William Bonner

This is one difficult book to review because I am having problems summarizing everything. The concepts are deep; the data is vast.

There are four major themes in the book:

The USA economically speaking in the decade of 2000 is similar to Japan in the decade of 1990. Japan is still trying to get out of the 1990 ruts of recession, a hiccup of a recovery, and then another recession. Japan is still in a hangover over their boom 1980’s when they enjoyed a stock market and a real estate boom. Now Japan struggles against deflation – meaning consumers are not purchasing. There was a great boom a decade ago in Japan but for every boom there must an equal and opposite bust. The USA has had a stock market boom and is in a real estate boom. What will happen to the USA in the future?

Second, there has NEVER been a fiat currency (meaning a currency that is backed only by the promise of a government) that has lasted. The dollar is the only known fiat currency that has appreciated against gold over a twenty year period. With a currency backed by gold, it gives the government some restraint. Nowadays, the government literally can just print more money whenever it wants. Unfortunately, the more money it prints, it makes the money in our pocket worth less. There’s a reason that since the invention of money, money has been backed by gold (at times silver). Now we have a government running amok making promises that it won’t be able to keep.

There’s a real estate bust that is ahead of us that will be much worse than the stock market bust. The stock market bust had people lose money who had money. However, when real estate busts, it will be the people who don’t have money that will be hurt. The book laments about the ratio of median income to median housing value and reminds us of Japan’s real estate boom.

Finally, there are stories of past boom/bust stories …. South Sea, Napoleon’s Mississippi, and Waterloo. Each time supporters cry “It’s different this time!” and every time they have ended up being wrong: the Internet, the automobile, the telephone, the telegraph, railroads, airplanes, and even the New World. Wrong, wrong, wrong.

The writers of the book have an email newsletter that I am subscribed to (that’s how I found the book). If nothing else, I think it’s wise to read about other people’s viewpoints – especially if they are rational and they disagree with you. My personal viewpoint on the subject of where the economy will go is beyond the scope of this message.… (more)

A compelling (though by now dated) history of the modern financial system up to the Greenspan era. W. Bonner demonstrates a knack for establishing panoramic historical perspectives relating to the contemporary financial fiat/fractional reserve banking system.

Also a surprisingly philosophical book. The author frequently reconciles some rather pessimistic political and economic realities with a Stoic or perhaps even Epicurean mentality, as the delightfully bold final lines of the book demonstrates.

"Financial Reckoning" is the product of a deep thinker. Bonner is clearly a man grappling with the historical and philosophical implications of the present order's slow but inevitable death.… (more)