Book review: Currency Wars

James Rickards writes about the next currency war, which could set off big problems for the United States and other countries.

 
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Photo: Anna Lisa Sang

CURRENCY WARS: The Making of the Next Global Crisis
(Portfolio Penguin)
James Rickards

Brazil has perhaps cried loudest this year about the costs of currency warfare, with repeated accusations that some countries are manipulating their currencies to the detriment of other manufacturing powers—such as, say, Brazil. But as Northwestern University lecturer Rickards writes, it’s only one of several countries “caught in the cross fire of a currency war among the dollar, euro and yuan.”

The result of that war, Rickards believes, will be a future U.S. president—possibly even Obama—taking to the airwaves with a sequel to the Nixon Shock, the 1971 Sunday-night announcement that ended the gold standard and effectively closed the book on an era’s global financial exchange system. It won’t be to herald a return to the gold standard’s return necessarily—though Rickards allows that’s a possibility—but some sort of “radical plan of intervention to save the dollar from complete collapse.” Its current trajectory is unsustainable, Rickards argues in what is actually a very entertaining history of a century’s worth of currency struggles. He thinks it unlikely that we’ll end up with an effective system of multiple reserve currencies. The more likely options Rickards sees are gold and chaos—and right now, chaos looks like a good bet.

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