Customer Reviews

The Ascent of Money: A Financial History of the World

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As Ferguson points out so clearly in his latest book, "Ascent of Money", money and its propagation have become the chief driving forces of modern history. Like it or not, society's love affair with money has driven it to devise all kinds of ingenious means for expanding its power to produce more. This study looks at a number of fascinating scenarios where the Medicis, the Rothschilds, the Bank of England, the Paris stock exchange, the insurance industry and Wall Street have all done their bit to raise the historical significance of hard cash to a stratospheric level where it is no longer just a tangible piece of paper but is now a universal abstraction called credit. At the heart of the matter is the individual and corporate need to generate economic growth by creating monetary opportunity. Money only circulates effectively in society if people can trust its value as a medium of exchange for goods and services. If production falters, as it is presently, money can quickly devalue. Ferguson goes well beyond looking at the conventional realms of money as a basic specie to analyzing the inflated world of credit instruments such as bonds, debentures, bills of exchange, stocks, swaps, derivatives, mortgages, and credit cards. While money has expanded to include a variety of uses which have encouraged western civilization to modernize in leaps and bounds, it has come with a terrible price: failure to know when to exercise restraint and moderation in the rush to get rich quickly. It is this excessive behaviour in war, peace, and prosperity that compels many to take incredible risks with their own money and that borrowed from traditional sources like banks. Offsetting every optimistic prospect of making money is the ever-present fear that it could be just as easily lost. We have now reached a point in history where the expected and projected big growth of the past decades is slowly being replaced by a long-term forecast of lower and even negative growth due to our inability to keep ahead of the investment curve. The traditional power and lure of money may no longer be able to sustain our personal and collective drive to make and keep wealth. Ferguson is one of those big picture historians who fills his writing with lots of interesting stories to make his point. Very informative read!

The latest book by Harvard professor and popular commentator Niall Ferguson is a historical look at the rise of finance. Ever wonder how the stock market came to be? Exactly how and why did the evolution of credit lead to the rise of civilizations? Could all the world's conflicts be explained by economics? These are the historical questions Ferguson poses and attempts to answer in "The Ascent of Money."

Ferguson's primary purpose for the book is by using economic history to help explain the complexities of modern financial institutions. Why, might you ask is this important? Because the average person knows little to nothing about such simple financial facts such as the interest rate charged by their credit card. Never before, in this globalized, highly coupled world that we live in today, has financial knowledge and a fundamental understanding of financial institutions been more important than it is today. Everyone is affected by world markets, interest rates, and inflation one way or another.

Some reviewers have critiqued the book for its lack of historical breadth, and to some extent I would agree. However, the book is already 350+ pages, and more historical examples would dilute Ferguson's arguments. As ambitious as it is to try to explain such a complicated subject, Ferguson is mostly on the mark. I highly recommend this book for anyone who wants to know more about the history of finance.

This is an exciting book of adventure and international historical intrigue that kept me reading into the night! I'm serious... and I'm an artist, not a business woman. Ferguson did an excellent job of intertwining our current economic crisis with the financial histories he chose to include in his book. It made his subject more relevant, and unfortunately, more perilous.

As a non-business person I learned so much about financial history and contemporary economics, all in an entertaining format. "The Ascent of Money" is must-reading for these times.

Ferguson comes up again as an unabashed defender of empire(s), especially those espousing financial capitalism as modus operandi. So much so that he touches revisionist overtones at times.

Had this been just a history book, however partial, Ascent of Money would have been only half bad. However, Ferguson's ideological positions only add insult to the periodic injury produced by financial capitalism.

Staying with history for a while, the book makes for a quick traversal of modern financial instruments and some of the supporting institutions and ideologies. Assuming the role of historian of finance, Ferguson doesn't seem to worry about proving anything; a narrative from the perspective of the victors, in (t)his case, the Anglo-Saxon financial elites, might do just as well. One comes away with the idea that financial capitalism is better, necessary, and almost always self-sufficient. Moreover, the welfare state should be viewed not only as a half-baked idea of capitalists, but also past its due date by now.

Here are few examples of missing pieces from Ferguson's take one the rise of financial capitalism: Nowhere is the goal of financial capitalism explicitly stated. I would posit that financial markets are supposed to help/guide us to do the best resource allocation (read, optimal) with the idea of maximizing social welfare. The "us" above is the state and voting citizenry, and not the financial elites alone. Without any compass at work, it's easy for the author to ignore the societal costs of financial capitalism--in the UK/US case, the disappearance of production followed by de-professionalization, and misallocation of resources during, and in the aftermath of, bubbles. In other words, if we look only at what financial capitalism creates, in isolation from other countries or its own side effects, Ferguson's book is right on the money. Otherwise, the market as compass is just as accurate as communism.

Ferguson doesn't seem to make much of his own statistics on how much more we spend on, let's say, healthcare and education for much lower returns. In fact, Schumpeter himself, one of the apostles of capitalism, once said that one of our problems in the US was the professional quality, or lack thereof, of our government employees. Hmm, could this have anything to do with how financial capitalism allocates human resources and/or how a society worships the high priests of finance?

In any case, fear not the current crisis, for Ferguson has embarked into the next expedition of financial capitalism as charted by the Harvard behavioral finance-, and MIT's Andrew Lo's financial evolutionist/adaptive markets-hypotheses. He does so by means of the last chapter in the book, a veritable illustration of plus ça change, plus c'est la même chose. In plain English, it's just the tools and possibly the actors that needed change, provided that the masters, ideology and the fools remain the same.

Rating this book is not easy. It should take 4 stars for the historic part, 2 stars for ideology, and 0 stars for partiality. All in all, for a 2-star book the interested reader may do better to borrow. And, yes, it reads fast and there is plenty of detail surrounded by historical context that make Ascent of Money a decent read.

