Paper Promises Debt Money and the New World Order

Paper Promises Debt Money and the New World Order❰Download❯ ➵ Paper Promises Debt Money and the New World Order Author Philip Coggan – Winner of the Spears Business Book of the Year Award Longlisted for the Financial Times Goldman Sachs Business Book of the Year Award In today's financial climate we are all naturally obsessed by debt Winner of the Spears Business Book Debt Money PDF ↠ of the Year Award Longlisted for the Financial Times Goldman Sachs Business Book of the Year Award In today's financial climate we are all naturally obsessed by debt In almost every aspect of our life we experience it on our credit cards mortgages bank loans and student loans But where has this debt come from How does it work What is any money really worth And what promises do we need to believe to keep the whole system afloatIn this Paper Promises eBook Æ fascinating look at money through the ages including our own unstable future award winning financial journalist Philip Coggan examines the flawed structure of the global finance systems as they exist today and asks with deeper imbalances that the world is currently facing what's actually at stake. 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 Banue Générale was created and the duc d’Orléans decreed all taxes could be paid using Law’s new paper moneyUnfortunately Law held the view that ‘it did not matter that paper money was not backed by an eual 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 manoeuvreIn 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 euivalents 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 reuisite 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 beIn 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 further it explains it all in a way that anyone with any interest in the subject can understand Philip Coggan has compiled a 400 page book with enough knowledge and analysis to make it feel like an 800 page book without seeming at all like a long and demanding readHaving read previous books in the financial and monetary sector Paper Promises compares favorably in the sense that it is truly the best of all worldsThe first part of the book is a financial and monetary history in every sense worthy of Niall Ferguson's Ascent of Money coupled with a monetary analysis every bit as astute as the works of Barry Eichengreen but much readableDespite the length of the book Coggan leaves no stone unturned The collapse of the Gold Standard Bretton Woods and the 2008 and subseuent sovereign debt crisis are all covered appropriately within this volumeRather than just been a simple chronological sweep of finance phenomena such as bubbles inflation and monetary practices such as uantitative easing are all explainedOne is hardly left wanting for as most uestions one is left asking after the events of recent years receive explanationAs a book that among many other things focuses on the value of money Paper Promises in itself is superb value for money and an important asset for the investment portfolio of any economics enthusiast Lucid explanation written in 2011 of how the western economies got into the mess of 2007 8 and of how little was done to correct the underlying problems Coggan forecasts another crisis even worse than the 2008 crunch and it is difficult to disagree with him In the late 19th Century economies were governed by the gold standard a system that tied the amount of paper money in circulation to the stock of gold Since governments could not magic gold out of think air the standard did not allow for continuously rising prices When we multiply claims debt we do not expand real wealth in energy manufactured goods instead asset prices like houses and shares tend to rise too which in turn pays off the return of the debt and then allows people to borrow money Rising debt simply creates claims on wealth with debt and asset prices closely linked This has been exacerbated by the “Greenspan Put” which was when the Fed rode to the markets rescue guaranteeing essentially that they would not fall to a certain price This has repeatedly happened particularly during Covid 19 and led in many ways to Silicon Valley Entrepreneurs having a relaxed attitude to debt and bankruptcy The world has been successful in creating claims on wealth than wealth itself We can reduce debt by allowing for inflation so we need to look at the “real” interest rate the part of the return that is in excess of inflation Inflation reduces the purchasing power of a currency Britain has not defaulted on its debt since 1672 in part because its creditors wealthy merchants and the ruling class who have owned the debt could democratically elect a different government if they were not payed Economies have been obsessed with output food warmth and shelter but as people have become wealthier they have turned into consumers consumption which now drives economies The collapse of the Bretton Woods in the 1970 helped debtors not creditors as countries could depreciate their currencies causing inflation to help pay debt Countries also lowered the currencies to increase exports and lessen imports or sometimes implement tariffs This just reduced the size of the economic pie and left everybody poorer The sound internal economic system of a nation is greater than the price of its currency RooseveltAfter WW2 the Eurozone created a trade surplus with the US which allowed them to get dollars in exchange for exports In turn this deteriorated the US trade position 2 crucial weakness in the Euro 1 under a floating rates system Greece would have seen a decrease in the value of their currency making their exports expensive 2 the only method for EU countries to handle debt crisis is to carry out austerity which causes huge political unrest EU bailouts are pointless because economies don’t actually fundamentally restructure themselves It the classic “Fudge and Nudge” America has done the same with its day of reckoning Debt is unlikely to be paid in real term to bond investors Countries that have to build properties want to see a decrease in property prices and improve national welfare Apart for the rich who want apartments in central London houses are generally not something that other economies buy so is actually unproductive for the UK economy and example of capital misallocated Energy is another unproductive cost for economies however with renewable energy 1 costs are reducing 2 likelihood that renewable energy producing counties will be able to export green energy to polluting counties There is an argument form McKinsey that real interest rates will start to rise when as the developing world economy runs up against reduced Chinese savings and a consumption based model American Industry leaders have often been plucked from business for the top US government jobs In the 1960 as Ford was the engine of growth in America Kennedy declared that “what’s good for General Motors is good for America” Therefore GM got preferential light touch regulation Now the same has happened with finance as it makes such a huge part of our economy with many bankers now part of governments One way to reduce Triple Lock Pensions has been link payouts to the CPI index rather than RPI as CPI undershoots the RPI by around 07% Increased consumption taxes are also a great way to raise revenue and pay off debt A rise in VAT in 2010 created 20% extra revenue