5 comments about Money: Understanding and Creating Alternatives to Legal Tender.

1. This book is a fruit of the author's "warm heart and cool head." The value of this book is to demonstrate a theory and a method for democratizing the power to issue money. We can understand the necessity for local currencies in order to decrease the concentration of power in monetary and financial system.



2. Make an estimate of the amount of time you have spent on preparing yourself to earn money, on getting it, and of taking care of it when you have it. Wouldn't it be worthwile to really understand what it is you are spending all this energy on?
   Tom Greco has been doing some of that work for you, with integrity, passion and enormous dedication.
   The time has come to shed some light on the mysterious workings of our money. Read why it is a losing game for most people, of why it is our master instead of our servant. More important still: what you can do to change it for yourself and for your own community.



3. This book has lots of good information in it, but the author's enthusiasm for local currencies leads him to order the book in an ineffective way: rather than highlighting particular currency projects, he should highlight the issues with and potential solutions to our monetary system. The most useful information -- currency formation, interest basics, suggested improvements (e.g. returning to a separation of on-demand and savings/investment accounts) -- was buried in the second half of the book.
   
   The current monetary system has several problems -- (1) distribution of wealth from poor to rich through payment of interest, (2) environmental degradation by necessitating continuous growth in order to repay interest, (3) increased risk of war since governments can print currency instead of increasing taxes, and (4) devaluation of currency through illegitimate creation of money.
   
   These are legitimate concerns. Another concern, that the banking system can lead to shortages of money, seems refuted by the phenomenon of deflation/falling prices. If limited to a small subsection of a larger economy, local falling revenues (and rising currency value) would still present difficulties when goods must be imported from outside the locality; but use of local currency (that the outside suppliers wouldn't accept) is irrelevant to the situation.
   
   I would also disagree with the author that the wealth distribution and the partial reserve problems are linked. The wealth distribution problem stems from needy people paying wealthy people for use of currency. There is no difference in this regard between borrowing cash directly from a person (i.e. 100% reserve) and taking out a bank loan (i.e. creation of new, illegitimate money), despite what the author seems to believe. The borrower will (or, rather, should) only do so if the intended use of the money yields a benefit greater than the agreed interest rate. Whether interest goes to both bank and depositor or to the bank only (solely to cover administrative costs), this will be the case (driving an unsustainable need for growth, liquidating the real wealth of our natural environment).
   
   Repayment risk coverage is not much considered in this book, though later chapters do admit a need for a reserve to cover chronic debit accounts. Discussion of the effects of higher interest rates for poorer people is not to be found, instead treating all borrowers/consumers equally. Loans herein are always "monetization of assets" (e.g. mortgages), but unsecured loans are (and should be) a possibility. Should all borrowers (or all citizens, for that matter) pay equally for insurance against defaults? The author would seem to imply so; whether good or bad an idea, some justification for doing so would be helpful.
   
   All in all, this book is a worthwhile read -- but definitely not the only book you'll need to read on currency or flaws in our economic system (e.g. subsidized pollution, tax code that favors property ownership, etc). Incidentally, if anyone knows of a good book on currency exchange (which is not covered in the above book), I would like to hear from you.



4. Contrary to the enthusiastic reviews, I have to forewarn possible purchasers of this book. It is a mix good information and superficial, misleading, and wrong information which together are likely to result in un-necessary difficulties if not disaster for projects supporting community based currencies.
   
   Without being tasked to rewrite this book let me cite a few examples. In the context of asset based currencies no mention is given on American Colonial script, the issuance of the Continental Congress's "Continentals," The US Civil War Greenbacks, or of the currently existing right of the US Treasury to issue silver certificates. A first lesson would be to examine successful commons centered currencies.
   
   It doesn't really deal with the various banking and monetary scams, including the Great Depression, version 1.0, that have been inflicted upon the US economy to serve private interests. It doesn't deal with the fact that credit cards are a way of generating debt, and thereby money, particularly when debt as extended in violation of existing fractional reserve laws relative to banking operations.
   
   Often what is described as "brief" historys or descriptions get immediately side tracked onto tangential material of little importance. The basic definition of money is all over the map, and there is little analysis developing a clear definition.
   
   To the extent that it uses material offered by the Federal Reserve it is using material that it deliberately misleading. The Federal Reserve is essential a privately owned and controlled corporation which acts in the interest of its investors and shareholders. Through the strategic political lobbying of the Congress it has obtained the primary right to issue and control our currency in the interest of its share holders and participant banks, not in the interest of the people of the US as a nation. Through the same legislation enabled by the ignorance and duplicity of our bribed politicians it has acquired the branding rights to pretend to be an institution of the US Government. To the extent that the faith in the US Currency is based upon this association it is misinformation.
   
   These are critical times in which we can expect to see a major collapse of the monetary and economic ideologies that have extracted so much wealth from the people of the US and from the World. While I fully support the concept and practice of community based currencies let this book not be your only source of information. Also, check into more serious analyses by sources such as the American Monetary Institute's "The Lost Science of Money." Greco's book seems to be in the lesser sense very much a "new age" sort primer without being serious about monetary history, current policies, or principles.
   
