Book review Economics Finance Recommended Read

Book Review | The Ascent of Money

‘The Ascent of Money’ is a scintillating journey tracking the evolution of money from the erstwhile Babylonian clay tablets to the exotic financial instruments of modern day.

A tale of human frailties that have often proved pivotal to the ascension and the decline of money over the ages, ‘The Ascent of Money’ is a roller-coaster journey into the annals of finance. Further,

The charm of history and its enigmatic lessons consist in the fact that from age to age, nothing changes and yet everything is completely different.

Aldous Huxley

Ferguson notes in the foreword,Behind each great historical phenomenon, there lies a financial secret.

He kicks off the proceedings explaining the embryonic role of money in the Roman society.

Subsequently, he offers crisp explanations of key financial concepts such as Cash reserves, Money supply, Credit creation, fractional reserve banking, Gold standard (whom Keynes dismissed as a barbarous relic), etc.

The evolution of the bond market, in the words of Ferguson, was a radical move in the evolution of finance.

The ability to fund a war through a market for Government debt gave rise to war bonds. Where many nations favored war bonds, the irresistible temptation to depend on them led economies such as Italy and France into a financial quagmire.

The booming bond market of England in the 18th century turned bonds into an attractive proposition worldwide. The same boom also witnessed a certain Nathan Rothschild play an instrumental role in Napoleon’s defeat in the battle of Waterloo.

It was Rothschild, who sold bonds in different countries and stockpiled Gold for the British army that ultimately resulted in Napoleon’s rout.

Peppered with such historical facts, ‘The Ascent of Money’ segues from one topic into next with mathematical neatness, stoking up reader’s interest in anticipation of seemingly uncovered historical facts.

Ferguson underlines three central factors in the creation of market bubbles:

  • Information Asymmetry,
  • Cross-border flow of capital and
  • Easy credit creation.

He illustrates the ills of stock market by typifying John Law, the creator of the first ever market bubble.

The history of financial institutions such as Fannie Mae and Freddie Mac is also well explained in the book.

Ferguson decipher linkages between the Great Depression and the 2008 financial crisis. He calls into question the role of credit-rating agencies which abetted the 2008 crisis.

These agencies obfuscated the toxic nature of various exotic instruments such as CDOs and Credit default swaps.

Ferguson also sheds light on the long-existing paradox of capitalism in America. He remarks:

The world’s most successful capitalist economy seems to be built upon foundations of easy economic failure.

Niall Ferguson

Evidently, each US citizen has an unalienable right to declare themselves bankrupt and seek a legal recourse to reorganization/liquidation of the debt.

The author also captures the momentum shift that is taking place from America as the central hub of Finance to the joint China-America entity often called Chimerica.

However, the content fails to do justice to what could have been an interesting subject. Seemingly, Ferguson has scraped together a motley collection of prevailing topics and composed the final chapter of the book.


In my view, the book could have been better off sans the hotchpotch of the final chapter. So you have everything from the rising Chinese capitalism to the human epitome of capitalism, George Soros to tidbits of Behavioral finance.

That said, one can safely skip the final chapter at the expense of losing out on some general and easily available information.

Finally, Niall Ferguson’s ‘The Ascent of Money’ despite some obvious shortcomings toward the end, successfully unwraps several of the lesser-known financial facts of the world.

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