Making Sense of the Dollar: Exposing Dangerous Myths about Trade and Foreign Exchange (Bloomberg) [Hardcover]

Marc Chandler (Author)

Book Description

Series: Bloomberg | Publication Date: August 19, 2009

Has the greenback really lost its preeminent place in the world? Not according to currency expert Marc Chandler, who explains why so many are--wrongly--pessimistic about both the dollar and the U.S. economy.

Making Sense of the Dollar explores the many factors--trade deficits, the dollar's role in the world, globalization, capitalism, and more--that affect the dollar and the U.S. economy and lead to the inescapable conclusion that both are much stronger than many people suppose.

Marc Chandler has been covering the global capital markets for twenty years as a foreign exchange strategist for Wall Street firms. He is one of the most widely respected and quoted currency experts today.

"Making Sense of the Dollar is a must for anyone involved in foreign exchange markets. Chandler's research substantiates a basically positive view of the U.S. dollar, and the book is perfectly timed, given the critical juncture in global currency markets--where the outlook for the U.S. dollar is under serious scrutiny--and the magnitude of government interventions to stem the current credit crisis."
--Hari N. Hariharan, Chairman and CEO, NWI Management LP

"...exposes the misconceptions about U.S. competitiveness, affirms the strength of the dollar, and applauds the resilience of the American consumer.... This lucid and well-written work is required reading for the expert as well as the lay person."
--Vera Jelinek, Ph.D., Divisional Dean, Center for Global Affairs, New York University, School of Continuing and Professional Studies

Editorial Reviews

About the Author

Marc Chandler, global head of currency strategy at Brown Brothers Harriman, has been involved in the global capital markets for twenty years. A prolific writer, Chandler contributes to TheStreet.com and Seeking Alpha, Barron's, the Financial Times, Active Trader, and Currency Trader. He appears on CNBC, Bloomberg Television, Nightly Business Report, and ABC and NBC national news reports. He is a frequent speaker to business groups, investors, and universities, and is an associate professor at the Center for Global Affairs, part of New York University's School of Continuing and Professional Studies.

Product Details

• Hardcover: 240 pages
• Publisher: Bloomberg Press; 1 edition (August 19, 2009)
• Language: English
• ISBN-10: 1576603210
• ISBN-13: 978-1576603215
• Product Dimensions: 9.2 x 6.3 x 0.8 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.6 out of 5 stars  See all reviews (21 customer reviews)
• Amazon Best Sellers Rank: #180,145 in Books (See Top 100 in Books)
  • #35 in Books > Business & Investing > International > Foreign Exchange

More About the Author

Marc Chandler, global head of currency strategy at Brown Brothers Harriman, has been involved in the global capital markets for twenty years. A prolific writer, Chandler contributes to TheStreet.com and Seeking Alpha, Barron's, the Financial Times, Active Trader, and Currency Trader. He appears on CNBC, Bloomberg Television, Nightly Business Report, and ABC and NBC national news reports. He is a frequent speaker to business groups, investors, and universities, and is an associate professor at the Center for Global Affairs, part of New York University's School of Continuing and Professional Studies.

Customer Reviews

Most Helpful Customer Reviews

40 of 48 people found the following review helpful:

5.0 out of 5 stars Shedding Light, August 10, 2009

By 

V Drucker - See all my reviews

This review is from: Making Sense of the Dollar: Exposing Dangerous Myths about Trade and Foreign Exchange (Bloomberg) (Hardcover)

Foreign exchange is a treacherous subject to navigate, difficult to predict and analyze, and most often left to expert traders and strategists. Yet that is no justificaiton for ducking out, since it is such a critical lynchpin of the entire system of global economics and internatinal relations.

Marc Chandler's book takes the bull by the horns. The author addresses his topic in a compelling prose style, which communicats effectively with non-economist readers, while providing ample fodder for the most informed professionals. Chandler's lucid voice steers the reader gently through the maze of trade accounting, globalization, labor markets, monetary policy and speculation, interspersing nuanced observations and discussions with simple economic explanations of how goods and money flows traverse the world.

In order to frame its message, the book uses a provocative format: it challenges a handful of forex myths, peeling back the layers of concepts frequently taken for granted as the common wisdom. For example, at the heart of the arguments, one particular chapter is bound to command attention. Is the demise of the dollar, and its threatened standing as the world's reserve currency an inevitability, as so many dollar bears have predicted in recent years? Chandler's response is a resounding no, citing, "the unique characteristics of America, such as its political stability, the depth and breath of its US Treasury markets, and its status as a superpower." He goes on to describe the dollar's other key attributes, such as its role as an invoicing currency for trade, and as a denominator of commodities.

