Customer Reviews

Money, Markets, and Sovereignty (A Council on Foreign Relations Book Seri)

5 star:		(3)
4 star:		(4)
3 star:		(0)
2 star:		(0)
1 star:		(0)

 

 

This is a wonderful discussion of money, trade and finance, how they originated as a natural result of people's innate desire to trade and interact, and how they have been hijacked by the sovereign state. There is also a devastating critique of anti-globalism; defeating globalism demands the state take even more control of people's lives, so as to restrict or eliminate interactions with anyone outside of the country. The book illustrates its points about money with examples from the role of sterling in the 19th century to the current hegemony of the US dollar (for how long?), supplemented by useful graphs.
Our national, economic and business leaders should all read this book because current trends with the dollar cannot be sustained. The only thing saving the dollar's status as the world's reserve currency today is the lack of an alternative. However statist politicians and economists have an amazing ability to not let reality interfere with their theories. If medical research was run on the same 'scientific' principles as economics, eye of newt and salamander tail would still be major drugs, bleeding would be the major surgical procedure, and medical students would be studying the four humors, much as all economics PhD candidates and MBA's today learn about perfectly efficient markets and completely rational investors (which means, as noted by Jeremy Grantham at GMO, the Federal Reserve and most economists could not see the housing bubble as bubbles are by definition impossible).
The authors' discussion of the Great Depression is terrifying (world trade dropped 70 % from January 1929 to March 1933, kicked off by the Smoot-Hawley tariff in the US) as the Obama administration is committed to a new round of protectionism, since it is unable to resist the protectionist demands of the labor unions or its own craze for carbon caps (which Energy Secretary Chu says will require a new set of tariffs against countries without adequate caps-contrary to current trade agreements, which are evidently of no concern whatever to the new administration even dedicated as it says it is to multilateralism).
Those who are ignorant of history....

This book was dazzling in its concise review of economic history and its defense of classic liberal economic principles such as free trade and the gold exchange standard. The final chapter however fizzled when they simply note that it is not politically possible for the US to return to a gold standard and thus, they simply hope the Fed will do a better job. It reminded me of a lot of articles I have read in magazines like Foreign Affairs and Foreign Policy over the years. They are always very smart about what has already happened but the future prescriptions are so often bland and vague.

A comprehensive history of money, monetary policy and sovereignity. A brilliant defense of classical liberal economic policies for globalization, and how monetary nationalism or sovereignity presents a great obstacle to globalization and economic freedom.

Globalization remains always controversial, especially during a severe recession. Its philosophical, political and economic history is a complex tangle, but globalism's current expression is even more complicated, weaving in everything from gold to monetary policy to nationalism. Council on Foreign Relations experts Benn Steil and Manuel Hinds have written a high-level, dense, but ultimately rewarding book for dedicated students of globalization. They contend that the U.S. Federal Reserve Bank faces a tough challenge managing the U.S. dollar as both a national and a global reserve currency. This book outweighs other popular texts on globalism in its scholarship, topic range and intellectual arguments. The authors make such a formidable case that critics will have to ratchet up their rebuttals dramatically. getAbstract highly recommends this work to policy makers and executives involved in globalization, but note: The book presumes more than a passing acquaintance with economic theory.

"Money, Markets, and Sovereignty" is an instant classic in political economy. In addition to being the most insightful book on globalization I've ever read, MMS is an amazing tutorial on the history of economic and political thought. Beautifully and entertainingly written.

This book does an excellent job of exploring the history and modern trends of state efforts to benefit from their control over currencies. Steil and Hinds give a very informative overview of the transition from commodity to currencies to fiat currencies and the problems posed by fiat currencies in the current era of globalization. The authors make a convincing argument that market sovereignty has traditionally been associated with de-globalization in the form of trade protectionism and restrictions on capital flows. Today though, a paradox exists because international trade flows are increasing while efforts to control currencies are also being ramped up. The free-floating fiat currencies manipulated by power central banks marks the height of market sovereignty, but individuals can move between currencies with such speed and ease that central bank powers are blunted. This reality undermines the level of confidence required to sustain a monetary system based on non-commodity backed currencies.

I was hoping that the book would give more space to issues beyond currencies that reflect the tension between state sovereignty and international commerce such as sovereign debt issuance, "hot money" flows, and the growth of sovereign wealth funds. And even though the book focuses almost exclusively on currencies, little mention is made of IMF Special Drawing Rights which the Chinese government has publicly supported as a potential alternative to the U.S. dollar. These minor complaints notwithstanding, "Money, Markets & Sovereignty" is one of the most informative and compelling books I have read in a while. The book is not too highly technical and I would highly recommend it to anyone interested in international economics.

This is a thought-provoking review of monetary policy and history. What is money and what gives it value? How are currencies managed and abused? How does the world financial system work? The authors exhibit an impressive grasp of economics and policy and provide worthwhile insights on the way the world works.

The book is mostly descriptive rather than prescriptive, hence the 4 stars (rather than 5). But know that going in and you won't be disappointed.