The Ascent of Money: Same Taste But More Filling
The Ascent of Money: A Financial History of the World, by Scotsmen Niall Ferguson, is yet another book about economics that teaches this lesson, summarized neatly by Frank Knight in 1921: "Uncertainty must be taken in a sense radically distinct from the familiar notion of Risk, from which it has never been properly separated," which is the idea that risk can be computed and monetized, while uncertainty (or as Donald Rumsfeld aptly put it, "unknown unknowns") cannot even be fathomed-- especially because, as Ferguson cleverly points out, your average investment banker has a career of twenty five years and bases his formulas and strategies on relatively recent data, but every forty or fifty years something happens beyond the pale, beyond our imagination-- but despite these occasional bouts of creative economic destruction, Ferguson believes-- like Matt Ridley-- that the ascent of money has done mankind great good, but he doesn't prove this with abstractions and theories, and that is the fun of the book; he uses messy examples from throughout history . . . each chapter tackles a different financial institution, from its origins until now (banking, the bond market, the stock market, insurance, real estate, globalization) and he often points out that finance was just as complex and chaotic in the past as it is now, and whether he's describing fellow Scotsmen John Law's gambles with the French Economy or the Medici's first attempts at banking or the Opium Wars, his writing is vivid, informative, challenging, and always cycles back to economics: ten Scottish Ministers' Widows' Funds out of ten.