It will not be out of context to mention here that Niall Ferguson is an intellectual, who effortlessly goes about possibly all areas of intellect. He is fundamentally a historian but has an equal flair in economics as well. Ferguson possesses an uncanny knack of detecting shortcomings of conventional establishments and power axes, especially in cases of power mongers, who transgress their pre-defined boundaries and inflict damage to the governance of a region.
The Scottish born Niall Campbell Ferguson rose to prominence in late 20th century when he debuted with his non-fictional work viz.,The Pity of War, wherein he severely criticized Britain having committed a historical blunder the world had ever known by participating in World War I and in effect ruined its empirical existence to the minuscule. Subsequently, it lost its superpower status.
Whatever may be the repercussions of Ferguson’s arguments, he always assumes the center stage and divulges the facts with such tempo that the audience becomes mesmerized and almost unanimously appreciates his oratory skills embezzled with choicest dictions.
Ferguson’s latest book,The Ascent of Money, suitably subtitled as A Financial History of the World has been able to move the entire international academics with his subtle style of writing combined with a systematic display of logic and reasoning.
Similar to Ferguson’s other works viz., Empire Colossus and The War of the World, the subject book was also converted into television documentary series.
The ascent of money complements the ascent of a human being. Ferguson continues with his contention that every historical event has an undercurrent of financial implication. He traverses through the back history and recalls how the Duke of Wellington and Nathan Rothschild were able to tame Napoleon at Waterloo by arranging ample monetary resources for the British Army. The morale of the British Army was livened up because of the reinforcement of timely resources by selling bonds and stockpiling gold with remarkable efficiency.
Rothschilds were considered the most solvent bankers of the era of 19th-century British regime and across the continent. They also had a vital role in the defeat of the South during the Civil War as they declined to put money on Confederate cotton-collateralized bonds. The Royal Spaniards had accumulated high bullion stakes from the developing world, but they ultimately failed to maintain their supremacy. On the contrary, the Dutch and British regimes were touching the zenith because of their well-planned and ornate banking systems that Spain was lacking at that juncture.
Also, the French Revolution was signified by the unethical plotting by a Scotsman named John Law who was bestowed the public finance by the French monarchy in token of gratitude for his generous financial aid. John Law went forward and unscrupulously ventured for subprime mortgage bubble, applying little intelligence and plenty of stupidity. The result was obvious. The French economy collapsed instantly with far-reaching effects and rendered the French citizens penniless for generations.
Ferguson was also apprehensive of America’s financial plight and expressed his doubts in the subject book that the next turn might be for this superpower due to its unhealthy money management. The apprehensions are particularly crucial because of the unprecedented financial crisis since the catastrophe of the Great Depression. He contends that the United States is probably facing financial pull-up. The gnawing magnitude of debts incurred, especially in the perspective of China, Ferguson aptly calls the present status as Chimerica. In reciprocation, China has virtually become the lender of the last resort to America.
It was all fair trade relations between the two countries until the break out of the present fiscal crisis, affecting the entire world economy. The consumers in America were on a buying spree and indiscriminately used their credit profiles for buying goods from China. The Chinese government, on the other hand, amassed a large chunk of foreign exchange surpluses out of it and reinvested prudently with Wall Street, aiming at lending funds to the prodigal Americans. The whole process was so cohesive and spontaneous that it appeared as if marriages made in heaven, Ferguson quipped.
But the harmony was short-lived because the relationship was based on unholy collusion, both carrying their interests.
The availability of easy money augmented the bank lending, issuance of bonds, fresh monetary derivatives, which was all evident in Planet Finance since 2000. The Asian savings glut had prevailed over the American consumer market from 2000 to 2006. There was no scarcity of either supply of money or availability of consumer durables. Everything was in order. The difference was that the products were not domestic. They were all imported from China. The U.S. mortgage arena was replete with funds, injected from China and any American citizen could get 100% mortgage with no income, no employment and no real purchasing power. The policy was to borrow and pay interest. Ferguson has named this Great Depression as Chimerica. The global imbalance was at its pick.
Like Ferguson’s past three documentaries, based on his works, The Ascent of Money also seems to be a carefully designed script for television streaming. Ferguson deviates from a historical analysis of the ancient 17th century monetary system, returns to the 21st century Great Depression, and again focuses on post-Katrina New Orleans Memphis for framing an in-depth assessment of hurricane damages and the plight of the State going bankrupt and the entire events to be documented for American Public Broadcasting System (PBS).
The book in comparison with the impact it has created in public mindset and carrying a demanding subtitle (A Financial History of the World) is quite light weighted (360 pages only) and ideally written for the sake of television viewers. It is not fair to attribute the financial crisis on Chimerica alone. The internal fiscal policies are also responsible for the artificial crisis, be it the negligence of the business norms or controlling the Subprime mortgage market.
In the end, Ferguson himself seems to concede that the fabricated financial system and its accuracy is not full proof and the inherent intricacies are the determiners of fiscal collapse. Niall Ferguson is himself in bewilderment and contemplates whether the Darwinian evolution of humankind is the cause of the effects the world is witnessing now in terms of financial turmoil.