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Leverage: How Cheap Money Will Destroy the World Hardcover – November 15, 2011
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From the Inside Flap
Leverage is an essential part of the financial system, and when used properly it allows businesses to borrow funds to invest in growth and expansion, offers opportunities for reasonably priced housing, and much more. But current imbalances in the ways in which leverage is being used by the rich and powerful in the United States and abroad have led to an alarming situation that threatens to shake the global economy to its core.
In Leverage: How Cheap Money Will Destroy the World, well-known market commentator Karl Denninger literally follows the money, tracing the path it has taken through history and discovers a shocking truththe power to control a nation's purse strings is addictive, and when that power falls into the hands of only a select few, they will pull the levers of government and policy to enrich themselves at the expense of everyone else. History is littered with the stories of collapsed monetary systems, and in every case the debasement of the currency in question, and the disasters that followed, can be directly blamed on excessive leverage, deployed in ill-intentioned and fraudulent ways by the elite.
The current Great Recession is no exception to this rule. It was no accident, and the politicians and monied interests responsible knew that it was coming. Special interests and other influential individuals have always used leverage to enrich themselves while looting the population at large. Eventually the bill always comes due and then we all have to pay.
With Leverage in hand, we can avoid this disaster, and Denninger shows how. With practical, realistic ideas for fixing the financial system, devising sound energy policies, and more, the book stands between us and a debt we simply can't afford.
From the Back Cover
Praise for Leverage
"Karl Denninger is a brilliant economist and someone whose opinions I respect and highly value.Leverage is a remarkable work that I highly recommend to anyone who wants to truly grasp the principles that drive our current economy and the breakdowns that occur when the fundamental mathematical laws governing economies are ignored or obfuscated. Karl has taken a complex macroeconomic system and masterfully pared it down to its essence. Leverage presents this information in an elegantly simple manner that the average high school student would understand, and provides a realistic plan for eliminating the mechanisms that have caused the 'boom and bust' cycles and over-leveraging that have plagued our economy for decades."Adrian Wyllie, Chairman of the Libertarian Party of Florida and syndicated talk radio host
"Karl is something of a rarity in our politicsa Tea Party conservative who believes in strong and effective regulation as a mechanism towards reducing excessive leverage in our economy. He spares no one in this discussion of a financial services industry that colluded with the government to rip off Americans by convincing them that home prices could never decline and that home equity was an ATM. Undergirding all of this was leverage, a useful tool that can become a poison if ingested wrongly or in unwise amounts. Leverage infects our medical system, educational system, and government. I don't agree with everything Karl says. I am after all a liberal, and he is not. But he provides a clear explanation of what is wrong with our economic and political order, and how to fix it."Matt Stoller, American political activist and writer
"Karl Denninger of The Market Ticker® has been a prophetic voice crying in the wilderness, repeatedly warning the world of the dangers of excessive debt. In Leverage, he provides a cogent analysis of the current economic crisis as well as a set of drastic policy prescriptions that may be the U.S. economy's only chance for eventual recovery."Vox Day, author of The Return of the Great Depression
"In 2007, our once lucrative business was collapsing. The harder we worked, the more difficult it became to afford even a modest standard of living. Out of a desperate need for answers, I started researching and that research led me to Karl Denninger's Market Ticker. As a quintessential Jane Six Pack, I knew only the basics of economics and the financial sense my accountant father had instilled in me. What I have learned from Karl over the past four years has changed my family's life, and I credit Karl for saving us from the financial ruin that has devastated many of our friends and extended family. Thankfully, Karl has simplified and condensed all this knowledge and information into one, easy-to-read book; so it won't take you as long as it took me to understand the scope of what we face and how to protect yourself and the people you love. Leverage is both frightening in its reality and hopeful in that it gives us the tools to change our future. Leverage should be in every classroom in America."Stephanie Jasky, founder, FedUpUSA.org
More About the Author
He has been a full-time trader since 1998, author of The Market Ticker (http://market-ticker.org), a daily market commentary, and operator of TickerForum, an online trading community, both since 2007.
Mr. Denninger received the 2008 Reed Irvine Accuracy In Media Award for Grassroots Journalism for his coverage of the 2008 market meltdown.
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Here is the author's three-line conclusion to the longer chapter that ends the book (my own notes in parenthesis):
01 Federal and state governments KNEW what was going on, and are COMPLICIT.Read more ›
The book itself is an indictment of the abusive borrowing and lending by banks, governments, corporations, and consumers over the last three decades; while this borrowing has driven an illusory prosperity, it will be the eventual cause of a moderately or horribly painful reckoning. The first half of the book discusses key concepts of compound interest and the debt circle, which you probably should have learned in school, and then explained how these basic principles have been intentionally or unintentionally ignored. The most cogent argument Denninger makes is that lending must always be backed with tangible assets equivalent to the value of the loan or else charge interest rates sufficient to compensate the risk bondholders and stockholders take when they provide necessary additional capital to back the loan. The message is clear: lenders keep trying to sell money they don't have.
The second half of the book takes an important turn. Noting that most books of this type advise how to avoid the catastrophe, Denninger makes a clear and haunting point. There are no shelters. There are no safe havens.Read more ›
Denninger starts by discussing the basic principles of financial leverage, or the use of borrowed money to replace actual earned capital in financial transactions. While it has its uses, he shows how leverage can go from being a powerful servant, to a seductive mistress, to a terrible master. In particular, he devotes a whole chapter to the excesses of the 2000s, such as the growth of the housing bubble and the rise of complicated financial instruments incomprehensible to mortal man. Ultimately, as he's said many times, "that which can't continue forever, won't."
The second half of the book is focused on what must be done to reverse the tide of debt and avoid complete and utter financial collapse, starting with, to quote him again, "stopping the looting and starting prosecuting." His comprehensive plan covers justice, the financial system (including the Federal Reserve), entitlement programs, the medical system, trade, taxes, energy policy (and its little-understood connection to defense policy), and more. Many of his suggestions will not be obvious ones at first glance, but ALL of them make sense.
Ultimately, reforms of the type Denninger advocates will not be painless...Read more ›
Most Recent Customer Reviews
Karl Denninger explains economics in such terms that anyone can understand it. Also, he is someone that can get you up to speed on about any topic possible. Read morePublished 7 months ago by Gregory S Bailey
You want to understand the crash of 08 and the coming disaster?? Get this book. Cheap money (ZIRP and QE) is gonna leave a mark! This time, world-wide.Published 11 months ago by kellyt
Karl Denninger is one of the brightest minds out there today. I am an avid reader of everything he writes, and rarely find I disagree. Read morePublished 11 months ago by William G. Benedict
Wow, this book really describes how the financial system works in this country.Published 14 months ago by Wesley
The very title of this book is a prediction from the author, K Denninger, to his readers. The problem is: In my opinion, you should never listen to Karl Denninger when he makes an... Read morePublished 18 months ago by Picturesque Music
Karl Denninger has succinctly covered the big issues with today's economy and government. Especially interesting is his discussion on exporting inflation and the pitfalls of... Read morePublished on January 24, 2014 by Sparkie
Fantastic book. Great information. Too many Americans have no idea what is really happening in the financial world. This explains it thoroughly but in a way anyone can understand.Published on December 29, 2013 by Sharonk720
Karl does a nice job of explaining our current situation and how we got here. I would like to live in the honest world with sound money which he envisions. Read morePublished on October 24, 2013 by Ed C
If you don't agree with is fanboy arguments he just silences you on his site and bans you. Typical one sided arguments, he's always right everyone else is wrong. Read morePublished on May 30, 2013 by T. Pro