With its focus on the origins of leverage, derivatives, and bubbles in the financial markets, Thomas Levenson's "Money for Nothing" could not have been written at a more opportune time, especially with the present COVID-19 pandemic leading to a proliferation in personal finance and investing. Rather than dive right into the South Sea Bubble, the primary event in the book, Levenson first provides an argument on how scientific reasoning led by thinkers such as Isaac Newton used their understanding of applied mathematics to bring forth the many market innovations that are so familiar today. Levenson's level of detail and understanding in honing his arguments are remarkable, and these details allow one to become fully immersed into the early capital market environment. It cannot be overstated just how well researched and written this book is; as a finance professional, it is evident how well Levenson understands market mechanisms and even the psychology behind them. I thoroughly enjoyed how well Levenson profiles and weaves in the important figures of the day, many of whom are well known in our modern world but not in such fleshed-out detail. "Money for Nothing" is truly an excellent book, and one that I would recommend wholeheartedly to anyone interested in business, the markets, or investing. I applaud Levenson for this extraordinary work.

This book was dense, it is not for the causal reader. I think it is important knowing that going into it. It is a book that I picked up and put down often. The lessons and origins are very important to understand, but you have to be very invested in the content.

Ok, I was expecting this to be a boring read. BUT, the author's dramatic writing about the people that were part of the Scientific Revolution and the creation of a booming economy kept me reading enthusiastically.

TL;DR

In Thomas Levenson’s Money for Nothing the scientific revolution coincides with England’s need for financial innovation, and Levenson depicts the turmoil, hope, promise, and despair with a novelist’s eye. Highly Recommended.

Review: Money for Nothing

Until I read Terry Pratchett’s “Making Money,” I never thought about the development of money as a historical process. I never would have thought the history of money could be interesting, but along came Money for Nothing by Thomas Levenson. While Mr. Levenson wasn’t as funny as Pratchett, he kept my interest as well as any Discworld book. Money for Nothing started by discussing Isaac Newton, and that’s guaranteed to get my interest going. But from there, he goes on to document how the scientific revolution of Newton’s time affected money leading into the South Sea Company and the market bubble (?bubbles?) it created. Money for Nothing by Thomas Levenson wrote this evolution of money as close to a novel as historical non-fiction gets. It dealt with a lot of history I knew nothing about, shedding new light on historical figures, and showing that when it comes to money, people never really change.

Thomas Levenson’s Money for Nothing was the historical book I didn’t know I wanted to read. I picked it up because the description promised it would show how the scientific revolution affected the concept of money. Levenson delivered. Money for Nothing examines the process of money becoming an ever-more abstract concept. During Newton’s time, England faced a number of unique monetary issues from the metal of their coins being worth more than the face value to untenable national debt to insurance betting to stock bubbles. Despite being roughly 300 years ago, England faced modern financial troubles. The more things change, the more they stay the same.

Levenson says that this period starts the formation of modern finance. He lays it out in an intriguing and well written way. While the focus is how money evolved into ever more abstract forms, Levenson uses people and their lives to convey the concept. His writing on Newton fascinated me, and I’ll have to check out his other book, Newton and the Counterfeiter, because of this. Sir Isaac is an amazing person in the history of science, for sure, but just in general, he led an interesting life, including time at the Royal Mint. Levenson writes Newton so well because he focuses on the person, both good and bad. The author brings this same attention to humanity for all the people in the book, and there’s lots and lots of names here. While some sought to make finance a purely reason-based pursuit, the South Sea Bubble shows that reason had little to do with the rise in price. Archibald Hutcheson used mathematical reasoning to show that the South Sea stock was overpriced. He printed pamphlets about it, and yet no one believed him. Levenson’s explanation of Hutcheson’s work and why it mattered despite being ignored is wonderful. He explains the revolutionary shift in thinking Hutcheson made. Would the bubble have been avoided if Hutcheson was taken seriously? It’s hard to say, but maybe it wouldn’t have been as bad.

