Originally published at: https://blog.12min.com/the-death-of-money-summary/
The Coming Collapse of the International Monetary System
Cracks in the economy are characteristic for every country. You cannot escape the massive impact of potential crashes and collapses.
In today’s book summary, we outline why and how should the world solve such pressing matters.
Who Should Read “The Death of Money”? And Why?“The Death of Money” comes at the right money, to warns us of the danger lurking ahead. The world rolls towards another major economic blow caused by various factors.
In this book you’ll get the idea of how dangerous the situation actually is; it’s best-equipped for people who have at least elementary economic understanding.
About James RickardsJames Rickards is an American expert in law and wrote numerous articles and books based on finance. He is the author of Currency Wars, The New Case of Gold, The Road to Ruin and The Death of Money.
"The Death of Money Summary"It’s never good to look back at life, but recalling the economic elements which caused the crisis in the 30s and recent history 2008, can produce a trace we ought to follow.
Some experts can say with some confidence that we rose above the temporary blow and managed to save our economy. However, many people are skeptical, because it’s too soon to tell.
Only a few centuries ago, our ancestors paid for their desired goods and other commodities in pieces of silver and gold. From the start of the 20th century, almost anywhere in the civilized world, the governments issued a decree from which the project of “paper” money was launched.
Such initiative reinvented the way of doing business and managing transactions. In truth, the money we use doesn’t have a real worth; the actual value derives from the state regulate.
After the 1973 oil crises, the world realized that the governments through their legal representatives could not “order” the bankers to stabilize the currency. It was literally impossible, since the monetary policy lost its grip, so the world economy entered into e process of never-ending fluctuations.
Even cyber-attacks can produce such damage, even leading to total state bankruptcy.
In addition to the previous statement, we highlight the financial warfare as a new battlefront for world dominance. There are two types of it: offensive and defensive.
The offensive financial warfare means to provoke or instigate a reign of fiscal terror on foreign markets and threaten the country’s economic prosperity. Such stock frauds occur behind closed curtains.
The defensive financial warfare is acting in defense of free capital markets, or devise a strategic plan to retaliate against the institutes or organizations which have caused the worry.
According to many forecasts, the upcoming years are going to be tough for investors. The investment climate is gradually creating a bubble and endangers the investors’ funds. If the Chinese market falls or declines, all the potential and current investors would have their money stuck in fruitless projects and operations.
Let’s expand on how to avoid being in that bubble:
The American dollar as a currency is not too secure as it once was. Many countries, especially the OPEC states are questioning the over-reliance of it and want to reduce the state reserves.
Although most of the trades on a global scale happen to involve the dollar, yet many superpowers like (China and Russia) don’t want to be enslaved by foreign country’s monetary policies due to inflation possibility.
Even today, politicians use the same methods intentionally to ease of the state’s debt. The currency value, can practically absorb the deficit but at what cost?
People will lose faith in the currency making it less valuable, which can lead to a financial collapse. A terrible price to pay for “irresponsible spending”!!
By now, you are aware that the dollar is in big trouble as the global reserve currency. To prevent a disaster, the world bankers must develop a long-term plan to handle the fluctuations.
So, what exactly can the banks do?
In recent years, one more quasi-currency has been developed to act on behalf of the IMF (International Monetary Fund) – the Special Drawing Rights or the SDR. IMF lends capital to third world countries in particular, but now the option is to rely on a self-made currency – more secure than the “green stuff”.
In general, this idea will allow countries to use the SDR in order to conduct transactions and swap or exchange currencies between them. This would ease of the process and set in motion real FREE-CAPITAL-MARKETS.
Even the U.S. representatives don’t oppose this idea, in fact, they think it would lead the American Economy in the desired direction.
Key Lessons from “The Death of Money”1. The threat of inflation 2. The famous claim 3. The value of diversification
The threat of inflationInflation is pretty common term in economic circles. The Weimar Republic suffered a loss in the WW1; their substantial military debt had risen to unmeasurable standards. Such significant amount had to be repaid.
They caused hyperinflation to handle the massive reparations and brought the world to its knees in order to reduce it.
The famous claimWarren Buffett openly discredited the value of gold and challenged all those investors who believe in it. Several years afterward, the global monetary system realized the mistake and gradually began to withdraw from the long-year partnership.
The value of diversificationAlthough there are thousands of ways to diversify your portfolio, it’s best if you apply some reliable tactics. Keeping 20% in gold bars and 30% in cash is a standard ground rule for investors. The other 50, you divide between arts, hedge funds, insurance, and real estates.
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“The Death of Money” Quotes[bctt tweet="In our time, the aureate has become brazen—the golden has become brass. A return to true value based on trust is long overdue." username="get12min"]
[bctt tweet=“The economy is like a high-altitude climber proceeding slowly, methodically on a ridgeline at twenty-eight thousand feet without oxygen. On one side of the ridge is a vertical face that goes straight down for a mile. On the other side is a steep glacier that offers no way to secure a grip. A fall to either side means certain death. Yet moving ahead gets more difficult with every step and makes a fall more likely. Turning back is an option, but that means finally facing the pain that the economy avoided in 2009 when the money-printing journey began.” username=“get12min”]
[bctt tweet=" SDR issuance can be viewed as “test drive” prior to." username=“get12min”]
[bctt tweet=“Workers receive raises in nominal terms, while wages adjust downward in real terms. This is a form of money illusion or deception of workers by central banks, but it works in theory to lower real unit labor costs.” username=“get12min”]
[bctt tweet=“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.” username=“get12min”]
[bctt tweet=“When it comes to betting on a sure thing, greed trumps common sense and makes the bet irresistible.” username=“get12min”]
Our Critical ReviewIf you are open to finding out the truth, then there is no better way to do it, then to read “The Death of Money.”
In this case, the truth refers to the troubling economic times that lay ahead of us. In our opinion, this book deserves all the praises.