The Death of Money (41 page)

the highly classified plans for continuity . . .
:
Marc Ambinder, “The Day After,”
National Journal,
April 11, 2011, http://www.nationaljournal.com/magazine/government-still-unprepared-for-disaster-20110411.

Chapter 3: The Ruin of Markets

“The peculiar character of the problem . . .”
:
Friedrich A. Hayek, “The Use of Knowledge in Society,”
American Economic Review
35, no. 4 (1935), pp. 519–30, http://www.econlib.org/library/Essays/hykKnw1.html.

Charles Goodhart first articulated Goodhart’s Law . . .
:
The paper has been reprinted in several publications. See Charles Goodhart, “Problems
of Monetary Management: The U.K. Experience,” in Anthony Courakis, ed.,
Inflation, Depression, and Economic Policy in the West
(Lanham, Md.: Rowman and Littlefield, 1981), pp. 111–46.

the wealth effect from housing prices . . .
:
U.S. Congress, “Housing Wealth and Consumer Spending,” Congressional Budget Office
Background Paper, January 2007, http://www.cbo.gov/publication/18279.

“We find . . . a positive connection . . .”
:
Sydney Ludvigson and Charles Steindel, “How Important Is the Stock Market Effect
on Consumption?”
FRBNY Economic Policy Review,
July 1990, http://ftp.ny.frb.org/research/epr/99v05n2/9907ludv.pdf.

heavily concentrated among the rich . . .
:
Sherif Khalifa, Ousmane Seck, and Elwin Tobing, “Financial Wealth Effect: Evidence
from Threshold Estimation,”
Applied Economics Letters
18, no. 13
(2011), http://business.fullerton.edu/economics/skhalifa/publication13.pdf.

“The idea of a wealth effect . . .
:
Christopher Flavelle, “Debunking the ‘Wealth Effect,’”
Slate,
June 10, 2008, http://www.slate.com/articles/news_and_politics/hey_wait_a_minute/2008/06/debunking_the_wealth_effect.html.

rising consumption may increase stock prices . . .
:
U.S. Congress, “Housing Wealth”; and Ludvigson and Steindel, “How Important.”

“The issue here is not whether . . .”
:
Lacy H. Hunt, “The Fed’s Flawed Model,” Casey Research, May 28, 2013, http://www.caseyresearch.com/articles/the-feds-flawed-model.

“Since wages remained soft . . .”
:
Ibid.

the reason for this damage to SME lending . . .
:
Steve H. Hanke, “The Federal Reserve vs. Small Business,” Cato Institute, June 3,
2013, http://www.cato.org/blog/federal-reserve-vs-small-business-0.

Federal Reserve low-interest-rate policy . . .
:
Giovanni
Dell’Ariccia, Luc Laeven,
and Gustavo Suarez, “Bank Leverage and Monetary Policy’s Risk-Taking Channel: Evidence
from the United States,” IMF Working Paper no. WP/13/143, June 2013, http://www.imf.org/external/pubs/cat/longres.aspx?sk=40642.0.

This is not certain to happen but is likely . . .
:
This analysis is based on data and reporting in Buttonwood, “The Real Deal—Low Real
Interest Rates Are Usually Bad News for Equity Markets,”
Economist,
October 20, 2012, http://www.economist.com/news/finance-and-economics/21564845-low-real-interest-rates-are-usually-bad-news-equity-markets.

“The Market for ‘Lemons’”
:
George A. Akerlof, “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism,”
Quarterly Journal of Economics
84, no. 3 (August 1970), pp. 488–500.

“Irreversibility, Uncertainty . . .”
:
Ben S. Bernanke, “Irreversibility, Uncertainty, and Cyclical Investment,” National
Bureau of Economic Research, Cambridge, Mass., July 1980, http://www.nber.org/papers/w502.

Even with huge pools of unused labor . . .
:
Jason E. Taylor and Richard K. Vedder, “Stimulus by Spending Cuts: Lessons from 1946,”
Cato Institute, Cato Policy Report, May–June 2010, http://www.cato.org/policy-report/mayjune-2010/stimulus-spending-cuts-lessons-1946.

the classic distinction between risk and uncertainty . . .
:
Frank H. Knight,
Risk, Uncertainty and Profit
(1921; reprint Washington, D.C.: Beard Books, 2002).

“It will pay to invest . . .”
:
Bernanke, “Irreversibility, Uncertainty.”