   Given that most people are unable to evaluate financial statements, this sort of feel good, skimming, and muddled presentation could easily lay the foundation for "well intentioned" fraud. On the other side, if these community based currencies are established wrongly it could expose people to a lot of legal and tax related trouble. There is massive irrationality and political ideologies afoot already in the "management" of the US and Global economy. When erecting community currencies it will serve our interests better by developing an understanding of the related material also from more serious sources. Sure this is a cheaper book and appeals to irrational exuberance, but will it provide a solid foundation?



5. This is the most comprehensive book I've found on the subject of alternative or complementary currencies. It outlines what is wrong with current money systems, gives some historical examples of alternative currencies, talks a little bit about different types of alternative currencies and different properties such systems may have, and then proposes ways to improve upon existing systems and implement new systems. I think it succeeds on most points, but falls somewhat short of the quality of scholarly literature at times. I think its final advocacy falls somewhat short of its purported goals...but overall, this book is still a must-read.
   
   The exposition of what is wrong with the current money system (Part I) is very easy to read and extremely compelling. Although it is a stance that many mainstream economists would take issue with, Greco's argument about what is wrong with society is remarkably airtight. I wish, however, that he would make more of an effort to tie his work in with the relevant economic theory, and also with work that has been done in sociology on the topic of poverty, in order to address possible objections that economists would raise. The book falls somewhat short of being scholarly research on this topic as its level of rigor and citing the literature is somewhat lacking; at times the book comes across more as a political advocacy piece than anything else. These weaknesses may explain why the book was not published in a mainstream press.
   
   The discussion of historical complementary currencies (Part II) is by no means comprehensive, as the other reviewers pointed out, but I don't think this is a shortcoming of the book. Greco discusses some systems that were successful and compares them to a few which were not, as a pedagogical tool (in Part III), in order to highlight the effects that certain properties or certain types of management (or mis-management) have on these systems. I don't think Greco intended to make this book a comprehensive historical survey of all alternative currency systems ever used--that would be a massive undertaking.
   
   In terms of the practical and advocacy part of the book (Part IV), which discusses how to improve on existing systems, and how to implement a complementary currency system, this book is more or less on target on most points, but I don't agree with the final conclusions. I feel like Greco recognizes all the key issues, but does not quite solve them (even though he argues that he does). The chapter on complementary currencies for impersonal markets is short and I think what is advocated there (relying on backed currencies for impersonal markets) is a cop-out. I think Greco would do well to explore a bit farther "outside the box", or, if he does not feel qualified to do this, at least end the book saying that more work is necessary. Greco's current stance seems to be that the solutions to the world's problems have already been invented and just need to be implemented--this is not entirely true, as there are a number of complementary currency systems in operation similar to the ones he advocates, and they have not grown to a large enough scale to solve any of the real deep problems that Greco highlighted in the initial part of the book.
   
   Bottom line? Read this book; there's no better book on the subject. This one is well-written, entertaining, and has a huge amount of information that cannot be found in any other single place.

1 comments about Milton Friedman's Monetary Framework: A Debate with His Critics.

1. Meltzer edited this collection of essays containing Friedman's most up to date exposition of his macro model and a series of comments from other macroeconomists such as James Tobin,Paul Davidson,Don Patinkin and Meltzer himself in the 1972-74 time period.The major problem in these essays is the failure of all the above mentioned economists(Davidson mentions the distinction frequently,but unfortunately adopted a misinterpretation of Keynes's approach to uncertainty based on the views of G L S Shackle,which are in fact a very special case of Keynes's own approach as originally specified in chapter 26 of Keynes's 1921 classic, A Treatise on Probability) to grasp the central theoretical role played in Keynes's General Theory of the clearcut distinction between risk and uncertainty.This is surprising since Friedman was certainly familiar with Knight's classic Risk,Uncertainty and Profit.Nevertheless,Friedman appears to have rejected the distinction maintained by both Knight and Keynes in favor of the subjectivist approach of Leonard J Savage,who,although discussing the problem of uncertainty(which Savage called vagueness),rejected any operational role for it in his theory of decision making under risk. The confusions of Friedman,Tobin, and Davidson all show up simultaneously in their attempted discussion of the technical details of Keynes's Theory of Effective Demand as modeled by Keynes in chapter 20 of the General Theory.Chapter 20,and the additional analysis contained in chapter 21 of the General Theory,contains the analytic core of Keynes's major innovation in the General Theory,his incorporation of expectations and uncertainty into the microfoundations of entreprenuerial decision making and the subsequent aggregation of this micro model into the macroscopic D-Z model,which Keynes had briefly introduced in a beginning chapter of the General Theory,titled"The Principle of Effective Demand".It is clear from a reading of pages 143-157 that Tobin,Friedman,and Davidson do not understand how to derive Keynes's original D-Z model.Simple integration of Keynes's derivatives ,either on pp.55-56,ft.2 or on pp.282-285 of the General Theory ,would reveal that D=pO and that Z=P+wN.Friedman fails to realize that the p in D=pO IS DEFINED BY KEYNES AS AN EXPECTED PRICE. Another error committed by Friedman is his failure to recognize that the mathematical expression p=[D/W.W]/O IS EQUAL TO EXPECTED MARGINAL COST.Practically all of Friedman's footnote 15 on pp.156-157 of this book is erroneous.None of these erroneous results were challenged by either Tobin or Davidson.Keynes's Z FUNCTION IS COMPLETELY ELIMINATED IN FRIEDMAN'S ANALYSIS.Despite the large number of errors,this reviewer recommends that this book be purchased.A study of these errors is very instructive.

