I picked up this book thematically to understand Bitcoin and money in general. Thought the book would help me understand the question “what is money, actually?”.
The book’s focus is actually focused on the 2008 “Great Recession”. Sumner’s argument is that the recession was not primarily due to the bubble-crash of the sub-prime mortgage market. His claim is that the US Fed policies were the trigger for the recession and the length of the recession was aggravated by the Fed policy.
An interesting sub-theme of the book was his historical review of the US economy from the 1929 “Great Depression” through and significant major events afterwards. Apparently, to understand the 1929 crash, economists “invented” the field of macroeconomics.
Section on history of American “fiat” money:
- Pre-1500: Gold & silver currencies prior to Columbus.
- 1500-1650: European inflation due to flood of new world silver
- 1879-1933: US dollar pegged to gold (1 dollar = 1/20 ounce gold)
- 1933-1934: US dollar devalued by Roosevelt (1/35 ounce gold). Americans by law cannot own bullion.
- 1944-1971: Bretton-Words regime (fixed, government negotiated exchange rates)
- 1964: Gulf of Tonkin incident. Johnson’s Vietnam War acceleration.
- 1968: Johnson increases tax rate to pay for Vietnam War.
- 1968: Foreigners cannot exchange dollars for gold
- 1970-1971: Nixon’s wage and price controls
- 1973: End of Vietnam War.
- 1973: OPEC oil embargo
- 1979: Iranian Revolution (a second oil price shock)
- 1979: Carter appoints Paul Volker to Fed.
- TODO: Continue
TODO: Tie economic event described to my life and job events. Often what I experienced was a result of those big macroeconomic events!