Book Review: Broken Money by Lyn Alden
I really enjoyed reading the first 2/3rd of the book. The last 1/3rd deals with cryptocurrency and bitcoin – I didn’t have enough of a background context or familiarity to grasp these chapters. I will re-read this section again in the near future.
The first 2/3rd of the book deals with history of money and the technological changes that led to a difference between speed of transaction and speed of settlement and the operational implications of this gap.
The book answers a lot of questions such as
- Why did Gold and Silver became the universally adopted currencies ?
- Why did we need both Gold and Silver ? And why today Silver isn’t considered as hard money as Gold ?
- Why commodity money only works well when trading partners are at the same technological level?
- Why the vector tech and banking innovations meant that a move away from the gold standard was inevitable?
- How is money created in our fiat / central banking system ?
- How did the dollar become the reserve currency of the world ? And what are the dangers of having a lot of your liabilities denominated in dollars?
- Why the reserve currency status of the dollar is a double edged sword for the US ?
- Why didn’t money printing cause retail inflation in 2008 while it did in 2020 ?
- How low interest rates, higher money supply and monetization of deficit have introduced noise in price signals?
- Why increasing rates is less effective or even counterproductive to combat inflation which emerged due to monetization of fiscal deficit ?
Lyn Alden explores these and many other questions using a systems view lens.
Recommended reading. 8/10
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