History Review: ‘War and Gold: A 500-year History of Empires, Adventures and Debt,’ by Kwasi Kwarteng

One of my souvenirs is a note from the Reserve Bank of Zimbabwe. I paid a vendor in Victoria Falls $3 for it, and that was more than it was worth. Its value to me is in the impressive pledge on the note: “I promise to pay the bearer on demand TWENTY BILLION DOLLARS.”

When your national currency is rooted in such paper promises, inflation and chaos are sure to follow.

This is the lesson taught in War and Gold by Kwasi Kwarteng, a son of Ghanaian parents who is a historian, hedge fund analyst and Conservative member of Britain’s Parliament. Kwarteng does not mention the fiscal follies of Zimbabwe’s President Robert Mugabe. His eye is fixed on the West, where abandoning gold to finance war and government largesse has repeatedly meant surrendering order and sound money.

War and Gold is a well-written history of money — particularly in the last 100 years — rather than a history of the interplay of its title subjects. It is a reach, for example, to tie the consequences of war into the big credit crashes of 1929 and 2008.

Kwarteng is not a gold bug. He does not think it feasible to return to a gold standard anywhere outside of China, where doing so would dramatically raise the value of the yuan and destroy China’s export-led growth model. Like his colleagues in the austerity-minded British government, though, Kwarteng clearly yearns for the discipline of balanced budgets and strict control over the growth of the money supply.

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