1 comments about Money: A History.

1. Written by the coins and medals experts of the British Museum, this handsomely designed work succinctly but comprehensively explores the entire history of money, from its earliest beginnings to the electronic transactions of the 1990's.
   The book features over 550 beautiful color and black-and-white illustrations, with essays covering ancient and modern coinage in global perspective, and relating the moral, political, religious, and social meanings inevitably associated with so powerful a force. Highly recommended as an excellent introduction to a complex subject, or just for enjoyable and informative browsing.

   (The "score" rating is an ineradicable feature of the page. This reviewer does not "score" books.)

5 comments about Trading in the Global Currency Markets Second Edition.

1. Luca has written what is essentially a text book for the foreign exchange market. That is good in that he provides a survey of the market, its history, how it works, etc. If you want to learn about the market, this book contains the information you desire. It reads like a textbook, though. If you want something to help you actually trade the market, look elsewhere.



2. This book turned out to be quite different from what I was expecting. By the cover, I thought it would be about finding a brokerage account, and then getting set up to trade away. To my surprise it was more of an educational textbook than a "do it yourself" guide for individual investors.
   
   However, this book contains a lot of interesting information about foreign exchange and how it works. It discusses the history of foreign exchange, factors that influence it, terminologies used by traders, and the different means that currency is traded. The primary focus is the multimillion-dollar trades put forth by large firms. It serves as a good reference and a good supplement to other readings about finance/economics in general. Since it covers a wide range of topics and somewhat glosses over them quickly, I suggest reinforcing with other more specific books on economics.
   
   The good points are that it contains much useful information for educating yourself in the foreign exchange area. The downside is that it is not a practical guide for people interested in getting their dollars converted to Euros by this evening.



3. The structure is good, topics are comprehensive, style is concise.
   
   The problems,
   
   The book seems did not proof read carefully. There are many typos, very confusing.
   
   Especially in the second part, which is about technical analysis, it does not explain details when they are needed. And it lacks proper explanations for figures. Some figures do not match patterns he described.
   
   This guy, Luca, seems to be famous. He is maybe good at trading himself and he is able to write a good book, but he just did not put himself into it.



4. The book contains a lot of undigested info on trading in currency markets, failing to explain much of the things it illustrates.



5. great book that does not leave anything out! i use it more as a reference than a read, though..it's looong!

4 comments about Interest and Prices: Foundations of a Theory of Monetary Policy.

1. This book is written by one of the giants in modern macroeconomics. Although a little bit lengthy, the book contains nearly all the recent advance in monetary economics, especially in the interest rate rules and optimal monetary policy. Of course, you should be familiar with log linearization and simple matrix algebra in order to access the mathematics of the book. Woodford¡¦s Interest and prices and Walsh¡¦s Monetary Theory and Policy (2nd edition) would definitely become the required text for every graduate course in monetary economics around the world.



2. For sure this will become a masterpiece in modern monetary policy. It is very well detailed, and discusses what is really important in the field.

   It is already a reference book, and must be read by practitioners, students and academicians interested in the subject.

   However the book has the following caveats:

   - It is too verbose. That means that you might have the same deepness with less words. As a consequence the reader often gets tired, bored and misses the main point;
   - It does not talk about conventional monetary policy as you could find in Walsh's "Monetary Theory and Policy";
   - Trying to make the exposition easier, the models are presented in separeted too far apart pieces. This makes it difficult to fully grasp the details at once.

   In view of this, I must say that Walsh's book might become a necessary complements to Woodford's. Notice that the styles and goals of both books are different. Therefore, buying one or another depends on your intentions.

   In additon I'd say that Woodford's overall strategy is right in terms of the sequence of subjects treated. However, shorter and more numerous chapters might improve the exposition tactics.




3. I have been spending the last four months concentrating on Woodford's model of a cashless economy, which Woodford presents in Chapter 2, and which provides the foundation for the rest of the book. I believe his model to be incomplete, relying on a rational expectations precedent of assuming bounded solutions when solving expectational difference equations. A colleague and I have written a paper that shows that this precedent is flawed and we then propose more rigorous procedures. When we apply those revised procedures to Woodford's model of a cashless economy, we find his model is incomplete.

   Furthormore, I am writting a second paper that shows that the central bank in Woodford's model is unable to affect the nominal interest rate paid on loans by other entities. If the central bank cannot affect this interest rate, then it cannot affect prices even if Woodford's model was complete.

