Customer Review

15 of 16 people found the following review helpful
5.0 out of 5 stars Is Owed Unto, 27 Jan 2012
This review is from: Paper Promises: Money, Debt and the New World Order (Hardcover)
On all British bank notes from £5 to £50 the words `I promise to pay the bearer on demand the sum of ...' still appear. In eighteen-century Europe an experiment with paper money was begun by John Law, a Scottish mathematician and gambler, who moved to France toward the end of the reign of Louis XIV. The monarchy of France was, at this time, verging on bankruptcy and, as the successor to the King was still only an infant, the duc d'Orléans held the reins. John Law suggested to him that the creation of a bank that could issue paper money in lieu of gold and silver was the best way to get France out of debt. The Banque Générale was created and the duc d'Orléans decreed all taxes could be paid using Law's new paper money.

Unfortunately, Law held the view that `it did not matter that paper money was not backed by an equal amount of gold and silver' and it was this belief that Coggan cites as the downfall to this early experiment: `Had the scheme been kept on a modest scale, with banknotes backed by gold and silver, French economic growth might indeed have been boosted over the long run.' However, Law's experiment did not diminish the eventual power of paper money, primarily because precious metals are easy to steal, rare and cumbersome to manoeuvre.

In order to keep their gold and silver safe people began to store their valuables in safes at goldsmiths where they would receive a receipt for their deposit. This receipt was effectively an early banknote and the reason why we see the words `I promise to pay the bearer on demand the sum of ...' on our modern day equivalents. The difference between the original receipts and today's notes is that these days the bearer cannot go into a bank (or a goldsmith) and demand the requisite amount of gold in return for the paper money. This is because in the 1930s the global economy broke with the gold standard, so today most of the world's currencies are no longer linked to the amount of gold any given country holds in its reserves. Instead most currencies are pegged to the US dollar and worth as much as the exchange rate claims it to be.

In Paper Money Phillip Coggan charts the journey of money from its direct links with gold to the present day climate of abstract money, exchanged at the press of a button. This book provides a valuable insight into the field of economics for those of us who have never studied in depth the ins and outs of such a complex system. The author succinctly charts the story of money and outlines, in layman's terms, the reason why we find ourselves in the current financial crisis. The reader is taken step by step through the Depression of the 1930s, the breakdown of Bretton Woods, asset bubbles, the problem with sub-prime mortgages, all the way to the collapse of Lehman Brothers and the vast debts the world is now drowning in. As Nassim Nicholas Taleb states on the front cover, `This book stands way above anything written on the present economic crisis', and furthermore it explains it all in a way that anyone with any interest in the subject can understand.
Help other customers find the most helpful reviews 
Was this review helpful to you? Yes No

Be the first person to comment on this review.

[Add comment]
Post a comment
To insert a product link use the format: [[ASIN:ASIN product-title]] (What's this?)
Amazon will display this name with all your submissions, including reviews and discussion posts. (Learn more)
Name:
Badge:
This badge will be assigned to you and will appear along with your name.
There was an error. Please try again.
Please see the full guidelines ">here.

Official Comment

As a representative of this product you can post one Official Comment on this review. It will appear immediately below the review wherever it is displayed.   Learn more
The following name and badge will be shown with this comment:
 (edit name)
After clicking on the Post button you will be asked to create your public name, which will be shown with all your contributions.

Is this your product?

If you are the author, artist, manufacturer or an official representative of this product, you can post an Official Comment on this review. It will appear immediately below the review wherever it is displayed.  Learn more
Otherwise, you can still post a regular comment on this review.

Is this your product?

If you are the author, artist, manufacturer or an official representative of this product, you can post an Official Comment on this review. It will appear immediately below the review wherever it is displayed.   Learn more
 
System timed out

We were unable to verify whether you represent the product. Please try again later, or retry now. Otherwise you can post a regular comment.

Since you previously posted an Official Comment, this comment will appear in the comment section below. You also have the option to edit your Official Comment.   Learn more
The maximum number of Official Comments have been posted. This comment will appear in the comment section below.   Learn more
Prompts for sign-in
 


Review Details

Item

4.3 out of 5 stars (29 customer reviews)
5 star:
 (14)
4 star:
 (11)
3 star:
 (3)
2 star:    (0)
1 star:
 (1)
 
 
 
Used & New from: £2.73
Add to wishlist
Reviewer


Location: Nottingham, UK

Top Reviewer Ranking: 79,554