Procure Easy Money: The Greatest Ponzi Scheme Ever And How It Is Set To Destroy The Global Financial System Narrated By Vivek Kaul Manuscript

Book : Easy MoneyVols
Author: Vivek Kaul
Publishers: HarperCollins
“We are born into a governmentyears in debt
That soon will be unable to even pay the interest on that debt
And the banks will burn
Money will be useless”
Charles Bukowski Dinosauria We

In monetary parlance, easy money refers to a monetary policy which aims to increase the money supply in the economy.
The book “Easy Money” in three volumes chronicles the rise of money, its mutation into various forms, with focus on easy money policy and the resulting booms and busts.


The first volume focuses on the period upto World War I, the second volume ends at dotcom bubble and the third volume focuses on the Global Financial Crisis ofand its aftermath.


The book is eminently readable, given that it is written by a financial journalist rather than an academic economist, The jargon used in the books are explained with easily graspable examples,

The author explains how debasement, i, e. , addition of base metals to precious metals in the coinage the easy money policy of ancient times mutated into easy money policy of printing more money with no gold reserve to back it up and ended up as fiat money.


What is this fiat money I am reproducing a paragraph here from my previous article on bitcoin,

“Modern paper currency had severed its links with Gold, Now the paper we hold on to is only backed by guarantee of the issuing Central Bank and the sovereign authority, ”

In reality, the end of gold standard inhas paved the way for dollar standard, with dollar being the global reserve currency, This transition from gold standard to gold exchange standard to modern dollar standard is provided in detail, This unique position is referred in the book as exorbitant privilege of dollar,

So, after the advent of this modern fiat money backed by dollars, how does a government manage its easy money policy

Conventionally, a Central Bank uses the following methods to achieve the easy money objective.


a Reduction in Interest rates
Reduction of benchmark interest rates by the Central Bank is a common Monetary policy tool, In India, this rate is the repo rate i, e. , rate at which the commercial banks borrow money from RBI, Currently this rate is at,.

The conventional economic wisdom is that the reduction in interest rates will spur up lending, thereby boosting economic activity both in supply side and demand side, resulting in economic growth.


While in India, space is still left to manoeuvre in the repo rate route, most of the central banks in developed nations have shifted the central bank rates to near zero or negative levels.


This easy money policy in Europe and US has lead to capital outflows to emerging market economies as oftrepeated in the book, money chases the point of highest return.
Further, this negative rate has also lead to peculiar situations whereas banks such as Jyske Bank offered negative interest rates on its mortgages and few other banks offered negative interest rate on deposits.


b Reducing Capital and Reserve requirements:

Banks in India are required to keep a portion of their deposits with RBI and as investment in highly liquid assets like GSecs, approved securities etc.
This is not much discussed in the book,

However, capital requirements are discussed in detail, Banks must hold an amount of capital as determined by their Risk Weighted assets according to Basel norms, By shifting the assets i, e. , loans from banks books by securitization e, g. , creation of mortgage backed securities, banks were able to free up their capital and lend more, This has also lead to a market for derivatives based on MBS culminating in GFC

c Open Market Operations:

RBI/ Central Banks conduct purchase of GSecs to improve liquidity in the economy
Beyond this there are also other unconventional monetary policy tools to achieve the easy money objective.
This usually occurs in a Zero Lower Bound situation occurs, i. e. , the interest rate is at zero or near zero,

One of such widely known tools is Quantitative Easing, Usually as mentioned above Central Banks Purchase GSecs from open market to improve liquidity, QE refers to a policy by which Central Banks buy bonds/ other financial assets from open market from private institutions, In some cases, Central Banks were also involved in equity markets,

In Indian context, recent Targeted Long Term Repo Operations TLTRO which mandates banks to invest in securities from primary/ secondary market could be termed as indirect QE.
However, as banks have to hold these assets in their investment books subject to capital norms, RBIs direct involvement is minimal,

There are also other unconventional monetary policy tools like Operation Twist, Helicopter Drop, Forward guidance etc, which were not discussed / discussed only briefly in the book,

The author argues that easy money policy is the major reason behind asset price bubbles such as dotcom bubble and GFC, The author also warns that this unfettered easy money policy may lead to runaway inflations at an unexpected point in time, In short, the author mildly warns that the situation mentioned in the poem quoted at the beginning of the essay may come true if current global economic order is disturbed and unfettered easy money policy is implemented.
Ft Overall an excellent trilogy, By the end of third book, you might feel its repetitive, hence notstar, The research put into the book and how Vivek has simplified the complex stuff, are truly marks of a great author, Really nice book. In the same lines as the previous one, it gives a very good insight on what happened and why, The reader friendly explanation is really what makes this book enjoyable, otherwise there is a lot of financial and economic mumbojumbo to make the head spin a bit,
This book made me curious to know more, So, am reading Satyajit Das's Extreme Money now, as Vivek cited him quite a lot in the book and also one of the first in the acknowledgements,

Extreme Money is definitely recommended to those who don't want to remain ignorant to global matters, Recommended book for students of commerce and economics to get a good overview of concepts as well as history of crisis in a succinct way, An unputdownable book for those who would like to know about the Subprime crises and its aftermath effects, Moral Hazard created by the U, S govt after continuous bailouts, Why some big financial institutions are too big to fail and the missed opportunity to break them off and why banks

are reluctant to raise fresh capital because it affects its return on Equity and thus, profitability.
There is much much more in this book to be learnt ! A page turner and I can vouch for this book, Buy it. Read it. Read it again. Although a lot had been said,written and documented aboutfinancial crisis, this trilogy not only explains it in a great detail, also gives comprehensive outlook of current global financial system since it's inception.
It sufficiently answers how and why related to 'crisis,world debt, Dollar as world currency in engaging way,
As you reach to the conclusion, you will have more questions than the answers,
But questions will be new,far scary and difficult to answer ! There is a situation in Michael Moore's famous documentary "Capitalism: A Love Story' which was released just one year after thefinancial crisis , where Michael Moore stands in front of Walls Street and asks everyone who comes out "Can you explain what is derivatives / CDO's and how it works " he struggles to understand and quotes that they are purposely complicated so as to avoid proper regulation.


Not only Michael Moore, all the world finds it same way,

In the preface of "Easy Money" Series Vivek Kaul mentions , he wonders whether people writing this stuffs actually understood or not

I started off with "Fault Lines: How Hidden Fractures Still Threaten the World Economy' by Raghuram G.
Rajan inand went forward with neumerous books on this subject but Vivek Kaul's "Easy Money" Series provides with highlights of all the important books on this topic along with his own analysis and examples in more layman terms , which provids more clarity than others.


I recommend this series of books to all those people who jumps into any publication which discuss about money and the crisis which it created in our world, Vivek has put forward massive effort to bring all the details and different point of views in one single source.


This is must to have in your booksshelf,
.