Nota Bene: Why is it that, in this book, Niall Ferguson writes so dismissively about George Soros' ideas on financial markets reflexivity? Soros has built his fortune also by leveraging the reflexivity he recommends be tamed by adequate understanding and regulation of the financial markets. Unfortunately, Ascent of Money contributes only partially to that understating, and reads little about financial markets regulation.

In providing the history of finance, Niall Ferguson opens a whole new dimension of understanding of the evolution of society. It soon becomes clear that without knowledge of the financial underpinnings of the events that have shaped our civilization, it cannot be properly understood.

The Ascent of Money is a finely researched work which eloquently describes in depth, this facet of our history. After reading it, everyday events suddenly take on new significance, in the light of the economic education thus gained.

If you feel at sea when considering the current financial situation, this book will provide you with an excellent compass!

Ferguson skims over the centuries, and attempts to package together a financial history of the world. Some of the stories will be familiar to the reader, others will be new. In particular, I thought Ferguson did quite well, with his description of the Mississippi Bubble.

Financial history is often an area of study, that is over looked. Yet there is so much, that can be applied to our current financial crisis. Ferguson tries to weave together some economic lessons, that can be applied to today`s economic situation. I felt the conclusion, which is an overview of the current economic slump, could have gone a little deeper.

In terms of the books rating. Someone that is new to the study of economic history, will find this book fascinating. Another reader with some background in economic history, will find some areas of repetition. Ferguson also maintains a somewhat capitalistic and libertarian slant, therefore progressives and socialists, will be in constant disagreement with Ferguson`s conclusions.

The title of the book infers a positive connotation to the development of money. I think the majority of people would agree that we are better off than those of Mesopotamia. This ascent, however, follows a saw-tooth pattern of gains and losses through time. Fergusson does a good job following these vicissitudes. I discovered the function of money studying economics in university, a unit of exchange. When a country has problems maintaining confidence in their currency, any benefits that the evolution of money has developed moves backward because the belief diminishes.

There is a lot of discussion on the purpose of this book: is it a history of money, does it fulfill an agenda of the author, does it describe the financial difficulties of our current economic condition, does it do all of these? I will look at how this book fulfills all of these.

Firstly, Ferguson provides us with a history of money by taking us from tablets used five thousand years ago in Mesopotamia to the earliest known coins from 600 BC found by archaeologists in the Temple of Artemis at Ephesus, to the Medicis of Italy, the Rothschilds, John Law , the American civil war, the World Wars, and to the housing bubble of the latest decade. These different periods illustrate developments and the failures in the history of loans, banks, bonds, real estate, derivatives, Chimerica, and the financial community's efforts to attach biological terms to the financial world.

Secondly, some have criticized Ferguson for only providing history that supports his political leanings. An argument could be made that this is a history of money and not politics although the two are highly intertwined and Ferguson does include politics in this history. I would think Ferguson tried to minimize the role of politics so criticisms of excluding Pinochet's human cost could be defended on these grounds.

Thirdly, the history of money is filled with instances of the animal spirit or irrational exuberance of human thinking which explains the most recent recession. From Medici to the Rothschilds, John Law to Ken Lay, over confidence soon gets the better of us and therefore does explain the cause of today's recession.

So I think Fergusson did a good job overall in combining micro details that provide a tactile connection to significant developments in the history of money and still achieve a macro understanding of money. Looking at the ledgers of the Medicis or the tablets that were used for crops keeps you on your toes while explaining the developments of the first lenders.

My favorite parts of this book include the Dutch United East India company's power in world trade, German monetary policy after WW I, the role of bonds in the US civil war, the Chilean experiment, and the modern day stock market, 12 fold increase over 20 years.

My least favorite part is the explanation of today's problems being the result of printing money. From my reading of the situation, it was the rating agencies who enabled the selling of the CDO's and mortgage company's ability to escape liability in their lending practices. Not the printing of money.

I'm looking forward to reading Ferguson's next book 'Civilization'.

Previous works from Feguson I have read include Empire and The War of the World but it took me two years after The Ascent of Money was published to get to it. Having now experienced the greatest financial crisis since The Great Depression, I was struck by how prescient Ferguson was when he penned and published this work as the extent of the damage was unimaginable. The line, "Perhaps, too, it will be a financial crisis that signals the twilight of American global primacy." produces chills given the now known historical context.

In his foreward he explains, "As I completed my research for this book in the early months of 2008, it was already a distinct possibility that the US economy might suffer a recession. Was this because American companies had gotten worse at designing new products? Had the pace of technological innovation suddenly slackened? No. The proximate cause of the economic uncertainty of 2008 was financial: to be precise, a spasm in the credit markets caused by mounting defaults on a species of debt known euphemistically as subprime mortgages." He provides entertaining (yet scary) observations of the "ubiquity and proximity of both easy credit and easy bankruptcy" in the US.

The book is divided into money and banking, bond and stock markets, insurance, and property. It is highly readable and would be a great substitute to the dry tomes that are often used in secondary and post-secondary economics and finance classes (the accompanying DVD would make another great teaching aid). Ferguson makes a strong argument for his central thesis: "the ascent of money has been essential to the ascent of man" and that we humans are largely woefully ignorant of finance. And he does this through entertaining tales of our economic history, by bringing clarity to the complex, and by sharing a laugh with us in terms of our economic foibles that are tied more to our humanity than to our financial acumen.

Ferguson call financial markets "the mirror of mankind", and as such, the entire financial system is so complex that he describes it as "non-linear, even chaotic." The book is valuable because it brings a bit of order to that chaos or at least an opportunity for greater understanding.

a great read for anyone in the financial services industry or with an interest in history.