Ridiculously prolific historian Niall Ferguson recently (May 2008) penned a fascinating history of money and financial services that goes a long way toward explaining the current state of financial affairs. The Ascent of Money traces the origins of theuse of coinage and other proxies forvalue, the first banks and stock exchanges, insurance schemes (both governmental and private), and other mechanisms such as work houses and social service agencies. Such structures, the author shows, were essential to the development of modern nations and now drive our governments in ways brokers in seventeenth-century Amsterdam could never imagine.
In describing the New York Stock Exchange, the Federal Reserveand the modernlives of corporate stocks, Ferguson outlines the case of Enron, Kenneth Lay's attempt to make "gold out of gas." Greed and the failure of oversight agencies combined to cause devastating effects on nearly everyone except those who were responsible for them.The development of insurance begins with the Scottish Minister's Widows Fund, with images of a balance sheet and amortization table showing how payments would be made, to the utter failure of modern flood insuranceto assist the citizens ofNew Orleans following Hurricane Katrina.
After those less-than uplifting stories, Ferguson moves on to the cautionary tales of the mortgageindustry collapse and the globalization of financial markets. Now market upsets in South America can affect every other stock exchange in the world instead of being barely newsworthy in thenorthern hemisphere! Ferguson explains the roles of the International Monetary Fund, the World Bank, and other such institutions and how they help and hinder individual states' financial health.
While all this maysound dauntingly complex or sleep-inducing, Ferguson's writing style and inclusion of examples from popular culture (Mary Poppins, It's a Wonderful Life) and the stories of real people from bankers to economic hit-men that keep thenarrative engaging. Ferguson has written previously on the American and British Empires, the relationship of money and power in the modern world, the Rothschilds, and World War I.