When Money Dies: Adam Fergusson

When Money Dies

Last week I finished reading the book “When Money Dies” originally published in 1975 by Adam Fergusson (reissued 2010).

I sought out this book primarily due to my concerns about Quantitative Easing, but as I read this book I found myself frequently wondering and worrying about Greece.

Fergusson relates the axiom that “if you wish to destroy a nation you must first corrupt its currency. Thus must sound money be the first bastion of a society’s defense.”

Fergusson’s book is a fascinating economic (and political) history of Germany from the end of WW1 in 1918 through 1924. The book frequently goes into granular detail, and at times has a near daily accounting of the tribulations of the German state and its people.

I was especially fascinated by the wildly varied responses and impacts of various economic segments of German society. At various times, despite near continuous devaluation of the Mark, much of German industry remained operational and in fact continued to expand. Not unlike today’s Quantitative Easing, continuous printing of ever greater values of Marks stimulated the economy, allowing Germany to maintain both high levels of employment and  economic / industrial expansionary investment. Also much like today’s experience with QE, the challenge for Germany was how to stop printing money without causing a total collapse of the Germany economy (which eventually was Weimar Germany’s fate).

I doubt that most people today are aware that Austria also suffered hyperinflation during this same period, and in fact Austrian currently devaluation preceded Germany’s. At the risk of oversimplification, it is interesting to note the stark similarities between Austria and present day Greece. 1918 Austria (population 6.5 million) had more state employees than Germany (population 50 million), tax collection was entirely ineffective, and all state enterprises ran at a huge loss. Austria, despite its effective bankruptcy, was “even supplying cigars to the population at far below the cost of production.”

One very interesting labor market outcome during this period was that “labour, wholly or partially educated labour, has already begun to rule in Germany, and there is no demand for brains: that is to say, brains have no longer a marketable value.”

The devaluation of the Mark was absolutely staggering, and at times the author struggles to document the unrelenting pace of devaluation. Periodically the book becomes rather repetitive, which accurately mirrors the historical events being described. The author  struggles with tragic adjectives; after a few chapters it simply becomes impossible to find creative new ways to describe the ever greater depths of unfolding economic tragedy. The reader gets a taste for the experience of the Germans during this period; each time it seems that things can get no worse, and that a bottom must certainly be reached, Germany prints a new larger denomination of Mark and the deflationary spiral plumbs new depths.

The events summarized by Fergusson happened less than 90 years ago, and were experienced and suffered by a well developed Western economy. However, a century is a long time. Could these events be repeated in this modern era? Certainly (hopefully)our learned Government and Global leaders are far more enlightened and sophisticated than 1920’s Germany. Or are they arrogantly (misguidedly) confident in their collective ability to ride the fiat currency tiger without getting eaten?

It is interesting to note that hyperinflation in the 21st century is not simply an obsolete historical tale. Zimbabwe was in the news as recently as mid-June 2015, when its central bank announced that the old Zimbabwe dollars can still be exchanged for US dollars, at a rate of 100 trillion Zimbabwean dollars per $40 USD. 100 trillion Zimbabwean dollar notes are actually more valuable on Ebay, where collectors have recently paid up to $159 USD.

If (or perhaps more likely expressed as when) Greece exits the Euro and resumes printing Drachmas, I am very concerned about the valuation of this newest fiat currency. Will Greece be able to successfully deflate away its serious debt and liability issues, or will the Drachma, along with Greece’s long suffering citizens, experience the German Mark’s hyper inflationary fate?

Frank T.

Physics for Future Presidents: Richard Muller 2008

Physics for Future Presidents

Physics for Future Presidents is a very interesting and entertaining book published in 2008 by Richard Muller. Muller wrote the book in the form of an educational primer addressed directly to a future president.

Muller opens with a quote often attributed to Mark Twain: “The trouble with most folks isn’t their ignorance. It’s knowin’ so many things that ain’t so.” Interestingly, to illustrate the aphorism itself, Muller points out that this famous quote is even from Twain. the quote is correctly attributed to Josh Billings, a humorist from the nineteenth century.

Muller covers a broad range of important physics concepts and principles which are valuable for rendering technically valid presidential decisions. He covers nuclear energy, nuclear weapons, fossil fuels, renewable fuels and solar energy, nuclear radiation and biological weapons, nuclear waste, space and satellites, human and robotic space exploration, global warming.

Muller also spends considerable time reviewing the scientific methodology for establishing and validating scientific facts and principals and differentiating these from opinions and  various forms of conjecture. He provides tools and insights to help the future president to identify various forms of propaganda such as distortions, exaggerations, cherry picked data, news bias, and misuse of statistics.

