Hello. I am Deepak Kundu, an avid book reader and quotes collector. As a hobby, I collect interesting quotes from the books that I read.
This post is a collection of 24 quotes from the book - Currency Wars by James Rickards. I hope you find these quotes useful.
Currency Wars Quotes
A currency war, fought by one country through competitive devaluations of its currency against others, is one of the most destructive and feared outcomes in international economics.
Currency devaluation as a path to increased exports is not a simple matter. It may lead to higher input costs, competitive devaluations, tariffs, embargoes and global recession sooner rather than later. Given these adverse outcomes and unintended consequences, one wonders why currency wars begin at all. They are mutually destructive while they last and impossible to win in the end.
Devaluation and currency wars never produce either the growth or the jobs that are promised, but they reliably produce inflation.
Today the risk is not just of devaluation of one currency against another or a rise in the price of gold. Today the risk is the collapse of the monetary system itself—a loss of confidence in paper currencies and a massive flight to hard assets. Given these risks of catastrophic failure, Currency War III may be the last currency war—or, to paraphrase Woodrow Wilson, the war to end all currency wars.
The idea of the gold standard was not to deplete nations of gold, but rather to force them to get their financial house in order long before the gold disappeared. In the absence of a gold standard and the real-time adjustments it causes, the American people seem unaware of how badly U.S. finances have actually deteriorated.
The euro and dollar are best understood as two passengers on the same ship. At any given time, one passenger may be on a higher deck and the other on a lower one. They can change places at will and move higher or lower relative to each other, but at the end of the day they are on the same vessel moving at the same speed heading for the same destination.
The value of a nation’s currency is its Achilles’ heel. If the currency collapses, everything else goes with it. While markets today are linked through complex trading strategies, most still remain discrete to some extent. The stock market can crash, yet the bond market might rally at the same time. The bond market may crash due to rising interest rates, yet other markets in commodities, including gold and oil, might hit new highs as a result. There is always a way to make money in one market while another market is falling out of bed. However, stocks, bonds, commodities, derivatives and other investments are all priced in a nation’s currency. If you destroy the currency, you destroy all markets and the nation.
Financial warfare is one form of unrestricted warfare, the preferred method of those with inferior weapons but greater cunning.
Companies that appear private but have nearly unlimited state resources behind them, such as China Petroleum and Chemical Corporation (known as Sinopec), are able to bid on natural resources, buy competitors and invest in equipment without regard to short-run financial impacts. They are able to gain market share by selling below cost. They do not have to worry about losing access to capital markets in times of economic distress. Such entities need not fear investigation by their own government if they bribe dictators and their troops to protect their interests. This neomercantilism is the power of the state dressed up as a modern corporation: old wine in new bottles.
Espionage, assassination, gold, currency and an international mix of actors at the crossroads of the world give Dubai its standing as the new Casablanca. Dubai, like Casablanca, is just a mirror of its time and place. Were it not for the corruption and dysfunction of the wider world, Dubai would have no clientele. Every war needs its neutral venue, and in the currency wars Dubai fills the bill. There is no currency anywhere that is not money-good in Dubai—at a price.
What is most striking about Chinese history is how often and how suddenly it has swerved from order to chaos through the millennia. Despite the appearance of economic dynamism in China today, sudden collapse is entirely possible and could be caused by things such as inflation, rising unemployment, ethnic tensions or a burst housing bubble.
If the Fed were to ask, “How’m I doin’?” the answer would be that since its formation in 1913 it has failed to maintain price stability, failed as a lender of last resort, failed to maintain full employment, failed as a bank regulator and failed to preserve the integrity of its balance sheet. The Fed’s one notable success has been that, under its custody, the Treasury’s gold hoard has increased in value from about $11 billion at the time of the Nixon Shock in 1971 to over $400 billion today. Of course, this increase in the value of gold is just the flip side of the Fed’s demolition of the dollar. On the whole, it is difficult to think of another government agency that has failed more consistently on more of its key missions than the Fed.
When the public realizes that it is being deceived, a feedback loop is created in which trust is broken and even the truth, if it can be found, is no longer believed. The United States is dangerously close to that point.
University biologists working with infectious viruses have airtight facilities to ensure that the objects of their study do not escape from the laboratory and damage the population at large. Unfortunately, no such safeguards are imposed on economics departments. For every brilliant insight there are some dangerous misconceptions that have infected the world’s financial bloodstream and caused incalculable harm. None of these ideas has done more harm than the twin toxins of financial economics known as “efficient markets” and the “normal distribution of risk.
Money works exactly like a battery. A battery takes a charge of energy, stores it for a period of time and rereleases the energy when needed. Money stores energy in the same way.
Currency wars are just an attempt at conquest without violence.
Finance must be returned to its proper role as the facilitator of commerce rather than a grotesque end in itself.
Taking a range of views from the conventional to the cutting-edge, we can foresee four outcomes in prospect for the dollar—call them The Four Horsemen of the Dollar Apocalypse. In order of disruptive potential from smallest to greatest, they are: multiple reserve currencies, special drawing rights, gold and chaos.
The SDR is world money, controlled by the IMF, backed by nothing and printed at will.
Gold is not a commodity. Gold is not an investment. Gold is money par excellence.
The history of central banking in general has been one of broken promises when it comes to the convertibility of money into gold, while the history of central banking in the United States in particular has been one of promoting banking interests at the expense of the general interest.
The path of the dollar is unsustainable and therefore the dollar will not be sustained. In time, the dollar will join a crowd of multiple reserve currencies, be subordinated to SDRs, be rejuvenated by gold or descend into chaos.
Derivatives do not spread risk; they multiply it and concentrate it in a few too-big-to-fail hands. Derivatives do not serve customers; they serve banks and dealers through high fees and poorly understood terms.
The U.S. economy as guided by the Fed has seen continual asset bubbles, crashes, panics, booms and busts in the forty years since the United States left gold. It is time to diminish the role of finance and empower the role of commerce. Gold produces the greatest price stability in prices and asset values and therefore provides the best visibility for investors.