The Ascent of Money

I just finished reading “The Ascent of Money. A Financial History of the World”  by Niall Ferguson of Harvard.

It is a sizable work that provides a rough presentation of the subject described by the title. While it may be useful as a first introduction to the subject, it lacks the element of search in depth that could have made it unique in its kind. 

I cannot judge if this is done on purpose but this lack of depth allows the author to get scot free for an unpardonable side stepping or cover up. I am talking of the unbridled increase in consumer debt in the U.S.A. over the past forty years, which is attributed by the author only to the abolition of the gold backing of the dollar.

The author attributes this increase in debt only to the fact that bank credit was available and nowhere in the book does he mention the fact that in the span of time since the abolition of the tie up of the dollar to gold, the great mass of borrowers, the so called consumers, composed primarily of working people and the middle class, had an unprecedented reduction in their real income.

 It is rather strange that he does not see that the decision to decouple the dollar from gold  is part of the great neoconservative scheme to reduce wages and demolish all barriers to the activities of the great financiers. Over the past forty years the great mass of the working people and the middle class suffered huge losses in their real income. In their effort to live the “American Dream”, these people turned to credit and the banking system was now ready in every way to provide unlimited credit.

So there resulted a situation where what was previously earned as income is now an increase in debt. The devastating negative effects of this development are seen in the current protracted stagnation.