   These are just challenges to Woodford's model which need to withstand the test of refereed journals. However, the potential reader of this book needs to be aware that there are some academics who are challenging the validity of his model. For more details, search for "Woodford cashless economy" with a search engine and you should be able to find my web page that discusses this (...) David Eagle, Associate Professor of Finance
   Eastern Washington University
   (...)




4. It's a most compehensive and thought-provoking treatise on modern monetary economics, an excellent follow-up to Carl Walsh's Monetary Theory and Policy. I think this reviewer who gives the book 2 stars just on account of one technical error that he claims to have discovered is being extremely myopic. The book is not about solutions to stochastic difference equations and neither does the author claim to be an expert at stochastic difference equations. The book handles what it is meant to handle admirably well, i.e. MONETARY ECONOMICS

5 comments about The General Theory of Employment, Interest and Money.

1. John Maynard Keynes is the collectivist's savior. Finally, the welfare statist thinks, someone who actually makes my ideas sound good to economists. Unfortunately, Keynes's theory is nothing new. It should be incredibly obvious to any non-professional that if a large entity (government) decides to spend a lot of money over a short period of time, then in the short term there will be very pleasurable effects. In the long term, however, a large sum of money spent by the government will have very harmful effects, distorting the price system and creating inflation, whereas a large sum of money spent by a private entity will have a sustained benefit on the economy.



2. Keynes presented a generalization of neoclassical theory.Keynes starts the GT in chapter 2 where he analyzes the neoclassical theory of the labor market.He notes that the most advanced technical treatmant was presented by Pigou in his 1933 book,The Theory of Unemployment.Keynes demonstrates in the appendix to chapter 19 that Pigou's model of his theory is a special case of Keynes's general model developed in chapters 20 and 21.The primary result of neoclassical theory is that an optimum result (full employment)is obtained in the aggregate labor market if the aggregated real wage(w/p) equals the marginal product of labor(mpl) derived from an aggregated production function(O= phi(N)).This is expressed as w/p=mpl,where w is the money wage,p is the price level,and mpl is the aggregated marginal product of labor.In chapters 20 and 21 Keynes presented his mathematical analysis.This leads to his generalization of the quantity theory's equation of exchange,MV=PO,to incorporate uncertainty and the speculative demand for money besides risk and the transactions demand for money.There are two such generalizations.Chapter 20 analyzes the labor market and the commodity market.Mathematically,there are two ways of expressing Keynes's first generalization in chapter 20-w/p=mpl/ep or the more convenient w/p=mpl/(mpc+mpi).Unless the elasticity ep=1(ep can range from 0 to 1) or the mpc + mpi=<1,the RHS of both equations will rise .This requires that the money wage also rise.Neoclassical theory requires that the money wage fall.The condition that the elasticity ep equal 1 means the economy is operating on the boundary of the aggregate production possibilities function curve because the labor market clearing condition,w/p=mpl, is an economically efficient outcome.It is thus allocatively efficient and productively efficient.
   
   
   
   
   
   In chapter 21,Keynes presents his generalization of the neoclassical equation of exchange with the money market added to the labor and commodity markets.The mathematical generalization now becomes w/p=mpl/e,where e is the elasticity that"... measures the response of money prices to the quantity of money in an aggregated economy"(GT,p.305-306).Unless e=1,where e can range between 0 and 1 ,as implicitly assumed by neoclassical economists,the RHS of the above equation will rise and it will be impossible for labor,in the aggregate, to cut its money wage as claimed by neoclassical theory in order to reduce unemployment.Again,the money wage will have to rise.
   
   
   
   The final point that needs to be cleared up is that Keynes's aggregate supply function is correctly specified and analyzed mathematically in chapter 20 on p.283 and in a footnote on pp.55-56 of the GT.The reader must be able to apply simple integration to Keynes's derivatives.I give the steps below:
   
   
   
   Go to footnote 1 on p.283 of the GT.Keynes defined P to be expected economic profit.The second line from the bottom of this footnote reads as " = delta P ", which is the same as" = dP".That should actually be " = delta P w subscript" due to either (a) a typographical error made by the printer in the GT or (b) because Keynes felt that it was obvious,since he divided D=Z through by w,to get Dw subscript = Zw subscript,which means that you must divide P by w.P is AUTOMATICALLY DEFINED IN TERMS OF WAGE UNITS.Pw subscript is equal to Dw subscript-N.Thus dP(or dPw subscript)=d(Dw subscript - N) =dDw subscript -dN.Simple integration gives the following result- Pw subscript=Dw subscript-N .Divide through by w and you obtain P=D-wN.Add wN to both sides.You get P+wN=D=pO or Z =D.Z=P+wN.w is the money wage.N is aggregate employment.p is the expected price level.O is real output,which is a function of N.D,the expected aggregate demand function,is thus equal to expected total revenue.Z,the expected aggregate supply function,is equal to total variable cost plus expected economic profit.
   
