Currency Wars: The Making of the Next Global Crisis

Currency Wars: The Making of the Next Global Crisis

by James Rickards


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In 1971, President Nixon imposed national price controls and took the United States off the gold standard, an extreme measure intended to end an ongoing currency war that had destroyed faith in the U.S. dollar. Today we are engaged in a new currency war, and this time the consequences will be far worse than those that confronted Nixon.


Currency wars are one of the most destructive and feared outcomes in international economics. At best, they offer the sorry spectacle of countries' stealing growth from their trading partners. At worst, they degenerate into sequential bouts of inflation, recession, retaliation, and sometimes actual violence. Left unchecked, the next currency war could lead to a crisis worse than the panic of 2008.

Currency wars have happened before-twice in the last century alone-and they always end badly. Time and again, paper currencies have collapsed, assets have been frozen, gold has been confiscated, and capital controls have been imposed. And the next crash is overdue. Recent headlines about the debasement of the dollar, bailouts in Greece and Ireland, and Chinese currency manipulation are all indicators of the growing conflict.

As James Rickards argues in Currency Wars, this is more than just a concern for economists and investors. The United States is facing serious threats to its national security, from clandestine gold purchases by China to the hidden agendas of sovereign wealth funds. Greater than any single threat is the very real danger of the collapse of the dollar itself.

Baffling to many observers is the rank failure of economists to foresee or prevent the economic catastrophes of recent years. Not only have their theories failed to prevent calamity, they are making the currency wars worse. The U. S. Federal Reserve has engaged in the greatest gamble in the history of finance, a sustained effort to stimulate the economy by printing money on a trillion-dollar scale. Its solutions present hidden new dangers while resolving none of the current dilemmas.

While the outcome of the new currency war is not yet certain, some version of the worst-case scenario is almost inevitable if U.S. and world economic leaders fail to learn from the mistakes of their predecessors. Rickards untangles the web of failed paradigms, wishful thinking, and arrogance driving current public policy and points the way toward a more informed and effective course of action.

Product Details

ISBN-13: 9781591845560
Publisher: Penguin Publishing Group
Publication date: 08/28/2012
Pages: 320
Sales rank: 86,709
Product dimensions: 5.40(w) x 8.30(h) x 1.00(d)
Age Range: 18 Years

About the Author

James Rickards is a counselor, investment banker, and risk manager with over thirty years' experience in capital markets. He advises the Department of Defense, the U.S. intelligence community, and major hedge funds on global finance, and served as a facilitator of the first ever financial war games conducted by the Pentagon. A frequent guest on CNBC, CNN, Fox, C-SPAN, Bloomberg TV, and NPR, Rickards also lectures at Northwestern University and at the School of Advanced International Studies.


Table of Contents

Preface xiii

Part 1 War Games 1

Chapter 1 Prewar 3

Chapter 2 Financial War 17

Part 2 Currency Wars 35

Chapter 3 Reflections on a Golden Age 37

Chapter 4 Currency War I (1921-1936) 56

Chapter 5 Currency War II (1967-1987) 78

Chapter 6 Currency War 111(2010-) 98

Chapter 7 The G20 Solution 125

Part 3 The Next Global Crisis 143

Chapter 8 Globalization and State Capital 145

Chapter 9 The Misuse of Economics 168

Chapter 10 Currencies, Capital and Complexity 195

Chapter 11 Endgame-Paper, Gold or Chaos? 226

Conclusion 255

Afterword 259

Acknowledgments 267

Notes 271

Selected Sources 279

Index 289

What People are Saying About This

From the Publisher

“One of the most urgent books of the fall.”
—Mike Allen, Politico

“Let’s hope he’s wrong.”
Financial Times

“Rickards . . . has written one of the scariest books I’ve read this year. Though I was tempted at first to dismiss him as alarmist, his intelligent reasoning soon convinced me that we have more to fear than fear itself. Part history, part primer and analysis, the text covers topics ranging from the “misuse of economics” to complexity theory. The pieces, although disparate, fit together snugly, as in one of those mystery jigsaw puzzles that come with clues in lieu of cover art. The picture that emerges is dark yet comprehensive and satisfying.”
—Bloomberg Businessweek

“Unsettling . . . fascinating . . . a thorough analysis of how nations have manipulated their currencies . . . with disastrous consequences.”
—Fort Worth Star-Telegram

