Currency Wars

Thursday, November 17, 2011

James Rickards examines the new currency war we are engaged in, and argues that it is one of the most destructive and feared outcomes in international economics. Recent headlines about the debasement of the dollar, bailouts in Greece and Ireland, and Chinese currency manipulation are all indicators of the growing conflict. In Currency Wars: The Making of the Next Global Crisis, 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.


James Rickards

The Morning Brief

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Comments [24]

fcvnyc from New York City

After careful reading of Rickards'book I think that his analysis about currency wars is basically correct and that a monetary standard is needed, but not a pure or flexible gold standard. I have proposed in my forthcoming book The Tierra Solution: Integrating Monetary Transformation, Climate Change and Sustainable Development the feasibility of A CARBON MONETARY STANDARD. For more information, see

Jan. 30 2012 10:28 AM
Gordon from Manhattan

Mises is also a deception and an evil one as well. Please do not argue that the Mises approach is in the best interests of the middle class and the poor. Mises argues that increasing the money supply devalues purchasing power. Yet, historically, this is not true and all of us who's ancestors were either serfs, slaves or other wise living in modern economies where socialism and revolution have driven those upfront inequalities underground can attest to our ability to purchase much much more than we ever have historically. What increasing the money supply and leveling the distribution of wealth DOES do is it prevents the wealthy from obtaining a complete control on value and wealth. A multi billionaire has more to lose from devaluation than a poor person. Like we used to say in the ghetto back in the 50's, If the Russians invade the USA Black people would certainly not lose any freedoms or property , we had nothing to lose. It was only the wealthy that were hysterically obsessed with an economic (and therefore political) "leveling" of the playing field, wether it is brought about by a crash or complete revolution and end to a system where the wealthy dominate the system. You dont have to "seize" the assets of the wealthy, you can just "devalue" them.... and if you follow that logic you see why they want the gold standard and the constant value (read domination) of economic and political valuations in place. After all , they worked and manipulated so hard to achieve this status quo. The ironic thing is the wealthy ( or as they like to call them selves "the markets") have no real desire to keep values. Look at Yahoo, which paid 1 billion dollars for the domain name " and promptly made it vanish. If you think about this you begin to understand why Von MIses , and other libertarians are really just trojan horses for re-institutionalizing slavery and serf economies.

Nov. 21 2011 01:55 PM
Micheal from Manhattan

This is why his nemisis P Krugman teaches at Princeton and has a column in the NYT, and a nobel prize in economics ... and this manipulator lectures to the Glen Beck/Ron Paul crowd.. If he did not know that his examples defeat his logic he should go home and study more .. if he DOES know that they do then he is evil. Either way he is a waste of airtime. I like to listen to opposing arguments Leonard, but not ones that leave me frustrated trying to comprehend and untangle the ludicrous faux intellectualism that this guy represents.

Nov. 21 2011 01:37 PM
George from Queens

This guy is an idiot or assumes that his listeners are idiots . I cant believe how he breezes in rapid fire thru a maze of disconnected facts that he tries to force into a libertarian tome on why we need to go on the gold standard. He has absolutely no real understanding of what he is talking about . He even arges that Japan's exchange rate in 2011 should be the same as it was after its disastrous defeat and impoverishment after world war 2! The problem of "technical idiots" like this is a THINKING person will check the historical exchange rate of the Yen BEFORE WW2 and find out that in 1897 the exchange rate was 2 yen to the dollar as opposed to the current exchange rate of 70 yen to the dollar... so much for the "devaluation of the dollar argument . OH by the way when the exchange rate was TWO yen to the dollar .. The USA was on the GOLD standard! MY opinion is when you get manipulators like this smearing facts .. they should be dismissed for what they really are... idiots!

Nov. 21 2011 12:42 PM
Mike from Manhattan

"Exporting our inflation"? The conservative economic disaster chicken little crowd is willing to twist any economic fact to try to fit it into their failed "predictions" of economic doom and gloom. Inflation in China is a byproduct of an economy that is growing at a rate of over 10% a year. "The Fed printed 2 trillion dollars between '08 and '11" This is not what happened, There was not an injection of Two trillion dollars in federal reserve notes into the world economy. A fact that this proffer of economic theory snake oil conveniently forgets. Why? His agenda is the usual gold standard crap that has been dignified by the likes of Glen Beck and other similar intellectual heavyweight.

Nov. 21 2011 12:27 PM

"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."

Says who?

Who wrote this? His agent? What is happening to public radio? LL left Rickards radical and dangerous ideas largely unchallenged.

Nov. 18 2011 08:49 PM

“The gold standard is to economics what the flat earth theory is to astronomy: something that may have seemed to make sense back when people didn’t know any better but is ridiculous to suggest today.” - Dr. Russ Anderson

The disadvantages of a Gold Standard far outweigh the supposed advantages:

See also,

Nov. 18 2011 08:40 PM

"I don't know if we're at the height of the bubble, but at some point you have to ask, which would you rather own, a new high tech Android Phone (sorry Apple fans, I'm a Google guy,) a LCD TV, and a tank of gas for your car, or an ounce of shiny metal that you have to pay to store in a secure area?"

Nov. 18 2011 08:19 PM

This guest was actually one of the better guests that Leonard has had on his show to explain our current economic mess, although there are some things that the guest is incorrect about—but I won't go into that here.

What I would like to offer here is information for those of you who want to know what the "gold standard" is, and also to understand why the Federal Reserve has actually brought about the current economic crisis we are in.

