The End of Alchemy: Money, Banking, and the Future of the Global Economy

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W. W. Norton & Company, Mar 21, 2016 - Business & Economics - 368 pages

“Mervyn King may well have written the most important book to come out of the financial crisis. Agree or disagree, King’s visionary ideas deserve the attention of everyone from economics students to heads of state.” —Lawrence H. Summers

Something is wrong with our banking system. We all sense that, but Mervyn King knows it firsthand; his ten years at the helm of the Bank of England, including at the height of the financial crisis, revealed profound truths about the mechanisms of our capitalist society. In The End of Alchemy he offers us an essential work about the history and future of money and banking, the keys to modern finance.

The Industrial Revolution built the foundation of our modern capitalist age. Yet the flowering of technological innovations during that dynamic period relied on the widespread adoption of two much older ideas: the creation of paper money and the invention of banks that issued credit. We take these systems for granted today, yet at their core both ideas were revolutionary and almost magical. Common paper became as precious as gold, and risky long-term loans were transformed into safe short-term bank deposits. As King argues, this is financial alchemy—the creation of extraordinary financial powers that defy reality and common sense. Faith in these powers has led to huge benefits; the liquidity they create has fueled economic growth for two centuries now. However, they have also produced an unending string of economic disasters, from hyperinflations to banking collapses to the recent global recession and current stagnation.

How do we reconcile the potent strengths of these ideas with their inherent weaknesses? King draws on his unique experience to present fresh interpretations of these economic forces and to point the way forward for the global economy. His bold solutions cut through current overstuffed and needlessly complex legislation to provide a clear path to durable prosperity and the end of overreliance on the alchemy of our financial ancestors.

 

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User Review  - ritaer - LibraryThing

Could not quite plough through to the end. I just found it astonishing that anyone with any awareness of the world could write a book about economics and money theory without any recognition of the role of resource depletion. Read full review

The End of Alchemy: Money, Banking, and the Future of the Global Economy

User Review  - Book Verdict

Governor of the Bank of England from 2003 to 2013, King argues that the Great Recession that swamped his tenure was just one of a series of financial crises in the 200 years since paper money replaced precious metals. But are such crises inevitable? He's not convinced. Read full review

Contents

Acknowledgements
The Good the Bad and the Ugly
In Money We Trust
Alchemy and Banking
The Purpose of Financial Markets
The Role of Central Banks
Money and Nations
Reforming Money and Banking
The World Economy Today
The Prisoners Dilemma and the Coming Crisis
Notes
Bibliography
About the Author
Copyright

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About the author (2016)

Mervyn King served as the governor of the Bank of England from 2003 to 2013. He was appointed Baron King of Lothbury in 2013, a Knight of the Garter in 2014, and is currently a professor at both New York University and the London School of Economics.

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