“It would not be difficult to recast . . .”
:
Ibid.

the counterproductive nature of Bernanke’s reasoning . . .
: Robert E. Hall, “The Routes into and out of the Zero Lower Bound,” paper prepared
for the Federal Reserve Bank of Kansas City Symposium, Jackson Hole, Wyo., August
13, 2013, http://www.stanford.edu/~rehall/HallJacksonHole2013.

Chapter 4: China’s New Financial Warlords

“Things grow and grow . . .”
:
Tao Te Ching,
trans. Stephen Addis and Stanley Lombardo (Indianapolis: Hackett, 1993).

the current Communist leadership’s greatest fear . . .
:
David T. C. Lie, eldest grandson of Zhang Xue Ming, mayor of Tianjin in the 1930s,
conversation with the author, Shanghai, June 6, 2012.

“The Myth of Asia’s Miracle”
:
Paul Krugman, “The Myth of Asia’s Miracle,”
Foreign Affairs,
November–December 1994, p. 62, http://www.pairault.fr/documents/lecture3s2009.pdf.

“China is on the eve of a demographic shift . . .”
:
Mitali Das and Papa N’Diaye, “Chronicle of a Decline Foretold: Has China Reached
the Lewis Turning Point?” IMF Working Paper no. 13/26, January 2013, http://www.imf.org/external/pubs/cat/longres.aspx?sk=40281.0.

In 2010 the ten most profitable SOEs . . .
:
James McGregor,
No Ancient Wisdom, No Followers
(Westport, Conn.: Prospecta Press, 2012), p. 23.

These megaprojects cover sectors . . .
:
Ibid., p. 34.

the interlocking interests of the political and economic elites . . .
:
“Heirs of Mao’s Comrades Rise as New Capitalist Nobility,”
Bloomberg
News,
December 26, 2012, http://www.bloomberg.com/news/2012-12-26/immortals-beget-china-capitalism-from-citic-to-godfather-of-golf.html.

One report on WMP sales . . .
:
Xiao Gang, “Regulating Shadow Banking,”
China Daily,
October 12, 2012, p. 8, http://www.chinadaily.com.cn/opinion/2012-10/12/content_15812305.htm.

“In June, a Chinese man touched down . . .”
:
Alistair Macdonald, Paul Vieira, and Will Connors, “Chinese Fly Cash West, by the
Suitcase,”
Wall Street Journal,
January 2, 2013, p. A1, http://online.wsj.com/news/articles/SB10001424127887323635504578213933647167020.

“Tackling inequality requires confronting . . .”
:
Bob Davis, “China Tries to Shut Rising Income Gap,”
Wall Street Journal,
December 11, 2012, p. A14, http://online.wsj.com/news/articles/SB10001424127887324640104578161493858722884.

corruption, cronyism, and income inequality . . .
:
Minxin Pei, “China’s Troubled Bourbons,”
Project Syndicate,
October 31, 2012, www.project-syndicate.org.

“Investment in China may currently . . .”
:
Il Houng Lee, Murtaza Syed, and Liu Xueyan, “Is China Over-Investing and Does It
Matter?” IMF Working Paper no. WP/12/277, November 2012, http://www.imf.org/external/pubs/cat/longres.aspx?sk=40121.0.

“Let us . . . give China five years to bring . . .”
:
Michael Pettis, “The IMF on Overinvestment,”
Michael Pettis’ China Financial Markets
, December 28, 2012, http://www.economonitor.com/blog/2012/12.

The Chinese workforce is now dominated . . .
:
Houng Il Lee, Xu Qingjun, and Murtaza Syed, “China’s Demography and Its Implications,”
IMF Working Paperno. WP/13/82, March 28, 2013, http://www.imf.org/external/pubs/cat/longres.aspx?sk=40446.0.

Chapter 5: The New German Reich

“the most learned man anywhere”
:
Einhard,
The Life of Charlemagne
(ninth century; reprint Kessinger, 2010).

“The final step was cannibalism . . .”
:
Lauro Martines,
Furies: War in Europe, 1450–1700
(New York: Bloomsbury, 2013), p. 118.

“No statement about how to deal . . .”
:
John Williamson, “What Washington Means by Policy Reform,” Peterson Institute for
International Economics, 1990, http://www.iie.com/publications/papers/paper.cfm?researchid=486.

