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Broken Money: Why Our Financial System is Failing Us and How We Can Make it Better
A Comprehensive Overview of the Past, Present, and Future of Money
Broken Money explores the history of money through the lens of technology. Politics can affect things temporarily and locally, but technology is what drives things forward globally and permanently. The book's goal is for the reader to walk away with a deep understanding of money and monetary history, both in terms of theoretical foundations and in terms of practical implications.
From shells to gold, from papyrus bills of exchange to central banks, and from the invention of the telegraph to the creation of Bitcoin, Lyn Alden walks the reader through the emergence of new technologies that have shaped what we use as money over the ages. And beyond that, Alden explores the concept of what money is at its very foundation to give the reader a framework to analyze and compare different types of monetary technologies and monetary theories.
The book also takes a distinctively human look at how money impacts the lives of real people, and how new monetary technologies shape the power structures within society.
In the modern era, energy abundance and technological enhancements have broadly improved human well-being, but the global monetary system has been slow to keep up. There are over 160 active currencies in the world, each with a local monopoly over its own country, and with little or no acceptance elsewhere. Many of them are rapidly diluted, which continually devalues the savings and the wages of the billions of people who live and work within those jurisdictions. Being born in the "wrong" country makes saving money far harder than it needs to be.
Nigeria has a population of over 200 million people and has averaged 13% annualized inflation over the past decade. Egypt cut its currency in half relative to the dollar twice over the past decade, which instantly devalued the savings and wages of its 100 million citizens. Dozens of countries have experienced at least triple-digit year-over-year inflation within the past four decades, including Brazil that outright hyperinflated in the 1990s while it was the fifth most populous country in the world.
Europe and Japan had $18 trillion worth of negative-yielding bonds in 2019, right before a wave of inflation wiped their purchasing power away. In 2021, the chairman of the U.S. Federal Reserve dismissed the idea that the sharp rise in the money supply from the pandemic stimulus would lead to price inflation. By 2022, as major inflation emerged, the chairman rapidly changed his outlook and tightened monetary policy so quickly that it led to the failure of some of the largest banks in the country.
How did we get to this point? Why isn't our money better than this in the 21st century? Broken Money answers these questions by examining the current mix of technology that has led to these limitations, and then explores emerging technologies that may be able to provide us with a monetary system that is fit for the modern era.
Broken Money explores the history of money through the lens of technology. Politics can affect things temporarily and locally, but technology is what drives things forward globally and permanently. The book's goal is for the reader to walk away with a deep understanding of money and monetary history, both in terms of theoretical foundations and in terms of practical implications.
From shells to gold, from papyrus bills of exchange to central banks, and from the invention of the telegraph to the creation of Bitcoin, Lyn Alden walks the reader through the emergence of new technologies that have shaped what we use as money over the ages. And beyond that, Alden explores the concept of what money is at its very foundation to give the reader a framework to analyze and compare different types of monetary technologies and monetary theories.
The book also takes a distinctively human look at how money impacts the lives of real people, and how new monetary technologies shape the power structures within society.
In the modern era, energy abundance and technological enhancements have broadly improved human well-being, but the global monetary system has been slow to keep up. There are over 160 active currencies in the world, each with a local monopoly over its own country, and with little or no acceptance elsewhere. Many of them are rapidly diluted, which continually devalues the savings and the wages of the billions of people who live and work within those jurisdictions. Being born in the "wrong" country makes saving money far harder than it needs to be.
Nigeria has a population of over 200 million people and has averaged 13% annualized inflation over the past decade. Egypt cut its currency in half relative to the dollar twice over the past decade, which instantly devalued the savings and wages of its 100 million citizens. Dozens of countries have experienced at least triple-digit year-over-year inflation within the past four decades, including Brazil that outright hyperinflated in the 1990s while it was the fifth most populous country in the world.
Europe and Japan had $18 trillion worth of negative-yielding bonds in 2019, right before a wave of inflation wiped their purchasing power away. In 2021, the chairman of the U.S. Federal Reserve dismissed the idea that the sharp rise in the money supply from the pandemic stimulus would lead to price inflation. By 2022, as major inflation emerged, the chairman rapidly changed his outlook and tightened monetary policy so quickly that it led to the failure of some of the largest banks in the country.
How did we get to this point? Why isn't our money better than this in the 21st century? Broken Money answers these questions by examining the current mix of technology that has led to these limitations, and then explores emerging technologies that may be able to provide us with a monetary system that is fit for the modern era.
538 pages, Hardcover
Published August 20, 2023
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Displaying 1 - 30 of 77 reviews
October 17, 2023
Bitcoin could be, perhaps should be, a global-game-changer. Lyn Alden does a fine job of placing Bitcoin in larger contexts: technological, historical, economic, political. Her perspective is that of an engineer evaluating a new tool that has come on the market. By the end, she has compared Bitcoin to historical solutions (gold), current solutions (fiat), and other proposed solutions (other crypto). Only Bitcoin provides the functionality of a strong currency (value that cannot be debased, ease and speed of exchange, privacy, freedom from manipulation, and ability to operate across time and distance). Her historical analysis is necessary so that readers understand what the attributes of a universal currency should be and what vulnerabilities led - over time - to the failure of previous econo-politico-financial monetary solutions.
Implicitly, she asks, "Does Bitcoin meet the need?" "Does it avoid previous and recurring difficulties?" "Does it create new problems?" "Are there other crypto solutions that are just as good, but cheaper, safer, easier to implement, more acceptable to users, or more acceptable to regulators or governments?" This book is a 500+ page "software review." After years of research, thought, and due diligence, Ms. Alden concludes that Bitcoin could be a much-needed improvement and should be supported/adopted. She recounts her own journey, from moderate skepticism to cautious support. She believes that fiat currencies and the current global system of petro-dollars has/is/will fail most people in the world. She believes that proof-of-stake currencies are mortally flawed and that stable coins simply digitize the economic unfairness of fiat currency. All that is left on her workbench is Bitcoin (and a few much smaller proof-of-work currencies). Since Bitcoin has already attained considerable size, use, and acceptance, she recommends it. Her recommendation is not absolute, but considered and conditional. Alden is an engineer. She understands the evolution of tools, systems and technologies. She is pragmatic. Bitcoin is the best tool currently available. If the current fiat currency/national bank/petro-dollar system is imploding (I agree it is), drastic change is required. Economic and political forces advocate for their version of a new system (just as such forces did at Bretton Woods). Alden asks us to see that for what it is and reject the status quo's self-serving digital solutions. She asks us to embrace Bitcoin since it is the only solution that can give us, "the other 99%," some "control of the ledger."
