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Summary
Summary
Winner of the Spear's Best Business Book Award
Longlisted for the 2012 Financial Times and Goldman Sachs Business Book of the Year Award
For the past forty years western economies have splurged on debt. Now, as the reality dawns that many debts cannot be repaid, we find ourselves again in crisis. But the oncoming defaults have a time-worn place in our economic history. As with the crises in the 1930s and 1970s, governments will fall, currencies will lose their value, and new systems will emerge. Just as Britain set the terms of the international system in the nineteenth century, and America in the twentieth century, a new system will be set by today's creditors in China and the Middle East. In the process, rich will be pitted against poor, young against old, public sector workers against taxpayers and one country against another.
In Paper Promises , Economist columnist Philip Coggan helps us to understand the origins of this mess and how it will affect the new global economy by explaining how our attitudes towards debt have changed throughout history, and how they may be about to change again.
Author Notes
Philip Coggan is the Buttonwood columnist of the Economist . Previously, he worked for the Financial Times for twenty years, most recently as investment editor. Among his books are The Money Machine , a guide to the city of London that is still in print in the UK after twenty-five years, and The Economist Guide to Hedge Funds .
Reviews (2)
Publisher's Weekly Review
Coggan (The Money Machine) traces "history's tug of war between monetary shortage and excess" in this engaging and timely book about the current financial crisis. From early stages of money forms, the author portrays a clash of opposing forces and ideologies: sound money or easy money, fixed rates or floating rates, creditors or debtors. Governments' role in monetary policy is given particular attention with respect to the Keynesian/monetarist debate: do we use fiscal stimulus to interfere with the markets or do we give it free rein? Through many diverse topics-exchange rates (being "the history of paper money") and the forces driving their wide and volatile swings, bubbles, "debt-fueled booms," and the Minsky effect-Coggan outlines his main thesis: "Money (debt) expanded to gratify the desire of the consumers and businesses for greater economic activity (more trade)." The book concludes with a discussion of the consequences of the debt crisis, namely, "inflation, stagnation and default," and outlines a new system. A history of economics is avoided; many major economists, such as Marx, Marshall, and Walras, never show up. However, these omissions prove expedient and allow this otherwise dense treatment to maintain direction and flow. A thoughtful and thorough book aimed at the layperson. (Feb.) (c) Copyright PWxyz, LLC. All rights reserved.
Kirkus Review
Economist columnist Coggan (Guide to Hedge Funds, 2008, etc.) tackles these questions and others in this comprehensive treatment of money and debt. As an award-winning financial journalist, the author writes for the layperson, refusing to shelter behind the jargon of the dismal profession. Further, he doesn't claim to know with certainty how the current crisis will play out. Coggan states forthrightly that the confusing mess in which we currently find ourselves--initiated in 2007-08 by subprime mortgages--is not just another upheaval in American finance but the end of an era, a major turning point. He does not think there can be a return to the status quo because the promises to pay made in earlier times cannot be honored. The author situates his conclusion in a discussion of the longer-run history of booms and busts of monetary systems, and their related structures of indebtedness. The extremes in this series included phases associated with the word "bubble"--e.g., the Mississippi and South Sea Bubbles--and the hyperinflation of Weimar Germany. The rapid expansion of paper credit secured only on promises to pay from the proceeds of anticipated future growth caused crises when they outran the possibilities of growth. As a result, leaders reacted with draconian austerity to rebalance financial excess, often with gold-based monetary systems. Unfortunately, the United States has fallen from its once-lofty perch. "The US," writes the author, "so long the dominant power, is watching nervously in its rear-view mirror as China catches up. In short, the confidence needed to borrow and lend is diminishing." A helpful analysis for anyone who wants to know how the world got into the present financial mess, which issues need to be addressed and what the consequences might be.]] Copyright Kirkus Reviews, used with permission.
Table of Contents
| Acknowledgements | p. vii |
| Introduction | p. 1 |
| 1 The Nature of Money | p. 17 |
| 2 Ignoring Polonius | p. 43 |
| 3 Going for Gold | p. 64 |
| 4 Money and the Depression | p. 79 |
| 5 Dancing with the Dollar | p. 99 |
| 6 Paper Promises | p. 114 |
| 7 Blowing Bubbles | p. 134 |
| 8 Riding the Gravy Train | p. 153 |
| 9 The Crisis Begins | p. 175 |
| 10 Not So Risk-free | p. 192 |
| 11 Bequeathing Our Debts | p. 212 |
| 12 Paying the Bill | p. 230 |
| 13 A New Order | p. 256 |
| Notes | p. 269 |
| Bibliography | p. 282 |
| Index | p. 287 |
