The Death of Money

INDEX

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Abe, Shinzo, 160–61, 260–61

Abenomics, 261, 264, 297

Abraham, 217

Adenauer, Konrad, 116

Afghanistan, 55

Aid, Matthew, 53

AIG, 77

Air-Sea Battle, 44, 63

Akerlof, George, 83, 84, 87

Albania, 136

Aldrich, Nelson, 199

allocated gold transactions, 275

Alpert, Dan, 245

Al Qaeda, 19, 27

alternative funds, 299–300

Ambinder, Marc, 63

American Airlines, 18, 20, 21, 24, 25, 26, 27–28, 35, 36

Ames, Paul, 143

ANZ Bank, 227

Arab Spring, 3

Argentina, 261, 290

ARPANET, 174

Articles of Agreement, IMF, 199, 212–14, 235

Asian financial crisis, 45, 120

Åslund, Anders, 142

asset swaps, 80–81

Associated Press, 59

asymmetric markets, 83–88

Atta, Mohamed, 24–25

Australia, 281

autonomous agents, 266

Azerbaijan, 233

Aziz, Shaukat, 31

Backus, David K., 74

backwardation, of gold futures contracts, 285

Bahrain, 58, 152

Baker, James, 177

Balko, Radley, 294

bank deposit risk, 218–19

bank failure risk, 218

Bank for International Settlements (BIS), 213, 276–78

banking risk, 11–12

Bank of England (BOE), 159–60, 161–62, 223, 230

Bank of Japan (BOJ), 160, 161–62

Bank of the United States, 199

barter, 254–55

Bear Stearns, 77, 103

Beijing Consensus, 118, 120–21

BELLs (Bulgaria, Estonia, Latvia, Lithuania), 140–146

economic responses to 2008–9 crisis and subsequent recovery in, 142–46

euro peg/conversion in, 141, 144–45

Berlin Consensus, 121–27

cooperative labor-management relations pillar of, 123–24

efficient labor pillar of, 124–25

innovation and technology pillar of, 122

low-corporate-tax-rates pillar of, 122

low-inflation pillar of, 122–23

positive business climate pillar of, 125–26

Bernanke, Ben, 262

cheap-dollar policy of, 129, 157–59

deflation and, 76, 77

information’s role in efficient markets, analysis of, 84, 85–86, 87

London speech of, 158–59

Tokyo speech of, 129, 157–58

bin Laden, Osama, 19–20, 37

bitcoin, 254

Black Death, 115

Black Monday, 270

Blackstone Group, 51–52

Bloomberg, Michael, 294–95

Bloomberg News, 101, 145

Boeing Corporation, 58–59

Boesky, Ivan, 18

bond markets, 180

Bosnia, 136

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

gold-to-GDP ratio of, 281

IMF commitment of, 202

inflation in, 3

Bretton Woods system, 118, 208–9, 235, 290

BRICS (Brazil, Russia, India, China, South Africa), 139–40, 146–50

foreign policy coordination by, 149–50

IMF voting reform requested by, 148

multilateral lending facility proposed by, 148–49

UN Security Council expansion sought by, 147–48

British Banking School, 168

BRITS, 177–83

Bronze Age collapse, 5

Brown, Gordon, 202, 274

Buffett, Warren, 32, 170–71

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

Burlington Northern Santa Fe Railway, 170

Burns, Arthur, 271

Bush, George H. W., 210

Bush, George W., 37, 210

C-20 (Committee of Twenty), 235–36

Canada, 202, 281

Cantillon, Richard, 7

capital flight, from China, 104–6

Carolingian Renaissance, 113

Carter, Jimmy, 85, 252, 295

Carter administration, 235

Carter bonds, 1, 253

cash, as investment, 300

central banks

Bank of England (BOE), 159–60, 161–62, 223, 230

Bank of Japan (BOJ), 160, 161–62

Bank of the United States, 199

central planning of, 69–72

European Central Bank (ECB), 117, 172

Federal Reserve (See Federal Reserve)

gold acquisition by, since 2010, 225–30

gold market manipulation by, 271–81

IMF as de facto, 199–207

purpose of, 199

Second Bank of the United States, 199

Central Intelligence Agency (CIA)

MARKINT and, 37–39

Project Prophesy and, 28–34

Rauf plot and, 36–37

“Challenge of Information Warfare, The” (Pufeng), 44

Charlemagne, 112, 113–14, 118

chartalism (state theory of money), 168–69

chartal money, 168

Chávez, Hugo, 40, 231

cheap-dollar policy of Federal Reserve. See easy-money policy of Federal Reserve

Cheney, Dick, 37

Chen Zhou, 43–44

Chiang Kai-shek, 91

China, 97–111, 139, 151, 152, 233. See also BRICS (Brazil, Russia, India, China, South Africa)

