Book Review: Currency Wars by James Rickards
This book came highly recommended by two global macro investors. One of them recommends reading all books by Jim Rickards to become macro aware. So I had high expectations going in.
The book chronologically covers currency wars from WWI to 2011. This timeline helps to see the path dependence and cause and effect of many events. Unfortunately, if you aren’t already familiar with at least some of these events you aren’t going to walk away with a deeper understanding of why and how of events. The book I suspect will probably be more helpful for those who are looking to fill in the gaps in their understanding rather those who like me are somewhat new to the subject or are working off a clean slate. I also got a sense that the author was emphasizing certain events to fit his world view – a return to a monetary system which is anchored to gold.
Here are some questions that the book answered that I found interesting:
- How the classic gold standard was self-regulating and how with the abstraction of gold in the gold exchange standard domestic constraints hijacked this self-regulating nature of the system?
- Why during crisis all countries went off the gold standard ? And why the price of gold convertibility was critical when countries wanted to get back on the gold standard ?
- In what way devaluations carried out by Britain and France in the 1920’s and 1930’s differed from the 1933 USD devaluation ?
- What led to the demise of the London Gold Pool in 1968? And why more than any other country, France wanted to convert its dollar reserves into Gold?
- Why was Germany willing to bailout other European companies in 2010 despite the high cost ?
- How QE can be viewed as an attempt to export inflation to rest of the world ?
- Why currency pegs operationally imply that your trading partner has the biggest say on your monetary policy ?
- How do gold bugs think about what should be the price of gold?
The book also got me interested in the following topics:
- The economic and political changes from the end WWI to the Great Depression in the mid 1930’s and its implication on the investing climate
- The 2010 Sovereign Debt Crisis
- The relationship between complexity, scale, energy requirements, and the rise and fall of systems of any kind – in this case the dollar system of international settlements and monetary policy.
I don’t recommend reading this as the only book or the first book on currencies, global macro and money. But I do think that it should on such a reading list and it should be read if you have an interest in these topics. Rating: 7/10
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