Too many books to read, not enough time to read them. However, this week I have been riveted by a book on the Great Depression called “Lords of Finance ” by Liaquat Ahamed. It is one of the best history books I have ever had the pleasure of reading. I thoroughly recommend it to anyone who has an interest in economic crises. It has many insights that help to explain the recent credit crunch through the mistakes made in the past.
Far from being a dry discourse on the causes of the depression, it follows the story of the four central bankers who took the world back to the gold standard and sowed the seeds of the economic catastrophe of the 1930s. It is good to remind ourselves that the crisis that we have recently seen is a mere squall compared to the hurricane that overwhelmed the global economy in the 1930s. We should be thankful that we had much more competent central bank governors who understand monetary economics (although it could be argued that they were partially to blame for the mess in the first place).
Even if you are not interested in economics, I think you will enjoy the storytelling, which focuses on Benjamin Strong, Montagu Norman, Hjalmar Schacht and Emile Moreau (heads of their respective central banks) and how their actions and legacies drove the world into the worst economic crisis ever seen. They are all slightly odd and eccentric characters, well described and explored by the book. Interwoven is also the story of John Maynard Keynes, who constantly warned of the dangers of the gold standard and subsequent policy mistakes.