   The same analysis and result is contained in footnote 2 on pp.55-56 of the GT.Keynes defines the derivative dZw subscript/dN=dphi(N)/dN =phi'(N)=1,where you use "d" instead of " delta " notation used by Keynes.Integrate to obtain Z=wN + C,where C is a constant of integration,after you divide through by w.We know that D=Z by definition and that D=pO from chapter 20.We get wN +C=pO or C=pO-wN once we subtract wN from both sides.By definition,C must be equal to actual profit if p is an actual price and expected profit if p is an expected price.Of course,if P=0,then you get Z=wN = total variable cost.(This is the case of constant returns to labor.Note that Keynes covered this case explicitly at the top of p.284, as well as on p.306 of the GT ,in chapter 21.)This,of course is the mistake that Don Patinkin made continuously from 1976-1989 in 3 books and 5 articles-failing to consider that Z is linear in both the diminishing returns and constant returns to labor cases.Of course,in the case of constant returns to labor,you would get a linear 45 degree cross representing the aggregate supply curve.The same mistake is made by all Post Keynesian economists like Sydney Weintraub, Paul Davidson,Douglas Vickers,Jan Kregel, Victoria Chick,Nevile,Skott and Dutt,etc.They fail to consider that Keynes worked with both cases, diminishing returns to labor as well as constant returns to labor,in his microeconomic analysis contained in chapters 20 and 21 of the GT.It is not surprising that the Post Keynesians can not deal with the technical analysis contained in chapters 20 and 21 of the GT and expressed by Keynes in the form of elasticities.Instead,they build their analysis on the claims of a mathematically illiterate economist named Dennis Robertson.It was Robertson who claimed that Keynes's theory of effective demand(D-Z analysis)was contained in chapter 3 of the GT.All Post Keynesians base their work on the assumption that Robertson was correct.Post Keynesians also confuse the D=Z locus,the aggregate supply curve,with Z,the aggregate supply function.All of these errors can be traced back to the original errors made by Dennis Robertson in correspondence with Keynes in Feb.-Mar.,1935 about the first 17 chapters of the GT.Keynes told Robertson very clearly that the anaysis of his D-Z model was in a chapter called the Employment Function.Chapter 20 of the GT is titled," The Employment Function ".After seventy years it is time for economists to read this chapter upon which KEYNES SAID EVERYTHING DEPENDS.
   The reason why ed <1 ep <1,e <1, and mpc+mpi<=1 is that the decision to invest in long lived durable capital goods ,within an economic environment of technological and financial change,advance,and innovation,thus creating the problem of technological obsolescence,is made under conditions of Keynesian uncertainty or Ellsbergian ambiguity.Neoclassical theory postulates that there is no uncertainty or ambiguity,only risk ,which is universally represented as the standard deviation of a normal probability distribution.This means that aggregate investment expenditure will not be erratic,unstable,and insufficient over time.Involuntary unemployment can't result
   Keynes argues,as does Daniel Ellsberg implicitly,that the assumption of normality is a special case.Hence ,Keynes's generalization that covers ambiguity and/or uncertainty.This means that aggregate investment will be erratic,unstable,unpredictable,and insufficient over time.Involuntary unemployment will result.



3. This version is virtually unreadable, due to its terrible formatting, which clearly no one bothered to even glance at after some kind of machine translation from another format.



4. This book is a lesson in garbage in, garbage out. Keynes starts with numerous false assumptions, and follows them to their false conclusions. Keynes has been proven wrong time and again, not only through the texts of much better economic writers (Hayek, Rothbard, Mises), but also through the plain facts of history.
   
   Keynes' book reads like through the looking glass, where down is up, and everyone is drunk at a mad tea party. Keynes' ideas are precisely what will (and already have) lead society to economic failure and misery. The current financial crisis is only the latest in examples of why Keynes was wrong.



5. The version of Keynes' "The General Theory of Employment, Interest and Money" published by Signalman Publishing is the best one for the Kindle because it is specially formatted for easy navigation using your Kindle. Students will especially appreciate using this with your Kindle because you don't have to read it straight through. You can do word lookup and also use the hyperlinked Table of Contents.

1 comments about Monetary Policy Strategy.

1. A very good and detail text about monetary policy.
   
   I bought it because his "The Economics of Money, Banking,...", this one is also good, but no better than the one I read. I download all working papers of Mishkin from NBER, just looks like the details of this book. So, if you read this one, you don't need to read papers.
   
   If you like colorful figures and charts, this one may be disappointing. However, I still recommend Mr.Mishkin's books, although he decided not to be the Federal Governor.

5 comments about Money: Whence It Came, Where It Went.

1. More and more books on economics are just based on political opinions so it is refreshing to read economics based on historical facts. Of course facts are interpreted and Kenneth Galbraith, as a leftist, is not unbiased, nevertheless he tries to be honest and didn't hesitate to be critics towards the US Central Bank. He qualified as Burton effect the veneration of scholarships towards this institution which is unjustifiable for him. For example, he is maybe the only one who reveals that the Central Bank has refused to save the 1929 crash but a state bank unknown from the public. The FED is in private hands although created with public agreement by Congress.



2. This is an absolutely wonderful book. Lively and fun to read. I highly recommend it. But it stops about 1973. The 2001 reprint was not updated. Which is a shame because Galbraith would have had a lot to say about the folly of the last 30 years.



