Paper Promises

Starred review from October 31, 2011
Coggan (The Money Machine) traces “history’s tug of war between monetary shortage and excess” in this engaging and timely book about the current financial crisis. From early stages of money forms, the author portrays a clash of opposing forces and ideologies: sound money or easy money, fixed rates or floating rates, creditors or debtors. Governments’ role in monetary policy is given particular attention with respect to the Keynesian/monetarist debate: do we use fiscal stimulus to interfere with the markets or do we give it free rein? Through many diverse topics—exchange rates (being “the history of paper money”) and the forces driving their wide and volatile swings, bubbles, “debt-fueled booms,” and the Minsky effect—Coggan outlines his main thesis: “Money (debt) expanded to gratify the desire of the consumers and businesses for greater economic activity (more trade).” The book concludes with a discussion of the consequences of the debt crisis, namely, “inflation, stagnation and default,” and outlines a new system. A history of economics is avoided; many major economists, such as Marx, Marshall, and Walras, never show up. However, these omissions prove expedient and allow this otherwise dense treatment to maintain direction and flow. A thoughtful and thorough book aimed at the layperson.