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Paper Promises: Debt, Money and the New World Order    by Philip Coggan order for
Paper Promises
by Philip Coggan
Order:  USA  Can
PublicAffairs, 2012 (2012)
Hardcover, e-Book
* * *   Reviewed by Bob Walch

'Economic history is a battle between creditors and debtors over the nature of money. Borrowers always want easy money, so they can repay their debts; creditors want sound money, so they can be sure they are repaid in real terms,' writes Philip Coggan.

He continues, 'Economists battle between those who believe money's main function is as a means of exchange (more money means more trade and a growing economy) and those who see money as a store of value (creating money will lead to inflation, not greater economic activity).'

Therein lies part of the problem facing the economies of Europe, Asia and the U.S.. The battles between these two points of view, where debtors are overwhelmed and money systems change, have occurred before and it sure appears to be happening again.

In Paper Promises: Debt, Money and The New World Order, Coggin, a British financial writer, demonstrates that the present economic crisis has a place in time-worn history. Just as in the 1930s, when the gold standard was abandoned, and in the 1970s, when fixed exchange rates were dropped, we are headed for some major changes. In the 19th century, he contends, Britain dictated the terms of the international system and in the 20th century it was America. But this time around it will be today's creditors in China and the Middle East who will call the shots.

And, as is now happening, the process of dealing with debt issues will pit the interests of rich against the poor and middle class, young against the old, public sector workers against taxpayers, and one nation against another.

This book begins by looking at the nature and origins of money and how it changed from solid objects to entries on a computer screen. Then the author discusses briefly how empires and kingdoms rose and fell along with their money, how individual currencies developed along with global trade and how such currencies changed from symbols of national pride to tools of economic policy.

Coggin also explains how debt ceased to be a matter of individual shame and became almost a human right. Finally, the focus changes to today and the current debt crisis. The situation is placed in the context of history and then the argument is presented that our present position is unsustainable.

'Many debtors have made paper promises that they won't be able to keep,' writes Coggin and therein lies the problem. Now what do we do? Obviously, a new way of dealing with debt must emerge!

Reading this book may not make you feel better or assuage the angst you may have been feeling about where we seem to be headed economically. But it will, at least, explain how we arrived at this sorry state of affairs and prepare for some of the changes that will, of necessity, have to occur in the months and years ahead.

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