I am less optimistic than Alden. I consider her evaluation of the global monetary crisis and Bitcoin's potential value sound. But I do not trust that most people or most companies will refuse the strongly marketed digital solutions offered by governments, regulators, and banks. Most people (sad to say) value convenience, personal costs, and immediate benefits more than privacy, public cost, and long-term benefits. Bitcoin should survive and grow, but it is unlikely to become a single, universal currency. Alden has little faith in public institutions. Sad. Apparently, I have little faith in people (even sadder). Or at least in their ability to resist popular trends.
The book is a must read for investors and onlookers, academics and non-academics, anyone who wants to understand the reinvention of money. The book's straightforward style and organization make it accessible and easy to translate. Even if Bitcoin fails to replace our current, flawed system, it can and should serve as a critical/useful alternative.
Implicitly, she asks, "Does Bitcoin meet the need?" "Does it avoid previous and recurring difficulties?" "Does it create new problems?" "Are there other crypto solutions that are just as good, but cheaper, safer, easier to implement, more acceptable to users, or more acceptable to regulators or governments?" This book is a 500+ page "software review." After years of research, thought, and due diligence, Ms. Alden concludes that Bitcoin could be a much-needed improvement and should be supported/adopted. She recounts her own journey, from moderate skepticism to cautious support. She believes that fiat currencies and the current global system of petro-dollars has/is/will fail most people in the world. She believes that proof-of-stake currencies are mortally flawed and that stable coins simply digitize the economic unfairness of fiat currency. All that is left on her workbench is Bitcoin (and a few much smaller proof-of-work currencies). Since Bitcoin has already attained considerable size, use, and acceptance, she recommends it. Her recommendation is not absolute, but considered and conditional. Alden is an engineer. She understands the evolution of tools, systems and technologies. She is pragmatic. Bitcoin is the best tool currently available. If the current fiat currency/national bank/petro-dollar system is imploding (I agree it is), drastic change is required. Economic and political forces advocate for their version of a new system (just as such forces did at Bretton Woods). Alden asks us to see that for what it is and reject the status quo's self-serving digital solutions. She asks us to embrace Bitcoin since it is the only solution that can give us, "the other 99%," some "control of the ledger."
I am less optimistic than Alden. I consider her evaluation of the global monetary crisis and Bitcoin's potential value sound. But I do not trust that most people or most companies will refuse the strongly marketed digital solutions offered by governments, regulators, and banks. Most people (sad to say) value convenience, personal costs, and immediate benefits more than privacy, public cost, and long-term benefits. Bitcoin should survive and grow, but it is unlikely to become a single, universal currency. Alden has little faith in public institutions. Sad. Apparently, I have little faith in people (even sadder). Or at least in their ability to resist popular trends.
The book is a must read for investors and onlookers, academics and non-academics, anyone who wants to understand the reinvention of money. The book's straightforward style and organization make it accessible and easy to translate. Even if Bitcoin fails to replace our current, flawed system, it can and should serve as a critical/useful alternative.
January 24, 2024
This books is actually two books in one or two separate parts.
First part deals with explanation of technical nature of money and how the modern FIAT currency system works and operates. I liked the clarity of the explanation and approach from system and engineering approach. It isn't financial system explanation from the money person, it is rather explanation of the money system from engineer point of view.
Second part is focused on cryptocurrency, in specific on Bitcoin as possible future basis for the monetary system or another type of money used in the system.
I found first part to be more informative and I think it is better as a book. What I liked is a concept of money and changing monetary systems as a function of speed of transaction and how it shapes the way we handle money.
The latter part provides very generic overview of Bitcoin (good for this level, but I also was familiar with it before) and then goes into a discussion on how it might be a solution for a future.
Good things about second part:
- Lyn makes a good points how solution like Bitcoin might be a needed evolution based on the need for the transactions in the network
- It is not a religious book, it isn't trying to convince person based on the faith in Bitcoin, rather on the basis of merit points discuses in the book.
- It approaches some risk analysis of the Bitcoin as a solution, not only as a technical solution but in overall as an approach
What I didn't liked about the second part:
- Whole part dealing with Bitcoin and energy is weak, much weaker the the rest of book. I get all those experiments and examples but it isn't convincing and it is not discussing the counterexamples (like building/reviving coal power to mine Bitcoin). IMO this is the weakest part of the book
- It isn't touching at all the potential risk from Bitcoin and moving towards the cryptocurrencies from social point of view ... not explicitly it makes an assumption that the result will be net positive
All in all ... I was wondering about 3/5 but gave it 4/5 as I found it as a well balanced, informative position and even with some drawbacks I think it is worth for people to read it.
First part deals with explanation of technical nature of money and how the modern FIAT currency system works and operates. I liked the clarity of the explanation and approach from system and engineering approach. It isn't financial system explanation from the money person, it is rather explanation of the money system from engineer point of view.
Second part is focused on cryptocurrency, in specific on Bitcoin as possible future basis for the monetary system or another type of money used in the system.
I found first part to be more informative and I think it is better as a book. What I liked is a concept of money and changing monetary systems as a function of speed of transaction and how it shapes the way we handle money.
The latter part provides very generic overview of Bitcoin (good for this level, but I also was familiar with it before) and then goes into a discussion on how it might be a solution for a future.
