In this where Ian Fleming-meets-Michael Lewis-meets-John Le Carre, James Rickards knocked the very stuffing out of yours truly and left me reeling with incredulity!Brash, egregious and outspoken, “The Death of Money”, is a roller coaster experience which at times is so surreal that you may be forgiven for thinking that Rickards is trying to pull the carpet from underneath you!
Just 3 days before the infamous 9/11 disaster there was an unusual element of trading in the stocks of both American and United Airlines. The peculiarity of such a trading was that put options were being traded betting on the stocks of the two concerned airlines going down. This frenzy of trading went unnoticed or was ignored as an aberration. Immediately after the attacks, the stocks of both the airlines plummeted more than 40%. Were the terrorists or someone within their network who was in the know of the ensuing insidious attacks indulging in insider trading to obtain pecuniary benefits in addition to wreaking a reign of terror? Although the investigating commission explored this angle only to discard it in their final report, Rickards firmly believes that this was also a financial warfare strategy adopted by the extremists to bring the dollar down to its knees.
Rickards, in this extremely fast paced and thriller like book, goes on to posit a few other theories and potential triggers which might signal the end of the American Dollar’s prestigious status as the world’s reserve currency. Some of the main contenders for the displacement of the dollar are:
The issuance of SDR’s by the International Monetary Fund amongst his members. The burgeoning rise of SDRs especially in times such as the financial panic that gripped the world beginning 2008 might soon be the preferred reserve currency. The fact that the dollar is diminishing in importance as one of the components of the basket of currencies making up the SDR bears ample testimony to this fact;
Rickards also highlights the frantic purchase of gold by many nations in general and China in particular as a potential signal for the return of the gold standard which was abolished by Richard Nixon in 1971. The “stealth” procurement of gold reserves by China in Rickards estimate gives the nation gold reserves of a whopping 4,000 tonnes!
The BRICS, BELLS and other alphabet souping of emerging nations are working closely and furiously to end the hegemony of the dollar. The establishment of a bank within the BRICS with a view to facilitate inter partner trading and also the trade engaged in by China with Latin America entirely being invoiced in currencies such as the Yuan and Peso to the exclusion of the dollar does not bode well for the American currency;
Pinning its hopes on inflation and thereby printing trillions of dollars, the Federal Reserve is turning a blind eye to the potential deflationary conditions that might come to haunt it, according to Rickards. The unfortunate experience of Japan is a case in point.
The doomsday scenarios laid out by James Rickards in this stupendous book might not come to pass after all. However the underlying signs and signals are inevitable and absolutely impossible to ignore. All these canaries in the mine and the elephants in the room however are being viewed dismissively by both mavens of economics and policy makers alike. In the general interests of a well functioning and interconnected global economy, it is imperative that initiatives be taken sooner rather than later.
