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Lords of Finance: The Bankers Who Broke the World

Lords of Finance: The Bankers Who Broke the World

Written by Liaquat Ahamed

Narrated by Stephen Hoye


Lords of Finance: The Bankers Who Broke the World

Written by Liaquat Ahamed

Narrated by Stephen Hoye

ratings:
4.5/5 (59 ratings)
Length:
18 hours
Publisher:
Released:
Apr 27, 2009
ISBN:
9781400181797
Format:
Audiobook

Description

It is commonly believed that the Great Depression that began in 1929 resulted from a confluence of events beyond any one person's or government's control. In fact, as Liaquat Ahamed reveals, it was the decisions made by a small number of central bankers that were the primary cause of the economic meltdown, the effects of which set the stage for World War II and reverberated for decades.



In Lords of Finance, we meet the neurotic and enigmatic Montagu Norman of the Bank of England, the xenophobic and suspicious Émile Moreau of the Banque de France, the arrogant yet brilliant Hjalmar Schacht of the Reichsbank, and Benjamin Strong of the Federal Reserve Bank of New York, whose façade of energy and drive masked a deeply wounded and overburdened man. After the First World War, these central bankers attempted to reconstruct the world of international finance. Despite their differences, they were united by a common fear-that the greatest threat to capitalism was inflation-and by a common vision that the solution was to turn back the clock and return the world to the gold standard.



For a brief period in the mid-1920s, they appeared to have succeeded. The world's currencies were stabilized, and capital began flowing freely across the globe. But beneath the veneer of boomtown prosperity, cracks started to appear in the financial system. The gold standard that all had believed would provide an umbrella of stability proved to be a straitjacket, and the world economy began that terrible downward spiral known as the Great Depression.



As yet another period of economic turmoil makes headlines today, the Great Depression and the year 1929 remain the benchmark for true financial mayhem. Offering a new understanding of the global nature of financial crises, Lords of Finance is a potent reminder of the enormous impact that the decisions of central bankers can have, of their fallibility, and of the terrible human consequences that can result when they are wrong.
Publisher:
Released:
Apr 27, 2009
ISBN:
9781400181797
Format:
Audiobook

About the author

Liaquat Ahamed has been a professional investment manager for 25 years. He has worked at the World Bank in Washington D.C. and the New York based partnership of Fischer Francis Trees and Watts, where he served as Chief Executive. He is currently an adviser to several hedge fund groups, including the Rock Creek Group and the Rohatyn Group, is a director of Aspen Insurance Co. and is on the board of Trustees of the Brookings Institution. He has degrees in economics from Harvard and Cambridge Universities.



Reviews

What people think about Lords of Finance

4.5
59 ratings / 26 Reviews
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Reader reviews

  • (5/5)
    A very interesting analysis of a theory that mistakes made by some of the key central bank players in Germany, England, France and the US led to the Great Depression. The author is pretty convincing in his argument, though it must be said that economic theory was at that point still developing (one of the sub-threads in the book is the emergence of John Maynard Keynes). Well-stocked with good details, and observations of the people involved. Spotted here and there with very minor errors (like identifying the USS Indianapolis as a destroyer), but on the whole, well worth reading. As a side note, I was very surprised to see the author cite Harry Dexter White as a Soviet agent; in spite of the Venona decrypts, this fact is still challenged by some, though Ahamed states it straight up. Very unusual.
  • (4/5)
    Well written, great storytelling of a very very relevant topic today. Great read with terrific portraits of the central bankers involved.
  • (5/5)
    This book has won several awards, including the 2010 Pulitzer for history; it is well-deserving. This is the third book on the Great Depression era that I have read this year and I would recommend reading this book and Amity Schlaes' The Forgotten Man (my review) back-to-back. You can't understand how we got to the Great Depression without this book.

    In my Money & Banking courses, I would always play the "Anatomy of a Crisis" episode of Milton Friedman's Free to Choose series. In it, Friedman laments that Benjamin Strong died in 1928, believing that Strong would have pushed the Federal Reserve to take the steps necessary to inject liquidity into the American system. It was Friedman and Schwartz's work that showed the U.S. needlessly hoarded gold, keeping monetary policy tight and forcing a chokehold on the U.S. economy. This book tells that part of the story well, including the insights of why France did the same thing. I see nothing to contradict Friedman's assertion that the Great Depression was a monetary phenomenon.