Good things about second part:
- Lyn makes a good points how solution like Bitcoin might be a needed evolution based on the need for the transactions in the network
- It is not a religious book, it isn't trying to convince person based on the faith in Bitcoin, rather on the basis of merit points discuses in the book.
- It approaches some risk analysis of the Bitcoin as a solution, not only as a technical solution but in overall as an approach
What I didn't liked about the second part:
- Whole part dealing with Bitcoin and energy is weak, much weaker the the rest of book. I get all those experiments and examples but it isn't convincing and it is not discussing the counterexamples (like building/reviving coal power to mine Bitcoin). IMO this is the weakest part of the book
- It isn't touching at all the potential risk from Bitcoin and moving towards the cryptocurrencies from social point of view ... not explicitly it makes an assumption that the result will be net positive
All in all ... I was wondering about 3/5 but gave it 4/5 as I found it as a well balanced, informative position and even with some drawbacks I think it is worth for people to read it.
September 11, 2023
Great book to understand money in the history of money the last third of the book describes decentralized bitcoin and some of the advantages and disadvantages.
November 14, 2023
I really enjoyed reading the first 2/3rd of the book. The last 1/3rd deals with cryptocurrency and bitcoin - I didn’t have enough of a background context or familiarity to grasp these chapters. I will re-read this section again in the near future.
The first 2/3rd of the book deals with history of money and the technological changes that led to a difference between speed of transaction and speed of settlement and the operational implications of this gap.
The book answers a lot of questions such as
1. Why did Gold and Silver became the universally adopted currencies ?
2. Why did we need both Gold and Silver ? And why today Silver isn’t considered as hard money as Gold ?
3. Why commodity money only works well when trading partners are at the same technological level?
4. Why the vector tech and banking innovations meant that a move away from the gold standard was inevitable?
5. How is money created in our fiat / Central banking system ?
6. How did the dollar become the reserve currency of the world ? And what are the dangers of having a lot of your liabilities denominated in dollars?
7. Why the reserve currency status of the dollar is a double edged sword for the US ?
8. Why didn’t money printing cause inflation in 2008 while it did in 2020 ?
9. How low interest rates, higher money supply and monetization of deficit have introduced noise in price signals?
10. Why increasing rates is less effective or even counterproductive to combat inflation which emerged due to monetization of fiscal deficit ?
Lyn Alden explores these and many other questions using a systema lens.
Recommended reading. But I do think you need to have some familiarity or an interest in exploring some of the above questions.
The first 2/3rd of the book deals with history of money and the technological changes that led to a difference between speed of transaction and speed of settlement and the operational implications of this gap.
The book answers a lot of questions such as
1. Why did Gold and Silver became the universally adopted currencies ?
2. Why did we need both Gold and Silver ? And why today Silver isn’t considered as hard money as Gold ?
3. Why commodity money only works well when trading partners are at the same technological level?
4. Why the vector tech and banking innovations meant that a move away from the gold standard was inevitable?
5. How is money created in our fiat / Central banking system ?
6. How did the dollar become the reserve currency of the world ? And what are the dangers of having a lot of your liabilities denominated in dollars?
7. Why the reserve currency status of the dollar is a double edged sword for the US ?
8. Why didn’t money printing cause inflation in 2008 while it did in 2020 ?
9. How low interest rates, higher money supply and monetization of deficit have introduced noise in price signals?
10. Why increasing rates is less effective or even counterproductive to combat inflation which emerged due to monetization of fiscal deficit ?
Lyn Alden explores these and many other questions using a systema lens.
Recommended reading. But I do think you need to have some familiarity or an interest in exploring some of the above questions.
November 16, 2023
This is easily the best book I've read covering the broader macroeconomy, including how our government-based currencies work, why we have inflation, how we got to this point, why things cannot last this way forever, and how our current situation is unique in history. It also paints a picture of a possible way forward.
This book does a great job of balancing the Keynsian reality of today with the Austrian ideal that many books argue for. This is one of the top books on currencies and macroeconomics that I'd recommend to someone new to the subject.
This book does a great job of balancing the Keynsian reality of today with the Austrian ideal that many books argue for. This is one of the top books on currencies and macroeconomics that I'd recommend to someone new to the subject.
November 25, 2023
This is the best accessible introduction to money, and the state of the global financial system that I've come across.
In particular I appreciated her contribution of framing all money as a ledger, with commodity money using nature and physical movement as a form of ledger. I haven't read all the Austrians, but this seems like a reasonable and obvious reconciliation between their views and the more dominant mainstream view.
Lyn is a clear thinker unencumbered by academic pedantry and dogma. Usually her next paragraph explains the obvious question that you would have as a normal person. Her deep mechanical understanding of finance and her breadth of knowledge assures you of the book's rigour despite actually being readable.
I'm probably being unfair by only giving a 4/5, but my only complaint is that the last ~200 pages seemed rushed/crammed.
There's so much noise and debate around money, the economy, finance these days. This book is pure signal and a great start and grounding around these topics.
In particular I appreciated her contribution of framing all money as a ledger, with commodity money using nature and physical movement as a form of ledger. I haven't read all the Austrians, but this seems like a reasonable and obvious reconciliation between their views and the more dominant mainstream view.
Lyn is a clear thinker unencumbered by academic pedantry and dogma. Usually her next paragraph explains the obvious question that you would have as a normal person. Her deep mechanical understanding of finance and her breadth of knowledge assures you of the book's rigour despite actually being readable.
I'm probably being unfair by only giving a 4/5, but my only complaint is that the last ~200 pages seemed rushed/crammed.
There's so much noise and debate around money, the economy, finance these days. This book is pure signal and a great start and grounding around these topics.
November 20, 2023
Money. Often talked about, rarely understood...
This book should be a first read for anyone trying to understand how 'good' money works, when your money stops working for you, how bitcoin might be a solution, why governments seem perpetually indebted and how things usually progress from there on.
IMO, if you were to read just one economics/finance/investment book, this is it. The author really drills down to the nuts and bolts of our monetary/economic system and allows you to make your own deductions from there on. You can also read any chapter on its own and still get the message.