foe the UK a better return than blanket austerity which is showing signs that alone it rarely worksThe EU’s Frugal Four; Holland Sweden Austria and Denmark are likely to benefit on the long run for what they see as unsustainable levels of EU debt A lucid even handed and very timely exposition of the nature of money and credit Coggan conveys the daunting scale of the debt problem the West has sunk into without sounding hysterical or despairing The way he contextualises the problem by showing how it is both similar to and different from previous crises is enlightening this is one of those books that weaves together scraps of knowledge you already have into a coherent wholeEven so it is not a tome that reaches out to the most casual of readers it is written in an authoritative style rather than the very personal conversational tone that seems to be becoming the norm for popular books on economics You will need a fair amount of interest in economics and a reasonable degree of concentration to get you from beginning to end but if you make that journey you will be well rewardedOne of the book's key insights is seeing the world as a power struggle between creditors and debtors The US formerly a creditor has become the world's biggest borrower with China footing the bill Meanwhile individual borrowers dominate the political discourse in many democratic countries which has caused public and private sector debt to explode with very few options for balancing the books that are politically palatable What is the way out? It will be interesting and not a little frightening to discover this over the next couple of decades Another book on economics in general and debt in particular This one is from an author who also writes for the Economist And it shows In a good way The story is very readable and well constructed It shows how we moved from bartering metal the gold standard Bretton Woods to the dollar standard The author describes debt as basically a struggle between creditor and debtor and if seen this way how it clarifies debt struggles throughout the ages Especially 2007 2008 is analyzed The post Bretton Woods system has broken down that much is made clear Interesting are the chapters where the author theorizes on possible solutions One of the most scary interesting ones highly rated as possible by the author is one where the biggest creditor on earth China puts its mark on a new system It would probably be about taking away free capital flows Just imagine how this would nearly wipe out an entire industry maybe that is not even a bad thing giving how this industry has benefited from good investment calls while pushing away bad debt to us the tax payer Truly a fascinating book about the different stages of the world monetary systems briefly from bartering gold standard Breton woods and now floating exchange ratesThis books covers loads of financial stories and the credit crunch with reasons why it happened and not just cuz bankers are wankers cuz we all over borrowed and trusted that housing is a says market even tho fucking Adam smith said that's false growth some 300 years ago First book on economics and thought it might be a hard slog but turn about a very easy and enjoyable read Recommend to everyone and if I could I'd give 6 stars Many of you who read this are probably avid readers of The Economist I am always amazed at how many great articles that are written every week and especially how uickly and concisely they are able to comment on complicated and current matters How wonderful then that a reporter of that magazine Mr Phillip Coggan previously among other things also at FT writing the Long view has written a book on one of the most relevant subjects today debt Not just that but putting debt in an historic context It’s a story about how we all went from using gold to accepting paper money with zero value He calls it the wars between creditors and debtors The book makes several interesting points among them please think about this In between 1882 1982 US GDP grew 34% per annum with total debt stable How much did GDP increase from 1982 to today and how much did debt increase? The answer is at the bottom of this pageKey events for the author are the rise and fall of the gold standard and of Bretton Woods and finally the current system Mr Coggan describes all systems positives and negatives but doesn’t have clear cut views on what’s best or what the endgame will be His only conclusion which is the same as many others like Rogoff etc is that debt levels are too high and that default in some form is unavoidable In the final part of the book he states that when paper promises breaks this will result in an economic turmoil which we just have seen the start of I found his arguments convincing and the way he gives a historic perspective to current events makes this a must read if you are going to understand the world for the next 10 yearsPaper Promises is a book that is very easy to read with a multiple of interesting references so it’s easy to dig into whatever subject triggers further interest However it reuires full concentration and I also think it helps to have read a few other books on similar topics like Niall Fergusson’s The Ascent of Money or Cash Nexus or CarmenRogoff’s This Time It’s DifferentMy views are neither those of a gold bug nor those of Lord Keynes but rather the pragmatist Reading this book gives several arguments to both sides of the debate but also a lot of critiue which I appreciate Coggan is in the bearish camp payback time is now so he has a lot of references to well known bears But he is not just bearish based upon the increase in debt but also on the basis of the weak trends in demographics unrecognised pension liabilities ever increasing healthcare costs as well as the risks of long term higher energy pricesThat’s all fine to me but I think he misses out on some potential hopes mainly the fact that emerging markets are growing very fast and that could mean a relatively high sustainable global growth rate and new technology breakthroughs are not considered So my only complaint with the book would be that it lacks an honest and sincere discussion on where he and most intellectuals could be wrong If you haven’t read any books on these topics this should be your first You could then follow up with the other books mentioned aboveOn a final note – the generation that lived through the 30’s ie his father tended to be highly suspicious of debt after the depression Coggan the senior refused to have a credit card He cut the cards in unsolicited offers into pieces and sent them back to the card companies with stern lectures on inflation This book describes the history of money since the gold standard till the modern days Very well segregates different stages of me net developmentWhat I didn't like was the fact that the reader is expected to know many of the events which took place background knowledge makes this book simpler to read and understandAnother weak part is a series of predictions that the author attempts to make Some of them have already got cancelled At the ending of historical experiments of unprecedented monetary easing you must refresh your understanding of monetary system und currency This is the best for doing so Real purchasing power of your saving has been reduced by your own central bank for rescuing monetary system You should not overlook such stealth taxation