The Death of Money

AFTERWORD

When I wrote Currency Wars in 2011, I diagnosed various dangers in the financial system and prescribed concrete steps policy makers might take to mitigate those dangers. I identified ways to reverse monetary and fiscal policy blunders around the world, particularly in the United States. My tone was cautionary but hopeful. I specifically said it was late, but not too late, to undo the damage caused by bankers and restore the financial system to a sound footing that would support commerce instead of trying to siphon it dry.

In the two and a half years since I completed Currency Wars, conditions have indeed changed—but not for the better. Elites who in former times were self-sacrificing have become self-serving. The world has passed the point where there is much prospect of soft landings; there are no easy exits from the policy mistakes that have been committed. All that remain are hard choices.

The hoped-for mild, middling inflation that becomes self-sustaining and seems to lift all boats with money illusion is not in the cards. There is only high inflation, deflation, disorder, default, and repression on offer. Exact paths and outcomes cannot be predicted, but severe consequences can be foreseen. These consequences may play out over considerable periods of time, but the underlying processes have already commenced.

The collapse of the dollar and the collapse of the international monetary system are one and the same. Threats to the dollar are ubiquitous—lost confidence, financial war, regional hegemons, hyperinflation, and more. These threats are looming larger and may even converge as inflation erodes confidence and emboldens enemies in a feedback loop that gains energy like a hurricane on warm water. The savings of everyday citizens are in the path of the storm.

Policy makers may not be alert to the dangers surrounding the dollar, but savers and investors show much better sense. A tide in the direction of hard assets is perceptible and growing stronger.

It may be too late to save the dollar, but it is not too late to preserve wealth. We live in an ersatz monetary system that has reached its end stage. In our time, the aureate has become brazen—the golden has become brass. A return to true value based on trust is long overdue.