The Ascent of Money Quotes

“The ascent of money has been essential to the ascent of man.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World

“there really is no such thing as ‘the future’, singular. There are only multiple, unforeseeable futures, which will never lose their capacity to take us by surprise.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“perennial truths of financial history. Sooner or later every bubble bursts. Sooner or later the bearish sellers outnumber the bullish buyers. Sooner or later greed turns to fear.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“money is a matter of belief, even faith: belief in the person paying us; belief in the person issuing the money he uses or the institution that honours his cheques or transfers. Money is not metal. It is trust inscribed. And it does not seem to matter much where it is inscribed: on silver, on clay, on paper, on a liquid crystal display.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“Money, it is conventional to argue, is a medium of exchange, which has the advantage of eliminating inefficiencies of barter; a unit of account, which facilitates valuation and calculation; and a store of value, which allows economic transactions to be conducted over long periods as well as geographical distances. To perform all these functions optimally, money has to be available, affordable, durable, fungible, portable and reliable.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“poverty is not the result of rapacious financiers exploiting the poor. It has much more to do with the lack of financial institutions, with the absence of banks, not their presence. Only when borrowers have access to efficient credit networks can they escape from the clutches of loan sharks, and only when savers can deposit their money in reliable banks can it be channelled from the idle rich to the industrious poor.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“The liabilities of the bank thus became its deposits (on which it paid interest) plus its reserve (on which it could collect no interest); its assets became its loans (on which it could collect interest).”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter,’ he told the Wall Street Journal. ‘But now I want to come back as the bond market. You can intimidate everybody.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World

“bear in mind when trying to compare housing with other forms of capital asset. The first is depreciation. Stocks do not wear out and require new roofs; houses do. The second is liquidity. As assets, houses are a great deal more expensive to convert into cash than stocks. The third is volatility.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“Large numbers of under-capitalized banks were a recipe for financial instability, and panics were a regular feature of American economic life - most spectacularly in the Great Depression, when a major banking crisis was exacerbated rather than mitigated by a monetary authority that had been operational for little more than fifteen years.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“Although the court recognizes his right to insist on his bond - to claim his pound of flesh - the law also prohibits him from shedding Antonio’s blood.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“There may be a lesson here for our time, too. The first era of financial globalization took at least a generation to achieve. But it was blown apart in a matter of days. And it would take more than two generations to repair the damage done by the guns of August 1914.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“It is not the fault of the mirror if it reflects our blemishes as clearly as our beauty.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“Banknotes (which originated in seventh-century China) are pieces of paper which have next to no intrinsic worth. They are simply promises to pay (hence their original Western designation as ‘promissory notes’),”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“From the summer of 1719 investors who wished to acquire the ‘daughters’ and ‘granddaughters’ were generously assisted by the Banque Royale, which allowed shareholders to borrow money, using their shares as collateral; money they could then invest in more shares.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“In 1947 the total value added by the financial sector to US gross domestic product was 2.3 per cent; by 2007 its contribution had risen to 8.1 per cent of GDP. In other words, approximately $1 of every $13 paid to employees in the United States now went to people working in finance.5 Finance had become even more important in Britain, where it accounted for 9.4 per cent of GDP in 2006.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“Few things are harder to predict accurately than the timing and magnitude of financial crises, because the financial system is so genuinely complex and so many of the relationships within it are non-linear, even chaotic.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World

“Very few economists foresaw the crisis, but a great many have tried retrospectively to explain it, generating a large literature of distinctly mixed quality.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“The first is that poverty is not the result of rapacious financiers exploiting the poor. It has much more to do with the lack of financial institutions, with the absence of banks, not their presence.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“however, the round trip was a very long one (fourteen months was in fact well below the average). It was also hazardous: of twenty-two ships that set sail in 1598, only a dozen returned safely. For these reasons, it made sense for merchants to pool their resources. By 1600 there were around six fledgling East India companies operating out of the major Dutch ports. However, in each case the entities had a limited term that was specified in advance – usually the expected duration of a voyage – after which the capital was repaid to investors.10 This business model could not suffice to build the permanent bases and fortifications that were clearly necessary if the Portuguese and their Spanish allies* were to be supplanted. Actuated as much by strategic calculations as by the profit motive, the Dutch States-General, the parliament of the United Provinces, therefore proposed to merge the existing companies into a single entity. The result was the United East India Company – the Vereenigde Nederlandsche Geoctroyeerde Oostindische Compagnie (United Dutch Chartered East India Company, or VOC for short), formally chartered in 1602 to enjoy a monopoly on all Dutch trade east of the Cape of Good Hope and west of the Straits of Magellan.11 The structure of the VOC was novel in a number of respects. True, like its predecessors, it was supposed to last for a fixed period, in this case twenty-one years; indeed, Article 7 of its charter stated that investors would be entitled to withdraw their money at the end of just ten years, when the first general balance was drawn up. But the scale of the enterprise was unprecedented. Subscription to the Company’s capital was open to all residents of the United Provinces and the charter set no upper limit on how much might be raised. Merchants, artisans and even servants rushed to acquire shares; in Amsterdam alone there were 1,143 subscribers, only eighty of whom invested more than 10,000 guilders, and 445 of whom invested less than 1,000. The amount raised, 6.45 million guilders, made the VOC much the biggest corporation of the era. The capital of its English rival, the East India Company, founded two years earlier, was just £68,373 – around 820,000 guilders – shared between a mere 219 subscribers.12 Because the VOC was a government-sponsored enterprise, every effort was made to overcome the rivalry between the different provinces (and particularly between Holland, the richest province, and Zeeland). The capital of the Company was divided (albeit unequally) between six regional chambers (Amsterdam, Zeeland, Enkhuizen, Delft, Hoorn and Rotterdam). The seventy directors (bewindhebbers), who were each substantial investors, were also distributed between these chambers. One of their roles was to appoint seventeen people to act as the Heeren XVII – the Seventeen Lords – as a kind of company board. Although Amsterdam accounted for 57.4 per cent of the VOC’s total capital, it nominated only eight out of the Seventeen Lords.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World

