The Ascent of Money

If this book were to be summed up in one word it would be the following: relevant. Completed in 2008 Niall Ferguson's The Ascent of Money is almost prophetic in its description of our worldwide financial bubble/decline in general and housing market fragility in particular. It is almost eerie to read Ferguson's assessment of the global financial climate and know that it was written before things got really ugly. Some people, it seems, could see it coming.

This is also a text that I would readily suggest to anyone feeling somewhat confused about the world of finance in light of recent events. Before picking up this text I would have had a difficult time describing what exactly a bond actually is in the first place, much less how the housing market entered into the current period of decline. I still would not feel entirely confident about describing these things in my own words in casual conversation, but Ferguson's book is understandable and straightforward to the extent that often unusually complex aspects of global finance are made to seem intelligible to those of us lacking any formal education in economics or finance.

Each chapter of his text chronicles the development of a different aspect of finance. Ferguson describes the rise of the banking system, followed by the bond market, the stock market, insurance, real estate and finally globalization. The final chapter describing the decline of the American empire and the rise of China is a bit convoluted and definitely the most difficult to follow, but the preceding chapters are very clear and quite captivating. Each chapter is chronological independent of the others producing a layered effect whereby each financial element can be seen interacting with the others that came before it. The cumulative effect is a thorough introduction to finance that avoids being either pedantic or overly simplistic so as to be patronizing.

Ferguson is a vivid storyteller, adept at making otherwise dense subject matter come alive by focusing on individuals within the larger story and using them as object lessons to illustrate a bigger point. One does not get the sense that the author is pushing a particular political agenda either. Rather, the history presented here seems as objective as possible if not a bit judgmental of the American habit of conspicuous consumption.

This is a relevant text that anyone at all interested in how we got into the current financial crisis should certainly read. Ferguson mentions the cyclical nature of finance multiple times throughout the text, suggesting in no uncertain terms that ignorance of past errors will undoubtedly result in their recurrence. We can all learn the lesson from our current crisis that it is wise to educate ourselves about finance and Ferguson's book is an excellent way to begin doing just that.