The Death of Money

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The Death of Money Page 43

by James Rickards


  gold reserve rebalancing and potential reform of, 279–84

  Washington Consensus, 118–19

  Internet, 174

  interstate highway system, 174–75

  investment

  Berlin Consensus and, 123

  Bernanke’s monetary policies aimed at increasing, 86

  Chinese economic growth and, 95–101, 107–110

  gold as not constituting an investment, 218–19

  infrastructure (See infrastructure spending)

  lack of, and duration of Great Depression, 84

  regime uncertainty and, 84–86

  investment portfolio recommendations, 298–301

  alternative funds, 299–300

  cash, 300

  fine art, 299

  gold, 298–99

  land, 299

  Iran, 12, 30, 151, 152, 153, 156

  cyberattacks conducted by, 60

  U.S.-Iran financial war, 54–58

  Iraq, 153

  Ireland, 128, 200

  iron rice bowl principle, 93

  “Irreversibility, Uncertainty, and Cyclical Investment” (Bernanke), 84, 85

  ISI (Pakistani intelligence), 36–37

  Israel, 156

  Italy, 128

  Jamaica compromise, 235–36

  Japan, 82, 157–62

  debt-to-GDP ratio of, 159, 259, 261

  deflation in, 160–61, 260–62, 264

  Federal Reserve’s easy-money policy and, 157–59

  gold-to-GDP ratio of, 157, 281

  IMF commitment of, 202

  quantitative easing in, 160–61

  secret gold acquisitions by, 273–74

  Jin Dynasty, 90

  Johnson, Lyndon, 7–8, 209

  Jordan, 152, 153

  JPMorgan Chase, 205

  Kazakhstan, 151

  Kelton, Stephanie, 168

  Keynes, John Maynard, 7, 131, 134, 168, 207, 244

  Keynesianism, 69, 124, 130–31, 193–94

  Khan, Kublai, 90

  Khomeini, Ayatollah, 30

  Kindleberger, Charles, 84

  King Dollar (sound-dollar) policy, 118, 176–77, 210, 211

  Knight, Frank H., 85, 268, 269

  Knight Capital computer debacle, 60, 63, 296–97

  Knot, Klaas, 233

  Korea, 202

  Kos, Dino, 272–73

  Kosovo, 136

  Krugman, Paul, 117–18

  on myth of Chinese growth, 94, 95, 96

  myth that gold caused market panics and, 224

  sticky-wage theory and, 124, 131, 134

  Kuroda, Haruhiko, 161

  Kuwait, 152, 153

  Kyrgyzstan, 151

  labor-capital factor input model of economic growth, 94–95

  labor-management relations, 123–24

  labor mobility, 125

  Lagarde, Christine, 144, 148, 191, 192, 194–95, 198, 205, 206

  land, as investment, 299

  Lao Tzu, 90

  Latvia, 136. See also BELLs (Bulgaria, Estonia, Latvia, Lithuania)

  lease arrangements, gold, 275, 284

  Lehman Brothers, 77, 103, 130

  Lenin, V. I., 7

  leverage, 250

  bank’s use of, 80, 188, 194, 196

  of IMF, 201–6

  paper gold transactions and, 275

  Levitt, Steve, 32–33

  Lew, Jack, 195, 196

  Lie, David T. C., 92

  Lipton, David, 194–95, 196, 198

  “Liquidation of Government Debt, The” (Reinhart and Sbrancia), 183

  liquidity trap, 246–47

  Lisbon Treaty, 117

  Lithuania. See also BELLs (Bulgaria, Estonia, Latvia, Lithuania)