I've been following Lyn Alden for 4 years now. This book puts many of her newsletters together and highlights her genius in explaining abstract concepts in a straightforward, unbiased manner.
This book should be a first read for anyone trying to understand how 'good' money works, when your money stops working for you, how bitcoin might be a solution, why governments seem perpetually indebted and how things usually progress from there on.
IMO, if you were to read just one economics/finance/investment book, this is it. The author really drills down to the nuts and bolts of our monetary/economic system and allows you to make your own deductions from there on. You can also read any chapter on its own and still get the message.
I've been following Lyn Alden for 4 years now. This book puts many of her newsletters together and highlights her genius in explaining abstract concepts in a straightforward, unbiased manner.
February 19, 2024
Fantastic overview of the history of money, what defines good money, how centralized banking works, and the case for cryptocurrency (especially bitcoin). Thankfully written in plain English!
October 12, 2023
Utterly fantastic, clear dive into what money is, how our current financial systems works and how it could work differently.
Starts with fascinating histories of money/banking/finance and deftly links them to our modern situation. Feel like I’ve gone from a 2/10 to a 5/10 in understanding these systems almost overnight (still a ways to go to 10/10…)
Then she jumps into Bitcoin and digital currencies and how they have the potential to change the system.
Can’t recommend enough if you’re even remotely interested.
Starts with fascinating histories of money/banking/finance and deftly links them to our modern situation. Feel like I’ve gone from a 2/10 to a 5/10 in understanding these systems almost overnight (still a ways to go to 10/10…)
Then she jumps into Bitcoin and digital currencies and how they have the potential to change the system.
Can’t recommend enough if you’re even remotely interested.
October 14, 2023
Thank you, Lynn!
Well written and very informative! Ending the Fed would be a good start. We shouldn’t have a known criminal cabal controlling the ledger.
Well written and very informative! Ending the Fed would be a good start. We shouldn’t have a known criminal cabal controlling the ledger.
October 9, 2023
Perhaps the most important book written on the history of money and its impact on whether an economy works for the many or the few.
October 5, 2023
Probably the best contemporary book about money you can get your hands on.
April 17, 2024
Great history and explanation of money and banking. Definitely recommend for anyone seeking to understand these topics.
September 10, 2023
Very helpful to understand what is money
Who controls ledger? I really agree with the question from the author and we need to try to find the answer for the question by ourselves. And I believe that this book will definitely help you find the answer. I strongly recommend this masterpiece, especially to Korean!
Who controls ledger? I really agree with the question from the author and we need to try to find the answer for the question by ourselves. And I believe that this book will definitely help you find the answer. I strongly recommend this masterpiece, especially to Korean!
January 23, 2024
Well, I never expected to read a 500 page bitcoin thesis and I definitely didn't expect to give it five stars.
In truth, the first ~300 pages or so have nothing to do with bitcoin and are more an overview and critique of our fiat-based financial system. This part of the book explores the history of money through the lens of technology -- it begins with a very interesting review of what monies were used thousands of years ago. Some of the most important characteristics for money are that it is scarce, liquid, portable and durable. For a long time for example a popular money was shells, which were super labour intensive to make and thus for anybody at the time to produce a lot of shells required a lot of effort. They were also light and small so easily portable, and widely accepted as money which made them liquid. A key takeaway from this part of the book was that if some subsection of the population becomes adept at producing or procuring this money, probably through superior technology, it no longer becomes scarce and the money will be devalued. The population that is able to boost production will reap the rewards for as long as the item remains a widely accepted currency, but once the world catches onto these new production methods there is a high chance the item will be discontinued as an acceptable form of currency. Other examples of money used hundreds or thousands of years ago included feathers, silver, gold, cattle, salt and animal skins.
Then the book moves on to discuss how gold and silver became the default currencies around (I think) the 1700s and 1800s. Then the gold standard was the basis for the international monetary system from the 1870s until around World War One. Eventually the world moved toward fractional reserve banking, where gold was decoupled from the dollar and banks no longer had to hold as much cash as they have deposits. Leverage got higher and higher, making the system vulnerable to collapse. Of course, central banks have at their discretion the option to essentially print money and prevent collapses in the system. With bailouts frequently directed to corporations that were overly greedy and took on too much risk, this system favours the wealthy. The middle class and the poor -- who bear no responsibility for these failures -- are the ones who can least afford inflation but they have no choice but to bear it.
Edit -- Thinking back, I should clarify that Alden says bailouts like in 2008 directed at corporations and printing money to give to banks to use as reserves is not the type of money printing that is likely to lead to inflation. If I understood her right, the type of money printing that leads to inflation is when you give handouts directly to individuals, because then there is more money in the system competing for the same number of goods and services.
Inflation in North America has mostly been manageable so far, but many developing countries have had hyperinflation. This is devastating and many of these people are already poor. The author contends that, for these people, bitcoin can be incredibly valuable. Before reading this book I naively thought people in countries with hyperinflation could just convert their currency immediately to the U.S. dollar, but I didn't realize how much control the governments of these countries are able to impose. They can order banks to freeze bank accounts and not allow citizens to hold anything but Argentinian pesos (for example).
Overall I think the book was well researched, thoroughly explained and persuasively argued. There are more legitimate use cases for bitcoin or a technology along those lines than I had realized. Its scarcity, immutability and decentralization make it quite attractive if we want to live in a world where governments have less control and therefore power.
In truth, the first ~300 pages or so have nothing to do with bitcoin and are more an overview and critique of our fiat-based financial system. This part of the book explores the history of money through the lens of technology -- it begins with a very interesting review of what monies were used thousands of years ago. Some of the most important characteristics for money are that it is scarce, liquid, portable and durable. For a long time for example a popular money was shells, which were super labour intensive to make and thus for anybody at the time to produce a lot of shells required a lot of effort. They were also light and small so easily portable, and widely accepted as money which made them liquid. A key takeaway from this part of the book was that if some subsection of the population becomes adept at producing or procuring this money, probably through superior technology, it no longer becomes scarce and the money will be devalued. The population that is able to boost production will reap the rewards for as long as the item remains a widely accepted currency, but once the world catches onto these new production methods there is a high chance the item will be discontinued as an acceptable form of currency. Other examples of money used hundreds or thousands of years ago included feathers, silver, gold, cattle, salt and animal skins.
