Long before I had discovered I had an interest in Macroeconomics and took a formal course in 2011. But macroeconomics cannot be fully understood without its twin subject — Foreign Policy. Studied in isolation, macroeconomics tends to get theory-oriented (the models!) and foreign policy gets politics-oriented.
Currency Wars seemed to be a promise for someone who is a novice at either subjects, but extremely curious about both. So I decided to pick a copy.
The author provides a historic perspective of the currency wars, the gold standard, the abandonment of the gold standard by the US, gold hoards by different countries, possibilities of gold playing an influential role in the world economy — were all succinctly covered in this book. I would have expected someone to use 900 pages to cover this body of work, but the author uses just 300 — another big reason for my favorable rating.
I always thought it is every country’s intention to increase the value of their currency. This book tells me there is a whole lot more to it. Value of currency in this interconnected world is quite a tool to boost a country’s economy, often at the expense of others. For that reason and to keep offending countries in check, countries often use devaluation (of their currency) as their primary MO. When consumer spending is stagnant, government spending is stranded, nearly the only thing left for the countries to manipulate is their net exports and every country would like to devalue their currency as a quick-fix to bolstering their economy and help employment. The author explains this with examples which are understandable even to the lay.
We are all used to grouping countries in different ways — but I never quite used China, Iran and Russia in the same sentence. Together, I understand from this book, they are capable of bringing US to its knees by waging a war of ginormous proportions. With currency, nuclear power and natural resources (respectively), they have more than what they need to do just that. Especially the Chinese.
Even if the extreme doesn’t happen, subtle changes in the dollar-yuan-euro relationship, along with influences from BRICS and other countries, have the potential to total the lives of normal human beings throughout the world, in more ways than I could have imagined.
As with many books I have read, the last chapter is brilliant. Titled Paper, Gold or Chaos — this provides a peek into the future possibilities in which currency wars could emerge and how the world would respond to it. This to me, is the most brilliant chapter of the book.
Lastly, the book starts with the kind of game I’d like to play. What is China launches a new currency? What is there is a 9 Richter earthquake in Tokyo? What is Russia stops exporting oil? What is Euro collapses and people return to their original currencies? What if we return to the gold standard? These types of questions are played in a lab condition — funded by tax dollars — by the US intelligence to anticipate the moves of the different players and analyze the impact on the world in general and US in specific.
The bottom-line: There are many books I read, but very few I recommend and even fewer I intend on reading again. This book joins the distinction of being one, which deserves both recommendation and re-reading. Another one from my picks is India After Gandhi.