The Ascent of Money A Financial History of the World

The Ascent of Money A Financial History of the World


  • Paperback
  • 448 pages
  • The Ascent of Money A Financial History of the World
  • Niall Ferguson
  • English
  • 02 June 2016
  • 9780143116172

10 thoughts on “The Ascent of Money A Financial History of the World

  1. Riku Sayuj Riku Sayuj says:

    Imperialism The Darwinian Justification Ferguson contends that today’s financial world is the result of four millennia of economic evolution It is very important to the aims of this book that this metaphor is accepted Ferguson looks at this evolution of money into the complicated financial ecosystem of today He explores how money mutated into new toolsorganisms and acuired characteristics that allowed it to meet the needs of its usersdemands of its environment better The tools that helped men make even money or harness their own energies efficiently were selected for as ‘fittest’ and soon took over the monetary environmentThis happened in fits and startsFirst came the invention of money itself which is not given much attention to probably because it is too shrouded in the mists of time and also because the West has no uniue claim on it at any of its stages even the advanced forms Then it started mutating into its various forms conuering and occupying various niches according to functionalityAnd according to Ferguson the civilizations who had access to these new and efficient tools were hugely benefitted and in many cases were at a decisive advantage down to our dayThe Evolutionary Stages1 BanksMoney once it allowed uantification of the value of transactions soon led naturally to delayed payments and then to the institutions of lending and borrowing These slowly grew to become banks clearing houses for ever larger aggregations of borrowing and lending2 BondsThe rulers and the lords were the biggest customers of the banks In time governments that figured out how to utilize the credit market best thrived and their innovations led to government bonds and securitization of streams of interest payments This matured into full fledged bond markets by the 13th century The rulers had great incentive to protect and regulate this amazing new source of funding This led those governments most dependent on these markets to institute regulated public markets so as to maintain stability and security of transaction which was in their own best interests Transaction and discovery costs reduced drastically and areas with such markets proved extremely useful to their rulers who could no raise money for wars much effectively Battles were now to be won and lost in the bond markets3 Stock MarketsBy the seventeenth century corporations started aping the states a process that was not limited to only financial matters and started to raise euity through share markets This could only develop first in areas with already well developed bond markets and public markets and thus gave them a further advantage — the advantage derived from the financial tools now extended from wars to trade and industry The West was rising buoyed by its financial innovations in Ferguson’s view4 InsuranceWith the institutions of bonds and shares prospering the next step was to use the market to spread risk out insurance funds and then pension funds exploited economies of scale and the laws of averages to provide financial protection against calculable risk The corporations now had another decisive advantage in being able to have access to protection against risk and in a world where financial risk was the biggest danger any advantage there could prove world conuering The accumulation of financial innovations had already tipped the balance for the West and was now on its way to helping them conuer the world5 Real EstateWith the rise of innovative instruments such as futures options and other derivatives it was now possible to increase leverage not only for governments and corporations but also for individual households With government encouragement they soon increased their leverage and used that to invest and in real estate This helped the western countries to have a larger and larger propertied class helping them to transition the into property owning democracies which according to Ferguson are the most robust sort6 Imperialism and Globalization The Justified CulminationNow we come to the crux of the narrative — Economies that combined all these institutional innovations banks bond markets stock markets insurance and property owning democracy performed better over the long run than those that did not because financial intermediation generally permits a efficient allocation of resources than say feudalism or central planning The financial ecosystem evolved in the West was the best suited for governance and for human civilization in general And it is for this reason that the Western financial model tended to spread around the world first in the guise of imperialism then in the guise of globalization and has been vital for all sorts of progress achieved around the world — from the advance of science the spread of law mankind’s escape from the drudgery of subsistence agriculture and the misery of the Malthusian trapFerguson has narrated the history of money as a financial evolution and thus given it the air of inevitable complexity and of progress This makes it seem like the adoption of the ‘evolved’ financial system first by the West and them by the Rest is but a logical and inevitable choice that is for the best of the world at largeIt is noteworthy that Ferguson makes a point of using elaborate evolutionary metaphors to project the history of financial institutions in a Darwinian lightWhy?According to this interpretation financial history is essentially the result of institutional mutation and natural selection Random ‘drift’ innovations mutations that are not promoted by natural selection but just happen and ‘flow’ innovationsmutations that are caused when say American practices are adopted by Chinese banks play a part There can also be ‘co evolution’ when different financial species work and adapt together like hedge funds and their prime brokers But market selection is the main driver Financial organisms are in competition with one another for finite resources At certain times and in certain places certain species may become dominant But innovations by competitor species or the emergence of altogether new species prevent any permanent hierarchy or monoculture from emerging Broadly speaking the law of the survival of the fittest applies Institutions with a ‘selfish gene’ that is good at self replication and self perpetuation will tend to proliferate and endureAs we can see there are certain key themes herea That the survived institutions have to accepted as ‘fittest’ under Ferguson’s interpretation andb That ‘selfishness’ of institutionsgenes are rewarding for the specieshumanity in the long run So we should encourage the selfish imperialism of countriesthe globalization of corporations today These are specious themes that are present in this book with a specific agenda trying to escape notice by being presented in pseudoscientific light And as we have seen from our discussion of how Ferguson uses the history of finance to show us how Imperialism was a good thing for the rest of the world we can safely slot this book as another among Ferguson’s life long attempts to come up with innovative apologetics for Empire


  2. Michael Michael says:

    Yay for empire Another book from the vaguely centrist right you know them those economists and Greek translators and philosophers from the University of Chicago who assisted Pinochet in his fascist coup won Nobel Prizes misconstrued Plato to fit their world view I'm looking at you Leo Strauss and finally today when they are primarily involved in teaching a new generation to do the same thingsWell Ferguson perhaps isn't so vehemently rabid about his political beliefs and he doesn't teach in Chicago But he is their counterpart the British free trader Only he has something the Chicago boys don't that very old and very British urge to colonize those who have defaulted on their debts We who are not so verse in financial lingo tend to call this imperialism a much effective imperialism because so incredibly beneficial to those who have the most to gainFerguson does a very good job of making economic theory as understandable as possible which means that I understood and could possibly recall about 30% of those unyielding financial terms and theories It's an excellent day when intelligent historians do not stoop to our level to be understood Ferguson makes his point without relying on that pitfall of historical writing making history uncomplicatedAnd yet oh and yet The closest thing to socially adept you're going to get here is the gold standard which by any standard including its own is a dangerous illusion of stability And don't even think for a minute that Ferguson will even mention the naughty word labor as applied to a working force He does his best to put a pretty imperial British mask over his rough working class Scottish face but for all his talk of bubbles and busts and liuidity and illiuidity and real estate and S L you have to wonder is it possible that something so vacuous as a number on a screen can define us politically culturally and spiritually? It's kind of a scary predicament and The Ascent of Money not only sets out to prove that this is true it also aspires to show that Planet Finance is an evolutionary process almost as evolutionary as evolution itself with a little ideology thrown in The last chapter Chimerica is one reason to read the book or at least that chapter as it portrays a clear sighted analysis of the US China situation which is becoming intricate and dangerous each dayIt is a minor but slightly important book about finance than financial history Then again maybe finance is financial historyI think it's time for some Naomi Klein


