Summary of Currency Wars – The Making of the Next Global Crisis by James Rickards

This blog is a summary of Currency Wars – The Making of the Next Global Crisis by James Rickards. It is a book that is now 11 years since printing but a lot of the insights have come true and a lot of the information on the history of currency wars is very informative. One in particular is Russia’s relationship with Ukraine and how it wants to ensure that it’s State Controlled Natural Gas Company Gazprom remains profitable and the sole supplier of natural gas to Europe.

Rickards begins the book with a quote from the bible which is extremely powerful:
“And when the money failed in the land of Egypt, and in the land of Canaan, all the Egyptians came unto Joseph, and said, Give us bread: for why should we die in thy presence? For the money faileth.”
Genesis 47:15, King James Version

A lot of people are discussing the decline of the United States and it’s currency, and the eventual replacement with something else. According to Ray Dalio in his book Principles for Dealing with The Changing World Order the trend is likely towards Chinese Yuan, though China and the Yuan are not strong enough yet.

Others on the “fringe” would say bitcoin or gold.

Many people are unhappy right now with currency devaluation and rising inflation.

I read this book wanting to understand what was happening with the U.S. dollars and better understand finance and investing.

Why did we go off the gold standard? Is it better to be on a gold standard? What is happening to the U.S. Dollar?

How come the government can print money at will or take it out of circulation (as it is doing right now?) and what are the long term consequences?

Why not use bitcoin or another currency or commodity based currency that is not controlled by any government?

Why do I as a private citizen have a hard time understanding government monetary policy?

Let’s summarize the book and answer these questions as well.

Prewar and Financial War

The beginning of the book is very interesting, as he discusses being invited to help the U.S. Government create and run a Financial War Game. Planning spans the Bush into the Obama administration and is conducted in March 17 and 18 of 2009.

Rickards highlights the military’s lack of knowledge of how finance works, who the players are and the types of moves they can make.

In the war game, he was on China’s team and sold all of China’s gold to Russia as Russia introduced a new Gold based currency. In the last round of the game a large amount of nearly perfect counterfeit hundred-dollar bills called supernotes are discovered in boats off the coast of Japan. These are printed by North Korea’s infamous Bureau 39, the state-sponsored racketeering agency set up in 1974 by Kim Il Sung to conduct money laundering, counterfeiting, drug smuggling and other acts to raise hard currency for North Korea.

All of these moves were played to undermine the U.S. Dollar. He noted that the U.S. Government had no idea how vulnerable they could be.