Beijing Consensus and, 120–21

capital flight from, 104–6

centralization, disintegration, and recentralization history of, 90–92

central planning, failure of, 69

collapse of, implications of, 297–98

Cultural Revolution in, 92

dollar investments of, 44

dynasties of, 90, 91–92

economic growth of, 93–96

elite/oligarch class in, 97–98, 101, 104–11

financial warfare capabilities of, 45–46, 51–53

GDP of, 93, 96

gold accumulation by, 12, 61, 226–30, 282–84, 296

gold as percentage of reserves of, 279

gold-to-GDP ratio of, 157, 281–82

IMF commitment of, 202

income inequality in, 106

inflation in, 3

infrastructure spending in, 98–101, 107–8

investment in European Union (EU), 126–27

investment/malinvestment in economy of, 95–101, 107–110

iron rice bowl principle in, 93

one-child policy, 95, 102

rebalancing of economy from investment to consumption and, 98, 107–110

shadow finance system in, 101–4

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

Taiping Rebellion, 91

unrestricted warfare doctrine and, 44–45

U.S.-Iran financial war and, 56, 57

Warlord Period, 91

Warring States period, 90

China Daily, 52

China Investment Corporation (CIC), 51

China National Petroleum Corporation, 97

China Petrochemical Corporation (SINOPEC), 97

China Railway Corporation, 255

China State Shipbuilding Corporation, 97

China Telecom, 97

Churchill, Winston, 116, 223

Citibank, 28, 30–31, 262

Citigroup, 196

civilizational collapses, 5

Clinton, Bill, 210

cluster paradigm, 192–93, 194, 198

CNN, 36, 37

codetermination, 123–24

Cohen, David, 54

Coinage Act of 1792, 217

Cold War, 46, 231

collapse

civilizational, 5

financial, 265–67

of international monetary system, 5

market, 11–12

warning signs of, 295–98

collateral swaps, 188

College of Europe, 116

commodities, 217

Communist Dynasty, 90, 91–92

complexity theory, 6, 269–70

financial collapse and, 265–67

market collapse and, 11–12

phase transitions in, 172, 265, 289–90

computational complexity theory, 71

confidence, in U.S. dollar, 253–56, 291

confirmation bias, 26

continuity of government operations, 63

contract theory of money (contractism), 165–67, 169

corporate tax rates, 122

correlations, 4–5

Cosco, 133

Counter-Reformation, 115

credit, in premoney economies, 255

creditism, 168–69

credit risk, 218

criticality, 270

Croatia, 136

Croseus, King, 217

“Crunch Time: Fiscal Crises and the Role of Monetary Policy” (Mishkin), 286–87

Crusades, 115

currency war, 159

cyberattacks, 59–60

cyclical downturns, 197–98

Cyprus, 200, 290

Dam, Kenneth W., 209–10

Da Silva, Tekoa, 236

Davoudi, Parviz, 151

“Day After, The” (Ambinder), 63

debasement, of money, 172

debt, 171–80, 290–91

Federal Reserve monetary policy’s relation to, 176–77, 180–89

Federal Reserve Notes as, 167

monetization of, 287–88

sustainable, 171–72, 176–80

tests for acceptable government spending, 173–76

of United States, 171–73

Debt-Deflation Theory of Great Depressions, The (Fisher), 246–47

debt-to-GDP ratio, 159–60, 173

deflation, impact of, 9, 258–59

of Japan, 159, 259, 261

of United Kingdom, 159

of United States, 159, 173, 259

defensive aspects of financial war, 46

deficits, 172–73, 176–80

deflation, 9–11, 76–83, 243–52, 256–64

banking system, impact on, 9, 259

Bernanke’s response to, 76, 77

Chinese imports and, 76

debt-to-GDP ratio and, 9, 258–59

deleveraging after housing market collapse and, 76–77

government debt repayment and, 9, 258

Greenspan’s response to, 76

versus inflation, in depression of 2007 to present, 243–52, 260, 290–91

in Japan, 160–61, 260–62, 264

post-2000 deflationary bias, 76

SDR issuance to prevent, 213–14

tax collection and, 9, 259–60

unemployment and, 77

De Gasperi, Alcide, 116

degree distribution, 265–66

de Léry, Jean, 115

deleveraging, 76–77, 246

DeMint, Jim, 205