  3. Warwick Warwick says:

    Financial institutions are not evil that's Niall Ferguson's main point For some this is already a hard sell I am not as it were temperamentally against the idea but I sure seem to read a lot of books by people who are so I was curious to follow his arguments And I have to admit that for the most part he makes his case convincingly arguing that ‘poverty is not the result of rapacious financiers exploiting the poor’ but rather ‘has much to do with the lack of financial institutions with the absence of banks not their presence’I guess this makes sense when I think of some countries I know To flesh out his case Ferguson goes back to the Middle Ages and chapter by chapter takes you through the major milestones in the history of finance the invention of banking in Renaissance Italy the development of bonds the emergence of a stock market the growth of a concept of ‘real estate’ His point is that a ‘world without money would be worse much worse than our present world’I have – to my detriment as a journalist and as a solvent member of society – an embarrassingly non stick mind when it comes to economic matters Terms like ‘arbitrage’ or ‘fractional reserve’ slide off it leaving no trace Among the stories Ferguson tells is the one about the Scotsman John Law who initiated one of the classic economic bubbles when – having unwisely been put in charge of the economy of Regency France – he frenziedly sold off stock in his new Mississippi Company Now this is something I have read about in detail on at least three other occasions over the years Colin Jones wrote about it in his history of 18th century France The Great Nation; then I read Arthur Herman's account of it in The Scottish Enlightenment; and recently Ned Sublette covered it from the American perspective in The World That Made New Orleans I've now read the story for a fourth time Yet if I sat down to explain my understanding of it I would probably struggle to fill a smallish postcardFor someone as weak in this area as I am this book did much better than most in giving me a proper deep context for understanding the world of finance For that I'm grateful How much I accept his thesis I'm not sure; as far as it goes it's obviously right but there are things not addressed in here that complicate the picture which subseuent events have made only too clearBecause unfortunately for Ferguson the most salient figure in the book is the one found on the inside cover ‘Published 2008’ In a cruel twist the book went to press just as the entire system it was trying to describe came crashing down around everyone's ears A few panicked footnotes ‘at time of writing – May 2008’ attest to Ferguson's attempt to stay abreast of events but it was an impossible job from where he was – namely in time to explain the ballooning subprime disaster but before the collapse of Lehman Brothers and the multi trillion dollar bailoutsWith this kind of hindsight any defence of the international finance system no matter how well intentioned cannot help but leave a bad taste in the mouth Which is not to say that Ferguson would have approved of what happened far from it – his tone is on such matters generally censorious and he writes explicitly against bailouts as a concept ‘Every shock to the financial system must result in casualties’ His broad principles of financial progress may be just about still standing but it's starkly apparent that the notion of regulatory oversight – which he never mentions – is far pressing than a 2008 perspective could allowFerguson turning the old saw on its head suggests that ‘money is the root of most progress’ and this may be so if you take the long view The long view is what this book does best Attempts to turn this into moral arguments about the present though only go to show the wisdom of that fine print which warns that a writer's sense of timing – like the markets – can go down as well as up


  4. Marc Weidenbaum Marc Weidenbaum says:

    The book is titled The Ascent of Money but it's not about the ascent of money It's about the path of money with the assumption that from the origin of the book's historical perspective money has been the bedrock of civilization There's no ascendancy because there is nothing for it to compete with in the author's telling What the book really is is a straight history of the above board financial markets and to that extent it's a useful and largely enjoyable read covering the move from barter to coin and from coin to virtual funds and from virtual funds to algorithmic trading The author does a wonderful job of jumping across vast time periods to draw comparisons showing how even if technology changes human nature does not He does a terrible job of telling jokes which comes across as a sort of nervous habit mostly alliteration puns and pop culture references one that someone close to him should point out to him The absence of under the counter financial markets and their influence on their substantial part of the global economy seems like a significant blind spot There are occasional asides to the Mafia narco states and the like and of course when Ponzi schemes come to light they are acknowledged But that's it As such it's sort of like this if The Ascent of Money were a study of a city it would only take stock so to speak of the goings on within buildings and institutions and not of street life In other words it's not a full picture It's like a Chamber of Commerce picture One other seeming blind spot if I'm not mistaken the author seems to have a disinclination toward companies that are not publicly tradedAlso I cannot recall reading a non fiction book recently with less of a thesis There is no overarching theme no consciously enacted perspective just the steady march of economic history proceeding like a fleshed out timeline I'd say most fiction I read has of a thesis of a sense of perspective on the world than this book does To be clear there is a concluding section in which the correlations between biological evolution and monetary system change is compared But in effect what has happened is that after dropping occasional references to such a metaphor throughout the book he then tries to tie it all together In other words the euation to produce this book was write a history of largely western economics at a largely macro level and then add a final chapter proposing a model supported only by parenthetical references in the majority of the book A comparison is not a thesis especially when the comparison feels added on Further the evolution metaphor is seriously sloppy For a widely traveled professor at Harvard he has created a loose at best metaphor with a floating subject that changes according to the need of his rhetoric on a moment by moment sentence by sentence basis Has money ascended like man is said to have? Has the nature of business? Has the market? If as the author states complex technological innovations haven't actually supplanted earlier modes like barter and loan sharks then how can the comparison to mankind be made? Are we humans surrounded by our own competing ancestors? And if in fact this is about an ecological comparison and not a one on one to mankind then why not just say so? Because comparisons to man allow for the idea of the free market having a rational hive mind sentience? Because The Ascent of Man sounds like a better logline than The Ecology of Money? It's altogether unclear If after this much effort a book's thesis cannot be plainly stated then it does not have one What it has is a paper wrapperAnd as a side note I may be mistaken but the book seems to clarify when an economist is left leaning but not when right leaning And the fact that George Soros and several other figures in finance are Jewish is pointed out but no other religion is listed with any particular freuency when other major figures are mentioned One final thing There is an anecdote about the film Mary Poppins early in the book that I highly recommend reading I can't do it justice but in brief the author was invited to speak at a business event and since the tone of his talk was somewhat negative about the economic short term and midterm several of the attendees all successful business people complained afterword essentially taking issue with the presence of a non businessperson especially one deemed not enough of an optimistic booster One of these complaints stated that they should have ditched him and just shown the movie Mary Poppins The author then takes the opportunity to point out the extent to which Mary Poppins' plot rests on the instability of British banks


