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 28 quotes from the book - The Death of Money by James Rickards. I hope you find these quotes useful.
The Death of Money Quotes
U.S. dominance in conventional air, land, and sea battle had caused our rivals to seek new ways to confront us. Future wars would be fought in an expanded battlespace that included stocks, bonds, currencies, commodities, and derivatives.
Wealth destruction through a market attack can be more effective than sinking enemy ships, when it comes to disabling an opponent. Financial war is the future of warfare.
All wars have costs, and many wars are so destructive that recovery takes years or decades. This does not mean wars do not happen or that those initiating them do not find advantage despite the costs.
Central bankers control the price of money and therefore indirectly influence every market in the world. Given this immense power, the ideal central banker would be humble, cautious, and deferential to market signals. Instead, modern central bankers are both bold and arrogant in their efforts to bend markets to their will.
Since 2008, markets have become a venue for wealth extraction rather than wealth creation. Markets no longer perform true market functions. In markets today, the dead hands of the academic and the rentier have replaced the invisible hand of the merchant or the entrepreneur.
Today central banks, especially the U.S. Federal Reserve, are repeating the blunders of Lenin, Stalin, and Mao without the violence, although the violence may come yet through income inequality, social unrest, and a confrontation with state power.
Deflation is the workingman’s bonus because it allows an increase in the living standard even when wages are stagnant.
Free markets matter not because of ideology but because of efficiency; they are imperfect, yet they are better than the next best thing.
We can no longer trust what the markets tell us. That’s because those who control them do not trust the markets themselves; Yellen and the rest have come to think their academic hand is more powerful than Adam Smith’s invisible one. The result has been the slow demise of market utility that, in turn, presages the slow demise of the real economy.
The dollar is money, money is value, value is trust, trust is a contract, and the contract is debt. By application of the transitive law of arithmetic, the dollar is debt owed by the Fed to the people in contractual form.
Buffett has been known to disparage gold, but he is the king of hard asset investing, and when it comes to the megarich, it is better to focus on their actions than on their words.
Debt used to finance government spending is acceptable when three conditions are met: the benefits of the spending must be greater than the costs, the government spending must be directed at projects the private sector cannot do on its own, and the overall debt level must be sustainable. These tests must be applied independently, and all must be satisfied.
Today every reference point is gone. There is no gold standard, no dollar standard, and no Taylor Rule. All that remains is what financial writer James Grant calls the “Ph.D. Standard”: the conduct of policy by neo-Keynesian, neo-monetarist academics with Ph.D.’s granted by a small number of elite schools.
The IMF is quite public about its operations and objectives. At the same time, it is little understood even by experts, in part because of the unique role it performs and the highly technical jargon it uses in doing so. Specialized university training at institutions like the School of Advanced International Studies in Washington, D.C., is a typical admission ticket to a position at the IMF. This combination of openness and opaqueness is disarming; the IMF is transparently nontransparent.
The IMF’s ability to topple a regime by withholding finance in a crisis is no less real than the power of Stalin’s KGB or Mao’s Red Guards.
Casual visitors to the IMF’s website should not be deceived by images of smiling dark-skinned women wearing native dress. The IMF functions as a rich nations’ club, lending to support those nations’ economic interests.
Deflation is every central bank’s nemesis because it is difficult to reverse, impossible to tax, and makes sovereign debt unpayable by increasing the real value of debt.
Outright physical gold ownership, without pledges or liens, stored outside the banking system, is the only form of gold that is true money, since every other form is a mere conditional claim on gold.
Gold involves none of the risks [...] It has no maturity risk since there is no future date when gold will mature into gold; it is gold in the first place. Gold has no counterparty risk because it is an asset to the holder, but it is not anyone else’s liability. No one “issues” gold the way a note is issued; it is just gold. Once gold is in your possession, it has no risks related to clearance or settlement. Banks may fail, exchanges may close, and the peace may be lost, but these events have no impact on the intrinsic value of gold. This is why gold is the true risk-free asset.
If the price of any good, whether gold or bread, is held below its intrinsic value by intervention in any form, the behavioral response is always to strip the shelves bare.
A gold standard is the ideal monetary system for those who create wealth through ingenuity, entrepreneurship, and hard work. Gold standards are disfavored by those who do not create wealth but instead seek to extract wealth from others through inflation, inside information, and market manipulation. The debate over gold versus fiat money is really a debate between entrepreneurs and rentiers.
Monetary policy around the world has reached the point where the contradictions embedded in years of market manipulation have left no choices that do not involve either contraction or catastrophic risk. Further monetary easing may precipitate a loss of confidence in money; policy tightening will restart the collapse in asset values that began in 2007.
Confidence is indispensable to the stability of any fiat currency system. Unfortunately, the academics who are now responsible for monetary policy focus exclusively on equilibrium models and take confidence too much for granted.
The failure to imagine the worst often results in a failure to prevent it.
Central banks act like a nine-year-old-boy who sees fifty dollars in his mom’s wallet and steals one dollar thinking she won’t notice. The boy knows that if he takes twenty, Mom will notice, and he will be punished. Inflation of 3 percent per year is barely noticed, but if it persists for twenty years, it cuts the value of the national debt almost in half. This kind of slow, steady inflation is the central banks’ goal.
Loss of confidence in a monetary system can rarely be restored. Very likely, a new system will be needed, with a new foundation that can engender new confidence.
The world has seen worse crises than financial collapse and lived to tell the tale. But when the crash comes, it will be better to be among those who have braced for the storm. We are not helpless; we can begin now to prepare to weather the inevitable outcome of the hubris of central banks.
Threats to the dollar are ubiquitous—lost confidence, financial war, regional hegemons, hyperinflation, and more. These threats are looming larger and may even converge as inflation erodes confidence and emboldens enemies in a feedback loop that gains energy like a hurricane on warm water. The savings of everyday citizens are in the path of the storm.