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Book Review of The Ascent of Money by Niall Ferguson

The Ascent of Money Book Review

When it comes to money, I live in the world of micro­eco­nom­ics and per­sonal finances:  pay­ing my bills, per­plex­ing over taxes, and putting some aside for the future. I am a finan­cial layper­son. Read­ing Niall Ferguson’s book, The Ascent of Money, taught me a whole lot about money. Now, I’m no author­ity, but at least I’m slightly more informed about my ignorance.

Book Review of The Ascent of Money, by Niall Ferguson

Overview of The Ascent of Money

The book is divvied up into six mas­sive chap­ters. The cryp­ti­cally artsy chap­ter titles don’t describe what’s in the chap­ter, so I’ve attempted to describe it for you, after the “or.”

  1. Dreams of Avarice:  or how money came to be
  2. Of Human Bondage:  or the scary world of credit, and how finance doesn’t func­tion with­out it
  3. Blow­ing Bub­bles:  or every­thing you didn’t know about bonds, stocks, shares, and trading.
  4. The Return of Risk:  or why peo­ple by insur­ance, and why busi­nesses buy insur­ance, and the fat cats that live large as a result (hedge fund managers)
  5. Safe as Houses: or real news about the real-estate mar­ket. I found this chap­ter to be very inter­est­ing after hav­ing read Sun­down Towns a book which dealt a lot with real estate topics.
  6. From Empire to Chimerica: or Inter­na­tional Finance 101:  How Amer­i­can and China form an uneasy finan­cial alliance that’s bound to end in trou­ble some­day. (Get it? Chimerica. China + Amer­ica + Chimera = Chimerica. Witty.)

Obser­va­tions on The Ascent of Money

  • The Ascent of Money is an easy read. You’ll have to work through a lot of data and foot­notes, but it turns out to be quite illu­mi­nat­ing. I have more inter­ested in his­tory than I do in finance, and this book brought the two dis­ci­plines together in a way that made it very interesting.
  • Niall Fer­gu­son is British, so he pri­mar­ily writes to a British audi­ence, but has a lot of infor­ma­tion about other coun­tries as well. His his­tor­i­cal and finan­cial research led him to Brazil, Japan, and all the G8s. The inter­na­tional scope of the book was fascinating.
  • Ferguson’s view of the finan­cial sit­u­a­tion of the world tended toward the  “glass half full” approach. Maybe he’s right. He does sug­gest poten­tial improve­ment of the mess we’re in, but it’s going to take a long time. That long-term adap­ta­tion idea may have some­thing to do with his after­word on evolution.
  • The after­word is titled “The Descent of Money.” The sec­tion is won­der­fully illu­mi­nat­ing, because he pro­vides a bird’s eye per­spec­tive of the whole book, and her­alds some prophetic notions about the world’s finan­cial future. Then, he launches into a long expla­na­tion of how the his­tory of finance is just like evo­lu­tion. Except, as he’s forced to explain, it’s not just like evo­lu­tion because there are so many dif­fer­ences. The con­clud­ing dis­cus­sion, in my non-financial opin­ion, does very lit­tle to enhance the book as a whole. It was like he thought he had a good idea at the end, and awk­wardly tried to slip it in.

What I Learned from Read­ing The Ascent of Money

  1. Macro­eco­nom­ics is pretty com­pli­cated. I do my own taxes, which means noth­ing more than that I spend hours on Tur­b­o­Tax, scroung­ing for deduc­tions and griev­ing the fact that I’m taxed to death for being self-employed. Read­ing The Ascent of Money opened my eyes to the panorama of eco­nom­ics as I’ve never seen it before. As Fer­gu­son put it, this is “the finan­cial equiv­a­lent of rocket science.
  2. Money, like every­thing, has a col­or­ful and sto­ried his­tory. The Ascent of Money is a his­tory book, and a pretty good one, too. The author sketches out a money map of the world, show­ing how this hap­pened and where it came from. He gets to the per­sonal level, too, and dis­cusses per­son­al­i­ties like the con­niv­ing Medicis and the risk-taking George Soros.
  3. Finance has changed, will change, and is chang­ing. The sweep of his­tory demon­strates that finance changes. It adapts to need, greed, and what­ever cat­a­clysm is at hand. The book of Rev­e­la­tion even con­tains infor­ma­tion on the star­tling changes in apoc­a­lyp­tic finance. Today, most of us pur­chase things online or using cards, rather than cash. That wouldn’t have worked thirty years ago. Today, despite the hype about eco­nomic glob­al­iza­tion, there are some who are push­ing for local­iza­tion, the near-opposite.

Other Stuff

  • Niall Fer­gu­son is a Scot­tish (in case you couldn’t tell by the name) his­to­rian and writer. He’s pretty smart. As a result, he teaches at Har­vard and writ­ten many books, some of which are controversial.
  • You can peruse the book on Google books with­out cost, the elec­tronic ver­sion of brows­ing a Barnes & Noble bookstore.
  • The book was made into a doc­u­men­tary. If you have five hours to spare, you can watch it online. I haven’t seen it. If you watch it, let me know if it’s any good.
  • You can buy the book on Ama­zon as well.

 

3 Comments

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