Muller carefully explains and debunks many myths and misconceptions, including concerns over radiation and the actual prevalence of various forms and concentrations of radiation to which humans are constantly exposed.

He closes the book with a summary of exciting new technologies including biofuels, clean coal, concentrated solar energy, safe nuclear technology, and various forms of renewable energy.

I thoroughly enjoyed this book, and am pleased to recommend it to anyone who has a general interest in science and scientific principles and methodology. You don’t need to be either a physicist or a presidential aspirant to enjoy and appreciate this book. This book will provide you with additional tools for your leadership and decision-making toolbox.

Frank T.

The Moral Case for Fossil Fuels: Alex Epstein

Moral Case Fossil Fuels

I just completed a very interesting and provocative book, “The Moral Case for Fossil Fuels”, copyright 2014 by Alex Epstein.

Today’s society, especially western cultures, have paradoxically grown more tolerant of some types of diversity, and completely intolerant of other forms of diversity. We embrace a wide range of sexual preferences, same sex marriages, alternate lifestyles. However, if someone chooses to explore the possibility that the scientific theories and opinions which postulate man-caused global warming and climate change may be subject to alternate interpretations, they are promptly ostracized, labeled “science denier” or worse.

I believe in taking reasonable and responsible steps to minimize human impact on the environment. I also believe that it is both socially and economically wise to extract maximum value and utilization from every unit of energy which we consume. I proudly drive a Prius. I’m sure others can lay claim to more “green credentials”, but my family and I do seek to be responsible consumers of energy.

However, I also seek to understand the broad perspective of energy generation and utilization, and both the risks and benefits of our various energy options.

If you have an open mind, and want to significantly expand your knowledge and appreciation for the role fossil fuels have played in the development and sustainability of our society, I highly recommend reading this book.

Alex is not a science denier. He does not dispute that man has had impacts on the environment. However, as a philosopher, Alex applies a humanistic approach to evaluating risks and benefits. “What will promote human life? What will promote human flourishing – realizing the full potential of life? How do we maximize the years in our life and the life in our years?”

Environmental thinkers hold as their standard of value “pristine nature or wilderness – nature unaltered by man”. Alex holds “human life” as the standard of value. He observes that “fossil fuel use so far has been a moral choice because it has enabled billions of people to live longer and more fulfilling lives.”

Alex explains that fossil fuels have allowed us to create a “world that was not supposed to be possible”. He postulates that there is “nothing intrinsically wrong with transforming our environment – to the contrary, that’s our means of survival. But we do want to avoid transforming our environment in a way that harms us now or in the long term.”

The book is very well researched, and contains a wealth of objective scientific information on a wide range of environmental and energy related topics. At times the book is a bit repetitive. In his quest to comprehensively cover each of his points and arguments, he frequently repeats or reiterates key discussion topics.

“The Moral Case for Fossil Fuels” doesn’t propose that we give up our quest for practical renewable energy sources. Alex is a champion for continued technological development, increased energy efficiency, reduced emissions and environmental impact. However, he offers wise council that the continued responsible use of fossil fuels, including associated human transformation of our environment, is morally responsible and a rational solution to maximize human potential.

Frank T.

Chinese Geopolitical Books

China Geopolitics

Many of us recognize that China already plays a very large role in global geopolitics, and is likely destined to become both an economic and military superpower in the coming decades.

My interest in China’s development, and its impact on Thailand’s economy and business community, motivated me to read two books which explore aspects of China’s geopolitical strategy.

Modern China essentially began in 1949. However, Chinese history, culture, and philosophy date back more than 3,000 years. Chinese leaders are certainly well grounded in the 21st century, technologically sophisticated, educated in modern economic and financial theory, and have a firm grasp of western culture. However, Chinese leaders and their advisors are also well aware of the deep and diverse philosophical wisdom accumulated through 30 centuries of leadership.

“Asia’s Cauldron”, published 2014 by Robert D. Kaplan, explores China’s historical and present day claims to the South China Sea. Kaplan does a very thorough job of reviewing all of the historical bases relevant to the current South China Sea conflict. He even provides a very interesting summary of the US domination of the Caribbean Sea subsequent to its defeat of Spain, the digging of the Panama Canal, and how these actions allowed the US to dominate the Atlantic and Pacific ocean trade routes.

Today China is poised to exert control over the South China Sea, closely following the historical strategy of 19th century America. Presently, more than half of the global ocean tonnage passes through the South China Sea, including more than 80% of China’s petroleum imports.

Kaplan postulates that China’s strategy is primarily motivated by trade and business, in the tradition of strong Asian leaders such as Lee Kuan Yew and Deng Xiaopeng. China is not significantly motivated by a desire to establish regional or global hegemony.