  5. Trevor Trevor says:

    Life has a habit of proving me wrong Recently I wrote a review of The Drunkard's Walk How Randomness Rules Our Lives and said something like you generally get a better understanding of a subject if you can see the historical path that has been followed in building the subject in the first place This book is all historical path but it has left me without a clearer understanding of what I had hoped to learn from itAnd this is a pity as there are many things about money I would like a deeper understanding of These are things that people ALWAYS take for granted in writing these sorts of books – and they are also things that I have NEVER understood Exactly the same thing happens with astronomy A lot of the universe seems to be made up of matter that has formed essentially into planes – our solar system is a good case in point with all of the planets going around the sun in what looks a lot like a disk I know that Kant was one of the people who worked out why this should be the case but other than knowing who worked it out no one seems to ever explain why that ought to be the case For years I had much the same problem with water freezing – in most liuids moving from a liuid to a solid decreases the volume water does the exact opposite It was only when someone explained the crystal structure of ice that this started to make sense I do particularly like things to make senseMy uestion about money has to do with the Stock Market This is my understanding Capitalism’s great invention was the joint stock company This was a way of raising lots of money from lots of different sources so that a company could be formed that would do what needed to be done build a railroad put down a gas pipeline whatever else The motto of capitalism could just as easily be ‘spread the risk – spread the joy’ The point being that even if you had enough money on your own to build a railway it would probably not be a good idea for you to put all of your money into that one thing just in case things went terribly terribly wrong By getting lots of people to put smaller amounts of money into a broader range of activities the chance of all of them turning sour at the same time is greatly reduced What you loose in total control you than make up for in avoiding sleepless nightsSo let’s say I want to start a company to build a better mousetrap following on from the remarkable success of both Agatha Christie’s and Hamlet’s earlier versions I need 10000 and so I issue 100 shares worth 100 each People are crazy enough to buy these shares and now I have my money and start researching mice and killing them All is good with the world I come up with said mousetrap one that kills mice by uoting all of the major solilouies of Hamlet at them until they decide the answer to the uestion is ‘not to be’ I start making lots of money The value of my company goes up to 20000 – so each of the shares has doubled in price I think I understand all of this so far But now there is a market in my shares and people not content with receiving dividends from the profits I’m making hand over fist want to sell my shares and take their profit in one go Okay good Lots of people decide to sell my shares at pretty much the same time – perhaps there has been a bit of a slide in confidence somewhere generally and even though the ‘boring vermin to death’ mousetrap is selling well and people have even started talking about how nobly designed it is and in apprehension how like a god and so on the general downturn in the market means people are selling stock left right and centre which just also happens to include mine and no one seems to be interested in buying stock So the price of my shares plummetsThe uestion I always have is – well so what? Surely the only time the company ought to be worried about the price of its shares is when they are being issued – as it seems to me this is the only time when they are going to bring in any money to the company What happens to the price following this would seem rather academic from the company’s perspective I issued the stock to build a company I have built that company that company is going well – why should the stock price bother me at all?Look I know I’ve got this arse about face in some way – and that is fine – but my point is that I would have expected to come away from this book understanding how this sort of thing works – and I didn’t Now don’t get me wrong I’ve read lots of books on pretty much this same theme and subject and I’ve never had this bit explained to me in a way I can understand It is very possible that I’m just a dolt and have completely missed what is so utterly transparent to everyone else they don’t even see the point in explaining it and as I’ve said already it wouldn’t be the first time All the same it would be nice if someone somewhere could point me to a book that explains this stuff in a way that even I can understandThe bits of this book that were particularly good were mostly towards the end when he started discussing behavioural economics I’m becoming a big fan of this subject but I do seriously wonder what it will end up adding to economics theory per se The fact we are ‘predictably irrational’ Predictably Irrational The Hidden Forces That Shape Our Decisionsis interesting enough in itself but what will be much interesting will be when this subject stops being about curiosities as discussed in books like Freakonomics Rev Ed A Rogue Economist Explores the Hidden Side of Everything and when a substantial and unified body of theory preferably able to make predictions grows up around these curious and fascinating factsThe part of this book where he brushes aside Confessions of an Economic Hit Man by talking about how little of a percentage of US total trade comes from Panama and therefore it simply wouldn’t make sense for the US to kill their president is so silly as to beggar belief Surely the percentage here is not of total of US trade but the total of Panama's trade that is dedicated to the US Surely too the canal should figure somewhere in these calculations – it did very much so in the hit man book And surely before dropping this argument entirely someone might want to talk about things without a direct 'economic' value to the US say the value of having yet another UN vote always in US favour by a compliant Panama This writer is very much of the Chicago School – never even mentions that even in its heyday and even in the US there were saltwater economists who rejected the ultra liberalism of the freshwater economists But economics is a political and ideological ‘science’ – which is another reason we should hope that adding some cutting edge psychology into the mix might help His mostly uncritical review of the Chilean ‘economic miracle’ gives the ‘all is sunshine’ version of Naomi Klein’s much darker version in The Shock Doctrine The Rise of Disaster Capitalism There is a television program that goes with this – I ought to watch it I guess but am probably unlikely to


  6. John Farebrother John Farebrother says:

    This is a very informative and convincing book about the history and the need for money I say that despite the fact that I disagree with the author's conviction that capitalism is one of humanity's greatest achievements and that the price of progress is than worth it no matter who loses out Also despite the fact that I have heard that the author is uite an arrogant individual But this book is a thorough and comprehensive account of the various milestones that have taken place in the history of money Above all it is a celebration of the achievements that have been made possible by money's capacity to leverage and create value a value that some would say is illusory and false But there is no doubt that the modern world as we know it would not exist without the lubricant and stimulant growth hormone money for better or for worse


  7. Chris Chris says:

    Ferguson is known as an economic historian yet his last few books were almost purely historical with only brief passages on the economic aspects of historical events Here Ferguson returns to telling about well not so much economics as the evolution of finance First money then banks then bonds then euities derivatives insurance and finally the causes of the recent credit crunch are explained and developed in simple and clear prose Unlike 'War of the World' a mammoth retelling of the horror of the 20th century which I felt had an impersonal and rushed air as though Ferguson had relied too heavily on his massive globe spanning team of researches from a host of universities 'Ascent of Money' is Ferguson really dealing with what comes naturally to him as an expert in both the early modern bond markets uantitative finance the inner workings of the House of Rothschild as he should he wrote the books on them the hubris behind Long Term Capital Management and every other complicated aspect of the markets Also the endnotes are what really put Ferguson in a class above the rest of the clutter in the 'NEW IN NONFICTION' shelves because Ferguson really is a world class academic The footnotes reveal the real depth and breath of Ferguson's learning and research everything from the Financial Times personal correspondences interviews from Democracy Now and every major current events book of the last generation including the new George Soros book which I bought WITH this book Let's get that straight Ferguson had read and referenced a book which is so new it was on the same 'NEW IN NONFICTION' shelf near his


