a book about the financial history of the world

ascent of money1the ascent of money (2008) by british historian niall ferguson was published as the economies of the western world was unraveling in what came to be known as the “great recession” \ describes financial instruments & innovations from the simple clay tablets of mesopotamia <not a promissory note but a statement that bearer will pay X goods at a specified time> to the complex derivatives of today <i still don’t have an understanding of it>

we typically think of “innovation” as those emanating from the fields of science, technology and the creative fields / the book describes the innovations in finance <money|currency ->  loans|credit ->  bonds -> insurance -> stocks -> derivatives | hedge funds -> increasingly complex financial instruments>   against the backdrop around which these innovations came to be <spice trade, empire building, wars, calvinism, rise of the welfare state, risk management, the principles of statistics  (yeah!), democratized home ownership, globalization>

even without an economic crisis and more importantly, because we can likely expect to experience at least one more in our lifetime, this book is worth reading / but perhaps after first understanding “everyday” financial facts such as compound interest | how inflation impacts your take home pay or your savings <if you have one> | your credit card’s interest rate <& why you should pay off your monthly credit card bill> | the pros & cons of ARM vs. fixed rate | when to place a large or small down payment for a car | 3-year or 5-year loan? | mutual fund or demand deposit account? | rent or own a home? | etc

it is ironic that most of us are not equipped with the knowledge needed to make sound decisions about our hard-earned money / it is important to have such knowledge because how we handle our finances has an impact on our lives in the short- & long-term \ and for some of us, it impacts not just us individually but also those who depend on us such as our children

now more than ever knowledge is power & we have the tool – the internet – to gather information that can help us make sound financial decisions \ the great recession was the result of many factors that are woven in complexity that ordinary consumers would have difficulty comprehending, much less understanding how they were players in it  /  just as science, technology, art & music over the past hundred years have had a profound impact on our lives, so has the financial system \ a basic knowledge of finance and its history is almost imperative in this age / this book was written by a historian <rather than an economist> which makes it more readable & easier to understand

*very interesting:  the afterword shows the evolution parallels between the natural & financial worlds, p. 352 in the paperback edition

 

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