Rating: 
Summary: Read between the lines
Review: Having traded currencies successfully for the past 20 years, I found this book to be a credible resource. With the U.S. deficit spiraling in the wrong direction, we need to be aware of all the possibilities to create optimum contingency plans. This book will provide you with the information to make the informed decisions.
Rating: 
Summary: Flawed economics?
Review: I am confused by the reviewer who said that "as U.S. current account deficits get reinvested in U.S. assets...foreign central banks do not hold on to their countries current account surpluses."It is my understanding that when a foreign country holds US dollars and then buys US assets (normally US govt bonds and GSEs)those dollar assets ARE still part of its reserves as it counts for an asset on the ballance sheet. Then, under a fractional reserve banking system, these foreign countries can then print more domestic currency using the dollar asset (usually 5 to 1 ratio). Therefore, it would seem that under the dollar standard system, our ability to generate unlimited dollar liabilites works insofar as other countries are willing to buy them. BUT at some point the whole fiat dollar system risks systemic failure if further money and credit (and therefore debt) cannot be pushed into the system.
Rating:
Summary: Read between the lines
Review: I first read The Dollar Crisis four months ago. With each re-read, the author's reasoning for and results of the coming dollar crisis makes more sense. It lays an extremely good foundation for the current world imbalance and makes valid predictions which are based on historical models. Although I wish the author had given additional recommendations for what we, as individuals, might do to protect ourselves before the eventual dollar demise, I do believe his idea of establishing a Global Minimum Wage may be the best way, internationally, to avoid the collapse of the dollar. I wish him the best of luck if he pursues this ambitious solution.
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Summary: Dollar Crisis Accurate and Timely
Review: I first read The Dollar Crisis four months ago. With each re-read, the author's reasoning for and results of the coming dollar crisis makes more sense. It lays an extremely good foundation for the current world imbalance and makes valid predictions which are based on historical models. Although I wish the author had given additional recommendations for what we, as individuals, might do to protect ourselves before the eventual dollar demise, I do believe his idea of establishing a Global Minimum Wage may be the best way, internationally, to avoid the collapse of the dollar. I wish him the best of luck if he pursues this ambitious solution.
Rating:
Summary: informative
Review: I have zero backgroud on economic. This books helps me to understand the US trade deficit, its cause and consequence. Now I can look at events from a new perspective. This is an excellent book.
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Summary: Closed my car loan
Review: I took a car loan at currently prevailing low interest. I thought of investing it in some other venture where i can get better return. After reading this book , I understood infusion of excessive credit leads to bubble economies which ultimately pop.The thought that pumping excessive credit into a better performing economy will accelerate its growth popped up many economies by altering its balance. One should pump credit slowly into economy as its capacity to handle credit intelligently and appropriately increases. I promptly closed my car loan and preferred to invest from my savings and also from future savings. This action gave me a correct picture of my finances and my abilites. I understood infusion of more money does not give better returns but by learning sound principles ,you can earn more by investing little.
Thanks for this insight.
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Summary: MUST READING
Review: IF YOU REALLY WANT TO KNOW WHAT IS IN STORE FOR THE WORLD ECONOMY- IT'S ALL RIGHT HERE--AG
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Summary: The US Dollar Ponzi Scheme - Uncharted Waters
Review: 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.
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Summary: Really flawed economic theory.