To understand the gold standard:

To understand how the Federal Reserve is slowly destroying the middle-class and also made it harder for people in the poverty class to work their way out of poverty since it was created back in 1913 (even though we've had amazing technological and industrial production processes improvements since then):

(You'll notice that both books are by the same economist. Leonard mentioned the Keynes vs. Hayek debate. The economist who wrote the two books above—Rothbard—is the real economist that should be on the lips of everyone in the debate against Keynes—not Hayek.)

Nov. 18 2011 12:57 AM
Ed Resor from New York Cirty

Worrying about inflation is fighting the last war. Deflation is now a more serious problem than inflation. If Rogoff, Bernake, and Krugman agree on this point it is probably correct.

The U.S. and some countries in Europe need some inflation to share the cost of recovery across all of us and to help get our economy back closer to full employment and full output.

Inflation will also encourage people to invest money and employ people rather than just leaving the money in the bank or U.S. Treasuries waiting for prices to drop further before they invest or hire.

Nov. 17 2011 01:15 PM

I did what I rarely do - turn off the show just after your guest called for the abolition of capital gains tax and corporate taxes, effectively allowing the rich, whose income is primarily from stocks or property to pay proportionally less tax than a bus driver and get wealthier still. When are middle income income americans on the right going to realize that this sort of tax policy is not in their interest or in the interest of the nation as a whole? Every time I hear someone spouting the specious argument that giving a tax break to the rich somehow miraculously stimulates the economy I want to scream 'prove it'. Wealthy Americans are historically speaking enjoying very low taxes already and the economy is in the toilet so exactly how is current tax policy - let alone further cuts - causing innovation and growth in the economy?

Nov. 17 2011 12:51 PM

There is a problem with someone who speaks across our radio waves faster than 50 words a second. It is impossible to conduct an argument at a speed that glosses over important points of debate. Is this a ruse? Investing in gold is like contributing to a ponzi scheme. Those who set up the scheme make out like bandits and those seduced by fast-talking hucksters later in the game are the losers.

Nov. 17 2011 12:43 PM
jgarbuz from Queens

It is a false hope. Our standard of living WILL and SHALL come down, like it or not. It simply flew too high on a burst of DEBT, that finally deflated. Period. This is a structural change that will require a generation of pain as we go down to a realistic altitude and attitude.

Nov. 17 2011 12:40 PM

I am no economist (far from it) but returning to a gold standard seems kind of loopy on just an intuitive level.

Nov. 17 2011 12:40 PM
Mikeweb from Brooklyn

Well, there we go. This guy just lost me at the well-worn insistance that lower tax rates increase tax revenue. He's on the Laffer Kool-aid. And now some Keynesian revisionist history. One word: idiot.

Nov. 17 2011 12:39 PM

Does your guest think that our economic system is dependent on catastrophes, in order to justify its existence?

Nov. 17 2011 12:38 PM
jgarbuz from Queens

The reality is, you can talk about currency manipulations and the gold standard till the cows come home, but until the US standard of living DROPS to a sustainable and competitive level, none of these fiscal or monetary fixes are going to do anything. The US standard of living for the last 40 years was built on a debt bubble that burst, and only till we come down off cloud 9 and forget the "American dream" of a McMansion and few SUV's in the garage, our unemployment problems will remain in place. We have to come down to the the right altitude.

Nov. 17 2011 12:37 PM
Amy from Manhattan

So it's not really an Apple pie? (& to the extent it isn't, it's not as American as....)

Nov. 17 2011 12:36 PM
Amy from Manhattan

What bothers me is that Rickards repeatedly says things like "Going back to the gold standard improved Country X's economy," as though that were the only factor. Sounds oversimplified--what else was going on that could have influenced the outcome?

Nov. 17 2011 12:34 PM

So there is enough gold on the Earth to represent the USA currency, much less the world's currency?

Just looking at the National Debt is around $15 trillion. The price of gold is around $1800/ troy ounce. That means just to represent the debt is around 8.333 billion ounces of gold... Current holdings of gold by the US Mint is only $147.3 million ounces. So it looks like we have a bit of numbers problem if you want do the entire economy in gold.

Nov. 17 2011 12:33 PM
Mike from Manhattan

This fixation on a gold standard instead of a labour standard is a tool of the rich to further devalue the purchasing power and delay the realization by the majority of people that live in this modern economic sharecropping society. The vast majority of people "owe" but do not "own". These crises are tools of the financial powers to disenfranchise the powerless, by denying them access to the jobs and livelihood that should be available to all with the proper allocation and valuation of labor and resources.

Nov. 17 2011 12:33 PM
Joe Mirsky from Pompton Lakes NJ

How does a gold standard work with the fractional reserve system we have in which banks create money?

Nov. 17 2011 12:30 PM
Tony from NYC

Please ask your guest to explain in more precise detail how short term foreign currency fluctuations (1-3 months periods, for example) are corrected for by exporters through immediate changes in the prices of traded goods. I trade/export/import un-hedge-able physical commodities worldwide for cash and bank wire transfer payment. Changes in currency values (for example the weakening of the EURO vs US$ in the past 30 days) get reflected in the prices of the goods within a few days - about how long it takes to do and close a deal - so currency fluctuations don't change the volume of business, just its direction (eg. export from Europe to China one month; export from USA to China another month). Trade barriers (like quantitative restrictions on the import of certain goods, like cars), however, do have large effects on both trade volumes and th direction of trade. I see quick compensatory adjustment to currency fluctuations by business. I believe that this part of international trade and finance is working. DON'T FIX WHAT AIN'T BROKE.

Nov. 17 2011 12:26 PM

What about financial collapses of 1870s, 1893 and 1907?

Nov. 17 2011 12:25 PM

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