  Long Depression, in Japan, 160

  Long March, 91–92

  Long-Term Capital Management bailout, 62

  Louvre Accord, 1987, 119

  Lowell, Francis Cabot, 6

  low-interest-rate policy, of Greenspan, 76, 260

  Lugar, Richard, 204, 205

  Maastricht Treaty, 117, 238

  McCulley, Paul, 168

  Macedonia, 136

  McKittrick, Thomas, 213

  Mahathir, Mohamad, 45

  Makin, John, 177, 244–45

  malinvestment, Chinese, 96–110, 107–9

  Manningham-Butler, Eliza, 37

  Mao Zedong, 92

  market collapse, 11–12

  “Market for Lemons, The” (Akerlof), 83

  markets

  asset bubbles, 75–78

  central planning and, 69–72, 87

  collapse of, 11–12

  defined, 68

  information asymmetry and, 83–88

  investment and, 84–86

  price discovery function of, 68

  regime uncertainty and, 84–87

  unintended consequences of Fed’s easy-money policies, 78–83

  wealth effect and, 72–75

  MARKINT, 35–41

  financial war and, 40–41

  meeting with CIA, 37–39

  military interest in, 40–41

  terrorist detection and, 35–39

  marks, German, 209

  Marshall, Andy, 42–44, 46, 47, 63, 64

  Martines, Lauro, 115

  Marx, Karl, 218

  Marxism, 69

  Matryoshka Theory, 70

  Medvedev, Dmitry, 151–52

  Merchant of Venice, The (Shakespeare), 67

  Merkel, Angela, 121, 127, 135, 202, 232

  Merrill Lynch, 184

  Mexico, 200, 233

  MF Global collapse, 196

  MI5, 36–37

  MI6, 36–37

  Ming Dynasty, 90

  mirror imaging, 62

  Mishkin, Frederic S., 286–88

  Mitbestimmung (codetermination), 123–24

  Mitterrand, François, 116

  Mohammed bin Rashid Al Maktoum, Sheikh, 154

  monetarism (quantity theory of money), 168–69

  money

  contract theory of, 165–67, 169

  defined, 165–66

  fiat, 168–69

  gold as, 217, 220–25

  gold’s role in enforcing money contract, 169–71

  quantity theory of, 168–69

  quantity theory of credit, 168–69

  SDRs as, 207

  state theory of, 168–69

  money illusion, 7–8

  money printing. See easy-money policy of Federal Reserve

  Monnet, Jean, 116

  Montenegro, 136

  Morell, Mike, 37–39

  Morgan, J. P., 220

  Morgan Stanley, 32–33, 262

  Morocco, 152, 153

  Mourdock, Richard, 205

  M-Subzero, 280, 283–84

  Mubarak, Hosni, 156

  Mulheren, John, 18–19, 32–33

  Mundell, Robert, 125

  Mussolini, Benito, 294

  Mutual Assured Destruction (MAD), 46, 63

  Mutual Assured Financial Destruction, 46

  “Myth of Asia’s Miracle, The” (Krugman), 94

  M-Zero (M0), 280

  Nakamoto, Satoshi, 254

  Napoleon Bonaparte, 114

  Napoleonic Wars, 115

  NASDAQ Stock Market closure, August 22, 2013, 60, 296–97

  National Defense University, 59

  National Journal,
63

  National Security Agency (NSA), 53

  negative real interest rates, 183–84

  neofascism, 294–95

  Netherlands, 233

  New Scotland Yard, 37

  New York Times, The, 39, 51, 55, 133, 144

  9/11 attacks

  continuity of government operations, failure of, 63

  as failure of imagination, 256, 257

  9/11 attacks, and insider trading, 17–28, 63

  Mulheren’s opinion of, 18

  9/11 Commission’s failure to find connection between, 21–22, 23, 25–27

  Poteshman’s statistical analysis of, 22–23