3. "Money" is an easily read and easily comprehended history of how the western industrialized countries have created, adapted, and managed their monetary systems. Written by one of the post-WWII-era's most famous economists, John Kenneth Galbraith, "Money" is as much a lesson in American history and politics as it is in economics. Galbraith seeks to show how the management of monetary systems, driven by the interests of the rich and supported at times by conservative ideology, has been fraught with error, corruption, and more commonly--simple incompetence. But he protests the inefficacy of monetary management too much. Published in 1975, Galbraith's book can be seen as a response to the rise of the "monetarist" school of economics which, in many ways, was a challenge his economic philosophy.
   
   An ardent supporter of the Keynesian school of economics, Galbraith rose to prominence during the late Depression era and especially during WWII as a government official in charge of controlling prices (He later served in the several Democratic administrations including a post as Ambassador to India for Kennedy). With the Depression still in full force just prior to WWII, he was chosen specifically to help implement a Keynesian economic policy which emphasized the use of fiscal policy--government spending and more activist management of the economy--to bring about full employment.
   
   In 1963, Milton Friedman and Ann Schwartz published the now famous "Monetary History of the United States, 1867-1963". Friedman and Schwartz laid out, in convincing empirical fashion, what became known as the "monetarist" school of economics which emphasized the management of the monetary system as the key to macroeconomics stability and growth. While "Monetary History" acknowledges the managerial shortcomings of past monetary officials--those shortcomings were the result of a lack of understanding of the monetary system rather than an inherent flaw in monetary policies themselves. In contrast, Galbraith's "Money" emphasizes that monetary policy is itself flawed. In addition to showing how attempts to manage monetary systems over the past 200 years have generally been abysmal, Galbraith goes on to assert that even when managed well, monetary policy has a limited impact on macroeconomic health compared to Keynesian-influenced fiscal policies.
   
   Galbraith may have a point. In the 30 years since he published "Money", activist fiscal policy has been replaced by activist monetary policy as the tool of choice for maintaining macroeconomic growth and stability. Yet, monetary crises have remained a significant feature of the economic landscape: The stagflation of the late 1970s, the early 80s recession as a result of the monetary policy response of Paul Volcker's FED; the Asian Financial Crisis; and the current housing bubble brought on by the FED relaxation of interest rates in response to the previous dot-com bubble. The art of managing a monetary system seems no more under control than it did earlier in the 20th century. What has changed over the past 30 years is the realization that increasing economic centralization under the aegis of Keynesian-influenced government intervention has been shown to be problematic to economic growth as well. In addition conservatives also call upon the works of Hayek to show that economic centralization--an inherent feature of heavily Keynesian governments--has political implications that put individual freedoms at risk as well
   
   Ultimately Galbraith's "Money" is an excellent and understandable introduction to the various efforts over the last several centuries to manage monetary systems. But the reader is given more than monetary and Keynesian theory and is engaged in a wonderful, if broad-brushed economic history of the United States. Fifteen years ago, an argument could be made that "Money" was out of date. A second look at recent crises born of monetary policy suggests that "Money" is a relevant reminder that there is still much to learn.



4. On one side of the world is a broad swath of professional mystery-makers, who stand in awe at the world's complexity, quite often view it as unanalyzable or irreducible, and let it stand pretty much as it was before. Then there are people in this world who want very much to take apart all the world's complex systems and machines, show you what they're made of, and say, "See? It's not all that awe-inspiring after all." I've decided that John Kenneth Galbraith, on the basis of "Money", is one of the latter.
   
   Among those peddling mystery rather than clear thinking around money are some of Galbraith's own economist colleagues, who enshround the topic in hefty terminology and bestow upon money men an authority that, as it turns out, they don't deserve. Here's Galbraith clarifying a couple often-heard terms from the world of finance (after another connected paragraph that I've had to leave out for brevity):
   
   "Few phrases have ever been endowed with such mystery as open-market operations, the bank rate, the discount rate. This is because economists and bankers have been proud of their access to knowledge that even the most percipient of other citizens believe beyond their intelligence. Open-market operations are the sale of securities just mentioned by the central bank which removes the loanable cash or reserves from the commercial or ordinary banks. The bank rate and the discount rate are the same; they are what prevent the banks from too painlessly recouping their cash by borrowing from the central bank. This is it. Viewed in the context of their development in the last century it is hard to regard these mysteries as anything but a simple, even obvious, accommodation to circumstance."
   
   That same tone, in a couple of particulars, is what makes "Money" such a tremendous book. First there's the persistently arched eyebrow, aimed at other economists. Then there's the urge to make the world clearer. The whole book is quite admirable in this way.
   
   Money's pace is a little funny: perhaps 80 pages get us from the start of world history up to the Bank of England, then another 100 pages from the 19th century to World War I. The remaining 150 pages covering the practical collapse of the gold standard through the Depression and its aftermath. It's like Zeno's Monetary History.
   