  8. Jan Rice Jan Rice says:

    Contemplating the title of this book my first thought was that it was by a person of the political left maybe not the Pope but an anti capitalist and moralizer on the all around evil of the financial system No said the person who recommended it to me; He's center rightSo then I saw the title as deriving from the bad boy mentality of the author thumbing his nose at such views The author has his own intended reference to The Ascent of Man a TV series by Jacob Bronowski that impacted him in his youth But the first two chapter titles Dreams of Avarice and Of Human Bondage did nothing to change my impressionAlso this book is based on a television series which is in fact what I originally set out to watch And in the series the author is strutting around looking very much like a master of the universe wannabe or to use the old Salomon Brothers' self descriptor that he uotes a Big Swinging Dick His presentation notwithstanding Ferguson isn't an economist or financier but a historian and professor Yet the teaching wasn't getting across I must have been looking around online; that's when I discovered there is a bookFrom that first chapter about the origin of finance I learned that the root of credit is in credo the Latin for I believe and that when Shylock calls Antonio a good man he means not his virtue but his creditworthiness And that the conjoining of goodness with creditworthiness echoed subseuently in the institutionalized racism of red lining in the 1940s whereby African Americans were deemed uncreditworthy in Chapter Six and again near the end of the book where the author uses a dollar amount to express what a person would have been worth had he pursued a certain investment strategyThe author also touchs on the legal fictions reuired to avoid running afoul of usury laws against the earning of interest laws that remained in effect in England until 1833 Examples are the repaying a loan with the inclusion of a percentage of the gains or the purchase of streams of annuity if I remember correctly the latter being one of Voltaire's methods And there's the Medici's rise via finance from small time hoodlums to popes royalty and arts patrons Bank is from banci Italian for benches on which the earliest bankers banchieri sat behind their tables And how precious metals do not define what money is In fact the importing of mountains of silver into Europe by the conuistadors changed what had been thought to be the worth of products so much silver poured into the economy that there was inflationAnd he talked somewhere about how loans create money You put your money in a bank So you have that much money And the bank lends it to someone else Now that person has that amount of money too Presto capital Or properly speaking the depositor and the borrower can each take that money and build or make something Although the borrower's position is balanced by debt still each has the use of the moneyIn the afterword the author defines money as the crystallized relationship between debtor and creditor but isn't that only because he's focusing on finance? It seems to me it would be basic to say it's the crystallized relationship between buyer and seller My husband is gloomily shaking his head while saying he doesn't know enough to comment so I've probably gotten onto shaky groundMy favorite chapters were Chapter Four The Return of Risk and Five Safe as Houses In the former I wondered why at the beginning he was making statements I expect to hear from the political left such as that financial difficulties are likely at present due to climate change and American foreign policy blunders and uoting Naomi Klein He talked about risk using as an illustrative case the uninsurability of parts of New Orleans post Katrina He also looked at the problem of inflation in the '70s in a one sided way it seemed positing Milton Friedman as the savior and socialism as the enemy At the end of that chapter he said the answer to the problem of risk lies in futures options and hedge funds albeit an answer available only to those with money And that was his answer to his rhetorical leftist references to risk at the beginning of the chapterFor the rest there are houses Chapter Five begins with the story of Monopoly the game invented by a radical who wanted to preach against the uses of money but turned into a glorification of same by a later developer The game became so ubiuitous that it was used in WWII to smuggle real cash to spies behind enemy linesFerguson makes clear that although the owning of homes benefits capitalist democracies the expression safe as houses applies to the lender not the buyer The lender can reclaim the property should the borrower default since you can't pick up your house and abscond with it What the purchaser must have is an income Then and only then is he home safeAnd back to the '40s and before that was when in the words of a friend of mine FDR saved capitalism In 1932 in the midst of the Depression Ford Company goons fired on 5000 demonstrating unemployed workers killing five and before long 60000 workers were singing The Internationale at the funeral The New Deal became answer to such unrest as did the creation of affordable long term mortgages and federal deposit insurance The chapter ends with safe as not houses but housewives and the merits of microfinance Women stay home use not suander the money and pay it back Elsewhere I've read of the similar merits of educating women But even in microfinance exorbitant interest rates have arisen supposedly as the only way to make money on a multiplicity of tiny loansAlthough Safe as Houses presents the risk to capitalism the author never puts together in a coherent way that classic liberalism in the sense of absolutely free markets sans any sort of planning or mitigation of the travails of the masses would lead to just the sort of uprising he describes as having happened back during the Great Depression The last chapter Chimerica deals with the Great Recession of 2007 and the relationship between the US and China They save they lend us lots of money; awash in all that money subprime loans were made to people with no jobs no assets and no prospects for which he fingers W Take that you conservative accusers Apparently no one knew that defaults on subprime mortgages would shake the international economy and affect people half a world awayThe author talks about the era of globalization that preceded WWI characterized by imperialism and gunboat diplomacy of which one low point must be the forced creation of an opium market in China for the merchandise produced in India under British auspices In light of that our present status as the drug market for the developing world doesn't seem so wrong Turn and turn about is only fair Ferguson uotes some of the financial elite of the Victorian era that prior era of globalization as saying war would be a disaster but most of them were saying it couldn't happen; the world was just too interconnected Of course he's comparing that to our own globalized times Then Britain was paired with Germany as the US is with China now But his picture neglects to touch on the pervasive belief that Europe needed war to cleanse or purify itself that I've picked up from other sources Markets have short memories Workers in the financial sphere have careers of around 25 years English speaking westerners feel so secure They are lacking in imagination and they are complacent The author closes with a review of economic thinkers such as Nassim Nicholas Taleb Fooled by Randomness and The Black Swan and Daniel Kahneman He's looking here at the hard wired irrationality that calls into uestion all economic forecasting without the benefit of hindsight that isNiall Ferguson's TV series as it was shown in England is available on YouTube There was also a four session NPR showing but we were lucky to end up with the six sessions that matched up with the six chapters The book goes into detail sometimes confusing as when terms are defined on the show but not in the book The book tends to contain jargon not readily understandable to the uninitiated sometimes unintentional but sometimes just maybe intended to mystify For example he says countries with financial intermediation do better than those with other systems such as feudalism or central planning The latter is a code expression for communism Is the former a code for capitalism?The book suffers from the severing of finance and commerce as they are intertwined and interrelated and as commerce as well as finance started off being in a bad lightThis book purports to be per the subtitle a financial history of the world but if so only in the sense of the special events and highlights that illustrate the rise in historical succession of banks government bonds markets for securities the stock market insurance and pensions derivatives and finally the political encouragement of home ownershipIt is a history in the sense of a 1926 book I had from my mother and uncle as a child in the '50s The First Days of Man that had chapters with such titles as How Mother Nature Made the Earth Ready for Man The Fish that Got Stuck in the Mud and The Ape that Walked Like a Man One can fit some pieces into the puzzle but won't find a comprehensive picture that provides massive new insightsTaking Niall Ferguson at his own word here's his view of money Far from being 'a monster that must be put back in its place' as the German president recently complained financial markets are like the mirror of mankind revealing every hour of ever working day the way we value ourselves and the resources of the world around usIt is not the fault of the market if it reflects our blemishes as clearly as our beauty The Ascent of Money was published in 2008 a year into the Great RecessionPostscript Are there no other paintings of the exchange of money? This book uses on its cover the very same one that is on the cover of The Mind and the MarketUpdate for October 13 I noticed this article reprinted in my local paper that seems to reflect the author's concept of goodness as creditworthiness


  9. Ci Ci says:

    The budget should be balanced the Treasury should be refilled public debt should be reduced the arrogance of officialdom should be tempered and controlled and the assistance to foreign lands should be curtailed lest Rome become bankrupt People must again learn to work instead of living on public assistanceCicero 55 BC So what have we learned in 2 Millennia? Evidently nothing?Ferguson argued that financial markets are like the mirror of mankind revealing the works of how we function in the world Why can we learn anything from history? He told us in his most brilliant segment of the book the afterwords that there are three reasons1 financilal market is about future and future lies in the realm of uncertainty as opposed to calculable risk risk is measurable but uncertainty is not2 because we are human our behavioral bias generates inherent instability in the system3 financial markets are analogous to a Darwinian system where institutional mutation and natural selection processes play important parts Things just happen the drift of random mutation and Things are made to happen the flow of the natural section generate unpredictable dynamism in the systemOverall this is an excellent book with good contents and good writing style


  10. Stephen Stephen says:

    40 stars I am a big fan of Niall Ferguson and this book certainly added to my appreciation for both his skill as a writer and his knowledge of history especially financial history After spending the early portion of the book on the history and development of currency this book becomes a brief look at the origins and development of the major financial institutions banks commodity exchanges hedge funds insurance companies and categories of assets bonds stocks real property options and derivatives For each of these various categories Ferguson provides the historical background that led to their development as well as the benefits and problems that came along with each A well researched well written survey of financial history and an interesting read


Leave a Reply

Your email address will not be published. Required fields are marked *

The Ascent of Money A Financial History of the World[EPUB] ✻ The Ascent of Money A Financial History of the World Author Niall Ferguson – Capitalsoftworks.co.uk A richly original look at the origins of money and how it makes the world go roundNiall Ferguson follows the money to tell the human story behind the evolution of our financial system from its genesis A richly of Money PDF ✓ original look at the origins of money and how it makes the world go roundNiall Ferguson follows the money to tell the human story behind the evolution of our financial system from The Ascent PDF \ its genesis in ancient Mesopotamia to the latest upheavals on what he calls Planet Finance Whats Ferguson reveals financial history as the essential backstory behind all history arguing that the evolution of credit and debt Ascent of Money ePUB ↠ was as important as any technological innovation in the rise of civilization As Ferguson traces the crisis from ancient Egypts Memphis to todays Chonging he offers bold and compelling new insights into the rise and Ascent of Money A Financial ePUB ´ fallof not just money but Western power as well.


