Panic, Fraud and Misadventure by ProQuest


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.

More Info
									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
       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
To top