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.

Mervyn King
Image source: YouTube Video Screenshot

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.

Mervyn King (Part 1): The Importance Of Financial History

Mervyn King (Part 2): The Difference Between Economics and Science

Mervyn King (Part 3): Role of Money & Banking Amidst Radical Uncertainty

Mervyn King (Part 4): Disequilibrium in the World Economy

About the Speaker:

Mervyn King was Governor of the Bank of England from 1 July 2003 to 30 June 2013 and was Chairman of the Monetary Policy Committee from 2003 to 2013 and Financial Policy Committee. He was Deputy Governor from 1998 to 2003, and Chief Economist and Executive Director from 1991.

Mervyn was a non-executive director of the Bank from 1990 to 1991. Born in 1948, Mervyn King studied at King’s College, Cambridge, and Harvard (as a Kennedy Scholar) and taught at Cambridge and Birmingham Universities before spells as Visiting Professor at both Harvard University and MIT. From October 1984 he was Professor of Economics at the London School of Economics where he founded the Financial Markets Group.

He was preceded as Governor of the Bank of England by Edward George. He was succeeded by Mark Carney.