World Famous Comics: Gold: The Once and Future Money
Gold: The Once and Future Money
By: Nathan Lewis Publisher: Wiley Average Rating: Binding: Hardcover Label: Wiley Number of Items: 1 Number of Pages: 447 Publication Date: May 04, 2007
Product Description: For most of the last three millennia, the world’s commercial centers have used one or another variant of a gold standard. It should be one of the best understood of human institutions, but it’s not. It’s one of the worst understood, by both its advocates and detractors. Though it has been spurned by governments many times, this has never been due to a fault of gold to serve its duty, but because governments had other plans for their currencies beyond maintaining their stability. And so, says Nathan Lewis, there is no reason to believe that the great monetary successes of the past four centuries, and indeed the past four millennia, could not be recreated in the next four centuries. In Gold, he makes a forceful, well-documented case for a worldwide return to the gold standard.
Governments and central bankers around the world today unanimously agree on the desirability of stable money, ever more so after some monetary disaster has reduced yet another economy to smoking ruins. Lewis shows how gold provides the stability needed to foster greater prosperity and productivity throughout the world. He offers an insightful look at money in all its forms, from the seventh century B.C. to the present day, explaining in straightforward layman’s terms the effects of inflation, deflation, and floating currencies along with their effect on prices, wages, taxes, and debt. He explains how the circulation of money is regulated by central banks and, in the process, demystifies the concepts of supply, demand, and the value of currency. And he illustrates how higher taxes diminish productivity, trade, and the stability of money. Lewis also provides an entertaining history of U.S. money and offers a sobering look at recent currency crises around the world, including the Asian monetary crisis of the late 1990s and the devastating currency devaluations in Russia, China, Mexico, and Yugoslavia.
Lewis’s ultimate conclusion is simple but powerful: gold has been adopted as money because it works. The gold standard produced decades and even centuries of stable money and economic abundance. If history is a guide, it will be done again.
Nathan Lewis was formerly the chief international economist of a firm that provided investment research for institutions. He now works for an asset management company based in New York. Lewis has written for the Financial Times, Asian Wall StreetJournal, Japan Times, Pravda, and other publications. He has appeared on financial television in the United States, Japan, and the Middle East.
Yes, it's long. That's what makes it a great history book. This is a great book discussing the reasons why Gold will be the ultimate monetary standard and why an individual should consider making gold a part of his personal portfolio. However, the people looking for an investment guide should look elsewhere. This is a history book discussing the possible future of the gold standard in America by historical example from the US and select countries.
It doesn't take 400+ pages to give you reasons why to put some of your money into gold, but this kind of historical detail helps a potential gold buyer understand the yellow metal is not so much an investment as it is an insurance policy. This book reinforced my already skeptical leanings towards the Fed and US monetary policy. It also made me wonder what's being taught in high school history nowadays with respect to economics as it relates to the causes of war. The sections discussing the civil war and WWII in particular were great gap-fillers for me, and the authors explanation of the Japanese financial slump made perfect sense.
Importantly, the author makes it clear on page 114-155 that he does not advocate a 100% gold-backed currency. That is, it is not possible and we should not be expected to back every last dollar with gold. Rather, gold should be part of the system to include a convertibility aspect. The strength of the gold standard comes not from digging up gold and burying it again in government vaults, but from the strength of the governments promise to uphold the integrity of the monetary system. A fixed reserve requirement would assist this promise tremendously. Currently, there is little to reassure anyone of the validity of the "full faith and credit" we now depend upon.
The sections discussing IMF and the upheaval for which they are responsible should be required reading for all members of congress. The IMF is directly responsible for the Asian monetary crisis, the Balkan upheaval and countless other disasters and yet they escape blame every time. The author points out the IMFs hypocritical habit of meddling in less-developed countries with ridiculous and irresponsible policies that would be laughed out of the room in stable economies.
Though the author picks apart nearly every US administration with regard to the dismantling of the gold standard, the book is refreshingly bare of the usual tin-foil-hat-wearer conspiracy theories - always a problem when reading anything about gold standards and monetary policy in general.
There are two small negatives to this book: First, the look forward suggested by the author is highly unrealistic. I pessimistically think there needs to be outright economic collapse and perhaps even conflict before anything will budge bureaucratic inertia. Second would be the books length, but that's a small price to pay for a very worthwhile history lesson.
Overall its a great read.
absolute must read This book is absolutely unbelievable vuluable and probably worth paying 1000$ for it (or should I say, 1 oz of gold!).
Not only does it explain in details what the gold standard is, and how it has worked in the past, but it also gives a very good overview of the various currency systems used in the past, the various fallacies about currencies, gold, politics, economics schools, etc.
It also reviews the history of our society through a different angle/lens. I feel like I understand the history now, and all the crises, wars, chaos that seemed to come out of nowhere has found a rational and sensible explanation. I had turned off my TV set and my radio receiver about 10 years ago, stopped reading the news papers and any other kind of useless noise, and all of the sudden, the world makes sense again.
Unfortunately, ignorance is bless...
