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4.2 out of 5 stars
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4.2 out of 5 stars
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This is a great book overall, and a very worthwhile read. It isn't the first book to point out that the "first there was barter, then there was money" history of money is almost certainly wrong, but it benefits from being more approachable than the others I've tried over the years (e.g. David Graeber).

It's possibly a remarkable thing to say given the importance of money in the modern economy, but we arguably understand less about it now than we did fifty years ago. Reading this book helps to understand that point, and also the point that "money" and "credit"---far from being separate---are a lot more closely related than we're typically taught to realise.

I wasn't a big fan of the way in which the book's conclusion was written - an imaginary conversation between the author and a clever-clogs. But there is far more of value in this book to be put off by the style of its concluding chapter.
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on 6 August 2017
This is a good book. Well worth Reading if you are looking for a well argued history of how people through history have conceived of money as a commodity rather then as trusted credit.

For me, the author makes a few unfounded moral conclusions from this argument, but this does not detract from a really interesting point of view and easily digestible book.
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on 16 August 2017
I am interested in economics and business but have not studied them formally. This is a brilliant explanation of what money is and how it works. I especially like the way Felix Martin shows how the headbanger view of money==gold is completely wrong. I feel much better placed to form my own opinion on this topic now, and recommend everyone reads this book!
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on 9 October 2014
I wish that I had read this book a long time ago, especially when I was studying economics, as it clarifies and simplifies some of the key issues and debates in economic theory. It's solid economics, rather than popular economics, so it requires effort, but it's worth it. He gets right to the heart of the nature of money as a social construct, and in doing so gives the clearest argument against the gold standard or any other standard, that I have read. This in turn shows why General Equilibrium modelling is an elegant thought experiment, but not useful for dealing with the real world.

When I started to work in the markets, I was surprised by how little attention was paid to much of the theory that I had learned at Cambridge. I assumed this was because financial economics was just catching up with the academy. I now realise that it was because much of the economics of the second half of the 20th century had been tried and discarded as useless, so practical economists had gone back to the basics. Again, this book explains why.
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on 27 March 2017
Interesting book.
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on 16 May 2017
very good.
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on 12 April 2017
Well written to gain and maintain interest in the subject.
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VINE VOICEon 15 September 2013
This book is deliberately, even pugnaciously, confident of its message: what money is, why people are wrong about it, and what it can tell us about today's economy.

Even if you are not convinced by the arguments (and there seem to be a lot of reviewers here who know better), the author makes a bold and even brilliant case for reassessing our understanding of what money is. He sets out a fascinating history of the evolution of our economic system, and wraps it up with a Platonic dialogue that refreshes all his arguments most usefully.

This was most welcome because I found the book starts with an almost pop-history lightness that makes it easy to read, then gets more serious as the author takes us through the history, and finally gets rather heavily into the economics of the latest financial crisis. So by the time I reached the end sections I was having to engage my brain more and more to keep up to speed.

I'm glad I read it, and personally thought it was a very persuasive and original work.
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on 25 January 2015
Felix Martin tempts fate by opening with a quote from A. H. Quiggan: "Everyone, except an economist, knows what 'money' means." Martin is a former World Bank economist, and at the end of this book, I sympathised with Quiggin.

After 260 pages of argument, Martin concludes that money is: "not a thing but a social technology - a set of ideas and practices for organising society. To be precise ... [money] is a concept of universally applicable economic value."

Earlier he states that: "Coins and currency ... are useful tokens to record the underlying system of credit accounts and to implement the underlying process of clearing."

Rather than providing a new and counter-intuitive insight into money, which he claims, there is analytical confusion.

A logical fallacy in much analysis of money is repeated here: because debts have often been used as money, it does not follow that money is a debt. Martin's novel version of this fallacy is to argue that because we use credit accounts and a clearing system to net off payments, this makes the credit and clearing system "money". This is a logical error. The standard definition of money - anything accepted as payment for goods and services - is clear, and distinguishes it from debt and the clearing system. This definition does not assume, as Martin implies, that money is a "commodity". The accepted means of payment, as his many examples illustrate, can be physical, or abstract (or virtual).

This is really a history book, which argues an unconventional and more relevant understanding of what money is. There is lots of fascinating history, but the central thesis is unconvincing. Martin goes as far as to suggest that a flawed definition of money, with intellectual roots in Locke and even Aristotle, explains the economics professions' failure to foresee the financial crisis. We know this to be false. Economic policymakers and academics ignored the financial system. The reason is not because they had incorrectly defined money, it is because they focus on the last problem. The obsession with inflation targeting was a prolonged response to the inflation shock of the 1970s and 80s. Unsurprisingly, economists - academics and policymakers - are now producing a vast literature on the financial system, banking and asset bubbles, without any re-definition of "money" (and it goes without saying that the next problem will lie elsewhere).

Consistent with this mainstream response, Martin places far too much faith in the idea that "narrow" banking will save the world. It is a variant of the old proposal that when you deposit money with a bank, it should hold an equivalent amount of cash in reserve. This view re-emerges in some form after every major banking crisis. Friedman was an advocate in the 1950s. The interesting question, which Martin evades, is why it is never adopted. Perhaps it is not such a good idea.

I had looked forward to reading this book. Martin's main argument is initially intriguing and there's plenty of history, but ultimately it is unconvincing.
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on 22 August 2013
This is great book for those with an interest in finance, economics and society. The author challenges a common view of money as originally a physical commodity, such as gold and silver, from which systems of credit derived. He finds this view in Locke, Adam Smith and John Stuart Mill, where it leads to the view that money is a medium of exchange that cancels itself out and can be safely neglected in economic theory. The survival of metal coins and destruction of paper credit notes give undue plausibility to this view.

To this he opposes an account of money as quantified, transferable social credit, which he attributes to John Law, Walter Bagehot (author of Lombard Street) and John Maynard Keynes, also tracing it back (unnecessarily perhaps) to ancient Greece. This view facilitates a more accurate understanding of the relations of private money and the state. Martin gives an interesting account of medieval bills of exchange that were not backed by a state. He attributes Locke's rejection of the transferable credit theory to a Whig desire to limit state power at a time when the state was beginning to be used to underwrite the currency through central banks in modern fashion. I liked his suspicion that the obscurity of some discussions of money is typical of those trying to keep a valuable trade secret.

Other reviewers have claimed that Martin overreaches himself towards the end in trying to advise contemporary politicians and I have some sympathy with this. He perhaps confuses the fact that something is social with the idea that it can be changed at will. The last chapter gives a clear summary of his basic ideas for those lost in the argument. Overall, I felt that I had learned a lot about money and its social significance from this book.
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