Are the dangers posed by currency fluctuation and manipulation as serious as an actual attack on America? That’s what James Rickards, author of Currency Wars, said during a talk in Washington last week.

Rickard’s exposition coincided with the five-year anniversary of the Lehman collapse. He laughed at the idea put forward by James Gorman of Morgan Stanley that the chance of a future crisis is now 0 percent, thanks to Dodd-Frank and other regulation. Actually, Rickards says, it’s probably 100 percent.

Much of his talk addressed issues which Rickards considers to be national security. A strong defense requires strong currency, which the defense community now realizes. Rickards participated in war games sponsored by the Pentagon, which pitted some major nations, as well as hedge funds and Swiss banks, against each other in all-out currency wars. Unfortunately, China (represented by Rickards) won. During the simulation, China and Russia acquired vast reserves of gold: Russia increased its holdings by 60 percent, China by 300 percent. Rickards claims that reality is mimicking this outcome.

He also thinks there’s enough historical precedent that people shouldn’t be making the same mistakes today. He points to the dramatic inflation in Weimar, which the Germans escaped by buying gold; they were enjoying a recovery and growing economy by 1925. There was the British deflation, which preempted the Great Depression by three years thanks to Churchill’s policies as chancellor of the exchequer, though Churchill was honest enough to admit his mistakes. And there was a less well-known American depression in the early 1920s. It was bad, Rickards says, but it ended in only 18 months because the U.S. government wisely did nothing in response.

Not so during Jimmy Carter’s presidency, when inflation reached high levels. The Carter-bond, as U.S. debt was jokingly called, had to be backed by Swiss francs because the dollar was so unreliable. What got us out of that? “Two words: Volcker, Reagan.” Fed chair Paul Volcker fought stagflation by tightening credit and this led to a reliable, sound dollar from the 1980s until the late 2000s. It was “far from perfect, but it worked well.”

It’s not likely that we’ll see such a stable dollar with Ben Bernanke and his likely successors calling the shots. Bernanke appears to naively believe that quantitative easing efforts would work if the many central banks of the world printed together. Unfortunately for Bernanke, banks around the world do not usually act in concert. Rickards reminds us that when “you manipulate the U.S. dollar, you manipulate every market around the world.” In this sense, Rickards points out with some amusement, Ben Bernanke has destroyed more regimes than the CIA. He attributes the Arab Spring and the current riots in Brazil to inflationary trends originating with the Fed.

For naysayers who claim that there is little or no inflation, Rickards reminds us that there is a constant tug-of-war between nominal inflation and nominal deflation, and so 1 percent inflation might be the combination of 10 percent inflation and 9 percent deflation. He would have us understand monetary policy as a relation between the money supply and velocity. Unfortunately, the U.S. money supply has increased 400 percent since 2008. Sometimes deflation is a solution, but Rickards insists that deflation is the government’s worst enemy: During a deflationary period, people find that their purchasing power goes up without a corresponding increase in income, thus leaving less money for the IRS to confiscate–a tax-and-spend politico’s worst nightmare!

Rickards projects a recession in 2014, or during QE4, and an eventual failing of the dollar, though that would not be a doomsday scenario. Some likely eventualities to replace a worthless dollar include multiple reserve currencies, or a new gold standard, which would require new reserve requirements, and would probably be a U.S. blunder if taken unilaterally, as it would be highly deflationary.

But regardless of what happens to our currency, we are in bad shape right now. Rickards points to high unemployment, record lows in the labor participation rate, record food-stamp enrollment, and extremely high numbers of people on disability (“the new unemployment,” Rickards calls it) and says that we are looking at depression-level statistics.

As for the Fed, with its absurd overleveraging, Rickards says: “It looks like a bad hedge-fund.”