   Galbraith's central observation about banking is that, beyond its most primitive forms, all banks suffer from one single, ineradicable problem: they have more money on the books than they actually have on hand. And every now and again, panic spreads from bank to bank, justly or unjustly: a nearby bank fails, so all my depositors rush to empty out their accounts. They are all shocked to discover that I don't have a special bag of gold coins labeled "Doris's savings account." My bank fails, as do all the other banks. My bank wasn't necessarily any worse just before the failure than it was a week earlier, but expectations combined to make it collapse. If I'm not mistaken, observations of this form are distinctly Keynesian.
   
   Indeed, Galbraith is an old-school Keynesian, responsible in some fashion for price controls during World War II. Some of the most interesting parts of "Money", to me, were Galbraith's defenses of this centralization. It all worked quite well, says Galbraith, and people seemed generally satisfied with it. When the price controls were lifted, inflation did not go through the roof; there was no pent-up demand waiting to explode, but for the evil central planners. This, and much of the rest of the book, is a more or less direct response to Milton Friedman, maybe especially Friedman and Stigler's "Roofs or Ceilings?"
   
   Part of "Money" is in fact a direct attack on Friedman's monetarism. The standard Keynesian attack seems to go like this: there comes a point in an economic crisis when the interest rate just cannot be productively lowered any more -- we are at the "zero lower bound". Banks are afraid to lend out any more money, so they hoard it. Lower interest rates near the ZLB just lead to more hoarding. The distinctive Keynesian response is to emphasize fiscal policy here over monetary policy: the government should actively spend money to put it in consumers' pockets to get people spending, get them borrowing (clear out those hoards), etc. When read today, Keynes sounds somewhat naïve about the prospects for apolitical control of the economy by a technocratic élite; so does Galbraith.
   
   Some of Galbraith's naïveté comes from a belief that the world is moving to greater centralization: fewer corporations controlling production, and unions representing workers in bulk. It sounds like commerce really was more concentrated during World War II, and consequently that the central planner had a much easier task than he would now. Galbraith doesn't seem to have updated this picture of the world since 1945.
   
   Still, "Money" is a terrific read. A lot of what Galbraith says makes perfect sense, and I have a much better picture of how monetary policy works. He's maybe less reliable on Keynesian demand management; just read the final 50 pages or so with the same skepticism that you brought to the rest of the book, and you'll be fine.



5. Galbraith presents a generally correct overview of the connection that exists between the private commercial banks' optimizing behavior, loans from the banks to speculators,speculation by the banks themselves,the creation of bubbles leading to manias,panics,crashes and economic collapse ,resulting in recession /depression.The business cycle is thus due to two major sources that create uncertainty about the future,one monetary and one real but both endogenous to the economic system-technological advance ,innovation,and "creative destruction" ,and financial innovation as the banks constantly try to create new assets to avoid the regulatory constraints previously imposed upon them in an effort to rein in and minimize their speculative behavior. Thus, Galbraith gets the following right:"In financing the sale of bad securities and in nourishing the stock market speculation,a leading part was played in these years(author's note-Galbraith is talking about 1925-1929;however,it also applies to the years 1980-2008) by the new monetary system"(Galbraith,p.173).
   
   
   Unfortunately,Galbraith was tutored,as was Paul Samuelson, on " What Keynes meant " by Joan Robinson,Austin Robinson,and Richard Kahn.This explains the following assessment made by Galbraith about Keynes and the General Theory:" The theoretical justification came in the book Keynes mentioned to Shaw(note-George Bernard Shaw),The General Theory....Keynes had long been suspect among his colleagues for the clarity of his writing and thought,the two often going together.In The General Theory he redeemed his academic reputation.It is a work of profound obsurity,badly written and prematurely published.All economists claim to have read it.Only a few have.The rest feel a secret guilt that they never will.Some of its influence derived from its being extensively incomprehensible.Other scholars were needed to construe its meaning,restate its propositions in intelligible form.Those who initially preformed the task-Joan Robinson in England,Alvin Hansen and Seymour Harris at Harvard-then became highly effective evangilists for the ideas".(Galbraith,pp.217-218).Galbraith,unfortunately,never covered the theoretical core of the GT in chapter 19,the appendix to chapter 19,chapter 20,where Keynes works everything out in great detail,and in chapter 21,where Keynes presents his final results demonstrating that it is speculation that causes involuntary unemployment.Keynes generalizes the Quantity of Exchange formula in chapter 21 so that,for instance,neoclassical theory and Milton Friedman's monetarism are seen as special cases holding only under certainty and linear (normal distribution)risk.These theories break down under non linear risk,uncertainty(ambiguity-D Ellsberg),and ignorance.It's all there on pp.304-306 of the GT.
   
   Galbraith's assessment of Keynes could not be further from the truth.Galbraith's assessment has been a major factor in explaining why economists still have no idea about what Keynes did in 1936.Galbraith is the founder of the American Post Keynesian School(Journal of Post Keynesian Economics),a major influence in the American Institutionalist School (Journal of Economic Issues),and a major influence in the Cambridge Keynesian school(Cambridge Journal of Economics).Galbraith's assessment forms the foundation for all work published on Keynes in these journals and many others as well.
   