Then the book moves on to discuss how gold and silver became the default currencies around (I think) the 1700s and 1800s. Then the gold standard was the basis for the international monetary system from the 1870s until around World War One. Eventually the world moved toward fractional reserve banking, where gold was decoupled from the dollar and banks no longer had to hold as much cash as they have deposits. Leverage got higher and higher, making the system vulnerable to collapse. Of course, central banks have at their discretion the option to essentially print money and prevent collapses in the system. With bailouts frequently directed to corporations that were overly greedy and took on too much risk, this system favours the wealthy. The middle class and the poor -- who bear no responsibility for these failures -- are the ones who can least afford inflation but they have no choice but to bear it.
Edit -- Thinking back, I should clarify that Alden says bailouts like in 2008 directed at corporations and printing money to give to banks to use as reserves is not the type of money printing that is likely to lead to inflation. If I understood her right, the type of money printing that leads to inflation is when you give handouts directly to individuals, because then there is more money in the system competing for the same number of goods and services.
Inflation in North America has mostly been manageable so far, but many developing countries have had hyperinflation. This is devastating and many of these people are already poor. The author contends that, for these people, bitcoin can be incredibly valuable. Before reading this book I naively thought people in countries with hyperinflation could just convert their currency immediately to the U.S. dollar, but I didn't realize how much control the governments of these countries are able to impose. They can order banks to freeze bank accounts and not allow citizens to hold anything but Argentinian pesos (for example).
Overall I think the book was well researched, thoroughly explained and persuasively argued. There are more legitimate use cases for bitcoin or a technology along those lines than I had realized. Its scarcity, immutability and decentralization make it quite attractive if we want to live in a world where governments have less control and therefore power.
February 12, 2024
I could write a very long essay about all the trains of thought this book assembled, oiled and dispatched in my mind. I won't (for now). Here's a (long) review instead.
5 stars.
As the book progresses, it gets a bit more rambly and I wish Alden would have skipped part 6–her thoughts on the ethics around privacy and government control–altogether (it's easier to recommend a short book than a long one), but the total amount of "aha"-moments (as easily measured by the amount of notes I made) still easily justifies that rating.
Why am I so excited about this book?
For a few years now, I've been intensely interested in money. Not so much in just owning the thing itself (though there's certainly nothing wrong with having lots of money), but in the concept. What is money? How does it relate to debt? How is it possible that large countries keep piling on debt without the whole house of cards coming crumbling down? How does our modern financial system work? Is it fair? Is it working well? Is there a better way?
The two most important stops on my money-journey so far were Dalio's "Big Debt Crises" and Graeber's "Debt: The first 5000 years". I read, I learned a lot, but I was still confused. There wasn't anything tying together the different pockets of knowledge in my head and, had you asked, I still couldn't tell you what money is.
Broken Money changed that.
Money is a ledger of who owes what to whom. Repeatedly asking "who controls the ledger?" is an incredibly helpful step-by-step guide through financial history.
Is the system fair? It's not. Is it working well? Some things obviously aren't. Not while just a few people can alter the ledger at will to finance their goals at the cost of everyone else in opaque ways.
As human preferences tend to differ when it comes to who should owe what to whom (and how long you should be owed something in the first place), the answers to some of these questions will likely also differ with said preferences.
Is there a better way? I don't know. Many were answered, but I still have questions about money.
Alden jumped to the "obviously we should want deflationary money" conclusion too quickly for me and I'd love to understand that better. What would a world with deflationary money really look like and do we want that kind of world? Are we really sure we don't want inflationary money to incentivize people to go around chasing for new ideas and innovations to make a return on their "favors owed to them from the past" (aka their money).
If you take the long-term view: people in the future don't care about the state of the ledger (who owed what to whom) from days past. All they'll care about are new ideas and new technologies that make their lives better. Productivity growth is what drives wealth and well-being forever, whereas human quibbling about how to organize that wealth and how to relate to each other can only do so for a while. However, it's the quibbling that tends to have a much more noticeable effect on your well-being in the short-term (even when the short-term can be for the duration of your and your friends' lives). So maybe your take on inflationary versus deflationary money is just about your take on the long-term versus the short-term view?
Why not have Bitcoin but with small in-built inflation?
5 stars.
As the book progresses, it gets a bit more rambly and I wish Alden would have skipped part 6–her thoughts on the ethics around privacy and government control–altogether (it's easier to recommend a short book than a long one), but the total amount of "aha"-moments (as easily measured by the amount of notes I made) still easily justifies that rating.
Why am I so excited about this book?
For a few years now, I've been intensely interested in money. Not so much in just owning the thing itself (though there's certainly nothing wrong with having lots of money), but in the concept. What is money? How does it relate to debt? How is it possible that large countries keep piling on debt without the whole house of cards coming crumbling down? How does our modern financial system work? Is it fair? Is it working well? Is there a better way?
The two most important stops on my money-journey so far were Dalio's "Big Debt Crises" and Graeber's "Debt: The first 5000 years". I read, I learned a lot, but I was still confused. There wasn't anything tying together the different pockets of knowledge in my head and, had you asked, I still couldn't tell you what money is.
Broken Money changed that.
Money is a ledger of who owes what to whom. Repeatedly asking "who controls the ledger?" is an incredibly helpful step-by-step guide through financial history.
Is the system fair? It's not. Is it working well? Some things obviously aren't. Not while just a few people can alter the ledger at will to finance their goals at the cost of everyone else in opaque ways.
As human preferences tend to differ when it comes to who should owe what to whom (and how long you should be owed something in the first place), the answers to some of these questions will likely also differ with said preferences.
Is there a better way? I don't know. Many were answered, but I still have questions about money.
