Will Byrnes's Reviews > Lords of Finance: The Bankers Who Broke the World

Lords of Finance by Liaquat Ahamed
Rate this book
Clear rating

by
1526851
's review
Jan 29, 2010

really liked it
bookshelves: non-fiction, economics
Read in January, 2010

Ahamed has written a fascinating account of how four central bankers were at the core of the economic madness that gripped the world after World War I and led to the second great war.

The personalities are interesting, and the scent of the times wafts from the pages sufficient to sting the nostrils. This is a book written for a popular audience. No great knowledge of economics is required. But that sure would help. It is not only our elected officials, Wall Street brokers and government officials who are ignorant of the rules of economics. I, and surely many of you are as well.

For me, it is a sort of blockage, like being able to read music. I taught myself to play the guitar at age 15, not well, but at all, and played for some years thereafter, writing a few songs, even performing on stage a few times, but I was never able to learn to read music. I tried several times, but was never able to get past a crude identification of the difference between whole, half and quarter notes. In the same way, whenever I have tried to crack the code that is economics, the result was intellectual cacophony. As that pertains here, while the story is fascinating, and the wealth of information proffered expands our knowledge of the times, one can only grasp a percentage of what is offered if one is economically tone deaf. I just do not get how a currency can be based upon the presence of gold or any other substance for that matter. Why not seashells or jelly beans? As a considerable portion of the book focuses on the ramifications of the gold standard, my intellectual economic disability severely reduces the understanding I can gain here. If you get the gold standard and are comfortable with discussions of macro economics, this will be mother’s milk for you. Great stuff. For the rest of us, it is a fascinating look at a tumultuous period with color portraits of some of the central players in the world economy.

Ahamed appears to be blaming the four economic titans on which he focuses for the ensuing economic and military maelstrom. But what should they have done, what could they have done, had the power to do, differently that would have changed the outcome? To lay blame at their door seems a convenient way to personalize blame for undercurrents that are all too widespread in humanity, short-sidedness, greed, mean-spiritedness, and downright stupidity. OK, wise guy, what should they have done? Yes, people, individuals, particularly powerful, influential individuals matter. But history is not just a series of he did this and she did that. There are currents to history that flow, regardless of how large the fish may be that inhabit the waters. The economic miseries of today are not merely a product of the madness of King Dubyah. The latter reflects the former and not the other way around.

One reason to read this book is to see how our current fiscal crisis might resemble those of the past. And indeed it does. Perhaps the mis-steps that were taken might be avoided today if we are to learn from history. But if there is one thing that we learn from history it is that people rarely, if ever, learn from history. It is an easy and interesting read. Whatever the conclusions the author may draw from his story, and whatever the cranial incapacities of an individual reader, the story itself is quite intriguing.
22 likes · flag

Sign into Goodreads to see if any of your friends have read Lords of Finance.
Sign In »

Reading Progress

03/20/2016 marked as: read

Comments (showing 1-25 of 25) (25 new)

dateDown arrow    newest »

message 1: by Caroline (last edited Apr 15, 2013 11:40PM) (new)

Caroline A brilliant review!

I too am blind to the machinations of economics. Only yesterday I was at the library thumbing throughThe Economics Book: Big Ideas Simply Explained, published by Dorling Kindersley. It had their usual eye-candy combo of pictures and diagrams and not-too-daunting slivers of writing. But what a joke. Economics sadly cannot be tamed in this way.

I also really liked what you said: There are currents to history that flow, regardless of how large the fish may be that inhabit the waters. Yes indeed.

And I totally agree that we seldom learn from history :-(


Will Byrnes Thanks C, Econ is not obvious to many of us. Paul Krugman does much better than most at explaining things.


message 3: by Caroline (new)

Caroline Thanks Will, have made a note of that.


message 4: by Dolors (new)

Dolors Cunning review Will.
And I can assure you that working in auditing in a Spanish bank nowadays it's the closest to a nightmare. Sometimes it's better not to know too much, or you'd never be able to sleep...


Will Byrnes It is said that there are lies, damned lies and then there are statistics. I expect the same holds for banking. There are thieves, there are damned thieves and then there are bankers. (George Bailey excepted, of course)


message 6: by Dolors (new)

Dolors Will wrote: "It is said that there are lies, damned lies and then there are statistics. I expect the same holds for banking. There are thieves, there are damned thieves and then there are bankers. (George Baile..."

Amen.


message 7: by Steve (new)

Steve "But if there is one thing that we learn from history it is that people rarely, if ever, learn from history."

Do you mind if I quote you on that, Will? It's a great combination of pithy, original and correct.

I suspect it's also true to say that we learn little from economics.


Will Byrnes Be my guest, although I am sure someone came up with it before me.

As for not learning from economics, I disagree. There are some who have indeed learned from the study of economics. See Paul Krugman as exhibit #1. Obama was well aware of the need for large stimulus and even managed to get some through. Unfortunately, it appears that many of the people in charge of our economies have not learned the same lessons, or for those who have they are blocked from implementing sane policies by those who maintain a maddening degree of ignorance.


message 9: by Traveller (last edited Apr 16, 2013 11:09AM) (new)

Traveller I just do not get how a currency can be based upon the presence of gold or any other substance for that matter. Why not seashells or jelly beans? ..."

