Niall Ferguson “The Ascent of Money”,
Posted by John Malloy on 09/20/2009
Special thanks to Network News contributer Peter Deppisch -
Bread, cash, dosh, dough, loot: Call it what you like, it matters. To Christians, love of it is the root of all evil. To generals, it’s the sinews of war. To revolutionaries, it’s the chains of labour. But in The Ascent of Money, Niall Ferguson shows that finance is in fact the foundation of human progress. What’s more, he reveals financial history as the essential back-story behind all history.The evolution of credit and debt was as important as any technological innovation in the rise of civilization, from ancient Babylon to the silver mines of Bolivia. Banks provided the material basis for the splendours of the Italian Renaissance, while the bond market was the decisive factor in conflicts from the Seven Years’ War to the American Civil War.
With the clarity and verve for which he is famed, Niall Ferguson explains why the origins of the French Revolution lie in a stock market bubble caused by a convicted Scots murderer. He shows how financial failure turned Argentina from the world’s sixth richest country into an inflation-ridden basket case – and how a financial revolution is propelling the world’s most populous country from poverty to power in a single generation.
Yet the most important lesson of the financial history is that sooner or later every bubble bursts – sooner or later the bearish sellers outnumber the bullish buyers – sooner or later greed flips into fear. And that’s why, whether you’re scraping by or rolling in it, there’s never been a better time to understand the ascent of money. Niall Ferguson, MA, D.Phil., is Laurence A. Tisch Professor of History at Harvard University and William Ziegler Professor of Business Administration at Harvard Business School. He is also a Senior Research Fellow at Jesus College, Oxford University, and a Senior Fellow at the Hoover Institution, Stanford University.
A financial history of the world
One way to make sense of the present financial chaos is to look back at the past
THE typical career of a Wall Street banker lasts about a quarter of a century, enough to span just one big financial crisis. As Niall Ferguson explains in his new book, “The Ascent of Money”, which will be published next month, today’s senior financiers would have started out in 1983, fully ten years after oil and gold prices first began the surge that had ruined the previous generation of money men. That, he concludes, is a “powerful justification for the study of financial history.”
Mr Ferguson is right. The world needs a book that puts today’s crisis into context. It is too late now to warn investors about expensive houses and financiers about cheap credit. But perhaps the past can help make sense of the wreckage of banks, brokers and hedge funds that litters the markets. Looking back may help suggest what to do next. And when the crisis is over and it is time for the great reckoning, the lessons of history should inform the arguments about what must change.
This rushed, uneven book, by a British-born Harvard University professor who made his name a decade ago with a history of the Rothschild banking dynasty, will contribute less than expected to that debate. It has strengths, including a tidy account of the run-up in housing markets and of the symbiotic rivalry between America and China. But in the earlier chapters—the history, oddly enough, where you would expect Mr Ferguson’s ambitions for his subject to quicken his judgments—the words rarely come to life, either as a source of ideas or as narrative.
Perhaps the book was bound to be flawed, given the pace with which today’s crisis has torn through the markets. As the debacle has unfolded, from a housing crisis, to a credit bust, a bank run and what now looks ominously like a global recession, each episode has posed different questions. Finishing his manuscript in May this year, Mr Ferguson must have been dizzy with the unravelling of certainties. And yet, he is at his strongest in his reading of the news. His story of what is happening today shows prescience, even if it is necessarily incomplete.
It may be that Mr Ferguson was too distracted by the present to pay enough attention to the past. Claiming to be “A Financial History of the World”, the book dutifully dabbles in societies, such as the Inca, who did not see gold and silver as money, and in the pre-Christian Mesopotamian clay tablets that served as credit notes for commodities. He traces the transformation of banchieri, named for the benches where money was changed, into the families that dominated the political and cultural life of Renaissance Italy and from there into modern bankers. He explains how the bond market had its origins in the state’s need for money to finance war. He describes how manias have repeatedly engulfed greedy investors over the centuries—concentrating on John Law, whose schemes ruined 18th-century France. And he rehearses the story of financial risk from its origins in Enlightenment Scotland….
www.economist.com
Posted by
John Malloy
on 09/20/2009. Filed under
International.
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