Press Reviews

Bloomberg.com:

“It’s hard to imagine a more entertaining book on such a vital subject.”

Dollar R.I.P.: ‘Biography’ Tracks Life, Predicts Grave Decline
Review by James Pressley

March 7 (Bloomberg) — Early in his “Biography of the Dollar,” Craig Karmin sits down with John Taylor, the chairman of FX Concepts Inc., a New York-based hedge fund that manages $12 billion in currencies. It was the middle of 2006, and FX Concepts was betting the dollar would rebound.

“The name of the game is to walk as close to the cliff as possible,” Taylor told Karmin. “Stopping before the edge of the cliff costs you money.”

So does tumbling into the abyss. That November — somewhat earlier than planned — Taylor and his colleagues changed course, becoming what he called “big-dollar bears.”

The U.S. currency keeps plumbing record lows. It now costs more than $1.50 to buy one euro, compared with about $1.25 in mid-2006. The timing is auspicious for Karmin’s whirlwind tour of how the dollar “conquered the world and why it’s under siege.”

Don’t be put off by the title, which echoes a flurry of recent “biographies” of inanimate objects. (There’s one on the Bible, and another on the digit zero. “Jerusalem: The Biography” is in the works.)

In Karmin’s case, the label makes some sense. For what he does is to trace the birth, maturation and widely predicted decline of the almighty buck as the world’s currency of choice. The dollar, like the U.K. pound before it, is hardly immune to challengers.

“Economists see the euro, and eventually the Chinese yuan, playing increasingly important roles in the global economy, chipping away at the dollar’s dominance,” writes Karmin, a Wall Street Journal reporter.

Undisputed Champ

For decades, the dollar has been the undisputed champ. It plays a part in almost 90 percent of all trades in the more than $3.2 trillion-a-day foreign-exchange market, as Karmin writes. The dollar accounts for almost two-thirds of the world’s central- bank reserves. Commodities from soybeans to oil are priced in it.

The dollar has, in effect, become the financial world’s software operating system — the Microsoft Windows of money.

“There is a clear benefit of easy communication when we’re all on the same system,” Karmin explains. The ubiquity of the dollar makes it cheap and easy to use.

The dollar’s death is hardly imminent, Karmin says: Any transition to a new world standard is likely to be gradual, as was the shift away from the pound.

Writing in the breezy voice of a Journal feature, Karmin takes us on a trip around the globe to show how pervasive the dollar has become. We travel to Ecuador, which scrapped its own currency, the sucre, for the dollar in 2000. Picture barges of U.S. coins chugging south and chartered flights airlifting more than $100 million in paper notes out of Miami.

The ‘D’ Word

Moving on to Seoul, we enter the Bank of Korea, a granite building modeled on a 16th-century French castle. This central bank has stockpiled so many dollars that it can drive down the currency just by uttering the word “diversification.” (Translation: The bank may dump dollars.)

Back in Washington, we tour the U.S. Bureau of Engraving and Printing, where the presses run around the clock five days a week (or more), churning out some 9 billion notes a year. At one point, Karmin finds himself holding two shrink-wrapped “bricks” of $100 bills totaling $800,000.

In the bureau’s Mutilated Currency Division, employees use scalpels and tweezers to pick through dollars that have been charred, chewed or put through a shredder. If they can verify that at least 51 percent of a mangled bill is genuine, the bureau will refund the owner.

Though some profile subjects become caricatures, it’s hard to imagine a more entertaining book on such a vital subject.

The dollar’s role as the world’s primary reserve currency has given Americans what French President Charles de Gaulle once called an “exorbitant privilege,” allowing the U.S. to run up foreign debts and trade deficits.

If you want to know what will happen when the U.S. loses that privilege, read this book.

“Biography of the Dollar: How the Mighty Buck Conquered the World and Why It’s Under Siege” is from Crown Business (263 pages, $25.95).

(James Pressley writes for Bloomberg News. The opinions expressed are his own.)

To contact the writer of this review: James Pressley in Brussels at jpressley@bloomberg.net.

The Economist:

“Jolly entertaining”

A MAN’S angry wife once ran $30,000 of his life savings though a paper shredder. Fortunately the nest-egg was in dollars and help was at hand in a little-known corner of America’s federal bureaucracy. Since 1862 the Mutilated Currency Division of the Bureau of Engraving and Printing has pieced together partially destroyed American currency. So long as 51% of a bill remains and can be proved genuine, Uncle Sam will refund its full value.

