The Ascent of Money: A Financial History of The World by Niall Ferguson Epsd. 1-5 (Full Documentary)

Niall Ferguson follows the money to tell the human story behind the evolution of finance, from its origins in ancient Mesopotamia to the latest upheavals on what he calls Planet Finance.

http://www.niallferguson.com

Bread, cash, dosh, dough, loot, lucre, moolah, readies, the wherewithal: Call it what you like, it matters. To Christians, love of it is the root of all evil. To generals, it's the sinews of war. To revolutionaries, it's the chains of labor. But in The Ascent of Money, Niall Ferguson shows that finance is in fact the foundation of human progress. What's more, he reveals financial history as the essential backstory behind all history.

Through Ferguson's expert lens familiar historical landmarks appear in a new and sharper financial focus. Suddenly, the civilization of the Renaissance looks very different: a boom in the market for art and architecture made possible when Italian bankers adopted Arabic mathematics. The rise of the Dutch republic is reinterpreted as the triumph of the world's first modern bond market over insolvent Habsburg absolutism. And the origins of the French Revolution are traced back to a stock market bubble caused by a convicted Scot murderer.

With the clarity and verve for which he is known, Ferguson elucidates key financial institutions and concepts by showing where they came from. What is money? What do banks do? What's the difference between a stock and a bond? Why buy insurance or real estate? And what exactly does a hedge fund do?

This is history for the present. Ferguson travels to post-Katrina New Orleans to ask why the free market can't provide adequate protection against catastrophe. He delves into the origins of the subprime mortgage crisis.

Perhaps most important, The Ascent of Money documents how a new financial revolution is propelling the world's biggest countries, India and China, from poverty to wealth in the space of a single generation—an economic transformation unprecedented in human history.

Yet the central lesson of the financial history is that sooner or later every bubble bursts—sooner or later the bearish sellers outnumber the bullish buyers, sooner or later greed flips into fear. And that's why, whether you're scraping by or rolling in it, there's never been a better time to understand the ascent of money.

Welcome to the world of money.

Bread, cash, dosh, dough,

loot, lucre, moolah,

the readies, the wherewithal.

Call it what you like;

money can break us,

or it can make us

In the past year, it's certainly broken

more than a few of the biggest names

on Wall Street and in the City of London.

And while former masters of the universe crash and burn,

the rest of us are left worrying

if our savings would be safer in a mattress than in a bank.

The great financial crisis that began in the summer of 2007

has most of us utterly baffled.

How on earth could a little local difficulty

with subprime mortgages in the United States

unleash an economic tsunami big enough

to obliterate some of Wall Street's most illustrious names,

to force nationalizations of banks on both sides of the Atlantic,

and to bring the entire world economy

to the brink of recession,

if not downright depression?

Shouldn't this series be called, "The Descent of Money"?

Well I want to explain to you

just how money rose to play such a terrifyingly dominant role

in all our lives.

What's more, I want to reveal financial history

as the essential back story of all history.

Banks financed the Renaissance,

while the bond market decided wars.

Stock markets built empires.

And monetary meltdowns made revolutions.

From Ancient Mesopotamia right down to present-day London,

the ascent of money has been an indispensable part

of the ascent of man.

But money's rise has never been

a smooth upward ride.

As we'll see,

financial history has been repeatedly interrupted

by gut-wrenching crises,

of which today's is just the latest.

From the fluctuating prices of the homes we own

to the high-speed industrialization of China,

the power of finances everywhere we look

and it affects all of our lives.

But are you in on the secret?

Do you know what causes a bank run

or a monetary meltdown,

or a stock market crash?

Can you tell the difference between

a subprime loan and a prime loan?

Well I think these financial technicalities

only really make sense once you know where they came from.

And that's why financial history is

more than merely academic interest.

Not knowing this stuff can seriously damage your wealth.

Crisis or no crisis,

the amount of money sloshing around planet finance

still boggles the mind.

By one measure, the US stock of money is now

$8.7 trillion--up 12% since last year.

And some people are still pocketing

a huge share of that cash.

Last year, despite the onset of the biggest financial crisis

since the Depression,

his hedge fund paid George Soros a cool

$2.5 billion.

That's roughly 41 000 times more

than the average American family earned.

As they say on Wall Street,

"Way to go."

Now however, imagine a world with no money.

500 years ago, the most powerful society in South America,

the Inca Empire,

had no real concept of money.

