The Ascent of Money: A Financial History of the World

The ascent of money has been essential to the ascent of man.

there really is no such thing as ‘the future’, singular. There are only multiple, unforeseeable futures, which will never lose their capacity to take us by surprise.

perennial truths of financial history. Sooner or later every bubble bursts. Sooner or later the bearish sellers outnumber the bullish buyers. Sooner or later greed turns to fear.

money is a matter of belief, even faith: belief in the person paying us; belief in the person issuing the money he uses or the institution that honours his cheques or transfers. Money is not metal. It is trust inscribed. And it does not seem to matter much where it is inscribed: on silver, on clay, on paper, on a liquid crystal display.

poverty is not the result of rapacious financiers exploiting the poor. It has much more to do with the lack of financial institutions, with the absence of banks, not their presence. Only when borrowers have access to efficient credit networks can they escape from the clutches of loan sharks, and only when savers can deposit their money in reliable banks can it be channelled from the idle rich to the industrious poor.

Money, it is conventional to argue, is a medium of exchange, which has the advantage of eliminating inefficiencies of barter; a unit of account, which facilitates valuation and calculation; and a store of value, which allows economic transactions to be conducted over long periods as well as geographical distances. To perform all these functions optimally, money has to be available, affordable, durable, fungible, portable and reliable.

The liabilities of the bank thus became its deposits (on which it paid interest) plus its reserve (on which it could collect no interest); its assets became its loans (on which it could collect interest).

bear in mind when trying to compare housing with other forms of capital asset. The first is depreciation. Stocks do not wear out and require new roofs; houses do. The second is liquidity. As assets, houses are a great deal more expensive to convert into cash than stocks. The third is volatility.

Large numbers of under-capitalized banks were a recipe for financial instability, and panics were a regular feature of American economic life - most spectacularly in the Great Depression, when a major banking crisis was exacerbated rather than mitigated by a monetary authority that had been operational for little more than fifteen years.

I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter,’ he told the Wall Street Journal. ‘But now I want to come back as the bond market. You can intimidate everybody.

Although the court recognizes his right to insist on his bond - to claim his pound of flesh - the law also prohibits him from shedding Antonio’s blood.

It is not the fault of the mirror if it reflects our blemishes as clearly as our beauty.

The subprime butterfly had flapped its wings and triggered a global hurricane.

Ricos y pobres, parece que los estadounidenses ven la bancarrota como un «derecho inalienable», casi en igualdad de condiciones con «la vida, la libertad y la búsqueda de la felicidad».

se podía incluir a Rothschild en la misma categoría de Richelieu y Robespierre como uno de los «tres terroríficos nombres que conjuran la gradual aniquilación de la vieja aristocracia». Richelieu había destruido su poder; Robespierre había decapitado sus restos decadentes, y ahora Rothschild proporcionaba a Europa una nueva élite social

There may be a lesson here for our time, too. The first era of financial globalization took at least a generation to achieve. But it was blown apart in a matter of days. And it would take more than two generations to repair the damage done by the guns of August 1914.

Banknotes (which originated in seventh-century China) are pieces of paper which have next to no intrinsic worth. They are simply promises to pay (hence their original Western designation as ‘promissory notes’),