This is a fascinating book, well written, and very insightful.

“Ancient Chinese Thought, Modern Chinese Power”, published 2011 by Yan Xuetong, takes a deep dive into the International Political Philosophies of the  “pre-Qin” thinkers. The pre-Qin period consists of the Spring and Autumn Period (ca. 770 to 476 BCE) and the Warring States Period (ca. 475 to 221 BCE). This was a time of ruthless competition for territorial advantage among the small Chinese states. China was unified by the first emperor of Qin in 221 BCE.

Yan focuses on seven pre-Qin masters: Guanzi. Laozi, Confucius, Mencius, Mozi, Xunzi, and Hanfeizi. Each of these seven masters held well-reasoned, unique philosophies on the variables leading to successful hegemonic power, humane authority, and governance.

I chose to read the book’s three appendices first, to gain a better understanding of both the pre-Qin period and the Yan’s academic and philosophical background. I believe that this proved to be a good reading strategy, but I must honestly say that Yan’s material is very academic and dry. The material is certainly interesting, and potentially relevant to a better understanding of current Chinese geopolitical strategy. However, it take great diligence and patience to read all of the details of ancient philosophy and the associated commentaries.

Unless you are a student of International Relations with a deep interest in historical Chinese philosophy, I suggest you skip Yan’s masterpiece. However, I highly recommend Kaplan’s book “Asia’s Cauldron”.

Frank T.

No Place to Hide: Glenn Greenwald

No Place to Hide

I just completed a very interesting and frankly troubling book, “No Place to Hide: Edward Snowden, The NSA, and the U.S. Surveillance State”, by Glenn Greenwald (copyright 2014). Glenn Greenwald is the reporter who broke the Edward Snowden story about NSA surveillance.

The book tells the story of how Greenwald was contacted by Snowden, how their relationship developed, and how Snowden ultimately convinced Greenwald to publish Snowden’s information concerning the depth and breadth of NSA surveillance activities.

The “behind the scenes” story about Edward Snowden, his personality and state of mind, his motivations to risk martyrdom as a whistleblower against possibly the most powerful spy agency in the world, and the struggle to evade detection and capture, is fascinating. Greenwald’s disclosures about NSA surveillance capabilities, infrastructure, and the massive and pervasive nature of their spying activities against both foreign nationals and U.S. citizens is both fascinating and shocking. Greenwald takes great care to explain the technology of surveillance and hacking, and also the legal and political framework under which the NSA conducts its activities.

Spying and surveillance is as old as human civilization, as is war, prostitution, deceit, corruption, and many other undesirable human vices. The value of surveillance as a strategic advantage and a tool for prevention or interdiction of wrongful acts is not in question. However, moral limits must be observed to protect the rights of innocent citizens, and the US should also recognize rights of non-US citizens.

The Fourth Amendment of the US Constitution clearly states “the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” The evidence presented in this book appears to resolutely demonstrate that the NSA, acting under the authority of both the Bush and Obama administrations, violated these Fourth Amendment rights both willfully, pervasively, and egregiously.

Greenwald succeeded in prosecuting his case concerning excessive and intrusive NSA surveillance. I believe that Greenwald also succeeded in both defining and defending Snowden’s motivation as a whistleblower in the tradition of Daniel Ellsberg’s disclosure of the Pentagon Papers (published in the New York Times in 1971). However, I am still not convinced that Snowden gave due consideration to other options to address the wrongful acts of the NSA.

Both Greenwald and Snowden clearly believe in the right and responsibility of a free press to investigate and disclose alleged wrongdoings. However, in this case, I am not convinced that widespread publication was the first and best option. Snowden never availed himself of other options, such as taking his evidence to an elected representative such as a Senator or Representative. The US Congress has 535 voting members, many of whom would have been receptive and responsive to Snowden’s considerable evidence.

Public disclosure was a nuclear option which placed Snowden in the position of judge, jury, and executioner of the NSA, and which ultimately has had little real impact on the NSA’s ongoing surveillance. Snowden’s self-righteous motivations may have been just, but I believe his actions are still subject to criticism.

Frank T.

Flashpoints: George Friedman 2015

Flashpoints

Last week I finished reading the book “Flashpoints — The Emerging Crisis in Europe” by George Friedman (published 2015). I found Friedman’s book to be a fascinating and insightful review of the long history of conflict and political fragmentation of the European peninsula.

Friedman brings the story of Europe to life by weaving his own family history into the narrative. Friedman’s family are Eastern European Jews who struggled to survive during the 31 years conflict spanning the two World Wars. However, I was most impressed by the fast that Friedman was able to maintain a very dispassionate and unbiased viewpoint despite the terrible tragedies through which his family and the entire European Jewish community suffered.

