  Thanks!

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Jack
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Slim reed

Hello all,

I want to throw out a paragraph that Rickards writes in chap. 9 abt the U.S. in its current situation. 

"Because debt and deficits are now so large, the United States has run out of dry powder.  If the United States were struck by another financial crisis or a natural disaster of the magnitude of Hurricane Katrina or greater, its ability to resort to deficit spending would be impaired.  If the United States were confronted with a major war in the Middle East or East Asia, it would not have the financial wherewithal to support a war effort as it had done in World War II.  Vulnerability to foreign creditors is now complete.  In the face of any one of these crises--financial, natural or military--the United States would be forced to resort to emergency measures, as had FDR in 1933 and Nixon in 1971.  Bank closing, gold seizures, import tariffs and capital controls would be on the table.  America's infatuation with the Keynesian illusion has now resulted in U.S. power being an illusion.  America can only hope that nothing bad happens.  Yet given the course of events in the world, that seems a slim reed on which to lean."                          -Currency Wars p. 188

What would the U.S. do if another heavy blow were dealt?  more money printing?...grovelling to China for more Yuan for bonds?...austerity (heaven forbid!!)...draconian emergency measures like Rickards mentions above?

How can we interpret a statement like this in light of... the recent announcements of military buildup in Australia,...the shenengans in the Eurozone,...the MF Global debacle.

Help me here all you with clearer heads.  What do you think?

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Max Keiser interview

Keiser interviewed Rickards recently on the book and general thoughts.

Worth a watch for anyone who has not seen it. From 13:50

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Eric Original
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My take, thru Ch. 3

Here's an abridged version of my post I put the other day at the Speak:

I just finished chapter 3.  Jacks observation about the cyclicality of history is spot on.  I'm fully on board with that.  

I'm a little surprised (maybe I shouldn't be) that Rickards seems to think everything was so wonderful under the gold standard.  And also so wonderful before we had a central bank.  Um...there was that little thing called the Civil War in there.  Plus numerous depressions.  Wealth disparity reached epic proportions, numbers that are only being reached again today.  I'm not convinced it was all so wonderful.  I tend to view history as a series of hard money/soft money cycles.  Each runs out of gas eventually and gets replaced by the other.  They are yin and yang, chocolate and vanilla.

I was actually disappointed with chapters 1 & 2.  I was hoping for more fireworks.

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i do not know jack

if when either economic/natural/military disaster strikes if the preSSes stiLL work they wiLL use them. that makes each peice of paper out there worth leSS. if it is so bad they caNNot print, default. rinse. start again. i think that is what JR is saying, with just having read that 1 paragraph, but foLLowing his stuFF for a few years.

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Rickards

I just started it but thought his analogy of the "tug of war" was amazing.

The Fed is attempting to inflate asset, commodity and consumer prices to offset the deflation of the crash. As in a tug of war not much happens in the beginning, just a lot of tension. The rope is the channel which the stress is conveyed. The rope is the dollar.

I wish I could just copy and paste it for all to read.

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I'm about 100 pages into the

I'm about 100 pages into the book. I agree 100% with your take EricO. 

I'm a little surprised (maybe I shouldn't be) that Rickards seems to think everything was so wonderful under the gold standard.  And also so wonderful before we had a central bank.  Um...there was that little thing called the Civil War in there.  Plus numerous depressions.  Wealth disparity reached epic proportions, numbers that are only being reached again today. 

Rickard's implies that the classical gold standard was a smashing success from 1870-1913. As Lee Corso would say, "not so fast my friend". There are better sources than this obviously but here are some snippets from wikipedia:

In 1871, Otto von Bismarck extracted a large indemnity in gold from France and ceased minting silver thaler coins. The first symptoms of the crisis were financial failures in the Austro-Hungarian capital, Vienna, which spread to most of Europe and North America by 1873.

The decision of the German Empire to cease minting silver thaler coins in 1871 caused a drop in demand and downward pressure on the value of silver; this had a knock-on effect in the USA, where much of the supply was then mined. As a result, the Coinage Act of 1873 was introduced and this changed the United States silver policy. Before the Act, the United States had backed its currency with both gold and silver, and it minted both types of coins. The Act moved the United States to a 'de facto' gold standard, which meant it would no longer buy silver at a statutory price or convert silver from the public into silver coins.

The Act had the immediate effect of depressing silver prices. This hurt Western mining interests, who labeled the Act "The Crime of '73."

The post 1873 period is often referred to now as the Long Depression and lasted until around 1880. But things got better from there, right? No, they had bubbles back then, too....

The Panic of 1893 was a serious economic depression in the United States that began in 1893. Similar to the Panic of 1873, this panic was marked by the collapse of railroad overbuilding and shaky railroad financing which set off a series of bank failures. Compounding market overbuilding and the railroad bubble, was a run on the gold supply (relative to silver) because of the long-established American policy of bimetallism, which used both silver and gold metals at a fixed 16:1 rate for pegging the value of the US Dollar. Until the Great Depression, the Panic of '93 was considered the worst depression the United States had ever experienced.

