As the August holidays get going, this publication has reviewed a few books that readers might enjoy if they can grab some spare time. Here is an example.
It is said that you can’t always judge a book by its cover but when a publication called The Little Book of The Shrinking Dollar carries a shiny gold dust jacket, it is a pretty reliable indicator.
The book, which is part of the Little Book Big Profits series, and written by Addison Wiggin and Samantha Buker, gives a rip-roaring, often funny-but-deadly-serious explanation of why they predict that the dollar’s day as a dominant currency is over. Shockingly, since 1970 – around the time when then-President Richard Nixon severed the Greenback’s link to gold – the purchasing power of the dollar has collapsed by 80 per cent.
Both Wiggin and Buker, who work together in the US at Agora Financial, are advocates of laissez faire economics, small government, free trade and hard money. In practice, such cheerleaders for “honest money” argue that the only way to keep monetary systems on the path of virtue is to base them upon a substance that is relatively fixed in quantity – such as gold. In the past, it has been easy for mainstream economists (you know, the ones who all spotted the 2008 Crash) to poke fun at such “gold-bugs”. They are not laughing quite so much now that big currencies like the dollar, euro and sterling are looking sickly.
This book is part of a trend of “hard money books”. More than a year ago, an investment professional and economics writer, Detlev Schlichter, penned an assault on the whole phenomenon of what he calls “elastic” money – ie, money that is not fixed in its quantity but which can, through central bank policy, be expanded almost without limit. (Strictly speaking, Schlichter says gold is not essential for a better system, but in practice it is the best way to proceed and is backed by hundreds of years of experience.) Other writers who have warned about the risks of fiat currencies are Jim Rogers - a big commodities bull and pundit on economics - and Peter Schiff, a US-based commentator and investor.
What is particularly nice about this book is that it does not bombard the reader with a great deal of complex theory. It boils down often difficult ideas into easy-to-digest paragraphs. It also contains a series of ideas for how people can shelter themselves from any monetary turmoil. But it emphatically is not some sort of utopian book, either. Nor is it a book for paranoiacs who think they need to keep a year’s supply of canned food under the stairs. There is some advice on investment, not just about gold.
Of course, people will continue to scoff about the case for gold. As far as the late JM Keynes was concerned, the old gold standard was a “barbarous relic”. Well, it is true that the discipline exerted by that standard could be fierce at times – but was it worse than the volatile period we have seen since 1970, with its quick boom-bust gyrations, ending up with the worst financial crisis since the Great Depression? It is worth remembering that between the end of the Napoleonic Wars and the outbreak of the First World War in 1914, the UK price level was – with the odd flicker – remarkably stable. How different was the 20th Century since 1918!
Even those who are sceptics about the case for gold should reflect on some of the statistics in this book, and ask if the guardians of paper money have been doing a competent job at guarding the value of wealth. The truth is that they haven't.