Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown Hardcover – 23 Sep 2011
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Paper Money Collapse was the 2012 getAbstract International Book Award Winner!...An excellent introduction to the dangers of our current monetary system.′ (therealasset.co.uk, January 2012)
From the Inside Flap
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.See all Product description
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So people will tend to reject the work without reading it (denounce it as absurd - and so on). However, if people actually do read it and think about it........
I think you will find that the evidence and arguments the author presents are conclusive - there is no escape from them.
So why "if only it was not true"?
Because if this book is correct (and it is) - then we are heading for a terrible economic crises. A crises that will make our present troubles seem like a storm in a teacup.
Detlev's book takes you right from the key question of "What is money?" and leads you step-by-step through how money operates in society, the differences between inelastic, commodity money (e.g. gold) and the prevailing elastic fiat currencies we are being subjected to, and the self-serving manipulation by private and government-controlled central banks that results when free market forces aren't allowed to operate. Most importantly, Detlev demonstrates why a central bank that continually increases the supply of money in circulation or encourages banks to lend more than their reserves will allow causes the cycle of boom and bust that we've suffered under throughout the 20th and 21st centuries.
This is essential reading for anyone who wants to understand why we're in this mess, what it will take to get us out of it and why politicians around the world will refuse to take action until it is too late to stop the breakdown of our monetary order.
What Detlev Schlichter has done is apply these ideas to the current economic malaise which has had a stronglehold on news reporting and political rhetoric ever since the housing market bubble collapse of 2007/8. His conclusions are not pretty and what makes them so terrifying is how convincing his arguments are. It leaves the reader in little doubt that the whole world is headed for a Weimar Germany-style economic black hole.
So who are the villains in this situation? Despite the commonplace assumption that today's economic woes represent a crisis of capitalism in fact this is most certainly not the case. Across Europe the state in its various guises conducts roughly half of all economic activity and its effect is wider than that due to the huge regulatory burden it imposes on the remaining part, the market-sector if you will. That's not what I would call capitalism.
The basic version of Detlev's thesis is this: In order to fund the vast bureaucracies of the modern welfare or social-democratic state modern governments cannot simply rely on taxes - it's impossible for them to raise anything like enough money this way. Governments have historically resorted to building up massive levels of debt by selling bonds. Banks have been willing to invest heavily in government debt because bonds issued by the US, the UK and many European governments are considered risk-free. After all the government has a monopoly on force and can always pay back that debt through tax revenues. But the long-term results of this policy is massive exposure of an inflated banking system to debt which, as Greece, Italy, Spain etc. have shown in recent months is not risk-free. Debt levels have become unmanagable, in the currently fashionable jargon of politics, unsustainable. The confidence that the debt will always be repaid is failing.
This presents a problem. In a rational, market based ecomony a body, whether a state or a commercial company, that cannot service its debts goes bankrupt. It defaults. The banks unwise enough to have lent it money lose out. But were this to happen, if the fiction of risk-free debt were to be so blatantly exposed, then the cost of running up the ever increasing levels of debt which all modern governments rely on would go up. And if governments were unable to raise more moeny through increased indebtedness then the whole welfare state experiment would come crashing down since massive debt is the only way to finance it. And default by a major ecomony would have a major, possibly catastrophic effect on the banks which lent the money and cannot get it back.
Thats a greatly truncated version, of course. And what makes it scarier is the blind refusal of mainstream commentators and politicans to face the facts. Obsession with indicators of short-term growth and paralysing fear of having to try and convince the public of the impossibility of maintaining the status quo has led the political elite to resort to the same doomed attempt to keep things going as Weimar Germany - the printing press. Under the Orwellian term "quantitative easing" this is exactly what the Fed, the Bank of England and the ECB are now doing on a massive scale - printing money out of nothing to prop up the bond market. Essentially governments are running up ever bigger debts and buying it themselves with monopoly money.
The endgame, as this vital and awesome book so clearly and logically demonstrates, will be (yes, that's will be - there is no other outcome short of alien invasion) a collapse of all the world's major currencies. And, as governments the world over try desperately to avoid the unavoidable logic of basic arithmentic, in the leadup we will see (and are seeing) ever increasing calls for market controls and intervention at the expense of the only part of the ecomony that actually produces the wealth governments are addicted to spending - the men and women who work in the private, market, sector.
If you buy this book, and I cannot recommend it highly enough, you should also check out the author's blog for up to date analysis of this real-time economic crisis. It is encouraging that his message seems to be filtering through to the mainstream if his recent appearences on the BBC and Sky News are anything to go by. Here's hoping against hope that the political class will start to pay attention.