Tuesday, March 8, 2011

Money and Foreign Exchange After 1914, by Gustav Cassel

(I had to make my own book cover, for the reasons outlined on the cover.)

This book's title might be deceiving. Reading this book in 2011, you might think, "I'm going to get nearly 100 years of history here." But the book was written in 1922. Hmmm. Slightly less history.

Nevertheless (the second time I've used that word in this collection of book reviews), a very, very good book. Cassel highlights all the problems with the supposed "return" to the gold standard that the gold exchange standard was said to be. The war-caused inflation that each government tried desperately to pin on other causes is shown to be completely the result of government action. The correct exchange rates at which the gold parities should have been pegged are worked out.

While we are 40 years into a non-redeemable floating exchange rate world, this book might seem irrelevant. However, I think it is a great lesson in what happens when redeemability is suspended or lost. The problems Cassel outlines are happening around us all the time; we just don't know it anymore because we don't have a memory of the world before 1914.

Rating: six and a half out of seven giant inflatable monkeys.

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