Just as those authors who were half-way through biographies of Michael Jackson felt their pulses quicken on receiving the news of his death, so too must have Niall Ferguson as the credit-crunch began in earnest and everyone started talking about money. The hardback edition of his book The Ascent of Money was published at the end of 2008 amid bailouts and rescue plans, and slight updates have been made for the paperback, with the introduction including events as recent as March this year.

A few years earlier many would have nodded in agreement with the optimist ring to the title. There are unlikely to be many nodding today. As Ferguson shows time and time again, we didn’t fully understand or control our financial systems in the past, and almost certainly won’t in the future. ‘Ascent’ here means development rather than improvement.

However, Ferguson is not entirely cynical about money’s role in human life. As he says in the introduction: “poverty is not the result of rapacious financiers exploiting the poor. It has much more to do with the lack of financial institutions, with the absence of banks, not their presence.” Whilst The Ascent of Money is no capitalist encomium, it is also very far from being a communist manifesto. In fact, although Marx is mentioned very briefly, for a book on the history of money very little attention is paid to those who suggested we should do away with it, or those who tried.

Ferguson does offer a mostly balanced picture, presenting us with illuminating stories of those who made it big, and those who fell spectacularly. This human aspect keeps the book from becoming bogged down in terminology and abstract concepts, and it is certainly hard to avoid a frisson of schadenfreude at the undoing of one history’s corrupt financiers. That said, the shockwaves that hit those lower down the financial food chain may seem a little too close to home for some.

The structure Ferguson uses is essentially chronological. Each chapter explores a major change in the evolution of finance, looking at the origin of the changes, moving forward to explain their development, the form in which they exist today and the role they played in producing the present climate. These include the creation of credit, the birth of the bond and the stock market, the rise of insurance, and finally the growth of the entity Ferguson calls ‘Chimerica’ – his name for the relationship that exists between America and China, with the former spending what the latter lends.

Ferguson’s portmanteau, ‘Chimerica’, is neat, and demonstrates a way with words which he uses to good effect. However, though the writing is mostly elegant, the occasional overworked pun reveals the book’s link with the tv tie-in: “is property really as safe as houses? Or is the real-estate game more like a house of cards?” Thankfully such things occur at the end of sections, and can mostly be ignored.

If you are looking for a book which places our current financial systems in context, and explains the jargon which has filled the media recently, you won’t find a better one than this. But if anyone is reading this book looking for investment tips or financial advice, the only conclusion is: spread your bets.  Boom and bust is part of human nature.

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