“Buy Currency Wars if you want to learn the history and language of the global currency markets and the political economy which they support.”
—Chris Whalen,

“Jim Rickards highlights dangerous dynamics between national security and the international financial markets. What we assumed was firm ground under our feet is more like the narrowing point of a precipice. Our politicians, national security experts, and financial markets, each chasing carrots dangling in front of them, fail to see that they are leading America right off the edge.”
—Charles A. Duelfer, former special adviser to the director of the CIA; author of Hide and Seek: The Search for Truth in Iraq

“Put on your flak vest and helmet and enter the dangerous battlefield of global finance. Jim Rickards takes you through a captivating roller-coaster ride—the past, the present, and a look at the problematical future of our ongoing currency wars.”
—Rear Admiral (Ret.) Stephen H. Baker, chief of staff, Fifth Fleet; recipient, Distinguished Service Medal

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Currency Wars 4 out of 5 based on 0 ratings. 22 reviews.
Anonymous More than 1 year ago
I just bought the Nook version of this book and couldn't put it down. I've just started to learn about economics the last four years and highly recommend this book. If you are just starting to learn about our financial system or have been around I still recommend. The author is very informed and backs up all ideas with facts, history, etc., so unlike other economic books with too much political slant. It starts out as a narrative and then towards the middle he really starts to address the impact of dollar on world currencies...must read. Very rare to find an "economic" book with "suspense"...
Anonymous More than 1 year ago
A compeling thesis on monetary instability.
honestTT More than 1 year ago
This is an excellent book and well worth your time to read it. I'm not sure why some reviewers did not like the book since their arguments were incoherent with respect to the authors main points. Perhaps it is because they disagree with his conclusion as to the best way to avoid Ruinous economic consequences Precipitated currency wars.
Anonymous More than 1 year ago
Extremely enlightening. This is a must read if you are interested in macro economics.
Anonymous More than 1 year ago
After graduate studies in government, social sciences, and real estate, and 30 years of dealing with the consequences of our monetary policy in the real estate business, this is the first book I've seen that gives a broad and long perspective on the role of monetary policy in history. I pick my writers carefully so as not to bore myself, so after enjoying Michael Lewis, I decided to "plow through" this book only to understand what is going on today. It was surprisingly easy plowing. Rickards brings it all very much to life, and covers a huge amount of (extremely relevant) ground in a short time... with elegant illustrations and an intellectually honest, balanced treatment. Highly recommended to anyone planning to live through the next decade, or who would like to understand the news!
Anonymous More than 1 year ago
A look at how markets can be manipulated to ruin a country. They are doing it to Iran right now, but it turns out it can be done more subtly...
Anonymous More than 1 year ago
This is one of types of book that makes you think about what could and might happen. The basic arguments seem sound and the conclusions all seem possible. In fact I would say much of the book has to say is just down right scary. It was well worth time needed to read and think about it's contents.
fz01 More than 1 year ago
For me this was light reading, perhaps not enough substance. But, interesting that Pentagon was involved in staging such war games, i.e. involving currency as war. We are apparently witnessing it today, via Dollar, Euro, Pound, Renminbi. Author predicts four stages, from what we see today to SDR, and basket of currencies, only to end in gold as the final solution.
everfresh1 on LibraryThing More than 1 year ago
I found this book uneven. I liked very convincing historical perspective (some facts that I didn't know about). I was bored in the beginning by currency war simulation description - seems like totally useless exercise and a waste of taxpayers money. I was skeptical about some generalizations of financial systems provided by author. I was totally convinced by his description of what the future hold. I was annoyed by some obvious biases in author's description of some government intervention in the past - not all was wrong. Overall, it's a very useful book that everybody should read, despite its shortcomings. I will definitely be looking at Fed's activities in a different light now.
Anonymous More than 1 year ago
Easy to read even for foreigner. Exciting !
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Couldnt get through it
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Anonymous More than 1 year ago
A must read
greybees More than 1 year ago
Light reading Richards reports in all-embracing detail - office layouts, furniture arrangements, beverages drank, foods eaten, etc. - the preparation for and events of a multi-day conference sponsored by DOD. Not sure of the overall cost of the operation or its usefulness because before too many pages are past the reader is rather disinterested. A reference to the Drudge Report by the author as a prime source of his financial information is rather telling.