When you have 17 books read and ready for review, you take a step back and say, “Are there any common themes here?” I have three books that attempt to predict the future, and I play them against themselves here. They give three different views of the future. My own view is an amalgam of all of them — optimist, inflationist, and deflationist. It will be interesting to see which scenario happens, if any.
The Global Debt Trap
This is the inflationist scenario. Two Austrian School economists, who previously had published only in German, were persuaded by Martin Weiss to publish their next book in English. Their last book, Das Greenspan Dossier, was a bestseller in Germany. That book critiqued the easy money policies of Alan Greenspan, and the asset bubbles he was creating.
In this book, they look at the subsequent policy which doubled down on Greenspan’s blunders, where the bubble in private and financial debt is replaced with public debt. They argue that this is an environment that will eventually result in inflation, and that those that want to preserve their wealth will need to invest in gold and other commodities in order to prosper, assuming the government does not come after you and take your gold from you. This book takes the view that governments will become dictatorial as they get more desperate.
I enjoyed this book more than the other two, but I found its conclusion and advice to be more severe than is likely to result. Also, the subtitle of the book overpromises. If they are right, you won’t make a fortune, you will only preserve purchasing power, which may be better than most.
Who would benefit from this book: Most investors would benefit from this book a little. It has the best explanations of what went wrong in the past and why.
If you want to, you can buy it here: The Global Debt Trap: How to Escape the Danger and Build a Fortune.
Full disclosure: The publisher sent this to me after asking me if I wanted it.
The Age of Deleveraging
Dr. Gary Shilling was way ahead of most commentators in arguing for a deflationary environment. Give the man credit, and the erudite folks at Hoisington Investments who are quietly the best bond investment managers over the past 30 years.
But the book is utterly self-congratulatory over past calls. Other books point at good past calls, but less frequently. I began to tire of it and entered uh-huh-uh-huh mode, where I scanned the book in two hours. The book sounded like a compilation of research reports on a wide number of topics reflecting an economy with too many claims on it, so best to grab the claims that are certain to be funded/paid.
The weakest point of the book is arguing why the government would not inflate its way out of the crisis. Yes, so far there has been deflation, backed by the US government, but why should the US government continue to pay particularly when the costs of Social Security and Medicare become steep? The book has no answer for that.
Who would benefit from this book: Most investors would benefit from this book a little. I can’t rule out the deflationary argument, after all, that is what happened in the Great Depression. But will it happen when there is no link to gold in the currency at all? I am dubious.
If you want to, you can buy it here: The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation.
The Next Boom
Technology and free markets conquer all. Don’t get me wrong, I love the free market, and wish we had more of it in the US. This is one of those books that assumes that we will necessarily get progress if we let people pursue their visions for prosperity.
Nice, but what about the present difficulties that have to be worked through in financials companies and the US Government? How do we work through Social Security and Medicare? The book says that we will grow our way out of it. I say that it is difficult to grow when the government is over-regulating, and consumers are still over-indebted.
Look, I can see his arguments in the long run, but in the intermediate term there are big issues to be dealt with that the author gives scant attention to.
I appreciate the long-term arguments. Many economics books fail to appreciate the degree to which economies can self-heal through growth. But it takes a lot of time, and there may be significant crises before the greater prosperity.
My quibbles have already been given.
Who would benefit from this book: Most investors would benefit from this book a little. Those that are pessimists would benefit more. The pessimistic arguments always sell more books, and this book bravely takes up the reasons why technological improvement will better our lives in the future. Good for all of us that htey wrote this, even if they ignore intermediate-term problems.
If you want to, you can buy it here: The Next Boom: What You Absolutely, Positively Have to Know About the World Between Now and 2025.
Full disclosure: The authors/publishers sent these books to me after asking me if I wanted them.
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My heart is closest to the Global Debt Trap, but I have some sympathy for both of the other books. Deflation is a major pressure, and we will have improvements in productivity even in the midst of trouble. The question is what the US government will do to fund itself as its deficits ascend. As I have said before, there are three answers: higher taxes, inflation, or default. At least one of those will visit us in the intermediate-term.