A Long View of Money, Wars & Governments

The 2008 financial crisis and its aftermath are part of a cycle of history that began five centuries ago, according to Kwasi Kwarteng's “War and Gold: A 500-Year History of Empires, Adventures, and Debt” (PublicAffairs, available Tuesday).

Kwarteng is a London native of Ghanian heritage, holder of a Cambridge doctorate in history, a former Kennedy Scholar at Harvard, author of “Ghosts of Empire: Britain's Legacies in the Modern World” (2011) and a Conservative member of the British Parliament. He traces that historical cycle's origin to 16th-century Spain.

Sending out sea voyages to conquer new lands and resources, Spain's Habsburg rulers soon were awash in plundered gold (and silver). But that influx of New World wealth couldn't sustain their lavish military spending, which would bankrupt Spain repeatedly and undermine its empire.

As “hard currency,” gold became the global economy's foundation. But governments needing to borrow to finance wars would suspend the gold standard and issue paper money — until debt and inflation prompted them to return to the gold standard, setting up the cycle's next iteration.

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