Chandler takes his own role as a educator seriously. He rises above every temptation to retreat into jargon, and consequently provides a pleasurable read, with stimulating arguments and refreshing clarity. Over the past twelve months, many investors and savers, rich and poor alike, have felt buffeted by economic currents and financial shenanigans they barely grasped. They have lost faith in both banking institutions and policy makers. A book like this pefforms a timely function. It sheds some light at a juncture when investors most need a helping hand, and teaches intellectual responsibility for understanding how the world works.

6 of 6 people found the following review helpful:

5.0 out of 5 stars A guide to how American Capitalism really works!, November 27, 2009

By 

James A. Hofmann "College Kid" (Stillwater, NJ) - See all my reviews
(REAL NAME)   

This review is from: Making Sense of the Dollar: Exposing Dangerous Myths about Trade and Foreign Exchange (Bloomberg) (Hardcover)

This has to be one of the most fascinating books I have ever read. It does a good job of taking the advanced global economy and breaking it down into simple points. Chandler then goes on to point out how the accounting systems and metrics we use to value and monitor things like savings and trade are way off because the system changed since the metrics were developed before WW2.

14 of 17 people found the following review helpful:

4.0 out of 5 stars Important perspective but the conclusions dont naturally follow, November 21, 2009

By 

A. Menon (Hong Kong) - See all my reviews

Amazon Verified Purchase

This review is from: Making Sense of the Dollar: Exposing Dangerous Myths about Trade and Foreign Exchange (Bloomberg) (Hardcover)

This book takes a fresh look at the way that both investors and policy makers should look at global flows in aggregate to determine whether imbalances are forming. The historical accounting standards for global trade has been the trade account and this has been emergent because they were once the dominating flow relative to capital good flows. The strength of an economy is often looked at in terms of strength of trade position and it is argued that one needs to reflect on the health of an economy in a much deeper and more integrated manner. In particular one needs to focus on the capital flows and the ownership of the means of production on a global basis by the public to see whether there are imbalances as global supply chains by US companies have become much more important and vastly reduce the significance of measures like the trade account.

I think the perspective is a very important one. Essentially the author argues that if one compares the aggregate trade volumes of US corporates then it changes ones perspectve on the trade account because the US sales volumes and the global supply chains that create them accrue profits to US corporates that if re-patriated vs being re-invested would vastly change the perspective that the US is losing dollars abroad (as US companies are accruing foreign currencies simultaneously to dollar accumulation but they go unaccounted for). Given the global sales volumes by US companies, there can be no doubt that the trade account does not measure the aggregate change in ownership capital goods of one nation relative to another (which is what we are really trying to measure). The simplified argument goes as follows, assume there are two countries, A and B, with 2 assets for each country, a bond and a stock. B has a trading surplus with A that gets reinvested in bonds but A owns 1/2 of the businesses in B- which is better off? The author argues that A which represents the US is actually better off (not due to this example, but thats the way he sees it). But that does not follow naturally. If there is a global slowdown, B becomes the creditor and the capital gains from the debt could exceed the profits from offshore subsidiaries, foreigners could buy more US equities to embed a recursive argument into the dynamics (as foreigners would own part of the offshore/for them local branches of US subsidiaries, and thus the capital gains would accrue to themselves) etc... It could be the case that summing over the profit of foreign subs and their ownership by the american public the trade becomes balanced or even surplus, but there is no analysis done on this, it is more of an assumption.

THis book takes a fresh look at the way in which global accounting should and could be considered. But there are a LOT of conclusions to this that also need to be explored in real depth, to name a few, if capital gains need to be added to trade deficit, it brings forward the distribution of ownership and its importance. People can be mobile too, if one looks at the US market and says that US companies have a surplus account then what makes a company US? Its share registrar might be currently US residents, but if tax policies change, so could the citizens especially those with the largest capital holdings. The distribution of capital in the US will become of hightened importance, the distribution of profits to labour and capital abroad will be of hightened importance (in the US, under the presumption US companies are wholly owned by US citizens it would not be as its either dividends to labor or owners of capital), the investment preferences of foreigners toward their dollar holdings etc. I recommend reading this as it brings up a very important perspective that should be explored, but a lot more data needs to be collected to draw conclusions about where the US economy stands. At its height, consumption in the US was surely not 71% of GDP because of knowledge of foreign capital gains, it was on bad assumptions about the way their housing assets were appreciating. This brings another question to mind which is, if people are in a surplus position summing over trade and capital gains with trade being negative and capital gainst being positive in a risky environment, is that something to be satisfied with? I am not sure, clearly the risk could turn those fortunes around quite quickly (consider offshore nationalization of US companies as extreme example). The arguments presented makes one question very seriously what the dollar is worth, what it affords its holders and what drives its fundamental position in a global economy. I recommend this book as it describes new perspectives, but conclusive relative position views are not demonstrated, nor should they be, before a lot more work has been done on this approach.