The Reckoning

"This one sort of speaks to something I’ve long been interested in. We get this general education in schools that follows the basic themes of presidents and wars and that kind of thing and then there’s this alternative history of finance and economics, and Lords of Finance impressed me because it gives you that alternative history, particularly through the inter-war years from the end of World War I into the Great Depression. A buddy of mine described it as The Guns of August for global finance and I think that sums it up nicely. It’s a great history. Well, what this book does is tell the story of the attempts to repair the global financial system that had been ruptured by World War I . It’s not widely known, but in the years leading up to World War I we had a surge of globalisation that brought together international trade and finance in a way that’s very reminiscent of what’s been going on in the last decade or two. This is the second era of globalisation and the first ended badly, with World War I, so he does mini-biographies of the central bankers, the people in the Bank of England, the Germans and the French and their efforts to repair the pre-war system and their fascination with the gold standard… it’s just a wonderful account of these men and their doomed attempts to save a system that ultimately collapses into depression and war. I don’t know that I’d blame it, but the lesson to be taken from that is, Tom Friedman had the argument a few years back that no two countries that have a McDonald’s ever went to war with each other – that was his promotion of globalisation and it was true right up until the moment when it stopped being true when the US bombed Serbia. The lesson I take away is that trade does not inoculate you from the dangers of war. The mere fact of having a globalised system and a lot at stake in terms of trade of commerce, and our relationship with China and other places doesn’t necessarily mean anything except that the cost of a conflict would be quite high. It doesn’t mean there won’t be conflict."