The Dollar Crisis: Causes, Consequences, Cures [Paperback]

Richard Duncan (Author)

Book Description

Publication Date: June 22, 2005

In this updated, second edition of the highly acclaimed international best seller, The Dollar Crisis: Causes, Consequences, Cures, Richard Duncan describes the flaws in the international monetary system that have destabilized the global economy and that may soon culminate in a deflation-induced worldwide economic slump.

The Dollar Crisis is divided into five parts:

Part One describes how the US trade deficits, which now exceed US$1 million a minute, have destabilized the global economy by creating a worldwide credit bubble.

Part Two explains why these giant deficits cannot persist and why a US recession and a collapse in the value of the Dollar are unavoidable.

Part Three analyzes the extraordinarily harmful impact that the US recession and the collapse of the Dollar will have on the rest of the world.

Part Four offers original recommendations that, if implemented, would help mitigate the damage of the coming worldwide downturn and put in place the foundations for balanced and sustainable economic growth in the decades ahead.

Part Five, which has been newly added to the second edition, describes the extraordinary evolution of this crisis since the first edition was completed in September 2002. It also considers how the Dollar Crisis is likely to unfold over the years immediately ahead, the likely policy response to the crisis, and why that response cannot succeed.

The Dollar Standard is inherently flawed and increasingly unstable. Its collapse will be the most important economic event of the 21st Century.

Editorial Reviews

Review

Posterity may remember The Dollar Crisis as a seminal book in the field of 21^st century economics. Indeed, rarely has a book offered such a grim yet, well argued view of the current economic situation facing the world.-- Steven Irvine, FinanceAsia Duncan writes like a man who’s already seen tomorrow. -- James Grant, Grant’s Interest Rate Observer

I held a class for about 150 people on the book entitled "The Dollar Crisis," authored by Richard Duncan. If you want to better understand why the real estate bubble bust and the crash of the dollar will probably lead to a prolonged recession, you may want to read this book sooner rather than later. In a nutshell, we really do not have a real estate bubble... the world is in a currency bubble. In other words, the governments of the world have printed too much "funny" money and cash will soon turn to trash.  Even if you are not in real estate or are saving dollars, you may want to read this book to find out what you need to invest in now, before the bubble bursts. If you are in stocks and mutual funds, you definitely want to read this book.-- Robert Kiyosaki, author of Rich Dad, Poor Dad

I would like every one of my subscribers to click on to Amazon.com and buy a new book that has just been published entitled, “The Dollar Crisis, Causes, Consequences, Cures.”  The book costs around twenty bucks and is worth ten times that amount.  The author, Richard Duncan has a great background and is as smart as they come.  He explains why he sees a crashing dollar and a severe recession coming up in the US – plus a world recession.  This is no wild-eyed guru, this is a guy who knows what he’s talking about and a guy who understands money and the world monetary system – he’s worked for both the World Bank and the International Monetary Fund.  Please buy this book!-- Richard Russell, Dow Theory Letters

Richard Duncan crisply explains why payback time for years of credit excesses, payments imbalances and securitized sub-par lending is imminent. Mr Greenspan, your time is up. --Philip Bowring, International Herald Tribune

Richard Duncan’s excellent book… we cannot recommend it enough.-- Bill Bonner, The Daily Reckoning

Richard Duncan… is one of the brightest financial analysts I know. Richard is the author of one of my favorite books called The Dollar Crisis: Causes, Consequences, Cures.-- John Mauldin, Thoughts from the Frontline

For a preview of how it might play out, consult Richard Duncan’s recently revised book, The Dollar Crisis:  Causes, Consequences, Cures.  Just try to sleep after digesting its thesis that the world’s biggest economy is looking like a huge and growing Ponzi scheme.--William Pesek Jr., International Herald Tribune

From the Inside Flap

"Posterity may remember The Dollar Crisis as a seminal book in the field of 21st century economics. Indeed, rarely has a book offered such a grim yet, well argued view of the current economic situation facing the world."
—Steven Irvine, FinanceAsia

"Duncan writes like a man who's already seen tomorrow."
—James Grant, Grant's Interest Rate Observer

"I held a class for about 150 people on the book entitled "The Dollar Crisis," authored by Richard Duncan. If you want to better understand why the real estate bubble bust and the crash of the dollar will probably lead to a prolonged recession, you may want to read this book sooner rather than later. In a nutshell, we really do not have a real estate bubble... the world is in a currency bubble. In other words, the governments of the world have printed too much "funny" money and cash will soon turn to trash. Even if you are not in real estate or are saving dollars, you may want to read this book to find out what you need to invest in now, before the bubble bursts. If you are in stocks and mutual funds, you definitely want to read this book."
—Robert Kiyosaki, author of Rich Dad, Poor Dad

