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Easy Money: Evolution of the Global Financial System to the Great Bubble Burst

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The second book in the Easy Money trilogy discusses how the global financial system evolved in the aftermath of the First World War and how that finally led to the dot-com crash in the United States, in the early 2000s. It gives an overview of how in the aftermath of the First World War, Europe was in major trouble. The book also analyzes how the United Kingdom of Great Br The second book in the Easy Money trilogy discusses how the global financial system evolved in the aftermath of the First World War and how that finally led to the dot-com crash in the United States, in the early 2000s. It gives an overview of how in the aftermath of the First World War, Europe was in major trouble. The book also analyzes how the United Kingdom of Great Britain, which was once the premier nation of the world, lost out to its former colony, the United States of America. The dominance of the United States led to its currency, the dollar, becoming the international reserve currency. This led to the United States having an exorbitant privilege which it still continues to have. Over the years, this exorbitant privilege has led to many financial crises in different parts of the world. It has also been responsible for the current financial crisis as well. The book concludes with the wisdom of the legendary investor Warren Buffett, who was deemed to be a failure, during the heydays of the dot-com bubble, when his investment company Berkshire Hathaway could not generate the stupendous returns that dot-com stocks had been generating. Nevertheless, in the end, it was Buffett who had the last laugh. As he wrote to his shareholders: "But a pin lies in wait for every bubble." The lessons of the dot-com bubble bursting were never really learnt, and soon the same mistakes would be made again.


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The second book in the Easy Money trilogy discusses how the global financial system evolved in the aftermath of the First World War and how that finally led to the dot-com crash in the United States, in the early 2000s. It gives an overview of how in the aftermath of the First World War, Europe was in major trouble. The book also analyzes how the United Kingdom of Great Br The second book in the Easy Money trilogy discusses how the global financial system evolved in the aftermath of the First World War and how that finally led to the dot-com crash in the United States, in the early 2000s. It gives an overview of how in the aftermath of the First World War, Europe was in major trouble. The book also analyzes how the United Kingdom of Great Britain, which was once the premier nation of the world, lost out to its former colony, the United States of America. The dominance of the United States led to its currency, the dollar, becoming the international reserve currency. This led to the United States having an exorbitant privilege which it still continues to have. Over the years, this exorbitant privilege has led to many financial crises in different parts of the world. It has also been responsible for the current financial crisis as well. The book concludes with the wisdom of the legendary investor Warren Buffett, who was deemed to be a failure, during the heydays of the dot-com bubble, when his investment company Berkshire Hathaway could not generate the stupendous returns that dot-com stocks had been generating. Nevertheless, in the end, it was Buffett who had the last laugh. As he wrote to his shareholders: "But a pin lies in wait for every bubble." The lessons of the dot-com bubble bursting were never really learnt, and soon the same mistakes would be made again.

30 review for Easy Money: Evolution of the Global Financial System to the Great Bubble Burst

  1. 5 out of 5

    Virat Sharma

    What an extraordinary book narrated in such an engaging style that you feel like finishing this book at one go. Mr. Kaul has done a excellent work in simplifying the great depression, OPEC Pricing the oil in Dollar terms , Japanese Real and stock market bubble that also lead to the "Tiger economies" or the so called "Asian 5" economies real estate and stock market bubble and finally the ".com" boom in The United States of America. The conclusion was an icing on the cake. An unputdownable book fo What an extraordinary book narrated in such an engaging style that you feel like finishing this book at one go. Mr. Kaul has done a excellent work in simplifying the great depression, OPEC Pricing the oil in Dollar terms , Japanese Real and stock market bubble that also lead to the "Tiger economies" or the so called "Asian 5" economies real estate and stock market bubble and finally the ".com" boom in The United States of America. The conclusion was an icing on the cake. An unputdownable book for all the economics and finance history lovers as this will give you a better perspective of the current economic scenario . Very informative. This is the best book that I have read in 2015 and waiting eagerly to savour the 3rd part of the Trilogy.