About the Author: Niall Ferguson

Niall Ferguson of Money PDF ✓ is a senior fellow at the Hoover Institution at Stanford University former Laurence A Tisch Professor of History at Harvard University and current senior fellow at the Center for European Studies at The Ascent PDF \ Harvard University a visiting professor at Tsinghua University Beijing and founder and managing director of advisory firm Greenmantle LLC The author of books Ferguson is writin.


10 thoughts on “The Ascent of Money A Financial History of the World

  1. Riku Sayuj Riku Sayuj says:

    Imperialism The Darwinian Justification Ferguson contends that today’s financial world is the result of four millennia of economic evolution It is very important to the aims of this book that this metaphor is accepted Ferguson looks at this evolution of money into the complicated financial ecosystem of today He explores how money mutated into new toolsorganisms and acuired characteristics that allowed it to meet the needs of its usersdemands of its environment better The tools that helped men make even money or harness their own energies efficiently were selected for as ‘fittest’ and soon took over the monetary environmentThis happened in fits and startsFirst came the invention of money itself which is not given much attention to probably because it is too shrouded in the mists of time and also because the West has no uniue claim on it at any of its stages even the advanced forms Then it started mutating into its various forms conuering and occupying various niches according to functionalityAnd according to Ferguson the civilizations who had access to these new and efficient tools were hugely benefitted and in many cases were at a decisive advantage down to our dayThe Evolutionary Stages1 BanksMoney once it allowed uantification of the value of transactions soon led naturally to delayed payments and then to the institutions of lending and borrowing These slowly grew to become banks clearing houses for ever larger aggregations of borrowing and lending2 BondsThe rulers and the lords were the biggest customers of the banks In time governments that figured out how to utilize the credit market best thrived and their innovations led to government bonds and securitization of streams of interest payments This matured into full fledged bond markets by the 13th century The rulers had great incentive to protect and regulate this amazing new source of funding This led those governments most dependent on these markets to institute regulated public markets so as to maintain stability and security of transaction which was in their own best interests Transaction and discovery costs reduced drastically and areas with such markets proved extremely useful to their rulers who could no raise money for wars much effectively Battles were now to be won and lost in the bond markets3 Stock MarketsBy the seventeenth century corporations started aping the states a process that was not limited to only financial matters and started to raise euity through share markets This could only develop first in areas with already well developed bond markets and public markets and thus gave them a further advantage — the advantage derived from the financial tools now extended from wars to trade and industry The West was rising buoyed by its financial innovations in Ferguson’s view4 InsuranceWith the institutions of bonds and shares prospering the next step was to use the market to spread risk out insurance funds and then pension funds exploited economies of scale and the laws of averages to provide financial protection against calculable risk The corporations now had another decisive advantage in being able to have access to protection against risk and in a world where financial risk was the biggest danger any advantage there could prove world conuering The accumulation of financial innovations had already tipped the balance for the West and was now on its way to helping them conuer the world5 Real EstateWith the rise of innovative instruments such as futures options and other derivatives it was now possible to increase leverage not only for governments and corporations but also for individual households With government encouragement they soon increased their leverage and used that to invest and in real estate This helped the western countries to have a larger and larger propertied class helping them to transition the into property owning democracies which according to Ferguson are the most robust sort6 Imperialism and Globalization The Justified CulminationNow we come to the crux of the narrative — Economies that combined all these institutional innovations banks bond markets stock markets insurance and property owning democracy performed better over the long run than those that did not because financial intermediation generally permits a efficient allocation of resources than say feudalism or central planning The financial ecosystem evolved in the West was the best suited for governance and for human civilization in general And it is for this reason that the Western financial model tended to spread around the world first in the guise of imperialism then in the guise of globalization and has been vital for all sorts of progress achieved around the world — from the advance of science the spread of law mankind’s escape from the drudgery of subsistence agriculture and the misery of the Malthusian trapFerguson has narrated the history of money as a financial evolution and thus given it the air of inevitable complexity and of progress This makes it seem like the adoption of the ‘evolved’ financial system first by the West and them by the Rest is but a logical and inevitable choice that is for the best of the world at largeIt is noteworthy that Ferguson makes a point of using elaborate evolutionary metaphors to project the history of financial institutions in a Darwinian lightWhy?According to this interpretation financial history is essentially the result of institutional mutation and natural selection Random ‘drift’ innovations mutations that are not promoted by natural selection but just happen and ‘flow’ innovationsmutations that are caused when say American practices are adopted by Chinese banks play a part There can also be ‘co evolution’ when different financial species work and adapt together like hedge funds and their prime brokers But market selection is the main driver Financial organisms are in competition with one another for finite resources At certain times and in certain places certain species may become dominant But innovations by competitor species or the emergence of altogether new species prevent any permanent hierarchy or monoculture from emerging Broadly speaking the law of the survival of the fittest applies Institutions with a ‘selfish gene’ that is good at self replication and self perpetuation will tend to proliferate and endureAs we can see there are certain key themes herea That the survived institutions have to accepted as ‘fittest’ under Ferguson’s interpretation andb That ‘selfishness’ of institutionsgenes are rewarding for the specieshumanity in the long run So we should encourage the selfish imperialism of countriesthe globalization of corporations today These are specious themes that are present in this book with a specific agenda trying to escape notice by being presented in pseudoscientific light And as we have seen from our discussion of how Ferguson uses the history of finance to show us how Imperialism was a good thing for the rest of the world we can safely slot this book as another among Ferguson’s life long attempts to come up with innovative apologetics for Empire

  2. Michael Michael says:

    Yay for empire Another book from the vaguely centrist right you know them those economists and Greek translators and philosophers from the University of Chicago who assisted Pinochet in his fascist coup won Nobel Prizes misconstrued Plato to fit their world view I'm looking at you Leo Strauss and finally today when they are primarily involved in teaching a new generation to do the same thingsWell Ferguson perhaps isn't so vehemently rabid about his political beliefs and he doesn't teach in Chicago But he is their counterpart the British free trader Only he has something the Chicago boys don't that very old and very British urge to colonize those who have defaulted on their debts We who are not so verse in financial lingo tend to call this imperialism a much effective imperialism because so incredibly beneficial to those who have the most to gainFerguson does a very good job of making economic theory as understandable as possible which means that I understood and could possibly recall about 30% of those unyielding financial terms and theories It's an excellent day when intelligent historians do not stoop to our level to be understood Ferguson makes his point without relying on that pitfall of historical writing making history uncomplicatedAnd yet oh and yet The closest thing to socially adept you're going to get here is the gold standard which by any standard including its own is a dangerous illusion of stability And don't even think for a minute that Ferguson will even mention the naughty word labor as applied to a working force He does his best to put a pretty imperial British mask over his rough working class Scottish face but for all his talk of bubbles and busts and liuidity and illiuidity and real estate and S L you have to wonder is it possible that something so vacuous as a number on a screen can define us politically culturally and spiritually? It's kind of a scary predicament and The Ascent of Money not only sets out to prove that this is true it also aspires to show that Planet Finance is an evolutionary process almost as evolutionary as evolution itself with a little ideology thrown in The last chapter Chimerica is one reason to read the book or at least that chapter as it portrays a clear sighted analysis of the US China situation which is becoming intricate and dangerous each dayIt is a minor but slightly important book about finance than financial history Then again maybe finance is financial historyI think it's time for some Naomi Klein