Well, they need something as a base, and gold was the traditional global currency to trade with, so they simply carried on using it. ...but it could just as well have been seashells; - however, gold was something that was considered 'precious' through the ages. Besides, gold does have some commercial and industrial value-- more so than sea shells. ;) :P.

..and jelly beans are bad for your teeth.


message 10: by Steve (new)

Steve My point about economics was meant to be tongue-in-cheek, but I will say that my years spent in grad school studying it taught me that there's a certain amount of squishiness to any social science and the attempts made in academics to add rigor through mathematical models often take more away in intuition than they add in certainty.


message 11: by Traveller (new)

Traveller Steve wrote: "My point about economics was meant to be tongue-in-cheek, but I will say that my years spent in grad school studying it taught me that there's a certain amount of squishiness to any social science ..."

Ha, yes, all those models. 'Specially the Keynesian one...


message 12: by Will (new) - rated it 4 stars

Will Byrnes I think Reagan's economic policies were based on jelly beans.


message 13: by Traveller (new)

Traveller LOL.
Of course, sea shells were used as currency in many places in the world..-I assume that's why you mentioned them... Africa, ancient China, some Polynesian islands,(IIRC) etc.

..and the jelly beans--is that what you used as currency when you were kids? <_<


message 14: by Will (new) - rated it 4 stars

Will Byrnes Traveller wrote: "LOL.
Of course, sea shells were used as currency in many places in the world..-I assume that's why you mentioned them... Africa, ancient China, some Polynesian islands,(IIRC) etc.

..and the jelly..."


Like I said,

and yes, I was aware of cowreconomy


message 15: by Moira (new)

Moira Russell Will wrote: "I think Reagan's economic policies were based on jelly beans."

And his foreign policies as well.


message 16: by Will (new) - rated it 4 stars

Will Byrnes Duck eggs


message 17: by Jeffrey (new)

Jeffrey Keeten Good lord our last president before the current president bragged about not reading. Hard to learn from history if one refuses to pick up say a history book. I actually think this book would be a good fit for me Will. I'm interested in finance and history. Great review Will!


message 18: by Traveller (last edited Apr 17, 2013 12:55PM) (new)

Traveller Will wrote: "and yes, I was aware of cowreconomy..."

Ah, yes, now I remember the name of the shells--Cowry shells, of course. Your memory is sharper than mine. :)


message 19: by Will (new) - rated it 4 stars

Will Byrnes Or my google skills. Only my keyboard knows for sure.

Well, definitely my google skills. My memory completely sucks.


Kelly H. (Maybedog) Did this book bring these ideas/concerns/terrors forward to fit modern day society at all?


message 21: by Will (new) - rated it 4 stars

Will Byrnes The implications of so much power invested in the decisions of so few people has obvious implications for today's world economy.


Kelly H. (Maybedog) Well duh. :) I was just wondering if he made any correlations outright or if the reader has to make the inference.


message 23: by Will (last edited Apr 22, 2013 05:05PM) (new) - rated it 4 stars

Will Byrnes Here is a quote from the book:
P 500
As with all analogies, the comparisons are never exact. Nevertheless, they illustrate the scale of the economic whirlwind of 1929—32—a crisis equivalent in scope to the combined effects and more of the 1994 Mexican peso crisis, the 1997-98 Asian and Russian crises, the 2000 collapse in the stock market bubble, and the 2007/8 world financial crisis, all cascading upon one and other in a single concentrated two-year period. The world has been saved in part from anything approaching the Great Depression because the crises that have buffeted the world economy over the past decade have conveniently struck one by one, with decent intervals in between.

For may years people believed—even today many continue to do so—that an economic cataclysm of the magnitude of the Great Depression could only have been the result of mysterious and inexorable tectonic forces that governments were somehow powerless to resist. Contemporaries frequently described the Depression as an economic earthquake, blizzard, maelstrom, deluge. All these metaphors suggested a world confronting a natural disaster for which no single individual or group could be blamed. To the contrary, in this book I maintain that the Great Depression was not some act of God or the result of some deep-rooted contradictions of capitalism but the direct result of a series of misjudgments by economic policy makers, some made back in the 1920s, others after the first crises set in—by any measure the most dramatic sequence of collective blunders ever made by financial officials.
He goes on to blame the insistence on WW I losers being heavily burdened with reparations debt, and the specific decisions of the bankers about which he writes. I do not happen to agree with his conclusions, but he thinks that a proper understanding of how things really work (and we all know that economists agree about that) would have prevented the Great Depression, and by implication will prevent another event of that scope. As for the recent economic woes, he clearly views those as not being of GD dimensions, given the above. So, he is looking at what he sees as a picture on a larger scale than the current crisis, and does not (as far as I recall from reading this three years ago) make a specific case regarding the 2007/8 eco crisis here. Someone who read it more recently than I, or who took better notes, might be better able to answer that question definitively. Hope that helps.


Kelly H. (Maybedog) That helps a lot. It's very interesting. Thank you!


Bobk71 Has anyone thought about why it should require an expert's knowledge to select a leader to take care of the most important issue of our lives (the economy?) It's sad but true that a monetary system designed for the benefit of bankers is probably too complex for democracy really to work.


back to top