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Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown
 
 
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Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown [Kindle Edition]

Detlev S. Schlichter (Author)
4.5 out of 5 stars  See all reviews (13 customer reviews) |
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Review

‘...An excellent introduction to the dangers of our current monetary system.′ (therealasset.co.uk, January 2012)

Product Description

The case for the inevitable failure of a paper money economy and what that means for the future

All paper money systems in history have ended in failure. Either they collapsed in chaos, or society returned to commodity money before that could happen. Drawing upon novel new research, Paper Money Collapse conclusively illustrates why paper money systems—those based on an elastic and constantly expanding supply of money as opposed to a system of commodity money of essentially fixed supply—are inherently unstable and why they must lead to economic disintegration.

These highly controversial conclusions clash with the present consensus, which holds that elastic state money is superior to inflexible commodity money (such as a gold standard), and that expanding money is harmless or even beneficial for as long as inflation stays low. Contradicting this, Paper Money Collapse shows that:

  • The present crisis is the unavoidable result of continuously expanding fiat money
  • The current policy of accelerated money production to "stimulate" the economy is counterproductive and could lead to a complete collapse of the monetary system
  • Why many in financial markets, in media, and in the policy establishment are unable (and often unwilling) to fully appreciate the underlying problems with elastic money

This compelling new book looks at the breakdown of modern economic theory and the fallacy of mathematical models. It is an analysis of the current financial crisis and shows in very stark terms that the solutions presented by paper money-enthusiasts around the world are misguided and inherently flawed.

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Product details

  • Format: Kindle Edition
  • File Size: 491 KB
  • Print Length: 288 pages
  • Publisher: Wiley; 1 edition (31 Aug 2011)
  • Sold by: Amazon Media EU S.à r.l.
  • Language English
  • ASIN: B005LVQGBU
  • Text-to-Speech: Enabled
  • Average Customer Review: 4.5 out of 5 stars  See all reviews (13 customer reviews)
  • Amazon Bestsellers Rank: #31,644 Paid in Kindle Store (See Top 100 Paid in Kindle Store)

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More About the Author

Detlev S. Schlichter
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Customer Reviews

Most Helpful Customer Reviews
20 of 20 people found the following review helpful
Format:Hardcover
When I first met the Austrian School of Economics and the monetary theory of the trade cycle in 2000, in the course of looking for an explanation of the dot-com bust, I believed politicians and economists would surely not let such a theory pass if it contained any truth. By 2007, I realised the mainstream of economics contained a key intellectual error - an inadequate treatment of time.

Given that understanding of time, elastic and inflationary money is a distinct poison. That poison is now destroying our society.

Schlichter's book sets out the arguments in convincing detail. I should love to believe he is completely wrong. That no longer seems likely.

Anyone who cares about prosperity and progress should read this book.
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36 of 37 people found the following review helpful
Format:Hardcover
Schlicter's analysis is certainly controversial, and I must admit that I started reading Paper Money Collapse with a degree of scepticism. However, the logic of his argument is compelling and, upon concluding the read and reflecting, the reason behind many recent world economic events becomes evident. A good example is the inability of western economies such as Japan and the US to stimulate growth, despite repeated attempts at monetary expansion.

He begins with a clear explanation of what money is and how it works; how it began as a pure commodity currency, morphed into a paper currency backed by gold, changed again through the process of Fractional-Reserve Banking and has today (as it has in past times before collapsing) become a fiat currency where Central Banks can create money at will and at no cost. Currency created through Fractional-Reserve Banking is somewhat elastic and that created by Central Banks is infinitely so.

It is this elasticity that allows monetary expansion to distort and unbalance the economy, and to induce short term stimulus in certain sectors but zero real growth overall in the long term. It also has the important side effect of generating inflation. As the process continues monetary stimulus is destined to have less and less effect whilst the inflationary consequence is intensified, with the inevitable result of hyperinflation and currency collapse.

Schlicter underpins his analysis with descriptions of historic paper money systems, all of which failed. Our present system of paper money, particularly after 1971 when the US abandoned The International Gold Standard, displays numerous symptoms analogous to the historic examples cited.

What is the solution? Schlicter is uncompromising; only after the effect of previous credit expansions have been unwound and we have returned to a system of inelastic money (albeit possibly including an element of Fractional-Reserve Banking) can the economy begin to grow naturally and spontaneously. We should look to the period of The Classical Gold Standard between 1890 and 1914 which enjoyed economic prosperity notwithstanding a modest rate of deflation throughout.

I confess that one reason for my reading this book was to see what I could do to adapt my personal circumstances to what is, by any measure, potential financial disaster. Schlicter claims that this is not the purpose of his book yet he goes on to suggest that gold acquisition is preferred strategy. However, he also points out that in 1933 Roosevelt confiscated all privately held gold!

I'm not sure what I'm going to do, but I certainly would not want to be dependent upon government bonds or pension obligations for my retirement.
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15 of 15 people found the following review helpful
Format:Hardcover
You have to hand it to a man who quits his cushy City job managing money to write a clean, underbrush-hacking book on the fallacy of paper currencies. He's serious, he's fearless, and he learned from experience.