Democrats, 175–76, 179, 180, 294

Deng Xiaoping, 93, 97

depressions

defined, 244

deflation in, 246–47

Great Depression, 84, 85, 125–26, 155, 221–22, 223–24, 234, 244, 245

Long Depression, in Japan, 160

of 1920, 246–47

regime uncertainty and, 125–26

2007 to present, 3, 76, 87, 126, 197, 243–52, 260, 290–91

derivatives, 80–81

gold as not constituting, 217–18

mortgage-related, 290

risk posed by, 11–12

size of positions in, 11

Deutsche Bank, 32–33

Deutsche Bundesbank, 232

devaluations, 158, 200

of dollar, U.S., 1, 10–11, 235

Gold Bloc devaluations, 222

Great Depression and, 223

digital currencies, 254

dollar, U.S., 161

alternatives to, 254

Beijing Consensus and, 120–21

confidence in, 253–56, 291

contract theory of, 165–67, 169

deflation as threat to, 9–11

demise of, potential paths of, 292–95

devaluation of, 1, 10–11, 235

financial war as threat to, 6–7

geopolitical threats to, 12–13

gold convertibility abandoned, in 1971, 1, 2, 5, 209, 220, 235, 285

inflation as threat to, 7–9

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

loss of confidence in, in 1970s, 1–2, 5

market collapse as threat to, 11–12

MARKINT as means of detecting attacks on, 40

pegging to, effect of, 155

SDRs as potential reserve currency replacement for, 211–14, 292–93

threats to, 5–13

Volcker’s efforts to save, 2

Washington Consensus and, 118–20

dollar index

in 1978, 1, 253–54

in 1995, 2, 253–54

in 2011, 2–3, 253–54

in 2013, 253–54

SDR issuance and weakness in, 210–11

Dr. Strangelove (film), 63

Draghi, Mario, 172, 211, 236

Dubai, 55, 58, 128, 153

Dubai World collapse, 128, 153

Duncan, Richard, 168

earmarked accounts, in gold, 276

easy-money policy of Federal Reserve, 3–4, 157–59, 260, 262, 264

exporting of inflation through exchange rate mechanism and, 75, 155

unintended consequences of, 78–83

weak response to, in liquidity trap, 247

wealth effect and, 72, 73

Economic Advisory Recovery Board, 252–53

Economist, The, 43–44, 134

Egypt, 156

Eichengreen, Barry, 207, 242

Einhard, 113

Eisenhower, Dwight, 174–75

electronic barter market, 254–55

El-Erian, Mohamed, 289

enemy hedge fund scenario, 47–51

equilibrium models, 4, 62

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

euro, 112, 113, 117–18

Chinese investment in, 126–27

future of, 133–37

skeptics of, analytic failures of, 129–32

sovereign debt crisis of 2010 and, 128–30

U.S. money market fund investment in, 127

Eurobonds, 136–37

Europe, 112–18. See also European Union (EU)

Charlemagne’s Frankenreich, 112, 113–14

post–World War II steps to unification, 116–18

warfare and conquest in, history of, 115–16

European Atomic Energy Community (Euratom), 116–17

European Central Bank (ECB), 117, 172

European Coal and Steel Community (ECSC), 116, 117

European Communities (EC), 117

European Economic Community (EEC), 116–17

European Rate Mechanism (ERM), 153

European Union (EU), 113, 121–37

Berlin Consensus and, 121–27

Chinese investment in, 126–27

demographics of, 134–35

expanding membership of, 136

fiscal and banking reforms, since 2011, 135–36

future of, 132–37

IMF commitment of, 202

precursor organizations and founding of, 116–18

sovereign debt crisis of 2010 and, 128–30

U.S. investment in, 127

Eurozone, 117, 121–27, 129, 130, 135, 136

gold-to-GDP ratio of, 157, 280

exchange rates, 130

external adjustment of unit labor costs, 131

Fail-Safe (film), 63

Fannie Mae, 248

Federal Open Market Committee (FOMC), 249–52

Federal Reserve

asset bubble creation by, 75–78

bank risk taking in low-interest-rate environment created by, 80–81

central bank, status as, 198–99

central planning by, 69, 71, 87

debt and deficits, monetary policy’s relation to, 176–77, 180–89

deflation and, 9–11, 76–83

easy-money policy of (See easy-money policy of Federal Reserve)

