Book review – War and Gold: A Five-hundred-year History of Empires, Adventures and Debt

This book is a good historic account of evolution of various currency systems and importance of gold. Written by Kwasi Kwarteng, a historian and a politician in UK. Earlier quite a few politicians could write really well, now it is such a rarity.

The book starts from conquest of Inca empire by Spanish empire. This conquest led to inflow of precious metals (read gold and silver) in the European country which helped finance further wars. The Spanish did a bad job of maintaining this conquest and led to build up of debt.  The high debt leads to issues of currency and inflation. This is how all these things are connected and becomes the theme of the book:

In the sixteenth century, Spanish conquistadors discovered the New World. The vast quantities of gold and silver would make their country rich, yet the new wealth, which was plunged into multiple wars, would eventually lead to the economic ruin of their empire. Here, historian and politician Kwasi Kwarteng shows that this moment in world history has been echoed many times, from the French Revolution to both World Wars, right up to the present day, when our own financial crisis saw many of our great nations slip into financial trouble. Kwarteng reveals a pattern of war-waging, financial debt and fluctuations between paper money and the gold standard, and creates a compelling study of the powerful relationship that has shaped the world as we know it, that between war and gold.

The author is not an economist so does not get into details of economics. But that is a blessing as well as usually such books are written by economists who have their own biases. So for instance, the author believes that gold is critical to ensuring a stable money supply and inflation. This is a belief which most economists may disagree in today’s times.

Then the book though promises to be a 500 year history, but most of the first 400 years are just covered in some 80 pages. Rest of the book (around 250 pages) is mostly set in 20th century with a brief coverage of recent American and European crisis. So there are all these classic debates related to money iduring WW-I, Great Depression, WW-II, Bretton Woods, Break up of BW agreement and so on.

Decent read..

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