Vacation Reading

A good book to read on vacation to get a valuable long term perspective on the financial markets is “The Ascent of Money: A Financial History of the World” by Niall Ferguson, a history professor at Harvard. The book discusses a long series of financial manias, panics and crashes along with a fascinating list of characters including Medici, Savonarola, John Law, Nathan Rothschild, Hernando de Soto, Milton Friedman and George Soros.

The last chapter in the book discusses the “empire” of Chimerica which refers to the combined economic power of the US and China. Chimerica has accounted for about 40% of worldwide growth over the last ten years, but has resulted in large imbalances in currency reserves. Last month, Ferguson published an op-ed piece in the NY Times called “The Great Wallop”  where he recommends a revaluation of the Chinese renminbi currency.

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