Having just completed reading The Death of Money by James Rickards, it is easier to focus initially on my disagreements with it than simply to concur with all the points of agreement.
The central theme of the book, the coming collapse of the international monetary system is and important and interesting one which affects everyone on the planet. Rickards illustrates how we have arrived at this point, and where we might be headed in the future, also addressing ways for investors to prepare. The Death of Money is on the whole a good and worthwhile read. He dispenses largely relevant, important information in an understandable way to a wide audience, and for this he deserves credit.
As Rickards puts it, the book is both a prequel and a sequel to his other book, the excellent Currency Wars, revisiting some themes and expanding on others. Much of the content is covered in Currency Wars and the prequel part really adds nothing to the theme of the book, merely revisiting the start of Currency Wars in more detail.
Coverage of 9/11 in Chapter 1
This is a topic which unfortunately features much more prominently than it needs to be (if at all), as part of the largely irrelevant prequel section which returns to the insider trading of 9/11.
In his interview with Daniel Ameduri of the Vision Victory channel, Rickards is asked, given his opinion on the events of 9/11 in the book, what he thinks of the evidence of World Trade Centre building 7. Rickards deftly deflects the question, saying there is no doubt of insider trading ahead of 9/11, and goes on to say this was carried out by ‘associates of the terrorists’ (I have addressed this in a previous blog post:
The question of WTC7 is not addressed.
question is at 22.30
In defence of Rickards, I can understand why someone who is trying to convey important messages in his two books, would not want to court controversy by delving into the events of 9/11. In which case I have to question why it features to the extent it does in his book. Obviously he wants to address it with regards to the new phenomenon of financial warfare and terrorism, however he digs himself into a hole asserting that the insider trading was carried out by ‘associates of the terrorists’ as he puts it, despite having no evidence of this.
The 9/11 Commission Report is almost forgiven for just not connecting the dots well enough, despite the fact that members of the commission have publicly admitted that they were “setup to fail” and indeed the report itself was a whitewash which has never seen a revision since, let alone a new investigation.
In my humble opinion, it is hard for me to believe that people with the intelligence and connections Rickards has, do not know what happened on that day, and can back up the government’s official explanation of the events with such confidence. From page 27:
On the “conspiracy theory” of the 9/11 Truth Movement:
This nonsense is a disservice to the memory of those killed or injured in the attack and in subsequent military responses. The hard evidence that the attacks were planned and executed by Al Qaeda is irrefutable. The 9/11 Commission Report is a monumental and excellent summary, a brilliant work of history despite the inevitable flaws that arise in such a wide-ranging effort.
I found this well crafted statement shocking to read, since it sounds like it came from the mouth of Dick Cheney himself, and leads me to believe, that like has been suggested by others, Rickards is effectively a ‘gatekeeper’ for the establishment, having worked closely with the U.S. government, and/or is towing the line of the official 9/11 story in order to get the book published. To question the events of 9/11 in any way whatsoever, would clearly overshadow the theme of the book, and would not be taken seriously especially on the mainstream media on which he regularly appears. Again, for these reasons I have to wonder why he covers this issue to the extent it does, if at all.
The European Union and the Euro
Rickards opens chapter 5 with a rather romantic and erroneous notion that the current political centralisation of Europe is descended from the time of Charlemagne. He looks very favourably on Angela Merkel and Mario Draghi and believes the Euro’s economic future is a positive one, asserting that Europe is past its crisis, and things are likely to get better from here despite unemployment levels in Spain and Greece in excess of the U.S. during the Great Depression.
By simply focussing on the relative strength of the Euro as a global currency, he overlooks the political nature of the EU, being an unelected bureaucracy, enslaving weak countries to austerity, trapping them in a currency which is too strong and where they have no influence over their own interest rates. His opinion of the Euro as a global currency is relative to the other more badly managed fiat currencies However, the ECB having the cleanest balance sheet is not a valid reason for advocating its existence and that of the Euro, particularly given the appalling social consequences it has resulted in on the European periphery.
