The Death of Money (42 page)

The fifteen-hundred-acre former Athens airport site . . .
:
Liz Alderman and Demitris Bounias, “Privatizing Greece, Slowly but Not Surely,”
New York Times,
November 18, 2012, http://www.nytimes.com/glogin?URI=http://www.nytimes.com/2012/11/18/business/privatizing-greece-slowly-but-not-surely.html.

“On Cosco’s portion of the port . . .”
:
Liz Alderman, “Under Chinese, a Greek Port Thrives,”
New York Times,
October 19, 2012, http://www.nytimes.com/2012/10/11/business/global/chinese-company-sets-new-rhythm-in-port-of-piraeus.html?pagewanted=all.

All these investment and expansion plans will have positive . . .
:
Ralph Minder, “Car Factories Offer Hope for Spanish Industry and Workers,”
New York Times
, December 28, 2012, p. B1, http://www.nytimes.com/2012/12/28/business/global/car-factories-offer-hope-for-spanish-industry-and-workers.html?pagewanted=all;
Angeline Benoit, Manuel Baigorri, and Emma Ross-Thomas, “Rajoy Drives Spanish Revolution
with Low-Cost Manufacture,”
Bloomberg,
December 19, 2012, http://www.bloomberg.com/news/2012-12-19/rajoy-drives-spanish-revolution-with-low-cost-manufacture.html.

adverse demographics as a major hurdle . . .
:
Buttonwood, “The Euro Zone Crisis: Growth Problem,”
Economist
, December 17, 2012, http://www.economist.com/blogs/buttonwood/2012/12/euro-zone-crisis.

a €60 billion bailout fund . . .
:
Matina Stevis, “Euro Zone Closes In on Bank Plans,”
Wall Street Journal,
June 13, 2013, http://online.wsj.com/article/SB10001424127887323734304578542941134353614.html.

Chapter 6: BELLs, BRICS, and Beyond

The original term
BRIC
was created . . .
:
Jim O’Neill, “Building Better Global Economic BRICs,” Goldman Sachs, Global Economics
Paper no. 66, November 30, 2001, http://www.goldmansachs.com/our-thinking/archive/archive-pdfs/build-better-brics.pdf.

“The other members would need to recognise . . .”
:
Ibid., p. S11.

He attributes economic success in the Baltics . . .
:
Anders Åslund, “Southern Europe Ignores Lessons from Latvia at Its Peril,” Peterson
Institute for International Economics, Policy Brief no. PB12-17, June 2012, http://www.iie.com/publications/pb/pb12-17.pdf.

“The government prohibited double incomes . . .”
:
Ibid.

143 “
Shoppers throng Nordic design shops . . .”
:
Paul Ames, “Estonia Uses the Euro, and the Economy Is Booming,” CNBC, June 5, 2012,
http://www.cnbc.com/id/47691090.

Estonia in particular has become a high-tech hub . . .
:
Ibid.

“When a credit-fueled economic boom . . .”
:
Andrew Higgins, “Used to Hardship, Latvia Accepts Austerity, and Its Pain Eases,”
New York Times,
January 1, 2013, http://www.nytimes.com/2013/01/02/world/europe/used-to-hardship-latvia-accepts-austerity-and-its-pain-eases.html?pagewanted=all.

“While challenges remain today, you have . . .”
:
Christine Lagarde, “Latvia and the Baltics—A Story of Recovery,” speech delivered
in Riga, Latvia, June 5, 2013, http://www.imf.org/external/np/speeches/2012/060512.htm.

“Today, Estonia’s economy is the fastest-growing . . .”
:
Ott Ummelas, “Why Estonia Loves the Euro,”
Bloomberg Businessweek,
February 2, 2012, http://www.businessweek.com/magazine/why-estonia-loves-the-euro-02022012.html.

O’Neill has consistently downplayed the idea . . .
:
Jim O’Neill, interview, CNN
Marketplace Africa, April 5, 2011, http://edition.cnn.com/2011/BUSINESS/04/05/jim.oneill.africa.bric/index.html.

“We directed our Finance Ministers to examine . . .”
:
eThekwini Declaration, Fifth BRICS Summit, Durban, South Africa, March 27, 2013,
http://www.brics5.co.za/assets/eThekwini-Declaration-and-Action-Plan-MASTER-27-MARCH-2013.pdf.

