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My new book is now available. I wrote this item for Forbes.com
to kick it off.
Those of you who frequent this site will find a lot of familiar
material. Indeed, a lot of it is covered in even more detail
elsewhere on this site. Despite what you may expect, writing a book
is mostly a process of concentration and editing, not expansion. One
of my weekly pieces here could have a dozen large-size graphs, while
the same topic might have to be dealt with in a book with two small
black-and-white graphs.
Nevertheless, there's a lot of benefit to be gained by putting
everything together in one coherent package. Only a small percentage
of people will follow a website like this, and put together all the
details from the weekly pieces. It takes a certain kind of
commitment to see the connections between it all -- a commitment
which is too rare, among the populace, to build sufficient
consensus. Also, a book is our way of saying: "This is what we save
for posterity." It serves that role, culturally. A website is much
too ephemeral, even if you can use the archives to access material
back several years.
Even those who are close readers of this website will find quite a
lot of benefit from the new book, I think.
The book is mostly about specific operating mechanisms. It is a bit
nuts-and-bolts-y in character. This will disappoint those who prefer
soaring libertarian rhetoric. However, I became increasingly aware
that there needed to be a one-stop resource for the details on how
to actually do all this stuff. If nobody knows how to do it, then
you can't do it, even if you would like to, and even if people did
in the past.
October
...
4, 2012: A Return to Stable Money Requires More Intellectual
Gasoline
target="_blank" January
...
29, 2012: Gold Standard Technical Operating Discussions 3:
Automaticity Vs. Discretion
target="_blank" January
15,
2012:
...
Gold Standard Technical Operating Discussions 2: More Variations
January
8,
...
2012: Some Gold Standand Technical Operating Discussions
As you probably guessed, the book is the reason why I haven't been
very active here in the last couple months. Like pregnancy, you can
multi-task through most of the nine-month gestation, but that last
bit requires a bit of focus to get it all out the door.
Yes, I think the cover is a bit playful for such a "serious" topic.
However, I decided that it also made the book seem a little more
accessible -- like a mass-market book for a general audience (which
it is), rather than some incomprehensible garble for the high
priests of monetary confusion. It is actually quite easy to read,
and enjoyable (I hope).
* * *
My new target="_blank" book, Gold:
the Monetary Polaris, is now available at Amazon.com. I
call it a seq target="_blank"uel to Gold:
the Once and Future Money, which was published in 2007
and is now available in five languages worldwide.
I want to talk a little about what the new book is about, and what I
want to achieve with it.
Steve Forbes generously wrote the introduction to the book. He said:
“Getting money right is the most important thing in economics, and
if anyone can dispel the anxiety and mystery surrounding this
crucial subject it is Nathan Lewis. He knows money inside and out. …
Readers will come away from reading this, scratching their heads and
saying, ‘My goodness, this is really not that complicated. I
understand it now.”
John Tamny, editor of the Forbes.com opinion section and proprietor
of RealClearMarkets.com, said of the book: “Nathan Lewis has written
a masterpiece. … It’s the best book on money yet.”
Yes, I know I wrote it, but seriously: this is the good stuff. I
wouldn’t waste my time, or yours, with anything else.
Even Subaverage Joe is probably becoming aware that the present
world monetary system – the system that emerged out of the breakdown
of Bretton Woods in 1971 – is becoming less and less tenable by the
week.
The next world monetary system should be a “stable money” system,
which in practical terms means: a gold-based monetary system. This
is not just my opinion. It is a continuation of a very long
historical pattern: After floating fiat currencies crumble, people
want something that is not a floating fiat currency.
However, the process of building a world monetary system doesn’t
happen just by wishing. Some real work needs to be done.
If you have ever seen a high-rise building being built, you know
that a big building requires a big foundation. For months and
months, workmen putter around a big hole in the ground. It seems
like nothing is happening.
Finally, the foundation is done. The building itself can rise
surprisingly quickly, and is soon finished and open for business.
You can build a little shack on a little foundation. But something
big – like a world monetary system – requires a big foundation. It
has to be strong and stable, to last for a hundred years or more.
The “foundation” that is required for a world monetary system is not
made of concrete and steel. It is made of ideas – the principles and
practical operating procedures that allow stable currency systems to
be created, and maintained indefinitely.
This “foundation” of ideas has been sorely lacking in recent
decades. I would even say it has been lacking since about 1900. The
crumbling of the Bretton Woods world gold standard system in 1971
was the aftereffect of the crumbling of the intellectual
“foundation” that occurred over several decades previous. The
principles upon which the pre-1914 world gold standard was founded
were clearly expressed by writers such as David Ricardo and John
Stuart Mill – even Karl Marx. However, by the 1920s, people had
already started to forget what the system was for, and how it
worked. By the 1960s, the world gold standard (the Bretton Woods
system) seemed like little more than an antiquarian superstition.
The basic principles were forgotten. The foundation was breaking
apart. Soon after, the building fell down.
With this new book, I want to build the new foundation – to do today
what Ricardo and Mill did in 1817 and 1848. Their ideas were made
manifest by the pre-1914 world gold standard, which I called “the
greatest monetary system ever created.”
The book is all about Why and How. Why would we want a gold standard
system, instead of the present fiat money system, or indeed any
other system? This is not hypothetical. We did this for hundreds of
years. We just have to look at the results – results that have never
been bettered.
Second, we have to know How to do it. Obviously, you can wish and
hope all you want, but unless somebody knows How to do it, it will
never happen. Not everybody needs to know How. But, somebody does.
You can wish and hope to be able to fly in an airplane. You can even
describe, in great detail, Why flying in an airplane is convenient
and beneficial.
But, unless some aeronautical engineer somewhere actually knows How
to build a working airplane, with all the specialized technical
details involved, your wishes and hopes will never be fulfilled.
Fortunately, making a gold standard monetary system – that can be
maintained indefinitely, even in the midst of crisis – is a lot
easier than making an airplane. The book outlines the day-to-day
operating mechanisms of How to do so, with many potential
variations. It says exactly what a central banker (or other currency
manager) should do between arriving in the office at 9 a.m. and
leaving a 5 p.m. every day – including crisis situations.
The book describes options such as “free banking” (multiple currency
issuers), “parallel currencies” (having both gold-based and fiat
currencies simultaneously), “End the Fed” (what could replace
today’s monopoly central banks), “warehouse receipt” systems (100%
bullion reserves), “no gold” systems (0% bullion reserves), and many
other options – with specific instructions on how to implement each
of them, and how one system might be better than another in certain
situations.
Descriptions are given for various ways that a country can
transition from a floating fiat system to a gold standard system,
allowing each government to choose the method that is most
appropriate for their specific situation.
The book also talks about the best ways to deal with banking system
insolvency, liquidity-shortage crises, and sovereign insolvency.
These events can often precipitate currency mismanagement and
crisis, which certainly does not need to occur.
It might take months – or years – for this “intellectual foundation”
to be properly completed. A critical mass of people must understand,
thoroughly, both Why a gold standard system is the superior option,
and also How to implement one, in all the specific details. During
this time, it might not seem as if much is going on.
Once that intellectual foundation is in place, the actual creation
of a new world monetary system – based on gold – can happen
surprisingly quickly.
Read the book. Take part in the process. It’s going to be so much
fun.
I promise.
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