  2. 4 out of 5

    Vikash Anand

    Easy Money: The evolution of the Global Financial System to the Global Bubble Burst, the second book in the series of Easy Money by Vivek Kaul is a fascinating book about the evolution of the sophisticated global financial system of the 20th century post the first world war, and the development of bubbles & after effects of the bursting of the bubble on the financial system and the global economy. American dollar as the international currency of the world Europe was destroyed during the course of Easy Money: The evolution of the Global Financial System to the Global Bubble Burst, the second book in the series of Easy Money by Vivek Kaul is a fascinating book about the evolution of the sophisticated global financial system of the 20th century post the first world war, and the development of bubbles & after effects of the bursting of the bubble on the financial system and the global economy. American dollar as the international currency of the world Europe was destroyed during the course of the second world war. Even countries like Britain, France were in a bad financial situation. In such a situation, American Dollar was placed at the heart of the financial system that evolved at Bretton Woods. The countries of the world came together to make one currency the leader of all others. Due to sufficient gold reserve, the United States was ready to convert Dollars into gold at the rate of $35 for one ounce (31.1 grams) of gold. It made the American Dollar, the most preferred international currency of the world as the only currency that could be converted into gold as per Bretton Woods Agreement. It gave Dollar a privileged currency in the global economy. Countries would have to maintain their foreign exchange reserves in US dollars. The Americans could not exchange their paper dollars for gold anymore. It was only an international gold standard under which other countries could convert their dollars into gold. The United States could print dollars it needed whereas other countries had to earn these dollars to pay for commodities like oil which were priced in dollars. The countries had to maintain stable exchange rates against the dollar, within a band of 1 percent on either side. When dollars flooded into France, the French central bank had to keep buying them to ensure that the dollar did not lose its value against the franc. The system allowed the dollar to be overvalued and ensured that the US companies could buy, or set up business in Europe, rather cheaply. The flow of easy money in the United States The optimism created in the United States due to this easy money policy resulted in soaring of the stock market. The flow of money in the stock market increased, investors discovered the beauty of leverage using margin trading and various financial innovation to maximize gain. It was abrupted in October 1929, followed by World Wide depression i.e. the Great Depression. Between 1929 and 1933,the real GDP of the US fell by over 25%. About 13 million people became jobless. The purchasing power of American was badly hit impacting the commodity economy. People wanted to save their money rather than spend it. The dot com bubble The dot com bubble of the United States in the 1990s was built on the belief that usage of the web was all set to explode as Internet traffic was doubling every three months. And it was speculated that internet companies are going to hugely successful. It resulted into IPOs by many companies showcasing themselves as internet companies and getting crazy market capitalization, at times without any business model.There was too much optimism. The bursting of the dot com bubble started when Russia defaulted on its debt on 17th August 1998. The price of oil had fallen the lowest in nearly 25 years, Russia was unable to pay interest as well as repay the foreign debt it had raised in dollars. The global sell off in panic as a result of Russia’s default hurt the investors. Long Term Capital Management (LTCM), a hedge fund lost more than 15% in a day. The technology-heavy NASDAQ composite Index started falling sharply. Implications of easy money policy in the system John Mauldin and Jonathan Tepper aptly describes the implications of easy money policy in Endgame-The End of the Debt Supercycle and How it Changes Everything “Global markets and economies are like forest fires.Avoiding small problems creates greater systemic problems when brush between the trees build up.Trying to micromanage small fires in central banking and fiscal policy leads to growing confidence by risk takers,so you get fewer small fires and paradoxically a greater chance of a major catastrophic fire.” The periodic build up & flow of easy money in the system results in incentivizing careless risk-taking & speculation resulting in the creation of a bubble in the economy. The bursting of the bubble once it becomes unmanageable in the integrated global financial system has repercussions across nations. The economic history of the 20th century is filled with many bubbles and bursts propelled by flow of easy money in the system i.e. Asian Financial Crisis, dot-com collapse, Lehman crisis. But still, the seemingly easiest way to stimulate growth, GDP and economic opportunities is to increase the supply of money by printing more money. It is rightly said one of the lessons of history is that we never learn from it. The implications of the easy flow of money in the system over a long period of time is not easy to understand,but everyone i.e. politicians and central bankers do everything that can be done to postpone bust by printing money endlessly even if it results in inflation. The short term benefits of stimulating economy is very much visible soon, but the implications of inflation and bursting of the bubble takes time. And that time cannot be predicted with accuracy, the only thing that can be done is to identify the systemic risks and make an effort to eliminate or reduce it. Easy Money: The Evolution of the Global Financial System to the Global Bubble Burst by Vivek Kaul is a fascinating insightful book that enriches understanding of the global financial system. The book is written in a simple easy to read language unlike many financial books. The analogies used in the book to explain the financial system simplifies the understanding of the seemingly complex financial system.