“the Beijing Consensus . . . is flexible enough . . .”
:
Joshua Cooper Ramo,
The Beijing Consensus
(London, Foreign Policy Centre, 2004), p. 4.

the five pillars . . .
:
John Williamson, “Is the ‘Beijing Consensus’ Now Dominant?”
Asia Policy,
no. 13 (January 2012), pp. 1–16.

six of the top ten applicants . . .
:
World Intellectual Property Organization,
WIPO IP Facts and Figures 2012,
WIPO Economics and Statistics Series, http://www.wipo.int/export/sites/www/freepublications/en/statistics/943/wipo_pub_943_2012.pdf.

The average European corporate tax rate . . .
:
“Corporate Tax Rates Table,” KPMG, http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx.

For rail freight traffic . . .
:
Leo Cendrowicz, “Switzerland Celebrates World’s Longest Rail Tunnel,”
Time,
October 20, 2010, http://www.time.com/time/business/article/0,8599,2026369,00.html.

“So if there were really a large excess . . .”
:
Paul Krugman, “Sticky Wages and the Macro Story,”
New York Times,
July 22, 2012, http://krugman.blogs.nytimes.com/2012/07/22/sticky-wages-and-the-macro-story.

“In a currency area comprising many regions . . .”
:
Robert A. Mundell, “A Theory of Optimum Currency Areas,”
American Economic Review
51, no. 4 (September 1961), pp. 657–65, esp. 659.

Europe has lagged behind the rest of the developed world . . .
:
Indermit Gill and Martin Raiser, “Golden Growth, Restoring the Lustre of the European
Economic Model,” International Bank for Reconstruction and Development, 2012, http://issuu.com/world.bank.publications/docs/9780821389652.

“As Chinese companies and entrepreneurs have moved . . .”
:
Howard Schneider, “As Chinese Capital Moves Abroad, Europe Offers an Open Door,”
Washington Post,
February 26, 2013, http://articles.washingtonpost.com/2013-02-26/business/37297545_1_direct-investment-chinese-investors-rhodium-group.

“was an early investor in bonds . . .”
:
Lingling Wei and Bob Davis, “China’s Zhu Changhong Helps Steer Nation’s Currency Reserves,”
Wall Street Journal,
July 16, 2013, p. C1, http://online.wsj.com/article/SB10001424127887323664204578606301739504368.html.

the ten largest money-market funds in the United States . . .
:
Howard Schneider, “In a Two-Faced Euro Zone, Financial Conditions Ease and Joblessness
Rises,”
Washington Post,
March 1, 2013, http://articles.washingtonpost.com/2013-03-01/business/37373712_1_euro-zone-holdings-euro-zone-17-nation-currency-zone.

Data for the first quarter of 1999 . . .
:
IMF, “Currency Composition of Official Foreign Exchange Reserves (COFER),” http://www.imf.org/external/np/sta/cofer/eng/index.htm.

T
he cheap-dollar policy was made explicit in numerous public pronouncements . . .
:
Barack Obama, “Remarks by the President in State of the Union Address,” January 27,
2010, http://www.whitehouse.gov/the-press-office/remarks-president-state-union-address;
and Ben Bernanke, “U.S. Monetary Policy and International Implications,” remarks at
IMF–Bank of Japan seminar, October 14, 2012, http://www.federalreserve.gov/newsevents/speech/bernanke20121014a.htm.

private-sector salaries in Greece had dropped . . .
:
“Salaries Drop by over 10 Pct Within a Year,”
ekathimerini,
July 2, 2013, http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_02/07/2013_507091.

“Across Europe’s southern rim, people recoil . . .”
:
Marcus Walker and Alessandra Galloni, “Embattled Economies Cling to the Euro,”
Wall Street Journal,
February 13, 2013, p. A1, http://online.wsj.com/news/articles/SB10001424127887324761004578284203099970438.

132 “
Europe was not built for economic reasons . . .”
:
Matthew Kaminski, “Guy Sorman: Why Europe Will Rise Again,”
Wall Street Journal,
August 18, 2011, p. A11, http://online.wsj.com/news/articles/SB10000872396390444375104577592850332409044.

“everything from Greek real estate . . .”
:
Stelios Bouras and Philip Pangalos, “Foreign Money Is Revisiting Greece,”
Wall Street Journal,
February 25, 2013, p. C1, http://online.wsj.com/news/articles/SB10001424127887323864304578320431435196910.

“The drive to improve competitiveness . . .”
:
Hugo Dixon, “The Gloom Around Greece Is Dissipating,”
New York Times,
April 21, 2013, http://www.nytimes.com/2013/04/22/business/global/the-gloom-around-greece-is-dissipating.html.