The Incas appreciated the aesthetic qualities of

rare metals.

Gold was the sweat of the sun.

Silver, the tears of the moon.

Labour was the unit of value in the Inca Empire,

just as it was later supposed to be

in a Communist society.

But in 1532, the Incas ran into a man

whose hunger for money had led him across an ocean.

Francisco Pizarro and his fellow conquistadors

had come from Spain to what the called

Upper Peru, inspired by the legend of Eldorado--

the realm of the gold-covered king.

After defeating the Inca army at the Battle of Cajamarca,

their quest began in earnest.

At Potosi, in what is now Bolivia, the Spaniards struck it rich.

They discovered the Cerro Rico--

literally, the "rich hill".

Towering nearly 16 000 feet above sea level,

it was a money mountain.

In that 250 years of Spanish rule,

more than 2 billion ounces of silver

were extracted from mines like this one--

14 000 feet up in the Andes.

What the Incas couldn't grasp was

why the Europeans had such an insatiable lust

for gold and silver.

They couldn't understand that to

Pizarro and the Conquistadors,

silver was much more than just shiny metal.

It could be made into money--

a store of value, a unit of account--

portable power.

I must say, I find this place pretty harrowing.

Spaniards had a system of forced labour,

which meant that every able-bodied male in the native population

had to do a stint down in these mines.

And you can see why 1 in 8 of them

didn't survive the ordeal.

Today, 500 years later, conditions for miners in the Cerro Rico

haven't improved much.

But at least they get paid for the work they do.

In those days, it was a way of making money

but verged on genocide.

The silver ore was ground up,

refined with mercury,

and then shipped to Europe as bars and coins.

made the Spanish crown rich beyond the dreams of avarice.

And yet all the silver in the mines of Potosi

couldn't help the inexorable economic and political decline

of Spain's empire.

Why was that when Pizarro seemed to have

struck it so incredibly rich?

The answer is that the Spaniards had dug up

so much silver to finance their wars of conquest

that the metal itself suffered an extraordinary

decline in value.

More silver coins didn't make Spain richer.

They simply made prices higher as

an increased quantity of money

chased the same amount of goods.

What the Spaniards didn't get

was that money is only worth

what other people will give

in exchange for it.

And whether money takes the form of

silver coins, sea shells, bars of gold,

or bank notes,

that's been true from Ancient times

right down to the present day.

Even lumps of clay can work

better than silver coins

if people have enough confidence in them.

In Ancient Mesopotamia,

nearly 4 000 years ago,

people used clay tablets, like these ones,

to commit themselves to particular financial transactions.

For example, this one, found a little southwest of Baghdad,

specifies that a debtor will repay

a lender 330 measures of grain

on the harvest day.

But this one's even more fascinating

because what it says is that

a debt of 4 measures of barley

should be repaid to the bearer of the clay tablet.

And it's that idea of repayment to the bearer

that really fascinates me.

If the phrase sounds familiar,

then it should.

Just take a look at the 20 pound note.

Bank notes have next to no intrinsic worth.

They're simply promises to pay

just like the clay tablets of Ancient Babylon,

4 millennia ago.

On the back of the 10 dollar bill,

it says "In God We Trust".

But it's not really God you're trusting in.

By swapping your goods or your labour

for a fistful of these things,

you're trusting the U.S. Treasury Secretary

not to repeat Spain's mistake and

produce so many of the damn things

that by the time you come to spend them,

they're worth even less than the paper they're printed on.

Today, we're quite happy with paper money.

Even more amazingly,

we're happy with money we can't even see.

Millions of dollars pass through this woman's hands every day.

Or rather, across her computer screen.

She's a foreign exchange dealer,

whose business is literally

buying and selling money.

Each day, around $3 trillion changes hands

in transaction like these around the world.

And it's all built on trust.

It has to be when you can't even touch the stuff.

That's what the Conquistadors got wrong.

They failed to see that money is about trust,

even faith; trust in the person paying you the money;

trust in the central bank issuing the money;

trust in commercial bank that honours the cheque.

Money isn't metal.

It's trust inscribed.

And it doesn't much matter what it's inscribed on--

paper, silver, clay, or a screen--

provided the recipient believes in it.

There was one huge possibility created

by the emergence of money

as a system of mutual trust.

A possibility that would revolutionize world history.

It was the idea that you could rely on people

to borrow money from you

and pay it back at some future date.

That's why the root of credit is "credo"