  signal amplification and, 24, 25, 26, 27

  social network analysis of, 19–20, 25

  Swiss Finance Institute study of, 23

  9/11 Commission, 21–22, 23, 25–27

  9/11 Truth Movement, 27

  Nitze, Paul, 43

  Nixon, Richard, 1, 2, 5, 58, 85, 209, 220, 235, 252, 285

  Nolan, Dave, 32–33

  numeraire, gold as, 219–20

  Obama, Barack, 37, 57, 129, 156, 202–3, 206, 252–53

  Obamacare legislation, 247–48

  offensive aspects of financial war, 46

  Office of Tailored Access Operations (TAO), 53–54

  Oman, 152

  one-child policy, China, 95, 102

  O’Neill, Jim, 139–40, 146, 150

  Operation Duplex-Barbara, 59

  Otto I, Emperor, 114

  Outline of Reform (C-20), 235

  Pakistan, 30, 151, 156

  panic dynamic, 62

  Panic of 1907, 198

  Panic of 2008, 46, 47, 52, 76, 77, 170, 188, 196, 201–2, 211, 296

  panics, 224

  paper gold transactions, 275–76, 284–86

  Paulson, Hank, 206

  Pei, Minxin, 106

  permanent disability, 246

  Peterson, Peter G., 51

  Petraeus, David, 37

  Pettis, Michael, 108–9

  phase transitions, 172, 265, 289–90

  Ph.D. standard, 177

  physical targets, in financial war, 46

  piecemeal engineering, 292

  piggyback trading, 24

  Plaza Accord, 1985, 118–19

  Pleines, Günter, 277

  Poland, 200, 233

  Ponzi scheme, in wealth management products (WMPs), 102–3

  Popper, Karl, 292

  Portugal, 128, 200

  Poteshman, Allen M., 22–23

  pound sterling, 157, 161, 209

  price discovery, 68

  primary deficit sustainability (PDS) framework, 177–83

  Project Prophesy, 28–34

  Pufeng, Wang, 44, 45

  Putin, Vladimir, 151

  Qatar, 152

  Qiao Liang (Unrestricted Warfare), 44–45

  Qin Dynasty, 90

  Qing Dynasty, 90, 91

  quantitative easing (QE), 159–61

  end of, implications of, 297

  by Federal Reserve, 184–85

  in Japan, 160–61

  in United Kingdom, 160

  quantity theory of credit (creditism), 168

  quantity theory of money (monetarism), 168–69

  Quantum Dawn 2, 54

  Rajoy, Mariano, 134

  Ramo, Joshua Cooper, 120

  random numbers, 268–69

  Rauf, Rashid, 37

  Ray, Chris, 35–36, 38, 40

  Raymond, Lenny, 35

  Reagan, Ronald, 2, 63, 118, 166, 176–77, 210

  Reagan administration, 235

  real incomes, decline in, 78–79

  regime uncertainty, 84–87, 125–26

  regional trade currency blocs, 255–56

  regression analyses, 4–5

  Reinhart, Carmen, 182, 183

  repatriation of gold, 40, 231–34

  Republicans, 175–76, 179, 180, 205, 294

  Reserve Bank of Australia, 52–53

  revolution in military affairs (RMA), 43–44

  Rise of the Warrior Cop (Balko), 294

  risk

  financial, 85, 268–70

  gold as risk-free asset, 219

  investments and, 218–19

  systemic, 11–12, 81, 188, 249–50, 251, 259, 270

  uncertainty distinguished, 85, 268

  Risk, Uncertainty and Profit (Knight), 268

  Roett, Riordan, 192

  Rogoff, Kenneth, 182

  Rollover (film), 1, 3

  Roman Empire, fall of, 5

  Roosevelt, Franklin D., 85, 295

  Rothschild, Nathan, 216

  Rouhani, Hassan, 57, 152

  Rubin, Robert, 177, 195, 196

  rule-of-law society, 166–67

  Russia, 139, 151, 152, 233. See also BRICS (Brazil, Russia, India, China, South Africa)