Alden jumped to the "obviously we should want deflationary money" conclusion too quickly for me and I'd love to understand that better. What would a world with deflationary money really look like and do we want that kind of world? Are we really sure we don't want inflationary money to incentivize people to go around chasing for new ideas and innovations to make a return on their "favors owed to them from the past" (aka their money).
If you take the long-term view: people in the future don't care about the state of the ledger (who owed what to whom) from days past. All they'll care about are new ideas and new technologies that make their lives better. Productivity growth is what drives wealth and well-being forever, whereas human quibbling about how to organize that wealth and how to relate to each other can only do so for a while. However, it's the quibbling that tends to have a much more noticeable effect on your well-being in the short-term (even when the short-term can be for the duration of your and your friends' lives). So maybe your take on inflationary versus deflationary money is just about your take on the long-term versus the short-term view?
Why not have Bitcoin but with small in-built inflation?
March 3, 2024
Significantly better than, e.g., "The Fiat Standard" - "Broken Money" does really well when it comes to diving deep into monetary systems and (especially) their shortcomings. What did I enjoy most:
- descriptions are full of details & easy to follow
- both theories of money as debt & means of value are covered very well
- the author does quite well when it comes to comparing the old & "the new" (more about it later) head-to-head
- there are a bunch of interesting "technical" details of current fiat global systems
- I've found here a bit of analysis I didn't get anywhere else (interesting criticism of Proof of Stake)
OK, what were the parts I didn't like?
- in approx. 70% of the book, the author switches to Bitcoin as an alternative to current fiat currencies & then suddenly, her tone changes - it's not as reasonable, analytic & dispassionate, but full of zealotry; an impression of objectivity fades away pretty quickly
- she covers some negative aspects (criticisms) of Bitcoin (e.g., energy consumption, transaction speed, etc.), and these topics get enough space, but ... the argumentation is too naive & shallow (e.g., what she says about cheap energy), I miss really honest devil advocacy, not even mention expanding into more tricky topics (social trust vs REAL transparency, inheritance, issue of lost wallets, etc.)
- monetary policies are criticized here as a source of inflation & reason why people's savings value decreases over time: that is fair, but I lack a deeper analysis of what happens if governments lose this tool - will they be able to keep stable economics, provide fundamental services to the people (education, medical, infrastructure), cover for the natural disasters, etc.?
To summarize:
- the initial 70% of the book: 5.5 stars
- the rest: 3 stars (it's still better than 90% of Bitcoin evangelism, but after the initial 70% I've expected better)
- descriptions are full of details & easy to follow
- both theories of money as debt & means of value are covered very well
- the author does quite well when it comes to comparing the old & "the new" (more about it later) head-to-head
- there are a bunch of interesting "technical" details of current fiat global systems
- I've found here a bit of analysis I didn't get anywhere else (interesting criticism of Proof of Stake)
OK, what were the parts I didn't like?
- in approx. 70% of the book, the author switches to Bitcoin as an alternative to current fiat currencies & then suddenly, her tone changes - it's not as reasonable, analytic & dispassionate, but full of zealotry; an impression of objectivity fades away pretty quickly
- she covers some negative aspects (criticisms) of Bitcoin (e.g., energy consumption, transaction speed, etc.), and these topics get enough space, but ... the argumentation is too naive & shallow (e.g., what she says about cheap energy), I miss really honest devil advocacy, not even mention expanding into more tricky topics (social trust vs REAL transparency, inheritance, issue of lost wallets, etc.)
- monetary policies are criticized here as a source of inflation & reason why people's savings value decreases over time: that is fair, but I lack a deeper analysis of what happens if governments lose this tool - will they be able to keep stable economics, provide fundamental services to the people (education, medical, infrastructure), cover for the natural disasters, etc.?
To summarize:
- the initial 70% of the book: 5.5 stars
- the rest: 3 stars (it's still better than 90% of Bitcoin evangelism, but after the initial 70% I've expected better)
October 30, 2023
An absolute tour de force. One the best books I've read so far.
Spoilers follow, in a train of thought manner.
Money solves the double coincidence of wants, as a set of IOUs. This is called the "credit theory of money" but who cares. Money is also this thing that everybody wants, but whose supply is limited. That's called the "commodity theory of money". Through the lens of technology, things with high salability (everyone wants some, even if only by convention), and a low flow to stock ratio, durability and portability are good forms of money and out-evolve other forms over time, like gold did for silver.
Gold was great but not super portable. When the telegraph was invented this became a problem, and so fiat currency and central banking came to dominate as the "ledger". Governments abused this system more and more over time to print money, an indirect form of taxation on the population. Centralisation and loss of privacy occured.
Having 160 world currencies is hugely inefficient, and the US dollar as a sort of world currency creates all sorts of distortions and imbalances.
Why is inflation so bad anyway? Arguably price is a signal that should be allowed to exist so we can react to it (e.g. invest in more supply). Maybe we shouldn't be intervening with money supply all the time and suppressing supply and demand signals.
Technologies like bitcoin represent a possible way forward, since they're scarce, secure in many ways, and thus could serve as a form of limited global fiat free from manipulation.
Spoilers follow, in a train of thought manner.
Money solves the double coincidence of wants, as a set of IOUs. This is called the "credit theory of money" but who cares. Money is also this thing that everybody wants, but whose supply is limited. That's called the "commodity theory of money". Through the lens of technology, things with high salability (everyone wants some, even if only by convention), and a low flow to stock ratio, durability and portability are good forms of money and out-evolve other forms over time, like gold did for silver.
Gold was great but not super portable. When the telegraph was invented this became a problem, and so fiat currency and central banking came to dominate as the "ledger". Governments abused this system more and more over time to print money, an indirect form of taxation on the population. Centralisation and loss of privacy occured.
Having 160 world currencies is hugely inefficient, and the US dollar as a sort of world currency creates all sorts of distortions and imbalances.
Why is inflation so bad anyway? Arguably price is a signal that should be allowed to exist so we can react to it (e.g. invest in more supply). Maybe we shouldn't be intervening with money supply all the time and suppressing supply and demand signals.
