The Road to Ruin

October 15, 2016
Can owning a Chagall keep the wolf from the door? In a time of a predatory capitalism that is beginning to feed on itself, that and a knowledge of complexity theory might get you more than a cup of coffee.Granted, financial consultant Rickards (The New Case for Gold, 2016, etc.) has been crying Ragnarok for a long time. Even so, the subtitle of this latest may be a touch more breathless than the contents really call for. Never mind that the author does indeed urge on his readers the thesis that the elite, whoever they may be--George Soros, to be sure, but Christopher Dodd?--have three things on their agenda: "world money, world taxation, and world order." The conspiracy theory stuff never goes away, but when Rickards' text settles down into its nerdier tropes, it gets interesting, if a little daunting. The author argues that the complex global financial system is now largely immune to analysis by the static tools of classical economics; "complex systems," he rightly remarks, "behave in a completely different manner from equilibrium systems." Number crunching begins to look like a secondary tool to the wind-reading skills of psychological forecasting: who's going to freak out first, and when? Examining such things as Bayesian probability (the "theorem is messy, but it's still better than nothing"), scaling metrics, and density functions, Rickards makes a good case to get smarter to how people actually think, which is seldom logical and seldom smart. He concludes, in the more sober and less conspiracy-minded portion of this double-edged book, with a view of what a well-structured, wealth-preserving portfolio might look like in a time when wealth creation is ebbing but wealth extraction--from your pocket, that is--is rising. Among its components are bonds and land, of course, but also, not surprisingly, "physical gold and silver...(coins and bars, no numismatics)" and, more surprisingly, museum-quality fine art. There's much for the alarmist here but food for thought for the calm investor, too.

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