Book Review: Currency Wars – James Rickards
Read. This. Book.
There is no shortage of bad economists in this world, fortunately, Jim Rickards isn’t one of them. He doesn’t have all the answers, to borrow a line from the Dhammapada, the Truth is like a tree with many thousands of leaves; I think Currency Wars has a few of those leaves within its pages.
Perhaps the thing that I like most about Currency Wars, is that Rickards isn’t an academic economist, he’s a financier. He has a sound understanding of most of the larger movements that have taken place within economics in the last sixty years, but the strength of Currency Wars doesn’t lie in attempting to advance theory with delicate nuances. As far as economics goes, the book consists of a brief review of international trade, monetary theory, and the interactions between the two. Any sophomore or junior in an economics program would know this stuff already.
The book is written for people outside economics circles, and for them this would all be mostly new, and this includes the vast majority of historians. Historians, sadly, know very little about economics, and this allows well-respected history books to contain absurdities that make any decent economist laugh, or maybe even cry. If the ridiculous interpretations weren’t taught to us as children, I doubt anyone would ever believe them; things like: WWII ended the Great Depression. Who could believe that bullets ripping through flesh and bombs blasting apart infrastructure are roads to wealth? But I digress.
Rickards provides a historical analysis of the last century as it pertains to national monetarism and international stability, and he does so with sound economic theory. This alone is an invaluable antidote to some of the myths that are perpetuated by historians who are absolutely economically ignorant. All historians provide a breadcrumb trail of facts, but it takes sound theory to connect those crumbs into a meaningful narrative. Without theory, history is nonsense.
While the first half of the book is valuable, the second half is riveting. Decades of experience within the financial industry and a strong grasp of many of the underlying errors that promulgate the academic worlds of economics and finance allow Rickards to interpret the unfolding of current events as few others can. His predictions are sobering yet optimistic in their own way.
The only complaint I have with the book is that he glosses over a few areas that I believe need further expansion, that and some of his recommendations are far from the only solution. Many of his criticisms against particular doctrines within economics could be accused of building stawmen. People who would make such accusations would be able to point to modern research and developing theories that show Rickards’ criticisms to be off target. While certainly there are economists making those strides, I believe his criticisms still ring true with the vast majority of academics, such is the sad state of our discipline. Rather than blast Rickards for beating a dead horse, we should be blasting our own for still riding them.
Twice now, economists from outside the particular echo-chamber where I’m comfortable dwelling have thoroughly impressed me, and have cited Walter Bagehot as an early influence on their thinking. For every book I read, it seems I add at least one more to the list of things I need to research. I won’t be letting anyone borrow this book, or if I do, I’m going to tear out the bibliography first, it’s a handy list of things I need get my hands on.
I can’t emphasize it enough, read this book.
– Other Steve