Book review: Death of money: the coming collapse of the international money system

Having worked on Wall Street for 35 years and advised the US Department of Defense, he is well qualified to write on this fascinating, challenging topic; namely, the coming collapse of the international monetary system.

Should the topic sound apocalyptic or esoteric, there is plenty to interest and provoke the reader, and Mr Rickards has a lively writing style. For example, writing about the role of the Robert Rubin “clique”, he says, “They exercise global control not in the blunt, violent manner of Hitler, Stalin or Mao, but in the penumbra of institutions like the IMF, behind a veneer of bland names and benign mission statements”. Or, when explaining the importance of gold in the monetary system, “It does mean that anyone who rejects gold as money must feel possessed of greater wisdom than the Bible, antiquity and the Founding Fathers combined”.

He is scathing of the elite and governments’ failure to address high indebtedness and deflation effectively.

His central thesis is that printing money is a clearly articulated objective of Bernanke and the Fed. The reasons are: lower finance costs, currency depreciation, increased import prices to cure domestic deflation and to reduce debt to GDP ratios in nominal terms are all objectives of Fed policy.

The outcome is potentially disastrous and, because the dollar has become valueless before in the Revolutionary Wars and in 1978, is not without precedent. The Fed and other central banks have been systematically, surreptitiously and manipulatively acquiring gold since 2009 to counter the expectation that the dollar will cease to be the world’s reserve currency. As an aside, he mentions that exceptions to the good buying strategy are the UK and Japan, which “...are out on a limb, with printing presses, insufficient gold, no monetary allies and no Plan B”.

What is different this time is that the dollar is the world’s reserve currency, so its collapse has disastrous consequences for the whole monetary system. Why the Fed did not address this while it still could in 2009 is because it is complicit with the bank share and bond-holders who would have suffered most. The behaviour of the elite “..is entirely characteristic of a society nearing collapse. Wealth is no longer created; it is taken from others”.

The real victims are ordinary people. But they are not powerless and should look for the signs (gold appreciation, its continued acquisition by central banks, IMF governance reforms, failure of regulatory reforms, system crashes, the end of QE and Chinese collapse). The solution, or the best protection, is to buy real assets: gold, fine art, land, alternative funds and cash in differing and changing proportions over time.

James Rickards is the best-selling author of Currency Wars, an economist, lawyer and investment banker

Julian Ide is chief executive of Old Mutual Investors