Paper Promises: Debt, Money, and the New World Order

363 Pages·2012·1.83 MB·English

by  Philip Coggan

Table of Contents

Title Page
Dedication
Acknowledgments
Introduction

Chapter 1 - The Nature of Money
THE STORY OF JOHN LAW
WHAT IS MONEY?
PRECIOUS METALS
PAPER MONEY
BANKING MONEY

Chapter 2 - Ignoring Polonius
THE FUNCTIONS OF INTEREST
BAD KINGS AND BAD DEBTS
DEBT AND THE INDUSTRIAL AGE
THE MORAL MAZE
MONEY AND DEBT

Chapter 3 - Going for Gold
THE TRILEMMA
THE GOLD STANDARD
HOW THE STANDARD WORKED
LENDERS OF LAST RESORT

Chapter 4 - Money and the Depression
A WORLD OUT OF IDEAS
THE BANKERS’ RAMP
THE US EXPERIENCE

Chapter 5 - Dancing with the Dollar
AVOIDING MISTAKES
THE DOLLAR’S ROLE
THE DEATH THROES

Chapter 6 - Paper Promises
THE RISE OF THE MONETARISTS
POLICY IN A WORLD OF FLOATING RATES
A MIXED SYSTEM
EXCHANGE-RATE CHOICES
THE EURO

Chapter 7 - Blowing Bubbles
FORTY YEARS OF BUBBLES
THE MINSKY EFFECT
THE SUB-PRIME BOOM
BUBBLES, PAPER MONEY AND THE END OF BRETTON
WOODS
WHACK-A-MOLE
DISGUISED INFLATION

Chapter 8 - Riding the Gravy Train
EFFICIENT-MARKET THEORY
REGULATION
THE BIGGER, THE BETTER
A CHANGE OF ATTITUDE

Chapter 9 - The Crisis Begins
AS UNSAFE AS HOUSES
CONSUMER DEBT
CORPORATE DEBT

Chapter 10 - Not So Risk-free
POST-WAR DEBT CRISES
THE CURRENT CRISIS
THE EURO-ZONE CRISIS
BAILOUT TIME
THE HIDDEN DEBTS

Chapter 11 - Bequeathing Our Debts
BABY BUST
THE UNRECOGNIZED LIABILITIES
A NEW ATTITUDE
ENERGY

Chapter 12 - Paying the Bill
AGGREGATING THE PROBLEM
THE LONG VIEW
WHERE DO WE GO FROM HERE?
THE UNHOLY TRINITY
INFLATION
STAGNATION
DEFAULT

Chapter 13 - A New Order
OPTIONS FOR CHANGE
THE OUTLINES OF A SYSTEM
PAPER PROMISES

Notes
Bibliography
Index
Copyright Page
To Helena and Catherine,
with apologies for the debts left by my generation
Acknowledgements
This book was inspired by my work on the Economist, in
particular a special report on debt that was published in the
summer of 2010. While I was writing the report, I was struck
both by the extraordinary rise in debt levels in recent years and
by the role that debt has played in influencing economics over
the centuries. Many a government has debased the coinage or
devalued the currency to deal with a debt crisis. That brought
the insight that economic history has been a war between
creditors and debtors, with the nature of money as the
battleground. The current crisis is just the latest skirmish.
The book is a work of journalism, based on my twenty-eight
years in the profession and my extensive reading of the
historical literature. It thus builds on the work of many
excellent historians, who are extensively cited in both the
footnotes and the bibliography. I am very greateful for their
scholarship, which has allowed me to develop my own
interpretation of events. Special mention should be given to
Richard Duncan, whose books suggested the idea that the post-
Bretton Woods era and asset inflation were intimately related.
In researching this book, I have been lucky to work for such
an understanding employer as the Economist, under the
leadership of John Micklethwait. Special thanks are due to
Edward Carr, who initiated my hiring and who made many
helpful stylistic comments on the manuscript; to John
O’Sullivan, who put me right on many economic matters; my
long-suffering officemate Andrew Palmer, who probably heard
far too much about the book’s gestation; and to Chris Young,
who looked through the book while on secondment from the
Bank of England. I hope that association with any heretical
pronouncements in the book does not blight his career.
At Penguin, my thanks are due to Georgina Laycock for
commissioning the work and to Will Goodlad and Richard
Duguid for seeing it through to publication. Charlotte Ridings