“We support the reform and improvement . . .”
:
Ibid.

a twenty-thousand-mile undersea fiber optic cable . . .
: “Brazil Plans to Go Offline from US-Centric Internet,”
Hindu
, September 17, 2013, http://www.thehindu.com/news/international/world/brazil-plans-to-go-offline-from-uscentric-internet/article5137689.ece.

the SCO’s rejection of a U.S. application . . .
:
Dilip Hiro, “Shanghai Surprise—The Summit of the Shanghai Cooperation Organisation
Reveals How Power Is Shifting in the World,”
Guardian,
June 16, 2006, http://www.guardian.co.uk/commentisfree/2006/jun/16/shanghaisurprise.

The Prime Ministers Council of the SCO signed an agreement . . .
:
“The Interbank Consortium of the Shanghai Cooperation Organisation,” Shanghai Cooperation
Organisation, March 16, 2009, http://www.sectsco.org/EN123/show.asp?id=51.

“the Shanghai Cooperation Organisation is a good . . .”
:
Rick Rozoff, “The Shanghai Cooperation Organization: Prospects for a Multipolar World,”
Centre for Research on Globalisation, May 2009, http://www.globalresearch.ca/the-shanghai-cooperation-organization-prospects-for-a-multipolar-world.

a joint Sino-Russian declaration . . .
:
“China, Russia Sign Five-Point Joint Statement,” Xinhua, June 18, 2009, http://news.xinhuanet.com/english/2009-06/18/content_11558133.htm.

several candidates for an alternative peg . . .
:
See Dr. Syed Abul Basher, “Regional Initiative in the Gulf: Search for a GCC Currency,”
paper presented at the International Institute for Strategic Studies Seminar, Bahrain,
September 30, 2012, http://www.iiss.org/en/events/geo-economics%20seminars/geo-economics%20seminars/archive/currencies-of-power-and-the-power-of-currencies-38db.

A logical extension, then, of the SDR basket approach . . .
:
The author is indebted to Dr. Syed Abul Basher for the suggestion and explication
of the SDR-plus-oil approach to the currency peg, ibid.

the United States would continue its loose monetary policy . . .
:
Ben S. Bernanke, “U.S. Monetary Policy and International Implications,” remarks at
IMF–Bank of Japan seminar, Tokyo, October 14, 2012, http://www.federalreserve.gov/newsevents/speech/bernanke20121014a.htm.

“Today most advanced economies remain . . .”
:
Ben S. Bernanke, “Monetary Policy and the Global Economy,” speech at the London School
of Economics, London, March 25, 2013, http://www.federalreserve.gov/newsevents/speech/bernanke20130325a.htm.

“The purpose of the purchases was and is . . .”
:
“Quantitative Easing Explained,” Bank of England, http://www.bankofengland.co.uk/monetarypolicy/Pages/qe/default.aspx.

“The impact on economic activity . . .”
:
S.
P
elin Berkmen, “Bank of Japan’s Quantitative and Credit Easing: Are They Now More Effective?”
IMF Working Paper no. WP/12/2, January 2012, http://www.imf.org/external/pubs/ft/wp/2012/wp1202.pdf.

“It’s very rare for monetary policy . . .”
:
Ambrose Evans-Pritchard, “Japan’s Shinzo Abe Prepares to Print Money for the Whole
World,”
Telegraph,
December 17, 2012, http://www.telegraph.co.uk/finance/economics/9751609/Japans-Shinzo-Abe-prepares-to-print-money-for-the-whole-world.html.

The BOJ pledged to purchase $1.4 trillion . . .
:
“Introduction to the ‘Quantitative and Qualitative Monetary Easing,’” Bank of Japan,
April 4, 2013, http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf.

“
The bank will achieve
 . . .”:
Ibid.

Chapter 7: Debt, Deficits, and the Dollar

the contract theory of money. . .
:
See Eerik Lagerspetz, “Money as a Social Contract,”
Theory and Decision
17, no. 1 (July 1984), pp. 1–9. The contract theory of money has philosophical and
legal roots as old as Aristotle and, in more recent centuries, John Locke and Samuel
von Pufendorf. It is presented here in an updated version for the purpose of illuminating
the intrinsic rather than extrinsic value of money.

the quantity theory of money . . .
:
Irving Fisher, “The Debt-Deflation Theory of Great Depressions,”
Econometrica
(1933), available from the Federal Reserve Bank of St. Louis, http://fraser.stlouisfed.org/docs/meltzer/fisdeb33.pdf;
and Milton Friedman,
Studies in the Quantity Theory of Money
(Chicago: University of Chicago Press, 1967).

the state theory of money . . .
:
Georg Friedrich Knapp,
The State Theory of Money
(San Diego: Simon, 2003).

