Ryan's Reviews > Money, Markets, and Sovereignty

Money, Markets, and Sovereignty by Benn Steil
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's review
Jun 12, 2009

really liked it
bookshelves: money-and-banking
Read in August, 2009

Money, Markets, and Sovereignty provides a sound philosophical basis for the relationship between globalization and the gold standard (or private money). Secondarily, it effectively characterizes the anti-globalization movement as an unoriginal reactionary movement which has reasserted itself in conjunction with every trade liberalization despite unending evidence demonstrating the mutual gains from trade. From a contemporary standpoint, the authors conclude that globalization is wholly incompatible with any nation maintaining sovereignty over their money (inflation, exchange rates, interest rates, etc) and that the lack of a gold standard to keep governments in check results in global instability.

This book is unfortunately very unconvincing if you do not already share the authors' point of view (although I do). The introductory chapters are extremely philosophical in nature and insist on both the Ancient Greek philosophy of Stoicism and a self-evident basis for Natural Law, neither of which is (or should be) the least bit conclusive for either anti-globalizers or mainstream/leftist economists. The authors then take this to argue that free trade across borders is an inalienable right in the same way free speech is, which not many people are really going to agree with.

There were a few frustrating issues in the text as well-

-The graphs of regression models they present in later chapters are just bad statistics. Not only are they simple regression; they are bad simple regression. For anyone out there who has taken stats, the heteroskedacity was blindingly obvious.
-Keynesian Economics was never properly addressed. The authors acknowledge the problem with the liquidity trap and sticky prices, state there is no evidence that this was a problem in the late 19th/early 20th recessions, and go on to ignore it without attacking it at a theoretical level. That simply isn't a way to appeal to mainstream economists unless the authors want to appear to be ideologues.
-The authors overstated the degree to which the West was on the gold standard before WWI. All banks, especially those in the US, were regulated and could disrupt capital/specie/gold flows in the same fashion as they are today.

...Among other problems. I did not mark all the pages I should have when reading.


I still like this book. In fact, I like it a lot. It's simple to find yet another right-economics book lambasting the Fed, but this one comes from a completely unexpected direction: what amounts to highly theoretical and philosophical international finance. It gives the reader all sorts of tidbits of monetary interest (pun not intended) while the authors continue with the broad arc of their theses.

I also should note that Benn Steil works for the CFR, an organization which any paranoid populist will quickly label as part of the grand international conspiracy and will not see it as anything but corrupting propaganda no matter what you say.
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