financial repression engineered by, 183–84

financial war, views on, 60–62

FOMC member views on tapering versus money-printing, 249–52

forward guidance of, 83, 86, 185–88

gold held in vaults of, 230

Great Depression monetary policy of, 223

Greenspan’s battling of deflation and creation of housing bubble, 76

insolvency of, 286–88

irreversibility of money creation and, 290

money contract and, 167, 180–89

PDS inputs, and monetary policy, 180–83

quantitative easing (QE) programs, 184–85

real income declines resulting from policies of, 78–79

savers penalized by policies of, 79

SME lending damaged by policies of, 79–80

U.S Treasury debt purchases by, 172

wealth effect and, 72–75

zero-interest-rate policy of, 72, 73, 79–81, 185, 186, 260

Federal Reserve Bank of New York, 73–74, 230

Federal Reserve Notes, 167

Federation of American Scientists, 58

fiat money, 168–69

financial repression, 183–84

financial risk, 85, 268–70

financial transmission, 193–94

financial war, 6–7, 42–64

accidental, 63

Chinese cybercapabilities, 45–46, 51–53

CIC-Blackstone deal, 51–52

cyberattacks combined with, 59–60

defensive aspects of, 46

enemy hedge fund scenario, 47–51

equilibrium models and, 62

Federal Reserve’s view of, 60–62

MARKINT as means of detecting, 40–41

offensive aspects of, 46

panic dynamic and, 62

physical targets, 46

purpose of, 61

solutions to, 64

U.S. cybercapabilities, 53–54

U.S.-Iran, 54–58

U.S.-Syria, 57

U.S. Treasury’s view of, 60–62

virtual targets, 46

Wall Street’s cybercapabilities, 54

war games, 58–59

fine art, as investment, 299

fiscal dominance, 287–88

Fiscal Stability Treaty (EU), 135–36

Fisher, Irving, 168, 246–47

Fisker, 123

Fitzgerald, F. Scott, 252

flash crash, 63, 270, 296–97

floating-exchange-rate regime, 235

Fonda, Jane, 1

food price inflation, 3

food stamps, 246

Ford, Gerald, 271–72

forward guidance, 83, 86, 185–88

forwards, gold, 275, 285–86

France, 235, 236

Franco-Prussian War, 115

Frank, Barney, 204, 205

Frankenreich, 112, 113–14

Freakonomics (Levitt and Dubner), 32–33

Freddie Mac, 248

Friedman, Milton, 84, 168, 263

Friedman, Tom, 256

Froman, Michael, 195, 196, 202–3

futures, gold, 275, 284–86

G7, 139, 140, 147

G9, 139–40

G20, 140, 147, 202, 203

Galloni, Alessandra, 131–32

Gang of Ten, 138, 139

Geithner, Timothy, 195, 196, 203, 244

General Electric, 255

General Theory of Employment, Interest and Money, The (Keynes), 246–47

Genoa Conference, 1922, 221–22

Gensler, Gary, 195, 196

geopolitics, 12–13

Germany, 125, 127, 136–37, 281

gold repatriation by, 231–32

GIIPS (Greece, Ireland, Italy, Portugal, Spain), 140, 142–46

Glass-Steagall, repeal of, 196, 253, 296

gold, 215–42

BIS transactions, 276–78

central bank acquisition of, since 2010, 225–30

central bank manipulation of, 271–81

Charlemagne’s switch from gold to silver standard, 114

Chávez’s repatriation of, 40, 231

China’s accumulation of, 12, 61, 226–30, 282–84, 296

classical gold standard, 1870–1914, 176, 234–35

constructing new gold standard, 237–42

contract money system, role in, 169–71

contracts based on, risks associated with, 217–18

disorderly price movements, implications of, 295–96

dollar convertibility abandoned, in 1971, 1, 2, 5, 209, 220, 235, 285

dollar standard, 234–35

drop from 1980 highs, 2

forwards, 275, 285–86

futures, 275, 284–86

Germany’s repatriation of, 231–32

gold exchange standard, 221–22, 224, 234–35

gold-to-GDP ratios, 157, 279–82

Great Depression caused by gold myth, 221–24

IMF sales of, 235–36, 277

as investment portfolio recommendation, 298–99

Iranian trading of, in financial war with U.S., 55–56

lease arrangements, 275, 284

market panics caused by gold myth, 224

monetary policy, and classical gold standard, 176

monetary system, role in, 217, 220–25

as M-Subzero, 280, 283–84

nature of, 218–20

as numeraire, 219–20

price rise of, 1977 to 1980, 1

price rise of, 2006 to 2011, 3

private market demand for, 230

quantity insufficient to support world trade and finance myth, 220

