A Primer on Money, Banking, and Gold (Peter L. Bernstein's Finance Classics) [Paperback]

Peter L. Bernstein (Author), Paul A. Volcker (Foreword)

Book Description

Publication Date: September 2, 2008 | Series: Peter L. Bernstein's Finance Classics (Book 1)

One of the foremost financial writers of his generation, Peter Bernstein has the unique ability to synthesize intellectual history and economics with the theory and practice of investment management. Now, with classic titles such as Economist on Wall Street, A Primer on Money, Banking, and Gold, and The Price of Prosperity—which have forewords by financial luminaries and new introductions by the author—you can enjoy some of the best of Bernstein in his earlier Wall Street days.

With the proliferation of financial instruments, new areas of instability, and innovative capital market strategies, many economists and investors have lost sight of the fundamentals of the financial system—its strengths as well as its weaknesses. A Primer on Money, Banking, and Gold takes you back to the beginning and sorts out all the pieces.

Peter Bernstein skillfully addresses how and why commercial banks lend and invest, where money comes from, how it moves from hand to hand, and the critical role of interest rates. He explores the Federal Reserve System and the consequences of the Fed's actions on the overall economy. But this book is not just about the past. Bernstein's novel perspective on gold and the dollar is critical for today's decision makers, as he provides extensive views on the future of money, banking, and gold in the world economy.

This illuminating story about the heart of our economic system is essential reading at a time when developments in finance are more important than ever.

Editorial Reviews

Review

"This book reveals and discusses the link that still exists between money and gold." (Finance & Management Faculty, October, 2008)

From the Back Cover

One of the foremost financial writers of his generation, Peter Bernstein has the unique ability to synthesize intellectual history and economics with the theory and practice of investment management. Now, with classic titles such as Economist on Wall Street, A Primer on Money, Banking, and Gold, and The Price of Prosperity???which have forewords by financial luminaries and new introductions by the author???you can enjoy some of the best of Bernstein in his earlier Wall Street days.

With the proliferation of financial instruments, new areas of instability, and innovative capital market strategies, many economists and investors have lost sight of the fundamentals of the financial system???its strengths as well as its weaknesses. A Primer on Money, Banking, and Gold takes you back to the beginning and sorts out all the pieces.

Peter Bernstein skillfully addresses how and why commercial banks lend and invest, where money comes from, how it moves from hand to hand, and the critical role of interest rates. He explores the Federal Reserve System and the consequences of the Fed's actions on the overall economy. But this book is not just about the past. Bernstein's novel perspective on gold and the dollar is critical for today's decision makers, as he provides extensive views on the future of money, banking, and gold in the world economy.

This illuminating story about the heart of our economic system is essential reading at a time when developments in finance are more important than ever.

See all Editorial Reviews

Product Details

• Paperback: 272 pages
• Publisher: Wiley; 1 edition (September 2, 2008)
• Language: English
• ISBN-10: 0470287586
• ISBN-13: 978-0470287583
• Product Dimensions: 8 x 5.1 x 0.7 inches
• Shipping Weight: 9.9 ounces (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars  See all reviews (8 customer reviews)
• Amazon Best Sellers Rank: #342,868 in Books (See Top 100 in Books)

More About the Author

Peter L. Bernstein's nine books include the worldwide bestseller Against the Gods: The Remarkable Story of Risk. Bernstein is also an economic consultant and publisher of Economics and Portfolio Strategy, a semimonthly letter for institutional investors.

Customer Reviews

Most Helpful Customer Reviews

72 of 74 people found the following review helpful:

3.0 out of 5 stars Substantially outdated, November 1, 2008

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The Dilettante "Dilly!" - See all my reviews

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This review is from: A Primer on Money, Banking, and Gold (Peter L. Bernstein's Finance Classics) (Paperback)

Prospective readers should note that this is not a new book. Rather, it's a repackaged reprint of one of Bernstein's earliest books (circa 1965). Fed Chairman Emeritus Paul Volcker has written a shiny new introduction and Bernstein himself takes a few pages at the beginning to place his old ideas in historical context, but frankly the meat of the book is totally outdated. There is perhaps no area in economics that has seen more change over the past 40 years than monetary policy. Bernstein wrote this book before the demise of the gold standard, before stagflation, before the modern consensus on monetary policy. If you want to read Bernstein on gold, a much more contemporary treatment is presented in The Power of Gold: The History of an Obsession (A caveat: I have not read that book yet, but include it only so the reader can be aware that there is an alternative.)

6 of 8 people found the following review helpful:

5.0 out of 5 stars If you want to understand the Fed, read this book., June 21, 2009

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Gaetan Lion - See all my reviews
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This review is from: A Primer on Money, Banking, and Gold (Peter L. Bernstein's Finance Classics) (Paperback)

I was in the midst of studying monetary policy and the related Federal Reserve balance sheet when a good friend of mine suggested I read this book to further my understanding on the subject. Given that I really liked another book written by the author: Against the Gods: The Remarkable Story of Risk, I was very receptive to my friend's recommendation. The book did not disappoint. I was amazed how insightful this book is given it was written over 40 years ago. Obviously, many of the new monetary policy tools Bernanke created over the past year (credit facilities and related quantitative easing) did not exist at the time Bernstein wrote this book. But, it does not matter. Much of the interactions between the Federal Reserve and commercial banks has not changed that much.

Reading the Appendix first is a great way to start this book as it gives you a quick technical education on the workings of the Fed vs commercial banks. But, the remainder of the book is instrumental in fleshing out this initial understanding and giving it historical context from the 1930s to the 1960s.

Bernstein who spent two years as a researcher at the Fed has a rare insider knowledge of how that system works. Many of his insights are counterintuitive. He explains effortlessly how the Federal Reserve and commercial banking system interact. Thanks to him I now understand that the relationship between the Federal Reserve and banks is very similar to the one between banks and consumers. We have deposit accounts at banks that give us the necessary credits to withdraw cash from ATMs. Banks hold reserve deposits (credits) at the Fed that give them the right to withdraw currency. In the same manner that our cash withdrawals directly reduce our deposits by the same amount; banks currency withdrawals reduce their reserves at the Fed by the same amount. But, we are the ones who really drive bank currency withdrawals from the Fed. Banks withdraw cash from the Fed to meet the volume of our own ATM withdrawals. Bernstein explains how the Government has little control on how much cash we keep on hand and how much we deposit in banks. This is the main leak (customers holding cash) of the deposit-loan money creation system.

Whatever one would think is outdated within this book is very interesting from an historical standpoint. In Chapters 13 through 15 where he covers the economic history of the U.S. from 1938 to 1966 and the role of the Fed is really fascinating stuff. This book is a testimony of economic history just like A Monetary History of the United States, 1867-1960 by Milton Friedman.

1 of 1 people found the following review helpful:

5.0 out of 5 stars Great book on banking, August 14, 2009

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Mariusz Skonieczny "Author" (Schaumburg, IL) - See all my reviews
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This review is from: A Primer on Money, Banking, and Gold (Peter L. Bernstein's Finance Classics) (Paperback)

I decided to read this book because I really enjoyed the author's other book The Price of Prosperity. This book did not disappoint. Even though some of the information is outdated, the basic structure of banking is still the same. In this book, the author explains the Federal Reserve, banks, customers and how they all interact with each other. The deposits that we put in the bank are used to make loans to other customers and businesses, but a certain portion must be deposited with the Fed. The Fed is the bank for the banks. I found this book a great read especially now when banks are facing tough times.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market