(Book) The Ascent of Money written by Niall Ferguson

The first thing that flashed through my mind as I started reading this was – this book has got extraordinary timing. Coming on the heels of one of the most severe market contraction seen since the Great Depression, this book aims to clear the air with a very interesting history lesson.

At a time when people are flummoxed by CDOs, swaps and other exotic financial products that seem to be beyond most of our understanding (which is why it hurt even more!!!), this book provides a background to how it all began – in other words, the evolution of the bank, the bond market, the equity and finally to the present system of high finance. From Mesopotamia to the republic nation states of Italy to present day Chimerica.

Evolution and innovation in finance has paved the way for the extraordinary abundance of goods we see around us and indeed without the advance in finance, civilization would not have progressed the way it has. That is the core message of the book.

We are taken on an adventure trip in history and see how important events that shaped the world as it is today were influenced by changes in financial fortunes – among others, from the French revolution, to the American civil war, Dutch East Indies, East India company, Waterloo, America’s rise and the Great War (WWI).

Its a fascinating view since seldom do we consider finance to be an important factors in political developments of the past, preferring to look at cause and effect of events. We realize how finance (and financiers) act as a powerful background force and which we seldom get to appreciate as finance is considered by laymen to be esoteric at best and not a relevant force as worst.

This book aims both to give a historical understanding of how ancient  Mesopotamia is linked through millennia with the sub-prime crisis of the present century and to help us appreciate the central role that finance plays in our lives – paradoxically as with its rising importance in our lives, its understanding has stagnated among the public, with finance considered the domain of whiz kids.

As I said, the book is timely – a reminder that we disregard the understanding of finance at our own peril.

But other than the message that the book aims to send out – this is a rollicking ride. Written with clarity and with the layman in mind, the book is fast paced, almost like a thriller, with events of past unfolding like picture flip-book, with the events shown in a different light than the usual history lessons. Of course, there are numerous other events that could have been covered but in order to remain focussed, the book takes care of some pivotal events.

I cannot imagine a more accessible book on finance in the market right now.

I cannot find a better way to end this review than by quoting the last words of the book itself -

“It is not the fault of the mirror if it reflects our blemishes as clearly as our beauty”

Finance, like the nuclear energy, depends on the wielder – a sub-prime crisis and the ability to buy your dream home are the two sides of the same balance sheet…

Labels: Books, economics, finance, history

posted by Protik Basu @ 12:18 PM