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Publisher's Summary

Something is wrong with our banking system. We all sense that, but Mervyn King knows it firsthand; his 10 years at the helm of the Bank of England, including at the height of the financial crisis, revealed profound truths about the mechanisms of our capitalist society. In The End of Alchemy, he offers us an essential work about the history and future of money and banking, the keys to modern finance.

The Industrial Revolution built the foundation of our modern capitalist age. Yet the flowering of technological innovations during that dynamic period relied on the widespread adoption of two much older ideas: the creation of paper money and the invention of banks that issued credit. We take these systems for granted today, yet at their core both ideas were revolutionary and almost magical. Common paper became as precious as gold, and risky long-term loans were transformed into safe short-term bank deposits. As King argues, this is financial alchemy - the creation of extraordinary financial powers that defy reality and common sense. Faith in these powers has led to huge benefits; the liquidity they create has fueled economic growth for two centuries now. However, they have also produced an unending string of economic disasters, from hyperinflations to banking collapses to the recent global recession and current stagnation.

How do we reconcile the potent strengths of these ideas with their inherent weaknesses? King draws on his unique experience to present fresh interpretations of these economic forces and to point the way forward for the global economy. His bold solutions cut through current overstuffed and needlessly complex legislation to provide a clear path to durable prosperity and the end of overreliance on the alchemy of our financial ancestors.

©2016 Mervyn King (P)2016 Audible, Inc.

Critic Reviews

"Mervyn King may well have written the most important book to come out of the financial crisis. Agree or disagree, King's visionary ideas deserve the attention of everyone from economics students to heads of state." (Lawrence H. Summers)

What members say

Average Customer Ratings

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  • Philo
  • San Diego, CA, United States
  • 07-13-16

Two books in one, both very fine

Here we have a tutorial on basics of money, banking and (some) finance, and their history. All the contemporary terminology is neatly fit into the explanations. It is a great way to become widely literate and current on this. Secondly, having educated and briefed the audience, the author shares his proposal to replace the overall central banking LOLR (lender of last resort) model (dating back at least to Walter Bagehot in his book 'Lombard Street' (available here), and the origins of modern central banking), with a PFAS (pawnbroker for all seasons) model. This in effect forces a kind of insurance premiums or pre-haircuts to be baked into credit deals from the start, to pay when they default en masse as they did in '08. I have seen this model criticized, as blocking the wild experimental quality of capitalism. But it is a great try and at least a start at remodeling the system so we won't have our overall financial system keep working in straightened times as an emergency insurer after the fact (after a financial collapse), charging ex post premiums back to us peasants for decades to come, while the fat cat bankers get bailed out (as the popular trope goes), and party on, with no fundamental fix to this model offered, to date. (Let me pause and say I do see some virtues in Dodd-Frank. I believe it goes some length toward reducing the frequency and depth of these problems.) Bravo for a very interesting read, and something to be pursued. This is the first Great Recession book (of dozens I have seen, most of the major titles) where anyone has bothered to propose any sizeable substantive changes. This deserves more workup. Very enjoyable and I expect to listen through again.

6 of 6 people found this review helpful

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Interesting but dry

Good summary and explanation of central bank purpose and function and rational supporting the policy.

1 of 1 people found this review helpful

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Educational and thought provoking

Very educational and thought provoking book. Mervyn King's audience here is anyone who not only wants to understand what happened during the financial crisis, but wants to better understand why it happened and what needs to change to prevent another. Thankfully, this isn't a book about finger pointing.

1 of 1 people found this review helpful

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Great Macro Knowledge

Really enjoyed it. Great for histroic knowledge.

You have to be interested in banking to really understand it. I will be reading it again for sure.

Recommended for anyone in Banking, or Finance or government. No matter how well you prepare for the future no1 really knows.

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Super!

Any additional comments?

This is a terrific book, assuming you're interested in banks, central banks, macroeconomics, and public policy. It's so good I read it twice in short order. The author provides clear and convincing insights into the fragility of the current banking system, and suggests a way out of the swamp.

My stereotype of a central banker is an establishment type, indoctrinated with establishment economics and policy ideas. Mr. King--perhaps now that he is an ex-central banker--refutes that stereotype. He is original, and skeptical of orthodoxy.

The book covers a lot of ground. As noted, the discussion of banking is superb, as is the treatment of central banking. The discussion of macroeconomics is perhaps too brief. I found it a little sketchy. If there is a second edition of this book I hope the author will flesh out that aspect, or perhaps write a separate treatise on macroeconomics.

Mr. King sees great value in Central Banking--he has not turned his back on the institution. Rather, he calls for the elimination, or reform, of the current system of fractional reserve banking in favor of a system he calls the Pawnbroker for All Seasons, in which assets are pledged as collateral to the central bank on an ongoing basis, so that assets do not need to be valued in a rush during a crisis. Under this system a bank can only create liquidity to the degree its discounted assets pledged to the central bank, and its liquid assets, cover the liquidity it creates.

The book is very well written, and the reader is excellent.

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  • Roger
  • Orlando, Florida United States
  • 05-05-17

Excellent First Half

I have listened to dozens of books about financial companies, crises, economics, etc. The first half of this book was excellent. Toward the end he is trying to make some prescriptions, but I could not follow some of what he was suggesting. I would definitely recommend this book because it is from a British point of view and all the others I have heard are by American authors.

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Great book by a great mind

Mervyn King has written an good analysis of the current situation of money and banking through the a historical perspective. While it is a great read, it could have gone into more detail about specific policy actions moving forward. However, the book was very easy to understand, and is a good choice for anyone wishing to learn more about the financial crisis and central banking.

I definitely would recommend this to a friend.

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A must to understand Early XXI

Superb historical description of how societies invented Trust to create wealth and the disequilibriums that arise when Trust disappears..

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Another paradigm

The End of Alchemy gives a differing view of the financial crises of the past decade.

Nervy King gives an insiders view, but rather than apologize and defend, he sticks to what happened.

Many will disagree based on politics though that's the point. Only by understanding the underlying facts and the emotional responses that create myths and actions by players can we hope to come together and move forward.

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Excellent. Excellent!!

Well written, well narrated. Highly recommended. Easy to follow and understand a very complex topic due to these positives. Excellent.

1 of 2 people found this review helpful

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  • steve
  • 04-23-18

A good book, but maybe not the best format.

I appreciate this book and the ideas in it but it has a lot of digressions, historical examples etc. and so it can all become a bit of a blur if you're looking for a book to listen to while doing something else.

The ideas aren't complicated or hard to understand but there is just such a volume of stuff around them that it sometimes gets difficult to keep track of the point the author is making. I was doing some simple activities while listening and found I would get lost in the details and lose the main thread of the ideas. I think this is a fault of the book itself rather than me just being too dumb or inattentive (although all dumb, inattentive people probably think that!).

If you're interested in finding how money and banking work then give it a go. Maybe you're smarter than me!

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  • Thomas
  • 04-03-17

a must read. objective, neutral, informative.

finally a book which seems not have the purpose to sell more books but is trying to give an objective view and to inform.
unlike others, there is no judging, no finger pointing.
very well written and preformed.

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  • Julie
  • 03-28-17

Complexity made easier to understand

Explanation and arguments finely balanced between complete novice and professional levels. subtle humour in what is often a dry topic.