I checked out this book from the dying breed of public libraries thinking that a former central banker must be competent in the monetary issues. When I already checked it out I noticed that the endorsements on the back cover were from the "wonderful trio" of neocons: Nyall Ferguson, Peter Frankopan and that FOE (Friend of Epstein) Steven Pinker. Furthermore, McWilliams' mother country, Ireland, like Switzerland as this author already noticed is a preserve of intellectual fashions of yesteryear.
My general opinion of the book by David McWilliams can be summarized by my favorite quotation from the "Pulp Fiction": "I like it, but it ain't true." The book is an easy and entertaining reading.
But despite the author's best intentions, the book suffers from typical pangs of neocon discourse: Europocentric outlook, simplistic explanations of complex phenomena, sloppy research and outright fabrications. It begins with supposed "quotation" of Vladimir Lenin's interview to the British Daily Telegraph. There was no such interview, furthermore the authors of the reference in the Journal of Economic Prospectives, from which McWilliams took this text suggest that, probably, this quotation was invented by the émigré Russian anti-Bolshevist forces. [1]
Population of the world in year 1 CE was much larger than 100 million cited in the book. Only well surveyed population of the Han Empire was about 60 million, the Roman Empire by the uncertain but credible estimates was between 45 and 70 million, and there existed two rather numerous polities: in the Near and Middle East (Empire of Seleucids in different incarnations, e.g., Antioch, Parthia and others) and the Indian subcontinent. There were also several less populated areas such as Africa, Northern Eurasia, Americas, Indochina and South Pacific. All in all, it is hard to justify the figures much lower than 220 million.
City-state of Florence was not the inventor of a gold coin. Introduction of the Florentine florin, as well as Roman scudo, as well as Venetian ducat was an imitation of the Byzantine solidus, which was used in Europe throughout all the Middle Ages.
The most puzzling though, is author's oversights in the field of banking. For instance, he writes: "When you go to the bank and ask for a loan for a car, the bank creates the money out of nothing, and puts it into your account. The new money didn't exist yesterday; today it does. It has been created not by the central bank, but by a commercial bank (p. 331)." It happens only in countries with insufficient bank supervision both by regulators and the buy-side investment analysts of the private banks. In reality, this fiction can exist only till the next corporate report is due. Since the invention/adoption of double entry accounting in Europe around twelfth century, a commercial bank must create an asset (claim on the car, house, etc.) on the other side of a ledger.[2]
Despite McWilliams' many statements, with which I tend to sympathize, his playing fast and loose with the facts and theories -- also a hallmark of neocon literature -- my opinion on his book is strongly guarded.
[1] Lenin, indeed provided an interview, about that time but not to the Daily Telegraph but to Manchester Guardian. In it he talked mostly about the independence of Finland and Estonia. Lenin could have been a bloodthirsty maniac, but he was also a genius of manipulation. His interviews to non-Communist media were usually well reasoned. Certainly, Russian political émigrés of that time were much smarter than their current crop, and the text cited by McWilliams imitates the contemporary style of Bolshevik theorists Y. Larin and N. Bukharin very well. Lenin was extremely sceptic of them both, and G. Pyatakov, the author of the First Five Year Plan openly ridiculed monetary nihilism in one of the Party Conferences when Lenin was still alive.
[2] Directors of the defunct Credit Swiss learned this at their peril. When the bank went into trouble, its managers decided to confiscate, Nazi-style, the assets of Russians as being the "bad people". However, these assets were liabilities for the Credit Swiss. So, to keep their balance sheet in order they had either to write down on paper some of the assets of their own, i.e. declare to the world that some of their loans were uncollectable -- because the outsiders cannot distinguish between truly toxic assets or accounting reappraisal -- or to increase equity, i.e. go through a bailout. Bailout by the IBS finally happened and the Credit Swiss ceased to exist.
