The Bottom Line
This book is excellent for understanding how the U.S. created an economy that puts constant downward pressure on the dollar. However, the conclusion that the dollar must collapse is not well-substantiated, and plays on fear. The solution, to hoard gold and other hard assets, is too narrow and not consistent with modern portfolio theory. The authors also concede that one of them, James Turk, could profit from a gold boom, since he publisher the Freemarket Gold and Money Report.
Pros
- Explains why the U.S. federal debt level is at $9 trillion, and its negative impact on the economy.
- Also explain clearly why personal debt is also soaring, and how this is bad for the economy.
- Details how the trade deficit has balooned.
- Discusses why the debt levels are unsustainable by economic growth.
- Good history of the gold standard and the rise of "fiat" money.
Cons
- Assume that U.S. dollar will fail because history shows ALL currencies ultimately fail.
- Point to four examples of failed currencies, ignoring plentiful examples of successful currencies.
- Assert gold, and other hard assets, are the only safety in a time of falling currencies.
- Assume a falling currency will lead to collapse.
- Create a panic mentality leading to a single asset class solution.
Description
- Part One: Why the Dollar Will Collapse
- Part Two: Money Then and Now
- Part Three: Why Gold Will Soar
- Part Four: Profiting From the Dollar's Collapse
Guide Review - Book Review
However, their assertion that the U.S. dollar will collapse because all governments' currencies collapse is based on only four examples: Ancient Rome, Revolutionary-era France, Weimar Germany, and Argentina. None of those examples are really similar to the modern-day U.S. economy.
The dollar has declined 40 since 2002, and could decline further still for the very reasons the authors delineate: a $9 trillion federal debt, excess liquidity causing inflation, the unsustainable personal debt of U.S. citizens, and a massive trade imbalance. However, the authors have not made an equally well-researched argument to support their conclusion that these conditions will lead to the inevitable collapse of the world's reserve currency.
Their recommendation to buy gold, precious metals and shares in gold mining companies is narrow and flies in the face of modern portfolio theory. They also recommend short-selling stocks of companies that will be hurt by a falling dollar. This is also known as timing the market, and is not recommended for the average investor.
If the dollar were to absolutely collapse, as they predict, it would wreak devastation upon the world's economy in ways that are really unimaginable. Owning gold might be the best way to go, or it might not. That's why a well-diversified portfolio, and constant attention to key economic indicators, is a better way to protect your personal finances than putting all your eggs in one basket...even if it IS made of gold.
