Money: whence it came, where it went, John Kenneth Galbraith, 1975

JK Galbraith was an erudite and witty American economist who, in another book “The Affluent Society” coined the famous phrase “private wealth and public squalor” to describe American society in the 1950s.

In this book, Galbraith selects scenes from monetary history to describe how money evolved, who controls it and what happens when it gets out of control. The book is rich with great quotes like “The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it.”

In a chapter describing how banks operate he writes: “The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent.”

The author shows how revolutionaries and settlers need easy access to money and credit to develop their societies – Assignat currency in revolutionary France, Continental currency and bank expansion in the USA – and even when banks fail “there were many that did so after honest and useful effort that left worthy men established on farms or in business and making a living.

Against those who make money easier to come by there is a constant historical pushback by the guardians of ‘sound money’ who need to preserve the value of their wealth.

The book concludes with thoughts about the low calibre of people who ‘manage money’ for the rest of us. He advocates, “Henceforth it should be the simple rule in all economic and monetary matters that anyone who has to explain failure has failed. We should be kind to those whose performance has been poor. But we must never be so gracious as to keep them in office.”