How To Survive a Spastic Economy, by David E. Rhoads, San Diego: D.J. Press, 1978, 170 pp., $9.95 (paper)
This book is a fooler. It looks like just another gloom-and-doom book. Early on though, two distinguishing features emerge to differentiate it from many other investment or business management books available today—gloom-and-doom or otherwise: Rhoads' description of the world's economic and financial problems is articulate; furthermore, he accurately identifies the product of those problems—uncertainty—and tells how to cope with it.
How To Survive a Spastic Economy is organized into two sections. Book 1 describes our problems and shows where they came from (you guessed it, inflation is the culprit); then, Book 2 tells how to survive them. Abundant graphs and illustrations along the way make the trip through both sections impressive and understandable.
The first part's graphs include a 150-year interest-rate history that illustrates the immensity of today's predicament, an extraordinary comparison of the consumer price index with the money supply, and a graph of the monetary debasement that powered the dissolution of the Roman Empire.
While Rhoads warns against overdependence on forecasts, he does predict that severe economic difficulties must be anticipated, probably around 1981. He explains that a crisis must occur. We must destroy the artificial wealth created by 40 years of inflation. Only that can free up our economy. The book goes on, however, to show how the wealth-destruction process can take several different forms, why the final form will be unpredictable, and why the process must be violent.
The second section tells how to arrange your assets to minimize the shock of rapid economic change and to maximize profit opportunities, how to use "trading" techniques to protect against being whipsawed by violent markets, how to ascertain the economic "weather," and what to do about it.
In Chapter 8 Rhoads really hits his stride. There he explains how to monitor the economy and its markets—and how to tell when the Federal Reserve System does something to them. He shows how to differentiate between a supply-demand-initiated price move and one caused by monetary change. Then he presents defenses against all monetary policies (inflation, deflation, stability) in all their possible degrees (from "mild" to "hyper"). He also tells how to determine which policy is actually in effect.
There are addresses for market and price information (most of it free), and instructions are recapitulated in an easy-to-follow, shorthand decision table and some sample portfolios.
Unfortunately, Rhoads had to publish this work himself. Consequently, while the book is well designed and of good quality, I do wish its author had retained an editor to help him with his redundant style. (I never want to see another sentence beginning with "and," "but," or "so.") He might also have presented more information on the various investment vehicles he talks about.
Still, it must be admitted that where other financial and management writers today have merely described the legs, ears, or trunk of economic survival and profitability, Rhoads has described the whole elephant—and he's done it masterfully.
This article originally appeared in print under the headline "How To Survive a Spastic Economy".