Book Review : The Death Of Money - The Coming Collapse of the International Monetary System

The Death Of Money – The Coming Collapse of the International Monetary System 

by James Rickards

ABOUT THE BOOK

This is a book on the International Monetary System, and specifically on the future prospects of the current system we all live under, the dollar-oil-US based Geopolitical system, which together define the world of International Finance, Trade, Geopolitics. In addition to this, or rather, as a part of this, it also serves as an excellent book on Geopolitical analysis of the current state of the world at large. It looks in depth at International finance, trade, geopolitics and the operational realities of this troika that combine to be called what is euphemistically called the International Monetary System

Its emphasis is identifying the existing fault lines, tracing geopolitical developments worldwide, examining the fine line between economics and politics, tracing the threats to Dollar Dominance, the rise of Dollar Alternatives, etc etc. It examines the current trends of Geopolitical realities in the large I international powers, the developing trends, a short past history of how we got here, and the rise, rise and rise of the Dollar that was a result of these factors.

THE ANALYSIS

Fascinating. If ever an hardcore conceptual book of Finance and Economics can be called thrilling, it is this one. This is a page-turner, a fascinatingly fast read. Despite the title, this isn’t about the collapse of Dollar; it much more of a complete geopolitical analysis. And the best part is the way it links International Finance with Diplomacy and Geopolitics, and places money in its proper context. The icing on the cake is the way it traces the vicious circle of the rich nations doing their utmost to protect their own turf, at the cost of the smaller and developing nations.

The central premise of the book is that the Dollar will not continue as the de-facto currency of international finance and trade. The only question is when will it cease to be the standard? To arrive at an assessment, the author has done a detailed analysis of the pertinent factors, viz. Gold & the Gold Standard, The Oil-Dollar Linkage, Geopolitics, International Agreements & Big Nation strategies to keep status quo, emerging trends in finance & geopolitics, IMF & SDRs, Economics: Major currencies, Institutions, Macro Fundamentals, and more. Thus, the scope is truly vast. And that is its main selling point, as it gives a tremendously broad yet detailed look at the entire global scenario.

Will the Dollar based economy collapse? It has to. Too many developments in the past have taken place – so much so that it is, in my opinion, only a matter of time. The western dominated world is now shifting decidedly east; the era of the West is drawing to a sure closure. More to the point, the west itself is breaking up – it is no more the solid homogenous façade it presented; recent developments in Europe, UK and the USA have ensured that. Thus, the emergent challenges to the Dollar Economy,  from both within the West and from its Eastern challengers, means that now it is only a simple matter of time. .. When? Cant be said, though I suspect not in the near future, given the depth of the Dollar’s reserves, and its hold on Currency and Bond markets worldwide.

Just 1 or 2 pins need to fall... Oil-Dollar linkage + Stronger Euro + etc... even 2 of the list will slowly move the world away from Dollar economics. This is not so easy as it sounds, though - EU + UK + Japan etc make up 65-70% of world trade, so as on date, this means that firstly non-dollar based volumes arent there. Secondly, there is an absence of an alternative – SDRs from IMF is as of now the only possibility, and it is way too thin on date. Thirdly, Geopolitics; it is in current western interests to keep the Dollar, geopolitically speaking. That is why I stated not in the near future

But this book makes an argument that were the Oil To Dollar peg to fall, the edifice could come crashing down; given ADB, SCO, ASEAN, Middle Eastern trade developments, India-Iran axis, etc. And there is a feasibility that the Saudis are impatient with the USA; another strong point it makes is that Germany, which is essentially running EU for all practical purposes, is also slowly getting irritated with USA. I can also spot a similar nascent undercurrent even in Australia and Japan; there are also fast-paced negotiations and treaties in place to look for non-Dollar trade, like Iran-India demonstrated. Others are also experimenting. Thus, we can see that there is emergent pressure from all sides on the Dollar.

This situation is not being helped by the USA’s inconsistencies in dealing with Friends, Foes and Trade partners alike. It is simply rubbing too many people the wrong way. That cant be good, no matter how powerful a nation you are. It then just becomes a question of time before an alternative is found – in my opinion, decades, nothing less. But the hunt is on; no matter that the current state is a Dollar based status quo for the foreseeable future. What will replace it? There is no currency on date, neither is there one on the horizon. And that remains the single biggest problem for the anti-Dollar brigade. Non-Dollar Denominated markets are wafer thin, and no single unit of exchange can perform the functions the Dollar currently does, and neither is there one on the distant horizon….