a) cashless intra-bank and interbank transactions b) fractional reserve banking and c) central bank monopolies on note issue, the very nature of money evolved in a profoundly important way.

Behind each great historical phenomenon there lies a financial secret, and this book sets out to illuminate the most important of these. For example, the Renaissance created such a boom in the market for art and architecture because Italian bankers like the Medici made fortunes by applying Oriental mathematics to money. The Dutch Republic prevailed

The central relationship that money crystallizes is between lender and borrower.

In 1947 the total value added by the financial sector to US gross domestic product was 2.3 per cent; by 2007 its contribution had risen to 8.1 per cent of GDP. In other words, approximately $1 of every $13 paid to employees in the United States now went to people working in finance.5 Finance had become even more important in Britain, where it accou

key components of the financial system: the bond market, the stock market, the insurance market, the real estate market and the extraordinary globalization of all these markets

Their source of profits lay in maximizing the difference between the costs of their liabilities and the earnings on their assets, without reducing reserves to such an extent that the bank became vulnerable to a run – a crisis of confidence in a bank’s ability to satisfy depositors, which leads to escalating withdrawals and ultimately bankruptcy: li

The volume of derivatives – contracts derived from existing securities or transactions, such as interest rate swaps or credit default swaps (CDS) – has grown even faster, so that by the end of 2006 the notional value of all ‘over-the-counter’ derivatives (excluding those traded on public exchanges) was just over $400 trillion. Before the 1980s, suc

Thus, for the next quarter century, did governments resolve the so-called ‘trilemma’, according to which a country can choose any two out of three policy options: full freedom of cross-border capital movements; a fixed exchange rate; an independent monetary policy oriented towards domestic objectives.57

The decision of the Nixon administration to sever the final link with the gold standard (by ending gold convertibility of the dollar) sounded the death knell for Bretton Woods in 1971.