"Currency Wars"

I became aware of James Rickards and his expertise in global financial markets through his appearances on CNBC. I follow his commentary on a wide range of topics on Twitter, @JamesGRickards. Mr. Rickards began promoting his new book, Currency Wars – The Making of the Next Global Crisis, in the summer of 2011 in anticipation of its release last fall. I have been looking forward to reading the book for a number of months. Currency Wars is a book that everyone that cares about their financial future should read. I believe Currency Wars is one of the most important business/economics/financial books written in recent years.

As stated on the cover jacket, “Currency wars are one of the most destructive and feared outcomes in international economics. At best they offer the sorry spectacle of countries’ stealing growth from their trading partners. At worst, they degenerate into sequential bouts of inflation, recession, retaliation, and sometimes actual violence. Left unchecked, the next currency war could lead to a crisis worse than the panic of 2008.”

Mr. Rickards analyzes the two currency wars that have occurred during the past century. Currency War I took place from 1921 through 1936. This period includes the roaring 20’s and the depression in the USand the hyperinflationary period that occurred in Germany that lead to Hitler’s rise to power. Mr. Rickard’s explains the background and impact of the competitive currency devaluations that took place between the worlds leading economies during the period. This period also includes Franklin Roosevelt’s devaluation of the US dollar, when he required all US citizens to turn their gold in to the government.

Currency War II took place from 1967 though 1987. It includes the impact of funding of the Great Society entitlement programs concurrently with the escalation of the Viet Nam war. It also includes the highly inflationary period of the late 1970s and Paul Volcker’s determined effort to significantly reduce inflation in the early 1980s. This period also marked the end of the Post World War II Bretton Woods Agreement and the end of the gold standard for the US dollar. It also marked the return of private ownership of gold by US citizens.

Currency War III has already begun. Mr. Rickards explains the recent actions of the US government and Federal Reserve and how their misguided policies may hurt all of us. The ultimate outcome of Currency War III is far from certain at this point. If you are following the action of the financial markets it will be easy for you to extend Mr. Rickards thought process from the completion of his manuscript in the summer of 2011 to today’s market environment.

As stated on the back cover jacket of Currency Wars, “While the outcome of the new currency war is not yet certain, some version of the worst case scenario is almost inevitable, if U.S. and world economic leaders fail to learn from the mistakes of their predecessors. Rickard’s untangles the web of failed paradigms, wishful thinking, and arrogance driving current public policy and points the way to a more informed and effective course of action.

Currency Wars isn’t full of academic lingo typical of most books written by economists. Mr. Rickards does a great job of communicating his view of history and current events with his readers. If you care about the future of the US, you should read Currency Wars.