  3. 4 out of 5

    Mamunuru Shankar

    Book 2 of the trilogy. Great read. This volume essentially deals with post second world war economies. How US acquired dominance over world trade. The Bretton Woods agreement and how the fixed exchange rate between gold and dollar effected the economies of the countries and the untenability and abrogation of gold standard came about is discussed. How dollar has become the heart of international finance with the help of OECD ( agreeing to sell oil only for dollars) is discussed. The credit expans Book 2 of the trilogy. Great read. This volume essentially deals with post second world war economies. How US acquired dominance over world trade. The Bretton Woods agreement and how the fixed exchange rate between gold and dollar effected the economies of the countries and the untenability and abrogation of gold standard came about is discussed. How dollar has become the heart of international finance with the help of OECD ( agreeing to sell oil only for dollars) is discussed. The credit expansion resulted due to trade surplus in Japan leading to similar consequences in east asian countries ending in the collapse of their economies. Finally how credit expansion in the US due to cheap Chinese imports, low interest rates lead to dot com bubble and burst. Very interesting read if you want to make sense international trade and monetary policies. I have to read the third volume. Mr Kaul makes the complex subject appear so easy.

  4. 4 out of 5

    Hrishant Singhal

    Detailed Yet Engaging!!! The book beautifully describes the Economy of the 20th century, from the Great Depression to the Oil Price Crash and Hike. It's a page turner for those interested to know these details. You would be mighty impressed by the effort put in by the author to present each and every detail but you'd never feel that it is too much, you'll relish it. Detailed Yet Engaging!!! The book beautifully describes the Economy of the 20th century, from the Great Depression to the Oil Price Crash and Hike. It's a page turner for those interested to know these details. You would be mighty impressed by the effort put in by the author to present each and every detail but you'd never feel that it is too much, you'll relish it.

  5. 5 out of 5

    Madan Mohan

    A book, very well written and engaging, for the average reader (non-finance and non-economists) narrating the evolution of the financial system, rise of the American Dollar as the global currency, Great Depression, 2008 financial crisis, etc.....A must read!

  6. 4 out of 5

    nishanth

    The best economics/financial history book I have read so far. The historical events have been vividly articulated and also complex terminology/jargons have been clarified with distinct examples. A pretty knowledgeable read!

  7. 5 out of 5

    Sai Krishna

    The book gives a great deal of how current day banking system evolved. How the risk taking investment of bank, led to the various recessions and how central banking solved those things.

  8. 5 out of 5

    Sujoy

    This book relives the journey of money through the 20th century. It helps us understand how money has been used and misused by society and countries, and how these have led to series of crises around the world. This book helps connect the dots between a lot of major events that happened in the world and helps us understand 'WHY' they happened. This, inturn, helps us see the method to all the madness that revolves around money and economies. Apart from being insightful, it's quite engaging and we This book relives the journey of money through the 20th century. It helps us understand how money has been used and misused by society and countries, and how these have led to series of crises around the world. This book helps connect the dots between a lot of major events that happened in the world and helps us understand 'WHY' they happened. This, inturn, helps us see the method to all the madness that revolves around money and economies. Apart from being insightful, it's quite engaging and we don't need a prior degree in economics to understand it. It's a must read.

  9. 4 out of 5

    Uday Roy

  10. 5 out of 5

    Vivek Kaul

  11. 4 out of 5

    Anant Tickoo

  12. 5 out of 5

    Sarsij Nayanam

  13. 4 out of 5

    Harsh Vardhan

  14. 5 out of 5

    Tarin Bansal

  15. 4 out of 5

    Vipul Worah

  16. 4 out of 5

    nobi mathew

  17. 4 out of 5

    Saiprasanna

  18. 4 out of 5

    Prodeepto Chatterjee

  19. 4 out of 5

    Mahesh Sundararaman

  20. 5 out of 5

    Divyansh Dalmia

  21. 5 out of 5

    Soumya

  22. 4 out of 5

    Bharath Reddy

  23. 5 out of 5

    Shiva Mudgil

  24. 4 out of 5

    vijay gupta

  25. 5 out of 5

    Piyali

  26. 5 out of 5

    Afsal

  27. 4 out of 5

    Mugdha Patwardhan

  28. 5 out of 5

    Vishnu Boorla

  29. 4 out of 5

    dron sharma

  30. 5 out of 5

    Jay

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