Many thanks to Nathan Lewis for sharing his knowledge and wisdom. I just wish that the book was twice as thick, so that you could go into more details about the causes and consequences of the various policies and actions taken by the governments or the IMF, etc. because sometimes the short cuts you take are more than hard to follow and even though I think I was able to follow you, I would have preferred to be sure about it.
Conceptually good, but too detailed for my liking The book starts and finishes strong--the first 100 pages or so and the last 50. But the middle gets very bogged down in intricate economic history with lots of minutiae. The author begins in the mercantile ages, perhaps the 1600s or thereabouts, and continues to the early 2000s. I was disappointed that the last few years were pretty much not covered, as that is what I'm most interested in. Discussion is not limited to the USA and covers the entire world. I think every economic event, significant or not, was touched on. Discussions of US presidents are mostly limited to Nixon, Carter, and Reagan.
So aside from the start and finish of this, this is mostly a book of economic history. Maybe I was expecting something otherwise when I picked it up. I support the author's premise, and he seems very confident in it. I'm new to the gold standard and I plan to learn more about it. I ended up skimming the middle 200 pages or so as I could not bear to read them in depth anymore after entering them. I understand that history is important for lessons, but I prefer summaries of it. It's never been my strong point, and this book is littered with dates and years that have always been anathema to me.
If you're new to the subject of the gold standard like me, this may not be the best initial choice. Or you might want to skip it entirely and instead seek other books or shorter articles online. This review might be somewhat useless, but if anything I would say to be mindful of the history in this book. Consider using Amazon's preview feature to see what I mean.
*Wow, coincidentally it's unbelievable how much I'm in agreement with Average Joe. I also have "The Coming Collapse of the Dollar" on my reading queue.
Insightful but Left with Unanswered Questions Good Insights But Unconvincing
Fiat money serves three purposes: legal tender, token for exchange and store of value. The author seems to propose a money system pegged to gold and believes that it will serve to stabilize the value of the paper money as the value of gold is relative stable in the long run. The author argues that, under the new gold based money standard, the value of paper money can be maintained through adjusting the money supply, possibly by the central bank. The author also believes that a gold-based money system is better than commodity-basket based system or a currency board system exchange system. The author points out that there is an inherent conflict between a country's domestic monetary policy in terms of maintaining an interest target and its foreign exchange policy in terms of keeping a fixed exchange rate.
The question that is not clearly answered is how the supply and demand of gold, and therefore related fluctuations of gold price/value, affects the value of money and the equilibrium between money supply and demand. Equally important and not clearly answered is how a country using the proposed gold-pegged money can defense itself against currency attack by speculators. When there is sell-off of the currency, according to the author, the central bank needs to retire the excess currency (money supply) it took in from people for exchanging gold. This is to maintain the value of the paper money pegged to gold. Reducing money supply seems to push up interest rate and restrain economic growth. A large scale currency attack may also push up gold price as the demand of gold for exchanging the currency intensifies. To keep the pegging creditable, the central bank has to exchange gold for the currency when it is demanded. The central bank either has to keep a gold reserve large enough or buy/borrow gold from the market. To buy gold, the central bank may have to borrow foreign currency (hard currency) to do so, especially when its currency is under attack (weak). Then the problem is essentially no difference than the familiar one we have seeing for a currency-pegging exchange system except the author claims that the value of gold, in the long run, is more stable than all paper money including "hard currencies" such as the dollar, pounds, etc. The author claimed that if the central bank maintains its credibility, then it does not need to keep a large gold reserve. However, if the credibility is better or at least as good as gold, we wouldn't need a gold-pegging or any pegging system. The whole idea to have the money pegged on something is because that people believe the value of that "something" in itself is stable.
As society has not find any universal stable measurement for "value" as we did for length and weight, we just don't have a stable media to store the value. Actually length and weight are only relatively stable under normal conditions on earth. The light of speed is probably the only constant in the universe we know so far. The value of gold, just like all other currencies and commodities, changes when the supply and demand fluctuates. It may be arguably more stable than other paper money. Nevertheless, it does not totally eliminate some major problems faced by the paper money. Plus, gold system may have its own problems. Is it immune from short-term speculations that could bring down a nation's economy?
Overall, I found the book valuable in providing a lot of economic insights on historical events. But I found the argument for a gold-pegged standard as the solution unconvincing. The ultimate solution may be, when globalization reaches its summit, one world currency is created. Then there is no currency risk. Only business cycles need to be dealt with. Then the money does not have to be pegged on anything except people's faith in the stability and survivability of themselves and responsible management on money supply. When there are multiple currencies, good management of and consistency among policies of exchange, monetary, and fiscal seem to be the gold standard demanded.
I'm all about gold - too many details in this book however I'm simply an average joe looking to preserve wealth from the coming inflation in the US dollar. This book did indeed help me understand central banking and how a gold standard can work. However, it contained way too many details with dates and years of various historical events.
What I really wanted, was a book that could help me conceptually understand the commodity of gold in an easy to read format. All in all I appreciated the book and am glad I read it. Perhaps I would have enjoyed this more had I read "The Coming Collapse of the Dollar and How to Profit from It" first as it did not dive into obscure details of historical events.
Anything Goes Trivia
Megaton Man
Tailipoe
Trevor
