Book Review: The End of Alchemy. Banking, and the Future of the Global Economy by Mervyn King

Abstract

After reviewing Skidelsky’s ”Keynes: Return of the Master, ”Turner’s”Between debt and the devil: Money, credit and fixing global finance” and Greenspan’s”The map and the territory 2.0.” I have started to review The End of by Mervin King, published by W.W. Norton and Company in 2016. My motivation comes from two quotes:”I’m not really a model driven person” and To learn writing, you must write alot.” Policy makers, who leave their posts, write two types of books. There are those who write peck and tell books that reveal personal details of the policy makers interactions with world leaders. Economic Consequences of the Peace, the book that brought John Maynard Keynes to prominence in the public eye, was a book of this kind.The End of Alchemy is not like these books. It is a substantive analysis of the 2008 financial crisis, seen through the lens of an academic who lived through and participated in managing that crisis as the Governor of the Bank of England. That, by itself, makes it essential reading for all who seek to deepen their understanding of the Great Recession. King explores how and why money and banking have become the Achilles heel of the global economy. More specifically, he examines the alchemy that runs through the financial system, whereby governments pretend that paper money can be turned into gold on demand and banks pretend that the short-term deposits used to finance long-term investments can be returned whenever depositors want their money back.