  3. Warwick Warwick says:

    Financial institutions are not evil that's Niall Ferguson's main point For some this is already a hard sell I am not as it were temperamentally against the idea but I sure seem to read a lot of books by people who are so I was curious to follow his arguments And I have to admit that for the most part he makes his case convincingly arguing that ‘poverty is not the result of rapacious financiers exploiting the poor’ but rather ‘has much to do with the lack of financial institutions with the absence of banks not their presence’I guess this makes sense when I think of some countries I know To flesh out his case Ferguson goes back to the Middle Ages and chapter by chapter takes you through the major milestones in the history of finance the invention of banking in Renaissance Italy the development of bonds the emergence of a stock market the growth of a concept of ‘real estate’ His point is that a ‘world without money would be worse much worse than our present world’I have – to my detriment as a journalist and as a solvent member of society – an embarrassingly non stick mind when it comes to economic matters Terms like ‘arbitrage’ or ‘fractional reserve’ slide off it leaving no trace Among the stories Ferguson tells is the one about the Scotsman John Law who initiated one of the classic economic bubbles when – having unwisely been put in charge of the economy of Regency France – he frenziedly sold off stock in his new Mississippi Company Now this is something I have read about in detail on at least three other occasions over the years Colin Jones wrote about it in his history of 18th century France The Great Nation; then I read Arthur Herman's account of it in The Scottish Enlightenment; and recently Ned Sublette covered it from the American perspective in The World That Made New Orleans I've now read the story for a fourth time Yet if I sat down to explain my understanding of it I would probably struggle to fill a smallish postcardFor someone as weak in this area as I am this book did much better than most in giving me a proper deep context for understanding the world of finance For that I'm grateful How much I accept his thesis I'm not sure; as far as it goes it's obviously right but there are things not addressed in here that complicate the picture which subseuent events have made only too clearBecause unfortunately for Ferguson the most salient figure in the book is the one found on the inside cover ‘Published 2008’ In a cruel twist the book went to press just as the entire system it was trying to describe came crashing down around everyone's ears A few panicked footnotes ‘at time of writing – May 2008’ attest to Ferguson's attempt to stay abreast of events but it was an impossible job from where he was – namely in time to explain the ballooning subprime disaster but before the collapse of Lehman Brothers and the multi trillion dollar bailoutsWith this kind of hindsight any defence of the international finance system no matter how well intentioned cannot help but leave a bad taste in the mouth Which is not to say that Ferguson would have approved of what happened far from it – his tone is on such matters generally censorious and he writes explicitly against bailouts as a concept ‘Every shock to the financial system must result in casualties’ His broad principles of financial progress may be just about still standing but it's starkly apparent that the notion of regulatory oversight – which he never mentions – is far pressing than a 2008 perspective could allowFerguson turning the old saw on its head suggests that ‘money is the root of most progress’ and this may be so if you take the long view The long view is what this book does best Attempts to turn this into moral arguments about the present though only go to show the wisdom of that fine print which warns that a writer's sense of timing – like the markets – can go down as well as up

  4. Marc Weidenbaum Marc Weidenbaum says:

    The book is titled The Ascent of Money but it's not about the ascent of money It's about the path of money with the assumption that from the origin of the book's historical perspective money has been the bedrock of civilization There's no ascendancy because there is nothing for it to compete with in the author's telling What the book really is is a straight history of the above board financial markets and to that extent it's a useful and largely enjoyable read covering the move from barter to coin and from coin to virtual funds and from virtual funds to algorithmic trading The author does a wonderful job of jumping across vast time periods to draw comparisons showing how even if technology changes human nature does not He does a terrible job of telling jokes which comes across as a sort of nervous habit mostly alliteration puns and pop culture references one that someone close to him should point out to him The absence of under the counter financial markets and their influence on their substantial part of the global economy seems like a significant blind spot There are occasional asides to the Mafia narco states and the like and of course when Ponzi schemes come to light they are acknowledged But that's it As such it's sort of like this if The Ascent of Money were a study of a city it would only take stock so to speak of the goings on within buildings and institutions and not of street life In other words it's not a full picture It's like a Chamber of Commerce picture One other seeming blind spot if I'm not mistaken the author seems to have a disinclination toward companies that are not publicly tradedAlso I cannot recall reading a non fiction book recently with less of a thesis There is no overarching theme no consciously enacted perspective just the steady march of economic history proceeding like a fleshed out timeline I'd say most fiction I read has of a thesis of a sense of perspective on the world than this book does To be clear there is a concluding section in which the correlations between biological evolution and monetary system change is compared But in effect what has happened is that after dropping occasional references to such a metaphor throughout the book he then tries to tie it all together In other words the euation to produce this book was write a history of largely western economics at a largely macro level and then add a final chapter proposing a model supported only by parenthetical references in the majority of the book A comparison is not a thesis especially when the comparison feels added on Further the evolution metaphor is seriously sloppy For a widely traveled professor at Harvard he has created a loose at best metaphor with a floating subject that changes according to the need of his rhetoric on a moment by moment sentence by sentence basis Has money ascended like man is said to have? Has the nature of business? Has the market? If as the author states complex technological innovations haven't actually supplanted earlier modes like barter and loan sharks then how can the comparison to mankind be made? Are we humans surrounded by our own competing ancestors? And if in fact this is about an ecological comparison and not a one on one to mankind then why not just say so? Because comparisons to man allow for the idea of the free market having a rational hive mind sentience? Because The Ascent of Man sounds like a better logline than The Ecology of Money? It's altogether unclear If after this much effort a book's thesis cannot be plainly stated then it does not have one What it has is a paper wrapperAnd as a side note I may be mistaken but the book seems to clarify when an economist is left leaning but not when right leaning And the fact that George Soros and several other figures in finance are Jewish is pointed out but no other religion is listed with any particular freuency when other major figures are mentioned One final thing There is an anecdote about the film Mary Poppins early in the book that I highly recommend reading I can't do it justice but in brief the author was invited to speak at a business event and since the tone of his talk was somewhat negative about the economic short term and midterm several of the attendees all successful business people complained afterword essentially taking issue with the presence of a non businessperson especially one deemed not enough of an optimistic booster One of these complaints stated that they should have ditched him and just shown the movie Mary Poppins The author then takes the opportunity to point out the extent to which Mary Poppins' plot rests on the instability of British banks