With magnifying glasses, tweezers, scalpels and many gallons of disinfectant, the mutilated-currency specialists can spend up to two years analysing a single bill. “We don’t care if it was in a fire, buried underground or water-damaged,” says one. “Maybe your dog ate it. Came out the other end. Clean it up a bit. We’ll take care of it.” In 2006 the currency forensics handled about 20,000 cases and sent out cheques worth $66m.

This tale is one of the many fascinating titbits that Craig Karmin, a reporter for the Wall Street Journal, has compiled in his “biography” of the dollar, a book that tells the story of America’s national currency. The approach is partly historical. Mr Karmin describes the dollar’s wild youth. In the era of free banking between 1837 and 1863, for instance, more than 700 banks could issue their own notes, and as many as one-third of all bills were fake. He documents the greenback’s gradual rise as an international currency after the creation of the Federal Reserve in 1913, and its global dominance after the second world war.

A dash of analysis is thrown in too. Mr Karmin explains how the dollar’s hegemony fostered global prosperity but also enabled America to run up large external deficits—and describes the threat these deficits pose to the dollar’s role, as well as the rise of challengers like the euro.

But his book is neither a definitive history nor a triumph of economic analysis. It is a series of lively stories, full of first-hand reporting, deftly woven together. You meet the hedge-fund honcho whose firm is one of the world’s biggest currency-trading specialists; the Ecuadorean hotelier who had to change everything after his country dollarised; the president of an online bank that offers Americans foreign-currency accounts. Mr Karmin has not written an important book about the dollar but he has written a jolly entertaining one.

Booklist:

“Remarkable historical, political, and economic examination of the dollar”

Craig Karmin, reporter for the “Money and Investing” section of the Wall Street Journal, traces the history of the almighty dollar from its beginnings in the early nineteenth century as a hodgepodge of U.S. regional bank notes to the de facto powerhouse of world trade in the latter twentieth century, and he examines the future of the dollar as the reigning currency of choice in the global economy. He goes from the daily routine of a currency trader who shuffles $20 million worth of positions with the click of a mouse to the hidden world of professional counterfeiting and the creation of sophisticated security features designed to thwart such activity. In the inner workings of the Bureau of Engraving and Printing, artisans still carve master plates with scalpels while enormous presses run nonstop, churning out $500 million worth of Federal Reserve notes per day, which often end up being stockpiled by foreign interests rather than in the hands of U.S. citizens. This remarkable historical, political, and economic examination of the dollar raises many concerns for all stakeholders in America’s future.

— David Siegfried

Kirkus Reviews:

“entertaining and informative social history”

Wall Street Journal financial writer Karmin places the dollar in the context of international history and finance. Written in witty reportorial prose, this “biography” traces the American currency’s history from its natal days in the mid-19th century, when paper money was printed by hundreds of private and state banks around the country; through 1971, when President Nixon took the dollar off the gold standard; to the present day, when foreign currencies threaten to upend the dollar’s century-long role as de facto international currency. Karmin structures the book as a series of six vignettes, each of which reads like a long-form magazine feature. From the floor of FX Concepts, a currency-trading hedge fund in New York City, he describes a massive market of traders who deal solely in currencies, not assets. In the bowels of the Bureau of Engraving and Printing, he vividly describes the history of paper currency and 200 years of efforts to counterfeit it. On the streets of Ecuador, he tells the story of a country that has adopted the dollar as its official currency, to both good and ill effect. The book ends, as might be expected, on a cautionary note. With a massive trade deficit, growing foreign debt and billions of dollars in the hands of currency speculators abroad ($250 billion in South Korea alone), the dollar could lose its privileged status to an upstart currency like the euro, the Chinese yuan, or both-an outcome that would be, a leading market strategist comments, “the equivalent of instituting a global tax on almost everyone.” Occasionally repetitive, but a surprisingly entertaining and informative social history of the currency that makes the world economy go round.