   The book is worth buying as long as the reader realizes that Galbraith has no specific knowledge of the GT and probably did not read it himself.

5 comments about Money, Banking, and Financial Markets.

1. 
   I've read the books of Mishkin and Hubbard, also well written pieces.
   
   However, Cecchetti seems to be able to explain concepts with more clarity and in a way that makes one remember the various theories long after reading the book.
   
   He should try to develop further the chapter on futures and give more emphasis on hedging, since this is the trend financial markets are moving towards these days, without having to impinge on books devoted solely to the topic.
   
   He may also want to expound more on the chapter covering foreign exchange and international markets, to make the book more relevant to international readers.
   
   on the chapter on monetary policy, since he touched on foreign central banks he may also wish to write about how other countries implement monetary policy, esp how the Bank of England uses the repo market to conduct money easing/contraction.
   
   Am looking forward to a much-improved version in the future.



2. This is an excellent undergraduate text on financial institutions and monetary economics. The exposition is rigorous yet avoids abstruse math. The best part is the section on monetary economics, where the author dispenses with IS/LM analysis and instead directly analyzes aggregate supply and demand. He writes from the perspective of a central banker (which he was), showing how central banks use interest rates to influence inflation and output. The writing is quite clear, and the numerous sidebars on historical and contemporary issues are excellent. Although some subjects (such as exchange rates) could have been developed in greater depth, this is a great textbook overall.
   
   Ideological footnote: Many undergraduate econ books assume (more or less explicitly) that disturbances in the macroeconomy are eventually self-correcting. This book has a somewhat different starting place: it takes it for granted that regulators will oversee the banking system and that central bankers will act to close output gaps and keep inflation under control (in fact, the latter assumption is built into the author's construction of the aggregate demand curve). According to the author, modern central banks have developed a fairly good understanding of business cycles and know how to moderate them through the use of monetary instruments. Let's hope he's right.



3. I teach undergrad business and economics, and have found this text to be very effective with my students, particularly as a follow-up to macro 101. One of the best things about the text is that it is well integrated; other texts seem somewhat choppy or fragmented.



4. The book is in excellent condition, but try to find out the reason for the delay by the post office, and try to avoid it. It does not make sense to receive the book a month after I make the order, especially I have upgraded the posting service.



5. This book came in on time but, the book itslef is out of the ordinary.
   The begining of the book start on the back cover upside down....never seen anything like this before.

5 comments about The Idea of History: With Lectures 1926-1928.

1. R. G. Collingwood's The Idea of History would be more correctly classified as a work of philosophy than a work of history, as the primary goal of the work is to present Collingwood's philosophical conception of the nature of history. In terms of methodology, Collingwood's book can be divided into two main sections.
   Parts I-IV are more historical as Collingwood traces the development of the practice of history. It begins with its Greco-Roman roots, examines the influence of Christianity, and moves on toward the development of modern scientific history, and finally finishes by examining the concept of history up to the then-present day. Throughout this first portion Collingwood does not directly present his philosophy, leaving it to the reader to infer it from his critiques of other historians. Part V is where Collingwood finally lays out his entire philosophy of history, fully elaborating what he only partially revealed in parts I-IV.



2. Highly Recommended.
   This book is one of the best books ever written on the Nature and Aims of History. This along with his "Principles of History" should give most readers all they need to know about the how and why of history.
   The book is extremely easy to read; harder to understand. Some criticisms of the book are not up to the mark, as for example complaints that Collingwood used Greek and Latin phrases in the book, and not everyone understands them. Most of the Greek and Latin are very easy to understand, any good comprehensive foreign phrase dictionary will readily yield them. In fact everyone at the Oxford of Collingwood's day, and nearly everyone who considered themselves a philosopher at that time, could read Latin, and most of them Greek. Don't complain because Kant wrote in German (and Latin and Greek), and that Collingwood writes British English (and Latin and Greek). His style is beautiful, the thoughts expressed profound.
   One does not get Collingwood's complete philosophy in this book, and indeed, parts of it cannot be understood without reading his other works. I think particularly of his famous doctrine of "re-enactment" of past thought, which is best understood in the light of the chapters on language presented in his "Principles of Art" (Oxford, 1938). Much invalid criticism has been written by those who have assumed this meant some kind of mental telepathy or intuition.
   This book, and everything Collingwood has written, will amply repay the thinking reader. He may, in fact, soon find himself armed with new philosophical ideas with which to think about the world.



3. This is a very fine edition of Collingwood's magnum opus The Idea of History. It also includes two earlier papers on the philosophy of history, etc. Any student or scholar who studies the discipline of history will need this book, and should read it closely. Van Der Dussen's introductory essay is also very good. Highly recommended.



4. My daughter, a freshman at Indiana University, e-mailed me a list of the books she needed. This was on it... I ordered it, paid for it, and had it shipped directly to her. It arrived sooner than expected, and before she needed it for class.
   
   Great Job.
   
   Julie K.



5. This is a good book but very esoteric. "What is History?" by E.H. Carr is an easier selection for the causal reader or someone beginning to study historiography.