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By Bilal Hafeez 29-08-2019

Currency Wars and the Fall of Empires (Coppola Comment, 6 min read)

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This in-depth piece by Frances Coppola, financial writer, explores and criticises James Rickards’ book Currency Wars. The book takes a largely American perspective, reviewing fiat currency over the last century. Coppola believes Rickard neglects two key examples of failed fixed currency systems, namely Germany post WWI and the collapse of the Soviet Union. She also dives into the impact of the Cold War on the global currency disputes with the infamous oil price wars and high inflation of the 1970s and ‘80s following the collapse of Bretton Woods. Towards the end, the piece turns to Rickard’s suggestion for the US to adopt a gold standard as a solution to the currency war which, under the current huge trade deficit they run, would bankrupt the treasury and cause a global monetary contraction.

Why does this matter? The US is clearly no foreigner to conflict, having maintained its global dominance through a series of damaging wars in the Middle East and further afield; this piece is a great reminder of why the US might want to steer clear of yet another. This Friday at the Jackson Hole meeting, new research was discussed that outlined how using monetary policy to fight currency war is self-damaging.

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)