The Ascent of Money

By Niall Ferguson

Money is a matter of belief, even faith: belief in the person paying us; belief in the person issuing the money he uses or the institution that honors his cheques or transfers.

Money is not metal. It is trust inscribed. And it does not seem to matter much where it is inscribed: on silver, on clay, on paper, on a liquid crystal display.

It is with this frame of reference, Ferguson tackles the financial history of the world (India barely makes it in the book. The only reference is to Andhra Pradesh).

Instead of taking a broad sweep of history, he follows four or five different tracks. He tells the history of Banking in one chapter, followed by bond market in another, followed by stock market, followed by mortgages and insurances and one inflation. He tells a history of each sector in each chapter. This format seems to work remarkably well and keeps the story lines clean.

The early banking history of Italian renaissance was especially fascinating as they seemed to have figured out banking at a scale, for the first time in human history.

The bond market chapter is full of fascinating stories about all kinds of key milestones from battle of Waterloo, French revolution to American Civil war to WW1 and WW2. There is a key invisible role bond markets played in all of these pivotal moments of modern history.

The stock market chapter is more of all the times economists predicted a recession, but never happened, and when they did how bad were they.

The mortgages and insurance chapter is about the invisible hand these play in wealth inequalities, natural disasters, government housing policy etc.

The chapter about inflation and hyper-inflation felt more topical to the current times. There was a section in the book, about first person observations of some one from pre-war Nazi germany on how hyperinflation made them feel worthless, in more than one dimension. It was not just about wages and money, but the devastating effect hyperinflation can have on a psyche of the population.

The book also talks about some of the experiments of Chicago economists in Chile, and how they evolved some wonderful pension schemes. That felt topical too, amidst all the talk of government efficiency.

This book was written in the wake of 2008 financial depression, and the last chapter goes into details of that. The chapter starts off fairly easy to follow, but quickly goes into complex three letter abbreviation financial instruments.

Overall, a pretty good informative book.