"I would like every one of my subscribers to click on to Amazon.com and buy a new book that has just been published entitled, The Dollar Crisis, Causes, Consequences, Cures. The book costs around twenty bucks and is worth ten times that amount. The author, Richard Duncan has a great background and is as smart as they come. He explains why he sees a crashing dollar and a severe recession coming up in the plus a world recession. This is no wild-eyed guru, this is a guy who knows what he's talking about and a guy who understands money and the world monetary system – he's worked for both the World Bank and the International Monetary Fund. Please buy this book!"
—Richard Russell, Dow Theory Letters

"Richard Duncan crisply explains why payback time for years of credit excesses, payments imbalances and securitized sub-par lending is imminent. Mr Greenspan, your time is up."
—International Herald Tribune

"Richard Duncan's excellent book… we cannot recommend it enough."
—Bill Bonner, The Daily Reckoning

"Richard Duncan... is one of the brightest financial analysts I know. Richard is the author of one of my favorite books called The Dollar Crisis: Causes, Consequences, Cures."
—John Mauldin, Thoughts from the Frontline

"For a preview of how it might play out, consult Richard Duncan's recently revised book, The Dollar Crisis: Causes, Consequences, Cures. Just try to sleep after digesting its thesis that the world's biggest economy is looking like a huge and growing Ponzi scheme."
—William Pesek Jr., International Herald Tribune

See all Editorial Reviews

Product Details

• Paperback: 288 pages
• Publisher: Wiley; 1 edition (June 22, 2005)
• Language: English
• ISBN-10: 0470821701
• ISBN-13: 978-0470821701
• Product Dimensions: 1.1 x 6.3 x 9.2 inches
• Shipping Weight: 13.6 ounces (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (86 customer reviews)
• Amazon Best Sellers Rank: #130,624 in Books (See Top 100 in Books)
  • #12 in Books > Business & Investing > Economics > Comparative
  • #24 in Books > Business & Investing > International > Exports & Imports
  • #79 in Books > Business & Investing > Economics > Money & Monetary Policy

More About the Author

Since beginning his career in Hong Kong in 1986, Richard Duncan has served as global head of investment strategy at ABN AMRO Asset Management in London, worked for the World Bank in Washington D.C., headed equity research departments in Bangkok and consulted for the IMF. He is now chief economist at Blackhorse Asset Management in Singapore.

Richard has appeared frequently on CNBC, CNN, BBC and Bloomberg Television and is a well-known speaker. He studied literature and economics at Vanderbilt University (1983) and international finance at Babson College (1986); and, between the two, spent a year backpacking around the world.

For updates on the author's views, please see his website/blog, Economics In The Age Of Paper Money:
http://www.richardduncaneconomics.com/

Most Helpful Customer Reviews

68 of 68 people found the following review helpful

4.0 out of 5 stars The Downside of the Dollar Standard July 26, 2005

By Izaak VanGaalen

Format:Paperback

Since the breakdown of Bretton Woods in the early 1970's and the end of the gold standard, the dollar has become the international reserve currency. The 20 years prior to 1970 international reserves increased only about 55%, but since 1970, with the adoption of the dollar standard, reserves have increased over 2,000%. This is primarily a result of US current account deficits, which last year ran about $600 billion - about 3% of GDP. Asian central banks hold about $2 trillion US dollar-denominated reserve assets. This surge in international reserves has created huge imbalances and it is the subject of this book by financial analyst Richard Duncan.

The dollar standard has allowed the US to finance incredibly large deficits by printing more dollars. The dollar standard has on the upside ushered in the age of globalization that has allowed Asian economies - first Japan, then the Tigers, and now China - to devolop by exporting to the US without importing equal amounts, leaving Asian central banks with large stockpiles of dollar reserves. And what can Asian central banks do with these reserves? About the only thing they can do is invest in US corporate stocks and bonds, T-bills, and US agency debt such as Fannie Mae and Freddie Mac. (We've been enjoying low mortgage rates because the Asian central banks buy up our debt so we can take out more.) And all these investments in return allow US consumers to buy more of their exports - call it vendor financing.

According to Duncan, these current account deficits and current account surpluses have already wrought havoc with the world economy: it caused the asset and stock market bubble in Japan in the 1980s; it caused the currency crisis in Malaysia and Thailand in the 1990s (Duncan was an analyst working in Thailand at the time and correctly predicted its occurence); and it is currently fueling the real estate boom in the US.

Asia's export-led strategies require that dollar reserves are reinvested in the US; this prevents their currencies from appreciating. Indeed, if the Bank of China or the Bank of Japan were to invest in the Euro or any other currency, the bankers and politicians of those countries would quickly protest because it would drive up their currencies and make their exports less competitive.

So then with the US increasing the world's international reserves at a rate of $600 billion a year, everyone is still happy for the time being. Asian countries are growing rapidly and American consumers have endless supplies of credit - using their homes as ATMs - however, this imbalance, unsustainable and in the long run, will precipitate an economic crisis. Even correcting this imbalance, if not done prudently, could precipitate a world economic slowdown.

This book was written before the recent decision by China to stop pegging the yuan to the dollar. This was a baby step in the right direction.

