The Ascent of Money by Niall Ferguson

Niall Ferguson follows the money to tell the human story behind the evolution of finance, from its origins in ancient Mesopotamia to the latest upheavals on what he calls Planet Finance.Bread, cash, dosh, dough, loot, lucre, moolah, readies, the wherewithal: 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 labor. 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 backstory behind all history.Through Ferguson's expert lens familiar historical landmarks appear in a new and sharper financial focus. Suddenly, the civilization of the Renaissance looks very different: a boom in the market for art and architecture made possible when Italian bankers adopted Arabic mathematics. The rise of the Dutch republic is reinterpreted as the triumph of the world's first modern bond market over insolvent Habsburg absolutism. And the origins of the French Revolution are traced back to a stock market bubble caused by a convicted Scot murderer.With the clarity and verve for which he is known, Ferguson elucidates key financial institutions and concepts by showing where they came from. What is money? What do banks do? What's the difference between a stock and a bond? Why buy insurance or real estate? And what exactly does a hedge fund do?This is history for the present. Ferguson travels to post-Katrina New Orleans to ask why the free market can't provide adequate protection against catastrophe. He delves into the origins of the subprime mortgage crisis.Perhaps most important, The Ascent of Money documents how a new financial revolution is propelling the world's biggest countries, India and China, from poverty to wealth in the space of a single generation—an economic transformation unprecedented in human history.Yet the central 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.

Interesting history of finance - pretty pertinent stuff...

Neither dense enough to be an actual ‘history of the world' level work, but neither light enough that you can dismiss it out of hand.

This book's fundamental argument is that poverty is not due to rapacious investors always on the hunt for more money to line their pockets, but instead due to a lack of such investors and institutions. Pretty bold argument, I have to admit. How does Mr. Ferguson back it up?

TL;DR, he doesn't. He mentions an isolated tribe in South America that is used to subsistence farming and hunting-gathering, and when they roamed out to make contact with the ‘civilized' world for the first time in history, they became a tribe of beggars. I failed to realize how this argument of money creation made any sense, and it is passages like these which frustrated me immensely, which do not make any sense even in context.

This argument is never directly (or indirectly) answered in what was supposed to be a ‘complete history' of the financial world. In my opinion, the title is very misleading - the book is simply an elaborate history of the biggest bubbles and bursts of the financial world - including the Spanish defeat of the Mayan empires causing a crash in gold/silver prices in the 16th and 17th centuries, the Latin American defaults of the 19th and 20th centuries, the Great Depression of 1929, and the so-called ‘second depression' of 2007-08. Mr. Ferguson credits the existence of institutions such as hedge funds and the Federal Reserve (US) for exacerbating such crises, which doesn't necessarily help his argument of the existence of such vast amounts of virtual layers of money somehow helping the common man's survival. In the course of describing such crises, he writes up the only good parts of the book - where you can actually see the modern-day forms of bonds, equities, hedge funds and insurance claims being formed.

Above all, you are supposed to learn something new from a book which totes itself as a history book. The only things one can take away from the book is that property is not a risk-free investment, you should have a diversified portfolio in order to make more money, saving/spending in excess is bad, and that the stock market runs on human whims, so never take it too seriously. All of which I already knew.