Monetary Policy in “The Ascent of Money” by Ferguson Essay (Book Review)

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According to Ferguson, behind every civilization and historical event there is a fiscal secret. This is the beginning of Fergusson’s text that seeks enlighten readers on the history of the economy during these hard times. The rise of Babylon is closely linked to the evolution of the concept of debt and credit; without bond markets and banks, the brilliance of the Italians would not have materialized; the foundation of the British and the Dutch economies was concept of corporate finance; and the highly sophisticated financial engineering of the Wall Street is a product of the global primacy of America. The power envisaged in developing nations can largely be attributed to their massive accumulation of wealth and high rate of development in the financial sector.

The insightful text enlightens readers on the fate of the national economies, with critical analysis of monetary policies and the causes of what is happening today. Ferguson demonstrates how money has been developing simultaneously with civilization, and this can be seen in emerging societies. He puts this into perspective through case studies, demonstrating how money facilitated the colonization of a number of nations, as well as the rise of emerging economies, such as China.

Ferguson asserts that rather than being just a piece of metal, money is trust-inscribed. For instance, the loss of tangible symbols might have weakened the trustful relationship between the receiver and giver of money. In the current economy, money has hugely been dematerialized, with only ten percent of total fiscal supply consisting of coins and notes. Salaries are automatically deposited to bank accounts, with bills and mortgages following a similar suit. A combination of deregulation of capital markets and dematerialization of money has devalued the contract that money represented.

Ferguson launches scathing attacks on our passion to property ownership and the pursuance of democracy with respect to property-owning, attributes that are intimately linked to Thatcher and Reagan. A critical analysis of text portrays the author is none other than a doctrinaire liberal, a finer financial analyst with an eye for details. Especially enthralling is the author’s discussions on the increased demand for financial innovation since the 1960s, which founded life insurance. His view articulates that the future is just a reflection of the past occurrences, and does not in any way provides insight of what lies ahead as far as humanity is concerned.

He asserts that, though history-free economists can buy the notion of efficient markets, history has made it impossible to predict the degree of the current financial meltdown. Similarly, it is impossible for history to answer the question regarding human’s attitude towards money. The text presents the weaknesses and strengths of history in comprehending the present occurrences. Fergusson uses a number of references and details that can only be expected in the works of historians. Clearly, the subject of finance fascinates him, and Fergusson demonstrates this through his extensive knowledge that can only be matched by professionals in this field.

According to Fergusson, money is a relationship between debtors and creditors who barely have the knowledge of each other. He indicates that success of European finance can be attributed to the needs of governments rather than those of commerce. From the text, we are made to understand that government is the main determinant of the rate at which economy grows, with England as the as a good example of the powers that a government can have over finance.

The success of England as a super power can be largely be associated with its capability to borrow huge sums of money at reduced rates. This has made it important for other nations to safeguard their creditworthiness through a balanced budget. In any economy, according to Ferguson, volatility is an aspect that cannot cease to exist. According to Fergusson, the great depression was a creation of poor monetary policies, which ultimately resulted to economic bubbles. In his understanding, good monetary policies are sufficient enough to maintain a stable economy, but cannot assure survival during difficult times as we are experiencing today.

This led to the ingenious invention, the insurance, which was meant cover uncertainty. The move followed the implementation of the concept in the health benefits and social security. Governments took this move because a sizable chunk of the population was left uninsured by the private insurers. However, social security has been used to reward the military, and the author uses the case of Japan to bring this into perspective.

The author successfully demonstrates how mischiefs by governments have resulted to nothing, but suffering to the mainstreams who are left with no pension after retirement. The widespread property-owning has promoted states considerably while popularizing capitalism. It has increased debts, and most debtors are the ethnic minorities who are expected to repay their loans at much higher interest rates than they could afford. Governments no longer take the concerns of citizen seriously since they are preoccupied with the urge to strengthen military powers at the expense of the latter.

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IvyPanda. 2020. "Monetary Policy in “The Ascent of Money” by Ferguson." August 18, 2020. https://ivypanda.com/essays/monetary-policy-in-the-ascent-of-money-by-ferguson/.

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