Technologies like bitcoin represent a possible way forward, since they're scarce, secure in many ways, and thus could serve as a form of limited global fiat free from manipulation.
September 9, 2023
Money is such an in incredibly important topic but unfortunately not very well understood by most.
Humans trade time for money as a form of storing our efforts in a battery than can latter be consumed or transferred but the current form of money can be diluted in non-transparent and opaque ways, thus stealing our most valuable resource - time.
With a blend of engineering and finance, Lyn did a great job explaining what money is at its core, its history, and the evolution of money as a technology. She explains the complex global financial system and emergence of new money technology in layman terms, making such important knowledge accessible to the mass.
With all the noises and distractions out there, this book is an absolute must-read to educate oneself on where we are in the money technology cycle, what it means when storing your hard-earned wealth in different vehicles, some can barely keep up with the pace of monetary dilution while there are better options to protect yourself and your family.
In my humble opinion, money is well worth the time learning about because (i) it can stop you from bleeding out wealth that was accumulated by expanding your time in the past and (ii) when your purchasing power grows, it creates time for you in the future - precious time to focus on your health, passion, and family.
Humans trade time for money as a form of storing our efforts in a battery than can latter be consumed or transferred but the current form of money can be diluted in non-transparent and opaque ways, thus stealing our most valuable resource - time.
With a blend of engineering and finance, Lyn did a great job explaining what money is at its core, its history, and the evolution of money as a technology. She explains the complex global financial system and emergence of new money technology in layman terms, making such important knowledge accessible to the mass.
With all the noises and distractions out there, this book is an absolute must-read to educate oneself on where we are in the money technology cycle, what it means when storing your hard-earned wealth in different vehicles, some can barely keep up with the pace of monetary dilution while there are better options to protect yourself and your family.
In my humble opinion, money is well worth the time learning about because (i) it can stop you from bleeding out wealth that was accumulated by expanding your time in the past and (ii) when your purchasing power grows, it creates time for you in the future - precious time to focus on your health, passion, and family.
January 13, 2024
Great Book. An introduction and 101 explainer on what money was in the past, what it is now, and what it should be in the future. Has many chapters explaining the current money system that uses Quantitative Easing and other sophisticated banking to dilute the money supply to enrich the government and cronies. The final sections are about Bitcoin, cryptocurrency, and the right to privacy which the book favors greatly.
The history of money section is the very fascinating and fun to read about. How we've always used a credit system with favors as the first money and then physical money with various coveted objects from sea shells to gold. The section also talks how technological advancement in telecommunications changed everything and made a credit system the dominants money system.
The middle section explains just how unjust and debasing the current system is with all the mechanisms the federal reserve uses. This section can be a bit of a slog since it is complicated but very important to our lives. The mechanics are explained in detail with T accounts for various scenarios and I now know understand how QE is sometimes inflationary and other times not. The FED, banks, and Treasury department really are devaluing the currency in a sophisticated and obfuscated way so the public will never catch on.
Last, there is hope in Bitcoin and the underlying technology. I never knew how important of a technological development that just recently happened. A decentralized digital currency that will never debase and that can transact and settle quickly, and that can be taken and used on any place on earth is amazing. Bitcoin made the bank account, debit cards, currency exchange, and government control obsolete.
Great Book!
The history of money section is the very fascinating and fun to read about. How we've always used a credit system with favors as the first money and then physical money with various coveted objects from sea shells to gold. The section also talks how technological advancement in telecommunications changed everything and made a credit system the dominants money system.
The middle section explains just how unjust and debasing the current system is with all the mechanisms the federal reserve uses. This section can be a bit of a slog since it is complicated but very important to our lives. The mechanics are explained in detail with T accounts for various scenarios and I now know understand how QE is sometimes inflationary and other times not. The FED, banks, and Treasury department really are devaluing the currency in a sophisticated and obfuscated way so the public will never catch on.
Last, there is hope in Bitcoin and the underlying technology. I never knew how important of a technological development that just recently happened. A decentralized digital currency that will never debase and that can transact and settle quickly, and that can be taken and used on any place on earth is amazing. Bitcoin made the bank account, debit cards, currency exchange, and government control obsolete.
Great Book!
October 25, 2023
This is an amazing book. Lyn's understanding of financial topics carries depth not found elsewhere. For anyone who is familiar with her newsletters, she tends to take an unbiased analysis and her conclusions are nearly always right on the money.
This book is written in such a way that any reader can understand it entirely. Financial topics can tend to run a bit dry, but not here, it was highly interesting and kept my engagement throughout. This is not a book about Bitcoin. Rather it's about different kinds of money and how societies have transitioned from one form of money to another, over time. Bitcoin is not mentioned much until the end.
Lyn shines light on the different strengths and weaknesses of each monetary system and how they operate. The presentation style is calm and not overstated, but delivers the facts which are important. Everyone could benefit from reading this book.
This book is written in such a way that any reader can understand it entirely. Financial topics can tend to run a bit dry, but not here, it was highly interesting and kept my engagement throughout. This is not a book about Bitcoin. Rather it's about different kinds of money and how societies have transitioned from one form of money to another, over time. Bitcoin is not mentioned much until the end.
Lyn shines light on the different strengths and weaknesses of each monetary system and how they operate. The presentation style is calm and not overstated, but delivers the facts which are important. Everyone could benefit from reading this book.
April 25, 2024
(heard in audible, but it doesn't exist here)
The book originally is really good as it presents a good history of money, different systems that existed etc. She also argues that the current system is broken, and a new system is needed. The second half of the book is all about bitcoin, and why this is such a better money ledger. I am not a believer of bitcoin, and the book didn't convinced me, even if the author is right, still I think the technology will be used, i.e. blockchain, but not bitcoin itself. I follow her, so I bought the book, but I got disapointed that in reality was just to "sell" the usefulness of bitcoin.
However, the idea that I haven't heard before, and it is obviously brilliant, is that if bitcoin would be used as money (it is not currently), everyday transactions will be on a layer on top of that, not bitcoin directly.
