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Barely five years later, Federal Reserve Chairman Paul A. Volcker showed the only thing needed to bring both price stability and, after a time, durable growth was a spine stiff enough to furnish a credible commitment to all economic actors that monetary policy would be conducted with inflation foremost in mind. Ferguson's first 20 pages begin at an Inca silver mine in the Andes; proceed backward to Mesopotamia and clay tablet money; introduce currency-signer Henry M. Paulson Jr., George W. Bush's third and final Treasury secretary; head off to Pisa for a discussion of Fibonacci, who in the 13th century provided the arithmetic foundation for finance and accounting; then go on to Venice for banking and Shylock, whose pound of flesh leads to loan sharking in contemporary Glasgow.
sending out only the exact number of he declared: “we shall defend our Is- witty, and eloquent Harvard don, John aircraft needed to meet each German land, whatever the cost may be, we shall Kenneth Galbraith. attack in accordance with the plan fight on the beaches, we shall fight on Galbraith’s book appeared in 1975 Dowding had devised, Leigh-Mallory the landing grounds, we shall fight in and its narrative returns always to the wanted to mass his fighters for gigan- the fields and in the streets, we shall preoccupation of the Gerald R. Ford tic sweeps. When he did so the flaw be- fight in the hills; we shall never sur- Administration: How to tame inflation came obvious. By the time his aircraft render, and even if, which I do not for a without plunging the economy into re- formed up in their big wings the Luft- moment believe, this Island or a large cession. The “where it went” refers to waffe had already attacked 11 Group’s part of it were subjugated and starving, the evaporative nature of money during bases. then our Empire beyond the seas, armed those inflationary years. Galbraith il- Leigh-Mallory got away with diso- and guarded by the British Fleet, would lustrates this by calculating that the beying Dowding’s orders because the carry on the struggle, until, in God’s $100,000 gift from Howard Hughes that Air Ministry supported him against his good time, the New World, with all its President Richard M. Nixon kept in a superior, a breathtaking display of mal- power and might, steps forth to the res- safe for three years lost 13.75 per cent ice considering the stakes. Luckily, just cue and liberation of the old.” In other in value to the inflation he was offi- when it seemed 11 Group was on the words, Britain would fight to the end cially attempting to control. How quaint ropes Hitler ordered the Luftwaffe to at- and beyond. Galbraith’s policy prescription seems tack London. Given this breather, 11 In his memoirs Churchill wrote today: wage and price controls (which Group restored its strength and togeth- that it was the British people who had Nixon actually had tried) so the arm- er with 12 Group, for a change, inflict- the lion’s heart; he only supplied the wrestling over income by big unions ed so much damage on the Luftwaffe’s roar. Though this does not do justice and big businesses that supposedly concentrated formations that Hitler put to his own role, he had it basically caused the creeping rot could be con- an end to daylight bombing opera- right. Notwithstanding the bravery of tained. Barely five years later, Feder- tions over England and canceled Oper- the few, it was the many who saved the al Reserve Chairman Paul A. Volcker ation Sea Lion, the proposed invasion. world. showed the only thing needed to bring Ultimately Britain was saved from de- both price stability and, after a time, dur- feat and occupation largely because of Hitler’s bad decisions, or so the story Panic, able growth was a spine stiff enough to furnish a credible commitment to goes. UT THE STORY, accepted by Korda, Fraud and all economic actors that monetary poli- cy would be conducted with inflation B has to be wrong. Germany was not on the verge of destroying Fighter Com- Misadventure foremost in mind. Not that a produc- tivity-enhancing technological revo- mand; it was on the verge of forcing 11 lution hurt. Group to redeploy. A somewhat weak- The Ascent of Money: A It is a convincing measure of the eco- ened Fighter Command would still have Financial History of the nomic successes enjoyed since the early been in business, along with the Royal World 1980s that Ferguson’s book is not obsessed Navy and the unjustly maligned British By Niall Ferguson with inflation. It does make the occasion- Army. They certainly would have de- Penguin. al appearance. No history of money, or stroyed Hitler’s ill-equipped and weakly 442 pp. $29.95. pocket history—the text is 358 spacious supported invasion force. The debt the pages, including 36 photos and repro- free world owes is therefore not only to, Reviewed by ductions—would be complete without it. or even mostly to, Fighter Command, for William Watson But given our current difficulties, Fer- all its excellence, but to Winston Church- Chair of Economics, McGill guson is more concerned with panic, ill and the whole British people for re- University; columnist, “Montreal fraud and misadventure in the financial fusing Hitler’s olive branch and vowing Gazette,” “Ottawa Citizen,” markets. to fight on alone for as long as it took the “Toronto National Post” “T
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