Of course these are just the "official" reasons why both the panic of 1873 and 1893 occurred. From 1866 to 1886, the bankers conspired to decrease the money supply in circulation by 84%, from 1.8 billion to 400 million!! The whole goal of course was to reinstate the central bank that Jackson had killed.

Indeed it was these conditions that led to the populist Free Silver movement, Coxey's army, and William Jennings Bryan's campaign for silver in the 1890's. Pretty convenient to have a depression when a movement to bring back silver was growing.....

The depression was a major issue in the debates over Bimetallism. The Republicans blamed the Democrats for the depression and scored a landslide victory in the 1894 state and Congressional elections. The Populists lost most of their strength and had to support the Democrats in 1896. The presidential election of 1896 was fought on economic issues and was marked by a decisive victory of the pro-gold, high-tariff Republicans led by William McKinley over pro-silver William Jennings Bryan.

The U.S. economy began to recover in 1897. After the election of Republican McKinley, confidence was restored with the Klondike Gold Rush and the economy began 10 years of rapid growth, until the Panic of 1907.

Interestingly, it is well-documented that JP Morgan spread the rumors that led to the Panic of 1907, at the behest of the Rothchilds (upon his death Morgan only owned 18% of JP Morgan Co.). In classic elite fashion, Morgan was of course there to provide a solution to the panic and soon thereafter the bankers began spreading central bank propaganda leading up to the now infamous birth of the dubious ponzi scheme that has ruined our world, the unholy marriage of the Federal Reserve Act and the 16th Amendment.

*Takes a break from writing post and fondles silver stack*

I just started it but thought his analogy of the "tug of war" was amazing.

Agree with this Murphy,  I thought that was a great analogy as well.

I'm hoping to finish the book this weekend and hopefully I'll have something useful to contribute.

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Great job crow, I like the

Great job crow, I like the 1873 reference, and its very true. Text book in fact.

http://en.wikipedia.org/wiki/Panic_of_1873

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Eric Original wrote: Here's

Eric Original wrote:

Here's an abridged version of my post I put the other day at the Speak:

I just finished chapter 3.  Jacks observation about the cyclicality of history is spot on.  I'm fully on board with that.  

I'm a little surprised (maybe I shouldn't be) that Rickards seems to think everything was so wonderful under the gold standard.  And also so wonderful before we had a central bank.  Um...there was that little thing called the Civil War in there.  Plus numerous depressions.  Wealth disparity reached epic proportions, numbers that are only being reached again today.  I'm not convinced it was all so wonderful.  I tend to view history as a series of hard money/soft money cycles.  Each runs out of gas eventually and gets replaced by the other.  They are yin and yang, chocolate and vanilla.

I was actually disappointed with chapters 1 & 2.  I was hoping for more fireworks.

I have to agree with Eric on all his points.   The United States has a long history of boom and bust periods mostly cost by the Wildcat banks and their artificial currencies.     He ignores at least 150 years of deficit spending for wars back to the Barbary wars and sending gold over to Europe to pay for US debt.  Silver/gold wars where the US goverment did everything in it's power to keep silver off the market that was supported by the Silverite party.   How Grover Cleveland sold his soul to JP MOrgan to get the US out of debt by issuing bonds that JP Morgan in turn sold to the public and made a killing on.   The Panic of 1893 was caused not by the lack of the gold standard but by Cleveland's and other US Presidents policy of Imperialism.    Goverments will manipulate currency, even gold and silver, to pay for their wars.   Without such a foreign policy we would not be in this mess.  So Eric's thesis is absolutely correct.  It is not only moving back to a gold standard or a bimetal standard that will create prosperity.   It is going back to the idea's in the constitution about how to run the country and how to conduct ourselves with foreign nations. 

While I haven't finished the book, I too was dissapointed with the war game and thus far in my reading he hasn't mentioned the many examples of how geopolitical factors are part of the war to devalue and collapse the dollar.

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A good read

I don't think Rickards planned to write an encyclopedia and so the above comments, while valuable for my historical education, don't to my mind detract from the book.

After all the book is designed for the general population and I find the writing style to be generally clear and simple.

What I understood from classical gold standard, 1870-1914, was that the loss or gain of gold in international trade due to balance of payments (capital account) constrained the paper currency and resulted in price stability. The problems cited above seem to be mostly domestic and not involve international trade.

I don't find anyone saying that Rickards is wrong, only that there are omissions. So far I've got through Chapter 6 and look forward to finishing it.

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I am just picked up this book

I am just picked up this book and started reading it this weekend.  I have only gotten into chapter one before the wife refocused my attention to other things, sigh.  I will be reading it this week and am curious what others have taken away from it.  Just reading the preface and the beginning of chapter one really grabbed my attention though.  I also loved the quote about the dollar and tug of war.  I am just curious what you all thought now that you have finished the book.  Thanks

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