It is somewhat contradictory that Rickards sees the centralisation of the European Union towards fiscal integration as a necessary step to full union, despite commenting that this type of central planning has been detrimental for the U.S. and China. It is true that monetary union without political union, has never worked before on such a scale, but implementation of ‘full union’ would completely strip all sovereignty from the once independent nations of Europe.
“The difficulties Spain has faced for the past five years are part of a necessary structural adjustment to allow Spain to compete more effectively. Most of this adjustment is now complete and Spain is poised for good growth in the years ahead. Unit labor costs have declined more than 20% since 2008, which makes Spanish labor more competitive with the rest of the world. Unemployment is difficult, but it gives Spain a huge pool of untapped labor that is now available as new capital enters the country. Increased labor force participation from among the unemployed will allow the Spanish economy to grow much faster than its overall demographics would suggest. The Euro has given Spain a strong currency, which is extremely attractive to foreign investors. . . . . Spain has successfully made structural adjustments and put its major problems behind it, unlike the United States where the structural problems have not been addressed and painful economic adjustments are yet to come.”
Having personally lived in Spain and witnessed the disastrous consequences of the Euro on its economy, increased poverty levels, sky high unemployment this analysis is naive at best. I can’t see how in hell a strong Euro can ever be good for such periphery countries with weak economies. The answer to these problems is not centralisation, but sovereignty, a weaker national currency and control of interest rates by the nation itself, not by the bureaucrats in Brussels. Freedom = prosperity!
Maybe it is because the author himself is American, and therefore is looking out for the interests of his country – fair enough. However, at times this seems to slightly compromise his objectivity on a few things.
The issue of a lack of an audit of Fort Knox is not addressed, and it is assumed that the U.S. still has over 8000 tons of gold in reserve. Of course national gold holdings are notoriously opaque, but nonetheless with the last proper audit being in 1953, and refusals of more recent audits by the Federal Reserve, together with the issue of the German gold repatriation request, it is giving the U.S. the benefit of the doubt that the holding is the amount the Fed says it is.
Additionally Rickards avoids detailing certain geopolitical blunders and atrocities committed by the United States in the name of defending the Petrodollar since the 1970s, notably the Iraq War, Libya, and a multitude of other reprehensible crimes committed in the name of the current Petrodollar fiat money system.
Despite these criticisms (and an over use of the thesaurus!), much of the factual information particularly in the latter half of the book clearly illustrates the mechanics of the global monetary system and the challenges facing it. Like with Currency Wars, Rickards has produced and entertaining and educational read in a style understandable by a much wider audience than many other books on similar topics.
The final three chapters of the book are definitely the best and most relevant, indeed the book generally improves as it progresses, where everything is boiled down in a more concise fashion.
As Rickards correctly notes, the nature of the next global financial crisis is due to the fact that:
“the world is facing structural problems, but is trying to address them with cyclical solutions. A structural problem can only be solved with structural solutions including changes in fiscal policy, labor policy, regulation and the creation of a positive business climate. Monetary solutions of the kind being pursued are not an answer to the structural problems we face. Meanwhile, monetary solutions threaten to undermine confidence in paper money. The combination of unaddressed structural problems and reckless monetary policy will ultimately produce either extreme deflation, borderline hyperinflation, stagflation or a collapse of confidence in the dollar.”
One cannot disagree with this logical analysis and the author’s suggested outcomes of this global economic reset are realistic. He is certainly correct that it is a matter of time until the dollar collapses, with this event leading to a reset in the world’s monetary system. I do agree with him that gold will likely regain its historic role as money and that after the end current era of fiat money, future power and influence will be apportioned by how each country is positioned in terms of their respective gold reserves.
In conclusion, the two books Rickards has written contain important and understandable information. While The Death of Money builds upon and complements Currency Wars to some extent, providing an updated perspective from four years ago, it takes a long time to reach conclusions and its message could be condensed, which is not necessarily helped by the inclusion of some of the earlier parts of the book.