    But one cannot understand that period without understanding the role that German reparations had on the entire system. That becomes the snowball that starts the avalanche. Ahamed gives a biography of the central bankers who propped up the gold standard after World War I, their context, psychology, and their interpersonal relationships. He details the decisions in monetary policy made throughout the twenties and early thirties. The life and writings of J.M. Keynes during this period is also chronicled and other prominent economists, such as Irving Fisher, are mentioned as well. Presidents and Prime Ministers are viewed through the lens of monetary policy and international finance. The book is not boring at all, the narrative is quite riveting.

    I give this book 5 of 5 stars, it is a must-read for anyone interested in economics of the 1920s and 1930s. I learned a great deal.
  • (3/5)
    This is a good book, but likely not for all. You don't have to understand a great deal of finance, but it helps to grasp the ideas of the gold standard, inflation, and deflation because the important events between the bankers of the world evolve around these concepts. What works in this book is how well the four central bankers (characters almost) interact with one another. Each man is so much a reflection of his country and to, almost a lesser degree, himself. The key German banker is incredibly self-assured, prideful, and not particularly interested in human interactions. The French banker is also a proud individual with a high degree of sensitivity to how other countries views his. This is a good way to understand world history on the whole...follow the money. What impressed me is how -despite the terrible attacks of the Germans- there was an understanding that it wouldn't be in the best interest of the world to completely crush the country after WWI. There's also the U.S.'s self-serving behavior where rather than support Britain and France directly with money in WWI, we held back and then offered loans. Worth reading if you're remotely interested in world banking affairs. It's not really that far removed from today's practices either.
  • (4/5)
    I am not a non fiction reader but really enjoyed this book. The writer shows the history around the Great Depression and the effects before and after the event.How the two great banking powers at the same grew to be four (including the French and Germans) through necessity and to the amount of Gold that each held in their main banks. Also how everyone, though they tried to help the greater good of the larger group, always came back to the main point....how will any changes help them and their nation.Linked to the Gold standards the US grew after the war due to them being the seller of goods needed in Europe. Due to the Germans not wanting to pay reperations you see the lack of will to help each other in Europe. And overall you see the normal banks in it for themselves and not thinking how what they do could impact on the nation in a whole.Read the book and see how many links you make to what is happening now....have to admit I made a few more than I thought I would!
  • (5/5)
    I have been somewhat concerned about the current economic situation in our country, but not knowing much about economics, I felt that this would be an appropriate book to read in order to gain some knowledge on the topic. I was not disappointed. Liaquat Ahamed not only provides us with a very informative book on the subject, but one that is also interesting and easy to understand. Ahamed tells the intriguing story of four men who were in control of the central banks in the United States, England, France, and Germany during World War I, and the era of the Great Depression. He explains the courses they chose to take in keeping their own countries afloat, and how their decisions affected the world economy. Sometimes their decisions were good, but many times their decisions only made things worse. One of these poor decisions was their determination to remain on the gold standard. As it turned out, recovery for most countries only began after they departed from the gold standard. However, Ahamed points out that there were also others to blame for the economic failures. Some of those who were blameworthy were the politicians who were involved in the Paris Peace Conference after World War I. Many of these people were so hateful and greedy that all they wanted to do was squeeze every cent they could from their enemies. France wanted to force the Germans to pay reparations that were too steep for them. In addition, the U.S. wouldn't forgive any of the debt that was owed to them by Britain and France. These rifts not only destroyed the world's financial system, but it eventually led the world into another world war. This book kept you engrossed by relating the life stories of the bankers who were involved, as well as the role Maynard Keynes, world renowned economist, played. In addition, Ahamed summed up his work with a comparison of the Great Depression era to that of the financial crisis of the late 1990s to early 2000s. It is an outstanding endeavor which made learning about world economics interesting and enjoyable.