Changing Fortunes: The World's Money and the Threat to American Leadership

by Paul A. Volcker

A historical survey of the global monetary order discusses oil shocks, floating exchange rates, and the Latin American debt crisis

Genres: Economics, Finance, History, Biography, Nonfiction

416 pages, Paperback

First published May 26, 1992

About the author

Paul A. Volcker (1927-2019) was Founder and Chairman of the Volcker Alliance. He was Chairman of the Federal Reserve under Presidents Jimmy Carter and Ronald Reagan from 1979 to 1987.

Reviews

[Denny Troncoso · Rating 5 out of 5]

An excellent book on the 20th century economic history. If you enjoy reading on the subject add it to your list.

[NDH · Rating 4 out of 5]

I very much enjoyed most of this book. Structurally, alternating between “authorial voices”, between Paul Volcker and Toyoo Gyohten, was a clever device that helped maintain my interest level. (PV can tend to drone on a bit and he seems to enjoy the sound of his own voice more than normal people should, while TG sometimes didn’t seem to have much to say.) But having these two perform a karaoke/kabuki duet surely captures something unique of the essence of the times, when it was fashionable to worry that Japan Inc. was going to take over the world. I do, however, sense that TG was more-than-a-little reluctant to appear on stage beside that towering giant PV, and only did so because it was easier to go along than to say “No”.
Be that as it may, the events described in the book were very real to me, having spent my university years studying them (late 70s) or having lived through them as a young professional (finance/consulting 80s and 90s). It was interesting to see from an inside perspective what was going on, on stage and off, and in the minds of principal actors.
And that’s about where my disappointment with the book started to set in. I remember the news reports about the various important-sounding meetings and agreements (Smithsonian, Plaza, Louvre, whatever). It always sounded like these guys really knew what they were talking about, that what they were doing was vitally important, and that the rest of us should just pray that they’d save the world, again. But from my perspective today, it all seems like a lot of wasted energy, wasted words, wasted time and money. People like PV and TG tell us with total confidence that it is “essentially necessary” to have some sort of international monetary/financial system (run by people just like them) since otherwise there will be nothing but chaos, uncertainty, and “disorderly markets.” So, they all jet off around the world, have endless conferences and discussions, at the end of which they issue a mealy-mouthed “communique” that, as they admit, says Nothing!
To me, it seems there is something unhinged, and dangerous, about this pervasive and evergreen-if-not-immortal belief in what can only be called Central Planning. The experts know what’s best, and it’s just those foolish, short-term-focused national governments (and, what’s worse, their people!) who continue to reject the wisdom of their betters, the self-proclaimed elites, as incarnate in PV and TG, oracular and inscrutable in their kabuki dress.

I guess I was kind of disappointed in PV. He’s definitely dropped a couple of notches in my estimation. Having long thought of him as the heroic giant who slew the inflation dragon, I now see him as just another bureaucrat who resents interference from mere popularly elected politicians. He certainly doesn’t disguise his disdain for “Reaganauts”, whom he refers to derisively. He seems to scorn “supply-side economics” without ever actually discussing it. Even monetarism— ‘inflation is always and everywhere a monetary problem’— doesn’t seem to be a deeply held conviction. In what does he really believe, except that unelected bureaucrats should have even more power?
Which brings us to the Latin American debt crisis. Of course ending inflation in the US was going to cause some big problems for anyone who’d borrowed big in dollars. Duh… Don’t cry about it Argentina. You bet wrong.
Finally…the last chapters. Neither PV nor TG had much—anything—worthwhile to say. PV’s wrap-up sounds like it was written by one of his grad students aspiring to be a political speech writer. TG’s was the forlorn hope of an aged bureaucrat who can only dream that someone after him will enjoy the power denied him by the remorseless gods.

What began as an interesting guided tour through the maze of monetary history ended up merely pathetic. Still, it’s a worthwhile read. But the gods have feet of clay.

[Mike Cheng · Rating 2 out of 5]

This book is based on a series of Princeton University seminars presented by Paul Volcker (former chairman of the Federal Reserve from 1979 to 1987) and Toyoo Gyohten (worked for Japan’s Ministry of Finance from 1955 to 1989). Published in 1992, Messrs. Volcker and Gyohten provide their respective points and counterpoints from American and Japanese perspectives. The primary topics covered are the decline of Bretton Woods, oil shocks in the 1970s, subsequent inflation, and the debt crisis of the 1980s. For me the most interesting parts were Mr. Volker’s views about the role of the U.S. as an economic leader, the primacy of the Dollar as the world’s reserve currency, and the role of central banks and monetary policy. Perhaps Mr. Volcker is best remembered for having the courage to allow interest rates to go sky high (the Federal Funds Rate flirted with 20% under his watch) in order to bring inflation down from almost 15% to 3%. #changingfortunes

[Isaac Chan · Rating 2 out of 5]

Wasn't able to get as much out of this book as other readers have, unfortunately. Regrettably, my embarrassing lack of knowledge of the historical context behind the economic events covered in this book put me in a bad position to appreciate the commentary, not to mention the boredom behind reading long diaries of events that happened decades before I was born, and the constant slight sceptism behind whether this decades-old analysis is even still relevant today (they BARELY mention China! Is Japan even still in the conversation today?)

I wished this one was less descriptive, and more explanatory and analytical. Right book wrong time perhaps. I picked this one up because I love Andy Constan's material and he recommended this one, but it turns out to be ntg like Andy's lucid analyses.

[Monzenn · Rating 4 out of 5]

A good book that covers an important period. Seeing how major players work during times of crisis is always eye-opening, and this is no exception. Understandable of course that it is their perspective that is highlighted, so it's good that it's from either side of the US-Japan relationship that speaks here (though notably Gyohten has significantly fewer lines).

[Garrett · Rating 3 out of 5]

Good insights, history, and thoughts. But dragged a bit and was still quite anchored to the Bretton Woods framework.

[PF Chang · Rating 3 out of 5]

End up seeing more questions than answers after reading it; but in a good way

[John Curtice · Rating 5 out of 5]

Criminally underrated macro book

[Geoff Steele · Rating 2 out of 5]

interesting history on the break up of Bretton Woods agreement, the $35 an ounce gold standard, leaving the gold standard, floating exchange rates, and Japan, Germany, and USA currency relations. Written by Paul Volker. Also, the fact that USA as the world's reserve currency look at and how the other countries peg their currency to the US'.

[Vanya Brucker · Rating 3 out of 5]

Boring but also … sometimes not boring. I liked reading the Volcker part.