His wakeup call to sound-money economics came in the wake of the LTCM crisis. The lessons from that are the same as the lessons from 2008... or the coming euro explosion... or another round of bank collapse. Detlev gets it; the rest of his ilk in the banking community and the wider parasitic political party of central banks are too busy saving their skins to care!

I believe Detlev Schlichter's Paper Money Collapse will prove the handbook for a new generation of economists. He's a bit like the Euclid of sound money. Once the Von Mises crowd gets a hold of this book, it can't fail to go viral in all sorts of excerpts! Your best bet is to read it cover to cover. It starts out from one basic principle: YOU are the driver of the economy. You buy what you need when you need or want it.

Detlev handily rejects, with welcome soundness, the idea that the economy is a super-organism worthy of preservation by the unsound manipulations of the State! All this intervention results in is what Detlev refers to as "dislocations." That is, misallocations of capital galore. I've just turned 29... I consider myself a young woman who's grown up in a world of nothing but false interest rates -- that give false clues to savers and industry -- that deliver only boom-bust cycles in rapid succession. I was born in a recession, I got my first job in a boom, I was baptized a finance editor by the bust, and I expect to enjoy myself even as the greatest depression the world has ever seen creeps stealthily to catastrophic proportions. Detlev is my hero.

We're not victims if we know what's going on. We might not take Washington D.C., London, or Geneva by storm, but we can take Detlev's concise lessons and teach them to those we care for! If the central bankers want to protect their own hides, so do we! Let's buy gold (and silver too) and sleep at night.

Ultimately, Detlev may come across as something of a pessimist. He's earnest, yet, he knows people. He gets power. So instead of painting a utopia backed by gold, his epilogue offers glimpse of chaos and collapse, and plenty more economic defibrillations -- thanks to government's can-kickers who just want to push the consequences down the road a week... a month... a year.

Right now, my dad's retiring, and he's outraged at being punished by his government (for whom he gathered revenues for 35-plus years) for saving in good faith. This is a great book to give him! He'll know he's far from alone for feeling as he does.

In short: Detlev delivers! His facts are simple. No GDP (Gross Deception Presentation) charts here. Just basic reasoning with algebraic clarity applied to man's needs. If you don't have the fortitude for Von Mises or Rothbard just yet, start here.
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Most Recent Customer Reviews
Essential Reading
They often say that "cometh the hour, cometh the man." In our case, the man is Detlev Schlichter, perhaps one of the best Austrian school economists in the UK and whose razor-sharp... Read more
Published 13 days ago by Mr. Ds Phillips
Interesting critique on current monetary arrangements
The worst thing about this book is the totally idiotic forward by Wiggin. He states grandly "if you agree with (everyone he disagrees with) then ... Read more
Published 2 months ago by Ioannis Glinavos
Bad book on an interesting subject
The question of the sustainability of a fiat currency is interesting and worth making, unfortunately Schlichtel's book is riddled with fallacies that completely undermine its... Read more
Published 3 months ago by AlexHanin
Horrifying and convincing
Much of that the author says in this book will be familiar to any readers of economists like Ludwig von Mises and Freidrich Hayek and he admits as much - this is a book about the... Read more
Published 4 months ago by Emilio Mestiga
Essential reading
Essential reading for those wanting to understand what is currently taking place in the world economy and just how it is all going to play out/end. Read more
Published 4 months ago by Nicholas Winstanley
very useful from economic point of view
The truth about what happened all this years with the fiat money system and why this system would collapse sooner or later.
Published 5 months ago by KARANASIOS
If only it was not true - but it is true.
People will be shocked by this work. It argues against one of the basic principles of our time - fiat money and the whole credit bubble financial system. Read more
Published 6 months ago by Paul Marks
Soundly argued
Replete with present day, post 2000 examples, this is an in-depth reiteration of the Austrian perspective and analysis of the virtues of a commodity money in comparison to the... Read more
Published 7 months ago by S Smyth
A clear-headed explanation of why paper money is so dangerous
This book is not comforting reading, nor is it always easy to read. You have to concentrate. But it is a "must-read". Read more
Published 7 months ago by Thomas H. Burroughes
An effort but definitely worth the effort - could be huge
I agree with the bit on the cover of this book where it says that this is not an easy read. For me, it has not been, and not just because the truths Schlichter spells out and... Read more
Published 8 months ago by Brian Micklethwait
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Popular Highlights

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&quote;
As the Austrian economists demonstrated, the long-term consequences of an investment boom are very different depending on whether it is financed through proper saving or money printing. &quote;
Highlighted by 41 Kindle users
&quote;
But excessive debt and asset price bubbles are inconceivable without a previous extensive credit boom, which in turn can only result from excessive money creation. &quote;
Highlighted by 39 Kindle users
&quote;
It is simply a historic fact that commodity money has always provided a reasonably stable medium of exchange, while the entire history of state paper money has been an unmitigated disaster when judged on the basis of price level stability. &quote;
Highlighted by 34 Kindle users

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