Individuals

When I started reading, I noticed a neat pattern. Each chapter focused on an individual and their contribution to the financial issues of the day. For example, chapter one focused on Newton, two on William Petty, and three on Edmund Halley. But quickly the list grew too long for me to keep up with, and I got caught up reading, forgetting to break to make name notes. There are many, many people in this book, but Levenson does such a good job of describing and presenting them, that they all remain distinct. It helps that a number of these people are well-known, but even those who aren’t receive attention and care. I appreciated the time Levenson took to ‘flesh out’ his characters. We learn about Hutcheson, John Blunt, Daniel Defoe, and many more. Each fit in without derailing the overall narrative. It’s really, really well done.

When learning about historical figures, we tend to learn only a fraction, and we think its their whole lives. For example, Newton did more than just invent calculus and gravity. But those are the things I learned in school about him, and other aspects of his life received no thought from me. Sorry, Isaac, old chum. But one of the great things about books like Money for Nothing is that the audience gets to see famous figures from history living life and doing things that they aren’t famous for. Seeing historical figures getting caught up in Exchange Alley’s rush towards the Bubble made them all the more human, and I think that’s a great thing. It’s hard to look at figures of the past, giants of society, and remember that they occasionally drank too much or made bad mundane decisions occasionally. With all the people moving in and out of this book, Levenson gives a taste of how the South Sea Company affected the whole of London.

Nonfiction that Reads Like a Novel

If a fiction reader were to ask me for a book to get started on nonfiction, in general, or history, in particular, I’d recommend this book. I can’t praise this aspect of Money for Nothing enough. I am easily distracted, and since most nonfiction books don’t build tension – granted it’s hard to do that when the ending is widely known – I lose focus easier than when reading fiction. However, Levenson’s focus on the ‘characters’ of this historical drama kept me engaged. Even though I knew what was coming, I didn’t know how the individuals would be affected. So, this created a form of tension that a lot of nonfiction books lack. If I were to write a history book, Money for Nothing would be one I’d emulate.

Caution is Required

This book documents the dangers of modern finance, and it shows that most financial innovations are done through trial and error. This method is necessary but can be disastrous, as the book so thoroughly shows. Money for Nothing demonstrates that risk increases as money moves from the hard backing of land, silver, labor, product, etc. to more abstract concepts. What does this say, though, about fiat currency? Does Levenson believe that a nation’s money should have a hard backing? I’d love to know his take on Modern Monetary Theory, a la The Deficit Myth.

I do agree that we need to be cautious with innovating and evolving money. Also, I agree that the more abstract money gets, the harder it is for non-finance people to understand. But I think fiat currency is important; in The People, No, Thomas Frank says the need for fiat currency led to the formation of the Populist Party around the end of the 1800’s. I don’t know enough to articulate the difference between a fiat currency versus a stock derivative, but I think there is one. I could be wrong; I’m not an expert in the field. They have a commonality in that they are abstract versions of money. Maybe it’s the level of perceived risk that I see between the two. Based on Money for Nothing, I’d like to hear Levenson’s analysis of the two concepts.

Conclusion

Thomas Levenson’s Money for Nothing shows the lessons from the South Sea Bubble apply today as much as back then. The scientific revolution coincided with a time when England needed financial innovation, and Levenson depicts the turmoil, hope, promise, and despair with a novelist’s eye. Money for Nothing proves that we often fail to learn from history, especially when there’s an easy dollar to be made.

Money for Nothing by Thomas Levenson becomes available from Random House on August 18th, 2020.

8.5 out of 10!

Good look at financial markets and lessons not learned

I enjoyed this book. It reads more like a novel than non-fiction as it is a well-told story, full of interesting, well-developed characters; some sympathetic, some not. Author Thomas Levenson creates a good sense of drama and I found the book hard to put down but I also found some descriptions of the financial tools used a little confusing. However, this may be more a result of the actual tools than the writing. The lessons from the events of the book are still applicable today, and Levenson addresses this in later parts of the book where he looks at the 2008 market crash. I had also read “The Hunt for Vulcan” by Levenson which was excellent. Some of the charm I saw in “The Hunt for Vulcan” did not carry over into “Money from nothing” but perhaps Levenson is more comfortable writing about science. Overall this is a book well-worth reading.
Disclosure: I received a complimentary copy of this book via Netgalley for review purposes.