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

by Philip Coggan

Overview

From the Economist’s award-winning Buttonwood columnist comes a timely and incisive analysis of debt: the defining feature of our financial era

Product Details

ISBN-13:	9781610391269
Publisher:	PublicAffairs
Publication date:	02/07/2012
Pages:	304
Product dimensions:	6.10(w) x 9.10(h) x 1.20(d)

About the Author

Philip Coggan writes the Bartleby column for the Economist and is the former writer of the Buttonwood column. Previously, he worked for the Financial Times for twenty years. In 2009, he was voted Senior Financial Journalist of the Year in the Wincott awards and best communicator in the Business Journalist of the Year Awards. Among his books are The Money Machine, The Economist Guide to Hedge Funds, and Paper Promises.

Editorial Reviews

Coggan (The Money Machine) traces “history’s tug of war between monetary shortage and excess” in this engaging and timely book about the current financial crisis. From early stages of money forms, the author portrays a clash of opposing forces and ideologies: sound money or easy money, fixed rates or floating rates, creditors or debtors. Governments’ role in monetary policy is given particular attention with respect to the Keynesian/monetarist debate: do we use fiscal stimulus to interfere with the markets or do we give it free rein? Through many diverse topics—exchange rates (being “the history of paper money”) and the forces driving their wide and volatile swings, bubbles, “debt-fueled booms,” and the Minsky effect—Coggan outlines his main thesis: “Money (debt) expanded to gratify the desire of the consumers and businesses for greater economic activity (more trade).” The book concludes with a discussion of the consequences of the debt crisis, namely, “inflation, stagnation and default,” and outlines a new system. A history of economics is avoided; many major economists, such as Marx, Marshall, and Walras, never show up. However, these omissions prove expedient and allow this otherwise dense treatment to maintain direction and flow. A thoughtful and thorough book aimed at the layperson. (Feb.)

Publishers Weekly

Will the rules of international finance be replaced; if so, what will be the terms? Economist columnist Coggan (Guide to Hedge Funds, 2008, etc.) tackles these questions and others in this comprehensive treatment of money and debt. As an award-winning financial journalist, the author writes for the layperson, refusing to shelter behind the jargon of the dismal profession. Further, he doesn't claim to know with certainty how the current crisis will play out. Coggan states forthrightly that the confusing mess in which we currently find ourselves--initiated in 2007-08 by subprime mortgages--is not just another upheaval in American finance but the end of an era, a major turning point. He does not think there can be a return to the status quo because the promises to pay made in earlier times cannot be honored. The author situates his conclusion in a discussion of the longer-run history of booms and busts of monetary systems, and their related structures of indebtedness. The extremes in this series included phases associated with the word "bubble"--e.g., the Mississippi and South Sea Bubbles--and the hyperinflation of Weimar Germany. The rapid expansion of paper credit secured only on promises to pay from the proceeds of anticipated future growth caused crises when they outran the possibilities of growth. As a result, leaders reacted with draconian austerity to rebalance financial excess, often with gold-based monetary systems. Unfortunately, the United States has fallen from its once-lofty perch. "The US," writes the author, "so long the dominant power, is watching nervously in its rear-view mirror as China catches up. In short, the confidence needed to borrow and lend is diminishing." A helpful analysis for anyone who wants to know how the world got into the present financial mess, which issues need to be addressed and what the consequences might be.

Kirkus Reviews

Management Today (UK)
“Fascinating and authoritative, with the rigour and depth to satisfy an economist and the accessibility and pace to engage the layperson … If everyone read Coggan's book we might just be a little more circumspect if and when the next burst of irrational exuberance overtakes the economy”
 
Independent (UK)
“In this context of mildly hysterical panic in financial circles, Philip Coggan's book adds a welcome note of calm analysis.”

Tyler Cowen, Marginal Revolution
”A very good and sensible introduction to the history of the recent economic crisis…. Recommended.”
 
Motley Fool
“With the developed world facing fiscal and monetary crises, Coggan's new book, Paper Promises, is a veritable enigma machine for investors who wish to decipher today's headlines.”

800-CEO-READ
“Paper Promises is not only a great book, it is a great accomplishment—a brilliant work of financial history, a clear examination of the present moment, and a journalistic masterpiece all wrapped into one.”

Joshua Rauh, Kellogg School of Management, Northwestern University
"A compelling sketch of how the indebtedness of much of the developed world will eventually unravel. Rapid credit creation has always been a double-edged sword, associated with economic growth and democratic expansion of opportunity, but also inevitably leading to asset bubbles. In Paper Promises, history serves as a guide for the new order."

Tim Harford, author of Adapt and The Undercover Economist
“This is a remarkable book from one of the most respected economics journalists on the planet. Every page brings a fresh insight or a new surprise. A delight.”

New Statesman
"Writing with a lucidity that enables him to convey deep insights without a trace of jargon…. [Paper Promises is] the most illuminating account of the financial crisis to appear to date.”
 
Times of London
“A smart and witty analysis of the current economic storm, set in the context of the history of money.”
 
Irish Examiner
“Philip Coggan is a well-known financial journalist…. He now proves to be an exceptional banking and economic historian.”                       
 


Financial Times
"Bold and confident ... Coggan covers the terrain with characteristic calmness and objectivity, avoids over-simplification, and laces his arguments with his trademark erudition ... The alphabet soup of acronyms, from SIVs to CDO Squareds, is blissfully lacking ... Finally, the book is free from the shrieking ideology that afflicts virtually all contemporary debates over money. Indeed, it offers a clear explanation of the fresh ideological divisions that have arisen over how to deal with the crisis ... the book should be taken very seriously."

Publishers Weekly
“Coggan traces ‘history's tug of war between monetary shortage and excess' in this engaging and timely book about the current financial crisis…. Thoughtful and thorough.”

Kirkus
“Comprehensive…. A helpful analysis for anyone who wants to know how the world got into the present financial mess, which issues need to be addressed and what the consequences might be.”

Nassim Nicholas Taleb, author of The Black Swan
“This book stands way above anything written on the present economic crisis.

From the Publisher