karl's Reviews > The Ascent of Money: A Financial History of the World

The Ascent of Money by Niall Ferguson
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M_50x66
's review
Mar 26, 09

Recommended for: Econ faculty to add to their syllabus as recommended reading
Read in March, 2009

Solid research (lots of footnotes), almost too much detailed stats at some points, and excellent writing (e.g., short sentences) are the strength of this book. It reads similar to a somewhat disparate collage of econ/finance/policy articles from the Economist, or the New Yorker, or Times. That takes a star off for me. There might be a lot of attention to Long Term Capital, Hurricane Katrina, professor DeSoto's work in Peru and South America, British landowners in the 1800's, and the poor in Detroit or Memphis (subprime mortgages). But I kept thinking "wow, this is interesting, but why is he focusing so much on this topic which may not have segued well from 2 prior topics?"

Very loosely this "ascent of money" starts about 500 years ago in his book (with bulk of pages covering the last 20 years): money leads to banks, eventually you get to governments issuing bonds, then private firms issue stock, then risk is shared with advent of insurance companies, then futures and options, and unwarranted tilt to highly levered investments in real estate.

Couple of things he made clearer: "Chimerica" (linkage of China the maker and lender with US the buyer and borrower... and he speculates the next great war possibly could be between these 2!); that LTCM's demise was they bet wrong on an increase in stock volatility in 1998 having sold ton of options; "NINJA" were the poor folks who were the predominant borrowers using subprime mortages (no income, no jobs and no assets), and folks well trained in financial history have seen lots of Black Swans!
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