repatriation of, 40, 231–34

reserves, rebalancing of, 279–84

return-to-gold-standard scenario, 293–94

as risk-free asset, 219

Russia’s accumulation of, 12, 229–30

shadow gold standard, 236

storage of, at Federal Reserve and Bank of England vaults, 230–31

swaps, 275

Switzerland’s repatriation of, 232–33

U.S. attitude to, shift in, 235, 236

Gold and Foreign Exchange Committee, 272–73

Goldberg, Jonah, 294

Gold Bloc devaluations, 222

Goldman Sachs, 32–33, 128, 139, 140, 205, 206, 262

gold-to-GDP ratios, 157, 279–82

Goodhardt, Charles, 71, 72, 87, 188

Goodhardt’s Law, 71, 87

Gotthard Base Tunnel, 123

government debt repayment, impact of deflation on, 9, 258

government program dependency, in U.S., 246

Graeber, David, 255

Grant, James, 177

Great Depression, 84, 85, 125–26, 155, 221–22, 223–24, 234, 244, 245

Greece, 128, 133–34, 142, 153, 200, 290

greed, 25

Greenspan, Alan, 76, 77, 122

gross domestic product (GDP)

of China, 93, 96

components of, 84, 96

debt-to-GDP ratio, 9, 159–60, 173, 258–59, 261

of U.S., 96, 244

Gulf Cooperation Council (GCC), 12, 150, 152–57

monetary integration process and, 153–57

as quasi-currency union, 153

Hague Congress, 116

Hall, Robert, 86–87

Hamilton, Alexander, 120–21

Han Dynasty, 90

Hanke, Steve, 80

Haydn, Michael, 37

Hayek, Friedrich, 70–71, 72, 87

hedge fund covert operations, 47–51

Hemingway, Ernest, 256

Herzegovina, 136

Himes, James, 284

Holocaust, 115

Holy Roman Empire, 114, 115

Hong Ziuquan, 91

Hoover, Herbert, 85

housing market

bubbles in, 75, 76–77, 248

collapse of, 2007, 248, 296

rise in, since 2009, 291

wealth effect and, 72, 73

HSBC, 227

Hu Jintao, 151–52, 202

Hunt, Lacy H., 74, 79

Hunt brothers, 217

Hyundai, 82

ImClone Systems, 25

income inequality, in China, 106

India, 12, 139, 151. See also BRICS (Brazil, Russia, India, China, South Africa)

IMF commitment of, 202

U.S.-Iran financial war and, 55, 57

Indonesia, 45

inflation, 3–4, 7–9, 75–83

alternative measures of, 3

Berlin Consensus and, 122–23

versus deflation, in depression of 2007 to present, 243–52, 260, 290–91

export of, through exchange-rate mechanism, 75, 155

Federal Reserve’s targeting of, 186–87

money illusion and, 7–8

in 1960s and 1970s, 7–8

in 1977 to 1981, 1

in 1981 to 1986, 2

in PDS framework, 183

pro-inflation (easy-money) policy of Federal Reserve (See easy-money policy of Federal Reserve)

in 2008 to present, 3, 75, 76, 77

information asymmetry, 83–88

information warfare, 44

infrastructure spending

Berlin Consensus and, 123

in China, 98–101, 107

In-Q-Tel, 34, 35

insider trading

Stewart’s trading of ImClone Systems, 25

by terrorists (See terrorist insider trading)

interest rates

bank risk taking in low-interest-rate environment, 80–81

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

negative real rates, 183–84

zero-interest-rate policy, of Bernanke, 185, 260

internal adjustment of unit labor costs, 131

International Emergency Economic Powers Act (IEEPA), 295

International Monetary Fund (IMF), 12, 81, 190–214

Articles of Agreement, 199, 212–14, 235

Asian financial crisis and, 45, 120

C-20 project, 235

cluster paradigm and, 192–93, 194, 198

commitments to expand lending capacity of, 202–6

as de facto central bank, 199–207

deposit-taking function of, 201

financial transmission and, 193–94

gold dispositions by, 235–36, 277

governance reforms, implications of, 296

historical roles of, 191

lending role of, 199–201

leverage of, 201–6

management of, 194–95

special drawing rights (SDRs) issued by (See special drawing rights [SDRs])

spillover effects of national policy, 193, 194, 198

international monetary system, 1, 12, 118–21

Beijing Consensus, 118, 120–21

Bretton Woods system, 118, 208–9, 235, 290

C-20 project and IMF reforms, 235–36

collapses of, 5

debt and deflation as problems of, since 2009, 290–91

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 source, 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