“the Dutch had improved on the Italian system of public debt (introducing, among other things, lottery loans which allowed people to gamble as they invested their savings in government debt). They had also reformed their currency by creating what was arguably the world’s first central bank, the Amsterdam Exchange Bank (Wisselbank), which solved the problem of debased coinage by creating a reliable form of bank money (see Chapter 1). But perhaps the single greatest Dutch invention of all was the joint-stock company.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World

“It nevertheless remains true that, in most countries for which long-run data are available, stocks have out-performed bonds – by a factor of roughly five over the twentieth century.9 This can scarcely surprise us. Bonds, as we saw in Chapter 2, are no more than promises by governments to pay interest and ultimately repay principal over a specified period of time. Either through default or through currency depreciation, many governments have failed to honour those promises. By contrast, a share is a portion of the capital of a profit-making corporation. If the company succeeds in its undertakings, there will not only be dividends, but also a significant probability of capital appreciation. There are of course risks, too. The returns on stocks are less predictable and more volatile than the returns on bonds and bills. There is a significantly higher probability that the average corporation will go bankrupt and cease to exist than that the average sovereign state will disappear. In the event of a corporate bankruptcy, the holders of bonds and other forms of debt will be satisfied first; the equity holders may end up with nothing. For these reasons, economists see the superior returns on stocks as capturing an ‘equity risk premium’ – though clearly in some cases this has been a risk well worth taking.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World

“It nevertheless remains true that, in most countries for which long-run data are available, stocks have out-performed bonds – by a factor of roughly five over the twentieth century.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World

“The performance of the American stock market is perhaps best measured by comparing the total returns on stocks, assuming the reinvestment of all dividends, with the total returns on other financial assets such as government bonds and commercial or Treasury bills, the last of which can be taken as a proxy for any short-term instrument like a money market fund or a demand deposit at a bank. The start date, 1964, is the year of the author’s birth. It will immediately be apparent that if my parents had been able to invest even a modest sum in the US stock market at that date, and to continue reinvesting the dividends they earned each year, they would have been able to increase their initial investment by a factor of nearly seventy by 2007. For example, $10,000 would have become $700,000. The alternatives of bonds or bills would have done less well. A US bond fund would have gone up by a factor of under 23; a portfolio of bills by a factor of just 12. Needless to say, such figures must be adjusted downwards to take account of the cost of living, which has risen by a factor of nearly seven in my lifetime. In real terms, stocks increased by a factor of 10.3; bonds by a factor of 3.4; bills by a factor of 1.8.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World

“And, as inflation has fallen, so bonds have rallied in what has been one of the great bond bull markets of modern history. Even more remarkably, despite the spectacular Argentine default – not to mention Russia’s in 1998 – the spreads on emerging market bonds have trended steadily downwards, reaching lows in early 2007 that had not been seen since before the First World War, implying an almost unshakeable confidence in the economic future. Rumours of the death of Mr Bond have clearly proved to be exaggerated. Inflation has come down partly because many of the items we buy, from clothes to computers, have got cheaper as a result of technological innovation and the relocation of production to low-wage economies in Asia. It has also been reduced because of a worldwide transformation in monetary policy, which began with the monetarist-inspired increases in short-term rates implemented by the Bank of England and the Federal Reserve in the late 1970s and early 1980s, and continued with the spread of central bank independence and explicit targets in the 1990s. Just as importantly, as the Argentine case shows, some of the structural drivers of inflation have also weakened. Trade unions have become less powerful. Loss-making state industries have been privatized. But, perhaps most importantly of all, the social constituency with an interest in positive real returns on bonds has grown. In the developed world a rising share of wealth is held in the form of private pension funds and other savings institutions that are required, or at least expected, to hold a high proportion of their assets in the form of government bonds and other fixed income securities. In 2007 a survey of pension funds in eleven major economies revealed that bonds accounted for more than a quarter of their assets, substantially lower than in past decades, but still a substantial share.71 With every passing year, the proportion of the population living off the income from such funds goes up, as the share of retirees increases.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World

“Inflation’, wrote Milton Friedman in a famous definition, ‘is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“A society that expects most individuals to take responsibility for the management of their own expenditure and income after tax, that expects most adults to own their own homes and that leaves it to the individual to determine how much to save for retirement and whether or not to take out health insurance, is surely storing up trouble for the future by leaving its citizens so ill-equipped to make wise financial decisions.”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“Bread, cash, dosh, dough, loot, lucre, moolah, readies, the where-withal: call it what you like, money matters. To Christians, the love of it is the root of all evil. To generals, it is the sinews of war; to revolutionaries, the shackles of labour. But what exactly is money? Is it a mountain of silver, as the Spanish conquistadors thought? Or will mere clay tablets and printed paper suffice? How did we”
― Niall Ferguson, The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

“se podía incluir a Rothschild en la misma categoría de Richelieu y Robespierre como uno de los «tres terroríficos nombres que conjuran la gradual aniquilación de la vieja aristocracia». Richelieu había destruido su poder; Robespierre había decapitado sus restos decadentes, y ahora Rothschild proporcionaba a Europa una nueva élite social”
― Ferguson Niall, El triunfo del dinero

“Ricos y pobres, parece que los estadounidenses ven la bancarrota como un «derecho inalienable», casi en igualdad de condiciones con «la vida, la libertad y la búsqueda de la felicidad».”
― Ferguson Niall, El triunfo del dinero