Library Journal:

“Karmin skillfully explains [the dollar's] inner workings”

The U.S. dollar, the best-known icon associated with this country, has evolved to assume a unique position in world trade, making global transactions simpler while also helping to expand the global economy. The greenback, however, may eventually lose its “privileged status” owing to modern world dynamics, such as the introduction of the euro, changing foreign central bank reserve strategies, the growing strength of economies like China, and powerful hedge fund managers with the capabilities for currency transactions that rival entire economies in size. Yet despite the complexity of the global currency market, Karmin (reporter, “Money and Investing” section, Wall Street Journal ) skillfully explains its inner workings and identifies the top players and monetary strategies. Pointing out that the dollar may decline even further in the future, he presents strong arguments for investing in foreign currencies and provides examples of how this can be done. Recommended for public library patrons with some knowledge of high finance, this may also be suitable in academic libraries as a non-textbook introduction to currency markets.

— Caroline Geck, Kean Univ., Union, NJ

Publishers Weekly:

“studded with interesting trivia”

In this colorful but sometimes superficial survey of the history and present role of the U.S. dollar, Wall Street Journal reporter Karmin tackles the complex dynamics that have placed American currency at the top of the global economy and the forces that now threaten its position there. In six loosely linked chapters-one offers a peek inside a currency-trading hedge fund, while another takes readers to Ecuador, which in 2000 abandoned its own currency and adopted the dollar as its only legal tender-Karmin examines the dollar’s unprecedented role as the first truly global currency that is trusted and accepted around the world, a phenomenon based on little more than faith in the U.S. government and “the idea of America.” The book is studded with interesting trivia, especially in a chapter about the Department of Engraving and Printing, which produces $529 million in banknotes every day and once printed counterfeit Cuban pesos as part of a government plan to destabilize Castro’s regime, but Karmin occasionally sacrifices depth and explication in order to maintain the book’s fast pace and glib tone. It’s a fun read, but doesn’t add up to more than the sum of its disparate parts.

Crown Publishing Group (Publisher):

“Biography of the Dollar is must reading for anyone who wants to understand what truly makes the world go ’round—and whether it will continue to spin the way we want it to.”

Will the sun set on the greatest currency in the history of the world?For decades the dollar has been the undisputed champ. It’s not only the currency of America but much of the world as well, the fuel of global prosperity. As the superengine of the world’s only superpower, it’s accepted everywhere. When an Asian company trades with South America, those transactions are done in dollars, the currency of international business.

But for how much longer? Economists fear America is digging a hole with an economy based on massive borrowing and huge deficits that cloud the dollar’s future. Will the buck be eclipsed by the euro or even China’s renminbi? Should Americans worry when the value of the mighty U.S. dollar sinks to par with the Canadian “loonie”?

Craig Karmin’s in-depth “biography” of the dollar explores these issues. It also examines the green-back’s history, allure, and unique role as a catalyst for globalization, and how the American buck became so almighty that $ became perhaps the most powerful symbol on earth.

Biography of the Dollar explores every aspect of its subject: the power of the Federal Reserve, the inner sanctums of foreign central banks that stockpile the currency, and the little-known circles of foreign exchange traders that determine a currency’s worth. It traces the dollar’s ascendancy, including one incredibly important duck-hunting trip and the world-changing Bretton Woods Conference.

With its watermark, color-shifting inks, and a presidential portrait that glows under ultraviolet light, the dollar has obsessed foreign governments, some of which have tried tocounterfeit it. Even Saddam Hussein, who insisted on being paid in euros for oil, had $750,000 in hundred-dollar bills when captured. Yet if a worldwide currency has enabled a global economy to flourish, it’s also allowed the United States to owe unbelievable, shocking amounts of money—paying $1 million for every man, woman, and child every single day just in interest on foreign debt; that’s raised concerns that the dollar standard may not be sustainable.

Any threat to the dollar’s privileged status would do much more than hurt American pride. It would mean U.S. companies and citizens would not be able to borrow at the low rates they have become accustomed to. The dollar’s demise would impact the rest of the world, too, boosting the costs of trade and investment if no other currency was able to play the same crucial role. Ultimately the dollar system may weaken, but it should endure—a while longer, at least; it’s in few people’s interest to see it fail, and there is still no credible alternative.

Biography of the Dollar is must reading for anyone who wants to understand what truly makes the world go ’round—and whether it will continue to spin the way we want it to.

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