The book originally is really good as it presents a good history of money, different systems that existed etc. She also argues that the current system is broken, and a new system is needed. The second half of the book is all about bitcoin, and why this is such a better money ledger. I am not a believer of bitcoin, and the book didn't convinced me, even if the author is right, still I think the technology will be used, i.e. blockchain, but not bitcoin itself. I follow her, so I bought the book, but I got disapointed that in reality was just to "sell" the usefulness of bitcoin.
However, the idea that I haven't heard before, and it is obviously brilliant, is that if bitcoin would be used as money (it is not currently), everyday transactions will be on a layer on top of that, not bitcoin directly.
January 29, 2024
Absolutely a delight to read. This book was very detailed, spanning from how money came to be (shells, grains, stones) to centralized FIAT, covering the dot com meltdown and 2008 crisis and 2023 bank failures, and moving to digitalized currency such as Bitcoin, stable coins and CBDCs covering privacy issues among many others.
A truly comprehensive book on money. For those who are trying to get a broad understanding on how money works, how it comes to be, where it is going, I highly recommend this book. It did get a bit technical for bitcoin part and how it works regarding mining and nodes, but overall I really do think it is an important book to read.
Blog: http://literaturesandmovies.com
A truly comprehensive book on money. For those who are trying to get a broad understanding on how money works, how it comes to be, where it is going, I highly recommend this book. It did get a bit technical for bitcoin part and how it works regarding mining and nodes, but overall I really do think it is an important book to read.
Blog: http://literaturesandmovies.com
February 7, 2024
The book has two parts. In first, author creates very convincing picture of development of money from the very beginning and why the current system is broken. The second part deals with cryptocurrencies and with Bitcoin, in particular. She is a bitcoin fan and she is very persuasive as to why Bitcoin could resolve many problems with current financial systems. She does provide for a good defense of some of Bitcoin criticism, like its energy usage. It will not cause me to buy Bitcoin (since even if it does make sense it doesn't mean that Bitcoin will fully realize its potential - the risk that author clearly delineates) but I understand clearer now why proof of work works and proof of stake doesn't.
September 6, 2023
Lyn Alden es brillante y este libro es un gran acercamiento, sobre todo para el neófito, a la génesis y la evolución del dinero y del actual sistema financiero. Una pena, aunque nada sorprendente dado el marco teórico de la autora -una entusiasta del "sound money"-, su trato somero y superfluo del verdadero monstruo que subyace a nuestra estructura monetaria: el eurodólar (del que el petrodólar es tan solo una parte). Si hay un capítulo de lectura obligatoria es "El largo ciclo de la deuda" (el 19).
Todo lo de Bitcoin (el último tercio del libro) es completamente prescindible, sobre todo si ya has sido evangelizado.
Todo lo de Bitcoin (el último tercio del libro) es completamente prescindible, sobre todo si ya has sido evangelizado.
May 6, 2024
3.5 stars. The book comes in five sections. Lyn Alden explains what will happen in each at the start of the book. I read the first four sections and found them both fascinating and sometimes remote and borderline boffin; I thought I’d have to read them twice really and some of those sections I WANTED to !!. The fifth section is heavy on Bitcoin. I found myself scanning these chapters which is why it didn’t make four stars. Maybe that section is better on a spoken book. The book has plenty of charts but has no index section so if you’re looking for something to explain “shorting” which comes into narrative - it’s tricky to find where that’s introduced. Give it go though.
January 24, 2024
The author breaks down the monetary system from using sea shells to modern day Bitcoin. Who ever controls the ledger controls the monetary system. Today most ledgers are controlled by governments and issued as fiat currencies except for distributed crypto currencies. These ledgers should be constrained by scarcity like gold but fiat currencies have always failed because there are no real constraints to issuing them in perpetuity, so much more nuggets laid out by the author which makes this my number one book on explaining the origin and evolution of money so far.
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March 15, 2024Broken Money is the Result
Lyn does a great job explaining the nuances of our broken financial system. At the heart is the ledger. Whoever controls the ledger controls society.
Lyn also recommends the obvious, fair solution. But people in power never give up their power willingly.
The real challenge is not the broken system - that's a symptom of the real problem. The people always have the power. We must decide: Are we going to, once again, perpetuate the cycle? Or are we going to finally realize distributing power to promote prosperity is a better way? We shall see.
Lyn does a great job explaining the nuances of our broken financial system. At the heart is the ledger. Whoever controls the ledger controls society.
Lyn also recommends the obvious, fair solution. But people in power never give up their power willingly.
The real challenge is not the broken system - that's a symptom of the real problem. The people always have the power. We must decide: Are we going to, once again, perpetuate the cycle? Or are we going to finally realize distributing power to promote prosperity is a better way? We shall see.
October 20, 2023
A fresh take on economic evolution
Accessible to everyone, provocative enough to captivate financial pros -- this is a brilliant, well researched history of money and its intersection with social and political power. Alden not only explains how financial structures have shaped the political world, but offers an optimistic view on how technology can increase our equality and freedom.
Accessible to everyone, provocative enough to captivate financial pros -- this is a brilliant, well researched history of money and its intersection with social and political power. Alden not only explains how financial structures have shaped the political world, but offers an optimistic view on how technology can increase our equality and freedom.
December 16, 2023
How to Fix Broken Money
This book outlines the history of money. It explains how money came to be, how it facilitated human flourishing, how it became corrupted, how this corruption corrupted society and now, how freedom is being lost as a result, and finally how a new form of money has emerged that is very likely going to slow down, stop, and perhaps even start the repair of our decaying civilization. This is a profound book of knowledge and hope.
This book outlines the history of money. It explains how money came to be, how it facilitated human flourishing, how it became corrupted, how this corruption corrupted society and now, how freedom is being lost as a result, and finally how a new form of money has emerged that is very likely going to slow down, stop, and perhaps even start the repair of our decaying civilization. This is a profound book of knowledge and hope.
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