“…The kicker was that from now on, any Russian export of oil or natural gas would have to be paid for in the new currency. U.S dollars would no longer be welcome. … The big idea in move one was that Russia would leverage its natural resources to improve its foreign currency reserve position.”
The evolution of global conflict has been triggered by nations desire to develop sophisticated methods of crippling enemy territory without physical altercation. To date, modern and more severe weapons such as logic bombs or foreign exchange controls can leave citizens of an enemy territory vulnerable and isolated. Currency Wars is a book elaborating ideally how currencies, which are meant to be legal tenders facilitating exchange of goods and services, have been transformed to be part of developed nations’ armaments. Currently, the dollar is the basis and pivot of the entire global system of currencies, stocks, bonds and investments of all kinds. A tweak in its value would disproportionately cause tremendous, negative shocks in different economies while benefitting others.
The book begins by elaborating how the US engages in sophisticated and intellectual games to understand how the world would react if the dollar was to behave in a certain way. These studies, along with weaponry and space exploration, are conducted in the Applied Physics Laboratory, to analyze how an actual financial war might evolve and what lessons might be learned. The author James Rickards provides a historical perspective from the Great Depression when world trade was collapsing to immeasurable lengths. Most, if not all nations, engaged in competitive devaluation of their respective currencies against the others. In an environment where businesses cannot expand and the government spending is limited, such as in the Great Depression era, the only other way to boost the economic growth and prevent cataclysmic deterioration of livelihoods was to increase net exports through depreciating one’s currency. Page 41 caught my attention when the author illustrated how super power nations such as US, France and Germany led the race to devalue their currencies through lowering interest rates and printing more money, causing their economies to topple in a downward spiral leading to disruption in trade and wealth.
In retrospect, currency wars have been fought several times before. Their impacts; deterring growth of trading partners to consequential levels of inflation, recession and perhaps violence and wars from the scramble of natural resources and territories. We are currently witnessing Currency War III, which Rickards dates back to 2010. Some of the events include BREXIT, the rise of China as a super power, Donald Trump’s presidency and the U.S – China trade war, COVID-19 pandemic and the recent Russia-Ukraine war. The Endgame of this, the author insinuates, could either be the return of usage of Gold as a standard, the discontinuation of the role of the dollar in international trade or quite frankly and perhaps the most likely outcome, chaos and the catastrophic collapse of investor confidence.
Currency Wars | Complete waste of time | Fine, but not happy with it | Satisfactory, not too bad | Loved it | Impactful |
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Cover Design Attractiveness |
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