Monday, November 7, 2011
Book Review: Money and Man
Elgin Groseclose's Money and Man is a great summary of humanity's experience with money over the centuries.
It's a good read for monetary newbies to understand how the physics of money affects the real world.
This book starts with Greek and Roman use of silver and copper as money - which are dependent on natural supply rather than issuance. This static supply affects credit and economic growth in a society.
In Europe, the use of paper money only really came about after the Middle Ages and it's interesting to see the move away from barter and precious metals to a fiat currency (although often backed by precious metals).
Fiat currency can be quite advantageous, provided its issuance is governed by restraint and wisdom. Unfortunately, it rarely turns out that way, and ultimately the history of the world is littered with defunct and now worthless paper bank notes. Groseclose delves into the reasons why different paper currencies failed.
It's worthwhile for an American to familiarize yourself with these concepts, because we're relatively unscathed by monetary devaluation. In other words, we take relatively stable money for granted.
That could change.