currency wars

[stone]

http://kingworldnews.com/kingworldnews/ ... cenes.html

Have any of you read the Jim Rickard's book "Currency Wars"? Is it worth a look or is it just a whoop it up for gold enthusiasts? The audio interview gets interesting when he talks about Bretton Woods etc. He also points out that the Yen has gone from 300 to the USD to 75 to the USD without Japan loosing its place as an exporter. He says that devaluing the USD is not the way to save US jobs.
He says that the USA could confiscate European and IMF gold as it is held in the USA. I'm not sure that gold actually has so much power. Someone could hold all the world's gold to no effect if the rest of the world just ignored gold.

[smurff]

Stone, the rest of the world will NOT ignore gold. 

[stone]

Smurf, when the Spanish empire was at its height, silver "pieces of eight" were the global currency and gold dwindled in value. I agree that gold value did not go to zero but it certainly was profoundly "de-monetized". Gold only regained monetary use with the fall of Spanish imperial power and the rise of the English speaking powers (broadly speaking silver mines are in Bolivia and Mexico, gold in South Africa, USA, Canada, Australia). Basically all the silver flowed from Latin America to China and then silver stopped being valuable.

[MediumTex]

Smurf, when the Spanish empire was at its height, silver "pieces of eight" were the global currency and gold dwindled in value. I agree that gold value did not go to zero but it certainly was profoundly "de-monetized". Gold only regained monetary use with the fall of Spanish imperial power and the rise of the English speaking powers (broadly speaking silver mines are in Bolivia and Mexico, gold in South Africa, USA, Canada, Australia). Basically all the silver flowed from Latin America to China and then silver stopped being valuable.

Wasn't the decline in the value of gold in the scenario you are describing due, in part, to the enormous amount of new gold brought to Europe from the conquered central and south American tribes?

I don't think something like that is going to happen again.

[stone]

Medium Tex, the conquestidors were actually disapointed at how little! gold they got from the New World. They got vastly more silver than gold. The consequence was that silver became the global currency and counterintuatively the value of silver increased relative to the value of gold. The trade deficit with China acted as a sink for the silver that was mined in Bolivia and Mexico.

http://www.bbc.co.uk/iplayer/episode/b0 ... _of_eight/

[stone]

I think the value of gold is largely a reflection of the extent to which it is "monetized". That basically is a reflection of the suitability of the alternative forms of money in use. Silver is not suitable now because there is no stockpile and it gets produced at a steady rate as a byproduct of mining for other metals. That makes the silver price very volatile. So the alternatives are gold versus fiat money. If all the gold stock pile got locked up by some Dr Evil and yet it could still be mined at $800 per ounce, then I don't think it would work well as money and so would end up "demonetized". I guess the commodity value of gold for decoration, dentistry and electronics isn't very much. Perhaps gold might just get viewed as a byproduct of mining silver for industrial use Gold jewelry is largely a display of wealth- its value relies on gold being monetized rather than on gold being shiny IMO.

[stone]

The fact that silver worked best as money when tonnes and tonnes of it were being mined and gold standard enthusiasts always talk about the period that happened to coincide with the US gold rush surge in production; makes me wonder whether in order for something to get successfully deployed as money it actually does require some inflation in the Austrian increase of monetary base sense

[smurff]

Well, regarding Rickard's book:  I could not find it listed at the NY Public Library's website, so I suggested that they acquire it. It's a big bestseller now; if the library does not get it I might have to break my rule and actually buy it.

[Storm]

I heard an interview with Rickards on Bloomberg radio recently and he seemed to be very much in touch with reality and history as far as currency intervention goes:

http://www.bloomberg.com/video/79944740/

As far as I remember, the basic premise was that the US, China, Japan, Europe, and the entire world is in a currency war right now, with each country trying to devalue their currency by printing in order to compete better in a global market.  He looks back through history and shows how every one of these currency wars has ended badly.

Based on the interview I would love to read his book, time permitting.