  5. Trevor Trevor says:

    Life has a habit of proving me wrong Recently I wrote a review of The Drunkard's Walk How Randomness Rules Our Lives and said something like you generally get a better understanding of a subject if you can see the historical path that has been followed in building the subject in the first place This book is all historical path but it has left me without a clearer understanding of what I had hoped to learn from itAnd this is a pity as there are many things about money I would like a deeper understanding of These are things that people ALWAYS take for granted in writing these sorts of books – and they are also things that I have NEVER understood Exactly the same thing happens with astronomy A lot of the universe seems to be made up of matter that has formed essentially into planes – our solar system is a good case in point with all of the planets going around the sun in what looks a lot like a disk I know that Kant was one of the people who worked out why this should be the case but other than knowing who worked it out no one seems to ever explain why that ought to be the case For years I had much the same problem with water freezing – in most liuids moving from a liuid to a solid decreases the volume water does the exact opposite It was only when someone explained the crystal structure of ice that this started to make sense I do particularly like things to make senseMy uestion about money has to do with the Stock Market This is my understanding Capitalism’s great invention was the joint stock company This was a way of raising lots of money from lots of different sources so that a company could be formed that would do what needed to be done build a railroad put down a gas pipeline whatever else The motto of capitalism could just as easily be ‘spread the risk – spread the joy’ The point being that even if you had enough money on your own to build a railway it would probably not be a good idea for you to put all of your money into that one thing just in case things went terribly terribly wrong By getting lots of people to put smaller amounts of money into a broader range of activities the chance of all of them turning sour at the same time is greatly reduced What you loose in total control you than make up for in avoiding sleepless nightsSo let’s say I want to start a company to build a better mousetrap following on from the remarkable success of both Agatha Christie’s and Hamlet’s earlier versions I need 10000 and so I issue 100 shares worth 100 each People are crazy enough to buy these shares and now I have my money and start researching mice and killing them All is good with the world I come up with said mousetrap one that kills mice by uoting all of the major solilouies of Hamlet at them until they decide the answer to the uestion is ‘not to be’ I start making lots of money The value of my company goes up to 20000 – so each of the shares has doubled in price I think I understand all of this so far But now there is a market in my shares and people not content with receiving dividends from the profits I’m making hand over fist want to sell my shares and take their profit in one go Okay good Lots of people decide to sell my shares at pretty much the same time – perhaps there has been a bit of a slide in confidence somewhere generally and even though the ‘boring vermin to death’ mousetrap is selling well and people have even started talking about how nobly designed it is and in apprehension how like a god and so on the general downturn in the market means people are selling stock left right and centre which just also happens to include mine and no one seems to be interested in buying stock So the price of my shares plummetsThe uestion I always have is – well so what? Surely the only time the company ought to be worried about the price of its shares is when they are being issued – as it seems to me this is the only time when they are going to bring in any money to the company What happens to the price following this would seem rather academic from the company’s perspective I issued the stock to build a company I have built that company that company is going well – why should the stock price bother me at all?Look I know I’ve got this arse about face in some way – and that is fine – but my point is that I would have expected to come away from this book understanding how this sort of thing works – and I didn’t Now don’t get me wrong I’ve read lots of books on pretty much this same theme and subject and I’ve never had this bit explained to me in a way I can understand It is very possible that I’m just a dolt and have completely missed what is so utterly transparent to everyone else they don’t even see the point in explaining it and as I’ve said already it wouldn’t be the first time All the same it would be nice if someone somewhere could point me to a book that explains this stuff in a way that even I can understandThe bits of this book that were particularly good were mostly towards the end when he started discussing behavioural economics I’m becoming a big fan of this subject but I do seriously wonder what it will end up adding to economics theory per se The fact we are ‘predictably irrational’ Predictably Irrational The Hidden Forces That Shape Our Decisionsis interesting enough in itself but what will be much interesting will be when this subject stops being about curiosities as discussed in books like Freakonomics Rev Ed A Rogue Economist Explores the Hidden Side of Everything and when a substantial and unified body of theory preferably able to make predictions grows up around these curious and fascinating factsThe part of this book where he brushes aside Confessions of an Economic Hit Man by talking about how little of a percentage of US total trade comes from Panama and therefore it simply wouldn’t make sense for the US to kill their president is so silly as to beggar belief Surely the percentage here is not of total of US trade but the total of Panama's trade that is dedicated to the US Surely too the canal should figure somewhere in these calculations – it did very much so in the hit man book And surely before dropping this argument entirely someone might want to talk about things without a direct 'economic' value to the US say the value of having yet another UN vote always in US favour by a compliant Panama This writer is very much of the Chicago School – never even mentions that even in its heyday and even in the US there were saltwater economists who rejected the ultra liberalism of the freshwater economists But economics is a political and ideological ‘science’ – which is another reason we should hope that adding some cutting edge psychology into the mix might help His mostly uncritical review of the Chilean ‘economic miracle’ gives the ‘all is sunshine’ version of Naomi Klein’s much darker version in The Shock Doctrine The Rise of Disaster Capitalism There is a television program that goes with this – I ought to watch it I guess but am probably unlikely to

  6. John Farebrother John Farebrother says:

    This is a very informative and convincing book about the history and the need for money I say that despite the fact that I disagree with the author's conviction that capitalism is one of humanity's greatest achievements and that the price of progress is than worth it no matter who loses out Also despite the fact that I have heard that the author is uite an arrogant individual But this book is a thorough and comprehensive account of the various milestones that have taken place in the history of money Above all it is a celebration of the achievements that have been made possible by money's capacity to leverage and create value a value that some would say is illusory and false But there is no doubt that the modern world as we know it would not exist without the lubricant and stimulant growth hormone money for better or for worse

  7. Chris Chris says:

    Ferguson is known as an economic historian yet his last few books were almost purely historical with only brief passages on the economic aspects of historical events Here Ferguson returns to telling about well not so much economics as the evolution of finance First money then banks then bonds then euities derivatives insurance and finally the causes of the recent credit crunch are explained and developed in simple and clear prose Unlike 'War of the World' a mammoth retelling of the horror of the 20th century which I felt had an impersonal and rushed air as though Ferguson had relied too heavily on his massive globe spanning team of researches from a host of universities 'Ascent of Money' is Ferguson really dealing with what comes naturally to him as an expert in both the early modern bond markets uantitative finance the inner workings of the House of Rothschild as he should he wrote the books on them the hubris behind Long Term Capital Management and every other complicated aspect of the markets Also the endnotes are what really put Ferguson in a class above the rest of the clutter in the 'NEW IN NONFICTION' shelves because Ferguson really is a world class academic The footnotes reveal the real depth and breath of Ferguson's learning and research everything from the Financial Times personal correspondences interviews from Democracy Now and every major current events book of the last generation including the new George Soros book which I bought WITH this book Let's get that straight Ferguson had read and referenced a book which is so new it was on the same 'NEW IN NONFICTION' shelf near his