  gold accumulation by, 12, 229–30

  gold-to-GDP ratio of, 157, 280–81

  IMF commitment of, 202

  Saudi Arabia and, 156

  U.S.-Iran financial war and, 56, 57

  Sakakibara, Eisuke, 261, 273–74

  Samsung, 82

  Sancerre, siege of, 115

  Sarbanes-Oxley Act, 196

  Sarkozy, Nicolas, 202

  Saudi Arabia, 152, 156–57

  Saudi Aramco, 60

  savers, 183, 184

  Chinese, 102–3

  Federal Reserve policies penalizing, 79

  Sbrancia, M. Belen, 183

  Schmidt, Helmut, 271–72

  Schumann, Robert, 116

  Schwartz, Anna, 84

  Schwarzman, Stephen A., 51–52

  Scotland, 136

  Second Bank of the United States, 199

  self-organized criticality, 270

  Serbia, 136

  Seven Years War, 115

  shadow finance system, in China, 101–4

  shadow gold standard, 236

  Shafik, Nemat, 194–95

  Shakespeare, William, 67, 88

  Shamoon digital virus, 60

  Shanghai Cooperation Organization (SCO), 150–52

  Shapiro, Mary, 59

  Shinohara, Naoyuki, 194–95

  sight accounts, in gold, 276

  signal amplification, 22

  in stock trading, 23

  terrorist insider trading and, 24, 25, 26, 27

  Skype, 144

  small-and-medium-sized (SME) lending, 79–80

  Smith, Adam, 70, 71, 72, 87, 218, 255

  Snowden, Edward, 39, 54, 149

  social disorder, 294–95

  solidus, 114

  Solyndra, 123

  Sony, 82

  Sorkin, Andrew Ross, 51

  Sorman, Guy, 132

  Soros, George, 45, 292

  sou, 114

  sound-dollar policy, 118, 176–77, 210, 211

  South Africa, 139, 235. See also BRICS (Brazil, Russia, India, China, South Africa)

  South Korea, 45

  sovereign debt crisis of 2010, European, 128–30

  Soviet Union, 69. See also Russia

  Spaak, Paul-Henri, 116

  Spain, 128, 134, 153

  special drawing rights (SDRs), 1, 3, 12, 155, 206–214

  creation of, 209–10

  deflation prevention as purpose of, 213–14

  dollar index weakness and, 210–11

  as emergency liquidity so
urce, 211, 213

  issuances of, 210–11

  as money, 207

  new global gold-backed SDR, structuring of, 237–42

  as potential future reserve currency, 211–14, 292–93

  valuation of, 210, 236

  specialist firms, 18

  spillover effects, of national policy, 193, 194, 198

  Stamm, Luzi, 232

  State Administration for Foreign Exchange (SAFE), 126–27

  state-owned enterprises (SOEs), 97–98, 107

  state theory of money (chartalism), 168–69

  Stein, Jeremy, 188, 189, 249–50, 251

  Stewart, Martha, 25

  Stewart, Rod, 52

  sticky wage theory, 130–31, 134

  Stiglitz, Joseph, 117–18

  stimulus plan, Obama’s, 174

  stochastic models, 269

  stock bubbles, 75

  stock market crash, risk of, 250

  Strauss-Kahn, Dominique, 191, 204

  structural downturns, 197–98

  student loan bubble, 247–49

  subsidiarity principle, 113–14, 118

  Sui Dynasty, 90, 91

  Summers, Larry, 195, 196

  suspicious trading, spotting, 32

  sustainable debt, 171–72, 176–80

  swaps

  asset, in derivatives strategies, 80–81

  central bank arrangements, 273

  collateral, 188

  gold, 275

  SWIFT, 39

  U.S.-Iran financial war and, 54, 56

  Swiss Army, 59

  Swiss Finance Institute, 23

  Switzerland, 202, 232–33

  Syria, 57

  Syrian Electronic Army, 59

  system crashes, 296–97

  systemic risk, 11–12, 81, 188, 249–50, 251, 259, 270

  Taiping Rebellion, 91

  Tajikistan, 151

  Tang Dynasty, 90

  TAO (Office of Tailored Access Operations), 53–54

  Tao Te Ching (Lao Tzu), 90

  tapering, 249–50

  TARP bailout, 62

  Tauss, Randy, 28–29, 35, 37, 38, 39

  Tavakoli, Janet, 2

  taxes

  corporate rates, 122

  deflation, impact of, 9, 259–60

  Taylor, John B., 176

  Taylor Rule, 176–77

  Tea Party conservatives, 172–73, 205

  technology, and economic growth, 95–96

  Tenet, George, 28, 37

  terrorist insider trading

  MARKINT and, 35–39

  9/11 attacks and, 17–28

  Project Prophesy and, 28–34

  Thailand, 261

  Theory of Moral Sentiments, The (Smith), 70

  “Theory of Optimum Currency Areas, A” (Mundell), 125

  Thirty Years War, 115

  threats to U.S. dollar, 5–13

  Tiananmen Square demonstrations, 92

  Too Big to Fail (film), 3

 

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