Review: Summary and rating comment:
This book economics theory is flawed. It assumes that foreign central banks hang on to 100% of the accumulated U.S. current account deficits. Instead, the U.S. current account deficit gets reinvested in U.S. assets. He explains that overseas banking crisis since 1977 were triggered by large U.S. current account deficits. But, these deficits got materially large only after 1998. The author maintains that U.S. households and businesses have deteriorating balance sheets. Meanwhile, a review of Fed data shows the opposite. Flawed economic assumptions go on and on within this book. Abstract:
The author states that the foreign banking crisis in the eighties and nineties were caused by the U.S. running large current account deficits. These U.S. deficits caused a built up in dollar currency reserves of the exporting countries central banks. These excess reserves caused lending booms, and asset valuation booms. These ultimately lead to banking crisis due to borrowers defaulting on their loans which financed overvalued collateral. His explanation of foreign banking crisis ignores the basic international accounting equality that current account deficits equal net foreign investments flowing back into the U.S. He states that foreign central banks reserves increased by the same amount as the U.S. current account deficits. They did not, as U.S. current account deficits get reinvested in U.S. assets by the foreign exporting countries. Thus, foreign central banks do not hold on to their countries current account surpluses. Additionally, the author mentions 24 countries which suffered banking crisis between 1977 and 1997 all due to the infamous U.S. current account deficits. But, the U.S. current account deficits never exceeded $150 billion until 1998. This deficit level is peanuts within a global trading system measured in $trillions. Thus, the U.S. current account deficit can't possibly explain foreign banking crisis going back to 1977. Many of the countries he mentioned that experienced banking crisis in the nineties (Indonesia, Korea, Malaysia, Philippines, Thailand) were actually running large current account deficits themselves. Thus, current account surpluses were not a factor in their respective banking crisis. The author also states that the current account deficit caused an asset inflation boom in the U.S. particularly in stocks and real estate. Here, the author runs into a contradiction that he chooses to ignore. How can the same U.S. current account deficits cause an asset inflation in both the exporting countries and the U.S. (importer). As mentioned, they certainly are not responsible for the asset inflation within the exporting countries. They could have caused asset inflation in the U.S. since these current account deficits have gotten reinvested as direct foreign investments in the U.S. But, the U.S. incurred a stock market boom from 1995 to 1999 when the current account deficit was not that high. And, it suffered a bear market since early 2000, when the current account deficit got significantly larger. These outcomes are the opposite of what the author theory suggests. The author also mentions highly inflated real estate prices. Meanwhile, U.S. commercial real estate valuation have been lackluster for the past decade. Residential real estate is really a local market that varies greatly from one county to another. At all times the U.S. will have residential markets that appear overvalued and others who appear cheap (nothing to do with current account deficits here). The author makes a popular case that the U.S. current account deficit level is not sustainable, because the U.S. can't borrow that much. Well, is that really the case? We are really talking of prepaid self financing here. If China experiences a $100 billion current account surplus with the U.S., we actually pay the Chinese that money upfront. They don't have to raise a dime themselves to reinvest this $100 billion back into the U.S. These foreign direct investments are broadly diversified between bonds, stocks, and direct investments. If we look at the U.S. net foreign investment position divided by the U.S. net worth (assets minus liabilities of individuals, businesses, and government), this ratio is only 6.3%. Several countries have foreign investment position ratio 50% or greater than the U.S. Australia has a ratio equal to 14%, Canada is 10%. I developed a model showing that the U.S. could sustain its level of current account deficit level for another 20 years to reach the same net foreign investment position as Australia today. And, Australia is no basket case. It's economy is doing a lot better than Europe and Japan. So, the U.S. current account deficit appears sustainable for at least a couple of decades. The author maintains that the U.S. consumers and businesses are already dangerously over leveraged, and thus, he expects rising defaults. However, actual Fed data contradicts him. Household balance sheets remain strong. At 2002 yearend, household debt represented only 24% of household equity. Meanwhile, businesses have steadily improved their balance sheet over the past two decades, as their respective Debt/Equity ratio declined from 150% in 1980 to 82% in 2002. The author supports his theory with media headlines on corporate failures (Enron, WorldCom). But, these are isolated attention grabbing incident. Looking at the balance sheet of the whole economy, as we did, you get a different picture. Unfortunately, dull good news never sells. The author's theory that the U.S. current account deficit is the cause for the World's deflation is ludicrous. The cause is China's exporting boom Worldwide. Also, China is buying dollars to keep the Chinese Yuan artificially low relative to the dollar and maintain its export surplus with the U.S. Thus, deflation is a Chinese phenomenon associated with its being the lowest cost producer and its manipulating the value of its currency.
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Summary: Whirrrrr...
Review: That's the sound of Ludwig von Mises, quoted at the top of Chapter 1 no less, spinning in his grave. Richard Duncan has written a pleasant enough book, and while he occasionally uses some oversimplified cliches (such as the Hair of the Dog analogy), overall there are plenty of easily digestable facts, making it a comfortable read. He uses those facts and an almost Austrian school-like analysis to jump to some unlikely conclusions for an economist: Keynesian economics has failed, but what is needed is more Keynes. The free market has failed, we need a world minimum wage. Monetarist inflation of the dollar is insupportable, we need a UN currency to inflate. In short, he advises world socialism of the sort detested (and thoroughly debunked) by von Mises and F.A. Hayek. I hope that any resulting academic discussion will lead Mr. Duncan to sounder conclusions in his next offering. Alternatively, maybe he can sacrifice some readability in return for a more rigorous chain of logic supporting his call for socialism. Before you sign up for Mr. Duncan's vision of the future, I suggest you read Henry Hazlitt's "Economics In One Easy Lesson."
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