  8. Jan Rice Jan Rice says:

    Contemplating the title of this book my first thought was that it was by a person of the political left maybe not the Pope but an anti capitalist and moralizer on the all around evil of the financial system No said the person who recommended it to me; He's center rightSo then I saw the title as deriving from the bad boy mentality of the author thumbing his nose at such views The author has his own intended reference to The Ascent of Man a TV series by Jacob Bronowski that impacted him in his youth But the first two chapter titles Dreams of Avarice and Of Human Bondage did nothing to change my impressionAlso this book is based on a television series which is in fact what I originally set out to watch And in the series the author is strutting around looking very much like a master of the universe wannabe or to use the old Salomon Brothers' self descriptor that he uotes a Big Swinging Dick His presentation notwithstanding Ferguson isn't an economist or financier but a historian and professor Yet the teaching wasn't getting across I must have been looking around online; that's when I discovered there is a bookFrom that first chapter about the origin of finance I learned that the root of credit is in credo the Latin for I believe and that when Shylock calls Antonio a good man he means not his virtue but his creditworthiness And that the conjoining of goodness with creditworthiness echoed subseuently in the institutionalized racism of red lining in the 1940s whereby African Americans were deemed uncreditworthy in Chapter Six and again near the end of the book where the author uses a dollar amount to express what a person would have been worth had he pursued a certain investment strategyThe author also touchs on the legal fictions reuired to avoid running afoul of usury laws against the earning of interest laws that remained in effect in England until 1833 Examples are the repaying a loan with the inclusion of a percentage of the gains or the purchase of streams of annuity if I remember correctly the latter being one of Voltaire's methods And there's the Medici's rise via finance from small time hoodlums to popes royalty and arts patrons Bank is from banci Italian for benches on which the earliest bankers banchieri sat behind their tables And how precious metals do not define what money is In fact the importing of mountains of silver into Europe by the conuistadors changed what had been thought to be the worth of products so much silver poured into the economy that there was inflationAnd he talked somewhere about how loans create money You put your money in a bank So you have that much money And the bank lends it to someone else Now that person has that amount of money too Presto capital Or properly speaking the depositor and the borrower can each take that money and build or make something Although the borrower's position is balanced by debt still each has the use of the moneyIn the afterword the author defines money as the crystallized relationship between debtor and creditor but isn't that only because he's focusing on finance? It seems to me it would be basic to say it's the crystallized relationship between buyer and seller My husband is gloomily shaking his head while saying he doesn't know enough to comment so I've probably gotten onto shaky groundMy favorite chapters were Chapter Four The Return of Risk and Five Safe as Houses In the former I wondered why at the beginning he was making statements I expect to hear from the political left such as that financial difficulties are likely at present due to climate change and American foreign policy blunders and uoting Naomi Klein He talked about risk using as an illustrative case the uninsurability of parts of New Orleans post Katrina He also looked at the problem of inflation in the '70s in a one sided way it seemed positing Milton Friedman as the savior and socialism as the enemy At the end of that chapter he said the answer to the problem of risk lies in futures options and hedge funds albeit an answer available only to those with money And that was his answer to his rhetorical leftist references to risk at the beginning of the chapterFor the rest there are houses Chapter Five begins with the story of Monopoly the game invented by a radical who wanted to preach against the uses of money but turned into a glorification of same by a later developer The game became so ubiuitous that it was used in WWII to smuggle real cash to spies behind enemy linesFerguson makes clear that although the owning of homes benefits capitalist democracies the expression safe as houses applies to the lender not the buyer The lender can reclaim the property should the borrower default since you can't pick up your house and abscond with it What the purchaser must have is an income Then and only then is he home safeAnd back to the '40s and before that was when in the words of a friend of mine FDR saved capitalism In 1932 in the midst of the Depression Ford Company goons fired on 5000 demonstrating unemployed workers killing five and before long 60000 workers were singing The Internationale at the funeral The New Deal became answer to such unrest as did the creation of affordable long term mortgages and federal deposit insurance The chapter ends with safe as not houses but housewives and the merits of microfinance Women stay home use not suander the money and pay it back Elsewhere I've read of the similar merits of educating women But even in microfinance exorbitant interest rates have arisen supposedly as the only way to make money on a multiplicity of tiny loansAlthough Safe as Houses presents the risk to capitalism the author never puts together in a coherent way that classic liberalism in the sense of absolutely free markets sans any sort of planning or mitigation of the travails of the masses would lead to just the sort of uprising he describes as having happened back during the Great Depression The last chapter Chimerica deals with the Great Recession of 2007 and the relationship between the US and China They save they lend us lots of money; awash in all that money subprime loans were made to people with no jobs no assets and no prospects for which he fingers W Take that you conservative accusers Apparently no one knew that defaults on subprime mortgages would shake the international economy and affect people half a world awayThe author talks about the era of globalization that preceded WWI characterized by imperialism and gunboat diplomacy of which one low point must be the forced creation of an opium market in China for the merchandise produced in India under British auspices In light of that our present status as the drug market for the developing world doesn't seem so wrong Turn and turn about is only fair Ferguson uotes some of the financial elite of the Victorian era that prior era of globalization as saying war would be a disaster but most of them were saying it couldn't happen; the world was just too interconnected Of course he's comparing that to our own globalized times Then Britain was paired with Germany as the US is with China now But his picture neglects to touch on the pervasive belief that Europe needed war to cleanse or purify itself that I've picked up from other sources Markets have short memories Workers in the financial sphere have careers of around 25 years English speaking westerners feel so secure They are lacking in imagination and they are complacent The author closes with a review of economic thinkers such as Nassim Nicholas Taleb Fooled by Randomness and The Black Swan and Daniel Kahneman He's looking here at the hard wired irrationality that calls into uestion all economic forecasting without the benefit of hindsight that isNiall Ferguson's TV series as it was shown in England is available on YouTube There was also a four session NPR showing but we were lucky to end up with the six sessions that matched up with the six chapters The book goes into detail sometimes confusing as when terms are defined on the show but not in the book The book tends to contain jargon not readily understandable to the uninitiated sometimes unintentional but sometimes just maybe intended to mystify For example he says countries with financial intermediation do better than those with other systems such as feudalism or central planning The latter is a code expression for communism Is the former a code for capitalism?The book suffers from the severing of finance and commerce as they are intertwined and interrelated and as commerce as well as finance started off being in a bad lightThis book purports to be per the subtitle a financial history of the world but if so only in the sense of the special events and highlights that illustrate the rise in historical succession of banks government bonds markets for securities the stock market insurance and pensions derivatives and finally the political encouragement of home ownershipIt is a history in the sense of a 1926 book I had from my mother and uncle as a child in the '50s The First Days of Man that had chapters with such titles as How Mother Nature Made the Earth Ready for Man The Fish that Got Stuck in the Mud and The Ape that Walked Like a Man One can fit some pieces into the puzzle but won't find a comprehensive picture that provides massive new insightsTaking Niall Ferguson at his own word here's his view of money Far from being 'a monster that must be put back in its place' as the German president recently complained financial markets are like the mirror of mankind revealing every hour of ever working day the way we value ourselves and the resources of the world around usIt is not the fault of the market if it reflects our blemishes as clearly as our beauty The Ascent of Money was published in 2008 a year into the Great RecessionPostscript Are there no other paintings of the exchange of money? This book uses on its cover the very same one that is on the cover of The Mind and the MarketUpdate for October 13 I noticed this article reprinted in my local paper that seems to reflect the author's concept of goodness as creditworthiness

  9. Ci Ci says:

    The budget should be balanced the Treasury should be refilled public debt should be reduced the arrogance of officialdom should be tempered and controlled and the assistance to foreign lands should be curtailed lest Rome become bankrupt People must again learn to work instead of living on public assistanceCicero 55 BC So what have we learned in 2 Millennia? Evidently nothing?Ferguson argued that financial markets are like the mirror of mankind revealing the works of how we function in the world Why can we learn anything from history? He told us in his most brilliant segment of the book the afterwords that there are three reasons1 financilal market is about future and future lies in the realm of uncertainty as opposed to calculable risk risk is measurable but uncertainty is not2 because we are human our behavioral bias generates inherent instability in the system3 financial markets are analogous to a Darwinian system where institutional mutation and natural selection processes play important parts Things just happen the drift of random mutation and Things are made to happen the flow of the natural section generate unpredictable dynamism in the systemOverall this is an excellent book with good contents and good writing style

  10. Stephen Stephen says:

    40 stars I am a big fan of Niall Ferguson and this book certainly added to my appreciation for both his skill as a writer and his knowledge of history especially financial history After spending the early portion of the book on the history and development of currency this book becomes a brief look at the origins and development of the major financial institutions banks commodity exchanges hedge funds insurance companies and categories of assets bonds stocks real property options and derivatives For each of these various categories Ferguson provides the historical background that led to their development as well as the benefits and problems that came along with each A well researched well written survey of financial history and an interesting read

Leave a Reply

Your email address will not be published. Required fields are marked *