Friedman provides a great depth and breadth of historical facts to help the reader to understand and interpret the current events and conflicts in Europe. I found a conclusion by Normal Angell (1933 Nobel Peace Prize winner) in his 1909 book “The Great Illusion” to be especially noteworthy, because it echoes commonly held views within the modern community. Angell argued that “war in Europe had become impossible due to the intense level of interdependence between European countries in investments and trade.” I count myself as among the many people who find it difficult to believe that major war could break out today between western countries, or between the West and China, India, and/or Russia precisely because the resulting economic disruption and devastation  should obviously make such a war unthinkable and therefore impossible. However, just five years after Angell published his book, Europe became embroiled in total war which was ultimately to last 31 years through the end of WW2, resulting in more than 100 million deaths.

Friedman concludes that today the European flashpoint are on the frontier of the EU, but the EU itself is crumbling. He opines that there are four European Unions: the German States (Germany and Austria), the rest of northern Europe, the Mediterranean states, and the states in the Russian borderland. Each of these four regions experiences reality in a different way, and the differences are irreconcilable. “… the idea that Europe has moved beyond using armed conflict to settle its issues is a fantasy. It was not true in the past generation, and it will remain untrue in the future.”

Friedman concludes his book with the following observation: “Humans do not fight wars because they are fools or haven’t learned a lesson. They know the pain that is coming. They fight because they must, because reality has forced them to do so. The Europeans are still human, and they will still encounter terrible choices like those that others face and that they have faced in the past. They will have to choose between war and peace, and as in the past, they will at times choose war. Nothing has ended. For humans nothing significant is ever over.”

I thoroughly enjoyed this book, and highly recommend it.

Frank T.

Thai IOD Director Certification Program (DCP)

Thai IOD Logo

Last week I had the privilege of attending the Director Certification Program, Class 203/2015 (AEC), which was conducted by the Thai Institute of Directors (Thai IOD). This 5-1/2 day residential program (Sunday through Friday) is a very serious, intensive program to provide Directors with the skills and knowledge to participate on the Boards of public and listed companies, and to very clearly understand the duties and responsibilities of being a member of a Board of Directors.

This program is very demanding, and I can honestly say that I was truly exhausted every evening after a full day of classroom lectures, discussions, and case studies, plus completing reading assignments to prepare for the next day’s program. I think it is fair to say that this program is expensive, but the Thai IOD and their expert facilitators make it worth every satang. My fellow classmates also greatly contributed to the learning process, as all participants contributed their extensive experience in a broad range of industries, disciplines, and nationalities.

I strongly recommend this program to any professional who serves as a Director of any company or organization, or any Executive / Sr. Manager who wishes to best serve their organization and enhance their career opportunities. This program is a requirement for Thailand Directors serving on the Boards of public or listed companies. It is not a requirement for the Directors of LImited Companies (LTD), but I firmly believe that every Director should very seriously consider enrolling in this excellent program. This program will enhance your ability to perform as a Director and to serve your organization and shareholders. It will also provide you with a very clear and precise understanding of your duties and responsibilities, which also give rise to potentially very serious civil and criminal liabilities. If you are a Director, you can’t afford not to successfully complete this DCP training program.

Frank T.

The Death of Money: James Rickards 2014

Death of Money

 

I recently completed reading “The Death of Money”, which is a fascinating book that explores the Global Monetary System and the dangers inherent in the current system of Fiat Currencies.

I found the book to be entertaining, informative, and in some cases, frightening. I am very pessimistic about the current stability and sustainability of our Global Financial System, and I genuinely believe that the past century has witnessed a number of terrible economic decisions which have led directly to our current unstable “house of cards” monetary system. I continue to be amazed at the resourcefulness of the US Fed and other Central Banks to keep the house of cards from collapsing. However, I am also convinced that the fundamental problems that led to the 2008 Global Economic Crisis have yet to be addressed or resolved, and the day of reckoning has merely been postponed.

James Rickards argues quite effectively for a return to the Gold Standard. He successfully debunks the assertion that the Great Depression was caused by the Gold Standard. He clearly explains that the monetary system at the time of the Great Depression was not based on the Gold Standard, but in fact was based on the “Gold Exchange Standard”, which was “at best, a pale imitation of a true gold standard and, at worst, a massive fraud. …”

Rickards explains that “A gold standard is the ideal monetary system for those who create wealth through ingenuity, entrepreneurship, and hard work. Gold standards are disfavored by those who do not create wealth but instead seek to extract wealth from others through inflation, inside information, and market manipulation.”

I highly recommend this book to executives and managers who have any interest or curiosity in our current global monetary system.