Duncan's analysis of the problem is very good, his policy recommendations, however, are questionable. He suggests, for example, giving global central bank status to the International Monetary Fund. That's a nonstarter for reasons obvious to Republicans. He also advocates a global minimum wage, giving workers more money to soak up excess supply. I can already hear the critics screaming no "world government."

The main problem that needs to be addressed - and Duncan stresses it many times - is that there needs to be a regulatory mechanism in foreign-exchange markets. Central banks intervene in currency markets for their own benefit - such creating an export strategy - instead of looking for ways to smooth global business cycles. China, with its revaluation of its currency, is looking to become a responsible global player - we hope. If the powers that be do not act in concert to coordinate a soft landing of the current imbalances, we will all be heading for some frightening times.

161 of 174 people found the following review helpful

5.0 out of 5 stars The US Dollar Ponzi Scheme - Uncharted Waters September 13, 2003

By Jim Seligman

Format:Hardcover|Amazon Verified Purchase

Richard Duncan's "The Dollar Crisis" is written in a fairly straightforward manner. It is a distillation of ideas about the monetary system, and facts and figures and examples. He tries to highlight key facts and ideas, and repeat them sufficiently so you won't miss them.

In this sense its rather good for someone who is not a specialist in this area, or has not been exposed lately to some of the concepts of international monetary exchange. I have an MBA, and a solid background in economics, and found the level to be just a little tedious in places but overall very good for review, and adequate for refreshing my memory.

It may not appeal to readers with no experience in economics or financial matters, since they will need an introduction to what money really is all about, and how an economy functions. It will also not appeal to dogmatic economists, but then, nothing but their own schools ever do anyway.

I am rather enjoying the book, and recommend it to anyone who wishes to delve further into the impact of the money system on macroeconomics and the world's finances, beyond the decision for 'the next trade.'

This book is helping me to think about the dollar as a 'medium of exchange' in a more theoretical manner. It is helping me to focus some of my own thoughts on the subject, and provided a good of the international accounting system.

We really are in uncharted waters. Never before in history has the world had a 'reserve currency' that is relatively unrestrained, with a 'master' who is willing and able to debase it to suit their policy needs, and manipulate markets in concert with their peers to prolong the situation and defeat the regulating systems of the markets, such as interest rates and exchange values.

We are in a feedback loop of mutually assured financial destruction with Asia.

We are supporting their economies by consuming their exports in a huge way, and they in turn are accepting our debt instruments (dollars) and using them to expand their own economies, as well as our own by buying our Treasuries, Corp bonds, GSE debt, and equities.

It seems like an endless round of bubbles have been created as the Fed seeks to avoid crises and keep this Ponzi scheme going, because that's exactly what the dollar is these days. Make no mistake about that.

It sets out some of the timelines nicely with the appropriate facts and figures, and helped me to understand the progression of events and the key decision points.

I don't think of Mr. Duncan as an Austrian, since in the first half he avoids the dogmatism that Austrians often fall into, which is the weakness of a theory that has never been tested and refined, while being academically marginalized. Since I am an 'Austrian' you can take that as a sincere criticism if you are so inclined.

As far as his solutions, I won't comment because I do not wish to give away the ending as they say, and I wish to highlight the book for its value in helping the reader organize a complex reality into some manageable ideas. In this Mr. Duncan exceeded my expectations.

102 of 109 people found the following review helpful

4.0 out of 5 stars Good information & case for international diversification January 2, 2004

By Mr. Roger H. Geyer

Format:Hardcover|Amazon Verified Purchase

This book presents a fact and chart filled analysis of the recent history of the U.S. economic big picture, and how this fits into the global scenario. From this, Mr. Duncan explains his conclusions on why and when the U.S. dollar will plumment.

He must be commended for all the research and the way the many charts and explanations build a solid case that there IS a considerable long term risk to the dollar, unless the current overall trends (public and private) in the U.S. economy change.

As a layman student of the markets and economics, I found this a very interesting read, and believe that the information presented is valuable to everyone who has a lot of dollar denominated investments.

My main concern, is the author makes the all too common mistake in assuming:

a. His scenario is absolutely certain.
b. His timing (e.g. in our face) of the coming event is certain.
c. His solutions would work, and are a must.

Having read maybe 100 investment books in the last 25 years and having gained a fair amount of experience and perspective, I'll opine that this is vastly overstating his case. More realistically, he makes a strong case for why there are serious risks in a dollar-dominated portfolio, and therefore implicitly makes a strong case for a significant diversification to a global or asset (i.e. real estate, art, etc) segment of a prudent investor's portfolio.

If Mr. Duncan had invested solid effort at the end of the book in providing cogent information about what the typical American investor could do to protect him/herself, instead of trying to convince his audience that he's absolutely right and the problem is imminent -- then this book would have earned 5 stars.

As it is, the reader is forced to come up with the (balanced portfolio) advice on their own, which may well require more investment experience than the average reader can be expected to have.