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

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.

The recent financial crisis has exposed the instability of our financial system. While there is plenty of talk of reform, few commentators are yet willing to consider that the root cause could be the transition from commodity money to limitless paper money, although the track record of paper money systems is uniformly discouraging: Throughout human history, all paper money systems have either collapsed in chaos, or society has returned to commodity money (usually based on gold) before a total currency disaster occurred. This book shows why this was the case and why this is also the choice we are facing today.

Drawing upon ground breaking new research, Paper Money Collapse conclusively demonstrates 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, by their very nature, lead to economic disorder.

These highly controversial findings clash with the general consensus that elastic state money is superior to inflexible commodity money, and that expanding money is harmless or even beneficial as long as inflation remains contained.

In an engaging style based on extensive study and analysis, this compelling new book exposes the fallacies of mainstream macroeconomics and debunks erroneous conventional wisdom. It explains why many people working in financial markets, in the media, and in policy establishment positions are unable (and often unwilling) to fully appreciate the underlying problems with elastic money and the danger it presents.

Paper Money Collapse shows in the starkest terms that the recent crisis is far from over and that the solutions presented by the advocates of paper money around the world are misguided and inherently flawed, in particular the current policy of accelerated paper money production to "stimulate" the economy. If these policies are continued, a complete currency catastrophe will be inevitable.

An absolute must–read for economists, individual investors, and anyone with an interest in finance, Paper Money Collapse will change the way you think about our financial system—and about how to take control of your own financial future.

"Detlev Schlichter′s new book is not an ′easy read.′? Instead, it is an important read.? It explains why the world′s dollar–based, post–1971 monetary system is not just inferior, it is unsustainable, unworkable, and unstable.? It′s an ′elastic′ money system.? And before long, that elastic will snap, with very unhappy consequences for the many millions of people who depend on it."—BILL BONNER, bestselling author, Financial Reckoning Day

"Detlev Schlichter′s book Paper Money Collapse develops a concise, clear, and at the same time deep economic analysis on the current elastic monetary system and why it is essentially incompatible with a free market economy. I strongly recommend this book to anyone interested in financial crises, economic recessions, and the future of capitalism." —JESúS HUERTA DE SOTO, Professor of Political Enonomy, King Juan Carlos University (Madrid); author of Money, Bank Credit, and Economic Cycles

"Schlichter′s book is a terrifying window into our future. Every academic, politician, banker, and opinion former should read it now."—STEVE BAKER, Member of Parliament for Wycombe

"Detlev′s understanding and insight into central bank policy propelled him to being one of the world′s preeminent global bond managers. He cuts through the fog of central bank mystery by providing a clear description of their apparatus and methods. Going beyond the requisite professional skepticism, Detlev has trained his scholarly attention to highlighting the enormity of the potential further damage they may yet wreak on us." —KEN LEECH, former CIO, Western Asset Management Company

"Detlev Schlichter has written a lucid, hard–hitting critique of what he identifies as the world′s twin financial scourges: central banks that produce an elastic supply of paper money and commercial banks that, through the alchemy of fractional–reserve banking, render central bank money many times more elastic.? Readers of Paper Money Collapse will, among other things, glean useful insights on how to protect themselves from paper money′s end game: an inflationary meltdown."—STEVE H. HANKE, Professor of Applied Economics, Johns Hopkins University, Baltimore

DETLEV S. SCHLICHTER is a writer and Austrian school economist who has spent nearly twenty years working in international finance, including stints at Merrill Lynch, J.P. Morgan, and Western Asset Management. In his career, Schlichter has overseen billions in assets for institutional clients around the globe.