Toyota, 82

Trading with the Enemy Act of 1917, 295

Treasury, U.S.

bond issuance in Swiss francs (Carter bonds), in 1970s, 1, 253

China’s U.S. Treasury holdings, 51

debt issued by, 171

Federal Reserve’s purchases of debt issued by, 172

financial war, views on, 60–62

sustainability of debt burden of, 171–72

Treaty of Amsterdam, 117

Treaty of Rome, 117

Triffin, Robert, 209

Triffin’s dilemma, 209

Troika (IMF, ECB, EU), 128, 133

trust, idea of, 166–67

trust products, 102

Turkey, 136

U.S.-Iran financial war and, 55, 56, 57

Tyson Foods, 255

Ukraine, 136

unallocated gold transactions, 275

uncertainty, 85–86, 268

regime, 84–87, 125–26

unemployment

in Eurozone, 125

Federal Reserve’s targeting of, 186–87

in U.S., 77, 80, 245

Unit 61398 (China), 53

United Airlines, 20, 21, 24, 25, 27–28

United Arab Emirates, 56, 152, 154

United Kingdom, 157–62

Brown’s gold sales, 274

debt-to-GDP ratio of, 159

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

gold-to-GDP ratio of, 157, 281

quantitative easing in, 160

United Nations, 213

United States. See also dollar, U.S.

asset bubbles in, 75–78

China’s gold accumulation and, 283–84

continuity of government operations, 63

debt of, 171–73

debt-to-GDP ratio of, 159, 173, 259

deflation and, 9–11, 76–78

dollar devaluations in, 1, 10–11

financial warfare and, 53–58

GDP of, 96, 244

gold as percentage of reserves of, 279

gold-to-GDP ratio of, 157, 280–81

government program dependency in, 246

IMF loan commitment of, 202–6

inflation in, 1, 2, 3, 7–8, 75, 76, 77

investment in European Union (EU), 127

student loan bubble in, 247–49

unemployment in, 77, 80, 245

unit labor costs, 124, 131, 134

Unrestricted Warfare (Qiao and Wang), 44–45

unrestricted warfare doctrine, 44–45

“Use of Knowledge in Society” (Hayek), 70–71

Uzbekistan, 151

value, meaning of, 166

value-at-risk models, 4, 267

Venezuela, 40, 231

Vikings, 115

Villiger, Kaspar, 233

Viñals, José, 198

virtual targets, in financial war, 46

Volcker, Paul, 2, 118, 176–77, 190, 197, 210, 211, 252–53, 256, 291

Volcker Rule, 252–53

Vujcic, Boris, 136

Walker, Marcus, 131–32

Wall Street (film), 24

Wall Street Journal, The, 39, 105, 106, 126–27, 131, 133

Wang, Xiangsui (Unrestricted Warfare), 44–45

war

financial (See financial war)

information warfare, 44

revolution in military affairs (RMA), 43–44

unrestricted warfare doctrine, 44–45

war games, 58–59

Warlord Period, 91

warning signs of economic collapse, 295–98

China’s gold accumulation as, 296

Chinese collapse as, 297–98

end of QE and Abenomics as, 297

gold market, disorderly price movements in, 295–96

IMF governance reforms as, 296

regulatory reforms, failure of, 296

system crashes as, 296–97

Warring States period, 90

Warsh, Kevin, 273

Wars of Louix XIV, 115

Wars of Religion, 115

Washington Consensus, 118–20

Washington Post, The, 126, 206

wealth effect, 72–75

direction of, 74

size and timing of, 73–74

substitution effects, 73

wealth management products (WMPs), 102–3

Wen Jiabao, 151

“What Washington Means by Policy Reform” (Williamson), 119

Williamson, John, 119, 120

Wirtschaftswunder, 127

Woodford, Michael, 185–86

World War I, 115

World War II, 115

Wriston, Walter, 190

Yellen, Janet, 67, 88, 251, 262

yen, 157, 161

yuan, 212

Yuan Dynasty, 90

zero-interest-rate policy

of Bank of England (BOE), 160

of Federal Reserve, 72, 73, 79–81, 185, 186, 260

Zhou Dynasty, 90

Zhu, Min, 190–95, 197–98, 213, 283–84

Zhu Changhong, 227

Zia-ul-Haq, Muhammad, 30