Tonight: the Ascent of Money – Monday 24th November, 8pm Channel 4

This second episode of historian Niall Ferguson’s series on the story of money and finance, The Ascent of Money, is probably worth a look.  It’s apparently going to cover the development and importance of bond markets, and although it includes an interview with a minor US bond fund manager rather than one of your friends at M&G, it will be interesting. 

Meanwhile it’s time for a quick competition.  I’m reading The Great Crash by Selwyn Parker.  Whereas Galbraith’s book of nearly the same name (The Great Crash 1929) covers the stock market’s dramatic fall at the start of the Great Depression, Parker takes the story on to the next few years and covers both the policy errors made by the authorities, and the impact on the people who suffered through unemployment and bank failure.  In some ways it makes me feel more optimistic about the current economic meltdown, for although we are unlikely to escape a severe downturn, at least the central bankers and governments now "get it".  We’ve now seen an expansion of the money supply and cut rates (money supply contracted aggressively in the 1930s and rates were slow to fall), fiscal stimulus (in the UK they actually put up taxes in 1930), and while in the 1930s banks were almost encouraged to fail, we are now bailing them out, allowing at least a chance for lending to recover.  However, we should remember that the US economy did recover a little by 1930, until the Smoot-Hawley Bill was passed, setting up massive protectionist tariffs  to keep foreign goods out of America.  At this point the global economy went into freefall, and trade almost ground to a halt – the depression deepened again and lasted for 5 more years.  Is there a danger that a Democratic US government, wanting to help the automakers for example, makes the same mistakes as Congress and the Senate made in June 1930? 

It’s a fascinating book, but Selwyn Parker will sadly suffer the same fate as J K Galbraith, who complained that he missed out on millions of dollars worth of sales of his greatest work as no airport bookshop would stock it.

Anyway – the competition.  The prize is a copy of The Great Crash, and it will go to the first person to email me the name of the US Treasury Secretary at the time of the Wall Street Crash – he’s the one who told the President to "liquidate labour, liquidate stocks, liquidate the farmers, liquidate real estate…".  

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

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