John Maynard Keynes adopted chartalism . . .
:
John Maynard Keynes,
Treatise on Money,
vol. 1,
The Pure Theory of Money,
and vol. 2,
The Applied Theory of Money
(London: Macmillan, 1950).

acolytes of the theory of money as an arm of state power . . .
:
Paul McCulley and Zoltan Pozsar, “Helicopter Money: Or How I Stopped Worrying and
Love Fiscal-Monetary Cooperation,” GIC Global Society of Fellows, January 7, 2013,
http://www.interdependence.org/wp-content/uploads/2013/01/Helicopter_Money_Final1.pdf;
Stephanie A. Bell and Edward J. Nell, eds.,
The State, the Market, and the Euro: Metallism versus Chartalism in the Theory of
Money
(Northampton, Mass.: Edward Elgar, 2003).

the quantity theory of credit . . .
:
Richard Duncan,
The New Depression: The Breakdown of the Paper Money Economy
(Singapore: John Wiley & Sons Singapore Pte., 2012).

His work could properly be called
creditism 
. . .
:
Fiona Maclachlan, “Max Weber and the State Theory of Money,” working paper, http://home.manhattan.edu/~fiona.maclachlan/maclachlan26july03.htm.

“bet on the country”
:
Warren Buffett, interview by Becky Quick and Joe Kernan, CNBC, November 3, 2009,
http://www.cnbc.com/id/33603477.

Not only did this spending not produce . . .
:
John F. Cogan, Tobias Cwik, John B. Taylor, and Volker Wieland, “New Keynesian Versus
Old Keynesian Government Spending Multipliers,” National Bureau of Economic Research,
Working Paper no. 14782, February 2009, http://www.nber.org/papers/w14782.pdf?new_window=1.

the relationship of U.S. debt and deficits . . .
:
John H. Makin, “Trillion-Dollar Deficits Are Sustainable for Now, Unfortunately,”
American Enterprise Institute
,
December 13, 2012, http://www.aei.org/outloook/trillion-dollar-deficits-are-sustainable-for-now-unfortunately.

Contrary to the oft-cited . . .
:
Carmen M. Reinhart and Kenneth S. Rogoff, “Growth in a Time of Debt,” National Bureau
of Economic Research, Working Paper no. 15639, January 2010, http://www.nber.org/papers/w15639.

“The Liquidation of Government Debt”
:
Carmen M. Reinhart and M. Belen Sbrancia, “The Liquidation of Government Debt,” National
Bureau of Economic Research, Working Paper no. 16893, March 2011, http://www.nber.org/papers/w16893.

“A . . . reason why forward guidance may be needed . . .”
:
Michael Woodford, “Methods of Policy Accommodation at the Interest-Rate Lower Bound,”
paper presented at the Federal Reserve Bank of Kansas City Symposium, Jackson Hole,
Wyo., August 31, 2012, p. 6, emphasis in the original, http://www.kc.frb.org/publicat/sympos/2012/mw.pdf.

“In particular, the committee decided to keep . . .”
:
Federal Reserve, press release, December 12, 2012, http://www.federalreserve.gov/newsevents/press/monetary/20121212a.htm.

The Fed’s own staff have expressed reservations . . .
:
Marco Del Negro, Marc Giannoni, and Christina Patterson, “The Forward Guidance Puzzle,”
Federal Reserve Bank of New York, Staff Report no. 574, October 2012, http://newyorkfed.org/research/staff_reports/sr574.pdf.

“a thinly disguised way of aiming . . .”
:
Charles Goodhart, “Central Banks Walk Inflation’s Razor Edge,”
Financial Times,
January 30, 2013, http://www.ft.com/intl/cms/s/0/744e4a96-661c-11e2-b967-00144feab49a.html.

a highly detailed critique of the Fed’s easy-money policy . . .
:
Jeremy C. Stein, “Overheating in Credit Markets: Origins, Measurement, and Policy
Responses,” Federal Reserve Bank of St. Louis Research Symposium, February 7, 2013,
http://www.federalreserve.gov/newsevents/speech/stein20130207a.htm.

Chapter 8: Central Bank of the World

To meet Dr. Min Zhu . . .
:
The profile in this chapter is based on Dr. Min Zhu, conversation with the author,
New York City, November 8, 2012; Dr. Min Zhu, lecture at the Watson Institute, Brown
University, Providence, R.I., March 29, 2013.

a China–western hemisphere supply-chain cluster . . .
:
Riordan Roett and Guadalupe Paz, eds.,
China’s Expansion into the Western Hemisphere: Implications for Latin America and
the United States
(Washington, D.C.: Brookings Institution Press, 2008).